It’s not magic

“The bigger issue, however, is that some of the hopes of a decade or two ago have not been realised. Social entrepreneurs claimed to bring a new mindset to business, along with radically improved results. But analysts have struggled to tie down what this means and whether it is true. Do social enterprises and entrepreneurs have a special ability to access resources, such as volunteer labour or unused buildings, or to combine assets in more effective ways? Is their advantage essentially about commitment and the ability to lock in loyalty? The jury is out on all of these questions.

This is the verdict of incoming NESTA chief executive, Geoff Mulgan, in an article for the RSA Journal on the current state of social enterprise (primarily) in the UK. While the overall message of the article is a positive one and reflects Mulgan’s long held enthusiasm for social enterprise, the quoted passage breaks the cardinal rule of New Labour-era social enterprise promotion, that those who excitedly claim that social enterprise is inherently better than other ways of doing things should not – under any circumstances – be forced to justify their assertion with empirical evidence (or even specific examples). Unfortunately, evangelists barely have time to pick themselves up off their beanbags before Mulgan delivers another blow:

“But the emphasis on individual heroes overshot and was, at times, almost comically oversold, particularly by certain American organisations, whose Oscar-style ceremonies and awards celebrated what some saw as a ‘club-class’ elite of social entrepreneurs, often with MBAs from western universities and privileged backgrounds. The language of magic and alchemy used to describe social entrepreneurs encouraged muddled thinking and action, obscuring the extent to which most successes depend on the chemistry of teams and places, not just individual brilliance. This is one reason why it has been harder than expected to replicate the serial entrepreneurs of business in the social world.

Some of us have been moaning about the cult of the social entrepreneur for quite a while. With hindsight, I’m more inclined towards Mulgan’s view than my own previously stated one –  I now accept that the idea that the UK’s major social problems were going to be solved by the individual brilliance of business-schooled dynamic self-starters was comical rather than actively bad. The idea may have helped turn some people in the voluntary sector against social enterprise but, in many cases, those concerned also have plenty of other objections.

And, of course, in reality most successful social entrepreneurs in the UK have got on with building teams and responding to local needs rather than worrying about whether or not they had the tub-thumping rhetoric to prove that they themselves were the great leaders that the world had been waiting for. What larger numbers of social entrepreneurs in the UK have believed in is the ‘magic and alchemy’ of social enterprise.

Mulgan is right that at least part of the advantage that social enterprises do have over public sector and private sector organisations (in particular) is based on ‘commitment and the ability to lock in loyalty‘: having staff who know what they’re doing and why, and really enjoy it. Within smaller social enterprises, which is most of them, the clear social mission often means commitment and loyalty can be maintained in the face of low pay, long hours and job insecurity.

Those who point out the wider possibilities offered by social enterprise are right to do so. Looking at my own organisation, our single biggest project is One in Four, a national magazine by and for people with mental health difficulties. If we were a conventional for profit business, we wouldn’t have launched the magazine because it’s never like to make a significant profit and if we were a charity we wouldn’t have launched it because it would have to promote the charity’s campaigning goals rather than provide a service to readers.

The mistake that social enterprise enthusiasts make is to suggest that taking an enterprising approach to delivering social change necessarily makes success (or even survival) easier. In most cases it makes it more difficult. For most of us, the magic – creating a sustainable business while delivering positive social change – is our ongoing aspiration rather than an in-built characteristic of the work we do.



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6 responses to “It’s not magic

  1. David, I was not long ago making this point about heroic individualism the ‘right stuff’ of ‘social enterprenuership’ as it’s clumsily described to Rod Schwartz on Social Edge.

    Where I’m coming from is as you know, the perspective of self-sustaining business which has a social objective and uses its surplus revenue to meet that objective. What we’ve been advocating had been conceived in 1996 and put practice in 1999 to tackle poverty in Russia. It may have floated around cyberspace indefinitely, were it not for the opportunity to pitch at a former US President.

    This in the approach we’d introduced to the UK in 2004, with the primary focus on poverty. The experience of an economic crisis in Russia and the 1996 critique of capitalism and debt was justification to advocate this alternative to capitalism “to be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”. The aim, to stimulate the UK economic and provide seed capital by developing a ‘community interest’ segment in the UK broadband market.

    The case was clearly stated, for a business which would stimulate sustainable localised economic development, without any suggestion that this could or should be deployed to replace primary care. This can be seen as a subsequent politically inspired distortion, with no empirical evidence.

    Referring back to this early call for a new form of capitalism, one may see that it’s “measured and calibrated in human terms” with a fundamental predicate that human beings are not disposable in the name of progress.hence the emphasis of the Universal Covenant on Human Rights in the business plan.

    It wasn’t welcome in the least then, before the credit crisis and in hindsight, perhaps not even understood. .


  2. Pingback: It's not magic | Beanbags and Bullsh!t | 'Believing! An Oxford Adventure |

  3. admin


    I think you’re right in the Social Edge comment to talk about solidarity over individualism. While it’s not necessarily political in a left/right sense, an approach based on solidarity and co-operation is a challenge to the ideas of 80s/90s/00s neo-liberal economics – whereas the ‘heroic individualism’ approach is more of an accommodation with that economic approach.

    On an unrelated matter, have you come across Danone’s work in Ukraine?:

    Quite interesting, I think, although I obviously don’t know much about either Ukraine or milk production.


  4. So Mulgan’s at Nesta now? According to Shann Turnbull, Mulgan told him that New Labour’s short-lived romance with stakeholding (reform of corporate governance to make firms more responsive to employees, communities, and the environment) came to an end when it was made clear by people from the “big end of town” that this was a no-go area. This is exactly the problem you get into when talking about reforming the capitalist economy. Capitalists, and their lobbyists, tend to kick up a fuss if a quiet word in the ear doesn’t work.

    So, whilst an emphasis on more solidaristic forms of enterprise doesn’t have a left/right split, it certainly does have a labour/capital split – because the good work of social enterpreneurs does not register (the value created is social capital, natural capital, etc. not financial capital which can provide a financial return…)


  5. Great piece David, a really good piece of writing. Hadn’t noticed Mulgan’s piece. Perhaps that will give permission for us all to have a more honest conversation.


  6. David, Now you bring up the subject of milk production, I’m reminded that back in 2005 I attempted to broker trade between a producer in Ukraine and a distributor in the US. The distributor was himself involved in charitable efforts in Ukraine, so he understood my motive to earn a commission for social purpose. The negotiation failed on the failure of the supplier to understand that his prices were higher than existing competitors and his production standards untested. Otherwise the product met the required spec. Danone in it’s own right isn’t a social business like Grameen-Danone , they will need to deal with powerful local interests in one way or another. Landkom has been doing similar things in grain production by leasing patches of land from smallholders.

    Back on the subject od solidarity, my colleague and P-CED founder died in Ukraine last week. He’d been there since 2002 in his efforts to leverage investment for social enterprise initiatives. In his last coherent telephone conversations, it was clear that his focus until the end was a cause he considered greater than his own life.
    I had no means to describe his efforts and sacrifice publicly. The Guardian for example has disregarded everything I’ve sent them. There was however a discussion on the sustainable business network on the balance between making profit and doing good, something in which Terry led in both arguing the ethical case, and leading by example.

    So, I took the opportunity in comment to announce his passing and illustrate the work he had done. That action earned me having my content removed and any future contribution pre-moderated.

    if one should wonder why some take to rioting in the streets, just take a look at how those giving their all are treated.


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