Governing for Impact: Managing Mission-Driven Organizations Through Stages of Growth and Investment

Abstract

Mission driven businesses — here defined as businesses that are managed to produce financial returns alongside intended social or environmental benefits — face many challenges as they grow past the “angel” stage and scale up into fully-fledged corporations. These include all the developmental challenges met by ordinary for-profit businesses and, in addition, the unique challenge of preserving mission as they grow. An emerging body of research, plus an increasing level of first-hand management experience across several sectors, reveals that governance offers a framework that can help blended bottom line companies manage some threats to mission and avoid “mission drift” during the growth stage.

Drawing together current learning from the field, sector research and material gathered through interviews with a number of leading practitioners, this paper seeks to demonstrate some ways mission-driven businesses can use governance to manage the pressures of change and preserve mission as they scale. It highlights a number of factors that can lead to erosion of mission in the growth stage, including changes to legal form, changes in leadership, especially in the role of the founder, and changes to board composition, in particular the advent of influential investors in decision-making roles. And it suggests how, through governance practice, businesses can develop the internal governance structures, processes and systems that will help them cope with the pressures of growth and, at the same time, work to embed mission in the DNA of the developing organization.