Our NHS: Social enterprise doing it better

I recently met with the team at South East Health – a recently certified social enterprise which is a conglomeration of doctors’ cooperatives, carrying out a variety of services including out of hours care, a roving GP, offender health and they run the NHS 111 service for the Great Yarmouth area (amongst many other things). My meeting was with the whole senior management team and I found the whole experience very inspirational. From my brief immersion, you could tell that there was a really collective effort shared in not only making services better and more joined-up for patients, but also how the reinvestment of profits and the social enterprise model can make a difference for the better.

We shared the frustrations and challenges of the NHS currently and how the bad stories often eclipse the good ones. The social enterprise model has so much to offer in the new contract environment – seeing ourselves as businesses but not at the expense of the care. We need to highlight this more effectively and ensure that good social enterprises like South East Health are on the same podiums as the private healthcare providers who are so effective at marketing their services across Government and the wider world.

They do have good stories too. In the face of so much bad publicity about the lack of performance of the new 111 service, their contract is getting extremely good feedback. But squeezes in budgets, which are facing everyone at the moment, are making life harder and harder as margins are cut. Commissioners need to not only understand the value of a social enterprise approach but also understand the dangers of contracting a substandard service from a purely cost-cutting basis.

It is only by working more collectively and effectively that we can bring pressure and influence to bear. South East Health represents some of the best practice in difficult times – part of a solution to a problem that many are grappling with. We just need more people to know about it. Particularly, as the Social Value Act puts the onus on clinical commissioners to deliver value to the local community.

Sentinel Healthcare CIC is another good example in the NHS, of spending money effectively, trying to ensure value for money and ensuring surpluses don’t go to private shareholders but back into the community, as a certified social enterprise.

This is what commissioners should be looking out for if they’re adhering to guidelines outlined in the Social Value Act. What better way than by looking for the Social Enterprise Mark?

Tax relief and social investment – the golden egg?

“Social enterprises play an important role in growing the economy, reforming public services and promoting social justice. The Government will introduce a new tax relief to encourage private investment in social enterprise. The tax relief will complement the Government’s other recent measures to help social enterprises access the capital they need, such as the launch in 2012 of Big Society Capital. The Government will consult formally on the details of the relief by summer 2013 and the relief will be introduced in Finance Bill 2014.”

An excerpt from the HM Treasury, Budget 2013.

Last week’s budget speech was regarded as a welcome boost to the sector, for many have been lobbying for tax breaks for a long time. As the only UK body to independently certify social enterprise, the Social Enterprise Mark Company generally welcomes anything that helps companies increase their investment potential in this exciting and innovative sector.

However, we would also caution that social investment should not come at the expense of a degradation of social mission because this is a central plank of any genuine social enterprise. The social mission at the heart of these businesses gives import to the asset lock which limits the amount of profits and assets that shareholders (if there are any) can take out of a business (see my January blog post on definitions). The asset lock is there to protect the very values and mission which make social enterprise different from other businesses.
The question, therefore, is not so much about how we attract individuals and organisations to invest in social enterprise (by this I mean equity), but more about how we attract the right investment into social enterprise that builds and enhances social mission. This is what will boost the real needs of the sector and most importantly its customers. Currently the debate is more focused on what the investor wants than the demand from social enterprises, hence the pressures to dilute the asset lock and open social investment up to the wider ethical business world, as outlined in Civil Society.

Social enterprises need a whole range of products that take into account the long and difficult game that they are applying their business model to. Very often, when it comes to investment they have had to come up with a raft of different solutions and be incredibly creative in order to meet their social mission. As we know those options are becoming increasingly limited, further exacerbated by the risk aversion of the banks and the still limited breaks being given to SMEs, which by far form the largest group of businesses certified with the Social Enterprise Mark (Mark holders).

Hence, the ideal scenario for Social Investment Tax Relief would be that the principle of social mission is at its core, rather than fixating on a prescribed investor model, which has yet to be proved. Tax relief is a good incentive and the government should let the genuine social enterprise market work out how to best apply it to increase their own social value.

So let’s stop talking about getting investment ready and instead think about getting investors in all their shapes and forms ready for the challenge ahead – offering opportunities for social enterprises to join up the products and fill the gaps.

Definitions again… legal this time

© Photographer: Olgalis | Agency: Dreamstime.com

It appears that before the Christmas period, there was a move by the Government to define what is meant by the term social enterprise (albeit limited to the health context in England). See
http://www.legislation.gov.uk/uksi/2012/3094/part/6/made

Any move to clarify things should be welcomed in my book and I would say that we are broadly in agreement with the spirit of it. However, the danger lies behind in the lack of specifics, which does leave it open to interpretation and possible hijacking. There are a couple of areas that cause the most concern, from our experience.

Firstly, the lack of a requirement for independence. This means that any company or organisation could potentially set up a social enterprise under this definition and they could still remain in control of it (sometimes known as the Golden Share) albeit with limited profit distribution and a lock on residual assets (if the company closes). This allows for ‘sham’ social enterprises – being used as a front for potential bidding for health contracts and will further blur the lines with regards to the privatisation of the NHS. We have seen this in other externalisations such as leisure trusts where a local authority has overall control of the company; of course these Trusts would not achieve the Social Enterprise Mark.

Secondly the wording is vague around social purpose. The Mark specifically requires that a social enterprise has stated social/environmental purpose(s) in its constitution whereas this definition states that the body must ‘contain a statement or condition that the body is carrying on its activities for the benefit of the community in England.’ This might be linked to the way that Community Interest Companies operate, but it does not prescribe how this this will be tested and interpreted.

Which brings me to the third concern which is how this definition will be regulated and how new social enterprises can be supported to ensure they meet the criteria in a robust way (see my last blog about the need for independent certification). The Social Enterprise Mark is a short-cut to demonstrating social enterprise criteria are real and dig into the true motivations for setting up as a social enterprise. The ultimate sanction is the removal of the Social Enterprise Mark business changes its way of operating.

I will be writing to Jeremy Hunt to tell him this!

Why independent certification is important for social enterprises

Why certify in the first place?
If it looks like a duck, quacks like a duck – is it a duck? Or does it matter if it’s a duck or a Christmas turkey disguised as a duck when it tastes nice and lays good eggs? (not that I’ve ever tried turkey eggs!)

Social enterprise is a term that has been around for a number of years now, but there are many people who are confused partly because there is no legal definition and partly because the term seems to have been adopted by so many different people, all having their own ideas about what it is. There’s also been a culture which ignored the integrity of such businesses, as long as it got the right results and demonstrated social impact.

Have customers really thought about the type of business that they are buying from though and if they knew, would they make different choices?

Witness the high-street banks. We all thought they were doing a great job, until the short term shareholder profit motivation and bonus culture was exposed along with the associated behaviours. Then there are the ethics – why should a company that is set up to support some of the most vulnerable in our society, then take individual profit for doing this?

In addition, how can you protect the integrity of something if you don’t know what it is that you are protecting?

Certification is necessary as it places boundaries and criteria which develop common understanding of the product, what it does and what it stands for.

So why not self-certify after all it’s quicker, cheaper and potentially more accessible?

Easy accessibility is its key downfall. It does not protect integrity, it is inconsistent and is open to self-interpretation and in the worst cases, abuse.

Having run the Social Enterprise Mark since the beginning, we have developed the criteria in partnership with the sector and have protected and owned these criteria fiercely. It is our experience that interpretation of the criteria is a technical job and not easily carried out by anyone. We are constantly learning about new forms of social enterprise and the way that they operate. Our Assessment Manual has taken years of work to develop and our certification panel has taken its job very seriously in developing those precedents which have been set.

This might all sound really boring and techy but it’s important for the future of social enterprise if we are not just to be subsumed into the wider corporate responsibility camp.

We stand for so much more and our Mark proves that this is the case.

For a more indepth understanding, have a look at Social Enterprise Mark’s criteria

On being a political animal

We are well into political party conference season, a time when a light shines on all parties and their policies.

Prompted by a discussion with a colleague, the political dimension of leading a social enterprise got me thinking. I mean political rather than Political. The triple bottom line of running a social enterprise is often talked about – profit, people planet – but the forth ‘p’ of politics is not often mentioned and I think features much more highly in running a social enterprise than many other types of business.

Running a social enterprise is a political balancing act – because it involves so many people and their own agendas (good and bad). It requires an insight into what drives behaviour and to react in ways that might seem alien to your own personality and culture. Many social entrepreneurs are activists – they have a cause, but in running a business you have to make compromises that mean the best for your business but not a compromise ‘too far’, leading to mission drift.

Social enterprises also want to be inclusive and pride themselves on this. However, running a business requires focus and dedication to making it work. Many ideas presented by partners and colleagues might be great as might many projects, but if they don’t stack up business-wise there has to be a resource that is going to offset that money drain (like a grant or contract). Having previously run the South West social enterprise network, RISE, it was clear at the end of the contract with the South West RDA, that this was the case – there was a demand for the services but no-one who was willing to pay for them. It requires hard decisions to be made.

There is a fair amount of Political interference too. At the local level social enterprises can become pawns in a much bigger game that local authorities are playing… for example, nominally supposedly supporting social objectives and then giving contracts based on price alone. Of course at the national level, Politicians are constantly remoulding social enterprise into whatever they want it to be, fitting it to their own political ideologies. That is why we need to be clear about our own identity and business model – keeping focused and using political judgement along the way.

Banking on learning the lessons

This week I listened to an interesting investigation into the changes in culture and practice that led to the downfall of the banks.  The presenter talked about the personal relationship that he used to have with his bank manager who agreed loans for his first car and his first home.  He then went on to describe how all this changed when centralisation took place, computers took over and the selling culture became king:

all staff had targets to hit in selling personal protection insurance, which turned out to be mis-sold on a massive scale, but with huge profits for the banks as the margins were so high!

There are now genuine questions about how we got to this position when the model that had worked for centuries was perfectly fit for purpose and was delivering good outcomes for the customer. We moved from a situation where customers knew and trusted their banks and local bank manager, to a situation where they have become big anonymous machines where you can’t talk to a human being, unless they are selling you something you don’t need.

The irony is that the questions about the banking crisis seem to go on in relative isolation to the changes in culture that seemed to have gripped the rest of the public and corporate sector.

I was interested to see in the weekend newspapers that SERCO is now in a favourable position to win a contract to deliver the National Citizen Service in partnership with a number of charities. Although there had been good feedback about the delivery of NCS, there were concerns that current providers were not able to scale up to deliver the contact nationally. 

BUT, what is the cost of scaling up?

Big contractors like SERCO have the infrastructure to put the bid together, but will delivery improve and at what price for the charities involved?  On the one hand we are told that localism is the answer, but then huge national contracts are put together risking just the same pitfalls that the banks have encountered.  The little guys are likely to get squeezed to the point of extinction and once they are gone we can’t go back.

We have moved from a nuanced locally-based approach to a bland, one-size fits all where the customer has very little influence in the process and profit is the driver…. I feel a sense of deja vu.

Understanding and fulfilling your customers needs

another happy customer?

How many people running social enterprises can really say that we understand our customers’ motivations?

 An interesting question and one that I suspect we don’t think about often enough.

Are our products and services really addressing the needs and challenges faced by our customers, or do they just build on the strengths of our own businesses?

In the social enterprise world there seems to be a universal agreement that if we shout loudly enough about social enterprise we will raise awareness of our business model and more people will automatically buy from us.

Is there a direct correlation between awareness-raising and buying behaviour?  Experience from the labelling world might suggest that this direct correlation is not true. In the case of Fairtrade, awareness is now extremely high within the general public, but it appears that sales have levelled off over the last few years. 

Awareness-raising to a wide audience is, of course, very resource intensive and perhaps we should be learning from the paradigm shifts in the marketing world?  The increase in the level of ‘noise’ from social media, multi-TV channels and mobile internet means that we need to be much more targeted in our approach.  It is only by transposing ourselves into the position of current and future customers that we will really begin to understand where we can put our efforts to greatest effect. 

This challenge is that much greater for us at the Social Enterprise Mark Company given the diversity of motivations that certified social enterprises (i.e. Mark holders) have for holding the Mark, in addition to the diversity of the customer base of these social enterprises,  themselves.  This has been a lesson from 50in250 and by attempting to bottom some of this out, we can better target our messages and services in our future campaigns and services.