Cold hard times

“It’s a cold, hard world love
these are cold hard times”
Lee Hazlewood, Cold Hard Times

Anyone in need of a reminder of the fact that cold, hard times are ahead for the social enterprise movement would only have needed to turn up at last week’s Voice 11 conference without a warm coat. Chilly conditions aside, though, David Ainsworth is right to point out that the stellar cast of government ministers turning up to the Social Enterprise Coalition‘s (generally well organised and  positive) flagship event underlines the increasing close relationship between social enterprise and the government or, at least, the increasing extent to which the government is looking to social entrepreneurs to ride over the hill and save the nation from the catastrophe of cuts.

In this context it’s worth having a look at the role of the people who populate many of the stalls at social enterprise conferences, the group of organisations described by The Young Foundation in last August’s Nesta-funded report Growing Social Ventures as ‘social venture intermediaries’ (SVIs). Organisations that help social enterprises and social entrepreneurs to do social enterprise.

I came across Growing Social Ventures a few weeks ago after Alister Grimes of Rocket Science had a series of strong points to make about what he felt were its deficiencies. While it may be true that, overall, it’s not the best report that the esteemed Geoff Mulgan will ever put his name to, there’s lots of really interesting points to consider.

The one that amused me most was the apparent views of SVIs – at least those interviewed – on the people that they work with:

“There was a broad consensus amongst our interviewees that many of the current generation of social entrepreneurs are lacking in basic business skills. Intermediaries need now to focus on training the next generation of social entrepreneurs – bright, talented and ambitious young people who can learn to develop a basic business proposition and clear understanding of a social need.”- Growing Social Ventures, Page 8

Obviously as a paid-up member of the dim, talentless and unambitious current generation of social entrepreneurs, I’m hardly an impartial critic of that broad consensus but I hope my partiality doesn’t prohibit me from raising a few questions related to it.

My route to first of the question involves accept that part of the charge is correct. Surveying the market place in the 2005 and 2010 with the options of: (a) trying to start a social enterprise delivering positive social change for disadvantaged people and communities or (b) starting a consultancy offering support to other people trying to start a social enterprise delivering positive social change for disadvantaged people and communities, someone whose primary concern was paying the mortgage and getting home in time for dinner would probably not have chosen option (a).

So, my first question is, do the people who support social enterprise (those who were interviewed for this paper) think social entrepreneurs lack ‘basic business skills’ partly based on the fact that they made the recklessly idealistic decision to become social entrepreneurs (rather than intermediaries) in the first place?

My second question would be, if those SVIs that were surveyed really think many current social entrepreneurs have failed to pick up basic business skills in an unlikely-to-be-repeated era of government funding for SVIs to help social entrepreneurs to develop basic business skills, whose fault is that and what’s likely to happen now there’s no money left?

But a third – and probably more important question – this ‘consensus’ raises is  ‘what basic business skills do social entrepreneurs actually need?’

I’m highly dubious of the idea that we need a generation of social entrepreneurs who are (primarily) really good at generating spreadsheets and writing business plans. That’s not because I believe the opposite – successful socially enterprising ventures do need spreadsheets with numbers that add up and business plans that make sense – but because we risk forgetting that these business skills need to complement rather than be a substitute for knowing what you’re doing and why you’re doing it.

Whether someone is trying to run a social enterprise, a corner shop, a council library or the church coffee morning, one way or another they either will or won’t be able to successfully work out (and continue to understand) what they’re providing, who (hopefully) they’re providing it to and how it’s going to be paid for. That’s the business skill that matters most but, given how difficult it is to get right and keep getting right, I’m not sure I’d refer to it as ‘basic’.

One of the biggest dangers in a climate where lots of things are going wrong and social enterprise is meant to make it all okay is that people will be poorly advised on whether whether what they do is more like a social enterprise (a socially useful business that can at least come somewhere near to sustaining itself through trading activity) or more like the church coffee morning (a positive small scale volunteer-led activity).

The challenge for SVIs is to support social entrepreneurs get a more refined sense of the practicalities what they’re doing so that – whether or not they need to form a social enterprise – they can either find an effective way of meeting a social need. I’m sure this is a challenge that most of them will rise to.

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3 Comments

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3 responses to “Cold hard times

  1. Couldn’t agree more, David. I hasten to add that, though interviewed for the report, that particular comment doesn’t reflect what I said. As you can imagine, I emphasised the need for a broad range of access / diversity in the movement. After all, it was largely people with business school MBAs who ran the various financial institutions that went belly-up….

    I do think there is a need for more business-like rigour at times (including at SSE): the realities of cash-flow, financial management, pricing, selling etc. Sometimes I think the movement is a bit too forgiving of nice people with a nice idea doing nice things. There are *specific* areas to target, though; a generic “basic business skills” is unhelpful, really: do they mean understanding finances? people management? strategic planning? sales and marketing? and so on.

    This comment may also reflect the background and experience of many of the SVIs (particularly the financiers). Perhaps the entrepreneurs might turn round and say that those SVIs are lacking in a “basic understanding of our motivations and the realities of the community we work with”. Just a thought :0)

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  2. beanbagsandbullsh1t

    I think they might, Nick. Not least because – while I’m all in favour of socially enterprising approaches to conventional market-based business and think there should be more of it – most social entrepreneurs are currently focused on finding relatively financially sustainable ways to do something that, from a conventional point of view, there is not a clear business case for (in that it’s unlikely to make a profit).

    Some people running SVIs might think that’s the wrong approach but if they think that most social entrepreneurs are doing that because they lack business skills – rather than because they’ve made a specific choice to do something very difficult – then they probably need to do a bit more market research on the sector they’re attempting to serve.

    Agree about business-like rigour – both in general and it terms of being an area where SSE could improve it’s already very good programme.

    (In a professional context) I’m as unsympathetic as you to nice, well-meaning people with arse/elbow issues, I’m just concerned that a focus on ‘basic business skills’ doesn’t help to resolve those issues or identify the social entrepreneurs who would benefit most from support.

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  3. What can I say David, other than repeat below something posted online 14 years ago, describing the profit-for-purpose model It came from a businessman who pitched it as a replacement for nonprofit and alternative to the laissez faire form of capitalism. Everything done since has been built on research analysis and formal business plans. Geoff Mulgan travels the world talking as if this new capitalism has yet to be discovered in a parody of the Wizard of Oz.

    After using this to leverage a microfinance iniititative in Russia, we introduced this self-sustaining approach to the UK in 2004.

    ‘The P-CED concept is to create new businesses that do things differently from their inception, and perhaps modify existing businesses that want to do it. This business model entails doing exactly the same things by which any business is set up and conducted in the free-market system of economics. The only difference is this: that at least fifty percent of profits go to stimulate a given local economy, instead of going to private hands. In effect, the business would operate in much the same manner as a charitable, non-profit organization whose proceeds go to local, national, and international charities. Non-profits, however, are typically very restricted in the type of business they can conduct. In the United States, all non-profits must constantly pay heed that they are not violating those restrictions, lest they suffer the wrath of the Internal Revenue Service. For-profits, on the other hand, have a relatively free hand when it comes to doing business. The only restrictions are the normal terms and conditions of free-enterprise. If a corporation wants to donate to its local community, it can do so, be it one percent, five percent, fifty or even seventy percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an a priori arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no objection can emerge. Indeed, the corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of corporate employees and community leaders. ‘

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