It’s The Thought That Counts
(or why CSR and social enterprise isn’t all about impact)
As Christmas drinks season approaches, people working in social enterprise everywhere will be bracing themselves for the “And what do you do?” question. Most of us will have a pithy business with a social purpose one-liner up our sleeves, which may or may not result in (1) someone quickly changing the subject (2) a toe-curling ‘oh good for you’ (3) standing by yourself, with a glass of mulled wine turning cold and a quickening sense of dread.
A fourth scenario is also possible- someone may want to interrogate your definition of social enterprise. I’ve had a few conversations that have played out a bit like this:
[stage direction: Person A to be wearing ‘Gucc loafs’]
Me: …it’s basically a business with a social purpose
Person A: so isn’t that a charity?
Me: It could be a charity with a trading arm. But a social enterprise could be a for-profit business as well.
Person A: So would the company I work for, [insert big business here], be a social enterprise because it has the purpose of growing the economy, creating jobs etc?
Me: Well does your company operate primarily for a social purpose or does it operate primarily to make stakeholder profit, but have positive knock-on effects?
Person A: The second one.
Me: So I wouldn’t call that a social enterprise.
Person A: Well, surely any enterprise has to primarily concern itself with making a surplus?
Me: Well I think a social enterprise makes a surplus for the fundamental purpose of bringing about positive social change. Hence a very significant proportion of the surplus would be allocated for a social objective.
Person A: Well the business I work for pays £x million in tax which goes towards the NHS/Social Services and/or funds [insert worthy charity projects here]
Me: But that’s not your main reason for making a profit.
Person A: Why does that matter? The business I work for could have a much bigger social impact than a small social enterprise.
Me: Have you tried the spring rolls?
Without getting into whether Person A is an advocate of trickle-down economics, orange in hue and in possession of disconcertingly small hands, we can see their argument has some bite. Faced with a choice, for example, between an asset-locked organisation hiring 10 people with autism to build a fairer world and a multinational hiring 100 people with autism only for reasons of economic utility, someone investing for maximum social impact is likely to opt for the latter. And it’s clear that lots of corporates are starting to give a social or environmental flavour to their own mission statements. Even if you’re not sufficiently naïve to believe this is always down to a surge in altruism, increased resource for social objectives is surely no bad thing. More resource means more opportunity to scale or deepen social impact, which is a healthy preoccupation in our sector. If we care about improving more lives or improving lives more, it’s hard not to be excited by the increased blurring of the distinction between the social and corporate worlds.
But, I think this blurring makes it more important than ever to focus on the motivations underlying a social enterprise or CSR programme and not just the impact. So, I still disagree with you Mr. Gucc Loafs. And here’s what I would have tried to argue if I’d had my brain in gear.
Why Motivation Matters:
1). Clear motivation = corporate social responsibility we can all believe in
It’s obvious that some companies approach CSR as a creative exercise in working out the maximum damage they can cause without putting off customers or working out how much feel-good polish is needed to obscure the damage they cause in the first place.
Even employers accredited by the Living Wage Foundation continue to employ security, facilities management and admin staff through outsourcing companies with track records of imposing antisocial hours, sudden pay cuts and zero hours contracts on their most vulnerable staff.
It’s easy to paint the outsourcing companies as the bad guys here, but inevitably their business model is built around winning contracts. The CEO of Mitie Group, one of Britain’s largest outsourcing companies, is on record bemoaning the fact that when it comes putting in competitive bids, ‘It’s all about price. There’s no interest in corporate responsibility or how much people get paid.’
The only way companies like Mitie are going to raise pay above national minimum requirements is if they are able to trust that their clients are genuinely committed to the CSR and Living Wage principles they espouse, in full recognition that this will impact on their bottom line.
There’s no easy way to build this trust across the system, but one step in the right direction is to develop CSR programmes that cascade through an organisation at all levels. One of Mitie’s clients, Lloyd’s Banking Group, announced that it was to become a Living Wage employer in November 2015. Separately, Lloyd’s began an innovative partnership with the WEA to give staff at all levels the opportunity to connect with disadvantaged communities in need of skills and expertise. In doing so, Lloyd’s are expressing a CSR commitment that’s about more than fair pay and runs deeper than the surface of the organisation. Ultimately, only these kinds of genuinely committed approaches to CSR will encourage the growth of social business practices in wider supply chains that are so easily corruptible.
2). The right motivation = a radical commitment to see things through to the end
Social and environmental problems are systemic and entrenched. If social enterprises are going to address these challenges, they need to be distinctive in their ambition. They need to be more driven by their social and environmental targets than anything else, including their own survival as an organisation.
This doesn’t mean social enterprises shouldn’t care about being competitive — anyone can give out envelopes of money until there’s nothing left. But social enterprises should, as a polar opposite to the sort of superficial CSR strategy discussed above, be thinking about how much social or environmental good they can get away with, without risking going under or radically compromising their scale of operations.
It’s a balancing act, but the ultimate motivation of a social enterprise must be to achieve its mission, not to survive as an organisation. Taking this to its logical conclusion, it’s often said that a truly ambitious social enterprise should be motivated to put itself out of business. It’s a nice slogan, but examples of social enterprises that have made a declaration of ‘mission accomplished’ and shut up shop are very hard to come by.
I don’t think that’s because social enterprises aren’t achieving their objectives. It’s just a reflection that social enterprises tend to have grand (dare I say, utopian) visions that naturally give rise to new mission statements. The acid test is again a question of motivation– are we looking for a new mission to sustain ourselves as an organisation, or are we convinced our new phase of operations would reduce the scale of a real problem? Perhaps the decisive test here is if a social enterprise is willing to set out a finite set of aspirational but concrete, measurable mission statements. Maybe we might even expect to see social enterprises setting out an end game from the outset — ‘We’ll carry out a focused intervention to remove plastic waste from this habitat and then hand over to an organisation with a proven track record of re-wilding’, for example.
In the same way, really effective CSR has to be underpinned by a whole-organisation commitment to a social mission. It’s not enough to just raise some money or donate time, even if this does have an impact. Without a clearly stated responsibility to (or ‘contract’ with) its beneficiaries, an organisation without a social mission can easily stop its social activities if it becomes expedient to do so.
3). The right motivation = an ambition to change the market, not just use it
A consistent social enterprise slogan is the need to use market forces to bring about change. The rationale for this is clear — the market is a big, hulking beast so if we care about impact, we need to saddle up. However, perhaps it’s even more powerful to talk about the social enterprise ambition to change the market and not just make use of it?
There are clear examples of social enterprises making effective use of the current market, like the burgeoning demand for bottled water. At one level, these social enterprises are the definition of effective pragmatism — the market for bottled water is clearly there and even though the scale of demand for plastic bottles is an environmental catastrophe, it’s undeniably better to get some social benefit from this demand than not at all.
But a commitment to commercial viability shouldn’t be to the detriment of an ambition to actually change what customer demand is. I don’t want to downplay how ideologically motivated some social enterprises are. Social enterprises are demonstrably much more likely to base themselves in areas of multiple disadvantage or have women in leadership, for example. Despite that, I think it’s fair to say that those on the more commercial wing of the social enterprise movement pride themselves on a neutral and pragmatic approach — “We’re not ideological, we’re just interested in what gets results”.
There’s an obvious philosophical problem here — a neutral position is itself ideological. But there’s a more significant potential pitfall — if ‘getting results’ is interpreted as ‘being successful in the current market’, how will social enterprise ever create a more sustainable future market?
Serious social enterprises need to question to what extent they are just driving our current economy. As our economic climate is underpinned by a political economy which generates environmental degradation and ever-widening gaps between rich and poor, using the system without challenging it is, fundamentally, an ideological way of operating. Even when a social enterprise views itself as the least-worst enterprise in the current demand climate, the motivation must be to change this climate in the long-term. Any lesser ambition will limit social enterprises to trying to solve problems, whilst fuelling a system that is creating or exacerbating the problems in the first place.
Putting motivation into action:
Acting on these principles raises a number of challenges that social enterprises need to get right:
1). Social enterprises need to learn from corporate approaches to shaping demand
We all want to believe in a market where there isn’t a trade-off between social impact and profit margins, but we’re a long way off. In the meantime, social enterprises that are ambitious about changing market forces need to get serious about shaping demand. The trailblazers in this area are corporate standouts. Netflix, Apple, IKEA, Amazon (Kindle in particular) have all successfully created new markets for themselves.
To emulate these success stories, social enterprises need a double-pronged offensive: (1) serious investment in product development and refinement twinned with (2) long term brand building and savvy marketing.
Given that social enterprise remains a comparative minnow in the market, banding together to develop our shared brand and appeal could get maximum bang for our limited bucks. I’m fully indebted to Anna-Maria Hosford and ideas shared by the New Citizenship Project in putting together the following plan of attack. (Sorry for getting a bit over-excited at the end. And sorry to Anna-Maria and NCP for dumbing down some seriously sophisticated thinking about the role organisations can play in supporting a culture shift from consumer to citizen)
- We need to use a design thinking approach to break down what matters to current customers and what could reach new ones.
- Then the challenge is to create market space by understanding the comparisons people make when choosing between social and mainstream products or services.
- Appealing to people only as consumers is unlikely to create significant market space because we’re appealing to parts of the brain that value price/convenience/status above wanting to do good.
- Our brand building needs to focus on developing the sort of emotional and ideological commitments that will trump commitment to price/convenience/status. That’s easier said than done, but an undistinctive ‘neutral’ approach isn’t going to cut it. This doesn’t mean becoming a weird alternative — it means aspiring to Apple-levels of brand loyalty (without creating incompatible add-ons every 10 seconds to bleed people dry). This will require people to think of themselves as citizens more than consumers.
- Then people will increasingly buy social, even if it costs a bit more etc.
- Then we can funnel more money into serious product development and refinement, adding the second prong to the pincer movement.
- RESULT: Inevitable social enterprise domination. Full blown market utopia. A circular economy. NIRVANA.
2). Social enterprises need to campaign for their mission, but not their businesses
Charities tend to be more driven to make political noise and grab attention than commercial social enterprises. Part of the reason for this will undoubtedly be the culture of neutral pragmatism questioned previously. But for a social enterprise that recognises the limitations of this approach, the outstanding challenge is to strike the difficult balance needed to keep political skin in the game, whilst being paid for products or services.
Charities that act as service providers with an advocacy remit are already striking this balance. Marie Curie, for example, is a charity with significant political clout which fundraises and generates income through delivering services. To achieve the required balance, Marie Curie works to campaign for its vision — a better life for people and their families living with a terminal illness — but doesn’t lobby for its particular services or products. By extension, social enterprise can rise the same challenge: Social Enterprise UK is working to develop the political context required to grow the sector in general, but there is so much room for social enterprises to start campaigning for their missions, whilst not lobbying directly for their businesses. We all know that small social enterprises don’t tend to have a lot of free capacity, but that makes the need for non-competitive, mission-based advocacy all the more acute. Small voices need to band together to get heard.
Taking on the advocacy challenge could have massive benefits for those social enterprises working in problem areas that tend to be under-represented in public policy and ignored in funding bids and innovation competitions. It’s not difficult to point to these areas in the current political landscape: a total lack of willingness to address failed drugs policy; a failure to move away from a criminal justice model which uses prisons as mass holding pens; the lack of any coherent national strategy for adult education; a crisis in the provision of social and affordable housing; £50m investment in grammar schools but nothing for social care. But there are social enterprise service providers (like Turning Point, Bounce Back, the WEA, Aspire Housing and Five Rivers) making an inspiring difference at the frontline in all of these respective areas. And the opportunity is clearly there for social enterprises to make more noise about what they are doing and how this should be reflected nationally to reduce the scale of the problems that exist.
Reasons to be cheerful, but most of all, motivated:
Given the scale of the problems society is facing, anyone working in CSR or social enterprise needs to be pumped up more than ever. Progressive social change has never been the sole product of market forces — even your most rabid neo-Marxist desperately clinging on to the dream of an inevitable revolution accepts that people need to actually do something, at least at the outset. The emancipation of slaves wasn’t a product of market forces, it was quite the opposite. The same can be said of the movement for women’s rights. Even though I don’t like the phrase (it sounds like an IBS symptom), social movements, that is organised groups of seriously pumped-up people, are the real drivers of change.
Social enterprise and CSR can be social movements that change the future of the market and by extension, the future of everything. But without a radical motivation to eviscerate social problems, turn the market upside down and make real political noise, we’re doomed to fail.
Happy holidays.
