North West CenterTURNING SOCIAL ENTERPRISE INTO A VIABLE BUSINESS MODEL

Acknowledgements

The following presentation was made possible by the generous time of the CEO of North West Center Tom Everill, and the COO of North West Center, [NWC] Mike Quinn.

NWC a registered not for profit business with a business model which has allowed it to empower many employees with learning disabilities, by employing them productively in worthwhile pursuits. The genius of the NWC model is that it has demonstrated the effectiveness of a business model that works and generates a high RoI while challenging almost all of conventional business assumptions with regards to employment of people with physical and learning disabilities.

Gnostam Consulting is a Strategic Decision making consulting firm which focuses on delivering real insights into how to improve the quality of strategic and operational decisions, as well as mitigating latent risk in business operations through effective risk management.

Is there value in diversity?

“Homogeneity is of no value in our work”

Mike Everill CEO of NWC

Conventional wisdom is that only some-one who has done something before can do it again. As consultants we come across this “un-written” bias almost everyday. Yet if we speak to almost any CEO, who is facing a real challenge, then it is clear that NOTHING in the resume’ of that CEO, or business decision maker will be of any value in making this decision that is akin to a leap into the unknown, save an unerring desire to find out a way to “solve” the problem “de jour”. Using yesterday’s tools to solve “different” problem is just a waste of time.

Conventional wisdom also makes distinctions between strategic, long term decisions and operational decisions. In examining both the Strategy and Operations of NWC, we have come away with the deep understanding of how intertwined strategic and operations decisions are.

Maximize Shareholder Value vs Social

Enterprise, is there a conflict?

Organization Choices: Do they make a difference to profitability? Is one a better model?

Government , Social, External

Groups

Social Enterprise, flatter hierarchy?

Creditors

Employees

RoI

RoI

Conventional

For Profit business

Model, with

Shareholders in

value driving seat

Employees

And RoW

Creditors

Overview of NWC Business

9 businesses are run at NWC:

Industrial Laundry , > 5 million Lbs of Laundry;

Order fulfillment;

Electronics, high tech component manufacture;

Janitorial Services;

Employment Services;

Navy victuals and provisioning;

Commercial Landscaping;

Document storage, management and secure shredding;

Big Blue Truck logistics, clothing donations.

Laundry Operations in Detail.

Commercial laundry has between 55-80 staff. Almost all have some form of developmental or physical disability;

HCAC accredited so can do Hospitals and also Hotels;

Certification means full quality control for disinfection of all laundry, as well as vaccination of all staff;

Very high end equipment that requires extensive training, which goes counter to the whole premise of employing people with learning disabilities;

Highly mechanized so can provide clients with true inventory management and quality control, at all stages of operations.

Large Hospital clients have subbed out the entire management of inventory. NWC owns the inventory, a provides laundry and medical overalls on a “just-in-time” basis, fully costed. Inventory shrinkage and risk, inventory purchasing is on NWC.

Risks and Rewards of Just in Time.

Operations risk far greater than for a conventional laundry, but:

Frees up resources in Hospital staff who do not have time, or the informational infrastructure

to continually manage the whereabouts of hospital linens;

Allows NWC to pass through vast purchasing power with respect to inventory sourcing;

Operations maximized for the delivery of CONSISTENT high quality at very high reliability, 99%

+, something that most commercial laundries are not able to do;

All this while employing developmentally impaired staff, which most commercial laundries

would not employ.

Risk of inventory ownership, re-washes, and tears and shrinkage is on NWC;

Yet NWC makes a good RoI.

How is this possible?

Better Design of Business Model

Strategically the challenge has been to choose businesses that NWC can

operate in profitably. The original model, [look for jobs for people with

disabilities] has been stood on its head. NWC assesses business that it can

serve, as effectively as commercial operators. The essential strategic

attribute, is to find a reliable business process that can be taught its

employees, optimized, and made better with “feedback” from

employees themselves.

Once NWC management opened its mind to the fact that repetitive

process manufacturing can actually be made MORE reliable with the

input from its staff, it became clear that disabilities ARE NOT an

impediment to making better operational decisions.

An example

NWC now provides Starbucks with Christmas gift packs. In 2012 the

assembly line that was established at NWC, which has x people working

on it, was able to fulfill an order of 900,000 ?? gift packages with a ZERO

reject rate.

How is that possible? Starbucks had always had rejects in the fulfillment of

its seasonal orders, packaged by commercial operators. The difference is

the NWC staff, the very same staff that is judged to have a learning

disability.

Risk Resilience, it can be done!

World

Individual

mindfulness

Collective

mindfulnessSystem

Resilience

Local risk

awareness

Turbulent interface between system & world

‘Harm absorbers’ Activities

Frontline operators

Management

The importance of culture

Only culture can reach all parts of the system.

Only culture can exert a consistent influence,

for good or ill.

Though it has the definitional precisionof a cloud

Safety culture at NWC ? Interlocking elements

Learningculture

Just culture

Reportingculture

Getting the balance right

Person

model

System

model

Both extremes have their pitfalls.

Blame

Deny

Isolate

Learned

helplessness

Cultural ‘strata’, bring out the positive

PATHOLOGICAL

Blame, denial and the blinkered pursuit of

excellence (Vulnerable System Syndrome).

Financial targets prevail: cheaper/faster.

REACTIVE

Safety given attention after an event.

Concern about adverse publicity.

Establishes an incident reporting system.

CALCULATIVE

Systems to manage safety, often in

response to external pressures. Dataharvested rather than used. ‘By the book’.

PROACTIVE

Aware that ‘latent pathogens’ and ‘error

traps’ lurk in system. Seeks to eliminate

them beforehand. Listens to ‘sharp enders’.

GENERATIVE

Respects, anticipates and responds to risks.

A just, learning, flexible, adaptive, prepared

& informed culture. Strives for resilience, diversity.

What can we learn from the NWC

experience?

Strategically, the choice to remove the bias towards employees with

learning disabilities, has been a winning choice;

Operationally, the relentless insistence on quality all through the system,

with a very high insistence on risk awareness has made it possible for NWC

to achieve almost unheard of levels of operational effectiveness, and

reliability. Customers want reliability, and they are quite happy to pay for

it.

Solutions thinking, lean manufacturing processes have resulted in

employees being exceptionally engaged, and part of the search for a

solution. Integrating different mind sets, means stronger and more reliable

solutions.

Thank you

Special thanks to Tom Everill and Mike Quinn, CEO and COO of NWC.

Paper produced from information that is deemed reliable, and with the

authorization of NWC center management, for which Philip Corsano and

Dr. Linda Bellamy are very thankful. Any errors and factual mistakes are

my responsibility.

Contact information: Philip Corsano, Tel 206-384-0069, email:

pcorsano@gmail.com

Dr. Linda Bellamy: e-mail: linda.bellamy@whitequeen.nl