Business Meets Goodness: The Goodwill Model

Case Study: Goodwill an Outstanding Model of Distributed Social Enterprise

As an example of long-term success in a highly complex organization, Goodwill Industries International, Inc., has many lessons to offer in the field of organizational leadership, says James K. Hazy, Ed.D. He and co-author Jim Gibbons conducted a detailed case study over five years involving collection and analysis of data such as direct observations, interviews and discussions, internal historical information, and internal case studies.

Dr. Hazy is a professor of management in the Robert B. Willumstad School of Business and also served on the board of Goodwill Industries International from 2008 to 2013. Gibbons is president and CEO of Goodwill Industries International.

Their study, “Leading a Large-Scale Distributed Social Enterprise: How the Leadership Culture at Goodwill Industries Creates and Distributes Value in Communities,” was published in the journal Nonprofit Management & Leadership. The journal’s editor described the paper as an exemplary case study on conceptual development, having broad appeal for future scholars.

The paper may be of interest to social enterprises seeking to scale up to a national level, as well as to profit-based businesses that incorporate a focus on social responsibility. It offers important insights on overcoming the complex leadership challenges of creating a common mission and brand identity, providing a strong organizational infrastructure to enable robust leadership at all levels, fostering a culture of leadership, and measuring the results of the social mission.

The authors refer to Goodwill as a “distributed social enterprise” because it is both a revenue-generating venture and a social services organization that gathers and distributes all revenue locally into its community-based mission of helping people to gain job-related skills and entry-level employment. Most revenue is realized through its donated-goods retail network of more than 3,100 stores. The case study examined how the $5 billion-plus nonprofit organization has succeeded for well over a hundred years to continually balance its dual objectives and overcome the complex management and leadership challenges specific to this hybrid operating model.

While Goodwill Industries International is the overarching organization, local Goodwill businesses function independently of one another but steadfastly adhere to a common mission across the larger network: “Helping people in need reach their full potential through learning and the power of work.” Each local Goodwill business has its own autonomous CEO and board of directors from within the community it serves. Specific social services vary according to need.

“The local CEOs and boards of directors are deeply aware of community issues and problems. They’re also aware of local resources and opportunities. They know the real issues faced in their own communities,” says Dr. Hazy. “This is the solution Goodwill developed over the years. They gather resources from the community and then put them back into the community. They are doing for the people what most needs to be done, where it most needs to be done. The key is that the value is distributed where the value is generated.”

This decentralized authority structure requires fostering a culture of leadership throughout the organization. “Leadership is everywhere,” Dr. Hazy says. “Leadership is not confined to any one person or persons. Organizations need to have various kinds of leadership skills throughout all levels as part of the culture.”

Part of the culture of leadership involves institutionalizing continual change. The organizational model, at the national and local levels, evolves as necessary in response to changing conditions and opportunities, both in its business enterprise and its revenue distribution mission. This is in contrast to corporate operating models, which evolve in response to market conditions, but for which revenue distribution to shareholders does not, and for most nonprofits, in which mission strategies may change but the methods of raising funds do not.

The dual nature of Goodwill’s operating model—an integrated business enterprise and social mission—presents demanding leadership challenges. Goodwill has to attract and retain the best talent at all organizational levels to both run its multibillion-dollar business enterprise and distribute that value within thousands of communities that depend upon it every day.