You’d have to have been living on the moon, or at least in a world without access leading social entrepreneurs’ Twitter feeds, to have missed this week’s successful conclusion to the heated discussion between cloud computing specialists, Salesforce and (a substantial chunk of) the social enterprise world.
For those of you who did manage to miss it, Salesforce have been using the term ‘social enterprise’ to describe their social media products and the companies who make use of them. While some in the social enterprise movement had raised concerns about this before, it was Salesforce’s recent decision to seek a wide-ranging UK trademark that prompted UK social enterprise umbrella body, Social Enterprise UK (SEUK) to launch its campaign to protect the ‘social enterprise’ brand in response to growing demands from members.
Now, following a successful (ironically) social media based campaign based on around the Twitter hastag #notinourname, culminating in a lengthy phone conversation between Salesforce leaders and SEUK chief executive, Peter Holbrook, the technology company have backed down and will be both dropping their trademark applications and ending their use of the term ‘social enterprise’ to describe their products.
Social Enterprise Live quotes Salesforce CEO, Mark Benioff’s explanation for this about turn: “It was never our intention to create confusion in the social sector which we have supported since our founding. As a result of the feedback we received, Salesforce has decided to withdraw its efforts to trademark the term ‘social enterprise’. In addition, Salesforce will look to remove any references to ‘social enterprise’ in its marketing materials in the future.”
I have to admit that despite being a strong supporter of the #notinourname campaign, I’m (pleasantly) surprised that it’s managed to deliver the desired result in such a short time. This is partly because, based on past experience, it seemed inconceivable that any debate focused on the meaning of the phrase ‘social enterprise’ could: (a) serve to bring the social enterprise movement together and (b) be resolved successfully.
Of course, Salesforce wasn’t making a contribution to the ongoing wrangle over what types of businesses are genuine ‘businesses that trade to tackle social problems, improve communities, people’s life chances, or the environment‘, they were using the term to describe something else entirely – with potentially serious (unintended) consequences.
Even so, this saga has revived the question of whether we need a definition of social enterprise – or ‘a social enterprise – in the UK. I used to be strongly against the idea but the Salesforce dispute is just one of several recent developments that have caused me to change my mind on the issue.
I remain skeptical about the idea that we need a definition of social enterprise to prevent the rise of ‘bogus social enterprises’. This term is most commonly used to mean people appropriating the term ‘social enterprise’ to give their business credibility when its primary focus is to generate profit for shareholders.
My problems with that argument are:
(a) there’s still not very many situations where claiming to be social enterprise will, in itself, offer you a competitive advantage.
(b) in situations where it might help, there’s ways to make the point without needing to actually call yourself a social enterprise anyway.
The fact that private sector back-to-work contractor, A4E, have now (rightly) been banned from suggesting they exist primarily for a social purpose suggests that the combination of regulation and public scrutiny should be enough to prevent companies describing themselves in a misleading (deliberately or otherwise) way for a long period of time.
The bigger danger – and the one that leads me to support an official definition – is inconsistent use of the term by public sector agencies when describing the organisations that they are supporting or awarding contracts to. A prime culprit in this is the recently departed Health Secretary, Andrew Lansley. As discussed previously, the Health and Social Care Act 2012, amongst its many and varied sins, says that:
“a body is a social enterprise if—
(a) a person might reasonably consider that it acts for the benefit of the community in England, and
(b) it satisfies such criteria as may be prescribed by regulations made by the Secretary of State.”
On that basis, local authorities are empowered to give the contracts to deliver the new Healthwatch service to ‘social enterprises’.
The Department for Business, Innovation and Skills (BIS) has a different definition stating that: ”The term ‘Social Enterprise’ describes the purpose of a business, not its legal form. It is defined (by Government) as ‘a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners’“.
The clearly something going slightly wrong if the government’s definition of social enterprise is not even recognised by other bits of the government when drawing up legislation. But that’s because the BIS definition is not a legal definition, it’s what some ministers and civil servants have chosen to say, and some other ministers and civil servants are at liberty to ignore it entirely.
This matters now because of what’s at stake. Frankly, I couldn’t care less if, at various points in the past, woolly definition of social enterprise has led to private sector businesses receiving some free business planning training or a free Business Link mouse-mat. It’s more of an issue when there’s important services and serious cash involved.
There’s also the Public Services (Social Value) Act 2012, which will come in force next year. While being a social enterprise is no guarantee of providing additional social value, and not being a social enterprise is no guarantee of not providing additional social value, it seems likely that the fact that an organisation is a social enterprise may be a factor in commissioners’ considerations under the act.
The growth of the social investment market – however skeptical some of us might be about the way it’s currently developing – is another good reason for ‘a social enterprise’ to be defined for tax purposes.
I think the time has come for clear, inclusive legal definition that enables organisations to register as ‘a social enterprise’ and be regulated accordingly. Peter Holbrook and the team at SEUK have done a fantastic job leading the Salesforce campaign, getting agreement on a definition would be an even bigger challenge.