The Social Business

Microcredit: officially A Good Thing?

Very real now. Dinner tonight was fab. What and amazing bunch of people we have brought here - including Finland's most sucessful business woman, the MD of the Eden Project, an American venture capitalist, a former adviser to Gordon Brown, a clutch of social entrepreneurs, head of corporate affairs for vast multi-national, CEO of a Danish Bank. What unites them is a passion about business and social innovation and a fascination with Yunus and Grameen. 



Until recently I didn't know a whole lot about micro-finance except that it was widely seen as a Good Thing. Done some research and it is clear it is a much more contested area than I had assumed. It has its critics from the left and right and there are diverse forms on offer - from NGO's, hybrids like Grameen and a recently expanding private sector. Does it really take people out of poverty or just ease some of the symptoms? Does it really have the amazing repayment rates that are claimed? Does it in fact just encourage people who can ill afford it to take on debts? Is it right that private sector investors who bring extra capital into the market make money on the back of loan portfolios that include the poor? These are the questions that really interest me and I hope we can get answers in our meeting with Professor Yunus and his team.



My research so far doesn't amount to much more than googling and talking to a few financial commentators so I am no expert and the critics who are hostile may be raving nutters for all I know. I genuinely approach this subject with an open mind. To say the evidence is contradictory is something of an understatement. Grameen claims that millions have been lifted out of poverty by the financial services - including micro-credit - offered by them and other players like BRAC. But some I have found some critics are pretty blunt. One economics professor at Yale - Dean Karlan - doesn't mince words: "Microcredit is a not a transformational panacea that is going to lift people out of poverty. There might be little pockets and there are people who are made better off, but the average effect is weak, if not non-existent". Ouch. http://karlan.yale.edu/



Luckily for me I am MC'ing a two hour dialogue with the daddy of microfinance on Sunday morning at Grameen HQ and will get to hear his responses to such critics.



We will also discuss with Yunus his concept of the "social business" and his vision of an economic system and social capital market running in parallel to capitalism as practised today. Fantasy island or a must have part of humanity's future if poverty is to put into museums? On Tuesday we get to see up close one these social businesses in operation in Bogra (5 hours north of Dhaka), a joint venture between Grameen and Danone. Can't wait.



Anyway, to bed. Fortunately too busy to miss home too much. Certainly not missing the crap weather being endured in Blighty. And to get away from the school boy yaboo sucks blamefest that passes for political discourse in the sceptered isle is bliss. It's just as bad here no doubt but luckily - in this instance anyway - I dont speak or read bangla! Mucho love from a balmy Dhaka!



Sent from my iPhone



Rob Greenland

Social Business Consulting

07905 800 710

rob@socialbusinessconsulting.co.uk

Day two in Dhaka

Some facts from Bangladeshi press today : there are are 156 million people living on 143,998 sq km, that's over 1,000 people per sq km or one person per square metre. 



Bangladesh is the 7th largest country in the world but in terms of GDP it's down at 196th place. 45% of people live below the poverty line and each year calamities like floods, cyclones and drought effect millions. 



Six million people live overseas and remitances (money sent home) is a key part of the economy (as it was in Ireland when my grandfather would send cash back to Galway earned working as a navvie in London). 



Unemployment and underemployment are endemic. Social enterprises like Grameen and BRAC have done heroic work and have achieved national impact but they have not come close yet to delivering a knockout blow to deep and systemic poverty in a nation which has been cursed too by incompetent and corrupt politicians. I will write later about what I am learning about the impacts of microfinance as a way out of poverty.



The horsetrading and bullshit of Copenhagen shouldn't obscure the fact that it is the poor of places like Bangladesh who will pay the highest price. The country is frighteningly vulnerable to rising sea levels. The place is flat and full of water. Long term it is hard to be optimistic.



Our guests have started arriving. Nick from Sydney and Amy from Boston arrived last night and we have just had breakfast together. Their excitment about the coming adventure is very uplifting. They've gone exploring Dhaka. On trips like this - and I've done similar ones to the USA, South Africa and Scandinavia - the make up of the group itself is as important as the content of the journey. The learning, networking, business ideas and friendships which develop among a highly talented, smart, passionate bunch of people will last longer then the experience of meeting Yunus and his team. 



Getting the mix of the group right is something we have taken very seriously. We have turned people down because they just weren't right. Not senior enough, not experienced enough - or, if truth be told, because they'd get on my wick after a day or two. I am intrigued about how the mix will go, who will really bond with whom, what roles people will adopt within the group. Will people live up to their reputations?! Fascinating stuff.



This afternoon going to Aarong to do some shopping. This national retail chain is run by BRAC and is brilliant. Wide range of great products, with knowledgable staff, fairly priced, and not pity purchase in sight. I'm intending to nail my Christmas shopping - the earliest I have ever done this!

http://www.brac-aarong.com/index2.php

This is a dry country. Only a few of the bigger western chain hotels sell booze. Big upside of this is that alcoholism and its pernicious effects are rare amongst people here. I remember the first time I went to a South African township in the eighties (full of leftie sentimentality about the heroic titans of the struggle I was about to meet) and being shocked by how many men were blotto most of the time. Not being offered a drink at every turn here really highlights for me how pervasive boozing is in England. Or, to be more honest, how much drinking I do. I hadn't bargained on my liver benefiting from Inside Grameen!

Getting ready for Grameen

Liam Black, from Wavelength, is taking a group of 25 people to visit Grameen - perhaps the world's most inspiring social business.  Technology permitting, he'll blog here about the experience over the next few days.  He arrived in Dhaka a few hours ago - here are his thoughts so far.  

I was lucky enough to have the winner and runner up of the All Asia Crying and Whinging Baby Awards mewling and snotting beside me all the way from London to Dhaka so arrived totally sleep deprived (and behind me was the Bangladesh Olympic non-stop farting champion!) 

But despite not having slept for 26 hours (and trying to stay awake until at least 9pm local time), we had a series of great meetings today in Dhaka with various parts of Grameen to finalise the event. They have some requests for us.  Yunus has to speak to both houses of the Indian parliament on 9th and needs time to prep so would we mind moving his session with us to Sunday? Oh, okay I suppose.  

As always the Grameen people are unbelievably accommodating and helpful and their good ideas are matched only by the copious amounts of tea which is brought to the tables (I've rarely had so much hospitality pass through me!). They love the delegate handbook we have created and seem genuinely as keen as I am to see our delegates descend from the cloudless sky into the madness of Dhaka. All the way along I have wanted this visit to be a real and mutually beneficial collaboration and not an exercise in poverty tourism. And I'm made up that it is.

The traffic here is a little less suicidally chaotic than usual since many people are still on their Eid holidays. But I'm promised by Suraya,  our superb fixer from the High Commission, that come Sunday the journey across town to Grameen HQ which today took half an hour will probably take an hour and a half. 

The streets of Dhaka are a riot of colour, throngs of people moving helter skelter alongside, between, sometimes over, the traffic. Packed buses with people clinging for dear life to the roofs, cars doing u-turns into oncoming dual carriage way traffic. Rickshaw drivers seemingly obilvious to the death which lurks in the darkness above the huge lorry wheels which miss them by inches, millimetres. Children everywhere. Drop dead beautiful women in the most gorgeously and richly coloured clothes walk by men lying unconscious on the pavement. Traffic cops waving their little sticks and absolutely no-one taking any notice at roundabouts which might as well have a sign that reads : Right of Way to Everyone Simultaneously (And Go As Fast As You Can). Old women who look about 160 begging at the car window. Limbless kids. Young mothers holding up consumptive looking babies. A city of millions living on the edge, somehow getting by from day to day. It astonishes me.

Grameen's swish 21 story HQ is never what anyone expects. It looks, well, it looks like a real business!  Inside, once you pass the exhibition celebrating Yunus's Nobel Prize, the feeling is more like a civil service with floor after floor of people beavering away administering the some two dozen enterprises which make up the Grameen Group. 

Okay got to go now Rob. We are making up the Toilet Packs for our guests - bog roll, wet wipes, Immodium and a postcard decsribing the variety of shits it is possible to get if you drink the wrong thing here. It's not all glamour this social business stuff you know.

PS I love Emirates. Shiny new planes. Lots of leg room. Almost edible food. Helpful staff. But what sealed it for me was that they so nailed the Bowie, Led Zep and 10cc playlists on their amazing entertainment system (with 200 films by the way). You can take the boy out of the seventies ...

From Dubai to Bangladesh

Liam Black from  Wavelength is in Bangladesh, to take a group of 25 people to visit Grameen - perhaps the world's most inspiring social business.  I've asked Liam - technology permitting - to tell us how it goes. Here's his first posting from the tarmac at Dubai airport.

Sitting on nearly missed plane for final leg to Dhaka.  Landed in Dubai late. Congestion at Heathrow, surprise surprise. First time on one of these Airbuses from London. Bloody huge. Really, how do they get off the ground? Cameras on nose and tail so you can watch landing and take off. Appeals to the boy in me who wanted to be a pilot. Red Devils to be precise. Bad eyes, since you ask. 

After nearly a year in the planning the reality of what lies ahead is a bit daunting!   25 people from diverse sectors and places- from Astra Zeneca to Eden Project and from Sydney to Sunderland - coming to Bangladesh to get inside Grameen with Wavelength. 

Sessions with Muhammad Yunus and his leadership team, extended visits to the villages to see microfinance in operation and, if you don't mind, a fancy reception at the British High Commission (who have been brilliantly helpful in pulling it all together).

Danone team Isabelle, Marie and Brice arrive from Paris on Monday to host us in Bogra where they have their joint venture with Yunus getting nutrition into poor kids. 

The logistics of the trip are complicated and there's so much that could go wrong. But I'm excited. We had this dream last year and here it is in all its risky, thrilling and multinational reality! Oh and we're filmming it all and producing a dvd with a virgin producer. Moi! 

Gotta go. The Emirates stewardess is giving me evils. Four hours to go. Tired. Dislocated. Hungry. Full of anxiety-tinged anticipation. 

Book review - The New Economics - A Bigger Picture

Here's a book review that I did for this month's New Start magazine:

There’s nothing particularly new about new economics.  Lots of the ideas which are explored in The New Economics:  A Bigger Picture – such as how traditional economics ignores environmental impact, or how our economic system encourages consumption for its own sake, have been discussed on the economic fringes for years.

 

Yet what is new is that the person sat next to you on the bus is likely to have opinions about economics.  Pre credit crunch, starting a conversation with your thoughts on the damaging impact of currency speculation was a sure fire way to get the whole of the top deck to yourself.  Now people understand that economics isn’t something that just happens elsewhere.  It affects our lives.  It is about our lives.

 

The value of this book is that it explores key economic theories through storytelling.  We are told why modern Britons work harder than mediaeval peasants.  Why we export the same number of chocolate waffles as we import. And why fewer people vote when they live near a Wal-Mart. 

 

The stories highlight the basic problems – such as the lack of social capital in a town dominated by a big retailer – compared to one with a host of locally-owned shops.  But it doesn’t just point to slightly depressing realities. Instead each chapter then explores some New Economics-inspired solutions – such as radical action to challenge local retailing semi-monopolies, or to encourage more local enterprise. 

 

The problems may not be new, and some of the solutions have been around for years.  But there is a new coherence and energy behind much of this thinking – which is well explored in this book. 

 

Social realism

I ran my final workshop today as part of a Charity Bank in the North programme of support.

The workshop helps third sector organisations to consider ways in which they can generate income, and, to use the much-used phrase, work towards sustainability.

Opportunity Knocks

View more presentations from robg.

Picking up on the comments on the last post,  it's clear that social enterprise isn't for everyone.  The issue is that it is often seen as a way out of a sticky situation.  As our experience at the fairtrade shop illustrates, trading can (of course) get you into a stickier situation than you were in the in the first place.  So whilst it's the right thing for some to explore, it's not the magic bullet that it's sometimes seen to be.  It's always worth considering why you are being encouraged to set up a social enterprise.  It might be a genuine desire to encourage enterprising solutions to intractable problems.  Or it could just be a way to pass the buck and not fund an activity which should be funded. 

The main message in my workshop is that you've got to take responsibility for the situation you're in.  To start with we do an exercise which looks at the context people find themselves in.  What's happening in their organisation?  Their sector? For the people they serve?  And in wider society?  This is really useful and brings out some common issues - a push towards partnership working, increased unemployment, an imminent change of government, funders who don't fund what we think needs doing, people who won't pay for services, etc etc.

These are all important issues - but my next question is:  Given all that, what are you going to do about it?  It's comforting to point to external factors which stop you from being the kind of organisation you'd like to be.  But I'd argue that the organisations that will be sustainable - in other words those which will keep delivering benefits - will be the ones that understand the context they're in - and take decisive action.

That's why we follow that exercise with one where we look at an organisation's current activities - to consider each activity in turn in terms of its social impact, and its contribution or otherwise to the financial health of the organisation.  The idea here is that you should start by looking at what you're already doing - and seeing if you can improve that - rather than start with a search for the killer idea.  

Only then do we consider new ideas - with a quick assessment of each based on how risky/difficult they appear to be. In broad terms we assume that a new service, sold to a new customer group, carries more risk than sticking to your knitting and serving the people you know.  That doesn't mean that you don't develop new ideas - but you should go into any new enterprise ventures with a clear sense of the risk involved.  Once you've done this work, you may well come up with two or three ideas which feel more do-able - and they may be the ones that you consider further - with a feasibility study, a plan or a bit of test-trading. 

I've enjoyed delivering the workshops over the last few months.  Like in the rest of my work I've tried to bring a sense of realism to the issue of sustainability.  If you're in a funding crisis, and you've never set up a social enterprise before, is now really the best time to do it?  You might feel like you have no choice - but if you are considering setting something up, at least go into it with your eyes wide open.  

It was ten years ago today

Well, it was ten years ago yesterday in fact, but even I tend not to blog on a Sunday, although I do tweet.

22nd November 1999 was the day that the fair trade shop where I cut my socially entrepreneurial teeth opened in its shiny new high-street premises.

We'd previously been hidden in the basement of a Christian bookshop - the kind of location that you'll find many a fair trade shop to this day.  We - with some justification - felt we were at the vanguard of the fair trade movement - taking it from the margins to the mainstream (I can well imagine that my press release used that very phrase).

It was all very exciting.  We had a party in the shop on the opening night for customers, members (500 local people had invested in the co-op) and suppliers, with gallons of organic wine supplied by Leeds-based Vinceremos.  I can honestly say that that night was one of the proudest nights of my life.  To get that far we had achieved so much, and it was incredible to see so many people there to celebrate it with us.  It was a bit like getting married, but with the tills running.

Five years later it was all over.  This was what greeted me the day after we closed in 2004:

The signage from the shop, (which cost a small fortune) hacked down and thrown to the floor by the organic retailer that we'd invited in to take over our lease. (I'm not suggesting they shouldn't have done that - it was just a brutal image for 10am on a Sunday morning).  

It's a story I've told in parts before - but we basically couldn't make it pay - and eventually we went into administration.  From £250k a year sales of fair trade goods to nothing.  

We all have stories, events in our lives which shape us.  Trade for Change is one of my stories.  I learnt so much during my seven years there - as a volunteer, shop worker, board member, treasurer, and ultimately one of the people who sat at the table with the creditors to work out a deal to save the business.

It's why I am how I am.  I'm a great enthusiast for finding entrepreneurial ways to change society.  But I can't stand some of the nonesense that surrounds the social enterprise movement - the hype, the spin, the cosy consensus that appears to exist amongst many with influence in the sector.

It's why my to do-list for the blog this week involves reading the Coalition's new research about the state of the social enterprise sector, and finding out more about the failure of Secure, a social enterprise which was set up to deliver prison health services and which has now gone bust.  I don't deliberately seek to find fault, to be cynical, or to point the finger.  But if we are to really change society, we need to celebrate successes, but also learn from things when they go wrong, and challenge some of the exuberance.  

Angel Entrepreneurs

It's Social Enterprise Day today.  So, for 24 hours at least, I'll put my default setting of sceptical enthusiast on hold and tell you a bit about my favourite social business - Angels Housekeeping. (I won't even mention that I can't wait to look at the detail of the Coalition's research - published today - that social enterprises are twice as optimistic about the future as SMEs).

Angels Housekeeping are based in Leeds and I've known them since they started out in 2005.  They are a CIC, and their main business is delivering domestic services - principally cleaning - to older people in Leeds.

You may wonder what's particularly socially enterprising about delivering a cleaning service.  To understand that, it's probably worth understanding the context they work within.  As yesterday's Queen's Speech illustrated, access to social care - particularly for older people, is a massive issue.  As more people require services, most Councils raise their criteria so that only those in the most need can get free or subsidised services in their home.  Increasing numbers of people need to find services themselves, and pay for them themselves. 

So what happens?  Some people are fine - they find services and they pay for them.  Others, for a variety of reasons, don't access services, and a slow but sure decline can set in - until a crisis happens - and the person needs expensive, intensive support from the State.  They suffer - and, to be blunt, we all end up paying.

This is where Angels make a difference.  They keep people's homes clean, but they do far more than that.  They put people in touch with the Council if they need a Social Care Assessment.  They fill in forms to get Attendance Allowance.  They phone the Fire Service to get smoke alarms fitted.  They ring the energy company when they've overcharged.  They keep in touch with relatives and let them know if there's a problem. More than anything they care - and if they go into your home and they see that you need something - they won't just walk back out again.  You'll never hear them say "Sorry, we don't deal with that", or "That's not my responsibility, you'll need to ring the Council."

The issue for them - and I'm sure they won't mind me sharing this - is that no-one pays at the moment for all that extra stuff - the social impact.  To anyone who knows them it's obvious that they make a difference to hundreds of people - and that they save the State thousands of pounds.  But it's hard to convince the State that investing here could save money elsewhere.  (The one exception to this is Keeping House -  a Leeds City Council project which I work on - which has supported Angels from the start.)

One of Angels' Directors, Gill Coupland, is also a Social Enterprise Ambassador.   She's at Number 10 today so who knows she might get the chance to make this point to someone who'll listen (although her dad told her to watch her purse - as it's Gordon Brown who needs the cash.)

I'm interested  - and I know Gill is too - to find out about Social Impact Bonds.  As I understand it the basic idea is about investing to save.  It's a way to invest in innovative approaches, with the potential for financial rewards for the investor if they promised social impacts are delivered. 

I think Angels would be perfect for this.  A back of a mop bucket calculation with Gill the other day suggested that they'll have had around £100k of added impact this year - from early interventions, referrals, benefits claimed etc.  If £25k had been invested - or even £50k -  in Angels to deliver that - then that wouldn't be a bad return.  And it would be a way to ensure that these impacts can be delivered in the long term.

What matters more - impact or structure

I'm on a bit of a roll writing about social impact at the moment - here's a post I've written for the UnltdWorld blog as part of their Shout Out for Social Enterprise series - questioning whether a focus on certain business structures (four legged company limited by guarantee good, two legged private business bad) takes us away from what we should be concentrating on - does this business make a difference?  

Not everything in black and white makes sense

It seems that not everyone shares our enthusiasm for social enterprise.  First there was NAVCA's boss twittering away about his doubts about the good ship #socent, and now Social Enterprise Magazine assistant editor Chrisanthi Giotis has told us about how she struggles to explain what she does to her friends.

I sympathise with Chrisanthi, as I find it tough to explain what I do half the time. I also share her enthusiasm for keeping it simple. However I'm not so sure about whether her decision to start talking social enterprise being about "really creative people who base all their business decisions on generosity, not greed" is really going to help that much.

It's a nice image, and one which her friends will probably quite like.  But is that really what it's all about?  I class myself as a social entrepreneur and if I were to write down what my values are, I'd probably include "be generous" amongst them.  That's why, for example, I freely share all my business planning resources.  But do I make such black and white decisions, where I choose generosity over greed?  

I'm sure Chrisanthi was partly writing on the UnLtdWorld blog to be provocative, but there's a broader point here about why many people either don't understand what social enterprise is all about, or are sceptical or even hostile towards it.  I think it's partly because we over-complicate it - and yes, I'm going to revert to type and blame bureaucrats and politicians for that.  In this country we've ended up being fixated on structures - so such and such an organisation is a social enterprise because they're constituted like this, whilst another isn't because they've got a different type of structure. 

Social enterprise, in my opinion, has been hijacked by people who want to find a cuddly middle ground between a sclerotic State and a rapacious private sector - both of which of course are caricatures as comical as the ever-generous social entrepreneur.  That's why I'm interested in social business - businesses that exist primarily to achieve social impact.  Some of them distribute profits, others don't. But they nail their colours to the social impact mast. When you keep it simple like that I think people can relate to it, and also challenge any business which they don't think is having the impact that they say it has.  But of course, that won't suit the UK social enterprise support industry.

A story to finish:  I heard today of an entrepreneur (I'll keep it vague to protect them) who has a great product which delivers tangible social benefits.  Primary customer is the public sector, but he wasn't getting anywhere with them.  He was advised to become a CIC.  He's now got more work than he can cope with, because his public sector buyers feel comfortable buying from a social enterprise.  What's changed?  Nothing much - other than the legal structure he works within.  I don't understand that - so I don't see why anyone else will either.