This report explores trends and lessons learned from hybrid organizations pursuing
environmental sustainability missions. It hypothesizes that hybrid organizations,
defined here as entities that are market-oriented and mission-centered, can
positively contribute to some of humanity’s most pressing challenges by deploying
their inherent business models. These organizations, which place equal emphasis
on their common-good mission and financial performance, blur the distinction
between nonprofit and for-profit entities. Building on prior work conducted by
researchers on corporate social responsibility, sustainable entrepreneurship, and
social enterprise, this research was motivated by a desire to fill a gap in the existing
literature on the contributions of privately held, for-profit businesses with
environmental sustainability missions.
The research includes an analysis of survey data from 47 hybrid organizations,
investigating their business models and strategies, finances, organizational
structures, processes, metrics, and innovations. The survey data reveal trends
related to the integration of business practices that enable companies to meet both
mission and market goals, such as employing innovative products in niche markets,
leveraging patient capital to meet non-financial objectives, and encouraging shared
authority rather than top-down leadership styles. The sample size is biased towards
young, small, U.S.-based hybrids, and although respondents show varying levels of
profitability, they maintain consistently high levels of integrating environmental
sustainability throughout their firms. Moreover, information gleaned from five indepth
case studies with best-in-class companies selected from the survey, reveals
instructive lessons for hybrid practitioners and researchers alike. These companies
demonstrate how to infuse an organization’s culture with its mission, and develop
deliberately close personal relationships with suppliers, customers, and
shareholders. In addition, these case studies exemplify the challenges of patience
and limits to growth rate that are common to many hybrid organizations. They also
illustrate a strategic trend toward premium product offerings, which allow these
businesses to avoid competing on price.
This research suggests that hybrid organizations offer an effective organizational
model for contributing solutions to global environmental issues. While there may be
limits to the speed of growth or scaling the impact of these organizations, they may
also be more effective and self-sustaining than traditional organizations in meeting
humanity’s common challenges.