With the launch of the new ‘Better Business‘ Guardian Professional Network discussing ‘Why successful businesses of the future will have clear social purpose at their heart‘ alongside Starbucks VP Ben Packard recently talking about social entrepreneurship it appears that the social enterprise movement over the last decade (since the 2002 DTI report ‘Strategy For Success‘) has now achieved its mission in getting social purpose mainstream.
More so it appears that the term ‘social enterprise’ – at least in the UK – is now problematic. There was recently an interesting discussion on a blog post by Rodney Schwartz, CEO of Clearly So, about how Salesforce has hijacked the term; however as can be seen in our previous posts we believe it is charities themselves who have hijacked the term from its cooperative and self-help roots. We commented:
It seems increasingly pointless to try to police the term social enterprise and actually it can be argued that the term – as something separate – has lost its meaning (or more positively has achieved its mission) as corporates such as Starbucks now talk about the importance of ‘purpose’ and ‘creating shared value. Indeed the Guardian Social Enterprise Network reported that the Belu water chief at the Social Enterprise Exchange stated that the company – touted as one of the best #socent in the UK – had not used the term for two years and to ask whether defining as a social enterprise actually limits thinking and growth.
We have been thinking the same recently especially as the UK social enterprise ‘sector’ redefines itself into smaller and smaller subsections with the new Senscot Voluntary Code of Conduct where no profit distribution to owners is allowed. So much for encouraging social entrepreneurship in the youth of Scotland by promoting that you don’t have to choose between ‘earning a living, pursuing your passions or devoting yourself to the causes that inspire you’ – from Start Something That Matters by Blake Mycoskie, founder of TOMS shoes and the one for one model that has nothing to do with legal structures, asset locks and profit distribution limits. Geof Cox has written a strong blog post about the inherent contradictions here in how the most successful enterprises raise equity and pay dividends.
It’s ironic that the UK social enterprise ‘sector’ is encouraging a silo mentality that pits it against the private sector – with rhetoric such as ‘anti-greed’ – at the exact point that mainstream business is now fully engaging with social purpose and social impact. And social enterprise is seen as offering a CSR solution rather than enabling mainstream businesses to move into the social purpose space.
We recently started defining ourselves as a ‘social venture intermediary’ in order to align ourselves with the language being used by progressive social entrepreneurs such as within the Social Edge community where the executive director Victor D’Allant was reported by Zoe Williams of the Guardian at the recent Skoll World Forum in Oxford saying “it’s all about social entrepreneurship versus charity. Nobody wants to do charity anymore. Charity doesn’t work”. Interestingly it also appears that Unltd and NESTA (with their Social Venture Intermediaries Fund) now favour the term social venture.
The Starbucks VP asked, “If the future domain of the corporate sector is creating shared value then what’s the role of the NGO?” We ask: If the future of the corporate sector is social purpose then what is the role of social enterprise?
About Richard Patey
Search, social and content marketer and editor of the Profit Is Good Blog.
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While: “Nobody wants to do charity anymore. Charity doesn’t work” – is a great bid in an auction of grandiose statements, it’s not actually true.
We have over 162,000 registered charities in the UK – and there’s millions of people committed to the charity model of doing good who’ve never heard of social enterprise, shared value or the Skoll World Forum. The factual statement that opponents of the charity model are making is ‘I don’t want to charity anymore, it doesn’t achieve the results I want’, which is fine but different.
I think your statement that: “It’s ironic that the UK social enterprise ‘sector’ is encouraging a silo mentality that pits it against the private sector – with rhetoric such as ‘anti-greed’ – at the exact point that mainstream business is now fully engaging with social purpose and social impact.” is more interesting although I think the situation is more subtle than that.
There’s always been a substantial part of the social enterprise movement that has pitted itself against the private sector.
Many of us – I’d like to think most but I haven’t done a survey – would take a pragmatic approach somewhere between Senscot’s view (that social enterprises need to be ‘not-for-profit’) and yours that if we have mainstream business proclaming its committment to ‘shared value’ social enterprise has achieved it’s goal.
I disagree with Senscot’s position because I think there have been – and will be – many instances where investment for return is the best way to enable social good to happen.
I disagree with your position because, for me, who owns and controls the business, and where the money goes, are major factors in the social impact that a business makes.
Part of the reason I’m a social entrepreneur is because I believe too much wealth and power is held by too few people (both in the UK and across the world) – and many major social problems either stem from that or are exacerbated by it.
Mainstream businesses showing a commitment to social purpose doesn’t do anything to remedy that situation. It’s a good thing but it’s not enough.
Interesting thoughts.
We’re on a similar journey – trying to work out how we stay relevant, remain useful and earn some money being what people like Nesta now call a social venture intermediary.
My angle on this is that a lot of the problem comes from the driver behind a lot of organisations getting involved in/redefinining themselves as social enterprise is an internal one rather than an external one.
Social enterprise is often seen through the prism of organisational sustainability – rather than as an approach which can achieve sustainable social change.
Of course, that’s a pragmatic approach which is very real for a lot of organisations trying to work out how to survive. But survival doesn’t necessarily mean that any long lasting change is delivered.
It’s why we’ve changed our focus to working on specific social issues, rather than just working with social enterprises per se.
So we’re working on empty homes, prisoner re-offending, care for people with dementia….. Starting with an external focus – what’s the issue in society that we’d like to help solve – and then finding people – including social enterprises – who want to help us solve that problem.
It makes a lot of sense to us – and seems to make sense to people who are interested in what we do. Whether it helps us become a profitable social venture intermediary – that manages to earn a bit of money in the space between social ventures and social investors – remains to be seen.
Thought provoking piece, thanks for this Richard.
We had a teach in a while back from a senior marketing exec who said “problem with you folk in social enterprise is that you only have one word for ‘shop’, which isnt that useful when you want to buy shoes and end up in a grocery store”.
All of what you describe has its place – charities, asset locked social enterprises, businesses with social commitment, better sustainable practice from commercial businesses. But we need to know which is which. Sometimes ownership does matter. Sometimes impact matters more.
At UnLtd we use the term ‘social venture’ to cover the full range of socially focused organisations. We use ‘social entrepreneur’ likewise to cover all socially minded entrepreneurial people. But it is useful to have some distinctions between the types of social venture.
Every time I see a new model, my reaction is to say great, what can we learn from that? what can it achieve? The problem with some of the sector agencies is that they want to put up barriers and say that’s “other”.
Are we so insecure in our world that we feel the need to tag our space with spray cans like disadvantaged teenagers in a poor area? I hope not. But if we are, lets find the social entrepreneurs who can help build more confidence and self esteem in the agencies in our sector.
Getting social purpose mainstream is one step towards social enterprise, but it is only one step. The two other dimensions – products of international collaboration amongst the associates of Social Enterprise Europe – would argue two further points. Firstly, the the goods and services need to be produced and distributed in a way that is ethically defensible, and secondly that the wealth and power sharing mechanisms of the enterprise need to be social (not ‘public’ or ‘private’). Social purpose is a necessary and important first step, but it sets the sights of the movement very low.
Based on a recent visit to Eastern Europe, I would argue that the UK is both ahead of and behind the curve in different ways. We’re ahead of the curve is developing a range of social enterprise forms and practice. The inclusive model of the UK is good in this respect (although the Social Enterprise Mark is a step back in this respect). However, we are behind the curve in our discussions about legislation to recognise social enterprise. The debate we were having there (as guests of the British Council) was enabling legislation that recognises:
1) All co-operatives
2) All primary purpose trading
3) Social businesses that have an asset lock on their assets
In the UK, we are a long way behind the curve when it comes to defining social enterprise in this way. All co-operatives are social as they either open membership or act to reduce pay differentials and create a more equal society (many do both). Primary purpose trading (not the trading arms, but the trading that is socially transformative) is being championed as the charity contribution to social enterprise. Lastly, because social businesses do not operate democratic governance, they need to have a statutory assets lock to prevent assets being used for private purposes or being transferred to private businesses. Co-operatives do not need such an asset lock (although it is defensible where funding is primarily from the state for public service delivery). What needs regulating in co-operatives is the integrity of the democratic process, and not the organisational assets. What needs regulating in social businesses is the assets (because there is not democratic process to secure them for social benefit). Primary purpose trading needs regulation to differentiate it from ‘for-profit’ trading.
Any of these models contributes to social enterprise/entrepreneurship because it depends more on social purpose/impact for its legitimacy that profit-accumulation (important, but secondary).
All the best
Rory
Good post and comments.
New Sector, Social Economy, Public Innovator, Social Entrepreneur, Social Enterprise, Social Innovation, Mutuals, Social Ventures…
We play games with words to try and create relevance and meaning. These are the efforts I have seen in years working at the New Economics Foundation and now here at Co-operatives UK.
If these words are opt-in, then they are inclusive but we can never really police them nor should we. What we do need is a better sense of quality and clarity around key components. For co-operatives, this is about member value. For charity, it is about public interest.
The world of Westminster in particular has an obsession with reinventing language. Good luck to those who need to play that game, but don’t confuse it with the long-run hard work of building successful businesses and one another word – a social movement.
Interesting blog post Richard. I’d particularly like to respond to the last question you raise “If the future of the corporate sector is social purpose then what is the role of social enterprise?” I think this question gets right to the core of the issue because the future of the corporate sector might not always be social purpose. Currently I’d agree that many are going this way BECAUSE this is what the market wants. Corporates are responding to shareholder, customer and partner demands so for them being social makes good business sense. HOWEVER what I think you fail to discuss is what happens if this trend dies and the market becomes less social. History shows us that trends change so it’s likely that in 10 years something else might be in vogue. This is where I believe the social enterprise sector (however you define it) is and must be different. There has to be a social purpose at the heart of what we do, that we follow regardless of what the market dictates.
I wonder if the commercial world are fretting as much? I agree they may well be venturing into your world because it sells product but that’s what they have that we lack,Products! If we could clearly define and get paid for social outputs this would be our market place we would be the market experts. Instead we have chosen to bastardise an existing model (commerce) to facilitate social outputs whilst pouring scorn on those who invented the model in the first place for improving their model by learning from you and me. They are smart cookies and they will mop the agenda and the market up unless we start to create clear, marketable messages about why mr & mrs consumer or commissioner should by from Social Enterprise and not business wrapped in a caring sharing package.
We also need to find an incentive for people to want to remortgage their homes and live off credit cards whilst they establish socially focused businesses. Whilst this is par for the course for business start ups I expect it’s rare for social enterprise. After all if there’s no reward there will be no risk. If people can create personal wealth and social wealth side by side without the stigma of definition then the idea of making less money but getting more respect for the way your business is run could drive a whole new breed of socially aware entrepreneur.
Thanks to all for some great comments.
@ David – with the rise of entrepreneurship, most young people I meet have no desire / intention to set up a charity – I would think that the rise of social entrepreneurship will lead to a reduction on the current 162,140 charities registered with the Commission. Regarding social impact, for me all that counts is the amount of positive social and environmental value created – who the owners are and what they do with the profit is already captured by focussing on social impact. I do not believe that income inequality negatively impacts on social impact; everyone can be better off whilst maintaining the same level of ‘inequality’ – the focus should be on making the process of value creation a level playing field rather than on reducing the gap and incentives for people to better themselves through innovation.
@ Rob – agree that a major barrier in scaling (and understanding) social enterprise is that it is seen as one component of the oxymoron of ‘sustainable funding’ promoted by NCVO rather than meeting social needs through a business. I think your approach of focussing on creating innovative solutions to external social problems is a wise move and will pay off with a well enough defined value proposition to the customer (which I guess is most likely cost-savings for local authorities).
@ Cliff – agree that social enterprise does not require any new models; it requires social entrepreneurs to create branded social ventures that are built to scale. Now that the old social enterprise intermediaries have lost the majority of their public funding it’s only a matter of time before the ‘tagging’ of a self-fabricated space comes to an end.
@ Rory – having an integral and genuine social purpose will lead to businesses acting ethically throughout their supply chain. Cooperatives as democratic, values-based businesses inherently create social value (and are therefore obviously social enterprises even if funded bodies such as SEMco state otherwise) but I do not believe that social ownership automatically leads to greater social impact; I personally believe that the obsessive, single-minded focus of the individual entrepreneur(s) really pushes the social purpose space forward. I agree that public assets that are transferred need an asset lock (e.g CIC) but disagree that this is a requirement for social enterprise.
@ Ed – for me there will never be clarity around social enterprise if it tries to combine the diametrically opposed paradigms of charity and business. Charities do great work but their focus is on solving a social problem (and then not needing to be around any further); social enterprise is about meeting an ongoing social need.
@ Joshua – being a ‘good’ business is required for long-term value creation / sustainability – I would argue that the new markets (of more enlightened and educated consumers thanks to social media) mean that a social purpose and ethical behaviour are no longer optional components.
@ Adam – agree that social enterprises lack products; the focus to date has been on (public) service delivery. This is not only dull, but stifles talented entrepreneurs from entering the social space and creating exciting, branded and globally scalable businesses. I’m glad you’re highlighting the need for personal risk and reward for those setting up social enterprises – those that advocate against personal wealth creation keep the focus of the movement at a small-scale local community level.
Interesting to read Eastern Europe and the British Council in the context of social enterprise. Given what Rory says and our own approaches to the British Council, there would appear to be a contradiction between word and deed.
In our 2006 paper which declared that it was “almost impossible to overstate the need for social enterprise in Ukraine”
we used Kim Alter’s social enterprise typology to identify the various forms. The paper argued that profit could be applied to resolve a wide range of social problems and was itself the product of a social enterprise.
Perhaps some forms of inclusion are more inclusive than others?