The End of Social Business - Or the Beginning?

I have spent the last week talking to bankers, VCs, donors, millionaires, entrepreneurs and academics. I have also, of course, been reading the papers and watching the telly.

What is abundantly clear is that we are in the middle of what will be looked back upon as a major change in our economic life and, arguably, the end of a particular kind of capitalism.

What is not clear yet, as the bullets fly and the shells explode is what the world will look like once calm resumes. While we are likely to see a far more regulated Eurozone-type financial sector, what will this mean for the `real economy' in places like the UK which, since 1986 have forgone a major manufacturing role in favour of financial services? What depth of recession are we going into? How many jobs will go? What will happen to houses and rates?

And, at a more granular level, what will this mean for third sector and social business organisations which, even durign the good times, were struggling to survive?Short-term, one sees the third sector and emergent social businesses as an expendable luxury, a bit like organic food. Great in the good times, cut back on the minute things get tough. There is more than a little truth in this. Charities and social firms will find their income down as people look to their pockets.

Longer term, the picture, I think, looks better. Taking aside the inevitable body-blow to social business in 2009-12, the concept of a better type of capitalism has never seemed more attractive. Indeed, has there ever been a moment before this when it has possible to ask, to insist even, that the single-bottom-line business model has seen its heyday?

Now, in this time of flux, I believe it is the perfect time to push for three things. Firstly, the reform of all corporate law (not just for banks) to demand clear publication of both social and enviromental bottom lines and extent of adherence to ethical business practices. Second, the creation a new kind of PLC which makes explicit social and environmental aims that rank alongside its financial ones. Not a CIC, as the assets would not be locked nor profits capped to anything like that degree, but something much more balanced than the typical share-value driven company we see in the FTSE 100 today.
Third, and finally, let's have a Social Investment Bank, a wholesaler of finance to capitalise the social economy. Never, in the era of the `bad-bank' has the case for a `bank-for-good', been more profound.

Even a year ago, there was no real appetite for most of this. Anyone talking about messing around with corporate law would have been brushed off as a socialist-interferer. Only CSR and other acts of voluntary partnership with the social sector were viewed as ways forward.

While we did see through CSR a lot of good progress and engagement (and Speaking Up is one major beneficiary of this), there is a strong argument that this does not run deep enough or wide enough to have a major impact on social problems. That the problems caused by certain company and bank activities far outweigh any useful outcomes from CSR.

This coming few years represents a great opportunity for the this deepening and broadening - and for it to be intitutionally embedded in law. The politics are are good now is they have been. Few beyond people like Sarah Palin now believe that unrestricted markets produce the best outcomes for people and society. Even the mainstream right in the US and UK acknowledge that the market needs stronger rules if it is to work properly - just like human beings need robust laws if they are to form successful societies. Indeed it is no accident that the most successful societies in terms of cohesion, interpersonal trust and personal opportunity tend to be capitalist ones - but where the extremities of the free market (income-inequality, a large underclass, poor life-chances, low social mobility) have been dealt with.

Arguably, it is countries like Sweden that have gone furthest in this direction though social solidarity there is expressed principally through a conflated state rather than an active civil-society. There, companies such as Nokia have a much stronger concept of corporate citizenship than, say Merrill Lynch or Lehmann Brothers ever mustered.

My own view is that social enterprise will develop from being a fringe activity at the edges of the third sector (protected by nebulous kite-marks etc), to a small but growing band of progressive businesses which currently are seen as mainstream corporates but are, in fact, changing quickly into something more balanced.
This crisis, if capitalised upon by lawmakers, will accelerate this trend so that within fifty years, we could end up with a corporate sector, underpinned by a sensible banking sector, which is as close to social business as I think we are going to get in this century.

Meeting the Mandarins

On Friday I am one of about ten third sector CEOs called by ACEVO to meet with the Permanent Secretaries of the major Whitehall Departments. We meet at Coin Street Neighbourhood Centre just near the South Bank. I arrive early and chat to the CEO of RDID Jackie Ballard who used to be a Lib Dem MP and thought the Commons was a pretty poor job compared to her current one.

Then they all arrived. Suddenly, I was having a coffee with Hugh Taylor, Permanent Secretary of the Department of Health and talking about personalisation of social care budgets. He's all for it (of course) but concerned that the provider market is still immature. Which is right. The big question is whether users holding the budget will force the market to become user-shaped. My guess is that it will take time, a process not an event. Big providers, whether private, public or third sector, all have business models to protect. Most of these services rely on large numbers to be viable. If some drop out to make their own arrangements, the whole service is at risk, forcing even those happy with the status quo to think again.
Which isn't quite the idea....Particularly when that majority are those least well-resourced to use their budgets well and there isn't another provider in the area.
Unintended outcomes comes to mind.

I manage to get Hugh Taylor to agree to meet. He want me to put together a group from the front-end of the supply chain in services to disabled people to discuss the issues with him and bunch of his top people. I agree to set that up. I am going to ask Jon Sparkes, the excellent CEO of Scope, who is also a Speaking Up trustee, Darren Fitzpatrick, a personal budget user (and Trustee of Speaking Up), one of the guys from In Control and at least one of the commissioners we are working with on our new service offering `life:unlimited' which aims to be a new-style service helping people to access the market and co-create new work, leisure and learning options using a personal budget.

The big messages of the day come from Stephen Bubb who delivers them with his usual verve. The third sector is ready to play a much bigger role in the life of our society and we, as its leaders, want to build a mature relationship with Government which goes beyond the usual blandishments. The day, in effect, was about developing respect, showing we were people Government could do business with.

Gus O'Donnell, Head of the Civil Service, spent the whole day with us. He was impressive, strangely classless for a senior civil servant and quite a bit younger than most of the Permanent Secs. His core point was that financially things will not be good for the next few years and that the sector has got to understand this. If I understood properly, the Government will simply not be in the market for pay-now-results-later propositions. In effect, we are being told to prepare for an era of austerity.

It was good to meet a range of top-level CEOs from the sector. Their quality was, I felt, pretty good, though quite variable. And there were some people I felt would have added a lot, such as Jon Sparkes of Scope or Cliff Prior of Unlted, who bring a high level of thinking to any occasion.

For once I managed to get home well before six only to find everybody out so instead unpacked my bag and lay down on the bed. I awoke, startled, an hour later by Ruby who was keen to demonstrate her tickling skills.

Suffolkated

I am invited to speak in Ipswich to launch a report on the state of social enterprise in Suffolk. I drive down from Bury St Eds with my friend and fellow West Suffolk separatist Mark Ereira Guyer.

Endevour House is one of those glass and steel monuments to municipal power which in place like this is the only such structure. Is the home of Suffolk County Council. The main endevour of its occupants is to impose a single tier 'One Suffolk' authority over all of us, removing all local democratic structures. A rival three unitary proposal was roundly rejected by the Boundary Commission. Apparently there are all sorts of creepy totalitarian things happening such as 'One Suffolk' staff groups to promote the idea beyond the council. When we get there it is clear that this is all that's going on. The place hums with it.

Into the gathering. Its the usual sleepy Suffolk mix of older charity types and deadbeat public sector lifers. The charitis feel social enterprise threatens their funding. The public sector worry about their jobs. That's about it really.

I decide to go on the offensive and declare myself a West Sufolk supporter and I got a few mock boos. That was as lively as it got.

I tried again and tld them to back winners and cut funding to nonperforming groups. Again, nothing.

All we had was this guy going on about why we don't publish every report in 17 languages, as though its 1986 and 7-7 never happened.

I leave before the end and head west, back to Bury.

Switching Sides

This week I make my first appearance as a columnist in Third Sector. Unfortunately it has meant I have had to say goodbye to the excellent people at Social Enterprise Magazine for which I have written for two and a half years. Telling Tim West, the Editor, that I was leaving wasn't good. He's one of the good guys who gave me my first break as a writer and I felt I was letting him down by leaving. Which, of course, I am. My preference was to do both TS and SEM but Haymarket (who own TS), insist that I had to choose. Considering they don't pay their writer this is a big ask but I can also see their point. SEM is a rival, of sorts, and they don't want to share a contributor.

So why jump ship? Well, the main reason is that the readership of TS is very large indeed in the third sector and, indeed, in the social enterprise sector generally. The column will be longer, more prominent and will enable me to speak on a wider range of matters than those linked to social enterprise (not that Tim ever particularly restricted me if I am honest). The final reason is that I want to speak directly to the charitable sector about a lot of things I believe it is getting wrong. Badly wrong. My first piece talks about how the sector needs to act now if it is to avoid major trauma in 2-3 years as the economy sours and the public finances deteriorate. I have plenty of others lined up. I won't be popular with some people but I think the sector needs someone telling it how it is.

My only regret is to leave a fast-improving Social Enterprise Magazine. I am compiling a short-list of excellent writers to suggest to Tim who, I hope, will still want to speak to me. I have offered to write occasionally for him on any subject at any time and I hope he takes it up.

There will, I am sure, be the odd eyebrow raised at this `defection' from SEM to a magazine focussed more on the charitable sector but, for the record, no slight is intended. My reasons, I hope, are clear.

Exhibiting in Frankfurt

I spend Wednesday at the European Venture Philanthropy Conference in Frankfurt. Up at 5am I travel with the irrepressible Benoit Vauchy of Permira who looks like he is used to early starts. As I worry about something happening in an advocacy project in Lincoln he is running the AA and Saga Group from his mobile phone. He is possibly 35. As normally the youngest face as third sector events I wonder if our sector is missing out on th e energy and talent of young men like Benoit.

I arrive at the conference totally shattere trailing in Benoit's energetic wake. The event, he tells me is held in the former HQ of IG Farben, pharamceutical makers appointed by Adolf Hitler to come up with Zyklon B, used to efficiently kill people in their millions. Miraculously the building, a neoclassical 1930s monument so favoured by the Nazis. escaped major bomb damage and became the HQ of the US Army in the immediate postward period.

today it is the university and host to 400 people from firms, social businesses and vp organisations across Europe.

Its a strange mix, a bit heavy on people from the financial sector and academics, possibly a little thin on living breathing social entrepreneurs.

This hunch is confirmed in our workshop where I feel like a rare exhibit brought out of its box into the sun. People were extremely interested, which was grea but because I was the only person they had met all day who was doing something with VP money and help.

I catch the plane just in time to Londons excelent City Airport and fall through the door exhausted . The dogs need walking and Wilf's been sick I am told by Katy. Oh,and make me some cheese on toast....
















piece of neoclaassi escaped major bomb damage and

Watching our Weight

These are wild, wild days. The chaos we are saying in the financial markets chills my blood. The future feels blown open. Everything is set up around a benign economy. This includes the third sector wbich I fear is about to catch not only a cold but possibly, at worst case pneumonia. Grants depend on the markets. The public finances beyond 2010 will be ruinous. While there will be greater scope for third sector provision, I also fear the pressure we are going to endure on our public sector contracts. Councils in particular just pass pressure downwards. My darkest fear is the evisceration of high quality orgs (like SU) which cost more than the lo-cost-lo-quality outfits.

So what do we do as a sector? The first thing to do is to shape our organisations so they are ready for a tougher climate. More efficient, leaner and keener. If we are to avoid enforced cutbacks of a fairly brutal nature we have a year perhaps to make difficult decisions now.

We also have to be honest about our lack of efficiency. In the good times, organisations - public, private or third sector - get fat. In some cases obese.

By 2012 I think we will be living in a different world. Four years of low to no growth, desperate public finances and high rates could leave the sector in a parlous state unless we act. NOW.

The Game is Up

I slagged Nick Clegg off the other day for a fairly bland speech to ACEVO members in Sheffield. However, this week he launched an excellent new tax policy for the Lib Dems. Tax cuts and smaller government. He's not the only one saying this. Alan Milburn, ex Health Minister, has called for a cull of Whitehall of 25% of headcount.


The idea here is not to create a nasty 19th century state but to recognise that the state has had its day (well, its century actually) as lead agent in public service provison.

Life for me throws up regular examples of why Nick Clegg and Alan Milburn are right.

Last night I was Guest of Honour at the AGM of a growing charity called Out and About. Based in Suffolk, they deliver exciting options for young disabled people. Their CEO, Steve Allman is a fantastic young talent who wants to grow it from its current £1 million to a multi-million outfit working right across the Region. I am so excited about Steve that I have just agreed to mentor him during the next year or two. He really is that good.

After my talk, Steve showed me round the building which Out and About share with Connexions. Till a year ago, Connexions was an independent company, a bit like a social business, albeit state-funded. Then it was taken in-house as part of some warped idea that this would somehow achieve joined-up-ness with the rest of the Council's derisory offer to young people.

One of the most depressing outcomes of this forced-takeover (this has happened everywhere) was in the internet cafe or Infobar which is jointly run by Connexions and Out and About. Once a thriving place, this is now much quieter and less well used. Why? Because the council says its OK to go on most sites except...get this...Bebo, MySpace and Facebook.

Now, I am not particularly `down with the kids' but even I know that young people essentially live their lives through such sites. Apparently, Steve tells me, the council are worried about their liability if a kid ends up being groomed by a paedo on one of their PCs. Their concern about a `Kiddy Fiddler on Council Laptop' headline outweight all others. Even for the kids themselves who end up using other facilities, presumably with no limits at all on viewing. But this is OK because risk to the council has been eliminated.

It is this sort of specious logic that makes so many people want to stop paying so much tax to organisations that think its OK to behave this way. Yet this is what happens when you give the state the right to become a monopoly. It serves its own interests, not those of the people. Or the kids, in this case.

While I am sure you get a bit of this in the third sector, its not nearly so pervasive and the lack of monopoly means organisations not delivering soon get found out. And I know for a fact that Steve would lift this ban immediately were Connexions outsourced to Out and About.

Now there's an idea...

Pravda

I went to a charity shop in Bury St Edmunds this week and bought a an old copy of Pravda, the official Soviet newspaper from 1988.

It was in near-perfect condition and after putting the kids to bed last night I sat down and immersed myself.

One article particularly made me smile. It was about this biscuit factory in Kazhakstan which was turning out biccies that nobody could eat because they were so foul.

The article earnestly spoke of the waste of resources this entailed and listed what needed to happen. There should be proper monitoring of quality, targets set and penalties for enterprises whose biscuits didn't meet them. Individual plant managers should be named and shamed. Possibly made to eat their own repulsive products! This would sort out the problem. It didn't of course and we all know what happened to the Soviet Union.

But doesn't this list sound familiar? You will find it in any report you read about Britain's failing public services. Just replace biscuits in Kazhakstan with MRSA or people with learning difficulties being killed by the NHS.

Thankfully all the parties now realise that you don't get change by exhortation, targets and bullying. Everyone now realises that you get better hospitals, schools and social services in the same way you get better biscuits. By empowering the customer not with platitudes or focus groups but by giving them hard cash to spend as they choose between competing suppliers.

In one magical stroke this does away with the need for phalanxes of regulators and quota-chekers. All you need is people talking to each other about what working best for them. Word gets around. Even, dare I say it, among poor people, most of whom are not as thick as the Guardian-reading intelligencia think they are.

These people (among them many readers of Social Enterprise) worry too much about the implications of smashing up public services and just giving people the money to make their own decisions. And the the cleverer ones among you make some very convincing-sounding arguments about postcode lotteries and the poor losing out etc.

But the truth is that the poorest and most marginalised have most to gain by financial empowerment. We have seen it in the personal budgets pilots in social care. Those who have had the dog-end of public services see the biggest improvements. It is the middle classes, who've always found ways round the system (the timely house-move, the first-names relationship with the Director of Social Services or editor of the local rag) who have most to lose.

And here's the challenge for social business people: ARE YOU GETTING ON THIS BUS OR NOT? Are you willing to get your hands dirty and try to deliver better public services than the state has tried and failed to do? Those that bite this particular bullet will add to the choice and diversity in public services for all people.

The rest, I predict, will just be consigned, along with Pravda, to the dustbin of history.

So which side are you on?

Shimla Pinks

Is Manchester's best Indian restaurant - and not a social business. Its a highly stylized , slightly brash place, typifing the confident new Manchester which I still feel stunned by when I come here.

The Manchester of my youth was drab, inward-looking and still bore the after-effects of World War II. Today it is full of place like Shimla Pinks and the buzz of knowing it is England's true second city.

Here, on Thursday night, I meet the irrepressible Doug Cresswell, founder and CEO of Pure Innovations, one of the biggest success stories in social enteprise - that, of course, nobody south of Knutsford Services has heard about. That's probably because they are based in Stockport and Doug spends most of his time building his business rather than (like certain others!) going round telling people about it.

I first met Doug, funnily enough, at a niche learning-disability conference where we were both keynoting. He was there telling the story of how he used to work for Stockport Council and then, after a couple of years plotting, took its shitty, traditional day services lock, stock and barrel, into a brand new firm, Pure, with a remit to get every single person into work. And you know what, he near as damn well did it. Not only in Stockport but now in other areas of the North West and now in London.

Like the very best social entrepreneurs, Doug is fuelled by a big belief. His is about the importance of work to a good life for those born with a learning disability. He has zero-tolerance for the failed policies of the past and has no hesitation in publicly denouncing local authority staff as `turkeys' who think they are owed a living.

Interestingly, local authorities around the UK love him and ask him to come and call their staff turkeys too. He gets away with it, I think, not only because he's an attractive personality but also because his overall message is a positive one. That it doesn't have to be like this. That with the right leadership, ideas and the proper direction of effort, problems can be solved.

Like a lot of northern social entrepreneurs, Doug tends to be ignored by the sector media and he isn't near enough to town to schmooze with the new social investment community. Yet he's as good as nearly all of the Ambassadors in terms of what he's done.

And not short of ambition. He wants to grow Pure from £6m to £15m in the next five years and is hungry to hear about our experience with Impetus Trust. I promise an intro, not only to them but to others I know. Doug has all the qualities these investors look for. He's got form, integrity, he is there for life and his ideas are road-tested. Watch that space.

Earlier in the day I had been in Barnsley with two of my staff, Jenn Kiernan and Natalie Hemingway, plus a former service user, Martin Piper, who want to spin-out a mental health helpline service currently run by Speaking Up into a new social business. I am impressed by their plans and we hook up with Rob Greenland who is, I hope, going to be supporting them to find a finance cornerstone.

They are going to become a CIC and have just two Directors. Good move as far I was concerned they might encumber themselves with a Trustee type set up. Jenn, who is going to be MD seems to have the kind of natural acumen and energy to make it work. Like many of our people, she has a great story which involves two foreshortened stints at Oxford Uni and 18 months working in Dolce's shoeshop in Meadowhall, Sheffield before geting to us. I am proud that we still find people like her - and prouder still that we are still willing to support them to become independent social entrepreneurs if that's what they seek to do.

Afterwards, Rob takes me for a beer and we discuss how it feels to be in social business for ten plus years. We're both moving towards the idea that the good you do is the good you are, regardless of the structure you operate within. Widening the tent to include progressive privately owned business is, for both of us, critical if social business is to move beyond the margins.

On Friday I visit Sheffield where I went to an ACEVO do with Nick Clegg speaking. I had to say I was underwhelmed. There was something unconvincing and lightweight about him which I couldn't get out of my mind. This was a big disappointment because I like what he writes and how he thinks. He just didn't seem big enough to me. Perhaps the Lib Dems have chosen the wrong guy, or gone for him a bit early. The other guy, Huhne, while boring-as-fuck, does seem to know his stuff and carry himself well.

The rain which became the floods started that day and thankfully I drove home without incident. Seeing Ruby (2) and Wilf (9 months) after three days was a delight though my response to them tends to be strongly related to the weather. If we're all stuck indoors, the days pass at a glacial pace. I now have a week off and if the forecast is right it is going to be long week ahead.

The week ends sweetly enough with an email from Patrick Butler at Guardian Society with a confirmation that they are going with a piece from me in Public Manager on Wednesday. Upon hearing this, Katy chooses to tell me she has just spent the fee on a new car-seat for Wilf.

Like most women,Katy knows the importance of timing.

Happy Wanderer

Saturday's experience in the Chairman's Executive box at Bolton Wanderers Football Club was all that could be hoped-for. Except of course for a BWFC win.

My team famously lacks quality and relies on physical strength to win games. In the words of veteran sports commentator Stuart Hall, who I meet afterwards: "Come to the Reebok Stadium, home of Rugby League, and get a kick in the Grampians".

Tonight I am back in the North-West. I am on a three-day Roadshow going to see our services and commissioners across the North of England. Today I was in Lincoln, tomorrow Barnsley, Thursday Sheffield.

On Tuesday I spent the day with a fascinating group of Speaking Up people on a brand new initiative we're calling Our Vision Our Future. This is all about our strategy for the 2010s.

The exciting thing about OVOF is that brings together people from right across Speaking Up, from the SMT to the Admin Team, from Barnsley to Cambridge, from Trustee through to Service User.

To introduce some new eyes I have also invited Commissioners, Funders and people from business to help us wrestle with the big challenges. We are being assisted by a superb agency, Impact Beyond, a social enterprise consultancy specialising in strategy.

So what are the challenges? In part they are the same as for all other organisations. Dealing with a recession. Coping with an uncertain political environment and major cross-cutting changes in policy. Getting to grips with a fast-changing society.

But some of the challenges relate to our rapid growth from a local to a national organisation:

How we grow to reach 000s more people without losing the heart and soul of the organisation.

How we remain edgy, fresh and opportunistic when we're having to add more structure and system to the way we operate.

How to free our people locally to give their best while maintaining a degree of `oneness' to the organisation both in terms of culture, profile and economies of scale.

What came across very clearly from the day is that we have something very precious at Speaking Up, something disabled people really like.

Our disabled Co-Chair Phil Tatt summed it up when he said that we are trusted to make a difference to people's lives that they remember and feel as real.

As a Founder, I couldn't agree with that more. The acid test of everything is how well we deliver. The challenge is that we don't have the mechanism of the market, in its purest sense, to tell us this.

The people we help can't really go elsewhere if we happen not to get it right.

Instead, in teh absence of market-signals, we make do with a combination of tools which, in combination, give us a bit of an idea of how well we are really doing. But its guesswork much of the time, something I find quite hard to deal with on a personal level.

That's why I think its so important to find better technology for capturing user experience, collating it and feeding it quickly back to staff and managers.

Until we have this in place, all we can do is work hard on our people's values & ideals, pick the right people, deliver the right kind of management and systems and hope that our funders keep up the pressure, on behalf of our users, 99.9% of whom do not have the marketplace power that funders do.

When all these stars are in alignment the results can be stunning. Achieving this alignment, however, is a beast of a task and, as a CEO you have to run very hard to get near it.

We are lucky. We hit far more often than we miss. Unfortunately, failure in the third sector is often hidden. Organisations that don't deliver are not punished in the way a failing business is. It is somehow more difficult to close a failing charity than a failing business, as though to to do so hurts the beneificiaries.

Actually, nothing is further than the truth.

I found out today that some kind soul has nominated me for Most Admired CEO. Given that I am not against Shami Chakoravorty or Victor Adebewole (the A list of the sector) I may even have a chance.

Even if I won, I doubt I would be more touched than I was when I found out via a text from a mate, that someone had put me forward.

Whoever you are, THANK YOU.