Geof Cox's Blog

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!

From Albania Again

Today in Tirana I chanced on the Commonwealth War Cemetery.  A surprise to find so old and intimate a link with home.  At random I read some of the near identical stones.

Sargeant G N Brookes   Pilot   Royal Air Force   7th November 1940   Age 24   In proud and loving memory of George, who made the supreme sacrifice.

Signalman D W Rockingham   Royal Signals   20th October 1943   Age 21   Always in our thoughts.

My own thoughts were taken by the loving mother and wife, who wrote 'sleep on dear one, until we meet again' – a mother no doubt already met, and a wife perhaps an elderly lady now, looking back on another life, perhaps another family.

Little children laugh and play on the grass beside the rows of graves.

Most moving perhaps though is the fact that these graves are still cared for, and fresh wreaths laid at the cemetery gates. By whom?

Yesterday the European Parliament voted to allow Albanians to travel to the EU without obtaining a visa. It's not the final decision, which presumably has to go to the Commission and Council of Ministers. But it was enough to make it a good day in the Oxfam office here.

I don't know how the British MEPs voted, but I would have challenged any of them to stand before these well tended graves of young British men dead these 70 years, then vote against Albanians.

Guardian Social Enterprise Summit

I've been asked to lead a session on legal structures at this year's Guardian Social Enterprise Summit.

Given the topic, I couldn't help wondering about the event pricing structure:

Private sector organisations £495 + VAT (£581.63 inc)

Government departments and agencies, local authorities £350 + VAT (£411.25 inc)

Voluntary sector, not-for-profit, charities £250 + VAT (£293.75 inc)

How about a quick poll of 'social enterprises': which category would you put yourselves in?  (Honestly now!)

 - or for another view look here!

A conflict common to many co-operatives...

I've been asked to help resolve a familiar situation in a co-operative:

A founding group has put much time and effort into building a successful business, which now has the opportunity to expand rapidly - which will require admitting new members.

Some of the founders are happy to do this, but others do not want to dilute their own control and investment (mainly time - but obviously it does have a financial value).

Luckily it is a share structure and it is possible to reward the 'sweat equity' - but it is also a one-member-one-vote structure so although there will be a probationary period ultimately control will be shared.

Obviously I'm aware of both the technical mechanisms that can mitigate problems like this - that's why it's a share structure! - and also the arguments for bringing in others to allow and boost growth (it's better to have a smaller share of something really valuable than the lion's share of very little).

However, for those who are happy to share ownership and control, the disagreement has raised questions about the others' commitment to co-operative principles - perhaps they were never heart felt principles at all - just a convenience to cohere a good team?

Given that this is such a familiar difficulty - which I know has broken co-ops in the past - I wonder if anyone knows of case studies, or just has their own story, of how co-operators involved in such conflicts have dealt with them - more especially how they have dealt with the feelings involved?

Social Enterprise in Albania

Monday 10th May     Tirana to Shkoder

In addition to my social enterprise development work for Oxfam in Russia, I'm also now helping to restructure the Oxfam country operation in Albania as a social enterprise.

To give me some idea of their work here, this morning Oxfam drove me out from the capital, Tirana, to the far northern town of Shkoder (pronounced Shkoddra) where we transferred to a big Landrover Defender – there are no made up roads out to the isolated villlages where Oxfam works – and subsequently to the even bigger and more rugged Landrover of one of Oxfam's partner NGOs, the Albanian Permaculture Resource Centre (which Oxfam actually set up). We were soon among horse and donkey-drawn farm traffic and – despite the valley heat – snow-peaked mountains.  Little boys with sticks encourage solitary cows along the track that challenges even the Landrover, until we abandon that too alongside the most beautiful river – the water turquoise under the white rock and sun. We make our way on foot across the valley, over a bridge only passable in summer (though in Albania this is most of the year!) - where you look far down into a deep gorge under the water - then up the other side of the valley to the little farm we are visiting here.

Back to Moscow

Despite appearances, and perhaps reputation, Russian food is in fact delicious...Despite appearances, and perhaps reputation, Russian food is in fact delicious...

Read from the first of my February 2010 blog posts from Russia here.

Russian restaurants, outside the big cities at least, are very different from those in Britain. In the evenings most have live music, and everyone - all ages - dances. It was in such a restaurant that we spent our last evening in Rybinsk, and drank vodka Russian style.

Victor was the master of ceremonies. He doesn't usually drink vodka in fact, but this restaurant had a particularly fine Siberian vodka – unfortunately not available in the the UK – for which he made an exception. First, a small glass is filled with vodka, and a second larger one with tomato or orange juice (most Russians prefer tomato). Then the toast, made in turn by anyone present who feels moved to initiate it, and the vodka is knocked back in one, followed straight down by a large gulp of juice. The other essential, after a few of these, is water: Sergey had the forethought earlier to give us all a bottle of water for our rooms - I drank the whole litre as soon as I got back, and woke up the next day feeling fine.

Where Rybinsk was very cold, but beautiful, our return found Moscow a balmy -7°c, and snowing hard. We drove back from Rybinsk in less than 6 hours; when we met Victor and Sergey on Friday at the Oxfam offices Victor told us that after dropping us off at the Izmaylovo Hotel it had taken him 3 more hours just to drive across Moscow.

So what was achieved in Rybinsk?

Of course we had, as is the way of projects such as this, a page-long list of specific objectives, and looking through them I think all were indeed achieved, or are on track for completion in the written analysis to come. I would expect no less: Oxfam are a good client precisely because they know exactly what they want and are realistic about what can be achieved; they commit funds very carefully and rightly insist on their money's worth. A measure of my respect is that, having worked for them a lot over the last 2 years, they remain among a small number of charities to which I continue to donate.

But I would pick out two outcomes of our work here that are a bit harder to capture in written objectives:

  • the observable change in the participants over the 3 workshop days; their growing confidence in their own abilities, and growing commitment to actually make their social enterprise work, and create incomes for struggling families in Rybinsk
  • the growing understanding between all of the partners: Pavel as the original designer, all those involved in the new social enterprise, Sergey and Victor and the other staff of the Oxfam Moscow office, and ourselves.

Children in Rybinsk - making their own furtureChildren in Rybinsk - making their own futureThis latter relationship in particular blossomed in the meeting in the Oxfam Moscow office on Friday.

One aspect of fair trade I haven't mentioned in these posts from Russia to date is the way it can challenge what Marx called 'commodity fetishism' – describing the way in which commercial products appear in shops stripped of their real origins in other peoples' work, and thus replacing the real social contact we should have with those people by an empty money relation. Fair trade helps tip the balance back a bit towards people: it matters to us what their lives are really like.

Our resurgent need for real human relationships instead of bland commercial transactions will I predict be a key driver of business in the next decade.

By introducing a story and other creative elements into the fair trade model we take this more human relationship between distant people up another level. As far as we are all concerned - I mean my like-minded colleagues in both Russia and the UK - we are not engaged in a one-off project for Rybinsk, but a pilot for a new model of fair trade that can be implemented anywhere people make something, and have a story to tell.

Day Two in Rybinsk: -18°c

By way of background I gave Helen a copy of the Wikipedia article on Rybinsk – unfortunately her eye was drawn unerringly not to the town's illustrious past or many architectural treasures, but to the article's apocalyptic warning that...

the giant Rybinsk dam, which holds the Rybinsk Reservoir (until recently the largest man-made body of water on Earth) places the town in imminent danger of the dam breaking and the reservoir flooding the city

Hopefully the fact that the reservoir, and most of the huge span of the Volga, are almost entirely covered by ice at the moment makes the danger a little less imminent!

Many people in Rybinsk have other pressing problems. In soviet times this was a closed town, and they still manufacture aircraft engines and components, but during the collapse of the soviet system in the 1990s most military work here ceased, and about 80,000 people lost their jobs. Only about 20,000 new jobs have been created over more recent years – this in a country where welfare benefits are not really enough to live on at all, let alone achieve any quality of life.

My social enterprise development sessions – which sometimes seem to revolve entirely around discussions of the impenetrable workings of Russian customs – are thankfully interspersed with Helen's story development workshops.

Helen and I with Pavel (right) and some of the other workshop participants - and the instant storyboard!Helen and I with Pavel (right) and some of the other workshop participants - and the instant storyboard!

These are based on building an understanding of story structure – starting simply by going around the room, each participant adding an event to a story beginning alternately with “fortunately” and “unfortunately”, then moving from this to a story pattern featuring a series of ever-increasing problems leading to a crisis, then moving back to some kind of resolution. This approach draws not only on Helen's experience as a writer and publisher, but also her current PhD research into children's story structures. We then tried this with Pavel's felt characters as the key protagonists – and eventually today developed the bones of a really good story – immediately illustrated by Pavel as a 'storyboard'.

I think everyone in the workshop – including me I must admit - was amazed to find we could do this so easily.

The story is at the heart of our thinking on the limitations of most fair trade models. I don't want to be misunderstood on this: I believe the fair trade movement (along with the 'open source' movement) is one of the best - world-changing - aspects of social enterprise. Cafédirect and others are altering the fundamental structures of international trade in some commodities. Liberation Foods have taken this a step further – using a Share Community Interest Company structure, and instead of raising grants directly for their work persuading international aid charities to assist share investment by the growers' co-operatives they work with – thus actually changing the distribution chain's ownership structure alongside its trading inequalities.

This is really good stuff. But most fair trade to date still deals with basic commodities – foods, cotton, etc – rather than the intellectual property development now at the heart of Western economies. The next step surely is to move fair trade, and production in developing and transitional economies, right into high added value processes, knowledge-based industries, and intellectual property development... hence the story.

I am of course aware that all of this is surrounded by deep ethical arguments. Another weakness of fair trade models is that they often involve transporting things half-way round the world: good for income distribution, bad for the environment. Our model might be criticised on these grounds, too, and also because in a world where the environmental imperative is to consume less it is perhaps harder to defend a fair trade model based on intellectual property development rather than meeting basic neeeds like food and clothing. These arguments are part of a more fundamental conflict between the aims of reducing inequality and reducing emissions, if the former means developing and transitional economies becoming more like 'the West'.

Personally, I am at ease with our work because it is based not only on economic, but also on artistic production, and speaks to a whole area of human experience that cannot be weighed in the balance of these economic/environmental arguments. If we cannot understand ourselves - and each other, wherever we live - through this most basic of human impulses – storytelling – what is left of us to appreciate the environment, or anything else?

Having said this, I acknowledge again the difficullty of these issues, and would be sincerely grateful for other views...

Read my next post from Russia here.

More Rybinsk workshop participants - Sergey Zhidkikh, the Oxfam Prgramme Manager, is next to me.More Rybinsk workshop participants - Sergey Zhidkikh, the Oxfam Prgramme Manager, is next to me; Sergey Postnikov, Chair of the Big Family NGO is in the centre at the back; and the children are from some of the hard-pressed families involved in Big Family.

2010 social enterprise visit to Russia - 1

When I got into the car in Rybinsk this morning Victor pointed to the temperature displayed on the dashboard. Although it was a beautiful sunny morning and not even particularly early – about 9am – the outside temperature was still only -16°c. Victor told us about a previous visit to Rybinsk, when even he had found it so chilly he ran to the car. When the dashboard lit that day the outside temperature read -42°c.

Over the last two years I've been advising Oxfam on the role social enterprise might play in their anti-poverty work in Russia. At first this was focussed on strategy: understanding the legal/financial environment for social enterprise, the resources and capacity of the NGOs for disadvantaged people Oxfam is working with, what external support might be available, and so on. Now at last the work has moved on to what for me is a more exciting phase: real social enterprise development work.

The kind of felt character that first caught my eyeThe kind of felt character that first caught my eye

Last year I met a group of people from the 'Big Family' NGO in Rybinsk who were creating a network of homeworkers to manufacture felt products. It was work ideally suited to housebound, single parent and hard-pressed families. Among them was a very talented designer, Pavel Gavrilov, whose felt characters had such personality they almost told you their own back story themselves. I immediately knew they would sell in the West, or anywhere there was significant disposable income, but the simple lack of economic activity in most of Russia (outside a few big cities - which are booming) made it impossible to realise anything approaching the real labour time they embodied.

How to solve this problem?

I approached it by bringing together two kinds of business model:

  • fair trade, and
  • merchandising (book and movie tie-ins)

First, incorporate some of the characters in a book aimed at children and sold through the Oxfam shops and other sympathetic retailers – this book itself being a wholly ethical product - and second, set up a 'fair-trade' style supply chain mechanism to take the felt characters from disadvantaged home workers in Rybinsk directly to the shops to sell alongside the book.

The idea is that they acquire sufficient added value to pay the homeworkers at least the average wage in Rybinsk, because they both reach a market with more disposable income and gain the emotional attachment people have with characters in a well loved story. I have never presented this idea to anyone without acknowledging how difficult it will be to pull it off – not least to create a great story starting only with the characters; yet everyone I have spoken to has loved the idea, including Oxfam, who have now brought me out to Rybinsk again with a writer and publisher, Helen Limon, to initiate the development of the story for the book.

One of Pavel's new more child-friendly felt charactersOne of Pavel's new more child-friendly felt characters

There are two main reasons for this I think...

  1. You only have to look at the characters to see them living and breathing in a successful story; and
  2. There is actually in this idea an attempt to move fair trade models up to a whole new level.

More of this in my next blog – but obviously Oxfam, as one of the fair trade pioneer organisations (they were among the founders of Cafedirect) saw in this approach an initiatve whose ripples might spread far further than the poor Russian families who will be its immediate beneficiaries.

So, after flying into Moscow at the weekend – fortunately just in time for the Maslenitsa pancake festival - and a Monday of meetings in the Oxfam office there – we traveled yesterday the 500k through the beautifully frozen Russian landscape, northeast to Rybinsk.

Read my next post from Russia here.

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