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Nourishing Enterprise

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Britain is facing a “new kind of poverty” with many parents unable to nourish their own families – not through lack of money but lack of knowledge, according to Jamie Oliver.

“This isn’t about fresh trainers or mobile phones or Sky dishes or plasma TV screens – they’ve got all that. It is a poverty of being able to nourish their family, in any class.”

So what is Mr Oliver saying?  This is not a crisis of material need; people have ways of getting these met?  Most of us have learned the skills of achieving material possessions.  But I don’t believe that the problem lies in a lack of culinary skill – I think this is a symptom of a deeper psychological need rather than a root cause of this new kind of poverty.

It is about a poverty of psychological need and ambition. 

It is about poverty of self-esteem. 

It is about poverty of belief.

And once enterprise professionals recognise the power of enterprise to nourish these very human qualities we will have a powerful antidote to this ‘new form’ of poverty.

However it will require policy makers and funders to recognise that enterprise is not all about start rates and VAT registrations, but is about developing an enterprising psychology driving enterprising behaviours.

Is ‘Social Enterprise’ A Stealth Tax?

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Where does a social enterprise get its start up capital from?

Ultimately? 

I understand that they may get it from a wide range of sources – but in essence where is that value created before it is made available to a social enterprise?

If I am right then it comes from:

  • involuntary or voluntary taxation on ‘for profits’ (which may or may not themselves already be providing positive social outcomes)  
  • gifts or
  • other forms of voluntary taxation such as the national lottery, foundations etc

But ultimately the source of nearly all of this cash is the ‘for profit’ sector*.  In essence money is taken from, or given by, those who have created profits to invest in ‘social enterprise’, including public services, that have little realistic potential for generating sufficient profit to make the risk of private investment worthwhile.

The extent of the ‘stealth’ in the ‘taxation’ varies widely in different contexts.  For example if I buy fairtrade chocolate I know that I am paying a premium to provide a social good.  The chocolate bar is clearly labelled and I can easily find out more about how my premium is used to derive social gain. 

However if I rent an office in a managed workspace provided by a ‘Community Interest Company’ am I equally clear on the premium that I will be paying to enable them to generate a profit in order to re-invest back into the community? 

Is the product clearly labelled in the same way that my fairtrade chocolate bar is? 

Are the mechanisms for re-investing my taxation clear and transparent? 

I can see lots of salaries that need to be covered from my rental.  I can see additional overheads (atria, gyms, cafes, sexy furniture, light fittings etc) that need to be paid for before any profit is created for re-investment.  And I can see prices that are significantly higher then the local market rate.   I can’t clearly see how my premium will be used to benefit the local community.  It feels like a stealth tax!

Even if the labelling is transparent and the mechanisms for re-investment are clear then I still have a problem with this model.  While both service provider and service user are engaged in a fair exchange from which both gain, I am not sure about what drives excellence in the service provider in the long term.  It feels a little like any other subsidised public service – and these have been notoriously difficult to manage efficiently and effectively.   As much energy goes into maintaining the subsidy as into generating value.  The ‘taxation’ gets locked in.

So is social enterprise just another stealth tax?  Well that would explain the massive extent of political interest.  But social enterprise can and must be so much more than this.  It can be the genuine organisation of a community around the concept of using enterprise to create social value.  It is this vision of a genuinely ‘social’ approach to enterprise that I believe we are at risk of losing. 

*I believe that there is a tiny venture capital movement developing to invest in social enterprise – but I am not sure what the return on investment is that these venture capitalists seek.  If it is a true VC model then it will be a substantial profit on their risk capital.  If they just want to see social good then it is not venture capitalism as I understand it – but just another form of giving.

Psychological and Technical Aspects of Developing Enterprise

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The vast majority of time and effort that goes into ‘supporting enterprise and entrepreneurship’ is focused on developing the technical skills involved.  You know the kind of stuff:

  • cash flow forecasting for dummies
  • how to develop a marketing strategy
  • making money from your hobby using e-bay etc etc

On the other hand very few providers think seriously about how they help people to learn to be more enterprising in the way they think, in the attitudes and beliefs that they hold, an din how they develop the resilience that enterprise demands.

Wepromote the technical aspects of enterprise ahead of the psychological aspects – just about every time.

But it comes down to this:

You train someone who does not think like an entrepreneur the technical aspects of business development and you have achieved next to nothing.

You train someone how to ‘think’ like and entrepreneur and you have one!  Bingo!

So let’s start to think hard about the way that enterprising people think, the belies that they hold and the assumptions that they carry – and lets learn how to help more people to develop and share this enterprising psychology.

Economic Gardening or Economic Hunting?

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Economic Gardening and Economic Hunting are two very different approaches to developing an enterprise culture.

An economic gardening approach sets out to create jobs and entrepreneurial activity by investing in local people and their talents, cultures, passions and skills.  It is an endogenous “arising from within” approach to community and economic development.  The starting point for economic gardening says that ‘in this community we have all that we need to build a vibrant and sustainable future’.  It may need careful nurturing to help it thrive but the seeds of our future success are already sown.

The key tools of economic gardening include:

  • building open and accessible networks for potential and current entrepreneurs that foster the exchange of ides and collaboration
  • signposting to existing and continually improving support  services that help local people on their enterprise journey
  • locally available, convivial and very low (preferably no) cost coaching support to help local people to nurture their dreams and aspirations and to believe in their ability to develop them
  • access to commercial finance for local people with investment ready business ideas
  • support services that recognise that everyone has the potential to become more enterprising and don’t just work with those that are already entrepreneurial.

This contrasts with economic hunting which sets to create jobs and entrepreneurial activity by attracting investment and employment into a community from outside.  The starting point here is one that says ‘our community is deficient.  We lack the entrepreneurs to create employment so we have to attract them from elsewhere.  Then perhaps some of the entrepreneurial pixie dust will rub of onto local people.  And if it doesn’t, well at least we will have attracted entrepreneurs who will provide them with jobs.’  This is an exogeneous approach to community and economic development.

The key tools of economic hunting include:

  • the creation of facilities and resources to attract companies or ‘creative class’ members to set up their homes and businesses in our community (NB usually these resources are beyond the means of many local people to access).  If you are in a facility that serves a ‘much better cup of coffee at a higher price’ than anywhere else in the neighbourhood, or if many local people are priced out of your facility, then there is a strong chance that it is the product of economic hunting rather than gardening.
  • the development of inward investment teams and budgets to enable local authorities and regional development agencies to negotiate ‘sweetened’ deals for employers to locate in their communities
  • support services that focus almost exclusively on the ‘already entrepreneurial’ as those who have the potential to create wealth and employment for the rest of us.

Historically most of the investment has gone into economic hunting strategies.

There has been a rise in interest (if not yet investment) in economic gardening.  I see no fundamental reason why the two can’t co-exist in the same community, but they are not always comfortable bed fellows.  Economic hunting usually means changing things to make them convivial to outsiders (better coffee, better carpets and sexy furniture).  Economic gardening means making things really convivial to local people, affordable, local and accessible.

Often community based enterprise development programmes struggle to help local people to access the business support infrastructure that was designed as an economic hunting tool.  It is not designed to be convivial to local people, but to that special breed of entrepreneur from out of town who will pay £3.40 for a posh coffee and £20 an hour to hire a meeting room.  More often than not such facilities fail to win in either of these two market places.

So which tribe do you belong to?  The hunters or the gardeners?