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What Not To Do When Establishing a Social Enterprise

I have been involved with establishing many social enterprises and often we suffer from an inferiority complex, a feeling that we are running a business and that in some way it is ‘business-lite’ in comparison to standard profit making business. This complex leads to a reliance on hand-outs and the subsequent mentality of helplessness that this engenders.

Over the years I have learned that we need to stand up for ourselves and recognise that working towards multiple goals of seeking an operating profit, social justice goals and environmental care is in fact ‘business-plus’ and we have nothing to feel inferior about.

Life would have been so much easier if I had understood that there are fundamental different principles underlying social enterprises as opposed to standard businesses. I wish I had had this clarity around these principles when starting to work on social enterprises.

Here are some of the principles which are key to understanding social enterprise.

1 – It’s not worth anyone’s while but it is worth everyone’s while! Fundamental to sharing value in a world driven by individuated value is the need to pursue goals and activities that are for the common good. Trying to divide the pie of the common good using standard business, legal and accountancy tools often fails to recognise the indivisibility of much of the work and the causal links involved.

2 – Believe first; manifest later (activity creates value) – standard business operating system states that you must identify the value first and then plan the activities to get at that value. If the value isn’t clearly identifiable before starting then you don’t start. Social enterprise often inverts this principle and understands that it is through activity – especially shared activity – that value becomes apparent and so you must start first, create and maintain activity and only after time will the value be truly identifiable and fully accessible.

3 – What Not To Do When Dealing with uncertainty/blurred boundaries; much of the work of social enterprises is very unclear not just at the outside but all along the journey and those involved need to develop the attitude and skill of being ‘comfortable’ with uncertainty. How to move forward in uncertainty is counter-intuitive to standard business practices but an everyday experience to those managing social enterprises. Another way of viewing this is that often what were once considered strict boundaries are now very blurred and that is okay! Whether that is exact roles and job descriptions; pre-determined outcomes of strategic plans; precise relationships with stakeholders; or any other boundary, it is important for managers to manage this fluidity and change as a basis of operation and not just an inconvenience until everything returns to ‘normal’ – uncertainty is the new normal.

4 – Sharing value and values requires collaboration – collaboration is not just a new term for networking but is a skill set of engagement that requires understanding of the principles involved; excellent communication skills; emotional intelligence; and a focus on the processes of engagement. The first item on the agenda of any new strategic goal has to be   ‘who can we collaborate with to make this happen’? Collaboration must be a voluntary, willing and participatory process free of judgement and cynicism and it must be recognised that this takes time – there is no ‘short version’ of this.

5 – What Not To Do with ownership models; much of what social enterprises set out to achieve is based on sharing value and accessing shared outcomes, within the current model of private ownership, can be problematic as the measurement and reward systems are focussed on individual gain, risk, responsibility and duty. Privately held assets are often locked within a legal framework that restricts access or benefit to very few. We need to embrace a principle of ‘letting it go to get it back’ which doesn’t necessarily mean handing over full legal title but is more about allowing the community to engage with, develop and benefit from the asset for the common good. This type of ‘open hand’ approach to managing projects is difficult even within some community or social enterprises when the management fall into the trap of pushing their own agenda or are guided by standard enterprise principles.

6 – Guided by principles; doing the right thing because it’s the right thing to do! Social enterprises operate in grey areas of uncertainty in relation to issues such as boundaries, structures and shared value outcomes which is not to say that social enterprises are fuzzy in their thinking but more that they operate in a type of ‘tidal zone’ between the dry land principles of the old models and the desire to work to new principles out on the ‘sea of sustainability’. In these tidal waters it is vital that the enterprise understands its guiding principles which can be used when making decisions where there is a high degree of uncertainty and there are several right answers. Following the money alone will not bring about the activities needed to address so many issues we face. Social enterprises provide a more nuanced and effective business-plus approach to these pressing problems.

I wish I had What Not To Do more clearly as I started working with social enterprises as it would have made decision making much easier.

Top Tip

Don’t assume that social enterprises are just business lite – they are in fact business plus!

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