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Recovering the Economy

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Listening to the various party conferences you would think that the politicians THIS time have learned the lessons of boom and bust and are now going to revamp macro-economic policy, remake the relationship between state and citizen, write off large chunks of eurozone debt and lead us into a brave new world of social justice and prosperity.

Yeah! Right!

Because the truth is that any levers that the politicians have in a modern market based economy are generally pretty ineffective.  They may pontificate about grand capital projects like high speed trains, tramways, arenas, flood defences and so on, but this is pretty much a combination of political posturing and feeding the professional and financial beast which we call the ‘regeneration industry’.  I sometimes think that ‘Degeneration Industry’ would be a more accurate moniker.  As this refreshingly honest trader put it, ‘Governments don’t rule the world: Goldman Sachs do‘.

Recovering the economy is not primarily a function of politics, but a function of enterprise.  About people using their skills and knowledge to provide products and services that people want, marketing and selling them effectively at a price that adds value to the customer and makes a profit.  Transactions in which all parties gain. Good business if the methods of production and distribution are environmentally sustainable and neither harm nor exploit.

But, improving the economy through enterprise is not the only thing that matters.  We also need to improve our communities, making them better places for as many people as possible to live full and rewarding lives in which everyone who wants to is supported to explore their potential and express it to the full.  And, these are not 2 distinct activities but 2 facets of the same process of development.

The challenge is not to find the right ‘macro-economic policy’ but to engage large numbers of people in living their lives to the full and doing what they can to help others looking to do the same.  It is about mass engagement, facilitation of ideas, and support.

You see the politicians can’t build good communities and sustainable economies.  We get these things as by-products of large numbers of people pursuing the projects that they believe in and helping each other wherever they can.  And occasionally falling out.  Great communities and their economies spring from people living their lives to the full and making the best of their potential.

It’s about time we recognised that and helped to make it happen.

A Compass for LEPs…

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LEPs are of course Local ENTERPRISE Partnerships.

But enterprise cannot be developed without full attention being paid to its wider impact on nature, society and personal health and well-being.  David Cameron has talked more than once about economic progress needing to be balanced with progress in well-being.  Pursuing the growth of GDP outside of this wider social context would seem to be a fool’s errand.

An enterprise policy that grows GDP, but increases illness or is not environmentally sustainable or increases inequality in our society may not be a good thing.

So, how about developing a simple compass that can form the basis of a practical evaluation for new enterprise proposals?  I was very taken by this simple framework that Danone use when evaluating their innovation projects…

N = Nature – will the development respect natural limits?  Is it environmentally sustainable?

S = Social – will the development lead to improvements in society?  Fair wages, good governance, increased equality, better access to finance to all  etc.  Will the goods and services produced enhance life in our communities?

E= Economic – will the project work economically? What payback periods are we looking at here?  How can we encourage doing the right thing even when payback periods may take longer than usual business conventions would allow?

W= Wellbeing or health – the Danone mission is to improve health for the greatest number of people through food.  If the project does not fit the mission then it will not move forward.

A Plea to LEP Board Members

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Do you ever question the belief that more economic growth is the only route to recovery?

That we can consume our way to a ‘better’ future by simply consuming more stuff, more quickly?

Do you ever consider that perhaps it is time to at least be open to the merits of leading in a different direction?

I am neither anti-capitalist, nor anti-growth but recognise these are double edged swords rather than cure-alls.

Working with Danone recently they introduced me to their compass test of business development, where any change has to meet the challenges of the four compass points.

  • N = Nature – can the proposed development be sustained in a one planet scenario? Does it fit with the laws of nature?
  • S = Social – will it lead to a socially just and improved situation?
  • E = Economic – will we see a return on investment? Usual investment and payback protocols apply and can be flexed
  • W = Wellbeing – will the proposed project increase health and wellbeing for the most people

Yes, the E matters. But not at any cost. So please encourage the LEPs to explore scenarios much more interesting than just the accrual of GDP.

Be more than just mere ‘whipping boys’ for the Treasury, and help us to find a genuine New Deal.

Reasons for Not Doing Micro-Enterprise Support

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So just why is it so rare to see decent business support provision developed specifically with the micro-enterprise in mind?  Well I suspect because there is a perception amongst the powers that be that it is hard, expensive and wasteful.

  • There are just too many micro-enterprises to offer more than a generic website.
  • Micro-enterprises are just too heterogeneous – they all have different wants and needs.  There is no one size fits all solution for them.
  • They just don’t have the capacity to absorb and act upon the services and guidance we offer.  There is no HR team to work with our skills offering, no marketeers to get involved with our business development work.
  • Micro-enterprises just aren’t able to engage strategically with support.  Everyone in the micro-enterprise is too busy doing their day job to invest in their development. They have no discretionary time to invest.
  • There is little return on public investment in micro-enterprise. They start small stay small and die small.  They are just lifestyle businesses that have little potential for job creation.
  • We don’t really understand them.  Our boards and committees are overloaded with people from big business.
  • To make a significant economic impact it is much easier to work with the big employers.  One big employer could trigger thousands of apprenticeships across the UK.  We might need to work with 10 000 micro-enterprises to find just 100.
  • Big businesses understand how the game is played.  They come to breakfast meetings, read policy papers and generally know how to work with the system.  Micro-enterprises tend to be much more opinionated, impatient and generally difficult.
Personally I think that each of these are actually reasons why enterprise support should be emphasised.  It is a massive market, driven, focussed and unlikely to indulge in pointless grandstanding and meetings.  The diversity of the sector means that is faces every problem and opportunity imaginable but also that the sector has all of the experience and skills within it that it requires.  The challenge is to get the know-how flowing. HINT when dealing with a large market this is not done by fielding a few experts.  If we can influence just a small part of the micro-enterprise market then we can make a massive difference.
Perhaps it is time we changed the rules of engagement to recognise how micro-enterprises work.  Drop the committees, agendas and the policy reviews and start committing to action and learning instead.

The Alternative LEP and Micro-enterprise

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Our alternative LEP will have a board stuffed full of owner managers of micro enterprises.

Don’t get me wrong we will have ‘token’ small and medium sized board members too – but will draw the line at Big Business. They have enough lobbying clout and influence to fight their own battles.

So what type of policies would our board look at developing?

  1. Programmes to promote local supply chains and sourcing from micro-enteprise wherever practical
  2. Conduct a major overhaul of commissioning and procurement processes in the public sector (local authorities and NHS as primary targets) and where possible big businesses to ensure that they are as micro-enterprise friendsly as possible
  3. Divert training and learning budgets away from FE colleges and pay owner managers to take on apprenctices and teach them current, commercial practices.  Move the locus for learning from the class room into the workplace.
  4. Develop ways to enable micro-enterprises to co-operate and collaborate so they they can punch above their weight. Promote collaborative consumption and production.
  5. Promote local economy arguments and the importance of keeping cash in local peoples hands rather than handing it over to multi-nationals

What other policy areas would an alt-LEP that understood micro enterprise seek to develop?