The challenges to scaling social enterprise globally

"Globally people are questioning the model of shareholder-driven capitalism and the short-termism it implies, from movements such as Occupy and academics such as John Kay, to corporate figures such as McKinsey’s Dominic Barton. "

So begins the intro to a Guardian debate on scaling social enterprise globally, but is the author aware that it was social enterprise which first questioned shareholder driven capitalism 18 years ago? I'm referring to our position paper for the US President which not only critiiqued the current model, but proposed an alternative which agued that shareholder primacy could be disregarded in a business model for social benefit.  For the last decade, the UK social enterprise community has been using one of it's original definitions - a business which invests at least 50% of its surplus revenue to benefit a given community.

Occupy was a consequence of ignoring   McKinsey is saying it because that's what their Mixmarket initiative, to which I made several contributions, is saying.

The medium for this debate is supported by The British Council who are in turn supported financially by the FCO, a government department operating within a democracy.

Is this just poorly researched journalism and something with dishonest intent? Have any of the panel developed their own model, taken it overseas and used their on funds to do so?

As I aim to illustrate, the greatest challenge to social enterprise is its inherently anti-social hegemony and the control of a neoliberal elite. 

The warning to Clinton about ignoring those we thought less important was repeated in 2002/3 when our work in Crimea drew attention to the need to deploy economic "smart bombs" to prevent the development of terrorism.   

In 2004 our warning was directed at British Government:when we introduced them to our non dividend distributing business model.

Capitalism is the most powerful economic engine ever devised, yet it came up short with its classical, inherent profit-motive as being presumed to be the driving force. Under that presumption, all is good in the name of profit became the prevailing winds of international economies — thereby giving carte blanche to the notion that greed is good because it is what has driven capitalism. The 1996 paper merely took exception with the assumption that personal profit, greed, and the desire to amass as much money and property on a personal level as possible are inherent and therefore necessary aspects of any capitalist endeavour. While it is in fact very normal for that to be the case, it simply does not follow that it must be the case.

Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.”

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

Let us now look at the discussion

"Scaling up - Should be just as interested in scaling out" tweeted Social Enterprise UK 

In 2006 when known as the Social Enterprise Coalition I introduced them to our work in Russia and Ukraine. It was beyond their current focus I was told. If it's now within their focus, why aren't they engaging?  What had I paid a subscription for?.

That same year, on the International discussion space known as Skoll Social Edge, pioneers were discussing the issue of 'profit for a purpose' Where were our UK experts when this was one of the few online discussion spaces about social enterprise?  As a software developer, I even offered to help the SEC set up a forum but there was no interest. They were in charge of discussions, it seems. So I created the Social Enterprise group on Facebook.    

"There's a lot of criticism online about your work in Ukraine" sniped Nick Temple of SE_UK, adding insult to poor customer service, some time later. It gave us some insight into both the organisation and himself. We were challenging those who maximise profit by keeping disabled children in appalling conditions,  Every year, up o 12% were dying of malnutrition. Speaking up about this was bound to attract criticism  If SE_UK weren't in our corner, who or what did they stand for?

It waa back in 2007, I recall that the subject of international social enterprise came up in discussion with John Bird of Big Issue.  Oddly , a Goldman-Sachs director joined in the conversation. My question to John was about the role of social enterprise internationally: 

JEREMY: You’ve mentioned internationalism and how important that is to you. We’ve got a number of questions about that that I want to just to put in to finish off with. Asif Saleh, who’s actually a director of Goldman Sachs – has been asking… is there support of help to start UK social enterprises that actually target countries or impoverished minority communities overseas? And actually, he’s not the only one whose been asking that question. Jeff Mowatt was asking that question about the role of UK social enterprises in overseas development, whether there’s money for it, whether there should be money for it?

JOHN: Are they suggesting that maybe it impoverishes the people overseas rather than ... it might help them but it wouldn’t help the people overseas? Is that what they’re really saying?

JEREMY: They’re not suggesting that. They, as I understand it, are actually asking whether we, here, should see some of the growth of our social enterprises into the overseas aide or overseas development market, if you call it…dare to call it a market.

JOHN: Yeah. I’m a great believer in that I ... That’s why I was never… I’ve never got excited about things like “Make Poverty History”, because I think their romantic idealism. I think what Africa… you know to me, I don’t want to do anything for Africa. I want Africa to do something for me. So, I want Africa to start making stuff that I can use and that I can sell throughout the world. I don’t want to lift another finger for Africa. I want to be able to put Africa in a situation where they can lift their own fingers, they can have their own high streets, they can have their own social businesses, they can have their own social echo. And so therefore, we can bring about transformation through trade, and through tapping into their expertise and all that stuff.

We weren't in Africa, but we certainly had Africans who were interested in the self sustaining approach to social enterpirse. One was a doctor, the leader of the Ugandan medical students in Kharkiv, where many come to study affordably. It was an example of Africa which has been used in the 1996 paper.     

"Top-notch education is leaving the confines of physical campus and four walls. A student in remote Zaire, given an Internet connection, can become a Duke-educated Master of Business Administration, while remaining mostly in his or her home village to the village's benefit. The prospect of such decentralized localization of education and economic activity allows a great deal of autonomy, freedom and self-determinism in the village's own character and identity. It need not be a risk to cultural heritage and integrity to benefit economically; the means by which such benefit will occur, how local citizens can have food, shelter, health care, and a basic sustaining human standard of existence can be determined at the local village level and then communicated at the regional, national, and global level simultaneously at virtually no cost via the Internet and a web site. It is this basic level of human sustenance, coupled with self-sustaining enterprise to provide this basic level of support, that I refer to as sustainable development -- which is just another way of saying "people-centered" economic development."

Big Issue Invest won't have much interest in us, our the children I refer to, but they did rather like the person-centered approach which 'puts people first"  

it also appeals  to Jeremy Nicholls who writes:

"There is a growing recognition across all sectors, shared value, social value, total value etc etc, social enterprise can show how much is possible and will speed up the scaling out - the challenge will be keeping accountability to people as central, however this is achieved, as this happens"

I responded to him with the opening paragraphs of the 1996 paper, from we who walk this talk,

"At first glance, it might seem redundant to emphasize people as the central focus of economics. After all, isn't the purpose of economics, as well as business, people? Aren't people automatically the central focus of business and economic activities? Yes and no.

People certainly gain and benefit, but the rub is: which people? More than a billion children, women, and men on this planet suffer from hunger. It is a travesty that this is the case, a blight upon us all as a global social group. Perhaps an even greater travesty is that it does not have to be this way; the problems of human suffering on such a massive scale are not unsolvable. If a few businesses were conducted only slightly differently, much of the misery and suffering as we now know it could be eliminated. This is where the concept of a "people-centered" economics system comes in."

Such is social enterprise. Use the words of others to promote reputation but never support or attribute the people who do it using their own funds.

Never was this truer than in the case of the British Council who were introduced often to our efforts in Ukraine. As was the FCO who help fund them.   The 'Marshall Plan' for Ukraine was introduced to them, formally in our response to their solicitation for partners in 2010.  

Their lack of response is questioned and 3 years later we learn that partners are expected to make a financial contrbution. 

We were using our own funds leverage support for our work - we didn't expect government who we pay takes   to, to steal from us. 

The greater theft however was from those who aspired to be free from corruption and from the vulnerable and voiceless children who are now in the firing line of an armed conflict. 

"Go find some supporters and influencers and start making the socio economic case for social enterprise" Says Peter Holdbrook "Their is evidence from across the world that when these agencies and people work together, amazing things can happen." Get the British Council to invite Muhammed Yunus over to inspire!"

Well yes, we did that and in 2010 for the Social Business Ideas Competition we called on the next best thing  Grameen Creative Labs and partner Erste Bank with whom we shared the strategy plan for Microeconomic Development and Social Enterprise in Ukraine.  Erste joined USAID and the British Council, So much for trust in sharing IP.  Where was the support of SE-UK?

t was in 2008 that a formal appeal for support was made to USAID, which is perhaps the starting point of my story which will see us hung out to dry and the death of our founder. As with the situattion I've described in the UK,, we were far from welcome with our activism. Big business wanted in on the social innovation space and helping children in Death Camps was a high risk issue: Our founder always spoke plainly.

This is not a research activity where many, if any, other people dared to participate.  UNICEF was willfully blind to the matter because it was just too dangerous to bother to intercede  Powerful interests remained entrenched with enforcers to make it dangerous.  Jurists were correct, in my view.  It was more a mafia operation than anything else, aimed at misappropriation and laundering of large money.  That was perfectly congruent with how Ukraine operated before the revolution.  USAID wanted nothing to do with it, nor would they fund any organizations or activists who might try.  Some things could be done and some things could not be done.  Helping these children was something that could not be done.  So, I exposed it and made it the central focus and metric of Ukraine’s microeconomic development blueprint.  In that context, it was far more difficult to ignore, dismiss, or argue about.  For about six months, I really did not expect to survive.  Nevertheless, Ukraine’s government finally conceded the point and announced the opening of more than four hundred new treatment centers for children who were theretofore invisible under tight and deadly enforcement.”

BITC were part of this USAID partnership and in 2013, their CEO would be plagiarising our work on redirecting capitalism for social good in the Telegrapht, while establishing a relationship with some of the most predatory oligarchs in Ukraine. So too were Tony Blair and Lord Mandleson.

Getting back to the conversation and ClearlySo raises the question about bottom-up development:

"We're interested in how scaling up globally can still ensure interventions remain bottom-up & accountable "

On the Skolll Social Edge discussions space in which Rod Schwarz of ClearlySo, our founder and I participated. He'd been introduced to our work often, including this from the 2006 Ukraine proposal. I had th impressions that Rod hadn't any interest, even in sharing the story: 

"Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders.

This program provides for near-term social relief for Ukraine’s neediest citizens, most particularly children who normally have least possible influence and no public voice. Over a few years time, the net cost financially is zero. Every component is designed to become financially solvent, through mechanisms of cost-savings and shared revenue with other components. One component, Internet, provides essential communications infrastructure as well as a cash surplus to be used to offset any lingering costs of other components such as childcare, and otherwise goes to a permanent social benefit fund under oversight of the aforementioned independent, citizens-based non-government board of directors.

Any number of other social enterprises can be created. Furthermore, any number of existing for-profit enterprises are entirely free to contribute any percentage of profits they wish to increase the proposed initial $1.5 billion social investment fund. If for example the total fund comes to $3 billion, that amount would generate at least $300 million per year in a hryvnia deposit accounts at any one of several major Ukrainian banks, to provide ongoing funding to continue to create and expand social enterprises.

This strategy places adequate funding for social benefit under control and management independent of government and the very obvious vicissitudes and conflicts inherent therein.

This is a long-term permanently sustainable program, the basis for "people-centered" economic development. Core focus is always on people and their needs, with neediest people having first priority – as contrasted with the eternal chase for financial profit and numbers where people, social benefit, and human well-being are often and routinely overlooked or ignored altogether. This is in keeping with the fundamental objectives of Marshall Plan: policy aimed at hunger, poverty, desperation and chaos. This is a bottom-up approach, starting with Ukraine's poorest and most desperate citizens, rather than a "top-down" approach that might not ever benefit them. They cannot wait, particularly children. Impedance by anyone or any group of people constitutes precisely what the original Marshall Plan was dedicated to opposing. Those who suffer most, and those in greatest need, must be helped first -- not secondarily, along the way or by the way. '"

The first threat to the project itself came when an oligarch declared his intention to engage Western experts to develop a 'Marshall Plan' for Ukraine.  As it turned out these "Western experts" were McKinsey. Terry Hallman noted:

"As the 60th anniversary of the Marshall Plan came around in June 2007, noise was emerging within Ukraine of a certain political boss preparing a Marshall Plan for Ukraine.  This person was a reputed mob boss -- exactly the sort of entity that the original Marshall Plan meant to oppose.  It seemed most likely that whatever he came up with would be self-serving, hijacking the label 'Marshall Plan' and turning the whole notion on its head.  I reviewed the original Marshall Plan and realized that what I had written was, in fact, the definition and spirit of the original Marshall Plan.  Thus, in June 2007, I appended the original title with "A Marshall Plan for Ukraine."

In the final analysis power overcame ideology and this oligarch became a partner in the USAID/British Council initiative.  

There were other relevant conversations on Social Edge. Terry, my late colleague spoke of dealing with IP in a corrupt post Soviet culture:on the subject of building a more efficient marketplace

"So, if we're inventing projects that we know will be stolen, there are at least two problem areas.
 

First, if stolen, it's stolen. It's not unlike an architect having a building design stolen. The architect/designer is in best position to understand exactly how it works and how to assemble what they've designed.

If someone wants to use a project design, it's the same as any other project design. The design comes after an in-depth research phase, which in my experience tends to be extremely difficult not least from danger involved in shining light under rocks where the core problems are to begin with. That is, corrupt bureaucrats and officials. When I finish the research part -- which I always do so far (Russia/Crimea/Ukraine) -- I know exactly what the problems are, what solutions are needed, and how to navigate. Possibly someone else could take over and manage things from there on -- implementation. I have no problem with someone else implementing a project, and usually prefer that. Even if they do, it's still a matter of stolen property in which we've invested unilaterally to produce. Almost always, however, there may remain critical components that the implementer just doesn't want to bother with. Maybe it's too dangerous. Maybe there are political considerations and conflicts. In that case, the designer is likely the only person(s) to know how to get those done. That's when it's time to consult with the architect.

Second, even if the project outcome, after theft, is what was envisioned by the designer(s), how does the venture qualify as a social enterprise? Sure, we can slowly design projects one by one as income from our funding side permits. We can do it a lot faster if we get paid for our R&D output, just like any designers.

Finally, is it acceptable to build projects with stolen property? What sort of results would that lead to? Can be build an ethical system based upon unethical behavior (such as violations of Intellectual Property Rights)?

If we invent such a system, is it anything new? Or is it just a twist on the old system?

One thing that can be collaborated openly is this: a Code of Ethics. But, whose ethics? What org(s) will enforce them, and how? Who decides who gets in, how, and why? "

It was 5 years after we shared the story of Torez before the Sunday Times reported on it, saying much the same things as we had about turning a wilful blind eye,  Promoting only one's own associates might not be entirely social but to be party to keeping us silent about things that matter is indefensible. Particularty when done by editors of the Guardian hubs.        ,      

In the end, it really is up to what we want social enterprise to be. A comfortable palliative for those who use the rhetoric of doing good to make money or something that goes to the heart of a corrupt system and takes on those who would benefit from the misery of others. There's no need for the hand to be invisible and an Invisble Heart should be taken for what it is, the self-aggrandising rhetoric of the usual suspects. 

Believe me, they will step on you and leave the vulnerable to perish, given half the chance.