The Social Business

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

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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.  

Every farmer needs good neighbours

It was great to see Gip from Salvo's winning on the F Word last night in their neighbourhood restaurants competition.  

I went to Salvo's a few weeks ago for their zero food miles menu.  They had a special menu for three days in their salumeria, with all the produce grown and reared in Leeds.  We really enjoyed it - and at £19.50 for a six course menu it was great value too.

I'd gone along because I know the people who run Swillington Organic Farm - and they'd provided much of the produce for the menu.  I went back again last Friday to interview Gip about how it went.  I took my flip camcorder but unfortunately I didn't get him in shot - he moved when we started talking and, still being a bit new to this stuff, I didn't realise - so you can only see half his head.  So I'll just have to tell you what he said instead.

Basically he was really pleased with how it went - and customers loved it - they were sold out each night.  He's keen to do more - with the next step being to buy a pig on a Community Supported Agriculture basis - where you pay up front to share a bit of the risk with the farmer.  You can imagine that there'll be plenty of scope for publicising this arrangement with Salvo's customers, which is great for the farm.

I'm really keen on this kind of thing - where local businesses get together and work with each other.  I wrote a while back about how I was feeling a bit unenthusiastic about a lot of the funded local food projects that I'd heard about at a conference.  They were great - but so many of them relied on funding - which won't be around for ever.  If you can get businesses trading locally with each other because it makes sense - and because it fits with who they are - in this case a neighbourhood restaurant - then that's got a much better chance of being sustainable and making a big difference long term.