Geof Cox's Blog

Business models based on greed and exploitation


I talk a lot about Business Models in my training workshops.  I reject the Business Plan fetishism indulged so myopically by the likes of Business Link.  Business Plans have their place in some trades – but usually way down the list of ingredients for success.   Getting your Business Model right, however, is near the top.

Business Modeling is something you do in your imagination, and using few words.  A Business Model is a working mental model of the key relationships you have inside and outside the business.  It's the fundamental story you tell yourself about what you do – and tell others if you only have a few sentences.

Slide Rule

I usually illustrate this with the story of the British slide-rule manufacturer who thought they were in the business of making slide rules.  They weren't – and when the electronic pocket calculator came along it wiped out the slide-rule business almost overnight (because, people below a certain age need to know, a slide-rule is, in fact, a pocket calculator).   At about the same time an unremarkable American manufacturer of office calculating machines and typewriters lit on the understanding that they were actually in the business of processing information.   That company was IBM, and they went on to become the biggest computer company in the world.

Not many jokes...

I asked a colleague recently if they liked my website - they thought for a bit before replying simply "Not many jokes" - so I thought I'd post this slide from my presentation at The Big Jump Conference yesterday, which some other colleagues found amusing...

Mutualism

NHS Social Enterprise Spin-outs - the real story

NHS Joke

I've posed the question elsewhere of whether the NHS Right to Request process actually led to ANY increase in the number of spin-outs to social enterprise – and not received a satisfactory answer.

Of course I know of a few cases claimed by the Right to Request process – my question is whether these, and possibly others, would have gone ahead, and maybe even been EASIER, without this 'support' intervention.  I certainly managed to keep one NHS externalisation last year out of the official process – which was completed very smoothly in just a few months thankyou very much.

Now I've just read the latest Third Sector Research Centre Working Paper on Social enterprise spin-outs from the English health service: a Right to Request but was anyone listening? by Robin Miller and Dr Ross Millar.   This should make uncomfortable reading for the NHS, and all those responsible for promoting the Right to Request.

Will tendering ever work for social enterprise?

I've been mulling over the stream of research findings over the last year or so around the way excessive public sector bureaucracy hampers the effective delivery of services – for example Professor Eileen Munro's recent finding that the safety of children is being compromised because social workers spend too much time on paperwork and targets.

I don't want to repeat here any of those Daily Mail kind of stories about the absurdity of some health and safety bureaucracy – though it is perhaps worth drawing attention to the government's recent attempt to get a sensible grip on all this through the Common Sense Common Safety report.

We all know about the inherent tendency of the public sector to get bogged down in bureaucracy.   It's hard to find anything new to say about it.  But one area in which social enterprise must keep on raising this issue is public sector tendering.

I know of course that there is a lot of on-going work around gearing social enterprise up to tender, simplifying tender procedures, and building in added-social-value criteria.  But this work may prove to be more than a little self-contradictory, and I still don't think we are strong enough in questioning whether bureaucratic tendering is usually the right kind of selection process at all.

I was talking to a colleague very eminent in her field last week, who had taken the decision not to pursue any more tenders.   She was turning away customers without any costly tendering, so why bother?

In the subsequent discussion we isolated 7 clear negative results of tendering - for both sides of the tender:

  1. Any business that is really good at what it does will build a loyal customer base – who will recommend others - so those that respond to tenders are likely to be those with least work on, or those most motivated by ambition, rather than those that are really best at what they do
  2. Social enterprise is more likely than conventional business to lose out in this situation, since it is likely to focus more on delivering social value, or on a work-life balance that is not financially driven, than on growth
  3. Tendering – and especially the kind of excessively bureaucratic tendering procedures often favoured in the public sector – tends to select those that are good at tendering, rather than those that are good at actually delivering
  4. And again, precisely because of its focus on delivery, social enterprise will suffer disproportionately from this
  5. Building in additional criteria meant to favour social enterprise might actually compound this problem - more criteria often means more forms
  6. Sometimes it all really is a costly paper exercise anyway (most of us have been to selection panels both for tenders and indeed for jobs where the winning candidate was always obvious to everyone, and we were all just going through the motions)
  7. And last but certainly not least, large organisations will generally have more capacity to engage in these tendering procedures – and most social enterprises are small.

In this perspective, tendering begins to look like a way of weeding out the best candidates, rather than selecting them!

Of course in many areas, for large contracts, public bodies are tied by EU and other regulatory frameworks – so there's a rather larger lobbying job to be done – but in many areas, such as health and social care, there are only limited legal requirements for excessively complicated tendering procedures, and the fondness of the public sector for them is underpinned not by regulation, but by habit - and the misguided belief that they actually work.

It might be objected that there is no other way of avoiding discrimination, or the old 'deal done on the golf course' mentality.   But is discrimination in areas such as this really best dealt with through excessive regulation? – or is it more a question of 'hearts and minds'?

I've also recently been involved in developing a project team for a new social enterprise. It was done entirely by 'head hunting' – no advertising costs, no forms, no interviews, no equal opportunities paraphernalia - a process common in the commercial world, but one that many in the public and voluntary sectors would frown on. Yet it is hard to find any good evidence that the bureaucracy surrounding equal ops in the public sector has made any difference. If it had, we should be able to point not only to higher proportions of women employed in the public sector (which we can - in fact disproportionately high) but also of disabled people - which we can't.   In fact the proportion of disabled people employed in the third sector – about 18% - is much better than either the public or private sectors - which do no better than each other at about 13% each (according to Jenny Clark, NCVO, September 2006).

I wonder if what really made the difference for women in the public sector, and disabled people in the third sector, was nothing to do with legislation or formality, but everything to do with cultural transformation.  And conversely, the fact that the formalities don't seem to have addressed the exclusion of disabled people in the public sector may demonstrate the cultural distance some public bodies still have to go to see what abilities people with disabilities can, in fact, offer.

Learning from the Open Source Movement


A Guardian sub-editor garbled the final paragraphs of my latest guest blog there - but here's a corrected version...


I argued recently that a focus on a few kinds of social enterprise - those that happen to fit an official definition, or can be used to forward a government agenda - is blinding us to a much bigger picture.

Perhaps the most striking example of this is the surprising indifference of social enterprise to another great movement of our times: the open source software movement. Now I'm sure that many people reading the last sentence will be utterly bewildered. Open source software? that's just a specialist thing for computer geeks, isn't it? What has it got to do with our enterprise, or the social issues we're trying to address?

Well – lots!

I think of open source as the 'intellectual property wing' of social enterprise – and nobody should be under any illusion about the leading position that intellectual property - the knowledge and creative industries - now occupy in developed economies. Moreover, this particular 'wing' is probably globally the most successful aspect of social enterprise. About three quarters of the internet runs on open source software. But let me pick out just three inspirational areas:

The focus on a few kinds of social enterprise is blinding us to a bigger picture


I was recently invited to contribute a number of 'guest blogs' by The Guardian - this is the text of my first...

I was at a 'woman entrepreneur of the year' awards do the other night as a guest of the North East Social Enterprise Partnership. NESEP had sponsored the woman social entrepreneur category. Half-way through the presentations of the businesses short-listed for the other awards, the NESEP Chief Executive turned to me and said “It's amazing how many of these are really social enterprises.” It was true: many of these leading women entrepreneurs were talking about the social problems they had set out to address through their business, or the artistic quest that really motivated them, or the ethical values they placed at the heart of their work. In fact, although the contenders for the social entrepreneur award were all doing great things, it was quite hard sometimes to see the difference.

It seems to me there are quite a few such straws in the wind around social enterprise nowadays.

Such as Jonathan Jenkins' plea here in the Guardian Social Enterprise Network 'not to let the purists hold us back'.

The Guardian Social Enterprise Conference

I'm fresh from the Guardian Social Enterprise Conference where I was leading the 'clinic' on different forms of social enterprise / legal structures. Although tied up in the clinics most of the day I was amused in the opening plenary to hear one speaker contrast social enterprises and charities - and literally a minute later the next speaker almost opening with the words 'we are a social enterprise and a charity'. I've already shared my thoughts on this recently on the Guardian Social Enterprise Network - and also elsewhere on this website - so I won't repeat them here.

But there was another contrast that struck me in the Guardian plenary:while one speaker focussed on the importance of local action and local community control, others talked only about 'getting to scale' and working with big business.

Am I the only social enterpriser out there worried by the apparent thoughtlessness with which we slide around these perspectives?

Don't they relate in a very interesting way to a bigger political divide: that between the environmentalist and anti-globalisation 'small is beautiful' tradition and the old rightwing unlimited growth/freetrade orthodoxy?

Lets be clear: part of what social enterprise is about really is local responsibility and accountability.  Within our rejection of business models based on greed and exploitation, I believe, there should also be a decisive rejection of the BIG BLAND BRANDS culture of globalised business, the monocultural high street and remote call-centre.

Does this mean we can't grow or replicate?  I don't think so; but it DOES mean we can't grow in the same way as financially-driven businesses.  In this area, they have little to teach us.  I've argued elsewhere that our growth and franchise models need to develop our own social enterprise intellectual property standards - and organisational structures that combine efficiencies of scale and coherent image with elements of local participation and ownership - and supply chains that rely on local sourcing and fair trade, not just bulk deals - and a deep and detailed understanding of what can simply be replicated - such as an IT infrastructure - and what really needs to be local and quirky and individual.  This is complex stuff - and you'll be a long time looking for answers in the world of conventional business management and professions.

For me you see social enterprise is not just about solving particular social problems - although I agree this is the starting point of most social entrepreneurs - it has also to be about modelling new and better ways of doing business.  Any business.  All business.

Let's not forget in this unrequited love affair with 'scalability' what we all really know - don't we? - that the obsession with 'economic growth' actually has to end The real questions are: how should social enterprise grow richer in experience, not just income?  bigger, but less hungry for resources?  more widespread, yet more local?  familiar, yet still really extraordinary...

What do social enterprise and chocolate have in common?


The failure of the school bus to turn up this morning and consequent need to drive my youngest in to school gave me the unexpected pleasure of a few minutes after 9 listening to Radio 4 - and hearing Deborah Cadbury talking about her latest book The Chocolate Wars.

In this discussion, in this particular history, there was much to learn about social enterprise.

Many know that the great names in English chocolate – Frys, Terrys, Cadburys and Rowntrees - were Quakers.  George Cadbury once worked for John Rowntree!  And many people in social enterprise know that Quakers have been crucial to its history too – Scott Bader for example.   But few are aware either of the extent of Quaker enterprise or the extent to which it was driven by Quaker / social enterprise principles: that wealth creation should fund social benefits, that fair trade is essential, that reckless debt is destructive.

These were the principles that once drove the growth of such household Quaker names as Barclays and Lloyds in banking, Clarks shoes, Wedgwood pottery, Bryant & May, Huntley & Palmer – not to mention Sony and Oxfam!

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