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Moneyball and flash boys: social enterprise?

29 Jan

dataFirst post of the year, and the fact that it is almost the end of January probably reflects what a busy start to the year it has been – at SEUK, as everywhere, there’s a lot on: new people joining, working on strategy / business planning, policy work ahead of the election, next state of social enterprise research in full swing, plenty of delivery before year end, and events, dear boy, events. Yesterday, I was up in Salford with about 30 participants of our Health + Social Value programme, and then on February 3rd we have our Social Value Summit – a big conference in London to try and move the whole field forward. More to come throughout February + March, and more local events with members too.

All of which unrelenting pace means it was nice over Christmas to take time out to do a bit of reading, and get a bit of external inspiration and thinking in. Given my new role which started in January, I read Consiglieri by Richard Hytner which was OK, if a bit badly structured – there were some nuggets (highlighted ready to be Evernote-d), but nothing that earth shattering or insightful. Interesting to think about the interplay between senior people in an organisation, and what makes that work, and how different pairings and groups can work best together. But not sure the book added much to existing management and leadership literature.

More thought-provokingly if behind-the-times-ingly, I read both Moneyball and also Flash Boys by Michael Lewis (find more on both here). The former is all about ‘sabermetrics’, the data revolution in baseball and how it changed the sport for good. The latter is all about how technology (and the people in charge of it) changed, corrupted and made a mockery of the stock exchanges in the US and elsewhere. I’d recommend both – Moneyball the book is better than the film, with more of the tracing of the history (some data nerd back in the 70s stapling his own publication together), more depth in the surrounding characters, and more detail on how it actually works. Of course, all of that would have made a more boring film, but it makes for a great book. My takeaways are: don’t assume what you’ve always done (+ taken to be right) is the right way, or always will be; don’t underestimate what data can do for you (but also use it in combination with gut, feel, instinct + heart); and don’t think you can’t win with fewer resources.

Flash Boys is genuinely terrifying – I don’t feel capable of explaining it here, but basically clever programmers + traders exploit microseconds of difference in the speed it takes for trades to travel along broadband / cable lines to manufacture profits for themselves in between buyers and sellers of stocks. And financial institutions create their own ‘dark pools’ (basically closed exchanges) in which the customer has no transparency, but is promised said financial institution will get them the best price – strangely, they tend to rip the customer off…who would have thought? I thought having read a couple of books about sub-prime and collateralised debt obligations that I had read about the lowest to which financial services could stoop + over-complicate; but this stuff is quite extraordinary. Blatant screwing of the individual, of the smaller company, and even of large main customers – and basically buying up the exchanges + regulators to the extent that no-one can change it.

What’s interesting about it is that it takes all skill out of the process – there is simply technological exploitation (admittedly very cleverly designed technological exploitation), no understanding of markets, analysis of companies, building of relationships, gathering intelligence, or applying of experience; just quicker fibre optics + algorithms. I’m not sure what I took from this book, apart from raised blood pressure – a reminder, maybe, that while we look at methods of investment + financial products in the social sector, we should be careful what we import and what we seek to emulate.

It’s got me thinking a lot about the unintended outcomes of new technology too – I wonder whether, as Stephen Miller has written recently, we need to be thinking about the ramifications + potential of ‘tech for ungood’ as well as ‘tech for good’. But at the same time, I’m hugely encouraged by the potential of data (again through advanced technology) to better inform and influence our knowledge and our decisions. Given we do (some of) the leading research on social enterprise in the UK, we need to up our game on data, follow the money + help share it better so that the whole movement can use it: no small feat for the year ahead.

Innovation: why disruption isn’t the only option

21 Aug

GoldfishGoogleIn the world of innovation, Clayton Christensen is a big deal – his book The Innovator’s Dilemmahas been the bedrock of much innovation theory since it first came out in the late 90s. It’s central thesis about disruptive innovation (& how new technology disrupts old businesses because their existing value networks & paradigms don’t value the new stuff) and it has been hugely influential across business and a wide range of other sectors. Which is why it caused a bit of a stir recently when it was given a fairly public takedown by Jill Lepore in the New Yorker. Her take was that taking a rigorous, research-led look at Christensen’s theory identifies plenty of holes – not least that several of the organisations he raised up have since not done that well (while those apparently being ‘disrupted’ have since gone on to great things).

I’m not well-informed enough to know which side of the argument to come down heavily on, although my sympathies are with Lepore – captivating business theories aren’t often followed up and analysed fully (it will be interesting to see if we are *still* talking about changing the tax letter 10 years from now as the best case study of ‘nudge’ in action in the UK). It’s been similarly well-documented how many of the companies in Good to Great then went to Gone. Broadly, I’m with John Kay in the FT on the Lepore-Christensen squabble (see Innovation disrupted by warring gurus).

But the thing that stood out for me from Lepore’s critique was less about the strength of the research / evidence or otherwise (Christensen has pointed out he has updated his book several times since), but more her attack on the overuse and misuse of the term itself. As she puts it, “Innovation and disruption are ideas that originated in the arena of business but which have since been applied to arenas whose values and goals are remote from the values and goals of business. People aren’t disk drives” – that certainly resonates with me. In the social sector here, we do seem to have simply appropriated the term and assumed that we should also seek to achieve or find or foster disruptive innovation. Should we? Is what Christensen puts forward about digital cameras or steel manufacturing as easily applicable to mental health services or youth unemployment? Is the language and landscape of clusters, accelerators and incubators appropriate for the social sector?

I was struck by this when listening to a senior guy from Google talk to a room full of mostly social enterprise leaders about all things Google – how they innovate, what products are coming up next, building culture, not being evil etc. It was interesting & engaging, and there was the odd nugget or takeaway that I felt I might be able to apply or think about putting into action in some way. But I couldn’t help feeling there wasn’t much that translated; a feeling reinforced by one of the leaders afterwards who pointed out that it was a little bit different running an enterprise supporting the most vulnerable people with complex needs in a very disadvantaged area in England – the ability (& propensity) to take risk is entirely and rightly different; innovation very likely to be incremental not disruptive; 20% of time on innovation development a non-starter; minimum viable product a scary prospect..and so on. Even before we get to the difference in scale. Is Silicon Valley really the model for everywhere (& everything) else?

It’s prevalent – take this recent TED talk from Joi Ito which takes the Silicon Valley ‘model’ (& different iterations of it) as the model for innovation everywhere, in a vast swathe of assumption. Or, as another recent article put it, we have heard a lot about Zappos and the way their values and practices revolutionise business, but we have heard less about Zalando and their effective implementation. And our sector ends up talking about social silicon valleys and the like, despite a long and outstanding track record of creating organisations & movements that create social change – Amnesty, Oxfam (& countless other major charities), Open University, the co-operative movement, the Big Issue (& accompanying network of street papers), fair trade, and many more. It’s primarily supposition that more innovation infrastructure, or mimicking venture capital in all its forms will lead to any acceleration in the continuation & growth of this track record.

The other error our sector seems to be making is often conflating innovation with technology (and in doing so, often with novelty). Got an idea? Got an app to go with it? Score! Got an approach that works? It isn’t online? No score! [NB – this is exaggerated for probably limited comic effect] I’m a passionate advocate and user of new technology, and of course it is changing our lives in myriad different ways, and opening up new possibilities – but does it require specific focus to generate more examples? Or, as one recent post put it, isn’t every entrepreneur a digital entrepreneur now? Isn’t every social entrepreneur too? Maybe this specific focus is helping drive progress – though I’d like to see more money flowing to investment in technology that helps existing organisations have more impact; apparently the ‘systems investment for medium-sized effective charity/social enterprise’ doesn’t have quite the same pzazz as a new start-up being accelerated.

[incidentally, kudos to Local Partnerships who are piloting a social investment fund for investment in technology; it has a narrow-ish focus, being only aimed at spin-out social enterprises from NHS / Local Govt, but let’s hope other funders and investors see if there is room for similar]

It’s not just about the social sector, though. Innovation is everywhere – I’m a big fan of Santander at the moment, because they have really authentically engaged with the social enterprise world, and supported a good range of initiatives (including some with my organisation, SEUK) which are trying to address gaps and build markets. But their current account advertising baffles me: its claim is that it is three things: 1) Useful (OK) 2) Rewarding (OK) 3) Innovative (erm…). Why on earth would I want my current account to be innovative? Many other companies are doing the same – as if innovation (rather than reliability, customer service, responsiveness, better pricing, consistency etc) is simply a good thing per se.

Of course, this isn’t an argument for the status quo – we need new answers and solutions but we also need to use the ones we have already found (& evidenced) more effectively; and we need to improve and refine models and services that work, but could be even better. And we know that social enterprises innovate – sometimes through necessity, sometimes by happy ‘accidents’ and coming-togethers, and sometimes by design. Often they have new collaborations and partnerships at their core. Certainly at SEUK, our most meaningful forward-pushing work is done in partnership (often multi-partnership) – sometimes that makes it more challenging than going alone, but the outcomes are usually better and more lasting.

So this isn’t an anti-innovation rant. But it is a ‘let us think about (& foster) innovation in the ways that are appropriate and fit to us’ plea. Less catchy. As I’ve written before, Saul Alinsky’s Rules for Radicals says that the “The price of a successful attack is a constructive alternative“. I’m not sure this has been an attack, or successful, but here’s a go at a constructive alternative made up of several parts:

– let us celebrate and encourage incremental innovation (and the persistence and commitment it can require), giving them profile to rival the new start-ups and waves of entrepreneurs
– let us look at infrastructure & interventions that promote & incentivise collaboration, partnership and joint working; across sectors, seeking to create shared, collective social value (less bees and trees than constructing a hive)
– let us look at the best innovation practice from not-the-US: what are the best approaches from Europe, Asia and elsewhere? (have we given up on frugal innovation? where are the long-term approaches + thinking on diffusion / replication?)
– let us read + respond + give equal prominence to alternative voices: the work of Judy Estrin (the Innovation Gap) and Mariana Mazzucato (the Entrepreneurial State) as we do to the Facebooks and Googles (Judy Estrin is worth listening to as a counter-blast to the rest of Silicon Valley on this recent Peter Day podcast: Inside Silicon Valley)
– let us create funds for investment in IT and finance systems, and in training / networks for those in operations, project management and partnership roles
– let us support innovations seeking to change the market and operating environment so that all those start-ups can thrive in their chosen industry

Or we could wait for the hack hack and the Accelerator for Accelerators to be joined by a Lab Lab and an Incubator Incubator. And wonder whether the money spent is really helping the people and communities that prompted the action in the first place.

Growing an enterprising culture

26 May

Image[originally posted on SEUK website]

I’m looking forward very much to speaking at the forthcoming Evolve conference organised by NCVO and partners (including ourselves at SEUK). I’ll be leading a workshop on ‘Building a culture of enterprise‘ which, for me, is at the heart of building a sustainable, enterprising organisation. To put it simply, a legal structure or nice mission statement doesn’t guarantee you will deliver anything; or to quote the mighty Peter Drucker, guru of gurus, “culture eats strategy for breakfast

It’s also all too easy for those looking at social enterprise, whether they are starting up or starting out in the charity and public sectors, to view it in a very technical way: is it a trading arm? should we be a CIC CLG or CLS? can we TUPE the staff across? what board + governance will work best? And so on. Or the temptation (especially for start-ups) is to get obsessed with the business plan, with forecasts, with modelling and more – this ‘paralysis by paper’ was a not uncommon sight in my time at the School for Social Entrepreneurs, as people tried to get everything sorted before they started. Plans are important frameworks for overall direction and strategy – but, as the saying goes, no plan survives first contact with the customer…

So we are really talking about culture here: that people within an organisation feel the ability to spot, develop and pursue opportunities (in line with the mission), to take and be comfortable with risk (and reward), to be creative and problem-solve, to be flexible and responsive in their approach. I tend to think of culture as like an organisation’s ‘personality’ – like people, a culture can be rational and objective, shy and introverted, or outgoing and gregarious. Sometimes there are visible signs of this ‘personality’: how people dress, what the workspace feels like, mission and value statements. At other times, it is through actions and interactions that a culture becomes apparent: actions that say “this is the way we do things here“.

Over the last few years at SEUK, we have worked with lots of groups from the public sector spinning out as social enterprises, and many charities exploring a social enterprising approach: to all, the mantra has been that the culture is the important bit, not the technical process. At the same time, as an organisation ourselves, we have been undergoing a similar shift: the transition from having a large core government grant to being a real social enterprise ourselves with mixed, diverse income streams would not have been possible without a more enterprising culture – in every person, in every team. Many of our members have also likewise successfully developed a more enterprising culture – from 100+ year-old charities to 2000-employee spin-outs from the NHS.

How? Well, you’ll have to come to Evolve and the workshop to find out – but it involves strategies around challenge, validation, recognition and communication. And a surprising amount of repetition. And a surprising amount of repetition. And the willingness of great, committed, skilled people to come on the journey – fortunately there is no shortage of them in the charity and social enterprise world.

Economics, equality and enterprise: recent reading + links

11 May

came_here_to_be_inspiredI’ve been struck recently how very significant trends and evidence seems to pass the social enterprise world: we’ve got our own voluminous waterfall of information, announcements, news, analysis and reports to cope with, so it can be difficult to get time to look at the contextual stuff too. And yet quite a bit of it is very interesting indeed – particularly how, at the same time as social enterprise continues to interrogate its relationship to mainstream capital (often through the vehicle of social investment), that same mainstream capital(ist) system is being questioned quite fundamentally by places like the FT and the IMF and the OECD, and other important initials. So there is a broad theme here of inequality, economics and their relationship to our world. And some other stuff I thought was interesting :0)

– Martin Wolf writes in the FT about how A more equal society will not hinder growth – he bases this on a note from the IMF (pdf) which, to quote Wolf, found that “societies that start off more unequal tend to redistribute more; lower net inequality (post- interventions) drives faster and more durable growth; and redistribution is generally benign in its impact on growth, with negative effects only when taken to extremes”. I think this (and Wolf’s further analysis) is fascinating – in a sense, at the heart of the social enterprise movement is a belief that business can reduce inequality, increase social justice, and help everyone prosper. The IMF might just be backing that up. And the analysis could not be more relevant in the UK where growth headlines don’t tell the full picture.

– There is more on inequality here (via @JeremyANicholls) on the Public Leaders Network: The 2014 budget fails to deal with the deeper issues of inequality in Britain which talks about the OECD pointing out that the austerity implemented may be having good overall economic effects in the short-term (as per growth headlines mentioned above) but be storing up trouble and cost in the medium to long-term.

– Stephen Miller, Senior Researcher at UnLtd, has been taking a look at neolilberalism and social enterprise on his blog. It explores the relationship of civil society and the social sector to business paradigms, and what effect the current financial / economic climate might have on social enterprise, social entrepreneurs, charities et al: “Is there a danger that good ideas are left on the roadside because they aren’t in vogue, or because they can’t generate substantial financial return?” and “There is an argument to be made that, actually, the retraction of the State from civil society just displaces dependence, rather than creating more independence”. Well worth reading part 1 too.

– More geekily / narrowly, I was interested to read David Ainsworth’s take in Civil Society on the new Social Investment Tax Relief and how it might play out – he points out that there might be some gift and loan scenarios that make it an exceptionally good deal for lenders….much more so than those getting the investment?

– There’s more good stuff from Martin Wolf on the Astra Zeneca-Pfizer smackdown: Astra Zeneca is more than the investors’ call He discusses how it creates questions about ownership, control and who should make decisions (newsflash: he thinks the employees might have a say….I wonder where that happens more currently? #socent) [via @JohnHitchin]

– Dan Corry’s RSA lecture on How do we drive productivity and innovation in the charity sector? also warrants a read. Some of it is fairly unsurprising ‘impact measurement organisation recommends impact measurement as important’ shocker, but there is some more interesting stuff there too even if (again) it assumes that importing private sector practice and theory is right (creative destruction etc). I think the part about feedback loops (which plays to why stakeholder involvement / accountability is so important) and how little collaboration we see is spot on – we’ve been involved in some really big collaborative projects of late. They are *hard* but also the most important things we are working on. Much else to agree and argue with here…

– Elsewhere, business leads government kicking and screaming into the future. As politicians tread water on the environmental challenges we face (across parties), business takes it seriously because they are thinking further than May 2015 (or indeed, 5 years after that). Latest example? Lloyd’s of London calling on insurers to take climate change into account (via M&S’ Mike Barry: @planamikebarry )

– Meanwhile, this wouldn’t be a blog about economics if it didn’t feature Piketty (review in the Telegraph of his book, Capital), who is so de rigeur as to already be a cliché. Piketty also argues that capitalism as it is leads to inequality, and that the evidence for this is overwhelming. The response from the right I’ve most enjoyed on this has been Janan Ganesh’s call for ‘rational optimism’ and the Conservatives introducing a property tax – an unlikely prospect, perhaps, but interesting reasoning on the way there.

– And then, today, Ha-Joon Chang (of 23 Things They Don’t Tell You About Capitalism fame) returns to a theme he has covered previously: how students are demanding a more plural economics curriculum, and how we should resist anyone saying that economics is a ‘settled science’. And he challenges the ‘economics can analyse everything’ trend we have seen in recent years. Read more in After the crash we need a revolution in economics teaching

– And a final non-economics, non-equality one, but one that will undoubtedly be more useful than the rest, and usable tomorrow! – 7 rules for meeting up. I love these. Now if I could just stick to them….

The right blend: Minsky, Pinsky + Alinsky?

27 Apr

gapingvoid_wisdomIt’s very interesting working at both a type of organisation (a membership body / trade association) and also in a sector (social enterprise) that by their very nature tend to be lightning rods for debate, competing ideas, different expectations (from varied audiences). Trade associations and membership bodies obviously have lots of members of different types with different needs and differing thoughts on a whole range of topics and issues – regardless of best efforts, it is difficult to satisfy all of these at the same time, whether it is the CBI, the FSB, NCVO or our smaller selves at Social Enterprise UK. Social enterprise itself is where socialists meet capitalists, where co-operators meet competitors, and charity meets business – which leads to passionate, important debates about profits, ownership, intention, reporting and much more besides.

All of which poses some questions about what are the best or most successful ways to operate, both individually and organisationally, given that context. This is post-hoc rationalisation, but I think there might be a bit of a blend of things that achieves good results.

1) MINSKY – or the importance of common sense
I was listening to a podcast on the train recently, and it was a programme about an economist called Hyman Minsky (you can listen to the programme here) which discussed how he had largely been forgotten, but rediscovered in the wake of the financial crash – sometime after his death. There is lots of detail out there should you wish to know more about him + his theories (eg this BBC piece), but the crux of it is that he believed that the economic system was inherently unstable and that this could largely be explained by human behaviour at different stages of economic booms. As one economist said about him: “He was much more for getting your hands dirty in the real world. I think Minsky gave us the first sensible overview of capitalism ever, which had warts and all what capitalism is about.

This seems to me (in retrospect) to have been a bit of a thread for me over the last couple of years. First, trying to rely on common sense; second, trying to ensure we are getting our hands dirty rather than relying on assumptions (which has meant a lot more member interaction, and higher quality research); thirdly, being realistic and pragmatic in what can be achieved and what is possible. The mantra has been the oft-repeated ‘under-promise and over-deliver’ – we don’t always succeed on either front, but it’s been underpinning our work and approach.

2) PINSKY – or the importance of (individual) inspiration
Before I got into the disruptive, innovative, paradigm-shifting world of social enterprise (no, me neither), I worked at a small charity that made most of its money from signing publishing deals and selling books. The charity’s founder, an amazing man called Nicholas Albery, had a hundred ideas a day, one of which was about learning poetry by heart – both because it is good for the brain and for the heart, and also because you could be sponsored to do it (learn + recite) and raise money for other causes. This, in turn, led to a book (Poem for the Day) and a follow-up (the creatively-titled Poem for the Day Two) which I co-edited – the royalties still go to charity.

Recently, I found myself diving into some poetry books again, and came across one by Robert Pinsky (himself a pretty inspirational figure) called Samurai Song which speaks to me a bit of resilience, and individual self-reliance: “When I have no means fortune / Is my means. When I have / Nothing, death will be my fortune. // Need is my tactic, detachment / Is my strategy.

I’m not suggesting that everyone should go out and read poetry as part of the working day, but that we all need those beacons of inspiration, either from our past or our present, who give us strength or encouragement to carry on; and who can provide insight that you don’t get in the twelfth meeting of the day or a policy consultation response.

3) ALINSKY – or the importance of community
Of course, if you just hang out on your own reading poetry and being inspired, you’re likely to become insufferable to yourself + others, and even less likely to achieve anything. If there’s one thing that’s important in my job and my organisation, it’s being able to build relationships and work in partnerships and sustain communities of interest.

This is where Saul Alinsky, the godfather of community organising, comes into it. He went through a brief period a couple of years ago when our sector paid attention to his work (largely when Citizens UK’s campaign work started breaking through, and when the government’s community organisers stuff kicked off). But he’s been less talked about recently. I still think his Rules for Radicals bears some reading, even if it is more rooted in direct political activism – after all, despite the pragmatism and realism that’s needed (see 1 above), we are still trying to change things and change the world around us.

I particularly like Rule 10: “The price of a successful attack is a constructive alternative.” This feels to me entirely right: critique by all means, challenge and bust the myths, point out the imperfections…but have a possible answer or alternative ready too. This seems particularly appropriate for social enterprise, but we still see plenty from all sectors content to criticise without suggesting what they would do differently.

And what is underlying Alinsky is the belief that we are stronger together, as a movement or collective, than we are as individuals and individual organisations. Increasingly, I think all our best work (if most complex and sometimes slowest and most challenging) comes in partnership and through partnership.

That mix: of realism and sense; of inspiration and self-reliance; and of constructive partnerships. That’s the blend I’m aiming for at the moment.

[NB – Of course, the more cynical amongst you might just be thinking that I’ve chosen these three because they rhyme (with a nod to my previous poetry days), but you would be wrong. Besides, I could have included Gore Verbinski, David Wallechinsky and Natassja Kinski if it had just been about the rhymes. Next week, a post on William Hague, Martin McCague and Norman MacCaig for Tory cricketing poetry fans]

Social enterprise listening…

2 Mar

listenLast week I was getting the rail miles in – Cardiff, Manchester, Exeter and Cambridge planning, discussing, representing and speaking about social enterprise. Apart from giving me an in-depth knowledge on the exciting topic of “which railway company’s wi-fi is worst?” and checking out which parts of the country are still underwater, it also meant I had the chance to listen to some podcasts I’ve been storing up for a while or which I haven’t got to on the commute. There’s a lot out there (they’ll let anyone have a go these days – see here). So here’s some recommendations from recent listens:

Peter Day‘s programmes are always worth listening to; one recent one on ‘disability in the workplace’ featured John Charles of social enterprise Catering2Order >> download here

– The magazine Monocle has always struck me as the paper equivalent of a Hoxton hipster with an asymmetric haircut, but it’s actually a decent read with interesting content. I recently discovered their Entrepreneurs podcast. Episode 73 (they are now on 124) was on social entrepreneurship, and featured the House of St Barnabas >> download here

– Analysis is always worth a listen, though requires a bit more concentration than some of the frothier radio out there. A recent episode that was more interesting than I thought it might be was ‘The Philosophy of Russell Brand’, looking at the philosophers and thinkers behind the Occupy movement and more >> download here

– While we’re still on Radio 4, the Bottom Line is still a winning format: 3 CEOs / leaders discussing a particular industry or area of business, hosted by Dragon’s Den / Today maestro Evan Davies. It remains an aspiration to get an episode renamed ‘The Triple Bottom Line’, but until that happens, I’ll have to enjoy episodes like the recent one on MBAs or something that I remain unmoved by and sceptical of, the ‘Sharing Economy’ >> download here


– I enjoyed the Freakonomics books, and I enjoy the podcast too – it’s still a bit superficial and I still occasionally find myself ranting at it, but it’s well-produced, takes different approaches to subjects, and gets me thinking. And that’ll do me. Recent episodes have looked the Pope dissing the free-market economy and a conversation about how to Fight Poverty with real evidence >> download here


– Social Good is a podcast from the Chronicle of Philanthropy which looks at social media for the social sector (broadly). It’s not bad, if completely US-focused, for a UK audience – still some good tips + nuggets of practical advice to take away in amongst the mutual congratulation. And occasional stand-out episodes like the recent one on big data >> download here

– Finally, of course, you have the ubiquitous TED talks. To be honest, these vary substantially in quality and level of insight, particularly with the rise of TedX. And I think there is something to recent critiques of boiling everything down to neat soundbites. Arguably you know something has reached peak hype when it gets a talk (for example…). But there’s some gold in them there hills too – recent highlights have included a talk on ‘how to make companies productive in an increasingly complex world‘ (ignore the fact that TED felt the need to add subtitles because the guy has a French accent speaking English!). You should also check out Michael Porter (on business / shared value) and Michael Sandel (on morals / markets) – Sandel wins, IMHO. But I’m a sucker for self-deprecation and unassuming big achievements, so here’s Paul Pholeros on, well, fixing homes to make people healthy:


Trust, social investment, and the real definition debate

25 Nov

mission_drives_the_businessA couple of weeks back, I was on a panel at the Good Deals conference – it was an interesting and informative event, and Matter & Co had done wonders on the pricing (day 1 free, day 2 very reasonable) for social enterprises + charities. As David Floyd has pointed out since, this had some effect, though perhaps not as much as I expected. There is still a divide to be bridged clearly, be it of language, jargon, perception, location or relevance – there just simply weren’t many frontline practitioners there.

The panel I was on was looking at something that is both a hoary old subject and one of increasing current relevance: the definition debate. The premise was that social enterprise as currently defined (mission in governing docs; 50%+ income from trading; 50%+ profits reinvested / gifted to social mission; controlled or owned in interests of social mission; transparent in how it operates / reports impact) is not fit for this ‘brave new world’ of social investment. Primarily, this is based on the assumption that, because most social enterprises can’t give equity, they can’t get access to capital to grow or give investors exits in the same way. Which limits both their potential to scale impact, and the investor appetite and ability to get involved. See James Perry’s (good) recent piece for this argument expanded.

I do think there is a definition debate – but it is not about ‘what is a social enterprise?’ – that’s pretty much agreed; as I’ve pointed out before, there’s very little difference between ourselves, the SE Mark, SENSCOT’s code etc. on this. The definition debate is actually about ‘what is a social venture?’ or ‘what is a social business?’ I asked this at the event, and got no answers – did it mean they were companies limited by shares, but with their social mission in their governing documents? Did it mean they had committed to operating ethically and transparently reporting their social impact? Did it mean they had committed to giving a proportion of their profits to the mission, rather than shareholders? It is entirely unclear how they differ from a standard business, apart from in most cases (for now) the ethical values and purpose of the founding social entrepreneur.

This question has led to a discussion about ‘trust engines’ or ‘commitment devices’ which can provide trust to a customer (be they public sector, private sector, social sector) that they are really ‘social’. I also asked at the event if anyone could give me any examples of trust engines or explain what they are – no answer again. I’ve heard differing things – some have told me it’s about mission lock; some about reporting; some about what they do with their profits; some say it’s all three. Interestingly, none of these are anything new (they are all part of the social enterprise definition). Worryingly, one social entrepreneur running a social venture said on video that her ‘trust engine’ was “my personal integrity“; another told us that they would “go to the press” if the investors tried to change their mission. This isn’t encouraging, when these organisations are receiving public money and publicly funded support.

None of this is about social enterprise being ‘better’ than anything else; or necessarily saying that they do all of these things (reporting, reinvestment, operations etc) perfectly. But it is about knowing what we are talking about on the spectrum – blurred lines don’t build trust. If government money and social investment are going to flow to these organisations, rather than social enterprises and charities, should there not be demands on them or standards they have to reach / aspire to? Otherwise, how can we tell them apart from any other business, apart from some nice words? It’s been noticeable that Treasury seems to be going for regulated social sector organisations (namely CICs, BenComms, charities) to qualify for its tax incentive – even companies limited by guarantee (a non-dividend, non-shareholder owned structure) with a social mission enshrined wouldn’t qualify in that scenario. And yet we read articles about how ‘trust engines might be the answer’ to the tax relief? How, when we don’t even know what they are? It’s on a spectrum between baffling and mythical.

There is something even more critical at stake here – social investment wholesalers and intermediaries are under increasing pressure to ‘loosen’ up their criteria so that they can invest in ‘social ventures’ and ‘social businesses’ (no, we still don’t know what they are). In some cases, this is money that has been *explicitly* ringfenced and set aside for investment into social enterprises and charities. And yet, because “the structures don’t work” or because “there isn’t enough pipeline“, we apparently have to widen definitions and broaden the scope. Rather than continue to innovate and improve the financial products to suit social enterprises and charities (who might have chosen those structures for good reasons of governance, transparency, community ownership and much else besides), or work to find ways to reduce rates of return or its price, there is instead a rush to suit the models to the finance. As Nigel Kershaw of Big Issue Invest might say, we are at risk of forgetting that the finance is a tool – it is a means to an end.

Will those making the decisions look back and be saying, “Yes, those hundreds of millions were originally intended for charities and social enterprises, but that proved quite hard, so we decided to open it up to businesses that said they were social. That was a lot easier, although I couldn’t really tell you what they are up to now, or what impact they had. The financial returns were excellent, though.”

It’s a curious state of affairs – we are told that social enterprises can’t achieve scale; but two of our members between them (both charities / companies limited by guarantee) have raised twice as much social investment in external bonds this year than Big Society Capital has got out of its doors in total in its entire existence; the first six-figure investment of a new forthcoming energy-related social investment fund isn’t a company limited by share – it’s a CIC which has successfully raised several million pounds from a wide variety of investors. Community share offers are flourishing up and down the country, largely under-the-radar, quietly achieving great things in local areas through local ownership. Our own Social Investment Deal of the Year nominees demonstrate how social investment can provide appropriate finance to social enterprises and charities who need it – when the financiers have alignment of mission, and when the partners work hard to innovate and develop models that work.

It’s also a curious argument and position to take at a time when public trust in shareholder-owned, profit-maximising organisations is arguably at an all-time low (be that in banking, energy, or public service outsourcing). What we don’t need right now is woolliness and blurriness that confuses and doesn’t build any trust: the opposite is true. We also don’t need to divert money away from charities and social enterprises who badly need it, just because social investment isn’t working as well or as quickly as people might have hoped to start with. If I’ve learned anything in this sector in the last decade and more, it’s that things generally take a lot longer than we think – a little patience wouldn’t go amiss right now; nor would a little robustness and rigour. If the easy path was always the right one, we would all be doing something different.

This also isn’t about ‘purity’ or, as I read recently, being ‘cultist’ about social enterprise, as opposed to being ‘big tent’ (though I’m yet to see the evidence that those proposing social ventures / social business are larger in numbers…). I’d actually welcome a more rigorous definition of social ventures, so that we could more proactively advocate for what they do – they might not be able to join us as members as things stand, but obviously we would be hugely supportive of more businesses locking in social mission, reporting against a triple bottom line. operating ethically and transparently, and so forth…than not. Then you might get to a big tent of social enterprises and social ventures side-by-side, some suited to some areas (eg. NHS / public service delivery where public trust is paramount, so social enterprise is more appropriate) and some to others. Agreeing to disagree in some areas, but broadly aligned on how business itself needs to change in the round. But there is much work to do to get there – and we need to focus on the right definition debate.

Luck and doggedness

20 Oct

findsomethingKatie and I went to see a play at our local theatre the other night, which doesn’t happen that often – but it was excellent (see here for details of The Herd, written by Rory Kineear). And like all good books or plays or films, we came out talking about it, and it set me thinking.

The bit that stayed with me was late on in the play (#notaspoiler) when the grandfather says that life ultimately comes down to “Luck and doggedness…nothing more than that; sometimes good luck, sometimes bad, and doggedness either way”  – I may be slightly paraphrasing, but you get the gist.

It got me thinking about how this applies more widely than family + relationships (which is what the grandfather was talking about) and particularly how it applies to success in the world of work. My gut feel is that we tend to be extremely impatient in the world of social enterprise – that’s no great surprise, because most people work in this sector / movement in order to change things…and because the problems being tackled remain huge. And, on the one hand, that impatience can be harnessed usefully – it motivates, provides urgency, prompts innovation, and can lend a focus to action. But I’m increasingly thinking that it leads us to ignore history, not wait long enough for results, and be on the constant hunt for things that will accelerate change…rather than those that will sustain and deepen it in the long-term (see this recent article on social enterprise accelerators). And that we therefore underplay the role of both luck and doggedness.

I remember reading Forces for Good (a US book about the six practices of high-impact non-profits) which detailed how one thing the organisations featured had in common was a) the length of time the organisations had been going and b) the length of time their leaders had continued with that organisation. [Interestingly, I heard Andy Street from John Lewis speak last week, and he made the point how most corporate CEOs last around 2 and a half years, an extraordinarily short period of time; he’s currently in his seventh year…and is approaching 30 years total at John Lewis] Doggedness  – which I think of as commitment allied to persistence – played an important role in scaling impact….over a long period of time. Similarly, looking at the ‘scaling social innovation’ literature, one finds that most of the featured ideas or innovations that have scaled have one thing in common – they were at least a decade or more old. Doggedness and keeping at it, and making incremental improvements constantly, and big decisions when necessary, are a key part of success in this world.

The luck can manifest itself in various ways – it is well know that the amount of time you put into a bid or proposal is often inversely proportional to the likelihood of you being successful with it; chance encounters lead to opportunities where planned blueprinted approaches do not; the right government Minister at the right time can make huge change in an area of work (and vice versa); the perfect person can apply for that role you’ve struggled to fill…and so forth. Some of this, of course, comes through doggedness – keep articulating the impact of what you’re doing, keep going to those events, keep improving the quality of what you do, keep building relationships…and the ‘luck’ follows. But sometimes it is pure chance – and, like Royal Mail shares, luck can go down as well as up.

For me, and this may be a very personal view, it is about remaining open whilst being dogged – too often, the latter can mean ‘heads-down, narrowly-focused, on-to-the-next’…which can mean that opportunities, or lucky moments, are missed or not seized. Or the doggedness is only applied to operations rather than business development….this was part of my theme on a related topic, which I spoke about at the excellent Social Enterprise Wales conference in Cardiff last week. I was asked to speak about how social enterprises could innovate to grow and sustain themselves….the powerpoint is embedded below, but my key points were that innovation was about

– implementation, not a nice new idea…(innovation is often incremental, not radical + disruptive)
– staying open to new ideas and new learning
– making time for it to happen amongst the day-to-day
– collaboration – it’s easier to be ‘lucky’ the more people you know and work with…

and, of course, that change is both relentless and continuous…so you have to keep doing it. Or what another person on another day might call  being dogged.

Transparency and value

29 Sep

 lotsandlotsofworkI’ve neglected this blog (and its select band of followers / readers) for a few months – for which apologies; as I wrote a while back, when things start to get squeezed, it is the ‘nice-to-haves’ that go first, and this personal blog falls under that title.

So I thought I’d share a few bits of writing  elsewhere to fill the void that might be of interest:

– My Third Sector column on social investment ventured into the field of transparency this month, and why it’s important across the sector:

“August is traditionally the quiet month for news, but this can be an opportunity for charities and social enterprises: in the summer months it’s possible to get coverage for topics that might never happen when the political and football (and political football) seasons kick back into action. This summer, however, the sector has been in the media not at its own behest, but because of stories about executive pay and zero-hours contracts.

What struck me about the resulting conversations from this coverage was not so much the strength of views on different sides of the debates but that both sides were concerned with the internal operations of organisations, rather than the external outcomes or impact of their activities. This is something that Social Enterprise UK has always been interested in. We believe a social enterprise should be able to say “we are transparent about how we operate and the impact that we have”>> READ ON HERE


– In preparation for our Bristol event on Social Value, I wrote a piece in the Guardian about where we have got to in the 6 or 7 months since the Social Value Act became law:

“It has opened some new doors and prompted some new conversations – the act may not be as strong in its language or requirements as some might have hoped for, but its status as legislation has undoubtedly changed the nature of some dialogues and created entirely new ones. Again, not all of these have been about provider-commissioner conversations, but also about social enterprises advising and informing their peers, and those inside public bodies doing likewise. And we have heard plenty of examples at SEUK of frontline social sector organisations using the act as a means of opening (or renewing) conversations with key people inside public bodies” >> READ ON HERE


– Housing Associations play a key role in the regeneration of many of our communities, and some of the most innovative partnerships and practice can be found there. I wrote a bit about how housing associations and social enterprise could work together in Pioneers Post:

“What has become apparent during our increasing work with the housing sector in recent years is not only is there great potential in more joint working between social enterprises and housing associations, but also that there is a really significant alignment of values, missions and objectives – local community regeneration; job readiness and job creation; financial inclusion; environmental behaviour change; and much more besides. And yes, many housing associations consider themselves social enterprises themselves, particularly those with a close and established link to particular communities and geographical areas – pioneers like the Aspire Group in Staffordshire, Bromford Housing also in the Midlands, Shepherds Bush Housing Group in West London” >> READ ON HERE


– At Social Enterprise UK, I’ve also been working / heavily involved in a swathe of research reports + publications. Check out the following, starting with our own state of social enterprise survey report:

>> The People’s Business – SEUK’s own biennial state of the sector report

>> Spin Out, Step Up – a report on the finance and investment needs of the health and social care social enterprises that have spun-out in recent years

>> The Landmarc Difference – a total contribution / triple bottom line report for a private company working at the intersection of social, economic and environmental (done with our friends at CAN)

>> Breaking New Ground – an evaluation of Deloitte’s Social Innovation Pioneers programme, analysing its impact thus far, and recommendations for further improvement



So Unsexy – the drab realities of social enterprise + investment?

1 Apr

technology changesAlanis Morrisette, for those of you who didn’t stick with her beyond the highs of Jagged Little Pill, has a song on one of her later albums called ‘So Unsexy‘ – it’s not a wonderful piece of work, but I’ve been reminded of it quite a bit of late whilst beavering away in the social enterprise space, as we are deluged by the sexy, the innovative, the techno-phile and the next big thing.

This post by the ever-provocative and insightful Craig Dearden-Phillips inspired me to get these thoughts down in writing – in the post, Craig wonders whether the social investment marketplace would ever “back the next Mark Zuckerberg” in its current formation, and wonders whether in fact he or she is languishing away in a bedroom, filling in a grant application. Craig was pointing out that backing disruptive innovation is about risk and that there is no ‘social silicon valley’ equivalent in the UK of the kind of network of entrepreneurs and angels who take that risk over in the tech world of the West coast of the US.

It reminded me, though, that actually it is an extraordinarily good time to be a UK-located tech-based social entrepreneur. You could apply to:

Wayra UnLtd
Bethnal Green Ventures
– Google’s Global Impact Awards
– Big Issue Invest’s Tech for Good Challenge
NESTA’s Innovation in Giving
alongside existing pioneering funders like Nominet Trust who focus on this area (and support some of the above) and programmes like Big Venture Challenge that have traditionally had a decent-sized tech slant to them.

This, in my opinion, is a good thing – we need to understand how we better use technology for social good, and put as much resource + energy into that as we do into understanding its potential for neater apps and better games. Where I work has its own slew of tech-based product + service ideas that it wants to implement. And I’m an absolute technophile, excited about all the latest developments (see my latest column on the potential of technology / peer-to-peer in social finance, for example). So the following should be placed in that non-Luddite, ‘not an either-or’ context…

…because I can’t help feeling that we are neglecting, or at least not putting similar sizes of resource, into other, less ‘sexy’ areas. The social enterprise that’s excited me most over the last few months is the Bounce Back Foundation – it does painting + decorating (and other manual work), and employs ex-offenders. And it does it very well. Another which I came away from completely inspired is Fusion 21 – a procurement and housing social enterprise, which uses purchasing scale and aligned social mission to create employment and training. It is fantastic – financially resilient, scaling social impact (1000+ jobs created), and spreading out from its North-West roots to other locations. And creating (real) apprenticeships in construction too.

I could go on with other examples, but what connects these two (though at different stages + scales of their journey) is a) their focus on employment and b) their focus on the mission / social impact; really, painting & decorating and procurement are, in this instance, just means to an end of employment, reduced re-offending, job readiness and so forth. It’s the old “we don’t hire people to bake cookies, we bake cookies to hire people” deal. They are rooted in practicality, and tackling some of the most intractable problems we have right now: youth unemployment and reducing re-offending.

I can tell you where the next socially-minded app or game might come from, or even the most brilliant use of technology in healthcare or crowdfunding which revolutionises its field; but I’m struggling to see where the next social enterprise plumbers, the next social enterprise construction firm, the next social enterprise farm, the next social enterprise garden centre (to add to Social AdVentures), the next housing refit social enterprise, the next loft insulation social enterprise….and so on.

This isn’t arguing for switching investment away from technology – but, to generalise horribly, the things that make it so swift to scale (low cost base, few people needed) also make it less likely to create jobs and employment on the ground. And if the financiers all pile in to tech, because of that potential to scale rapidly, rather than grow incrementally, we may miss a significant opportunity for social enterprise to tackle the biggest problem the country faces right now. It might not be sexy, but it’s hugely needed.