Small is the new big!


I've written before about some of the problems with the idea, uncritically accepted in some parts of the UK social enterprise movement, of social enterprise 'scaling up'.  My gut feeling is that although conventional business forms of growth might be appropriate in some circumstances, by and large we need to look precisely in the other direction: how to keep social enterprise small and locally, or community-based (while at the same time taking advantage of some economies of scale - for example through online 'collaborative communities').

It is refreshing to see conventional business moving decisively towards micro-enterprise too.  "The major business trend of the last few years is the regeneration of the cottage industry economic model."  (Simon Wicks, Enterprise Nation)

EcologistThis is certainly true at the cutting edge of farming.  I've just read Vandana Shiva's article Small is the New Big in The Ecologist magazine, about how, measured correctly, small organic farming is much more productive than big agriculture.  In a project involving 1,000 farmers in South Nyanza, Kenya, who are cultivating two hectares each on average, crop yields have risen by 2–4 tonnes per hectare since converting to organic farming.  In another case, the incomes of some 30,000 smallholders in Thika, Kenya rose by 50% within three years of converting.

Some will find it surprising that the UK government now includes self-employed people who work primarily for social purposes as 'social enterprise', but we are experiencing a much larger change, linked with the growth in social enterprise, away from big business and towards micro-enterprise - 95% of UK businesses are now 'micro' (under 10 employees) and most of those (about ¾ of all businesses) have no employees at all; moreover, the number of self-employed people is rising rapidly and the number of large businesses is falling rapidly.  (UK Government Department for Business, Innovation & Skills 2012 Annual Business Population Estimates).

This trend does not date from the 2008 financial crisis, but can in fact be mapped across developed economies with the spread of the internet.  It is of course true that some of the growth in self-employment is down to the recession – people turning to it as a last resort, who will return to the conventional job market when times change again; however, the trends we are looking at here have been clear over a 20 year period now.  Moreover, they have been accurately theorised and predicted.  As early as 2002, Yochai Benkler used Coase's transactional costs analysis - the widely accepted explanation of why firms arise in a market economy - to predict that the way in which the internet changes business costs would lead to networked micro-enterprises out-competing large firms.

The most powerful examples to date here are new business models based around online 'collaborative communities', such as 'crowd sourcing' - many of which link naturally with social enterprise because of its culture of empowerment and commitment to community and environment.

“The linked development of online networking and renewed belief in community, along with environmental concerns and questioning of an economy based on buying and selling, are moving us away from the top-heavy, command-and-control forms of consumerism and towards decentralised ideas based on openness, sharing and peer-to-peer collaboration.”  (What's Mine is Yours - How Collaborative Consumption is Changing the Way We Live, Rachel Botsman & Roo Rogers, Collins, 2011)

Big Business Reaction!

The Spanish National Federation of Bus Transportation (Fenebús) has called for the closure of the ridesharing company Blablacar.es website, saying that its operations are seriously impacting on the interests of passenger transport companies!  Great example of how 'collaborative consumption' co-ordinated over the internet will move us beyond an old business model...

It is obviously a matter of

It is obviously a matter of surprise that the UK govt now takes self employed people. Does it really signify anything so logical?

Small is the new big!

Nice article Geof - have reproduced on FairShares website and posted to Twitter, LinkedIn and Facebook.

All the best
Rory

Thanks Rory.  Since writing

Thanks Rory.  Since writing it I've seen others over the last few days, reacting to the mess at The Co-op and problems at Mondragon, asking whether social entrerprise 'at scale' is really possible at all.