The social enterprise: Threat or opportunity?

new market

“To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections, constitute the perfection of human nature.”

Adam Smith

For the past decade I have been involved in public sector contract management.  Dependent on the contract my duties have ranged from day-to-day responsibility for operational incidents, responsibility to ensure performance delivery, and always a pursuit for deriving maximum value for money.  When I first started this work there remained a high level of internal opposition, and indeed hostility, not just towards the contracted companies but even on a personal level towards the individuals on the front-line.

Much has changed, and mostly the prejudices have fallen away – much through good work – but of course there remain the sceptics, and ideologues who for principle or conviction may never be persuaded to reflect or re-think.  By no measure is any contract perfect (and lessons are not always learnt and shared) but with regard to fulfilling the terms of the contract I have observed and experienced a flexibility, and occasionally an investment of resources, which for many reasons public sector organisations simply could not match in scale or certainly in time.

My experience has persuaded me that the significant risks of public sector contracts are in the letter of the detail.  Ensure you are clear on what services are included, and ensure you have the right balance of incentives and penalties from which to manage.  With regard to who provides the services every encouragement should be given for partnership delivery; ensuring the niche and specialist services can be delivered as well as those which are resource intensive.  You may save money through a single provider but be prepared for significant risk, delays in optimum delivery and disengagement from stakeholders.  A mature service provider will acknowledgement it’s strengths and weaknesses and equip itself with complimentary partnerships.  A social enterprise model would encourage partnerships from within local communities which may mean public bodies, businesses or charities – this may be a way for national companies to remain players but they will to adapt too and beyond a revise mission statement.

“The disease which inflicts bureaucracy and what they usually die from is routine.”

John Stuart Mill

There are political, philosophical, and economic debates to be heard on outsourcing but actually the debate has moved on.  The choices available now are not as stark as public or private and this provides genuine opportunity for both innovation and social enterprise whereby the benefits can be broader than the desired or required output.  I would ask that there is proper engagement and debate with the knowledge that the aged models of delivering public service are not fit for role.  There are very few operations that would benefit only from additional resources, and at the same time the relentless pursuit of profit from any socially-orientated enterprise is doomed to fail.

The idea of a “social market” is not a new one, in modern times it was the Social Democrats Party who resurrected the idea, with Tony Blair promoting it as “the third way”.  The Coalition government talked up  conceptof “localism” and “big society” in a similar vein.  If you remove the party packag ing from the kernel of the ideas there is commonality, a theme which without being specific or sufficiently articulate.  Social enterprises can be described as “businesses 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 primary legislative driver is the Public Services (Social Value) Act 2012.  That any Government believed it necessary to bring forward such legislation, and which received wide cross-party, is indicative of where the level of confidence is for public bodies to deliver innovation as well as value for money.

“Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”

William Pollard

There will be many civil and public servants who will rejoice in the opportunities provided by the Act.  This does not denounce all good work previously done; many councils will have been properly motivated and intended and always sought best value and provided good services, you can hear the canter of a “but”?  What is now encouraged are the wider benefits through social activity and enterprise.  Many of the themes are really quite obvious and in now ways new; the use of local contracts and employment of local talent.  The law change is of course important but for myself it is that we might all consider how we work a bit differently for the benefit of both people and the planet.

This provides such an opportunity for town at the start of a journey for re-generation or growth in particular.  A model which, if at the core of the economic plan, not only delivers public services but also encourages all businesses to behave differently. The agenda being that social and environmental purposes are at the very heart of what they do, and the profits they make are reinvested towards achieving those shared purposes through shared values.  The extent to which services and projects are delivered through social enterprise still remains very much a political decision, for which the local community have some input.  There is a financial threshold within the legislation but it is not a restraint but offers a sensible pause in what are early days.  It will no doubt be how public bodies proceed which will determine the breadth and depth of change in any area but of course this may also be instigated and achieved through lobbying, opportunity, threat and agents of change.

“Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.”

Franklin D. Roosevelt

The model encourages co-operation, co-working and can provide real financial benefit in sharing facilities, systems, skills and purchasing power.  That there is an emphasis on localism this produces not only a financial boost to local providers of goods and services but direct benefit to the environment in reducing delivery miles, and encouraging a joint approach to managing recycling, and developing local energy provision which as stand alone businesses might have prohibitive costs attached.  The benefits should provide incentives for all businesses to consider this path but again it is embryonic and may need adjustments to fit some sectors, again this should not dissuade genuine innovation and enterprise in this respect – look at what the principles are together with the objectives.

From my experience I would argue that innovation is not encouraged in the public sector.  There remains too much reliance on patronage, and although this can be beneficial if the manager is progressive and empowering she or she will eventually find themselves in a cul-de-sac.  Similarly all is not light and rainbows in the private sector, and at times I have been disappointed by very similar ancien regimes.  Too often ventures are driven and motivated by the personal success or promotion of individuals, this I would argue is more common and bankrupt than any pursuit of profit.

There will continue to be objections from the Left and Right of politics although I believe there is certainty in the continued growth of social enterprises.  There are justifiable concerns from the Left that any workers who change employer through contract award must be afforded legal protection, but also and perhaps more fundamentally, that labour is again seen as only a marketable resource which can be shifted about according to need.  Certainly the many changes of the labour market in the past decade indicates a growth in flexible contracts which translates as “inconvenient” to the family life of most workers, and of greater concern the proliferation of short-term contracts which undermines anyone’s ability to plan their futures.  The Right will counter argue that individuals should have the right to manage and pursue their agendas to maximise profit, as it is from this profit that the business, workers and wider-community might prosper.

I am convinced that the ethos of social enterprise requires that workers are treated fairly, and that they are able to contribute to their endeavour just as each social enterprise contributes to it’s community.  I have highlighted some of the potential cost benefits to a business working as part of the community; to this end I believe the provision of a living wage is a legitimate and necessary cost.  Businesses of course would continue to exert autonomy but there would be challenging dynamics at work if business principles were only being applied with external partners alone – would this be viable, how would it present?

I think this model presents an opportunity for each town to reinforce or re-create their own image and present a clear statement of their principles.  It would encourage the use of produce, resources, skills and talent which are local, building upon traditions yet presenting them in a progressive and forward-looking frame.  It is a clear position contrary to the might and right of the corporate but it might just also influence them as to how they conduct their business.  I would certainly advocate the community seek engagement with all parties to this end.

“We cannot seek achievement for ourselves and forget about progress and prosperity for our community… Our ambitions must be broad enough to include the aspirations and needs of others, for their sakes and for our own.”

Cesar Chavez 

Rose Fair yesterday


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