Is Social Enterprise all it’s hyped up to be?

This is the second in a series of blogs on social enterprise, and the first of the follow-up posts to Social Enterprise and Social Change

Many people are a bit unsure of the idea of social enterprise. “Oh it’s just another name for a charity with revenues” from some, or similarly “it’s just charity rebranded to be trendy for High Net Worth Donors”. From the investor community we hear “we hear a lot about all these fantastic social enterprises, but where are they? We can’t find many interesting ones to invest in.” I’ve even heard a few from the private sector complain “government prefers social enterprises to the private sector, so we have to work harder in procurement”.

Personally, I think the idea is important and that provided we get the environment around them more enabling, they could be a significant force in the UK in the future. I’ve set out below the four reasons and trends that I think support this view and, as ever, would be interested in other people’s thoughts and ideas on the subject.

Need for social innovation and change

We are living in a time of consistent and widespread change, economic uncertainty, climate change, globalisation, migration, technological advancement to name but a few.

Some of these are frightening, some are exciting but they all have social consequences. They have consequences for the people living in our societies who are typically powerless to manage them. It is not just the people in the ground who feel powerless. Politicians are also living with the consequences of looking like passengers on the bus, unable to conduct it or steer its direction. Many would argue this is at least in part behind our present delusion with them.

So who do we have to deal with these consequences? And how well do we gear them up to do so? An entrepreneurial social economy is vital to provide the level of adaptation required.

Changing social economy

For want of better terminology, I have used the term social economy to cover organisations providing social services and services to our communities.

So an enterprising social economy, able to adapt to this changing environment, able to support the needy and provide those on the edge with routes back into society is essential.

Partly in response to these challenges we are living in times of extraordinary change for the social economy itself. The idea of the public sector providing and responding to need as a monolithic institution is being eroded. The roles of the private and charitable sectors are intended to grow as we define a more mixed environment. But there is a problem. The private sector can feel, well a bit private sector. Shareholder value’s time in the sun may be receding, but it has left a suspicion that private enterprise will put short term profit before customers, and certainly before service users, if they are not the ones paying for the service.

Charity, in the meantime, can feel well a bit charity. Management can seem under-resourced, systems may not be in place. The organisation may be unable or unwilling to cope with scale and may give a slight sense of indiscipline. This, like the charge of not caring placed at the door of the private sector, is often unfair. But it is a view that is there and that sticks in the mind of commissioners.

The idea of social enterprise therefore, mission driven but
with business discipline, is deeply attractive to many in government sitting there wanting to buy social services, rather than delivering them all themselves.

Rise of social entrepreneurship

There is no question that more people want to be social entrepreneurs. It fits the spirit of the age and allows people to bring together their head and their heart in whatever they choose to do. If we create a functioning environment, all the ingredients in the primordial soup are ready to go.

The need for more socially authentic business models

A number of business sectors have lost trust with their consumer base, or left some consumers to the side in search of profit. Financial services, particularly consumer financial services, is a particularly strong example. Whether it is extended warranties, payment protection insurance, asset management fees, dodgy but lucrative tax “mitigation” structures… It doesn’t look good. To my mind the market is crying out for lower cost, transparent, authentically marketed products that it can trust. A huge social enterprise opportunity.

So in summary, the idea of social enterprise has enormous potential and real appeal. The interesting question is therefore, what’s holding it back? I start on that soon, but next up – is the government’s definition of social enterprise fit for purpose?

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3 thoughts on “Is Social Enterprise all it’s hyped up to be?

  1. Pingback: Is Social Enterprise all it’s hyped up to be? | a social entrepreneurs diary

  2. Interesting blog. I look forward to the next instalment. Personally, I think government likes the label and idea of social enterprise, but have concerns whether it really cares whether an organisation meets the true values of one.

    • Hi Louise – this is something I am thinking about quite a lot at the moment. Differentiating commercial enterprise from social enterprise from government’s point of view is not necessarily straightforward, and difficult if you include European state aid issues. I’ll try and write something coherent on the topic for discussion in the next week or two.

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