Social entrepreneur Liam Black is with a group of business leaders, social innovators and entrepreneurs in Dhaka for a week.   He’ll be telling us what they get up to over the next few days in a series of guest posts.  Here’s his first post.

Just left room full of 20 jet lagged but revved up people recently arrived in Dhaka for our Inside Grameen week. Senior leaders from the likes of Rolls Royce, Google, Barclays, Unilever, IDEO and social innovators like Sam and Michelle from www.livity.co.uk, Rob of www.bbbc.org.uk and upstarts like Lily, founder of www.mybnk.org. We are all here for a week in Bangladesh to get to the bottom of the Grameen phenomenon and its partnerships with multinationals like Danone.

For me there are two big issues for the week:

1. Does microfinance work and what is the role of commercialised micro finance institutions – MFI’s?
2. Is it possible/right to make personal profit from providing finance for the very poor?  More of this second hot potato later in the trip.

So, does microfinance work or is it a hyped and marginal movement distorted by the high profile of microfinance godfather and social entrepreneur superstar Yunus and his amazing abilities to communicate and enroll the elites of the western world?

Development experts argue about the efficacy of micro-credit (i.e. small loans) as a route out of poverty. One indisputable fact is that after 30 years of microfinance – offered by Grameen and other large suppliers such as BRAC – Bangladesh remains pretty much as poor as it was in relative and absolute terms at independence in 1971. There has been no knock out micro-financed blow against poverty.

There is surprisingly little independent research into Grameen’s work and its real impacts on the lives of poor people in Bangladesh. In 1998 the World Bank reported that 5% of Grameen Bank borrowers moved out of poverty each year. In 2003, Shahid Khondkar again on behalf of the World Bank concluded: “The results of this study strongly support the view that microcredit not only affects the welfare of participants but also the aggregate welfare at village level”. Yunus claims – based upon his own internal survey that “56% of [Grameen’s] borrower families have crossed the poverty line by 2005, on the basis of ten indicators set by Grameen Bank to track impact of its programme”.

Few commentators approach this subject without an ideological axe to grind, but most critics of micro-finance and Grameen – whether from the left or the right – concede that the movement has undoubtedly done a great thing in bringing financial services to poor people and offering an alternative to unscrupulous loan sharks and, by focusing on women, may have contributed to building up their position within society.

But they challenge the overall impact such moves have had on ending poverty. Some critics have questioned Grameen’s claims about the high level – 98% – of repayment and say this is because of clever accounting and rolling over loans to massage the figures. A detailed Wall Street Journal investigation in 2001 made this claim. This is rejected by Grameen.

The New Yorker magazine carried out an extensive investigation into microfinance in 2006:

“Hyperbole distorts the debate on both sides. Yunus speaks eloquently of eradicating poverty, but some argue that microfinance burdens the very poor with debt. Since relatively few rigorous studies on the impact on microfinance have been completed, ideology tends to dominate”.

In India, the government has recently stepped into the unregulated microfinance market and suspended the activities of some providers. There are claims too that anxiety about debt has led to suicides amongst the people. This is strongly denied by the MFI’s involved (which include social entrepreneur golden boy Vikram Akula of SKS who has recently become very rich by ‘privatising’ his MFI)

Meanwhile some Indian MFI’s recently agreed to reduce the interest rates that they charge to borrowers.

New York University’s Professor Jonathan Morduch is a long time researcher in this field who says that there is clear evidence that microfinance can help the very poor but warns that credit alone is not a panacea. It no doubt helps many individuals but loans to the poor have yet to demonstrate an impact on aggregate poverty levels. Quoted in the New Yorker, Professor Morduch said that: “The boldest claim for microfinance – that it can eliminated large part of world poverty –outpaces, by a long distance, the evidence accumulated to date”.

So, much to ponder as we go deep into Yunus rural heartlands on Sunday to meet those who borrow money from him and prepare to debate the issues with the Professor himself next week.

Liam, Dhaka, 5^th November 2010

Things feel pretty gloomy this morning.  I’ve been spending the last couple of days telling myself and others that we need to stay hopeful.  That the word prosperity has its roots in the latin word for hope.   That we don’t need growth as we’ve always known it anyway.  We’ll work it out, I tell myself.  There are opportunities here, we must look for them, not lose hope, I keep repeating.

And I do believe all that stuff.  I have to, because I think if you don’t, you might as well just give up.  And I’m not prepared to do that.  I  have a son who’s 4 and we owe it to his generation to try to think of ways to work our way out of this mess.  But that doesn’t stop it feeling pretty bleak this morning.

I grew up in Liverpool in the 1980s.  I was 7 when Thatcher came to power.  I’m not pretending that my life was all Boys From The Blackstuff gloom, far from it.  But Liverpool, caught between Thatcherism and Militant, was a pretty grim place in the 1980s.  The city is recovering, but has never really recovered.  Many families and communities were scarred for life.

I haven’t digested all the news from yesterday yet so I don’t really feel like blogging about it today.  So in true blogger style I’ll just talk about myself instead.  What am I going to do now?

If I truly believe in my strapline – make it your business to change the world – then I need to see our current situation as a big opportunity to make a difference.  Once the cuts start to hit there will be service after service which people say “We can’t lose that”.  Amidst all of that, some of those services could be run by people themselves.  Perhaps I can help there.

But I’ll also need to help by working with people to be realistic about opportunities.  Lots of my work is done in areas where there is market failure – where the market has been propped up for years by funding of one kind or another.  Sometimes even the most socially entrepreneurial group of people can’t do anything if the State retreats and takes its money with it.  Or, the best they can do is think of a totally different way to meet the need.  We need to be careful to not go down a load of dead-end streets which just waste everyone’s time and cause more anger.

And personally, where will I get my work?  Like most people in the social enterprise sector I am overly reliant on the public sector to fund my work.  I know the dangers in that but that’s where the money’s been.  I don’t work in a sector where entrepreneurs come to me, wanting to spend some of their money on me.  Other people pay me to work with entrepreneurs – Business Links, local Councils and the like.   That money is going to be thin on the ground.

Big Society, I hear you cry.  There’s a big opportunity there.  Perhaps.  But as I suggest above, social entrepreneurs aren’t social alchemists.  Big Society will need investment, on a big scale, and a big change in mindset.  How, for example, will third sector organisations, accustomed to funding, go about setting up new enterprising services?  They’re used to finding funding for salaries etc for the start-up phase.  If they’re not there, will they find other ways to bootstrap the start up?  Or will they just not bother?

So I will need to continue to find new ways to work.  I’m not your average consultant, and I’m by no means a clock watcher, but I still get paid, generally, on day rates.  That’s likely to need to change.

I’m onto it – with my business partner Gill I’m running a DIY Business Planning course next month.

The next few years will be very DIY – as the State retreats people will need to become more resilient and do things themselves.  This is our first attempt to meet some of those needs.

So I don’t feel gloomy, but I feel realistic.  I feel hopeful, but I’m not stupid.  I know full well that the next few years for me will see me fielding lots of interest from people who want to do something, but don’t have any/much money to pay me to do it.  So I’ll have to think of different ways to work.

My interest, and concern is in how we hold together as a society in times like this.  Clearly the cuts will hurt a lot, but its the cumulative effect, the possible loss of hope, and loss of a vision for a better society, which is most worrying.  That’s the world I work in.  So I need to get to work.

Francis started school last month. He seems happy. We went to chat with his teacher this evening and all seems fine.

I’m interested in education. I’m particularly interested in how boys are educated, given that I was one, I have one and they tend not to do as well as girls at school.

I did well at school because I was bright, academic and compliant. I fitted in. Lots of others did too, but plenty didn’t. There was such a strong sense of you being a bit of a failure if you didn’t go along the conveyor belt of good GCSE’s, good A Levels, and a good degree.

Of course all that matters, and “doing well” has served me pretty well. It got me out of Liverpool which was probably no bad thing. Nothing against Liverpool, I’m very proud to come from there and it will always be “home”, but I think it was important to leave. Going to University gave me that opportunity. It also gave me the chance to work in Ecuador for a year, which was probably my defining life experience.

But increasingly I feel it’s not the be-all and end-all. That’s easy to say from a privileged position of having had that opportunity. But in the recent debate about the future of University education, you could be forgiven for thinking that the only way to succeed in life is to go to University. So if we don’t widen participation, the argument goes, we’re by default resigning loads of young people to a second class life.

It’s not a very popular opinion, but I’m not a fan of increasing student numbers. I think we’re obsessed with the wrong statistic – as if our country’s competitiveness is reliant on us having more young people with a degree than Slovakia, Belarus, or India. I genuinely don’t see that there is a direct link between the number of degree-educated young people, and the future economic prosperity of our country. And anyway, is economic growth what it’s all about? If we think it is, then we’re in trouble.

I’m interested in young people being supported to achieve what they are able to achieve. For some that will be a degree, for others an apprenticeship. For others it could be their first business.

This brilliant talk and animation from Sir Ken Robinson via the RSA illustrates some of my thinking on this, in a far more articulate and broad way than I ever will. It suggests that our education system is based on churning out young people so that they are ready to contribute to the country’s economic engine. Do well at school. Go to University. Get a job. Contribute to GDP. My generation, to a large extent, believed that one would lead to another, and to a certain extent that did happen. It certainly doesn’t happen as much now, and it won’t in the future.

How are we to educate young people to cope with what the next 25 years are going to throw at them? I certainly hope Francis won’t be taught how I was taught, even though it allowed me to “succeed”. And from an enterprise point of view, how can we help them to develop entrepreneurial skills, that go beyond producing badges to sell to press-ganged parents?

What will be success for Francis? 10 A*s? Or the ability to think for himself, to challenge the answer at the back of the book? To learn to work collaboratively? Or to be top of the class?

Here’s the second guest post from Liam Black, who recently spent a week in Bangladesh putting things in place for a visit to Grameen next month.

Last week I met for the first time Corinne Bazina who for the last six months has been overseeing the Grameen Danone joint venture in Bogra about 4 hours (or 56 depending on the traffic!) north of Dhaka.

I’m always looking for find examples of ‘corporate social innovation’ – that is, big businesses being very clever in the ways they create products and services which address big social needs by aligning their people, brands and core operational competencies. In London later this month we are bringing the world’s leading exemplars together to share learning and evangelise to the growing Wavelength community of business and social enterprise leaders.

It was Danone that really got me interested in this space when I met Emmanuel Marchant a couple of years ago. Emmanuel heads up Danone Communties, which drives forward the French giant’s social business strategy. I really admire these Danone guys. Not only are they doing and not just talking, they are very open and transparent about what they are doing, why they do it and what they are learning – warts (and there are many) and all. One of their marketeers when asked why are you being so honest with us said “Because we want to be known, understood and copied”.

The origins of the idea which became Grameen Danone Foods Ltd are quickly becoming legend. Groupe DANONE CEO Franck Riboud invites Yunus for lunch whilst he is Paris in October 2005. They get on like the proverbial house on fire and decide to do something together to help the poor of Bangladesh. They shake hands and in less than two years in 2006 the new joint venture social business to help end child malnutrition is being opened to worldwide publicity in Bogra by footballing superstar and Muslim icon Zinedine Zidane and productions kicks in February 2007.

It is difficult to overstate the difficulty of commercial and social challenges which these two men set their operational people. To produce a yoghurt to improve kids’ health in a country with few fridges and daily power cuts (in those areas lucky enough to have electricity); which will recruit and train local unskilled people; be sold door to door by poor women to supplement their incomes; to use its demand to improve the lot of rural milk producers AND be a model of environmental friendliness and reuse!

Production and sales are increasing, 40 people have jobs, 500 poor women supplement their income through door to door selling and rural milk farmers have a more reliable market.

The challenges are huge even if the business gets to break even next year. The biggest one is cultural. Danone is keen to back away and hand over to local people but skills and experience are hard to find a small provincial town in one of the most underdeveloped countries on the planet. Danone’s impeccable intentions of creating a genuinely local business run up hard against the brute realities of educational and skills deficits in a chronically poor place.

Danone’s investment in plant, start up costs and operating losses is around 1 million euros. At the moment the Return on Investment is unproven but the Return on Inspiration is huge. I’m convinced anyway that the French multinational has had a bigger impact by investing in social business than if it had just given the money away in a traditional big corporate CSR way. And the yoghurt – Shokti Doi – is very tasty and good for you!

Leading UK social entrepreneur Liam Black has recently returned from a week in Bangladesh, preparing for a visit to Grameen later this year. Here’s the first of his two guest posts.

Just back from Dhaka carrying out recce for our Inside Grameen event in early November.

During the parts of the day when not sitting in the insane traffic congestion and chaos I was sorting out logistics, accommodation and catering with various suppliers and talking though the programme with the lovely people at Grameen mission control and Danone.

Despite its many and varied challenges, Grameen never fails to impress and I look forward to meeting again with its founder Muhammad Yunus to discuss and debate the hot issues round microfinance and social business.

Recently, Yunus went head to head with Vikram Akula of SKS Microfinance , the microfinance institution which has shed its “non-profit” status to seek millions on the capital markets to fund its growth.

A protégé of Yunus who served his time at Grameen, Akula says that the scale of poverty is so huge that the only way to deal with it is to access money from the capital markets to fund quick, big growth. He says it is possible to help many many people out of poverty and return adequate profits to investors. His growth has been impressive.

Yunus contends that the introduction of private profit into the microfinance equation will inevitably lead to corruption of the original mission.  What Akula is doing he implies – with his trademark avuncular smile – is simply profiteering from the poor. He argues that the word “microfinance’ itself should be only used to describe his type of non-profit distributing model.

This is a really important debate. Is Yunus simply an old fuddy duddy being overtaken by a new generation of market driven social entrepreneurs or is he the guardian of the Gates of Righteousness pouring the boiling oil truth on the heads of profit driven barbarians who, when it comes to it, will always put their interests ahead of the poor?

More on this next month when I return to Grameen HQ.

There will be more from Liam later this week. You can read his account of his visit to Grameen in 2009 here, and the story of my two days at Danone in Paris earlier this year here. My video interview with Danone staff from Argentina is here.

The Lib Dem Minister for Care announced this week that from November everyone in receipt of social care will be able to choose to receive an Individual Budget. In short, this means that they can choose to spend the social care money that they are entitled to in ways that they choose – as long as it achieves agreed outcomes. It sounds great – and potentially it represents a life-changing step forward for millions of people.

This is an area I’ve been working in a lot recently – for example on this project in Bradford and this one in Leeds. Our main focus in each project is supporting organisations to set up services which people may choose to buy with their Individual Budget. The big hope is that lots of innovative services will spring up in place of the one-size-fits-all services of the past – day centres and the like.

As we’ve seen elsewhere recently, there’s a lot of faith placed in the market, in competition, and the transformational power of individual choice. It is assumed that the market will develop so that the best services (those for which there is most demand) flourish, whilst those which don’t meet people’s needs disappear. It’s an attractive vision in lots of ways, but I think we all know that markets don’t work quite so perfectly, particularly for those people without much power in the market.

Working with Gill, my business partner at Social Business Brokers, we’ve spent the last few months trying to get behind the rhetoric of Personalisation so that we can start to support people to set up services. I think we’re making some good progress, and I remain hopeful. But I can assure you that when you really start to try to understand Personalisation, it isn’t quite as rosy as it might first appear. Here are some of the issues that I think need to be addressed.

(For clarity’s sake, the points I’m making don’t relate in particular to one local authority – they are issues that we’ve come across in our work and in research into personalisation across the country.)

Anecdotally, we’re hearing that a good majority of people are continuing to receive the same services that they received before – even though they are now statistically classed as having an Individual Budget. It would seem that some local authorities are classifying someone as receiving an Individual Budget if they have been through the social care assessment process. So, in short, that means that their needs have been assessed, nothing has changed in terms of what they receive, but they’re now classed as being in receipt of an Individual Budget. That, to me at least, isn’t right, and presents us with misleading statistics.

It would appear that the majority of the support planning and brokerage work – to help people to agree how they’d like to be supported, and then find appropriate services, is being carried out by social workers. Now I have nothing against social workers, but I would think that there is a link between the point above (that most people are getting what they always got) and this point – that the people who’ve always done the support planning are still doing the support planning. Anecdotally we hear that Individual Budgets are seen as a right pain to administer – and with recruitment freezes and the like you can understand why an overworked social worker might gently encourage a client to stick with what they’ve got – particularly if that lack of change gets hidden in the statistics as I suggested above.

We’re not seeing a great deal of evidence of innovative services setting up. It’s still early days – and I’m sure there are people like us in other parts of the country trying to encourage the development of new services. Much emphasis is being put on third sector services (particularly social enterprises) being set up. But, as you’ll know, times are currently tough for the third sector, and insecurity in terms of funding isn’t providing an environment in which many organisations feel comfortable setting up new, risky, customer-facing services. There is also little funding or investment available to set up new services. And given that, anecdotally at least, most people seem to be sticking with what they’ve got, you can understand why some organisations may make the judgment that the market doesn’t exist for new, innovative services which individuals could purchase.

You can probably see the problem here in terms of market development. Customers can’t be expected to choose services which don’t yet exist – whilst businesses are reluctant to set up services where demand appears weak. It’s a classic chicken and egg situation. Will it be the third sector that drives innovation here? We’re certainly doing what we can in the work that we’re doing – but I think on a broader scale we need to be realistic. Setting up services which individuals can choose (or choose not) to pay for is as big a cultural challenge for the third sector as it is for the public sector. Innovation may come, but it may take time. My hunch is that it will be the private sector which leads on this.

So what do we do about this? At a national level, I hope for some leadership from people such as the Care Minister, to listen carefully to what’s happening, and to try to get beneath the rhetoric and the good stories (people buying season tickets in place of day care etc) to really understand what’s happening on the ground. We need to not be hoodwinked into believing that loads of people have Individual Budgets, when in practice nothing has changed (or improved) for them. And I also think that we need more honesty about the role of social workers in making change happen. Are they best placed to do support planning and brokerage? Or are they best placed to maintain the status quo? I think we need more creative and innovative ways to support people to decide what outcomes they want – and then to help them find the right services.

And, of course, we need a good dose of social entrepreneurship. That doesn’t mean social enterprises will solve it all. But it means that we need enterprising people finding creative ways to create change.

At an event we ran recently, one third sector representative confidently told the room that Personalisation will have been long forgotten by 2020. We’ll be back to State delivery of services, he reckoned. By then we’ll have seen that Personalisation was just a big waste of money and didn’t work. I didn’t agree with his analysis, but I do think that if we don’t up our game a fair bit, he could well turn out to be right.

I wrote recently on the Guardian Leeds blog about our local shop closing.

It’s literally next door to our office in the centre of Leeds. We’re a few minutes away from the main shopping centre so it’s a bit of a pain to have to walk that bit further for your milk or your sandwich. And it’s just not nice to see shutters where there was once a nice little shop.

So I sounded people out about a public meeting to discuss the idea of a community owned shop. It’s all the rage – at least on the Archers – and I was keen to see if there would be interest amongst local businesses and residents.

Twenty-five people came to the meeting. We had some good discussion – helped by the fact that the landlord who owns the property came along too. Ian Adderley from Co-operatives Yorkshire and Humber came along to chat about other community owned shops, such as this one in Leeds and this bakery and grocers in Slaithwaite.

I put together a quick survey – which more than 20 people who were there have completed. You can read a summary of the survey’s findings here.

I haven’t studied them in detail yet myself – I haven’t had the time – but I just want to make a few points related to this idea in particular, and the bigger picture, which includes Big Society.

I think it’s interesting how there appear to be two main camps – one interested in a shop (ideally community owned) in the premises vacated by Simpsons – whilst another camp is interested in the broader idea of a “more interesting kind of shop”. There was talk of local suppliers, slow food, a decent bakery, that kind of thing. All made possible by a different form of ownership.

I asked people to define what they were interested in because I think it’s important, from the start, to be clear about people’s self-interest. That sounds like a dirty word, very un-Big Society. It can easily be confused with selfishness. But I think identifying self-interest is key, if people are to find time to make things happen. It’s why I wrote this post – Big Society – or People Like Us?

Whilst I think self-interest needn’t be a bad thing, I think there is a danger that the most capable people end up looking after themselves, whilst those who may need help more take time to get their act together. (If you want confirmation of this, just check out the answers to Question 4 for the list of skills and resources from our bunch of city-livers/workers in the survey).

There may be two sets of self-interest here – one in a local shop in those premises – and another in a shop, somewhere in Leeds, that does things differently. They might overlap, but they may not.

So, here are the survey results. Primarily, I’d be interested in the responses of the people who were at the meeting, or who are interested in this idea – just leave a comment below. But I’d also be keen to hear from other people – with your thoughts on any issues this raises, and what you think we should do next.

Those of you who follow me on Twitter may well be fed up with hearing about my efforts to buy a house.

To cut a long story short, we sold our house in February and moved to a rented flat for what we thought would be a 6 week period whilst our house purchase went through. But, to cut more long stories short, that deal fell through close to completion, as did the next one. A few grand lighter, with blood pressure that bit higher, we’re no further on than we were when we started looking for houses last September. When they say buying a house is stressful, they’re not wrong.

What’s gone wrong? We’ve been pretty unlucky – both deals looked straightforward but both vendors then acted in ways which were anything but straightforward. The technical term is that we were shafted, twice. Some of that behaviour, I think, comes from the fact that the housing market is in a complete state. In the 11 months we’ve been looking, there are plenty of houses which have taken months and months to sell, or haven’t sold at all. Meanwhile, there are a handful which have sold within days. We’ve gone to closed bids on at least four houses – with each selling for above the asking price, in a supposedly depressed market. Dysfunctional doesn’t begin to describe it.

And what of our old friend the Estate Agent? Traditionally people haven’t been so keen on them largely because they make a fortune out of you whilst seemingly not doing a great deal other than drive around in souped-up Minis. Who couldn’t sell a house in a bouyant market, where all buyers believe that the worst that can happen is that they’ll move on in a couple of years, with a tidy profit? But how do you serve a market which is on its knees?

You don’t, as it would appear most Estate Agents believe, just carry on as if nothing’s happened. I have seen very little evidence that they have adapted at all to changing circumstances, other than the inevitable redundancies and closure of branches. I am not aware of much reflection on how they could serve their customers differently, in order to keep the market moving.

Here’s an idea for starters. Could they maybe be a bit more frank in how they describe a house? I know it’s a standing joke (“opportunity to stamp your personality = house is a wreck etc) but it’s actually not very funny when you spend hours looking round houses which, if you’d been given an honest appraisal on Rightmove, you wouldn’t have gone anywhere near. Estate Agents are obsessed with the outputs – aka viewings – so that they can show the vendor how hard they’re working. Maybe if they worked harder at understanding what buyers really want, and then tried hard to find people who were really interested in a house, then they may more likely achieve their desired outcome – a sale.

I have lots more ideas (I feel like I’ve undertaken in-depth undercover research into the housing market – there is nothing I don’t know now) but don’t worry, I won’t bore you with them now. But this is a classic example of where what we don’t need, in my opinion, is a social enterprise to enter the market. What we need is an Estate Agent that recognises that it could have positive social impacts – both in terms of happier customers and, potentially, stronger communities – if it was to start to think how it could really add value to an area.

I believe that to continue to have a role in an online world where the likes of Tepilo, Tesco and Rightmove will make the traditional Agent pretty redundant, they are going to have to think of how they can really make a difference to customers and to the communities in which they sell houses.

One type of social business that I particularly like to work with are businesses which are meeting some sort of environmental need.

At the Danone Social Innovation Lab last month, I chatted with several Danoners (and their NGO partners) from around the world who were involved in setting up social businesses which had an environmental impact, including Gonzalo Roque and Martin de Ferrari from Buenos Aires, Argentina. They were planning to set up a business to improve the quality and quantity of plastic recycling in Argentina. You can see my interview with them here:

The main thing that interested me in what they were doing was that there were clear social, environmental and business benefits from the work they planned to do. The way plastics are currently recycled – by people working informally, and selling plastic on to middlemen – was largely unsatisfactory. The prices people got varied a lot – as the middlemen tended to exploit people – who were themselves reliant on the prices being paid by China for plastic. That meant they couldn’t always make a living out of it – and as a result children would often join their parents in the search for plastic bottles. The quality of the plastic that was processed was often poor – making it more difficult to re-use. And that made it more difficult for Danone to reach their ambitious targets for use of recycled plastics in their bottles.

It makes it easier to do the right thing environmentally if it also makes sense financially. This morning I’ve spent an inspiring few hours with SCRAP – a scrapstore in Leeds which takes business waste and sells it on for creative re-use. It’s a great way to divert a good few tonnes of waste from landfill – whilst also helping people to be creative.

What I like about them is that they are really committed to finding a way to make their social enterprise stand up as a social business. Traditionally they’ve had some funding – but not much – and my work with them is to help them to develop further so that they can generate more income and do more good.

Our affluence has made us a bit lazy and complacent when it comes to how we use the world’s resources. Maybe now, with the environment and our economy looking increasingly fragile, we’re rediscovering that thrift and respect for nature make financial sense as well as environmental sense.

I’ve had a bit of a moan on Twitter this morning about some poor service we recently received from a third sector organisation. We booked a room for an event – and to cut a long story short they offered friendly but poor service. We did most of the running round to confirm the booking details, and then on the day they gave the projector we’d hired to someone else. Then, to round things off, they didn’t put enough postage on the invoice, so we ended up paying £1.14 for the privilege of collecting our invoice from the sorting office!

I’m interested in understanding the root causes of the poor service we received. I think there’s an issue about diversification and the need to generate income. I imagine the organisation in question started off years ago as a community development organisation, renting a room in a tatty corner of a council building in the neighbourhood where they grew up. And along came European millions to enable them to build a multi-purpose venue, which housed the work that they do and also gave them the opportunity to rent rooms to other people.

There’s no problem with that necessarily. And you can’t really argue that much with organisations which look to diversify in order to bring in various sources of income. But what if you don’t have the skills to compete in your new marketplace? Venue hire is a massively competitive market, and customers are very demanding.  To compete, you need to be good at what you do.

There’s a good argument to say that you should stick to your knitting. It’s tough though, particularly at the moment as funding streams dry up. It can be tempting to come up with bright ideas which will supposedly generate “free” money to keep you going.

The one that I’ve been asked to help with most is the community cafe which wants to expand into outside catering. The argument goes: “We can charge £5 per head for the kind of stuff we sell in the cafe for £1.50.”  True – to an extent. But it’s a whole different market – with different customers and competitors. That’s not to say that you can’t make it work. But it’s not necessarily the case that a community cafe can sustain itself through a Robin Hood strategy of selling paninis to office wallahs whilst offering cheese baps to the urban poor.

So what do I do about this? I work with people to help them to assess their ideas. Nothing particularly clever, and no scientific formulae to help us to understand whether a particular idea offers a chance to generate income. But we start by considering:

1. Does this idea involve selling more of our existing services to existing customers?
2. Does it involve selling existing services to new customers?
3. Does it involve selling new services to existing customers?
4. Does it involve selling new services to new customers?

The theory there is that there’s likely to be greater risk in developing a new service, and selling it to a customer group that you know nothing about. It may also require more resources in terms of time and money. That’s not to say not to do it – but grouping ideas like this at least gets people talking about risk – and their ability to take on new business ideas.

It’s hard to work out whether your idea is likely to generate income.  And unfortunately, the more outlandish the idea, the harder it can be to argue against it.  You can be accused of lacking vision.  But with money so tight, we have to try to find ways to help people choose the right way forward, instead of digging a deeper hole.