Social Enterprise: Fringe or Transformation of the Mainstream? Professor Peter Lloyd

Social Enterprise Estimated 55,000 in the UK accounting for 1% of GDP; Retail coops, mutuals and housing associations have a combined turnover of £42 Billion; But the vast majority of SEs are still very small and lacking in scale and scope; For most the dependency culture still dominates and risk-averse behaviours by funders stops creative evolution; But it varies with geography and legacy;

A Revolution in Social Finance For some elements of SE there has been a revolution in prospects; New social finance has seen new designs for money - hybrids combining public grant, commercial loans, equity funding and various types of philanthropic giving; The “London Hub” has become a world leader in this sort of finance - CDFIs, New Social Banking, Loan Guarantee Funds. Mutual Credit, Private Equity Funds exploded into Venture Philanthropy, Social Investment Funds etc. etc.)

Intermediary Support Organisations High profile social enterprises and hybrids Small social enterprises and more socially driven organizations Revenue, Loan, Equity Finance The Target Set for Innovative Action THE SOCIAL ENTERPRISE ICEBERG Consolidation, public support and volunteering FLOAT THE ICEBERG SEs with Leadership, Ideas and a sense of market Sustainable Revenue Potential

THE UPAS TREE Strong Public Grant Aid Legacy Social Enterprise Social Entrepreneurship Loss of capacity independently to innovate

What would it take to transform things and make a real difference?

First: Accept the Public Role but Create a New Space Old-established “big players” on average 40 percent funded by the State; Assisted regions dominated by the grant economy + quasi-public services (Charities); Capacity for SE to achieve sustainability by selling direct services to government is possible but no panacea (£3.6Bn Cuts) Need to re-envision the role of SE as a site of enterprise, transformation and creativity;

Second: “Open the Box” Population of networks, and support bodies has exploded and has become politically embedded; In some places a “crowded platform” with a culture of “sector expectation” very hard to shift; Even the crisis is not having the necessary effect; Tendency still to believe that “my organisation (sector)” cannot be allowed to fail; Open the door– social innovation across all sectors – including private and public hybrids;

Third: “Get Real” about Prospects Over-wishful claims for SE to contribute to social benefit outcomes at scale (Big Society etc.) ; The social economy rarely grows self-sustainably out of the resources available in local communities – especially the poorer places; But “Bumble bees” do fly even here in spite of the context - the issue is to find, grow and support them; The crisis demands creativity and new approaches to revenue and finance (Rochdale Pioneers); Leadership, social entrepreneurship, innovation and strong but open networks the key;

Fourth: Drive for Innovation and Openness The modern economy is increasingly made up of a myriad of hybrid forms that straddle the private, public, household and grant aid spheres; This is where the source of innovation and creativity for SE lies angel networks, ideas incubators; Social entrepreneurship and social enterprise forms one element but it can go much wider – a general transformation in relations of production; This means shedding defensive mindsets in favour of the objectives of transformation as well as outcomes for “the sector” – outward and forward looking;

Beware “Isomorphism” (tr. One Shape) Current emphasis on delivery vehicles – public procurement and contracting; Line up and be “ready for investment”; Fine - BUT - delivery demands focused, efficient and effective vehicles not necessarily creative ones; For many creative hybrids this solution can be limiting: – Connecting the unconnected may be the creative act – Multiple goals can look like “poor delivery focus” – Orthodox “business-like” management to get “ready to invest” may be necessary but not sufficient – Leave space for innovation and new ideas – risk finance Watch the bandwagon effect if it becomes a straightjacket or a path to insider preferment;

Social Innovation "Social Innovations are innovations that are social both in their ends and in their means. Specifically, we define social innovations as new ideas (products, services and models) that simultaneously meet social needs (more effectively than alternatives) and create new social relationships or collaborations" (Social Innovation Europe 2012): “The R and D wing of the Welfare System”:

The Missing Dimension: Capacity for Innovation and Creativity!