I recently attended a judges meeting for a major award. Ten luminaries of the voluntary sector decided which charities should be recognised for business excellence.
One of the judges asked how I had made Speaking Up into an innovative, entrepreneurial organisation. The first thing I told her was that we’re not there yet. Despite all the hype, the third sector contains few such organisations. We have yet, I told her, to see the third sector equivalent of the Ipod Nano or Toyota Prius.
OK, so we’re better at innovation than our over-fed public sector. But that isn’t exactly a boast when you look at how a vibrant private sector has transformed the way we eat, drink, communicate and entertain ourselves in Britain in the last decade. Can we really say we have matched that level of innovation when it comes to meeting social need?
So what are we doing wrong? The first thing is that our organisations are not built for innovation. For a start, we are far too slow-moving for most entrepreneurs. We like to find consensus, include everybody. Entrepreneurs can’t work like this. They need power and pace.
Another problem is governance. Charities and social enterprises give Trustees – most of whom aren’t any good at business - the final say on business strategy. And entrepreneurs just scare them to death.
Finally, we live by yesterday’s management theory. This proclaims that we must freight our organisations with military-inspired structures, voluminous corporate plans and process-driven management systems.
All that baggage slows innovation down. We need to learn from organisations such as 3M, GE and Apple, all of which are complex networks of cellular organisations led by entrepreneurs and focussed on innovation.
But the biggest single reason the social sector is not truly innovative is that most of us don’t operate in real markets. Sure, we have users to whom we are supposed to listen when shaping services.
Yet this does not make us “user led”. Users don’t crack the whip in the third sector. Funders do, staff do and board members do. However we dress it up, users still get what we choose to give them. Users lack the single most powerful tool to force innovation – the power to decide to go elsewhere. In their dislocation from users’ preferences., many social businesses are more like public than private sector organisations. More Gosplan than Google.
So what’s the answer? One is to create more markets. To give disadvantaged people real spending power. An example is direct payments . With the “Disabled Pound”, we’re now seeing innovation around the needs of disabled people that years of exhortation about “listening to users” never achieved. While there are obvious limits, the scope for empowering vulnerable people through cash payments has hardly yet been explored.
A final reason we don’t innovate much in the third sector is that it often doesn’t get you anywhere. When did you last hear of a third sector heavyweight being put on the canvas by a nimbler, more innovative pretender?
Instead, the rookie gets a nice award, a flurry of be-suited visitors (“We think this is really interesting”) and then they don’t get called back. Although they would never admit it, the visitors know their organisation is safe even if they don’t invest in new ideas. No, the sector talks innovation very nicely. But we don’t really do it very well.
So what am I doing to help make Speaking Up more entrepreneurial? My answer to the judges went a bit like this.
Firstly, we employ more entrepreneurs than your average social sector outfit. They are out there so find them.
Secondly, we treat our key people like entrepreneurs, not employees. We give them space. We avoid process driven initiatives.
Thirdly we allow risk and failure. The F word is a dirty word in the third sector but is key to successful innovation. Fourthly, we reward entrepreneurs by giving them better pay rises than people who just tick over. Finally, we tell Speaking Up people that if they don’t innovate we will, quite happily, let their projects - and their posts - go. Nobody has a divine right to exist.
The judges, I don’t think, will pick us. I don’t think I said quite the right things. They wanted me to tell them the sector was becoming more entrepreneurial, not how deluded it is.
I honestly don’t think that many people in our sector grasp that that it took a whole new outlook, method of organisation and leadership to create the Ipod Nano and the Toyota Prius. It took risk, faith, courage – and competition.
What sustains me is a belief that social entrepreneurs will, given opportunity by the state, unleash equally radical innovation in response to many of our deepest social problems.
But a word of warning. It won’t happen under Labour. They flirt with us and occasionally even snog. But they still love the public sector too much to start a new life with us.
Our best opportunity may be called Dave or Nick.