In June 2017, a journalist was preparing a major news story about Lumni Inc. (Lumni), a company that he wanted to profile in the next issue of his Mexico City-based magazine. Lumni's mission was essentially a social one: to improve the conditions, access, and quality of higher education for young students, especially in Latin America. However, although its mission was originally non-profit, Lumni was not considered a non-governmental organization since it worked with a financially sustainable model and did not depend on donations or government funding. As the journalist investigated this business model, he learned that some experts referred to it as a hybrid business model. Although he had been gathering research on Lumni for some months, he still was unsure whether his report should promote hybrid business models as viable alternatives to traditional business models.

A hybrid business model incorporates the social responsibility interests of a non-profit organization with the economic objectives of a for-profit company. This note explains the fundamental organizational activities that drive a hybrid business model and provides examples of successful hybrid business models currently in operation. This note can be used as a companion document to Lumni Inc.: Improving Society in a Sustainable Way, product no. 9B18M011

On June 25, 2014, the director of marketing and development at Allied Founders Pvt. Ltd., a company that operated out of Belgaum in India, was analyzing various problems associated with his company's management approach. The director was considering a change from the company's system of breakdown maintenance to a new information system of preventive maintenance. While executing its first international export order, the company faced several challenges related to production delays, mainly due to poor equipment maintenance. To plan for his company's future in the international market, the director proposed adopting preventive maintenance as a solution, but he was unsure whether to use traditional means (i.e., manual record keeping) or implement a new information system. He was concerned about the issues that could arise from the change, including resistance from employees worried about job loss, providing the necessary training, and exposing the company to other risks.

In April 2017, a college student in California was graduating with a degree in business administration with a concentration in entrepreneurship. She had been a florist for the past six years and wished to pursue her dream of starting her own flower business. Her vision was to open a flower shop where all the arrangements were uniquely designed for each customer and no two arrangements were the same. Her current employers were trying to sell their shop (Belle Fleur) and offered to sell it to her at a discount price. She had to decide whether to buy the business or start her own shop from scratch.

Calgary's city manager sought to build stronger relationships with the community to attract development and retain investment in the city. He knew that implementing the Proximity Initiative guidelines, a collaborative effort between the Railway Association of Canada and the Federation of Canadian Municipalities, while intended to limit potential safety risks in the case of a derailment or volume release, would simultaneously limit urban development opportunities, particularly within the downtown. The guidelines did not consider the balance of public safety with economic diversification so specific to Calgary's context. The manager had to consider an appropriate solution for his city.

In 2017, hedge fund Mantle Ridge acquired less than 5 per cent of the stock of CSX Corporation (CSX) and made demands for board representation as well as the installation of a new chief executive officer (CEO) of CSX. This new CEO had abruptly resigned from Canadian Pacific (CP) and joined forces with Mantle Ridge at the time the fund announced its activist position in CSX. On February 14, 2017, CSX management announced a special meeting and shareholders' vote to respond to Mantle Ridge's demands, which included a compensation package for this new CEO, estimated at $300 million. In light of the improvements at CP, could the same model be implemented successfully at CSX? If so, was the proposed compensation package for an incoming CEO justified? The chief investment officer of a large U.S. pension fund, has been asked to vote at the upcoming meeting and faces two main questions: Should she vote in favour of approving the package? Alternatively, should she sell CSX stock now?

In 2018, Ann Randazzo, executive director of the Center for Energy Workforce Development (CEWD) is assessing the organization's performance since its 2006 founding. Founded to address an imminent retirement bubble of middle skills workers in the utilities industry, CEWD had since expanded its mission to focus on workforce development initiatives to improve the skills and diversity of the industry's workforce. The group was an example of an industry coming together to collectively address a problem facing all members of the industry.

Redfin, a technology-powered residential real estate brokerage, was founded in 2002 with the intention of using technology to disrupt the real estate industry. Over the next 15 years, Redfin made several changes to its business model. Initially, the company provided less support than a traditional real estate brokerage but helped home buyers and sellers save more money. Over time, in response to customer feedback, Redfin increased the level of customer service it provided while decreasing the amount customers saved, instead relying on its unique online tools to differentiate itself from other real estate brokerages. In July 2017, Redfin went public at a $1.73 billion valuation. Now, in late 2017, CEO Glenn Kelman had to decide what Redfin's top strategic priority should be. Redfin could try to increase its market share, which was currently less than 2% even in the company's top markets, or it could focus on balancing costs and improving its bottom line.

Founded by a team of hedge fund and NGO alumni, OpenInvest launched its platform in 2015 to enable retail investors to tailor their portfolio to their personal values in an automated way, for instance by screening out weapon manufacturers stocks or overweighting LGBTQ friendly companies, while still closely tracking the overall stock market performance. Bolstered by $3.25M in seed funding from Andreessen Horowitz, in 2017 OpenInvest was also preparing to launch an app targeted at millennials customers that would include a novel proxy voting feature that allowed clients to vote on shareholder resolutions with a simple swipe. With this technological addition OpenInvest was well on its way towards realizing its mission of democratizing SRI investing, bringing transparency to the financial services market, and enabling retail investors to invest their capital in a way that aligned with their values. However, getting to scale and profitability in the crowded robo-advisors space was a critical challenge. The case closes with the founders contemplating expanding or migrating their model from B2C to B2B in order to achieve scale and profitability faster. The case is an opportunity to discuss the theoretical underpinning of creating impact in public markets, to explore how portfolio performance may be affected by Socially Responsible Investment (SRI) screens; and to understand drivers of demand for impacting investing more broadly. The case also explores the challenges the founders face when aiming to design a new product to meet an emerging need, and which distribution channel to choose for doing so.

Qualtrics was an online survey research platform and since the beginning, the company had relied entirely on an inside sales model-sales done remotely without face-to-face contact with clients. The low-cost inside sales model, along with an emphasis on a strong sales culture, had helped Qualtrics to grow rapidly. However, it needed to prepare for the next phase of its growth. The company decided to diversify its product portfolio and target different types of customers (enterprise clients). In accordance with this change, it recognized the need to revise the inside-sales-only model by adding a field sales component to better serve these customers. Many organizations often go through a turning point in their strategy to explore ways for growth. The case series outlines the best practices of scaling an inside sales model and the challenges involved in changing an organization's sales management and strategy to initiate future growth.

Qualtrics was an online survey research platform and since the beginning, the company had relied entirely on an inside sales model-sales done remotely without face-to-face contact with clients. The low-cost inside sales model, along with an emphasis on a strong sales culture, had helped Qualtrics to grow rapidly. However, it needed to prepare for the next phase of its growth. The company decided to diversify its product portfolio and target different types of customers (enterprise clients). In accordance with this change, it recognized the need to revise the inside-sales-only model by adding a field sales component to better serve these customers. Many organizations often go through a turning point in their strategy to explore ways for growth. The case series outlines the best practices of scaling an inside sales model and the challenges involved in changing an organization's sales management and strategy to initiate future growth.

Qualtrics was an online survey research platform and since the beginning, the company had relied entirely on an inside sales model-sales done remotely without face-to-face contact with clients. The low-cost inside sales model, along with an emphasis on a strong sales culture, had helped Qualtrics to grow rapidly. However, it needed to prepare for the next phase of its growth. The company decided to diversify its product portfolio and target different types of customers (enterprise clients). In accordance with this change, it recognized the need to revise the inside-sales-only model by adding a field sales component to better serve these customers. Many organizations often go through a turning point in their strategy to explore ways for growth. The case series outlines the best practices of scaling an inside sales model and the challenges involved in changing an organization's sales management and strategy to initiate future growth.

HubSpot, an inbound marketing, sales, and customer relationship management (CRM) software provider, announced that it had acquired Motion AI, a software platform that enabled companies to easily build and deploy chatbots, fueled by artificial intelligence, to interact with their customers. Before unleashing bot-building technology to its B2B customers, HubSpot first needed to develop some best practices for the use of chatbots for CRM. First, the team had to clearly assess the trade-offs between effectiveness and efficiency associated with the use of bots versus humans to create, nurture, and manage customer relationships. Second, they had to decide to what extent to anthropomorphize the chatbots. How human-like should they be? Was a conversational user interface (UI) the desired solution for B2B CRM or would a stripped down, more functional UI produce more efficiency for the customers who interacted with the bot? Historically, HubSpot had "practiced what it preached," using its own products to build its business. The team had to consider whether to use chatbots to nurture and service its own customer relationships and manage the effectiveness and efficiency of its sales funnel. Currently, a team of chat representatives worked with marketing to qualify and prime prospects for HubSpot's sales team. Could they and should they be replaced with chatbots? Was HubSpot ready for bots to become the face of its brand to its prospective customers?

In January 2018, Caelan Langan, an associate at KSW Partners LLC ("KSW"), was asked by Katherine Scott, the partner for whom he worked, to recommend a proposed structure to acquire a prominent office building in San Francisco for their most recent fund. Caelan was asked to review potential acquisition structures that would minimize the impact of taxes on their investors' returns. The assignment was complicated as KSW had different categories of investors (a sovereign wealth fund, pension funds and high net worth individuals) each of which had different tax considerations. The differing interests created significant potential conflicts in terms of how to manage the investment and when to sell the building, as the economic consequences to each category of investor were not the same. Even the economic interests of KSW were not completely aligned with their investors. The case outlines the alternative investment structures that could be considered: REITs, Limited Partnerships, C Corporations, and combinations of those entities. The case illustrates how to manage the potential conflicts and the important consequences of tax policy on how investments are structured. Students are asked to model the results of alternative investment structures and determine what Caelan's recommendation should be.

CEO Zhang Ruimin must plan how to accelerate the growth of self-managed micro-enterprises. Platforms were Haier's business platforms operating in five major sectors: white goods transformation, investment and incubation, financial holdings, real estate, and cultural industry. Platform owners incubated micro-enterprises on their platforms with the resources Haier had, but they were not the supervisors of micro-enterprises. His goal was to tear down the walls between the organization, shortening the time the company took to respond to users' needs, with the ultimate goal of "zero distance" between employees and users. Haier had engaged in a series of organizational changes since 2005, the most recent of which started in 2012. His latest experimentation was turning Haier into a platform for entrepreneurship. Employees and those outside Haier could set up micro-enterprises on Haier's platforms. Zhang thought Haier was on the right track, but the model had to prove itself in practice. He set a timetable: the micro-enterprises must reach the tipping point by September 20, 2018, which meant the micro-enterprise would have become a platform to which all resource providers would flock and stay loyal. There was no precedent of transformation like this anywhere. Would Haier succeed? What could Haier do to push the micro-enterprises to get to the tipping point?

The case opens with Said Darwazah, chairman and CEO of Hikma Pharmaceuticals, the multinational generics company, anticipating the company's 2017 AGM and reflecting on changes made over the previous year to address concerns expressed by proxy advisors and some shareholders about Hikma's reliance on a combined chairman/CEO position, the long tenure of some directors, and the company's approach to executive pay. The case describes Hikma's origins as Jordanian pharma company founded by Darwazah's father in 1978, and traces the evolution of its governance as a private family company, then as publicly-traded company listed on the London Stock Exchange in 2005, and finally as a member of the FTSE 100, beginning in March 2015. Ahead of the 2017 AGM, Darwazah is confident that shareholders will approve changes made to the company's executive incentive plan (EIP) and steps taken to accelerate the turnover of long-serving directors, but he wonders how much longer the company will be able to continue with a combined Chairman/CEO and, more generally, how to marry the high level of governance expected by shareholders with the entrepreneurial spirit that had driven Hikma's growth and development.