Sunday, March 31, 2013

Why are most social entrepreneurs very young or very old?

Have you ever noticed that most social entrepreneurs are either very young or relatively old?  Not that many in the middle (say 35-50)?

This is because, dear reader, because you can only really afford to work in social enterprise when you are young and need very little and have no responsibilities (like me), or when you have made some money and can downshift.

I speak, of course, with myself in mind.  From the age of 25 I led, from scratch, a social enterprise that, by my late 30s  the best part of 200 people and turned over about  £5m.  

Financially I was, by global and even UK standards, in a fortunate place.  But I was struggling to meet a big mortgage, we were down to one  income,  two small children, no savings or pension.   

When I left, at 40, I needed to borrow £25k to finance my next business.  I had no capital.

This was tough.  Here I was, successful social entrepreneur and all of that - and having to start again without a pot to pee into.  

As my millionaire pal handed me that loan, I promised myself to ensure that any future business, social or otherwise, would be fully capitalised by the one I had created earlier.  

Fortunately, I found some backing 18 months in from NESTA (for which I am eternally grateful) - but I consider myself very lucky indeed not to have found myself on the job market.

So there you have it.  Being a social entrepreneur, at least in surplus-retaining enterprises, is a luxury of the very young, the rich and the pensioned.  I hope to join the party again one day soon, but only when I can afford to.  

Of course it shouldn't be like this.  Of course it should be ok to make it financially feasible for social entrepreneurs to put their whole careers into social ventures.

But  try telling that to the sackcloth-and-ashes types you find across the charity and social enterprise sector.  

They think you are a greedy b-----d for wanting than you need to survive and would rather you bugger off than receive more in reward, however critical one might be to a business.

Nearly three years into my new venture I am, I am glad to say, doing OK.  I had paid that loan back and am now, at 43, paying into a pension and,  hold your breath, overpaying on my mortgage each month.   

Thankfully I am, through my new venture Stepping Out, also helping to create social enterprises and through our Foundation  support early grass roots ventures with 'angel' funding. 

One day I plan to return to mainstream social enterprise, like many of those who come either from the City or long corporate careers, secure enough not to have to worry about the money side of it all.  

But it isn't ideally the way it should play.  

Better never to have had to leave at all.

Sent from my iPad

Friday, March 29, 2013

Will the social investment sector back the next Mark Zuckerberg?

Only the deluded would fail to  recognise that the public and social sectors have hit some sticky limits in moving the dial on the worlds most profound social problems. 

We can, course. take heart from the rise of brand new 'disruptive'  innovators such as Teach First which, over a decade, has achieved some system-change in the UK education sector. 

Also, thanks to the likes of NESTA, Unltd, the SSE and the Shaftesbury Partnership, we  see a lot of promising stuff riding over the hill..

But let's be honest here, this is still early in the day. The social sector in the UK is remarkably stable.  Barring the odd newcomer, the  names topping  the social sector bill today are much the same as 20 years ago.  Silicon Valley - or even Roundabout - this is not!    

Indeed the next Amazon of Facebook of the social sector is probably still working out of a bedroom somewhere.  Or, even more likely, the Mark Zuckerberg of the social sector is just coming to the end of a small social entrepreneur development award and wondering where it's next investment is coming from. 

  In fact he is dreading the panel he has to meet next month.  He is over-trading massively already (trying to show his model works) and he only has nights free to work on the five year P & L and cashflow being demanded by a po-faced group of former bank staff who are now running his social investment fund.  

In truth, he hasn't a clue about his P & L, or the scale-up potential of his model.  He just knows he has something which works and that he wants to devote his next five years to showing this to be true.   

The following week he actually meets the committee, they see his rather rough-cut plans, give him a hard time about the mistakes and send him packing on the grounds that this risks being good money after bad.  Everyone feels like they have done a good job and another sector changing idea quietly dies.  

 Our Mark Zuckerberg figure, now 30 and broke, is forced to get a job as a social enterprise investment adviser (there is always funding out there for those) and the world continues to turn.

The test of when the penny really has dropped in the UK social sector will be when we understand thst ideas that change the world need more than small development programmes, banking-inspired finance and highly conditional support.   

When, I wonder, will  we understand that very large bets need to be taken on people and teams, even when there is no real surity about where it's all going? 

In my view, we are a long time out from this.  Today's social innovator has to walk a fine line between telling a good story of revenue today and a ton of jam tomorrow.   If they can't do this, they don't get through the kind of assessment processes that are too hard too early (and indeed cost more to run than the amounts they invest).

My fear is that the emerging social investment market is going the way of the banking sector..  We hear that the large injections of capital coming out through various outlets under the Big Society programme are to be 'vanilla',  

This, I perhaps naively, take to mean straightforward, low-risk, semi-bankable.  Part of me is ok with that.  Easy to access, soft , unsecured finance is a very good thing indeed, especially in a capital-starved charity market which won't otherwise borrow.

  But I also wonder where the funding for the non-vanilla, the triple-choc-mint-and banana - really risky, dial-moving stuff is ever coming from?   Nobody seems to be into that space, except possibly for NESTA, at anything like the levels required to invest in big change.  

 Angel funding, which plays such a key role in the private sector, is still eluding most of the social finance houses. 

On a very micro-level, we at Stepping Out are trying to walk our talk.  Our Foundation (which recycles some of our profit) puts almost  all of its resource behind promising people and ideas at a stage where nobody really has a clue where it could all go. 

  If I ever have any serious money I hope I will continue to invest this way, before the business plan and all the suited, booted stuff about projections, revenue models and all of that. 

 There is a time for this, sure, but we often impose it way before an idea is really ready and, as a result, I suspect we not only miss a lot of good stuff but also tie long-burn innovators into short-term cycles that hold back their impact.

The test of our emerging social finance sector will be simple : will they back  the next Mark Zuckerberg?

Sent from my iPad

Saturday, March 23, 2013

Why Social Enterprise is the Future in Public Services

Social enterprise is the only real future for public services.  The challenge at the moment is that hardly anyone in the public sector understands this yet.    Some cling to the idea of an improved public sector offer, or quasi-business conducted by arms-length companies.  Others cleave to the private sector, as though that were the only way to delivery anything properly.    However, for a small minority, the penny has dropped - that the best form of delivery for the bulk of public services is neither public or private but something else - a form of enterprise which is independent, managed as a business but run for exclusively social purposes.

So what's so special about social enterprise?   Three things.  The first is freedom.  These organisations are independent and free to fulfil services as they see fit, whether these are spin-out businesses like Sandwell Community Care Trust (formerly Sandwell Council Day Services) or the scores of Academies now dotting the landscape.    Decisions quite rightly sit with the boards of these organisations and the professionals in them.  It  is pushed down to the  rather than sucked up to the wrong level.   While most us us understand the life-giving role of freedom in the private economy, many of us don't, somehow, realise that the same is required when it comes to public services.  As a result, politicians, and the senior people they appoint, create the opposite of freedom      When my company, Stepping Out,  sets up a social enterprise out of the public sector, the hardest argument to win is for its total freedom -in preference some semi-free arrangement with its former parent.   Freedom is the oxygen.

The second is the people-factor.   Services are made up, in part, of paid people.   People either like the organisations they belong to or they don't.   They either feel involved and valued and trusted or they don't.     For many complex reasons,  great numbers of people in public services do not  good about their organisations.    Despite years of investment and trying, the public sector has struggled to achieve the kind of buy-in necessary to really change the way services operate.  Social enterprises, by contrast, are, by and large, staff-owned and recognise the critical role of people in raising productivity, innovation and improvement.   Absence rates tell part of this story (far better than in the public sector) but also what people say about their companies.  It is no accident that several social enterprises are now listed in the Best Places to Work awards every year.

The third, and perhaps, the most powerful reason why social enterprise is the future of public services is that further improvements in our public realm (better public health, stronger communities, improved education, safer streets etc) depend not on more public services but more effective conjoining of public, private and community resources.   Sixty years ago, the poor state of public health demanded, quite rightly, the creation of a single national NHS.   Likewise, the patchy provision of education for working  class children necessitated Local Education Authorities and councils building schools.     Today, the challenges are different.   Beyond the provision of the very basics, pushing through to the next level in health, education and so on requires a far more nuanced approach to public service provision.    To enable this we need to create provider landscapes in all sectors which allow other types of provider to develop and to encourage types of provider - like social enterprises - which, in their very DNA, are built to recognise the often dual role of citizen as user and producer of services.   

Take substance misuse as an example.   This costs the country tremendous amounts in police, court and NHS costs, not to mention the uncosted misery to all involved.   No level of additional public services are going to dent that problem.   The main solution actually lies in helping those in recovery to support those still deep in the problem.   More structure and scale around things like abstinence-based support is probably our best hope both for the people struggling with addiction and for the taxpayer.    The organisations best-placed to add the necessary structure and scale are, yes, social enterprises, whether these be existing charities like Focus 33 in Bury St Edmunds (where Russell Brand came) or new ex-public-sector organisations like Spectrum in Wakefield.   Can the state also work in this way?  No, it can't - because, unlike civil society organisations the state isn't well-placed to put together the complex suite of resources needed to solve problems.   These comprise the efforts of individuals, their families and friends, the wider community, the business community and the state itself.  Crafting them into a person-shaped solution is what social enterprise, in its many forms, including spin-outs from the public sector is best at doing.

Despite the self-evident nature of much of this, the argument is a long-way off won in the long-corridors of the public sector.  Talk to many people in Councils, Whitehall or the NHS about social enterprise and you can count the seconds till they glaze over.   It's not just normally something they think about much.  They are still living the dream that their world is still intact when the rest of 21st century Britain has long since pulled ahead.   At very close quarters I see some Councils and parts of the NHS where the only way you can tell you are not in 1986 are the grumpy emails (copied into about 80 people) by which most communication appears to be done.   Practice around culture, management and customers are all light years behind where they ought to be.  

If this sounds like a counsel-of-despair, it isn't.  I am actually very optimistic about the future.   Things are now happening in public services that are showing the way.   This is being accelerated by the financial crisis in the public sector which is going to last well into the 2020s as the business-model of public services is eventually superseded by something far more sustainable and successful.

And the shorthand I use for that model is social enterprise.