Wednesday, May 21, 2008

Is Social Enterprise the Future of Capitalism?

A question to which I will shortly need to turn... as I have to put the arguments that it is to a debate tomorrow at Anglia Ruskin University....

Just flogged to London and back for an unpaid gig for the Professional Fundraising Association. Turned out to be a small, 30 minute seminar for about eight people. I need to think a bit more carefully about what I do. While I can use the time on the train productively, the net benefit of this appearance was negligible.

This made all the more apparent when I had a mail from my excellent MD Kathleen Cronin telling me, in her incredibly tactful way, that things are extremely tough back in Speaking Up and that she and I need to refine our respective roles.

Which gets me onto my evolving role in Speaking Up. When I tell people about my new MD, people immediately follow with `What is it you do then?' as though I am now enjoying abundant free time. I still see myself as at the heart of business-generation at Speaking Up - ideas, relationships, creating an entrepreneurial climate.

The `split' as we are attempting it, sees me leading on strategic income, big external relationships, innovation and influence and her leading on the delivery side. Of course the two sides interact and that is where our partnership (and it is just that) needs to be constantly honed.

What I admire a lot about Kathleen is that she understands the challenges of coming into a founder-led organisation and has, with enormous care and patience, tried to redraw the lines so that I am doing what I am best at and she is too.

The challenge for me is to let her have the big calls on all things operational which, for somebody who used to count the organisation's paperclips, is a big ask. I tend to retain a `buck stops here' mentality at times, a kind of Pavlovian reaction to any big decision, especially where money is involved.

But if she is to have the power to do the job I want her to do, she needs to make those calls - with my involvement and consultation - but nothing more.

John Willman's profile of myself and SU in the FT today. Link is www.ft.com/cms/s/0/372e60cc-26d1-11dd-9c95-000077b07658.html?nclickcheck=1 Really pleased with it. In main section of paper just below and excellent piece by Luke Johnson. John tells the SU story really well. Will email him in a bit to say thanks.

Tomorrow I have got to debate Debra Alcock Tyler of DSC at Anglia Ruskin University as to whether Social Enterprise is the future of capitalism or just a load of smoke and mirrors. Slightly dreading the drubbing I am bound to get from a bunch of students and charity types who will no doubt buy into Debra's slightly traditional view that the state and the voluntary sector should stick to their postwar roles.

I am developing a view that the debate tends to get stuck in definitions, cliches and arcane discussions about legal structures, ratios of earned income and so on. Hence the popular distinction between `social enterprises' (earned income, CICs, business-driven, professional) and `charities' (donated income, amateur, lacking in sustainable income, values driven).

I think this is unhelpful. There are not really two `camps' in the sector. This is something got up by the media and fuelled by the sector's big personalities. Most organisations I know are a combination of attributes. Indeed DSC itself is one such. A lot of its income comes from trading: Books, conferences, training. It is professionally run and yet also incredibly values-driven. It is a hybrid between the best of `charity' - people-centred, involving, based in values - and business - focussed, efficient and commerical. For me, DSC are a social enterprise as much as a traditional charity, an interesting fusion. Yet the debate forces organisations to make a false choice.

The debate tomorrow ask the big question about the parameters of social enterprise. There is this big fear out there in the sector that the commercial `wolves' will start wearing the clothes of social entrepreneurship and that the `good guys' who are true to the brand will be indistinguishable from the charlatans.

Again, I think this is misguided. There is something going on out there. I talk to a lot of people at the very pinnacle of business. Bright people who, contrary to popular perception, think deeply about the world. And they are worried. Especially those who have kids. This is because they, like any intelligent person, knows full well that the whole of our civilisation is at mortal risk, probably in the next 100 years max, from climate change and its associated problems.

This changes the picture entirely in terms of global capitalism. For long-term profitability, there needs to be a long term! How we run our economies will increasingly have to reflect the pressing social and environmental challenges we face.

For this reason, I believe we are now entering a post-CSR age. Corporate Social Responsibility was once a fig leaf to cover the indiscretions of companies, somewhere to send the people who were not really up to it in the business. Now, we're seeing organisations like M&S and Vodaphone looking very seriously at how to deliver a double-bottom line - an account of their social impact which, in terms of accuracy and depth, matches their financial reporting. Sure, this is just starting and hasn't yet hit the small and medium sized businesses which form the bulk of our economies, but the important thing is that it is starting.

And it is here that the real opportunities for more social enterprise reside. Recently the founder of Grameen Bank, Muhammed Yunus, went into partnership with dairy giant Danone to produce a low price yogurt for the poor of south Asia. The returns to capital are lower than in normal investment scenarios in relation to the risks, but the pairing of Danone and Grameen gives `reach' into the poor communities of Asia which Danone alone couldn't achieve - and, of course, gives those people access to a product which would otherwise be out of reach.

Joint ventures such as these - which enable the massive funds available in the capital markets to be `leveraged' into social purposes - will, I believe, atrophy in the coming years. Just imagine what could be achieved through these kind of partnerships. This kind of activity will dwarf the good done by traditional donor-led charitable work, which, at the end of the day, is limited by the amount of money people will give away. Which seldom goes above 1% or so of income. Solutions to problems which use the normal workings of the economy to create social change are so much more powerful - and do not actually require mass philanthropy to deliver.

For this reason I believe that social enterprise will, over the next 50 years, transform the face of capitalism. I forsee a blending of sectors between public, private and voluntary as all recognise the need to collaborate in new formats to tackle as yet unmet problems.

The real divide then will be between organisations that are entrepreneurial (whether public, private or voluntary) and organisation which are not. Viewed from 100 years hence, our current world will look as absurdly divided up as the world of the early 1900s does today.

Well, its 5pm and I think I have worked out what I am going to say! Its a splendid day outside and my aim to have this cracked by 7pm so I can put the kids to bed, take a brisk walk with the dog and settle down for the Champions League Final. Though I like Avram Grant (anyone with a connection to the Holocaust knows how little these things really matter) I am rooting for Man U. Not because I support them (I am Bolton-till-I-die) but because I like the fact that Man U are an `organic' club, not a bunch of assembled superstars. So come on you Reds!

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