In the For-Purpose Enterprise you see three contexts: The Organization, The Association and The Company. Each context serves to express purpose in their own way. They are overlapping, co-arising contexts which makes the For-Purpose Enterprise a dynamic structure.
About ‘The Organization’
Holacracy is the name of the game in the Organization container with the Holacracy Constitution as its ruleset. In this container the work for purpose gets done within circles, roles and accountabilities.
Although in the model the three containers seem to be equally important, the Organization is the probably where most of the energy goes. For an Organization to express work, what does it need?
Skill and talent (people resources)
Assets (capital resources)
While they are secondary in one regard, they are at the same time necessary, because without them the Organization can’t pursue its purpose.
About ‘The Company’
In order to work in an interconnected way, everybody has to play by a similar set of rules. This way, no matter where you show up in the world working with whatever legal entity, you can pursue purpose across various For-Purpose Enterprises.
There may be different legal underpinnings, for Dutch law for example, but the same capital structures, membership units, and the same basic principal agreements apply in all For-Purpose Enterprises, across a growing number of jurisdictions.
It’s what we call the Dynamic Capital Structure, defined by membership units, or classes of stock if you will. In a For-Purpose Enterprise, we there are four types of units:
- Long-term capital interest (C)
- Profit interest (P)
- Deferred Interest (D)
- Dynamic Allocation Interests (A)
This allows for dynamic equity. The units are encoded in the Membership Agreement and they’re used to manage the capital needs of the Company. Every For-Purpose Enterprise has these four types of units defined. They can be used as new, more flexible financial vehicles between For-Purpose Enterprises. The For-Purpose Enterprise is creating a global business language, expressed in its legal structure.