Continuing discussions from #UnusualGlasgow: The future of social enterprise in Denmark and the UK

By Mathias Bruhn Lohmann

Last week, SIX curated the Unusual Suspects Festival in Glasgow. Working together with a wide range of local hosts, the event brought together both usual and unusual suspects for 20 events taking place in every corner of the city. As I attended one of the sessions Friday morning — the future of social enterprise in Scotland and around the world — I was once again reminded of the strong belief in, and growth of, social enterprise in the UK. During the session, one of the participants explained: “In Glasgow, there are as many people employed in social enterprise as there are in construction”. Having worked with social innovation in Denmark in recent years, this impressive fact made me reflect on the differences between the UK and Denmark — and clarified how the social enterprise sector is only starting to take form in Denmark. Although some discussions are shared, like the question of public sector commissioning, the size and scope of social enterprises in UK really do seem to stand apart from what is happening in Denmark.

One thing that might have caused the Danish and British sector to develop differently is the assigned role of social enterprises in each country. As far as I understand, much of the UK activity in social enterprise and social investments have revolved around an outsourcing or acquisition of public sector services. This was also emphasised by one of the participants in the Festival-session. While pointing to several news stories in the daily paper, Geoffrey Whittam from Glasgow Caledonian University argued that social enterprises in Scotland play an increasingly important role in filling out the gaps evolving from an on-going decrease of the public sector due to continuous cuts in public expenditure.

This idea is different to the one we see in Denmark — at least in practice. Although the larger movement of social innovation in Denmark rests on the same idea that our chronic societal challenges must be dealt with in new ways, and by other actors than the government — the role of social enterprise has so far been more or less disconnected from the issue of gaps in public sector service. Instead, social enterprises have almost entirely been used as means of including people with some form of disadvantage or disability into the ordinary labour market — in businesses or projects with no attachment to public service delivery. An often-cited successful example of this is the Danish social enterprise, Specialisterne (The Specialists): A company where the majority of employees have a diagnosis on the autism spectrum and work as business consultants on tasks like software testing, programming and data-entry for the public and private sectors. Other Danish examples include Glad Fonden (employing people with disabilities in TV/Media, design, and catering), Comeback Industries (employing young, multiethnic ex-offenders in a multi-business cooperative), Send Flere Krydderier (employing ethnic minority-women in exotic catering), or All Ears Telemarketing (employing people who are visually handicapped).

The focus on inclusive employment resonates with a dominant trend in Denmark these years of merging social policy with employment policy — with the employment of people on welfare payments being regarded as a key solution to both social and economic challenges in society. Seeing that traditional means of job-creation (like the use of job centres and activation) has only had minimal effects, social enterprises have been seen as a new and largely inexpensive opportunity of generating employment. But it is still very much an isolated, half-hearted effort compared to larger employment reforms and cutbacks. In that way, social enterprise has not (yet) gained ground in the heart of the public sector — or its governing politicians.

Part of the explanation might be Denmark’s strong labour unions and the predominant idea that core welfare services should (only) be delivered by the public sector — not unreliable corporates or unskilled volunteers. Denmark and the UK have obviously entered the realm of social enterprise from very different starting points — with different welfare models and different gaps (in shape and size) in the delivery of welfare services. Thus, framing the role and potential of social enterprise in each context could become a key element in bringing the sector forward.

To take an example, you might discuss whether social enterprises should necessarily reinvest all of their profits or not — but to bring social enterprise closer to the public sector in Denmark and avoid people not trusting their intensions, reinvesting profits would probably be a necessary condition. Until now, paying out part of the profit to investors have been allowed — as long as this payout is seen a secondary goal to the primary social aim. This might be different in the UK, but the question always entails a fundamental ideological discussion of whether you believe in the possibility of running an efficient and successful business without the promise of individual profit.

Similar to this, is the discussion on what the main priority of social enterprise should be? Is the primary focus of a social enterprise business or social inclusion? And can you run a viable business with a two-fold objective? These are difficult questions. Even though social impact should always be the end goal, I believe social enterprises should be run like a business — otherwise the whole premise of using business methods to ensure social impact through economic sustainability is gone. However, several questions rise from this: What does this mean for the people you employ and the competencies you need? Do you take on social workers or social skills to deal with those of your employees that might have a mental or physical disability? Or does your accountant suddenly get an unexpected social clause as part of his contract? And what about measurement? Although revenue quickly shows in the accounts, how do you demonstrate social returns?

One of the largest challenges, in terms of hiring people with disabilities in a social enterprise (which are often small in size), is the risk of exposing people to a start-up environment of continuous funding, unclear hierarchies, shifting strategies and short-term projects. Knowing that these people might be in need of a gradual and steady start on the labour market, the worst-case scenario is that the condition among the people you are trying to strengthen gets worse due to stress and uncertainty. As Rob Pryce, from Jobs and Business Glasgow, said during the session: “The risk of starting up a social enterprise might even lead to poverty, since entrepreneurs might set up an unsustainable business that leads them into long-term debt.”

Now, continuing the discussion from the Unusual Suspects Festival, how does the future of social enterprise look in the UK and around the world? As I have no intension of delivering an adequate response to this question in this blog, let me simply point out three things that we might consider to further the field

• Size matters: Perhaps we should increase our focus to changing existing structures, institutions and organisations rather than supporting the start up of new and small-scale social enterprises. This would entail a shift from social entrepreneurship and individual motivation and success, to social intrapreneurship and the greater, more patient and collective aspirations for change. Like the case of CSR — which some of us believe to be promising, but largely insufficient to bring the radical changes we need in society — large companies and organisations might be better equipped to deal with social and economic objectives simultaneously and ensure the long-term financial stability, which is so critical to social change — and especially the stability and support necessary for inclusive employment.
• Social enterprise is a political endeavour: Although social enterprises are often thought to be autonomous from the state — social enterprises are not autonomous from politics and political discourse. Whether the political climate is dominated by discussions around unemployment, immigration or conservation of the natural environment, social enterprise (if wanting to have large-scale systemic impact) will be linked to political priorities and goodwill one way or the other. This is especially true when it comes to citizen-driven public services, where social enterprises and entrepreneurs are trying to fill out gaps left by an inefficient or largely non-existing public sector in a given domain.
• Social enterprise is about more than employment: This is where Denmark can really learn from the UK! Whether it’s using business and market mechanisms to improve and change the spheres of culture, arts, community, or environment — social enterprises and social impact investments have a far greater potential than just creating employment for the people left on the margins of our labour markets. Using methodologies and inspiration from marketing, customer service, business model generation, design thinking, prototyping, or human resource management — social innovators and social enterprises in any field, and at all levels, might benefit from building a stronger and more sustainable revenue base — accompanied with a better understanding of their end-users, target groups and opportunities for impact. Far too many brilliant projects have disappeared unnoticed because of lacking financial and organisational sustainability. Cross-sector collaboration and knowledge sharing holds great potential.

Mathias Bruhn Lohmann was SIX’s secondee from Denmark during autumn 2015. When not in London, Mathias is working in Social+, a Copenhagen-based lab and launch pad for social inventions and social experimentation. Social+ collaborate with organisations, enterprises, philanthropic foundations, end-users & public agencies to co-create groundbreaking social innovations that improve life-conditions for marginalised people in Denmark.