May Salesforce be with you

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.

and

(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.

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9 Comments

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9 responses to “May Salesforce be with you

  1. jeffmowatt

    David, No doubt you’ve seen the recent article in the Guardian’s hub by Jonty Oliff-Cooper who asks for a debate on the definition of social purpose business.

    Brushing aside the immediate thought that as a pioneer of social purpose business, the Guardian won’t publish what I offer them on the subject, I was struck by the fact that here was someone asking for something uncommon in social enterprise – open public debate.

    Several months ago, I felt obliged to comment on a Guardian article on Creating Shared Value where Mark Kramer claimed that corporations could profit from solving social problems. I disagreed pointing out from earlier reasoning, that pre-existing social purpose business did not seek to profit but deploys profit to extend the ‘bottom line’ toward discernible social impact. I gave the example of business investing in removing chiidren from orphanages and the consequential reduction in state costs. That go me barred from commenting since,

    It’s been a similar experience with Social Enterprise Magazine who on one hand ask me for a social impact report Ours described the impact of profit-for-purpose business, reasoning the case for an alternative to capitalism. On the other hand they’ve blocked me too. Call me suspicious, but I couldn’t help noting the arrival of Matter & Co with the call for a new form pf capitalism. Social media fails in drawing a response to my introduction.

    The most bogus of social enterprise, surely, is the form that creates its reputation vicariously by borrowing from the IP of those it censors,

    In 2009, Oxford Social Enterprise Forum met to ask whether a new form of capitalism was possible. Just weeks earlier our founder was presenting on the subject to the somewhat humbler Sumy State University. He remarked that an undergraduate could risk expulsion by submitting a thesis based on the work of another. Were Oxford going to expel themselves?

    A4e may have profited from presenting as a social purpose business, but they broke no laws in doing business as Mark Kramer would have sanctioned. On the other hand there’s a distinctly anti-social form of business which breaks most laws, to leave society with some of its most intractable problems.

    I argue that the greater harm is done when social enterprise becomes a matter of pushing others out of the way, for the benefit of n-one.

    http://economics4humanity.wordpress.com/2012/09/08/a4e-and-social-purpose-business/

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  2. Thank you David, and all, for your support for the #Notinourname campaign. Right now we are mopping up to make sure the campaign has the desired effect in the long-run – an embedded understanding among profit-distributors that our name is not for misappropriation. Salesforce were by no means the only ones using this term to describe private companies who use social media products in particular ways. We are now tackling the others and asking them to give us the reassurance that Marc Benioff and Salesforce did. But on the need for a legal definition, we don’t think you’re alone in having changed your mind about its usefulness. It’s good to have your opinion in advance of our asking for it. And we’d love to know what others in social enterprise think. We will act according to what or members tell us, of course.
    Celia Richardson, Director of Communications, Social Enterprise UK

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  3. jeffmowatt

    Yesterday we learned that Care Minister, Norman Lamb, who’d threatened to resign a year ago over the Health and Social Care Bill, now supports greater private sector involvement in the NHIS.

    I was reminded that the definition of social enterprise was being questioned by Andrew Lansley.two years ago.

    http://www.businesszone.co.uk/anyanswers/whats-your-definition-social-business

    it’s been more than 8 years since we called on the social enterprise movement to support our call on government for “social purpose” business Pointing out that due to increasing poverty, it was “completely predictable that it should be only a matter of time until uprisings become sufficient to imperil an entire nation or region of the world”

    “Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

    We were members of the SEC briefly, in 2006/7 when it became very clear that what the members had to say was of little interest.

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  4. Pingback: Defining social enterprise for tax purposes « Economics for Humanity

  5. Simon Teasdale

    Thanks for another thoughtful and inspiring article David. I loved the notinourname campaign too – well done Social Enterprise UK. However I was struck by how many in the social enterprise movement (SEUK included) are happy to use the mythical figure of 62,000 social enterprises to accentuate their importance, while fully aware that 90% of these are profit distributing businesses. It seems somewhat perverse that they then want to exclude ‘profit distributors’ from using the label social enterprise.

    It’s really interesting that David is coming round to the need for a definition. On balance I tend to agree. In some circles social enterprise is already a dirty word used to describe the privatisation of public services. I too would like to see government clarify what they mean when glibly using the term, particularly in relation to the NHS and social investment. The government (BIS) definition was kept deliberately loose so as to include all the different groups using the label at the turn of the millenium. Perhaps this open and inclusive approach has served the social enterprise movement well in developing a high profile. However it (unintentionally?) left space for private businesses and a new government to now use the label for their own purposes.

    Now may be the time to protect the ‘brand’. The interesting part will come when trying to draw legal boundaries around what is and isn’t a social enterprise. Who should decide who will be included and excluded. I would be particularly interested in learning what David thinks about using the SE Mark as a basis for a legal definition!

    Simon Teasdale

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  6. Beanbags admin

    Hi Simon,

    Thanks for your comments. In terms of the final point, I don’t think it would be a very good idea to use the Social Enterprise Mark criteria as a basis for a legal definition.

    I think a clear government definition could do the Social Enterprise Mark Company a favour by releasing them from the position they’re stuck in – trapped somewhere between claiming to define what a social enterprise is, and providing a kitemark for social enterprises that they regard as being successful.

    I’m fairly relaxed about any legal definition being open and inclusive – as long as it’s clear.

    I think the 62,000 figure (didn’t it go up to 68,000 at one point?) is still used – despite almost everyone in the social enterprise world knowing that it’s nonsense* – is because it’s a vaguely plausible sounding number that also seems like quite a lot.

    Another possible benefit of a clear definition is that it could produce a similarly impressive sounding number that’s actually based on facts.

    *The research it comes from isn’t nonsense but the meanings attached to it by sector leaders and politicians are.

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  7. Pingback: Business and the NHS « Economics for Humanity

  8. Pingback: Society daily 11.09.12

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