“Our time has come”

So proclaimed Social Enterprise Coalition, Chief Executive, Peter Holbrook, at Wednesday night’s RBS SE100 Summer Celebration. In his speech he also revealed that social enterprise got 19 references, compared to the voluntary sector’s 16, in the government’s Big Society document.

Evangelists for the social enterprise movement are certainly bullish – Holbrook is probably one of the more moderate voices of optimism – but the volume of questions about whether the movement in its current state will be able to live up to the hype is set to grow and grow.

SE100 is an exciting project but it’s one that provides as many questions as it provides answers. Rob Greenland has made some eloquent points on  SE100 and the issue of growth comparison. The final results of the growth table make fascinating reading but leave most of Rob’s queries hanging in the air.

Especially perplexing is the decision to foreground an RBS SE100 Growth Award that takes no account of the effect of the starting point on the challenges involved in delivering growth. Two of the three companies shortlisted for RBS SE100 Growth Award have turnovers (post-growth) of £53,198 and £103,159 respectively.

The challenge of moving from being a very small, semi-professional organisation to a slightly less small full time operation is a big one. It would be great to have an award that specifically recognises the achievement of those social enterprises that have been most successful in doing that but it’s hard to see the point of measuring their percentage growth against the percentage growth of organisations starting with a turnover of millions. There is no meaningful relationship between the business tasks that these different types of organisation are undertaking, and the challenges they face in delivering growth.

Aside from the weakness of the comparisons between social enterprises there’s the bigger worry that evidence of massive growth for very small organisations will be spun as evidence that social enterprises are inherently likely to grow more quickly than other businesses because they’re social enterprises rather than because they’re more likely to be really small.

Part of the reason why this kind of spin is wrong is that massive growth of really small organisations, unless there’s a huge number of very small organisations growing at that rate, has limited economic value. The experience of increasing my organisation’s turnover from £21,088 to £48,722 in 2005-2006 (an increase of 131%) and £48,722 to £114,538 in 2006-2007 (an increase of 135%) was massively important for me, my colleagues and the people we work with but it didn’t herald a brave new dawn for social enterprise, or even for social enterprise in the London Borough we were based in at the time. An organisation with a turnover of £10,000 growing 5000% has less economic impact than an organisation with a turnover of £1million growing 51%.

The other reason why the ‘social enterprises are growing so fast’ spin is wrong is that a key reason why many social enterprises have been growing so fast recently is that the government has spent the last 18 months pump-priming the economy – both through the schemes such as the Future Jobs Fund and through spending on public contracts – and also because many social enterprises work with unemployed people and the recession means lots more people are unemployed.  Contrary to what some sector evangelists suggest, social enterprise has not generally been growing ‘despite’ the recession, many social enterprises have been growing because of it. The pump-priming party will soon be over.

I don’t have a problem with the fact that many social enterprises are relatively small organisations. I’m proud of the fact that my organisation delivers high levels of social impact operating on the proverbial shoestring budget and I admire and am inspired by others who do the same. I also don’t think the fact that social enterprises work with unemployed people or receive government funding is a bad thing. What is a bad thing is to gloss over these facts and suggest that the social enterprise movement is somehow in a position to save the UK economy or even significantly affect the what it operates.

It his concluding remarks at the SE100 event, former Dragon Doug Richard expressed his hope that the event marked “the beginning of the end of social enterprise” because ultimately all businesses needed to become ethical businesses. This is a worthy aspiration and is part of a discussion that, for commentators such as Richard, necessarily extends way beyond the world of social enterprise into the world of mainstream business.

The key role of the social enterprise movement in that discussion is to discover and deliver better ways of doing business that help to build a social responsible economy.  But a vital part of the ongoing process of doing that successfully is a closing of the gap between the hype about social enterprise and the reality.

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5 Comments

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5 responses to ““Our time has come”

  1. Hi David,
    You’ve raised some really good points here which is why the RBS SE100 Data Report, which is produced by Social Enterprise, the organisation I work for, has a special section dedicated to the 50 largest organisations on the index and specifically makes the point that ‘growing from a £100k company to a £200k company is challenging enough. Growing from a £100m to a £200m company is another matter altogether’.
    We also point out that the average growth of the biggest 10 organisations on the index is 19.62 per cent, the average growth of the ten smallest organisations on the index is minus 0.35 per cent.
    We also have a special section dedicated to an analysis of the Future Jobs Fund and its impact on the sector and, as a knock on effect, the results of the index.
    You can download the report from http://www.socialenterpriselive.com/se100
    One more point, while your article has focused on the growth section of the index, don’t forget the index puts equal weight on impact, which we analyse through the matrix of impact measurement.
    The report is 64 pages but we’ve worked really hard to make it very readable, so happy reading!
    Thanks,
    Chrisanthi
    (assistant editor Social Enterprise)

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  2. beanbagsandbullsh1t

    Chrisanthi,

    Thanks for your response. I’ve read some of the full report and I’m looking forward to reading the rest of it over the weekend but, unlike scientists who produce research and that get them misreported and quoted of context by journalists, your team has the luxury of running whatever coverage you like on your report on your own website.

    And it seems reasonable to comment on the message that you are putting out to the 95%+ of people who read some coverage of SE100 but will not read the full report.

    The line you’re choosing to push is the fact that 100 social enterprises of varying sizes who have grown the most have achieved average growth of almost 80%.

    My line is that I thoroughly congratulate the people involved in running those social enterprises but I don’t think this information tells us anything very much about the impact of social enterprise on the economy as a whole, or about whether social enterprises are more likely to grow more quickly than other businesses.

    I imagine that social enterprises who haven’t grown at all (or whose turnover has decreased during the measured period) will not have been so keen to take part in the survey as those whose growth has increased. You’re measuring the average growth in turnover amongst the 100 of those social enterprises who want to tell people about their growth in turnover.

    And what is the % growth figure for the 100 non-social enterprise small businesses who’ve grown the most over the measured period?

    Your piece on the Future Jobs Fund (FJF) in the report is very interesting but I think the fact that- through FJF – the SE100 Growth Award winner Mow & Grow received 78.35% of its turnover in what is effectively grant income from the Department of Work & Pensions is under-represented in the coverage on your website.

    The plus side is that as Nick Hurd seems to think this kind of growth is a very good thing, the onus is on him and his colleagues to set up a fund to replace FJF to enable it to continue and be replicated.

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