The Social Business

Osborne, Co-ops, Free Schools and Privatisation

George Osborne was on the Today programme this morning talking about Tory plans to open up the delivery of public services to social enterprises  - in particular, it seems, to co-operatives.  I assume Steve Hilton has decided that we're not awake enough to understand what a social enterprise is at 7.10am (he's probably not wrong), so he instructed him to just keep saying the word co-operative as often as he could in three minutes.  It is a lovely word after all.

I have written a lot about how public services need to improve.  I am also an enthusiast for socially enterprising approaches to delivering services.  But I'm suspicious of political enthusiasm for social enterprise.  In this case I'm picking on the Tories, because I find them (and Osborne in particular) unconvincing, but I'm pretty sceptical about Labour's motives in this field too.  

There's something of the four legs good, two legs bad dogma about politicians embracing social enterprise. They are so desperate (as they should be) to work out ways to make the UK a better place to live that they can end up believing that transferring services to social enterprises will magically make things better. They can definitely make a big difference if the social enterprise is good at what it does.  But they are not inherently better at doing things than other organisations or businesses.

I also have a question about the likely capacity for social enterprises to deliver services.  I know all the stats about how the sector is expanding, but I'm also aware that not everyone is cut out to be an active member of an employee-owned business, of the kind Osborne is proposing.  I'd be a rich man if I had a pound for every public sector employee who's told me that they're hatching plans to set up in business, to break free from the dead hand of bureacracy.  I'd have about £3 if I had a pound for every one that's done it.  Osborne said this morning that services will only be transferred to co-operatives if that's what staff want.  I think that, sadly perhaps, is a big if.  

So, if I'm right, and the public sector won't be transformed by hordes of public sector workers all desperate to set up co-operatives, how will we find different ways to deliver services?  Enter the private sector - particularly if the Tories get into power.  I suggest that politicians will keep talking about the opportunities for social enterprises, pointing us to that lovely social enterprise which collects bulky waste in Liverpool, whilst plenty of the opportunities will actually be gobbled up by the private sector, who will soon speak the language of social responsibility with more fluency than your average social entrepreneur.  

I do think that will happen more quickly if the Tories get in.  Read for example this account of a recent Politics Show about Michael Gove's Free School plans.  They interviewed Tory MP Tim Yeo, who made it clear that he thought that the Free School plans were flawed - not because schools should not be independent, but because the organisations that will run them won't be allowed to make a profit.  One rogue Tory does not a party make, but I very much doubt that Yeo is alone.  

Gove wouldn't dare allow idea of private-sector-run Free Schools to get in front of voters.  But two years into a Tory government, with restless right-wing backbenchers giving Cameron grief, you can well imagine that things might change.  Co-operatives'  real value to Osborne and his colleagues may be to clear the way for further privatisation of public services.  

*Other vehicles to create social change are available

I've just put Frank to bed - far past his normal bedtime.  He came with me this evening to a talk by business author and social entrepreneur Robert Ashton.  I like Robert - he's a human-scale entrepreneur on a talk-circuit dominated by supposedly super-human entrepreneurs who most of us find it hard to relate to.  He talks a lot of sense.

He also had a picture of Frank in his presentation, much to his delight.  I'd seen Robert at Voice10, and I'd told him that I was bringing him along - and his photo turned up by the power of Facebook, to illustrate a point about what the world may look like in 2100.

Robert was talking about social enterprise as tomorrow's enterprise.  Someone asked a question at the end, which I've summarised here:

"When we tell people that we run a social enterprise, they don't understand.  They just say, "Why don't you just run your own business?"  We say it's because we care, but that doesn't seem like a good enough answer.  What's a snappy way to tell people why we run a social enterprise?"

I'm sure it's a question that many people ask - why don't you just set up your own business?  I think it's a valid one, and it's one that I ask people when they come to me, asking me to help them to set up a social enterprise.  It isn't for everyone.  It also isn't the only business model for creating social change.  

I imagine there are value judgments in the statement "it's because we care".  The assumption is that people who don't set up social enterprises don't care - they're just fat cats out to make a fast buck at the expense of everyone else.  Those people exist - but there are also plenty of people who run businesses which aren't structured as social enterprises (as we tend to define them in the UK) and who are doing good.  And I think there are plenty of others who are coming round to the idea that they could do more good in their business, but aren't wholly sure where to start.

This is one of the things that concerns me about the Social Enterprise Mark.  The world's in a right mess.  And the social enterprise movement seems to be setting itself up as THE vehicle to get us out of this mess.  The Mark will, in their words, represent businesses working for social and environmental aims.  

Except it doesn't.  It represents businesses working for social and environmental aims which spend at least half of their profits on socially beneficial purposes.  So there's a value judgment there about profit, which rules a lot of us out.  

I think in many cases profit-distribution and ownership are red herrings.  Often they make sod-all difference to how much change is created, and, at times, can get in the way.  At other times they magnify the change created by the business. So, for example, I will soon set up a business as a social enterprise - because I think that particular business will achieve more good structured that way.  But social enterprises aren't (as I think the questioner above is suggesting) inherently good - or necessarily better at doing good than other businesses.  

I'd be right behind a Social Business Mark which was awarded to businesses which have clear social aims, and which provide externally verified evidence of their impacts.  I'd even be happy if the businesses which had certain "social enterprise" structures got a further tick in the box.  But given that my interest is in social change, and is not ideologically driven by a dislike of profit distribution, I am finding it hard to get enthusiastic about the Social Enterprise Mark.

RBS - what a waste

I saw this today in Leeds City Centre.  Is it a business making it clear that they own the bin, or is it political graffiti inspired by Royal Bank of Scotland's role in the takeover of Cadbury?

 
 

Social Impact Camp

I'm on the train home after a productive and enjoyable afternoon and evening in London.

I'd spent the morning in Leeds working with people with whom I'll soon be setting up a social business (yes me, the second Earl of Pointing Out That Other People Aren't Running Their Social Enterprises Quite As Well As They Could Be, setting up a social business.  It'd best be good.)

I spent the afternoon at RSA House making the most of their library facilities.  It's nice to feel that there's a little bit of London that's "mine".  On a day spent thinking about social impact, it was interesting to be reminded of the RSA's goal - to remove barriers to social progress.  A neat mission.  

This evening I went to the first Social Impact Camp, organised by Bright One Communications at UnLtd.  The idea was to bring together a load of social entrepreneurs who are interested in looking at ways that they can measure and prove the impact that their business has.

It's a crucial issue - and one that I've written about before.  My interest - and the reason I went down today - is in trying to develop ways to measure impact which are do-able by your average small business - social or otherwise.  I've had a fair bit of experience of most of the social accounting methods that are used within our sector, and let's just say I have an open mind as to whether they are appropriate and useful for the majority of people with whom I work. 

The thinking behind them is sound, and the methodology rigorous.  But I'm not wholly sure they are an appropriate use of time and resources for many small organisations.  Traidcraft, yes.  The Guardian, yes.  Fifteen Foundation, yes.  But most people I work with - and me?  No.

My impression from chatting with people tonight is that there are plenty of other people who feel the same.  A number of people hinted at feeling that their attempts to measure their impact were a bit inadequate.  A number of people had started to do something which was quite involved, and then, understandably, gave up.

Others have tried more DIY ways - Ben Matthews, who hosted tonight's event, talked us through the work he's done - focusing on the impacts that his communications work has with his clients.

One of "my" big ideas - which I hope we can develop at the Social Impact Camp - is to develop social impact circles.  I took the idea from the lending circles used by people like Grameen - where groups of people borrow together, support eachother, and, I suppose, keep eachother honest.  I think we could do something similar to help us to keep an eye on our social impact.  We could collaborate to clarify what we're trying to achieve (it's usually easier for someone else to see it - and they don't need to be an "expert"), and then remain accountable to each other as we report back on what we've done.  Instead of Social Audit Panels you'd have the wisdom of circles.

This stuff really matters.  Times are going to be tough for the next 5 or 10 years.  We'll need to learn to achieve a lot more good with a lot less money.  So we need ways of proving to ourselves that what we're doing is worthwhile -  whilst also proving to others that its worthy of investment. 

I have flour, yeast and water (but no salt). I will survive.

I've just seen the following at my local Tesco:

I defy you not to panic just a little bit when faced with bare shelves in a supermarket.  

It reminded me to blog about a programme I heard on the radio the other day.  The Food Programme focused on bread, and featured a number of small-scale bakers.  I found it really inspiring.  They talked to:

• The Handmade Bakery - a Community Supported Bakery in Slaithwaite, where people buy bread weekly on a subscription basis - similar to the Community Supported Agriculture scheme I've blogged about at Swillington.
• A guy who knocked on his neighbours' doors and asked them if he could bake bread for them.  He now has a nice little business.
• A woman who is using small-scale breadmaking as a way to encourage young people to develop a few entrepreneurial skills.

It's easy to dismiss this kind of thing as self-obsessed middle-class food snobbery, and in some cases I'm sure it is just that.  But there is something quite profound in the desire of increasing numbers of people to take more control of where their food comes from.  It's got something to do with the empty shelves above, or perhaps more importantly, whose shelves they are. 

Some final thoughts from Bangladesh

Here are some final thoughts from Liam, before he begins his journey home from Bangladesh.

All alone in the hotel restaurant. Feels very weird after being so close to 22 people for the last week. All our Inside Grameen Delegates are speeding away from me at 30,000 feet to the four corners. 

Left behind to work on the film about social business.  I’ve spent the day crouched in front of monitors, in sound studios, listening to music which might work on the film, making lists of the people we must thank. Would love to go home but this has to be done. So much excellent footage. Interview with Yunus (who yesterday was speaking to the Indian parliament about his social business vision). So many shots of the gorgeous lush countryside and the horrible mess that is Dhaka. Interviews with the Grameen ladies in the villages, bank staff, yoghurt makers, French MBA’s working in Bogra, eye doctors,  rickshaw drivers, beggars, wide eyed kids, quite stunningly beautiful women. How we are going to get it down to ten minutes or so is a problem I have left with the talent at Drik. They are up all night to get me a good rough cut tomorrow. Looking forward to seeing that.

Wrap up session with the delegates was fab. I wont bore you with the litany of praise we got for taking the risk of putting this event on. I was very touched by people’s passion and honesty and the commitments they made about what they will now do as result of all we’ve seen. Again I am struck by the power of bringing together people from different sectors to share an experience and learn through it together.

In no particular order here are my round up thoughts:

1. Social Enterprise in the UK needs a great big kick up the arse. The obsession with what the government or the Eton Rifles think or want is farcical. Here in a place where there is no effective state, people like the Grameen folk must learn not to become dependent  on anyone for anything.  I just don’t trust free money Yunus told me.  I will probably punch the first whinging social enterprise type I run into back home who starts complaining about cuts. Just build a fucking business that can make money and help people. If you can’t do that go and work for the council or a bloody RDA. 
2. Big scale change must involve private sector business and multi nationals. The haphazard incremental growth of local social enterprises is nice but marginal. The world needs social innovation that can get to a big scale quickly. It does not need more cafes for disabled people or pretend work schemes for unemployed people which fall apart when the grant money dries up. The winners of the recent social enterprise awards are great little organisations but if I’m honest did I see any real social innovation – ideas that could change things big time? No I didn’t.  The social enterprise sector must open itself to the world of business or it will be increasingly marginal and stagnate forever going round and round the petty debates about definitions, who is and who isn’t, and kissing the bum of whoever sits at the top of the Cabinet Office.
3. Social innovation is messy, chaotic and not linear. Get in there. Learn by doing it. Yunus has semi divine status. But he is just a man (albeit a pretty extraordinary one) and has made numerous mistakes in his time. But get the right partners, each do what you do well, stay focussed on the core purpose at all times and amazing things can be achieved even in places as messed up and chaotic as Bangladesh.

This is my third visit to Bangladesh this year. I’ve fallen in love with it. I have met so many lovely people and there is here – in the rural areas at least – a sense of social solidarity which we have lost. And a society that gave birth to Grameen and BRAC must have a lot right with it.

But the place scares me too. It is an entire society living on the edge of a precipice. Rural poor people  can be wiped out by a cyclone or bad harvest (and they are all in the fields now hand picking a good crop). Slum dwellers live hand to mouth every day. And horrible Dhaka slides over the cliff under the sheer weight of numbers and a political elite who don’t give a monkey’s .

The roads are a handy metaphor for this place. Huge numbers of people trying to get somewhere in a chaotic reckless mass. Death or serious injury close to you all the time and no-one to help you if you crash. 

But let me end on an up note. A regional manager at a Grameen branch gave a farewell speech to me in very halting English. It was one of the most moving things I’ve heard for some time. He spoke about the need for global solidarity and the joining of hands of all those who want to be on the side of the poor. He spoke about the stupidity of racism and that so much more binds the people of the world than divides them.

So, in the spirit of global solidarity, much love to anyone who is reading this and good bye from the land of the Bangla speakers.

Liamxxx

Grameen - The Dignity Engine

The experience is nearly over.  Here's Liam's latest post from Bangladesh.

Back in the bus. Big crash had blocked main road to Dhaka so we take side road. Mistake. We get stuck in the middle of a gridlocked village surrounded by people. Sham – our Grameen guide – jumps out and disappears into the melee. Feels like our dad has gone. Half an hour passes. Nothing. And then trucks start reversing, cars are pulling off the road. And there’s our Sham directing the traffic, shouting at the crowds to stay back! He gets back in the bus to huge applause, whistles and cheering. He asks if we want to stop at the Grameen branch up the road for tea and a toilet break (in this country not an offer to be sniffed at!). Suddenly we are moving and soon we are back on the main road happy to be taking our chances again in the murderously reckless traffic thundering towards the capital.

Sham tells me later that when he was a boy scout he did a module on unblocking traffic jams. All I did as a scout was smoke Rothmans and try and get off with the guides. 

So, only a few hours to go and people will start dispersing. We had another jaw droppingly inspirational day in and around Bogra yesterday hosted by Isabelle and her team from Danone Communities. This social  business partnership with Grameen manufactures and distributes a high nutrition yoghurt (called Shokti Doi) to poor kids. We saw the factory, met the ladies who sell door to door, sat in on a village education session to about 200 hundred villagers gaping and laughing at the man dressed as the Shokti Doi lion. Genius. At the end of the day we had three hours with the Grameen Danone team during which the group all gave them one piece of advice, support, insight about how they could make the business better.

The business is not perfect, it is not in profit yet and they are still too reliant on the brains and resources of Paris. But what is so impressive about Danone is that they learn by doing. They haven’t waited for the perfect business plan. They know social business innovation is messy and not linear. They know the outcome they want but are happy to travel with an incomplete map. And talk about generosity of spirit and transparency. Marie used a great phrase last night when Miriam from Unilever remarked how open and honest they were being. “ We want to be known, understood and copied”, she said. They also have a line in their budget called Shit Happens – making provision for the inevitable wrong turns, unexpected bumps in the road and cock ups.

Went to bed with my head buzzing.

This morning we had a quick trip to the Grameen Eye Hospital. Built two years ago this two floor highly professional facility has treated 82,000 people and has a success rate about what the World Health Organisation average. It uses a cross subsidy model – those who can pay are charged a bit more to enable the poor access. Seeing an elderly village lady being led tenderly into the operating theatre to get her cataracts removed was very moving for us all.

And again the unbelievable go-the-extra-mile hospitality and openness. Returning to the f-you culture of London will be a stretch.

I’m weary, sleep deprived and so wishing this bus trip was over. But I am also full of admiration for this bloody amazing Grameen organism. Paul of IDEO said they’re not a business they are a dignity engine. It ain't perfect. It feels a bit rickety in places as well as state of the art in others. It is over reliant on the founder Yunus. It won’t solve poverty in Bangladesh. BUT its network of various businesses are living symbols of what it looks like to put the poor first and not last. To not just talk about practical solutions but to make them and keep making them.  

Who does fairtrade work for most?

I really need fairtrade to work.  There are times that it feels like I need it more than coffee farmers or tea plantation workers.

I know that sounds ridiculous, and it clearly is ridiculous.  But my point is that a belief in what fairtrade means forms an important part of my vision of the world, and my daily struggle to try to make sense of an obscenely unjust society.

I do what I can to make things better, bit by bit, day by day.  I do that by working with social entrepreneurs.  By writing about social business.  And by drinking fairtrade tea, and eating fairtrade chocolate.  Every little helps, I tell myself.

And I more or less handed over my life to fairtrade for seven years, working at a fairtrade shop in Leeds.  That's where I learnt most of what I know about social business.   We went from small basement premises to the high street, doubling our turnover and introducing loads of people in Leeds to fairtrade.  But eventually, we closed, unable to make the sums add up.  

Every year we hosted a fairtrade producer during Fairtrade Fortnight - cocoa farmers from Ghana and Belize, tea plantation workers from Tanzania.  The questions changed as the fairtrade sector expanded.  In the early days the question was "Should I buy my Cafedirect from the supermarket or from Trade for Change?"  In later years the question became "Should I buy Traidcraft's [fairtrade product of choice] or the [Pick Your Own Big Multinational's] equivalent product?  The debate would develop, and would inevitably focus on whether we should spend our money with the big multinational, and whether they should have the Fairtrade Mark in the first place.

Generally, the producers were pretty bemused by these arguments.  Their message was consistent and clear - just sell more of our stuff.  If a big multinational was to approach them with an offer to buy tonnes more of their cocoa on fairtrade terms, then there will only be one answer.  And it's an answer that we'd no doubt give ourselves if we were in the same position.

Lots of people aren't happy about the Fairtrade Foundation's decision to award Nestle the Fairtrade Mark for Kit Kats (the four finger ones, and only in the UK and Ireland).  Lots of the concern centres on Nestle as a business -  and understandably so - they're probably the most boycotted business in the world.  You can read an excellent argument against the decision here.

I'll be honest, I don't like Nestle.  Nor am I a natural supporter of big multinational companies.  But I don't believe that monday was a black day for fairtrade, as Joe puts it in the piece I've linked to above.  I think the Fairtrade Foundation have done the right thing.  As uncomfortable as it makes me feel, I think it's progress if Nestle start buying fairtrade cocoa and sugar for four finger Kit Kats.  Only time will tell whether this turns out to be the beginning or the end of their commitment to fairtrade cocoa.  I accept that their history with their Partners Blend coffee suggests that we shouldn't hold our breath.

But fundamentally I believe that one of the great successes of the fairtrade movement is that it has engaged big businesses, helping some of them, some of the time, to trade in a a more just way.  And I think it gives us opportunities to point out just how ridiculous it is that companies like Nestle continue to buy the majority of their cocoa on non-fairtrade terms.  So for me it's progress, uncomfortable progress, but definitely progress.  

Efficiency savings and failure demand

Whilst Liam is briefly away from an internet connection in Bangladesh, I'll talk for a while about matters closer to home.

With the Pre-budget report on its way this week, there's plenty of talk from politicians and commentators about how we're going to save money and get debt under control.  Good old "efficiency savings"  got another outing yesterday, with Gordon Brown pointing to at least £1.3 billion that could be saved over four years.

Is he right?  God knows.  Anyone who has any dealings with the public sector (that's all of us then) won't need telling that there are some pretty inefficient public sector services out there.  My public sector friends never tire of telling me about inefficiencies in their particular part of the sector.  So you can see why, if you're sat on top of the pile as Prime Minister, that you'd make greater efficiency a priority.

I'm interested in considering the incentives people have for being more efficient, against continuing to be inefficient.  This is where one of my favourite ideas, failure demand, comes in.  I've written about it before so won't go on, but the basic idea is that a lot of apparent demand in a system tends to come from mistakes - people not being dealt with properly first time round.

I'd encourage you to think about your recent interactions with public services.  Was any of the demand that you created actually failure demand?   Where you weren't dealt with properly straight away, so had to phone back, email again, or go to an office again?  I've got two examples in my life from the last 7 days alone.

My question is whether there is a disincentive to become more efficient in the public sector.  What will happen if you tackle failure demand, particularly at a time when the State is looking to cut costs?  You won't get rewarded - certainly not with a bonus.  They'll realise that fewer people are needed to administer your particular system, and they'll make you redundant.  So what does the rational person do?  Stick with the inefficient system, which is helping to keep you in a job. 

I know that's a rather bleak view of humanity, but I think it's a realistic view.  I also accept that inefficiency isn't just about individual decisions to "be inefficient".  But I also don't accept the argument that it's all "the system's fault", and that all public sector workers are heroic selfless individuals.    

So what do you do to solve this problem  - if you agree with my analysis?  I think first of all you acknowledge the issue.  You are honest about the reasons why efficiency savings never happen at the scale that they are expected.  And then, to be frank, I'm not sure what you do.  In theory you reconnect your staff with the social purpose of their service, and create a culture in society where we all acknowledge the part each of us plays in helping the State to spend our money more wisely.  As I say, that's the theory.  What will happen in reality? We shall see.  I can't say I'm feeling that hopeful.  

Meeting Muhammad Yunus

Liam Black is in Bangladesh visiting a number of social businesses run by Grameen.  I've handed the blog over to him for a week to tell us what he's up to.  Here's his latest post....

Not every day you get to meet the world's best known social entrepreneur and Nobel prize winner and have dinner at a British High Commission. Well, that's what I did today. 

Amazing three hours with Yunus at Grameen HQ. He gave short talk about where his 25 (I think) businesses are up to and the rest of the time was Q and A. Questions ranged across his leadership style and the dependence of Grameen on his power and charisma, the challenges of scaling and internationalising social innovation, how to make effective partnerships with multinational companies and what will happen after he goes.

The numbers are amazing (and remember Grameen is not the biggest microfinance lender in Bangladesh): 8 million borrowers, 27,000 staff, $100 million dollars lent a month, 60% of loans are drawn from cash deposits. Grameen Phone is the biggest tax-paying company in Bangladesh with 54% of the huge mobile phone market with 50 million (that's 50 million) customers. His relationship with the Norwegian telecoms company Telenor is troubled though but I couldn't get to the bottom of that.

The group was united in its admiration of his achievements and the scale and simplicity of his vision. Can’t help but agree with his analysis that the current economic orthodoxy - business is about profit only - is a one-eyed and pathetically inadequate expression of the human. The one-dimensional nature of free-market capitalism condemning people to be "money-making robots" only has conditioned us to see the world that way. See it differently, he argues. That's all. Can business not also be structured around the innate selflessness of people, as well their selfishness? Social business, he asserts, does just that.

Paul, from IDEO, nailed it by saying that Grameen is not a financial brand but an equality brand and his message is bigger than the obvious holes and failings of some of his social business empire. Rick from Rubicon said he was a "performance artist", his businesses the artwork expressing his vision of equality. He has already achieved his goal by putting equality and the rights of the poor on the world's agenda.

And yet, and yet. Despite his protestations that Grameen would survive his departure, I'm not convinced. He is the sun around which it all revolves. From the salons of the rich in London and Washington to the villages in rural Bangladesh, Grameen is Yunus.  Ask a question of any Grameen employee and the answer always comes back to him. He resolves all big disputes, steps in when there is a problem, fronts all new ventures. Would the likes of Danone, Adidas, Veolia et al queue up to joint venture with Grameen if Yunus was not out the front?  He is all over the world all the time. Advising Japan about how to deal with their epidemic of suicide. In Colombia. In Albania. In India. His energy at 69 is breathtaking. But is he spreading himself too thinly?

A genuine one-off and he left us with much to mull over as we headed off to the British High Commission for dinner -  to meet the diplomats and local dignitaries and some Grameeners. Very nice gaff and good food. Good speech too from the High Commissioner Stephen who seemed genuinely pleased to see us.  A delayed bus back meant I could have an extra whisky. As a Brit taxpayer I felt like I deserved it.

Tomorrow we are off to the villages to see the bank in operation at the frontline. And then we travel north to Bogra to get inside the joint venture with Danone where we will be joined by Isabel, Marie and Brice from Paris. So, much more ground to cover and social business things to ponder.

A side discussion is going on in the group about Social Return on Investment - can you out a financial number against social impact? The consensus is no you can’t and you will waste much time trying to.

The group is gelling fantastically well and no major balls-ups so far. Fingers crossed and inshallah (a word I so now understand having been here!) that this will continue. 

Tired but feeling good. And Chelsea lost. Maybe there is a God and the muezzin who keeps waking me up at the crack of dawn is on to something ...