What's the point of business anyway?

What’s the point of businesses? Maybe, job making? On the face of it, creating jobs – assuming half decent conditions and fair pay – is a good thing. How about ‘wealth’ creation? But, again, what is that for? A good life, wealth for oneself, one’s family and future generations maybe.

I think, through business, that we can earn a good living but also that businesses should help to create a better world and fairer society through their activities. Captains - usually male - of industry may bash their fists on their walnut inlaid board-room tables and fume that business is about making money and that only charities do good but I think it vital that businesses, as a hugely important part of our society, have a duty to contribute more to it.
 
When I founded my business, eight years ago, I never wanted to be one of those business owners who bluster and whine about red tape. Also, I definitely did not want to be one of those people who you regularly see moaning about any attempt to give workers, society or the environment a break. Other than the occasional phone-slamming fury at HMRC’s lack of assistance I think I’ve stuck pretty much to those principles. Another thing I try not to be is cynical. I want to be optimistic, trusting even. My friends think I’m an idealist.
 
Business is a profound force in the world. Businesses do create jobs and profits. Taxes on these profits – not those squirrelled away in private offshore tax havens – fund our hospitals, schools and public services. Owners gain wealth. This wealth is supposed to trickle down to benefit us all. ‘Trickle’ says it all. If it was a ‘cascade’ or a ‘gush-down’ we might feel less angry about corporate greed. Trickle down is defunct and morally bankrupt as a concept. Wealth ossifies at the top. Rich get richer, poor stay poor. Both sides of the political spectrum say they recognise this. The Conservatives say they want to build a fairer Britain that works for everyone. Labour talks about the many not the few.
 
A key question is: at what cost is that wealth made? We have seen countless scandals based on profiteering that is often criminal – financial mis-selling, horse meat in burgers, fake breast implants, Paradise Papers, Panama Papers, siphoning off pension funds. And huge damage done to people, the environment and animals in the name of profit and, by association, business. 

Attempts to address business behaviour are met with scepticism from one side and complaints of over regulatory bureaucracy on the other. Corporate and social responsibility is dismissed as ‘greenwash’. Even ‘purpose’ – that latest buzzword – can be viewed cynically without proper certification, governance and action.
 
So how might a business contribute more, whilst still doing the day job? I think that contributing more leads to doing the day job better, more productively and ultimately more profitably. Doing good is also good business.
 
Business could start by paying the real living wage. Costs will increase in the short-term but long-term stability and productivity can be increased. Businesses could improve work-place well-being. A happy, healthy workforce will be more productive. Businesses could offer flexible working – encouraging family friendly working patterns. They could spend more in their supply chains locally and socially rather than at the cheapest rate. They could minimise any gender pay gap. They could adopt a diversity confident approach to employment. National government could even incentivise these behaviours with tax breaks.

Business is a powerful force but pursuit of profit alone can be damaging. Examples of egregious executive behaviour abound. But so do instances of businesses doing better – Richer Sounds, John Lewis and Riverford have all shown what can be done with innovative ownership and pay structures; B&Q and Marks and Spencer with supply chains.
 
We cannot wait for the government - paralysed by Brexit and lobbied to death by corporate interests - to act. We need to take action and the power ourselves - our great businesses can go further. And this, in a way, is the true purpose of business: to give people the agency to create a better world.
 
We all want to get on: get a good job, feel like our life has meaning. Earn a good living and make the world a better place. Let’s put this into the heart of our businesses too.

Social enterprises for a strong economy and a fairer society

There are two problems at the heart of Britain’s economy: that of driving fair, sustainable growth and that of boosting productivity. The focus has been, for too long, on the latter. We need a shift to investing in, buying from and supporting social enterprises.

We need an economy where businesses create decent work and the where the dividends of growth and prosperity are more equally shared. Check out your history books at the pages on Russia and France: if the rich get richer and the poor get poorer we can head, ultimately, into violent revolution.

The proceeds of growth are, too often, not shared fairly and this leaves many workers dispirited. Too many businesses are focused on minimising their tax bill, rather than contributing a fair share to fund public services. The largest social enterprises and co-operatives in the UK pay more in tax than Amazon, Facebook, Apple, Ebay and Starbucks combined.

Our local economic policy is fixated on productivity. It is a thorny problem: it takes us five days to produce something that Germans do in four. The reasons for this are vexed and no-one seems to be able to put their finger on what might be the problem and how to solve it.

We need a radical shift in the way we think about business and a move to a more socially enterprising economy. This is golden opportunity for the region to create productive, inclusive prosperity. Social enterprises not only create jobs and wealth, they do so more fairly and more innovatively than standard businesses and they also tackle social and environmental problems at the same time.

So, what are social enterprises? Simply put a social enterprise is a business with a good cause at its heart that dedicates its work and its profits towards achieving this good cause. My nine-year-old daughter described them as ‘businesses that help people’ which I thought pretty much nailed it. Nationally famous social enterprises include The Big Issue and Divine Chocolate. But did you know that there are social enterprise banks, book shops and bakeries? There are sport shops, florists, pharmaceutical companies and toilet paper makers. There are also gin, wine, whisky and beer producing social enterprises! Pretty much all sectors of the economy have a social enterprise in them somewhere. Although maybe not in the arms and tobacco industries.

Social enterprises can take many forms. They can be co-operatives, community businesses, trading charities, community interest companies or a myriad of other hybrid ethical structures. This can cause problems of definition but all are united by a common feature:  that of using business to tackle social or environmental problems.

Here in the South West we are blessed with some world leading social enterprises. We have The Eden Project and Jamie Oliver’s Fifteen Restaurant in Cornwall. The University of Plymouth was the world’s first accredited social enterprise university and Plymouth was the UK’s first ‘Social Enterprise City’ - a virtual brand that has led to over £6 million of investment into the city in the last three years. Livewell Southwest operates across large parts of Devon and is one of the largest health and social care social enterprises in the UK. Plymouth Energy Community, which raised over £3 million to put solar panels on schools and Plymouth’s Life Centre, has revolutionised the way we look at local energy generation, investment and community ownership.

Across Devon and Somerset there are well over a thousand social enterprises. Their combined turnover is £1.5 billion per year and they employ close to 33,000 people. That’s big - and small - business but, despite being a significant part of the economy that is better for all of us, it is still marginal in government policy making.

So back to why investing in social enterprise is an answer to solving the knotty problem of a fairer economy. Here are some killer facts. Social enterprises are more likely to innovate and are more profitable than standard businesses. Social enterprises are more likely to be led by women. They are starting up at a faster rate and are operating in the most disadvantaged parts of the region: where we most need businesses to work to create productive growth. Critically, social enterprises are also much more likely to pay more fairly: over three quarters of social enterprises report paying the living wage to their employees.

Social enterprise shows us that we can create a vision of a better world driven by business. And this is a pro-business and an unashamedly ‘for profit’ agenda. The more profit we make the more good things we can do with it.

It is social enterprises that are building the inclusive, prosperous, productive economy we need to rejuvenate our high streets, treat workers and pay women fairly and tackle deep rooted social and environmental issues.

Business can make us noble or be a tool for oppression and control. Increasing unfairness can lead to deep societal problems. We need to enhance and protect our environment whilst creating decent jobs. I think social enterprises can create solutions and offer an alternative, compelling vision. One based on business.

Now, THIS is business

This is SEWF. This is business. This is social enterprise.

As the train pulls away from the wonderful city of Edinburgh I’m still wearing my Social Enterprise World Forum (SEWF) conference pass round my neck. In the rush to make it to the station I’ve forgotten to remove it.

Edinburgh, city of enlightenment, of castles, miles royal and dancing. Of crags and tails and granite. Of festivals and fringes. Of rugby and politics and a seat of government. Of holy stones, elegance and palaces. Now Edinburgh is a global city of social enterprise. Alive with colour and diversity of fourteen hundred people from nearly fifty countries. We are called, we are absorbed, we are engaged and energized. Imbued with hope and reassured: we can build a better future.

I turn to my notebooks to being writing this article. I have taken pages and pages of notes. Motivational quotes, calls for action, wise words, policy insights and wild ideas gleaned from a dizzying array of vibrant speakers from all parts of the globe. Here are a few of my highlights in no particular order:

• “We need more AI and regulatory tech social enterprises and less chocolate” - Indy Johar of Dark Matter Labs challenging us to be audacious and create a raft of digital social enterprises.
• The 83 strong New Zealand/Aotearoa delegation standing and singing a song in the opening ceremony.
• “We will wash down the walls of oppression” - Mike Curtin of DC Central Kitchen.
• Bruktawit Tigabu of Whiz Kids in Ethiopia illustrating the deep societal issues of lack of literacy and domestic violence that her social enterprise is tackling.
• School children explaining social enterprises in the simplest forms: “businesses that help people.”
• Phillip Ullman, brilliantly odd, of the converted £880 million Cordant Group urging us to be whole, disintermediate and look for covenants not contracts.
• “[Social enterprises can create] a flourishing web of life - Clive Hirst of Social Enterprise Solutions.
• Audrey Tang, Taiwanese Digital Minister and self-confessed ‘conservative anarchist’ calling for radical transparency and more poetic job descriptions.
• “We must be business…and create the future before it gets done to us” - Lord Victor Adebowale.
• The wild, hairy, tattooed men of Clanadonia smashing drums and swirling bagpipes.
• “Scotland is a better country because of social enterprise” - John Swinney MSP and Deputy First Minister.

All these moments scintillate, coalesce, fly apart and collide. I find at Preston, nearly 200 miles from Edinburgh I am still wearing the conference pass.

I’m left with another idea inspired by Indy Johar: that business can make us noble or be a tool for oppression and control.

This, then is SEWF. This is business. This is social enterprise.

Don't start a social enterprise if you just want grants

I’ve been having a little social enterprise wobble recently. I’ve met a lot of people thinking of setting up social enterprises because they wanted to get grants for their work. Then I read a depressing article where a business said they converted to be a social enterprise because: ‘we couldn’t make any money’. Argh, hold head in hands and sob.

I started to think: is this the elephant or sacred cow or third rail (insert suitable metaphor - I like Trojan sea cow) in the social enterprise room. I feared for the future of social enterprise - are we really just a group of pseudo-philanthropic organizations? Can we really change the face, body, heart and soul of commerce?

We like to talk about social enterprises being ‘businesses’. That is, they trade: they sell something to someone. One question I ask all start-up folks I meet is to write down: “I sell x to y” and fill in the blanks. I sometimes feel a flutter of disappointment by the responses. Often there is a dearth of clarity about the market for products and services. I suspect this is probably true for standard businesses starting up too. However, on the positive side, this is always something to work through with social entrepreneurs and, in working it through, you can arrive at some innovative and unusual places.

Then there’s also the old 1% gambit: “the total market for widgets is a gazillion pounds. If I can get 1% of that market it means returns of a, b, c.” Well, if I had 1% of the cash of the one percent gambitters I would probably…not be a rich man. Note that ‘gazillion’ is an indefinite or fictitious number. A suitable term, then, for a fictitious market.

This does get to a gritty issue at the heart of social enterprise - if tackling pressing social and environmental issues was easily tradeable surely someone would have done it by now. That leads you down some tricky paths - making money out of poverty, profiting from others misfortune, etc.

In earlier, rosy-tinted, pre peak of inflated expectation days, people said that social enterprise goes where the private sector doesn’t or that social enterprises operate in areas of ‘market failure’. I always thought, and still think these ideas are red herrings. We shouldn’t be scared to take on the private sector and I’m not even sure what ‘market failure’ is - no one is yet to explain this to me clearly. Answers on an e-card please.

I would advise not to start on the premise that you need a grant to make your business work. Start from a point of knowing there is a clear market for your product or service and that someone in that market will pay for it. Sure grants can be good sources of investment and many standard private sector organizations also get grants - maybe that is another elephant in an albeit more lucrative room - but see them exactly as that: a source of investment; not something to rely on.

Another common difficulty is thinking of an idea and having a vague notion that somehow the state will subsidise or pay for it. In an age of austerity (whatever Philip Hammond might say) that’s a dangerous path for any social entrepreneur.

So don’t start a social enterprise if all you want to do is get a grant. Start a social enterprise because you want to be a business that sells something to achieve a good cause.

New politics, a new hope

Is Brexit the rebellion of the voiceless?

No this is not another Star Wars themed blog!

Yesterday evening I attended the Nexit: What next for Plymouth and the South West event organised by RIO and the RSA at Devonport Guildhall. Around 200 people showed up - a sign of increasing politicization maybe and great to see so many engaged people. The waiting list was nearly as long as the attendance list apparently.

So a big turnout. And big ideas were discussed. There were initial ‘provocations’ from Molly Scott-Cato, Green MEP for the South West; George Cowcher, Director of Devon Chamber of Commerce, John Harris, a Guardian political journalist with a penchant for anything non-Westminster and two young people - Joe and Tom from Our Way Tech.

Molly asked for a second referendum, proportional representation and a need to reclaim our country. Citizen’s juries and a ‘progressive alliance’ of Greens, Lib-Dems and Labour were also mooted.

George gave a precise talk about business issues post Brexit. He said a majority of businesses wanted to remain in the EU and that there was still no real vision for what leaving looked like. In the South West we are particularly vulnerable to potential export problems caused by Brexit as 60% of our exports go to Europe. The main point that resonated with me was his direct question to business: “Exactly what ‘red tape’ do you want to change?” There is a lot of bluster about EU regulation but no-one can seemingly put their finger on what they want to remove.

Joe gave an eloquent and heartfelt speech (written on the back of a napkin in an impressive five minutes) expressing his fears about right-wing populism and invoking the spectre of fascism. Tom produced one of the quotes of the night: “A window has been broken - but that is good for people who fix windows.” I was left a bit bemused.

John Harris then gave an excellent talk on his approach, Brexit and the deep cynicism about politics. He said that a leave vote was just as valid as a remain vote and that we need to understand why Brexit happened. He called the Brexit vote a ‘rebellion of the voiceless’. In a telling moment he asked if anyone in the room had voted leave and only one or two people raised their hands.

We then had discussions in table groups. I was honoured to be asked to lead one of these. Our topics ranged widely over education, housing, environment, representation, inequality, economics and more.

We decided to develop our own new political party - the ‘Greater Britain Party’ - taking back the language of ‘great’ and ‘Britain’ from the far right with a new progressive manifesto:

1. Talk about politics in schools and everywhere

2. Proportional representation

3. Lower the voting age to 16

4. Sort housing and jobs

5. Improve environmental protection.

Ok, so some work needed on the detail but it was fun, lively, inclusive, honest and had real conviction.

What I found particularly refreshing was the ability to talk about politics in a community, non-party political setting. It felt natural and engaging. Yes, most people were in broad agreement but judging from responses there was a mix of Greens, Lib-Dems and Labour (new and old) and possibly some Conservatives too.

I think the event could have been improved with a ‘Leave’ key-note speaker and maybe we needed more dissent in the room around the opportunities presented by Brexit. A criticism could be that it was a large number of ‘Remainers’ talking to themselves.

John Harris wrapped things up with a call to arms - to find innovative solutions - one being found in Plymouth’s burgeoning social enterprise movement. His most powerful argument was his last. He said: “Dark forces are at work in the country - any attempt to overturn the referendum result through legal or other means could further disenfranchise the ‘voiceless’ turning them to more extreme politics.”

We must not let that happen.

Marginal gains in governance

Here at Iridescent towers - currently disappearing into the Plymouth mist and storm Imogen - we’ve been delivering the Pop Ideas funding and business planning advice scheme on behalf of Plymouth City Council, in partnership with Zebra Collective, for well over a year now.
 
This successful project has now seen over £1.5 million brought in to 69 community groups across the city. This represents a return on the City Council’s investment so far of 25 to 1!
 
In our last blog on Pop Ideas we talked about the reasons for organizations not getting funding. Another point that is becoming apparent is that well governed groups are more likely to succeed.
 
That’s obvious right? Well yes, but it seems to us that getting governance right can be a challenge. In the light of the Kids Company fiasco and the accompanying government report, governance is high on the agenda. That report focusses on when governance goes wrong. And we only really hear about governance when it goes wrong because that’s the sensation that makes the news.
 
However, we think that good governance shouldn’t be difficult or scary or dry. It is about common sense, judgement and proportionality. It should be the bedrock that enables your business to thrive.
 
What is governance?
 
I like this definition from Good Governance in Australia: “Good governance is about the processes for making and implementing decisions. It’s not about making ‘correct’ decisions, but about the best possible process for making those decisions.”
 
This older definition from Chris Cornforth, still stands the test of time: “[Governance] is the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organization.”
 
What happens when governance goes right?
 
Why bother with governance? It’s all policy, red tape and dull isn’t it? Well there appears to be evidence that getting it right can help. There is some research about the link between good governance and growth of organizations. These studies tend to look at private sector businesses rather than those in the social economy (there’s a gap in the market there) but the concept is similar.
 
In 2014 a report in the august publication ‘Principles of Contemporary Corporate Governance’ (Cambridge University Press) stated that: “There now exists ‘empirical proof’…that good corporate governance is important to companies and does add value and make a difference”.
 
An Association of British Insurers report in August 2013 found that good corporate governance adds value: “Good corporate governance enhances…a company’s long-term sustainable performance: it is critical to…economic growth.”
 
Others are a little more sceptical: The ‘Business Case for Corporate Governance’ (again Cambridge University Press) states that it is “Inconclusive that there is a direct link,” however; it points out that, at the very least: “Sensible corporate governance activities may prevent the destruction of value.”  We would sagely argue that it’s important to stop the ‘destruction of value’! Even the government report into Kids Company says that it did good stuff. Sadly that value appears to have been 'destroyed' by poor governance.
 
So what have we seen in Plymouth?
 
Our experience is that groups with good basic foundations in place; those with policies and procedures appropriate to their work, size and complexity can prosper. These organizations win more tenders, gain more grants and gather more supporters. However, a caveat, the reverse may also be true: again look at Kids Company; on the face of it they were phenomenally successful at fund-raising.
 
We have all seen examples where governance may not be outright terrible but it can be flaky. Of course the problem is that governance is not sexy. But the academic evidence and our own experience seems to suggest that good governance can help you. In times of austerity, cuts and competition for funding any edge you can find will help.
 
It’s like David Brailsford’s theory of marginal gains in cycling that led to oodles of gold medals. Increase one, two, three percent in each area and it all adds up to significant improvement. This takes leadership, vision, drive and time. But broken down into manageable chunks it is achievable.
 
We’ll leave you with a question: What can you do each week to marginally improve your governance?

What Star Wars can tell us about Social Enterprise

If you asked me to name my favourite films, my gut instinct is to say Star Wars (episodes four, five and six that is, although one, two and three aren’t as bad as all that, apart from Jar-Jar). What's this got to do with social enterprise I hear you ask - well just cool your Hoth-resistant moon boots and stick with me. 

With the new Star Wars film just around the corner I'm watching the trailers with awe and excitement. I feel a bit like the seven year old who saw the first film in a small, dingy cinema in Cornwall in the 1970s.

So to social enterprise. The nature of the battle of the Rebellion versus the mighty Galactic Empire got me thinking about the parallel with social enterprise and standard business. I know all big firms aren’t really hideous Vader-esque clichés but, hey, I’m having a bit of fun here.

On one side you have the fragmented Rebel Alliance - a rag-tag fugitive fleet (er - I’m mixing my science-fantasy metaphors, that's Battlestar Galactica) being pursued across the known universe (isn’t that from Dune?) founded on some mystical mumbo jumbo. This is like the social enterprise community. No one can really define it (I'm sorry Dave, I’m afraid I can't do that). It is slippery; a loose federation of coops, CICs, charities, registered societies and other exotic, hybrid special purpose vehicles cobbled together to form a movement. The politics are complex and sometimes unity seems a far horizon. 

Compare this to the Empire; a vast, malevolent machine with a clear governance structure directed from the top. Its minions are motivated by fear and greed. For the Rebellion (read social enterprise) power is diffused and the motley collective struggles against the Empire which is dominated by one man, the Emperor Palpatine. I should like to inspect his declarations of interest for swanky lunches paid for by Trade Federation corporate lobbyists.

And it always seems to be a man. Look at the Empire, can you find one female role model? Are any Stormtroopers secretly clone women? Despite some movement on this, FTSE100 companies are still dominated by men. Unlike social enterprise where there are large numbers of women leaders. The recentSEUK State of the Sector report points to 40% being led by women. This needs to get well above 50% of course. The Republic had strong female role models. Is Sophie Tranchell the Princess Leia of social enterprise? Is June O'Sullivan our Mon Mothma? Claire Dove our Amidala?

Let's look at the capital assets of the empire. Huge star destroyers, even more massive super-star destroyers. Then mightiest of all, the Death Star itself, which can destroy a planet (much like a massive oil spill or endless carbon emissions). Maybe, if Grand Moff Tarkin, of foul stench fame, had hired Futureclean - a social enterprise - to wash the seemingly limitless squadrons of TIE fighters, the packs of AT-ATs and the swarms of speeder bikes - he would be still be alive. All that stuff was beautifully maintained, sleek and impeccably clean wasn’t it? Just hold that image and think of a well-resourced corporate business that can seemingly throw money at all the equipment and gear it needs.

Compare this to the Alliance with its rusting speeders, bolted together X and Y Wings and its used, dirty tech. This is social enterprise: under-capitalized, lacking assets, begging and borrowing although sticking to good principles of reducing, reusing and recycling.

Then there is research, development, marketing and training. The Empire invests enormously in the Imperial Naval Academy, in clone armies, in new ways to crush and terrorize the opposition. They can even obliterate planets: “Fear will keep the local systems in line. Fear of this battle station.”

Many social enterprises lack marketing and training budgets and often struggle to invest in new services and products to grow but they are strong on innovation as the State of the Sector reports. The Rebel Alliance had to innovate and be clever to survive - finding hidden weaknesses, moving their secret bases, using cunning tricks to get past guards on forest moons. 

However, it is not all as gloomy as a Dagobah swamp. The rebels have key allies strung across the galaxy. They - and social enterprises - are motivated by values. They may have a small workforce (compared to the colossal Stormtrooper/corporate army) but they have an untapped pool of supporters. Many worlds and peoples will rise to support them, even lowly Ewoks. The lack of marketing, lobbying and corporate power in the Alliance and social enterprise is offset by the passionate tales that are handed down and heart-warming stories of the few taking on the mighty. And that mystical mumbo jumbo may well end up being quite useful after all.
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We all know who wins in the end, right?