ResPublica and Philip Blond certainly seem to be attracting the attention of us social business people.

It’s great that the DTA is going to do a joint think piece with them and as ever I’ve just enjoyed Steve Wyler’s introduction to how that might look. A quick reflection on the forthcoming ‘The Asset Effect: ten ideas to capitalise the poor’.

Steve bemoans that “many in national and local government… are resistant to the idea that people in poor communities are capable of owning local assets…they would prefer that assets be owned and managed…for poor communities, rather than by them”. Too true.

BUT, can we recognise that it is generally nightmarishly complicated to run an asset as a grant free success? At Camberwell a set of professional business people have developed and run Shine for four years yet still made hundreds of mistakes as we have clawed our way to profitability. In Headingley, with 900 members and social capital coming out of our ears, and despite fantastic support from the likes of DTA and Social Investment Business, it has been a real five year struggle to take on our abandoned school to turn it into an enterprise and arts centre.

To do this asset ownership stuff when survival depends on sales, needs not only determination but skills and knowledge. In disadvantaged areas there may have to be the money to buy these in, or else a partnering with social developers to make it happen. Let’s keep real about this.

At the other end of the spectrum to the need for business skills, is the ‘whose business is it anyway’ question. If we’re honest, many Development Trusts are run by small groups of people without much democratic oxygen. Yes, it’s sometimes difficult to get volunteers for the Board, but that’s hardly the point. Boards deal with the boring stuff. Until the Development Trust movement sees mass membership and involvement and all the energy that brings to community enterprise as a top priority, potential will be wasted.

I vowed in my twenties, I’d never be one of those people who filled their life going to ‘community meetings’. I wanted to get on and change the world (forgive me, it was the seventies). Now I am that boring meeting man, but I hope I’ve grasped that unless we use ‘assets’ as a portal to people’s aspirations, they may as well stay in the public sector.

I was disappointed, but not surprised, to see the debate now “raging” between social enterprise bodies and the health secretary. Social enterprise is becoming a dogmatic cult that is insisting upon a particular definition in order to legitimise its very existence. Ok, maybe it’s not that bad…but, people are wasting time arguing about what is a social enterprise and what is not. The latest debate appears to hinge on independence of an organisation from the government. Interestingly, I bet 50% of social enterprises have local authorities or other government organisations (i know the government and local authority are two different things….ease up!) on the board, controlling the board, or provide more than 50% of the revenue stream and use this influence to manage the social enterprise. So what exactly is the argument against a former part of the NHS being called a social enterprise?

I have a better idea. Let’s take all the energy wasted in this definition of a social enterprise circus and focus it on building or amplifying amazing social enterprises small and large across the country. That’s how you define your patch: make something happen.

The Community Land Trust conference in London today was really enjoyable.  I saw some excellent examples of CLTs, and a not so excellent example of a scheme run by an award winning housing body – sparking some interesting conversation around the powers shifting.  Well, looks like the time has come…

The germans seem to have the spatial planning sussed.  The district Vauban in Freiburg is one of many developments created in a co-operative, participatory way and encompasses the 3 sustainable tenets of economic, social and environmental.  No fences or walls, just managing co-existence together.

There was also the project that was a tower block of flats in England – the council said they were going to take away the 24 hour concierge so the residents (all elderly) decided to take it into their own hands, set up a co-operative and employed their own concierge.  Incidentally, the block is so well insulated now that the residents actually make a profit on their winter fuel allowance which they club together and use to splash out on a day trip to the seaside.  Can anybody help me out with the name of this one?  I was so taken with the presentation that I forgot to write it down.

Anyway, I digress.  Onto the Birmingham Jewellery Quarter, which was the part of the day that fired me into blog action.  There’s a real sense of independence with interdependence here.

Four well established community organisations spanning heritage, residents, manufacturing and retail are looking for a structure that will allow them to drive forward their ambition: taking control of their future in the quarter.  Bring the assets under the control of the organisations through a co-operative and drive forward through inward investment, new and increased income streams, new assets, new services resulting in long term value.

The question that animated the audience and took us well over our allocated time was of governance.  This seems to be a real hot topic, I’m having conversations about governance more and more recently.  What structure would be best suited for a diversity of groups with different interests, but a common goal?

OK – here’s my take:

1. what is the common goal, can it be worked backwards?

2. why does structure matter?  Is it not the mission and aims and reinvestment plans of profits that matter, regardless of structure?

This was met with the response that a social enterprise status would need to be reached in order to tap into funding.  Ok, what funding?  Government?  Sorry, I said, what funding?  Where? Lottery, heritage, etc etc.  Alright already, I’m back with the class.  Hm.

Ok, I get the part about being legally obliged to reinvest, but where’s the carrot for the equity investor?  Are we now about to enter the realm of empowerment without the empowerment to structure ourselves attractively?

We had loads of fun on Saturday. We also learned some key lessons for our social business. But first, watch this video of us rowing our hearts out.

Ok. Did you see it? Probably not. We are the boat at the bottom of the screen, beginning to edge out the other boat near the finish line of our 2nd heat.

No. That’s not what I wanted you to see; what I wanted you to see was a team of rowers (totalling 17: including Camberwell, Shine, friends, family and business partners) working together to win. Paddles stroking in near unison. You see, in Dragon Boat racing you need a combination of things to win: ability to listen, ability to work together, and good technique. It’s the perfect metaphor for successful business.

Our first heat was a disaster. We all paddled like hell, but did not go very fast and it was a bumpy wet ride.

Our second heat was superb. We all paddled like hell, but together and with a focus on our technique and it was a smooth ride with only some gaps in concentration.

Our third and final heat put us momentarily in the top 3 (out of 26 boats) and helped us beat a boat full of husky firemen! We paddled like hell, together, with good technique and a concentration on the little things (stroke, timing, paddle positions, seating positions, not looking at the other boat, etc.). This time we were near perfect (for a saturday afternoon with no prior experience!).

We ended up 5th out of 26th! Coming from nearly dead last to missing the finals by less than a second. Awesome!

What we won? The understanding (from the proof our efforts) that working together, listening to the leader and each other, paying attention to the little things (good technique), and doing our best – whatever that is – it is possible to beat the big guys. We will be taking these lessons to heart as we learn to adjust from a hyper, active enthusiastic team to a hyper, focused enthusiastic team…and hopefully beating the big guys at their own game.

What would happen if you took this Dragon Boat lesson back into your business?

I like the point of this video. The point is not made with as much finesse as it could be: Cameron really goes for the entrepreneurial thing with example after example while letting the global theme sit in the background. He is advocating a different approach to learning, free from the shackles of the our industrial age education system. To my mind, it’s needed. We are creating too many scared robots for too few robot companies.

Social enterprise needs to take a similar path. We don’t have enough stories about entrepreneurial social ventures. And the ones that sound entrepreneurial often turn out to be businesses propped up (and I am not talking about investment, but ongoing operational capital month after month) by non-entreprenurial grant subsidy. In fact, I bet more than 75% of social enterprises are run by folks with little to lose except the job of running the firm. This creates a safety culture and leads to non-entrepreneurial approaches to business and social problems. I don’t think you can build a new business model, social business, without going after new ways to do things. Most social enterprises are a redux of existing businesses without the drive to be market leading innovators.

Unfair? Maybe. But, having worked with many wonderful people in social businesses across the UK, I worry that we have the wrong people or wrong situations at many of these firms. The leaders have nothing at risk and yes, without anything at risk- whether it’s part of the salary or their own money invested – it’s hard to imagine innovation or creative approaches. The alternate scenario is no better; the organisation is set up and virtually operating as an arm of the public sector. What would happen if more people joined the social business tribe who invested their own money into the business, pushed the business model to the limit (innovating, leading, or otherwise disrupting industries), or simply realised that commerciality needs to edge out social benefit (from a % of effort) in order that they create long lasting value?

The world of social business would thrive. People would be drawn to it because we would have more market makers (locally and globally). And the excitement of social business would shine through.

How could we change the social business paradigm?

With an entrepreneurial approach.

Great advice from Rory Sutherland (at TED of course!) on how to change the world around you for the better implementing small stuff. Think about how we might approach a social enterprise venture, especially if it needs to stand out in the crowd.

Turns out the new government wants to know what you and I think about cuts; where, how, and why should we/shouldn’t we.

I think the cutting is going to be the easy part. So I will pass on making a recommendation on them. I think Cameron and crew can cut 15% without affecting services; It may affect the economy, because that will mean many people will be out of work, but the cuts ain’t rocket science.

Where is the real energy needed? Investing.

Yes, that’s right, investing. Investing for the future. Making the new government work. That’s a big job, so I have honed my suggestion down to one particular section of the government spend; Investment. It is still going to happen, but how it happens is more critical than ever before.

What’s Wrong? Nearly everything, excepting the intent. We are currently operating with bureaucratic, oversized, and mal-adapted organisations. Don’t get me wrong, there are great people inside every beast, but it’s still a beast. To be more specific:

1. Bureaucracy: this is killing the investment cycle. Quangos set up processes that kill organisations, not support them. In my 5 years of experience, Quango investment money appears to take an average of 18 months to be realised. This is in addition to the countless hours invested by the hopeful organisaton. Mind numbing. *I am sure the quango can produce the paperwork to justify this process; but that kind of proves my point.

2. Lack of Flexibility; quango investment orgs and for that matter, most councils (sans particular departments in at least one council I know – Leeds) lack flexibility. Investing is tough. It requires tenacity and the ability to adapt with the invested organisation as the outside world changes.

3. Lack of Knowledge; quango investment orgs seem to have the wrong ratio of people who actually know how to invest and provide investment service. Everything is geared to risk aversion and process, when this is the exact opposite of the focus needed for social investment models.

What needs to be done? Streamline and refocus the effort on investment, the original purpose.

1. Invest in real economic models; sift for charities and organisations not willing to take on finance. It appears that many organisations are still getting through and others are defaulting on their debt as if they simply decided not to return the neighbour’s plate that was delivered with cookies.

2. Small is beautiful; investment house boutique model. Stop building massive quango’s. It isn’t the size of the org, but the size of the fund that makes the difference.  Link the boutiques under a major investment source to ensure they learn from each other. The economy of scale idea, normally a good idea, counteracts the benefits of knowledge, flexibility, and speed when it comes to investing.

3. Return driven. The current paradigm has lots of paper being pushed in lots of directions. The focus has been put on the process, not the investment. Start measuring the success on both amount invested AND return garnered. Perhaps this is happening now, but it is not having the intended impact in practice.

Sure, there are lots of other ways to affect this area of government. In fact, you could kill it all together. I don’t support that, as it disadvantages us against the entire world (especially China). So if we are going to invest tax money, as a catalyst for real and sustainable economies in the social business arena, let’s stop pretending quasi government organisations are the solution.

Salt ponds in San Francisco Bay help satisfy Americans’ appetite for salt. Picture: Jim Wilson, New York Times

I am a big fan of a capitalist economy. Frankly, a socialist economic model leaves me feeling a bit, err, underwhelmed. But, like many modern day (see post neanderthal) societal inventions like the bible, constitutions, and laws, flexibility is not an intrinsic part of their design. Some will argue this is the point, especially with the bible, but that’s an argument for another blog – not this one. I am concerned with the adherence to pure capitalism that is preventing corporations from acting logically in the interest of their clients and society in general.

The most notable case of the corporation turned public destruction organisation has been hilariously represented by the tobacco industry. It turns out, you don’t have to have a cancer causing product to act destructively. All you need is a penchant for pushing overconsumption; enter the fast food industry, auto industry, and the oil & gas guys (and they are mostly guys). But, the group is now joined by a surprise entrant: the salt industry. It’s a surprise to me, because salt is generally a good thing. Unfortunately, according to this story, they seem hell bent on helping to kill their clients by the tens of thousands. Why? According to them – it’s good business. Oh, and it’s our fault because after years of cultural marketing we simply can’t do without the heavy doses of salt.

I am continually perplexed by this kind of defensive, destructive behaviour. It flies in the face of one of the tenets of their own capitalist mantra: long-term shareholder value. When faced with the knowledge that your product is making people sick or killing them, surely you would find a way to avoid doing this so you could keep them as customers (forget the morality). Instead, company after company tries to deny the facts, then obfuscate the truth, then block legislation, and finally figures out a way to operate without actually changing their product all that much (even with people dying, other people lose interest in the long run).

I have first hand experience working inside one of these behemoths that adhered to this approach. Luckily, when I was working at AT&T, our product was not killing people or making them ill (angry, maybe). But, AT&T had a similar problem as the salt industry. AT&T was on a nearly catastrophic course towards reduced profits due to severe price compression on their business: making phone calls. Instead of spending the bucket loads of cash (it was actually described as railroad car loads of cash by senior management) on innovation and figuring out how they may remain relevant for the long-term, they spent most of their energy attempting to block clients from achieving savings, lobbying for more restrictions on competition, and instructing a sales force to spread fear uncertainty and doubt about the competition (some of which was warranted). This ended with AT&T being bought by SBC. What would have happened if they had marshalled their resources for productive change, instead of hanging onto the past?

An obvious alternative approach is powerful, long-term, and helpful. Psssst, it also looks a lot like social business. Especially if you define social business as business set up to ultimately help society at large.

Let’s use the salt guys as our case study, but this could apply to any of the industries in various ways. Salt, referred to as “the foundation of civilisation“, is essentially a good thing. Unfortunately, the salt industry has ensured we have too much of it; so the good thing is now killing us. What to do? Listen to Seth Godin for a starter. Seth often talks about making a profit from the goodness of your product and to avoid selling crap just because you can. Seriously, what would happen if the salt industry owned up to the health problems associated with too much consumption of salt, created awareness of the benefits of salt, and helped their clients change their business models to maintain the use of salt (boutique, different uses, etc.)?

Enter social business. It operates the same, but differently. A social business has a profit motive, but it also aims to serve / benefit society. Instead of remaining marginalised at the edges of public services, social business needs to step into the void being created by the salt industry, the fast food industry, the oil and gas industry. Imagine an economy dominated by social businesses; it will not be free from problems, but I would imagine the problems will be a bit less dangerous.

I was in a North East town recently where I met up with a couple of gurus who knew the area well.  I was chauffered around all the best parts of the town, told about the exciting plans that were in place over the next 10 years, and how the area was in a boom time in terms of inward investment.  All in all, I had a very pleasant morning.

Now I am a pretty transparent person and my face shows how I am feeling.  As we sat down to lunch I felt there was something missing.  Surely enough, one of my hosts asked me what they had not shown me.  I explained that while the tour had been very beneficial, I wanted to see the bits that were not so ‘wow’.  We are interested in making a social impact, involving the community, raising aspirations, creating opportunities.

This led to a conversation on what we actually are.  When I initially met up with my hosts, their first impression was that Camberwell is a commercial investor.  But now, they said, they thought that Camberwell was a social business wanting to serve the community for social impact.

This made for a good discussion.  Because actually – both are true.  Yes, we do take an investor approach to the areas that we scope. Firstly, the spaces and places have to work commercially.  And yes, we do wish to serve the community.  Once sustainable, the spaces and places have to work socially.

We spent the afternoon touring the not so ‘wow’ parts.  And we identified a site.  That’s the first part.  Now we are looking to identify engaged players – individuals and organisations that can truly see the vision for this site and bring something to the table.  We are there to create the platforms that can make it all happen. Commercially. Socially. Authentically.

Why do some neighbourhoods have brilliant parks, while others are built like prison playgrounds; metal, unbreakable? Myopic tendencies.

My first thought is leadership. Some neighbourhoods lack visionary and strategic leadership. This is evident in poor and rich neighbourhoods alike. They lack the ability to see what is possible, sticking with a defensive approach based on what they assume is probable (vandalism, low usage). They miss the point; if you build something worthy of attention, it will get it…if not, well you get the point.

Secondly, it’s money. Sometimes this is lack of it, while other times it is priorities for the money.

What would happen if a substantial local social business with a great commercial mind put money into local infrastructure? It would have less money for targeted programmes, but wouldn’t the overall impact of brilliant public space create the strategic change it was seeking anyway?

In the end, without strategic leadership and money, the myopic brigade rules and we all lose something.