USC Marshall MBAs Doing Good
Each year, the USC Marshall Society and Business Lab (SBL) awards subsidies to MBA students who intern at nonprofit and social enterprise organizations. Follow their adventures.
When I started business school I simultaneously decided I needed to keep up with current events, particularly those of the business nature, so I subscribed to Bloomberg Businessweek, in hope that reading a weekly magazine would fill me with the knowledge of finance and business that I felt I was lacking.
What I found instead while reading this week’s issue was an article showcasing social enterprise and socially and environmentally “good” products. Blending a social or environmental mission with business is evidently the new trend, and it is increasingly gaining momentum in the business sector. The article delved a little deeper into the psychology behind this trend, and intrigued by its findings, I thought I’d share here:
Young professionals, the article states, who would normally be in a position to donate to various philanthropic efforts, just don’t have the finances to in this economy. But our generation still cares about our respective causes and carbon footprint. It’s quite the predicament.
In lieu of more traditional philanthropy, we are reclaiming the power of our pockets, infusing the causes and issues we care about into our regular purchasing decisions – we buy clothing made of sustainable materials, purchase groceries from local vendors, and feel good knowing that every time we buy a $44 pair of shoes, a child in need receives a pair for free. We prefer to buy water bottles where we know that 5¢ of the $2 bottle will be donated to creating potable water solutions in Africa because it simply makes us feel better to leverage our small daily decisions, and those 5¢, to impact the issues we care about.
One thing I sometimes lose sleep over is whether these types of purchasing decisions will lead to any real impact. After belaboring this for a while, however, I’ve come to this conclusion: We may not be moving the needle forward in any drastic way by purchasing products that have an embedded social mission, especially when only 5¢ of a $2 product is donated to a cause, but we are signaling to corporations and companies that feeling good about the purchases we make matters to us. And this is hopefully the catalyst of a long-term trend that will continue to stimulate the private sector and encourage businesses to consider missions and causes in their models, so that there can be lasting and real, sustainable social change.
I spent this summer as an intern at REDF, a venture philanthropy organization that aims to build capacity in the social enterprise sector - and in particular at non-profits that run businesses that create jobs - by bringing resources, funding, and business skills to social enterprises. Each summer, REDF places a cohort of MBA interns at their portfolio companies for a 10-week long internship.
The portfolio company I worked with this summer, Chrysalis, is a social enterprise that helps people with the greatest barriers to employment, such as homelessness and incarceration, find jobs. At Chrysalis, I was specifically tasked with assessing the feasibility of a new business line, in addition to analyzing some internal processes and operations. At one point, as I mentioned in an earlier post, I even helped run a warehouse.
As any good business school student would, I’ve chosen to end this blog with lessons learned and key take-aways from working in social enterprise and venture philanthropy:
You actually use the SWOT Analysis and other concepts from Marketing, Ops, and Finance: As I discussed in my earlier post about homelessness and baking cookies, my Year 1 Ops Class came in useful this summer. But I didn’t give credit to the various other classes that made their mark this summer, Marketing especially. When conducting a feasibility analysis, which is eerily similar to an ISMP, applying Marketing frameworks helped me to better assess the company’s core competencies and position and map them in relation to their competitors.
Everyone uses Powerpoint and Excel - in the way they were meant to be used: So long are the days of using Excel to make lists. Even at social enterprises, Excel is used to create complex financial models and Powerpoint decks are the main platform used for presentations. If there is something I wish I had spent more time developing in Year 1 of business school in preparation for my summer internship, it would be better Excel and financial modeling skills. A deep understanding of these tools is incredibly valuable in the social sector.
While Social Enterprise is far from perfect, it’s the best answer out there: Mission meet Business, Business meet Mission.These kids do not play in the same sandbox. Actually, they are more like estranged lovers that you try to get to live under one roof. What’s generally good for the business – growth and specifically growing the bottom line – is often not good for the mission. And in the case of a social enterprise that is embedded in a non-profit, the social mission must come first, making it particularly challenging to run the business.
However, though this arrangement is far from perfect, when it comes to best being able to balance these different interests and understand the difficulties in carrying out workforce development programs, this hybrid structure is possibly the only structure that can address and accommodate to both the needs and challenges of a business and a non-profit.
What Social Enterprise could use more of is MBAs: I don’t mean to say that in a self-congratulatory or overly confident way. Clearly, with one year of an MBA under your belt going into an internship you quickly learn how little you actually know. But what you do also quickly begin to recognize is the value that you can bring and especially the contributions you can have upon completion of your MBA.
To really understand social enterprise, you need to be able to understand the nuances and the implications of balancing the business with the mission, an ability to apply analytical and problem-solving skills, utilize the right technologies to impact your work, and be able to listen to and make decisions based on different stakeholders’ interests. Thus, the combination of skills and training - in consulting, finance, operations, marketing, and management - that students develop during b-school is the holistic package that is needed to drive success in social enterprise.
2012-2013 marks the fifth consecutive year of cuts in the California
education budget, with the possibility of further cuts if neither the Brown
(Prop 30) nor the Munger (Prop 38) tax initiatives pass this November. To
give you some real numbers, in 2007-08, a charter school in California
would have received about $6,750 in General Purpose funds for a student in
grades 9-12. By 2011-12, that amount had dropped $700, down to $6,150. If
the Brown tax initiative passes, that amount will remain the same. If the
Munger tax initiative passes, that amount will increase by about $1,000.
If both initiatives fail, that number will drop yet again to just below
$5,850. A loss of $300 per student is devastating to a school’s budget;
teachers and staff are let go or given more furlough days, programs are
cut, old textbooks continue to be used.
In addition to budget cuts, schools have to worry about when they will
actually see their funding. Schools are supposed to receive their funds
based on a pre-determined apportionment schedule, which is different for
each type of funding. For General Purpose funds, the CA Ed Code stipulates
that each school should receive about 9% of their funds on a monthly basis
from July to June, with 100% of funds collected by June. However,
California has been deferring revenue for schools, leading to big cash flow
problems. Even if the taxes pass this November, schools still won’t receive
32.8% of their 2012-13 General Purpose revenue until the summer of 2013-14-
if the taxes fail, that portion goes up to 34.5%. Charter Schools in
particular are affected, as they can’t depend on their district to float
them cash. Charter Schools have to tap into lines of credit to access cash
to keep their vendors and employees paid. Some schools turn to factoring,
selling their receivables at a discount-this method of raising cash got
Inner City Education Foundation schools into financial trouble in 2010-11,
placing them about $16MM in debt. The leaders of so many charter schools
are passionate people who care deeply about education, but lack the
financial knowledge to properly manage cash flow and access low cost lines
of credit to create a sustainable organization. ExED, my Education
Pioneers placement for the summer, helps charter schools with these issues
by providing financial and cash flow projections and a dashboard for easy
monitoring, and leveraging strong relationships with many local banks
willing to work with charter schools on loans and lines of credits.
What has been frustrating to me as I learned more about these issues in
education is that no one seems to be taking a long-term view of possible
solutions. Instead, there are more furlough days here, staff cuts there,
and lost programs. It seems like the November tax initiatives are both
necessary and just another band-aid. One of my fellow Education Pioneers
shared the following parable, which, while applicable to many sectors and
issues, I think especially resonates with those of us concerned with
*One summer in the village, the villagers gathered for a picnic. As they
shared food and conversation, someone noticed a baby in the river,
struggling and crying. The baby was going to drown! *
*Someone rushed to save the baby. Then, they noticed another screaming baby
in the river, and they pulled that baby out. Soon, more babies were seen
drowning in the river, and the townspeople were pulling them out as fast as
they could. It took great effort, and they began to organize their
activities in order to save the babies as they came down the river. As
everyone else was busy in the rescue efforts to save the babies, one of the
villagers started to run away along the shore of the river. *
*“Where are you going?” shouted one of the rescuers. “We need you here to
help us save these babies!” *
*“I’m going upstream to stop whoever is throwing them in!”*
Spoiler Alert: In Operations in year 1 of business school you learn a lot about baking cookies. Your typical Ops question goes something like this: If you can only bake 20 cookies in an oven at a time, and you have 2 ovens, and it takes 45 minutes to bake a batch of cookies, and 5 minutes for prep time between batches, how long will it take to bake 100 cookies? And more importantly, where is the bottleneck? Operations, in a nutshell, is about rooting out inefficiencies.
I didn’t think much about these cookie-baking lessons after Ops ended, until I started my summer internship at Chrysalis, a Los Angeles based social enterprise that helps formerly homeless and incarcerated people find jobs. The social enterprise is both a non-profit, in that it relies on donations and philanthropic funding to provide services to its clients, and a business, in that it is the largest provider of street maintenance services to Business Improvement Districts in the LA area, with a recently formed staffing agency business line as well. These businesses serve two purposes – to help create a sustainable revenue source for the non-profit and to function as a transitional jobs program for people with significant barriers to employment. Chrysalis employs its own clients in its business lines, providing job training and opportunities to build work experience, so that clients may find and retain a permanent job elsewhere.
During my first two weeks at Chrysalis, I was tasked with helping them develop an operational process for a new city contract they had just procured. The contract was for a warehouse that would store unattended personal property found in the Skid Row area and collected by the City’s street services. It was essentially a way to ensure that as LA City began to clean and power-wash the heavily polluted Skid Row area, people – who already had such few possessions – wouldn’t lose their remaining items. For Chrysalis, this contract meant a handful of new jobs that could employ their clients.
Logistically, however, creating a process to efficiently log, store and retrieve people’s items was very challenging. Drawing from Ops class, I began to think about developing processes for personal property storage and retrieval the way I used to consider processes for oatmeal chocolate chip cookies. I had to consider our capacity, map out flows, and take into consideration potential inefficiencies. Typical questions I began asking myself were: If the shipments were unloaded between the hours of 8:30am to 12:30pm, and I expected that around 20 bags would be unloaded per day, with 3 dock workers, and 1 administrator to input the data collected, how much time would it take to unload and store each bag? Furthermore, If 10 people came to claim their property, but only 1 could speak with the administrator at a time, what was the average wait time? How fast was our turn-over? And perhaps, most importantly, who was the bottleneck?
There are a lot of theoretical lessons taught in the core that are unexpectedly relevant and applicable to your scope of work, whether during your summer internship or after. It pays to pay attention to the classes you don’t think will come in handy later, cause you never know, and you might find one day that eradicating homelessness is a process that is highly similar to that of baking cookies.
It’s hard to believe that I just finished week 6 of my internship. Time has just flown by! I’ve been working in the Food Services Division at Los Angeles Unified School District (LAUSD) this summer and I have to say, I’ve been pleasantly surprised at how much I am enjoying it. As the second largest school district in the nation and one of the largest employers in the County, public perception of LAUSD has often been mired in negativity. My biggest hesitation in accepting my offer with Education Pioneers (EP) was not knowing where I would be placed during the summer. When I accepted, the one thing I did know was that I did not want to work at the bureaucratic mess known as LAUSD. But as luck would have it, while sitting in LAX waiting to depart for my PRIME trip to Hong Kong, I received an email from EP with a proposed project: LAUSD was looking for a Fellow to work on in its Food Services Division on a project to identify cost control strategies for food expenditures. Let me back up here: before business school, I spent over 6 years working in food service operations at a local non-profit that serviced Southeast Los Angeles. Access to healthy foods and proper nutritional education has always been a passion of mine. I have experience with federal funding, I understand how to navigate local politics, and I have a basic understanding of the food industry (it can be quite convoluted). At the same time, finance was definitely an area where I could use more growth (to say it was a subject matter that did not come easily to me is putting it mildly). Surprisingly, this project sounded like a great fit, but it was at the dreaded District.
I decided to take a chance and accept it. The great thing about EP is that although you don’t know where you will be placed when you accept your offer, you are able to accept or reject any project that is proposed to you; the intent is to truly find a good match for you and the partner organization. Working at the District has forced me to recognize and work past my own biases. Yes, it is a large bureaucracy and yes, there is much room for improvement. But there is also a number of highly talented and motivated people who work there. LAUSD has seen significant improvements in recent years but in a $7 billion organization, positive changes are difficult to celebrate when there is so much more to do. California ranks amongst the lowest in the nation in its investment in public schools. The situation is dire and the stakes are high; reform can easily be seen as hopeless. Therefore, what I appreciate most about my summer experience is seeing the high levels of commitment from a myriad of dedicated people and organizations, to truly transform the educational landscape in Los Angeles. The process is long, complicated, and arduous but it is one that we all are stakeholders in, not only as neighbors and parents, but as future employers in our communities.
With over 1.1 million students in 1700 schools 135,000 employees (including teachers) and a budget of $24 billion, the New York City Department of Education (DOE) is the largest public school system in the nation. In an effort to raise the quality of education for all its students the DOE has implemented a department wide choice system through its High School Admissions Process. This means that all graduating middle school 8th graders should be able to choose which high school to attend based on academics, extra-curricular activities, ratings, location, etc. But as the debate goes—how real is this idea of choice?
Much controversy surrounds the idea that choice is not real. Real choice would mean all families have the ability to choose between public schools, parochial schools, private schools, Montessori schools, charter schools, or home schooling. Technically, only the middle and wealthy classes have real choice because they can afford all the different options of schooling available. The lower income classes cannot. Those that live at or near the poverty line must attend public/district schools because they cannot afford any other option. Putting financial resources aside, choice is also limited based on your knowledge and awareness of how to navigate the choice system.
Under the NYC DOE choice system, any child can apply to any high school. But simply having the option to choose a school does not mean you can or will be able to attend a better school. And the reasons why are plentiful: high performing schools want to make sure the children that are actually assigned to that school have priority enrollment; lack of financial resources to ensure you are able to travel to that better school; lack of information about the differences in schools or how to simply navigate the system to make it work for you.
Ideally, every child should have the opportunity to find a seat at a school of his/her choosing, preferably a better school. Theoretically, choice should force the low performing schools out of the system. With choice in schools comes competition, creating a marketplace, which by definition indicates there will be winners and losers. However, the whole point of education reform is to eliminate the losers of education. Schools should not be in competition with each other because there simply cannot be any losers in education.
Choice in the NYC DOE does not reflect a public school system with all good schools. For many, choice often means choosing one bad school over another. Choice is simply one component in the education reform movement.
Education Pioneers is definitely not your typical MBA summer internship
experience. While it is true that I go into an office and work on projects
in excel and power point (an MBA student’s best friends), this only takes
up about 50% of my time. The other 50% is spent at workshops, exploring
education sector issues with the 35 other members of my co-hort, going to
lunch with leaders in the education sector, and visiting school sites to
interview administrators, teachers and parents. This balance allows me
learn a little bit about everything in the education sector, while taking a
deeper dive into the issues surrounding my project.
Education Pioneers placed me at Excellence in Educational Development, or
ExED, for the summer. ExED is a management and consulting company for
charter schools and a few other education related non profits. They provide
start up consulting for charter schools, then continue to provide back
office services like payroll, budgeting, and securing low interest lines of
credit and loans once the charter school is up and running. They have
tasked me with two projects. The first, and largest, is creating an
information kit for traditional public schools either considering or
beginning the process of converting to a charter school. The conversion
process is incredibly complicated, and for many schools, contentious.
The original intent of charter school conversions was to allow low
performing schools to break away from the district and gain the autonomy
some see as necessary to turn around their student achievement. However,
since the CA state budget crisis, mid to high performing traditional public
schools in middle class neighborhoods are converting for financial reasons-
many schools can either get more funding or spend their funding more
efficiently when operating independently. School districts don’t want to
lose the prestige and funding these schools bring to the central offices,
but there is very little districts can offer to entice these schools to not
In order to convert a traditional public school must draft a charter
petition and get at least 50% of the certified teaching staff to sign off
on it. This can prove a difficult task, as many teachers don’t want to
lose the various benefits they have earned teaching in the district, and
many are concerned about losing the protection of their union. However,
all conversion charter schools I have studied actually stayed with their
teacher’s union (usually UTLA or CTA) after converting, creating
independent union agreements. Schools can also face resistance from
students, parents and community members who may not understand what a
charter schools is, or fear the kind of changes their school may face. I
asked several staff of successful conversions what was the most common
concern they heard from parents or community members. Everyone, so far,
has cited either admission and tuition policies or concerns about school
traditions, such as mascots and sports teams, and the most common concerns.
A common misconception about charter schools is that they are private
schools with an admissions process and/or tuition charges. In fact, charter
schools are public schools- free to attend, and most operate under open
enrollment, although conversions are allowed to grant admissions preference
to students living in the original attendance boundary or who previously
attended the school.
Once the school has submitted the charter petition and it has been
approved, another challenge faces them. The school now must be prepared to
set up the infrastructure and operations previously provided by the
district- everything from maintenance to payroll. Operating as a business
can be overwhelming to school administrators who are used to focusing
purely on the educational aspects. ExED helps schools select vendors and
set up solid processes to ensure smooth operations. Cash flow is a big
issue for charter schools- portions of funding come in at different times
throughout the year, and the state has issued several payment deferrals
over the past few years. Charter schools have to learn how to match their
accounts payable and receivables, and often have to depend on lines of
credit or loans to generate cash, especially in the first year of
operation. However, through efficient spending and smart financial
management, many of ExED’s clients have managed to create cash reserves,
allowing them to depend less on their lines of credit.
These are the basic issues I’m covering in my information kit. I’m almost
done with my first draft and I’m excited to perfect it over the next few
weeks, and focus more on my second project, creating a report on the
spending patterns of ExED’s clients to allow for easier benchmarking and
comparison. The summer is really flying by, and I’m taking advantage of
every opportunity to learn more about the education sector.
Whenever I tell a long-time LA resident that I work for LAUSD this summer, I inevitably will receive one of two responses (sometimes both): 1) Wow, that is so great of you to help our ailing schools. 2) Wow, that must be a terrible place to work at.
While I do agree with the latter sentiment to some degree, I feel that people outside LAUSD don’t truly understand what really plagues our city’s school district. There are so many false notions about LAUSD that are floating out there. So here am I today to dispel some of that. Of course, being at LAUSD for 10 weeks does not make me the LAUSD expert but I will try to expose my readers to hopefully a clear understanding.
Myth: LAUSD is a place full of deadbeat workers.
This is absolutely bogus. Every large organization has its share of deadbeat workers. LAUSD is not any different. Nonetheless, I have met more passionate people in LAUSD than I can really count. I am willing to bet that there is a higher percentage of LAUSD employees passionate about education than there are employees in a typical corporation who are passionate about that particular industry. What is true is that there has been a long history of short-coming in academic performance which led to a significant amount of despair and pessimism. Nonetheless, LAUSD employees are still working extremely hard to improve our children’s education on a day to day basis.
Truth: LAUSD is a place full of incompetent employees
This may be shocking for me to say but I am NOT saying the employees are incompetent because they are not talented people. The reason why I am say they are incompetent is because far too many district employees come from the pipeline of educators in the schools. Instead of procuring employees from functional backgrounds, former teachers are placed in roles with little or no training in business. The central office has too many former teachers and principals working on data, marketing, and finance when these employees are originally trained to teach or manage people as a principal. It’s not a problem of people but a problem in HR policy.
Myth: The district is too big for its own good.
The district is indeed very bureaucratic and collaboration can be very difficult with so many different departments in the entire central office. But to say that the district is too big is misguided. There are so many things the district can take advantage of as the nation’s second biggest school district after New York. Our size allows us to do things that smaller district can’t like making huge capital expenditure (Check out Roybal and Cortines high near downtown!) or hire superstar administrator like John Deasy or contracting with Xerox to significantly printing/copy cost. The district took a beating when the payroll system overpaid teachers millions a few years ago. But that was not a result of size. It was a result of poor planning and testing. In fact, smaller district would have been even more prone to this kind of error. Being large definitely has both advantages and disadvantages but the jury is still out whether LAUSD is truly too large for its own good.
Truth: The district is a toxic environment to work at.
Unfortunately, this breaks my heart to say but it’s true that LAUSD is indeed a toxic place right now. I am not referring to the catastrophic result in student performance (thought that is toxix as well) nor the oft-mentioned deadbeat or incompetent employees. What I am referring to is the animosity between central office and the local schools. With six changes in superintendentship within eight years, there are too many disgruntled school administrators who are prone to ignore the initiatives that the central leadership is setting out simply because they think they can outlast the existing regime. Or in another example, for performance management, schools seem at times more concerned about meeting performance target to avoid the “wrath” of the central office rather than to ensure higher graduation of students. I am not accusing that the school administrators to have ill intentions. I think both sides should share equal blames in toxic mess that the district is in. I just think until both sides can build better trust, LAUSD will keep running itself into unnecessary obstacles, which I often see as hindrance to the current initiatives that are in place today.
Final Deliverables for LAUSD Although I’m in the second week of classes, I didn’t finish up with my internship until yesterday. In the morning I headed over to the Beaudry building and up to the 15th floor for my final meeting with the team that I worked alongside all summer. On my way, I began to run the whole summer through my head. As I walked through the 15th floor, I glanced at the narrow desk in the hallway that I frequently worked at. The day that I stood up from that desk and rammed my head on the low, over-hanging file cabinet was my “ah-ha” moment. The bruise on my head reminded me that I was definitely not working in a fancy corporate setting like many of my classmates, but it didn’t matter because I loved what I was doing. The purpose of my analysis wasn’t to exceed revenue targets. Knowing that I was going to make recommendations for a system that could increase teacher effectiveness, thereby impacting the quality of education of 672,000 students, is what made my summer a very memorable and valuable experience. Needless to say, I felt fortunate with my placement and project this summer. Understanding the importance and LAUSD’s need of a pay-for-performance model, I tried my best to deliver something of value that could be useful even after I left. The presentation itself was somewhat informal in that we sat around a conference table as I walked them through the deck that summarized my work over the summer. I highlighted some key takeaways from my other two deliverables and made sequencing recommendations to successfully move LAUSD toward a pay-for-performance model. My other two deliverables were the incentive models and a heat map. The purpose of the incentive models is to demonstrate what LAUSD would look like under each of the three selected high-profile district models. Each model showed an individual teacher’s earnings over their career as well as a breakdown of the yearly cost to the district. The heat map underscored best practices and components that align with attracting, supporting and retaining effective teachers. Alignment with the UTLA contract was also included, but not rated. Jessica Salazar
Filming went great! I’d prepared simple character descriptions, gathered props, decided what activities to demonstrate, practiced shooting with my camcorder, etc. beforehand and all that organizing definitely paid off. I then had enough time to edit the videos down to about 5-minutes each, which ensures that the new hires watching them won’t get bored and tune out. I was also able to cut in “slides” that had titles, steps, rules, helpful tips, and things to watch out for.
Nowadays, people increasingly expect to be able to watch a demo video (on YouTube, for instance), instead of having to learn something by reading a book or manual. And truly, the former is much more efficient and entertaining. If a picture is worth a thousand words, then a movie is worth a million. My bosses were really grateful that I started a training video library and plan to add more and more activity demos to it. This should greatly reduce the amount of time that employees spend training new-hires, get new-hires up-to-speed faster, and also increase the quality of the guidance the new-hires provide.
I think that technology really is the key for not-for-profits nowadays. It’s a great solution for a lack of “manpower” since many are understaffed for the sake of keeping within their budgets. In addition, technology may require an up-front investment, but after that, it’s very cost-efficient. Besides video and on-line trainings, technology can be used for marketing on the cheap — sending e-mails instead of letters, utilizing social networking and crowd-sourcing sites (such as Groupon’s G-Team), having a really user-friendly website that can answer all questions and receive donations with the click of a button, and so on.
I am so excited and curious to see where technology takes not-for-profits, specifically educational ones. The Khan Academy (www.khanacademy.org), is a great example of how the internet can be a huge help to teachers and school districts that are over-extended and facing shrinking budgets. Every child learns at their own pace and in their own way, so the key is being able to tailor programs to each one’s needs. This is not possible when there’s one teacher for every 30 kids, but it is possible when there’s a library of different explanations for a topic available.
My summer internship with CORE really opened my eyes to the multitude of possibilities out there and inspired me to seek further training in how to use and make effective use of technology. Thanks for making this all possible, SBL!