The Social Business

Now the really hard work begins

So here we are. Day one of a Tory – Lib Dem government.

What might this mean for social entrepreneurs, and the world of social business? We are likely to be given opportunities over the next five years to do much more, and to have much more influence over the lives of the people of this country. More public services will be outsourced to social enterprises. More public sector workers will be encouraged to set up social enterprises so that they can sell their services back to the State. Hopefully a new generation of social entrepreneurs will emerge, as people across communities realise that if things are going to change, they are going to have to change them. With big budget cuts, the State is likely to withdraw completely from the delivery of certain services, leaving, in theory, big gaps which social entrepreneurs could fill.

I’ve made no secret on the blog of my scepticism with regards to the Tories’ plans for Big Society. I’ve also explained how growing up in 1980s Liverpool means that I am instinctively hostile towards the Conservatives. Yet I’ve also made the point that one reason that I am involved in social business is that I’m not, and never have been, a party-political animal. My hostility towards the Conservatives has never been balanced by a great enthusiasm for Labour or the Lib Dems. Until the last 6 months, I’ve never really taken much notice of any of them. The financial crisis changed all that.

Here are my thoughts on day 1 of the new Government. I think social entrepreneurs – and I’m thinking in particular of those who deliver services to the public, on behalf of the State, have a great opportunity to make a difference to people’s lives in what are bound to be difficult years. But we need to balance entrepreneurial enthusiasm, and the desire to make a difference, with hard-headed assessments as to whether the “opportunity” in front of us is actually just a get out of jail card for whoever is cutting that particular budget.

All of a sudden public servants who have always believed that the answers lie with them, and them alone, will warmly embrace social entrepreneurs and enthusiastically invite them in to “do things differently”. This could be progress, but it’s not necessarily progress. We need to remember that there can be a big gap between need and demand – and that someone, somewhere, needs to pay for services. This is where the pragmatism of the social entrepreneur may need to overcome the anger and the passion of the social activist. At times there may be no realistic way to deliver a service, if the State isn’t going to fund it. They need to be told that – not given a two year period of grace whilst we try to make a silk purse out of a sow’s ear.

We also need to manage expectations. It takes time for new approaches to deliver results. At a time when every penny that is taken from us in tax will be closely scrutinised, there will be pressure to promise that we can deliver more, and more quickly, than is realistic. Years of mediocrity can’t suddenly be transformed into 5 star service.

Over the next few years, the real social entrepreneurs, and the real social businesses will emerge from amongst the ranks of the “me-too” organisations. It’s been sexy to be a social enterprise (or to at least call yourself one) since 1997. I don’t think it’ll feel quite so sexy over the next few years – even though it will be more high profile. But if you’re up for it, and if you’re serious about creating social change, then I have no doubt that there will be some once-in-a-lifetime opportunities to really make a difference. But we’ll need to be hard-headed as well as passionate about creating change.

Categories: Mutuality, Public services, Social change, Social enterprise, Social entrepreneurs, Social Justice

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  1. Rob

    What makes us believe that because we are social enterprises we are inherently more able to innovate and reduce costs than the for profit sector? Or the public sector?

    If I change the structure of my business do I become more innovative? Lower cost? More impactful?

    What is the USP of the SE sector? Where does it come from? How is it sustained? Where is its competitive advantage?

    If it lies in channelling peoples’ passion for social change and organising it into ‘good work’ then working to deliver the cuts required by the state, then it is a competitive advantage that will soon be squandered.

    Your point about sow’s ears is extremely valid. However faced with the struggle for survival in an increasingly crowded SE market (no surprise to me that we have lost our first SE furniture recycler in Leeds)it is likely that opportunities to deliver sow’s ears will be grasped as they will be seen to be the only ‘opportunities’ in town. Even social entrepreneurs have bills to pay.

    Perhaps it is time for more SEs to ‘sack their funders’ if they are limiting the social impact that can be achieved and find investors who share the agenda for social change rather than a wish to contract for cheap service delivery. This would be a genuinely enterprising path. If the challenge is to deliver social justice and profit then perhaps the State should no longer be the investor of choice for SE?

    But I am afraid for much of the sector survival has become the name of the game and we can expect to see some miserable services delivered for the state by social enterprises as a result.

  2. Good points Rob.
    In 1997 too there was much talk about a new politics, Third Way (remember that?), leaving behind the divisions of the past, big tent etc etc. I hosted delegations of ministers, civils servants and policy wonks like Geoff Mulgan (who clearly couldnt believe their luck to suddenly be on the inside). They came to Liverpool to look at our social enterprises FRC and Create and oohed and aahed. Mulgan asked me what it would take to get 1,000 of them across the UK. I told him and am still waiting for him to get back! I was assured that there would be a whole new approach etc. We wrote papers and gave impassioned speeches about reforming the Social Fund to create a supply side push for social enterprise suppliers.

    Fast forward 13 years and although much has changed, there is much that feels the same today. The Tories talk about their Big Society and no-one quite knows what they mean. I’m sceptical – old war horses like IDS and Hague talk about new politics etc and privately educated millionaires strike me as unusual standard bearers for a fairer society. It all brings a wry smile to my wizened face – but I wish them all well. I really do. They’ve a tough old job ahead and it would be pathetic to hope that they fail.

    Like 1997, I see consultants, wonks, representative bodies etc maneuvering for advantage and their place in the ConDem sun. Peter Holbrook et al are paid to do the best for their members as they see it and they will all eagerly join the consultative committees and commissions which will no doubt appear over the coming months. Good luck to them.

    I have actually been in partnership with a LibDem council in Liverpool and we did some bloody good stuff through Bulky Bob’s which is still going strong. There are no doubt parts of that party which really do get what social enterprise – as a business model- is all about. I hope Cllr Richard Kemp gets the SE Minister job! Contrary old fecker but he does get it!We negotiated with Liverpool that they would pay us quarterly in advance so that we didnt have to bear the cash flow pain.happy days. But even so it was bloody hard work to keep it all together and make money and hit the social targets.No way we could do that now if the imperative was to strip gazillions out of the public cost base.

    Who knows what will come out in the wash regarding the reform of public services and the role of the “not for profit” sector under the Clegg/Cameron Love In. Maybe I am missing it and there will be a radical change. We’ll see.

    But this I do know because I am in very close touch with many social entrepreneurs away from the ra-ra of the spin machine: most social enterprises live hand to mouth, and rare are those that get into a consistently profitable, cash positive position, with a financial stability, and strength in depth of quality management that allows for risk taking, diversification and serious scaling up.We can argue all night about why this is. My point here is that in a big picture which is about huge cuts in public spending by a new government in a hurry to have itself seen as making a difference there are great dangers for social enterprise.Mike spells out some of them very well in his post.

    Rob, one thing is for sure though you will have much to blog about!

  3. As ever, tediously, largely agree with you all. Managing expectations, delivering results, balancing the hard-headed with the idealistic. As you say, Rob, I think there will be opportunities. But decisions about them have got to be taken with mission + pragmatism in mind, every time. And, as Mike says, we shouldn’t lose sight of the fact that government is far from being the only funder / investor / customer. Nor, as you and Liam point out, that it is often the local that is as important as the national.

  4. Also generally in agreement. The big danger – as suggested by cautious comments from Peter Holbrook recently – is that the convergence of social enterprise spin and the government’s need for cheaper responses to social problems is going to create a make or break period for social enterprise (or, at least, for the view that social enterprise is way forward for state-funded services).

    I’m hoping we get more of the good stuff you’re hinting at and less of the bad stuff but wouldn’t really like to make a prediction either way.

  5. Hi Rob, such a good and thoughtful piece.

    Here’s two thoughts to chuck into the pot.

    An active society isnt only about social enterprise as trading entities. It’s equally about the people powered community action – already the great majority of the million plus social organisations in the UK, driven by voluntary activity and time more than money. This sort of activity is not usually delivering public services, but often reduces the call on public services, and very often makes our world a better place to live. And if Govt can reduce the barriers to doing it, we could all benefit.

    Second thought is that social enterprise as simply a different manager of the same model of services is worthy but probably the dullest part of the sector. As Nick says, there are other markets to generate resources and much more creative ways to achieve good for society and the environment.

    Supporting people to start up new social ventures at UnLtd I’m always struck by how much of their time has to go on dealing with heavy regulation way before its really needed. Government can reduce barriers and simply get obstacles out of the way of people in the early stage and small scale social ventures which are the bedrock of community life. And support agencies like ourselves can up our game in how we assist – this is the point where we are beyond proof of concept, and must get into a step change in what we offer.

  6. Hi Rob
    Your blog is as eloquent as ever in making some very good points. It has attracted comments from some of the leading players in the sector and that’s good too. But one point that has yet to be made struck me whilst sitting in a North Norfolk church listening to the Archbishop of Canterbury share his views on what’s needed to change rural Britain for the better. (Oh and in case you worry – I was probably the only ‘born again atheist’ in the building!)

    The moment of revelation came during the Q&A session when a particularly militant sounding lady asked why there were so few clergy these days. ‘How can the Christian message be spread in the countryside,’ she asked, ‘if there are so few clergy to visit schools, families and everyone?’

    His response was polite but to the point and can be paraphrased crudely as; ‘it’s not up the the clergy to do all the work. They’re there to lead and support, but actually it’s the collective responsibility of all congregants to go out and spread the message.’

    In other words,isn’t the answer to challenge the deep rooted cultural perception that most working at the coalface of service delivery seem to have – that they should wait for others to act rather than act themselves?

  7. Why does soical enterprise exist in the first place? Why has it grown in importance?

    Because in an economy which is geared towards capital accumulation, needs for which there is ineffective demand lead to market failure – there’s no supply to meet the demand. The state can meet the supply for the essentials directly or indirectly.

    Why the preference for social enterprise? Because it is an opportunity to replace public sector workers that have trade union representation and negotiated pay and conditions with a more “flexible” workforce. And who is better placed to win contracts – social entreprenuers or Serco? The Tories’ talk of public sector “co-ops” mask the fact that they would be nominally joint-ventures with multinationals specialising in outsourced public services.

    The bottom line here is that working people are to pay for the capitalists’ crisis with a sustained attack on living conditions, and establishment politicians are hoping that talk of “social enterprise” will integrate some and neutralise others. It’s Mary Poppins logic – a spoonful of sugar makes the medicine go down…

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