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Phone Co-op members demand clear limits to risk 6 February 2018

Posted by cooperatoby in cooperative, Social enterprise.
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I am now eagerly awaiting the decision of the Phone Co-op board following the decisions of the AGM last Saturday in Sheffield. The meeting, which was attended by 153 people – about 15 of whom were not members – voted overwhelmingly to support two motions critical of the co-op’s new growth strategy and asking for greater transparency and care with the members’ investment.

Overall the experience of the AGM was very pleasant: a convenient venue right opposite Sheffield station, a copious lunch served in an airy atrium, and a lecture theatre fitted with electronic voting equipment.

Even better were the two guest presentations: the first from Jean-Paul Flintoff introducing the 1 Million Conversations campaign. “A transformative conversation may only take five minutes,” he said, brandishing a mug designed to stimulate exactly such talk. I was disappointed not to pick up one of those mugs myself – I’m sure they’ll become collectors’ items. The second presentation was by Vivian Woodell (ex-CEO) and Dame Glenys Thornton on the plans of the newly-established Phone Co-op Foundation.

The meat of the meeting was however more serious, and concerned the whole culture and strategy of the co-operative.

Part of the solution to inequality?

I moved the first motion, which noted the apparent doubling of pay differentials to a ratio of 10 to 1. I alluded to my previous jobs where pay was much more equal – above all at Suma, which now has 162 workers and has practised equal pay for upwards of 40 years. I mentioned Wilkinson and Pickett’s 2009 book The Spirit Level, which correlates income inequality with a host of social ills from obesity to imprisonment. I said how much I admired the Phone Co-op’s balanced model of development, the way it cares for members, employees and the environment, and the impressive contribution it makes to the co-operative movement. “It is indeed the inspiring ‘better model for business and the economy’ that it claims to be,” I said. I called on the board to continue their commitment to honest and open communication about recruitment – and only 2 members disagreed with that, while 89 supported the motion.

The second motion was moved by Simon Blackley, who chaired the co-op for the first nine years of its life. The motion queried the ‘dash for growth’ strategy that had been briefly set out in the annual report. While welcoming growth, he felt that the upside of the plan was unrealistically ambitious, while the downside was downplayed. That downside has already absorbed a quarter of the co-op’s reserves of ₤1m, and risks eating into the member’s share capital of ₤7m. Seeing as this capital is withdrawable, retaining the members’ trust in the liquidity of the co-op is paramount.

A credible plan?

Interim CEO Peter Murley had already given much greater detail on the new growth strategy he has masterminded since his appointment in the middle of last year. His starting point is that the co-op is “A telecoms business with a co-operative USP, not a co-operative with a telecoms USP”. He believes that the co-op has underinvested in systems as well as in people, and that it must achieve critical mass or wither on the vine. This means achieving a sixfold increase in customers and targeting the business market, which is growing four times faster than sales to individuals. This turnround requires the co-op to sustain losses of ₤2.3m before reaping the reward of much higher profits.

All business plans follow this curve, so the question is whether it is a credible projection – and whether it is fair to risk the members’ investments without a more inclusive debate. In the 3 hours at our disposal, and even by overrunning for ¾ of an hour, debate had to be curtailed. But at the vote, 79 members supported the motion, with 12 against. Some members had had to leave by then, and at least one, attending by internet, reports that he could not vote.

These two reverses leave the board, and the new permanent CEO Nick Thompson, who takes up his post on 19th February, with a tough nut to crack. One solution proposed was that the coop could issue a separate class of shares to fund this investment. Then members would be clear about the risk they are sharing. I for one would buy some.

Video of the AGM: https://www.youtube.com/watch?v=tOw0qFOk3d0 (I am on at 2:44:40)

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Community wealth building through anchor institutions 3 October 2017

Posted by cooperatoby in cooperative, social economy, Social enterprise.
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A report to the British Labour Party analyses the characteristics of different forms of ownership of businesses – co-operative, employee-owned, local, municipal and national. It proposes the creation of ‘Anchor Institutions’ to promote local economic development.

Download Alternative Models of Ownership at: http://www.labour.org.uk/page/-/PDFs/9472_Alternative%20Models%20of%20Ownership%20all_v4.pdf

Further information:
A description of the work on community wealth building developed in Preston in north-West England, as part of the URBACT ‘Procure’ partnership:

Community Wealth Building through Anchor Institutions, Centre for Local Economic Strategies (CLES) can be downloaded at: https://cles.org.uk/our-work/publications/community-wealth-building-through-anchor-institutions/

Mission-led business – building another half-way house 13 June 2016

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The British government is trying to consolidate a newly-defined sector of what it defines rather broadly as the ‘social economy’.

It has coined the term ‘mission-led business’ (MLBs) to fit between social enterprise and corporate social responsibility. The definition is stronger than the latter in that it ‘identifies an intention to have a positive social impact as a central purpose of its business; makes a long-term or binding commitment to deliver on that intention through its business and operations; and reports on its social impact to its stakeholders’ – but weaker than the former because it ‘can fully distribute its profits’.

Rob Wilson, the UK’s Minister for Civil Society, has published a call for evidence on MLBs, saying: “I want every UK entrepreneur to be able to easily establish a business that makes a good profit while at the same time making a commitment to social impact. And I want everyone – consumers, governments and companies – to integrate mission-led businesses into their buying and investing habits.”

This initiative thus seeks to give an identity to businesses which want to a have a positive social impact – and who doesn’t? – but whose investors are unwilling to share any profit or power with other stakeholders. The definition is silent not only about ownership and participation, but also about the distribution of profits or assets. It relies solely on good intentions and social reporting.

The evidence will be considered by an advisory panel led by Nigel Wilson, CEO of Legal & General, but which has no representation from co-operatives, social enterprises or charities.

To comment, before 8 July 2016, go to: https://www.gov.uk/government/consultations/mission-led-business-review-call-for-evidence See the Pioneer Post report at: https://www.pioneerspost.com/news-views/20160512/global-social-innovation-round-34

See Senscot post – thanks Alison Lamond in Facebook Worker co-operatives group.

A slight change of tack? 14 April 2016

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It’s good news that Elżbieta Bieńkowska, the hitherto elusive Commissioner in charge of social enterprises (her portfolio comprises the internal market, industry, entrepreneurship and SMEs), has finally found the time to meet members of the European Parliament’s Social Economy Intergroup, as Social Economy Europe reports.

Sadly, one thing the Commissioner did not do is announce that the Commission is planning to launch a “Social Business Initiative II”, though this has been hinted at by officials. But she did at least signal her desire to avoid any potential rift between the two main tendencies in the social enterprise sector – those that institutionalise participation and democracy in their legal structures, and those that don’t. So the drift in terminology from “social business” to “social enterprise” continues and the buzzword is now “social economy enterprise”: “The Commissioner agreed on the necessity to share -within the different EU institutions- a common and inclusive understanding of the social economy. In this way, she stressed that the term “social economy enterprises”, seems to be the consensual one and therefore it should be used by the different institutions whilst developing its policies.”

Hopefully this hatchet-burying means that the Commission and the sector can concentrate on increasing the number, scale and impact of social economy enterprises. Their potential contribution is recognised. It would be a wasted opportunity if the Commission did not focus efforts on maximising it.

Social innovation & migration 5 February 2016

Posted by cooperatoby in Social enterprise.
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I’ve been thinking briefly about the relevance of social innovation to migration. Many social innovations rely on one of two mechanisms: user involvement and new technologies.

On the first point, the people who facilitate migration are typically portrayed as exploiters – people traffickers – but they are clearly fulling a market niche. They are providing services that migrants want to buy. The principal problems are price and quality – i.e. a high profit is being made through providing unreliable and dangerous transport and accommodation. If the public sector is unwilling or unable to find solutions, and the private sector exploitative, is there a third way?

Could one look at addressing the problem from the users’ point of view? Before the Second World War, migrant services like the famous ”Kindertransport” were laid on by philanthropists. Today, those looking to emigrate for whatever reason could form co-operatives to manage good value, safe means of transport.

On the second point, migrants already apply new technologies to this social problem, even if only by using Google Maps. But surely some Uber-like matching of supply and demand could also be useful.

Objecting that all this is illegal is not only inaccurate but beside the point: just as in treating drug addiction as a medical rather than a criminal issue, this is all on the principle of harm reduction.

Missing links 29 November 2015

Posted by cooperatoby in EU, Social enterprise.
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EQUAL archived website front pageThe other day I was dismayed to find that my habitual Google searches for ‘Social Business Initiative’ and ‘EQUAL’ didn’t work anymore. Both sites contain a wealth of useful reference documents on EU policy. Prime suspect was the Digital Transformation, the Commission’s search-and-destroy mission on its wonderful web presence, whose stated objective is to “help people find the information they are looking for quickly and easily” but which in fact has the opposite effect by erasing history and disabling countless external links.

Happily I found that links I’d previously written into Wikipedia articles still worked. What has happened is that the Commission has obscured them. In the case of the SBI it’s an accidental result of the merger between the Enterprise and Internal Market DGs, and in the case of EQUAL it seems to be sheer bloody-mindedness that the EQUAL archive site is hidden from search engines.

Anyway all is not lost. Here are the links: SBI: http://ec.europa.eu/growth/sectors/social-economy/enterprises/index_en.htm

EQUAL: http://ec.europa.eu/employment_social/equal_consolidated/

How to support innovation using the ESF 11 November 2015

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Social innovation is one of the buzziest words of the last few years – but once it is mentioned the almost inevitable follow-up is – “whatever it means…” Everyone knows that social innovation is a good thing, and they want more of it, from more people. But how do they know whether they have it or not? Even more problematically, how can they encourage its emergence?
In some senses this dilemma is a long-standing one: the European Commission has habitually refused to answer the question “what is innovation?”, retorting that “if we knew what it was, it wouldn’t be innovation”. Sometimes I have suspected that European programmes place such a premium on innovation purely because that is the institutional space left for them – the day-to-day stuff is left to the Member State level.
The popularisation of the social innovation meme by President Barroso and others has raised the stakes. In transnational work in the ESF, for example, social innovation is supposed to be mainstreamed. And innovation has to be more than creativity – it implies rigorous management in making change happen.

Flanders institutionalises innovation

Flanders is a region that has got ahead through innovation, and the Flemish ESF Agency is one of the few to take a serious and structured approach to encouraging innovation. It devotes 8.5% of its ESF budget – €32m – to innovation and transnationality. On 26-27 October it held a seminar in Brussels to selflessly transfer to other ESF managers the results of an 18-month project to improve the way the ESF supports innovation: Meer werk maken van innovatie voor werkgelegenheid en arbeidsmarkt. The project involved partners from the Czech Republic, Sweden and Poland. 70 people from the ESF all over the EU community attended the event.
Project activities included a literature review, study visits and exchange events, and its results are presented in a comprehensive 396-page toolkit. This focuses on service development but also says something about systems innovation.

Theoretical framework

The first thing to say is that the seminar was hard work – and I mean that in a good way. The content was challenging – even the bits when the participants were supposed to have the luxury of sitting back and absorbing presentations. When it came to doing exercises the effort demanded was even more. But it was well worth the effort, and Benedict Wauters is to be thanked and congratulated for sharing his results.
The content was unique in my experience in that it combined the most abstruse of theory with the most hands-on of practice – and took in some illuminating practical examples along the way.
The theoretical framework Flanders has adopted is based on Theory U which emphasises interactions between people, works upwards to transition theory and has the final goal of improving human welfare and development.
The theoretical underpinning came in the form of presentations from two EU-funded research projects on what social innovation is.

• Theory 1: A multilevel theory of transition

The first is TRANSIT (Transformative Social Innovation Theory), presented by Flor Avelino from Erasmus University in Rotterdam.
In her vocabulary, a transition is the sort of high-level innovation that takes between 20 and 50 years to occur, and is further-reaching than the three lower levels, a systems innovation, a process innovation or a product or service innovation. Transitions evolve over time: the challenge of peak oil became that of climate change and is now all about the economic crisis.
She defined 3 levels of socio-economic processes:
• The highest level is the landscape or underlying process such as climate change and population ageing
• In the middle comes the socio-economic regime, or set of dominant practices – such as an oil-based economy
• At the lowest level come niches – spaces for innovation that are opened up by technological developments – such as wind power or car-sharing
The theory holds that the regime will defend the status quo, so one of these transitions will happen only when it gets caught in a pincer movement from both sides at once: caught between a shock in the landscape – such as climate change – and the opening up of a technological niche like a new form of energy generation. To my simple mind this is a more developed way of saying there has to be both a supply and a demand for innovations, and no barriers in the process of matching them. But the theory puts it in dialectical rather than market terms.
Flanders SI -  the bigger picture of innovation.
A multilevel strategy for transition management therefore involves playing into landscape developments, challenging regimes and empowering niches to scale up.
Social innovation involves a change in the social relations through which we know, frame, organise and do things. This brings to the fore the concept of agency – what can people do? It is expressed in a set of new social movements which challenge the status quo. The project is studying 20 of these, focusing on Europe and Latin America, and including Impact Hubs, Ecovillages, Fab Labs and RIPESS.
The project is looking at how different narratives of change interact, including, in the field of ‘new economy’, the green economy, the collaborative economy, social entrepreneurship and the social economy, and the solidarity economy – i.e. changing the whole economic system including the private and public sectors. What they have in common is that they are hybrid – they challenge the boundaries between public and private, formal and informal, and for- profit and non-profit. Above all, they involve a shift in power relations. However it is unclear how power is shifting – in the case, for example of Airbnb. What seems like a transformation may in fact be a capture by the existing regime.

• Theory 2: Capability theory

The second research project, CRESSI – Creating Economic Space for Social Innovation, was presented by Nadia von Jacobi of Pavia University. It is applying Amartya Sen’s Capability Theory to social innovation. Basically this holds that social progress is about expanding people’s opportunities; it is not only about the resources people have, but the choices they can make. From a given set of resources (or endowments) – which include the physical environment, institutions, social networks and cognitive frames – people are subject to a set of ‘conversion factors’ – such as their individual traits and the context they find themselves in – which determine the ‘capability set’ of choices they have open to them. Social innovation occurs when the functionings people achieve feeds back and influences the resources available.
If people are to have greater agency, they need to be empowered. They need to have various sorts of power:
• power over – you can resist manipulation by others
• power with – you can act in groups
• power to – you can create new possibilities
• power from within – you can change yourself
Social innovation involves people forming networks and exerting power on three forces in society: institutions, social networks and cognitive frames. This bottom-up approach overcomes the pitfalls of the top-down logic, which treats people, as target groups – patients rather than agents, underestimates complexity and assumes it is neutral with regard to the existing asymmetry of power.

An example of service design

As regards practical tool for social innovation, seminar participants had a choice of two, and I chose service design, presented by Kelly Pollard and Laure Monbrun of PearsonLloyd, a London-based designers. In the A Better A&E project the consultants worked with the UK Department of Health and the Design Council to improve the quality of the waiting experience in accident and emergency depart¬ments of hospitals. The objective was to reduce aggression and violence against A&E staff, of which there are 55,000 cases each year in the UK, which cost the NHS €95m.
Flanders A better A&E resultsThe process they undertook was a little counterintuitive. Instead of tackling head-on the relatively small number of case of direct physical violence, they decided to reduce the frustration patients felt all the way through their visit to A&E, thus improving the quality of life for a great many more people.
The process they went through is known as the ‘double diamond’ (not the beer I used to avoid in the 70s) and comprises 4 stages: discover -> define -> develop -> deliver. It involved talking to the stakeholders to learn about their behaviour and needs, mapping the patient experience, and developing a clear set of charts and signs which would make sure that patients knew what was happening to them at any given moment. They also produced guidance for staff and are developing a mobile phone application. Equipping a hospital costs about €80,000 and typically shows a return on investment of 3:1.

Designing ESF calls for innovation

The seminar’s third section showed us how Flanders organises ESF calls for innovative projects. It holds separate calls for two types of innovation:
• innovation via exploration – for people with a challenge they need to meet
• innovation via adaptation – for people with a service that works well and deserves scaling up

It gives each project a 100% grant of €50,000 for a first phase lasting 6 months, and if the result is validated (by external experts) then it gets a follow-up grant of up to €150,000.
Flanders SI double diamondThe process is rigorous: in the first 6 months, projects have to produce a concept description, an experience map, a high-level business model, a concept test, a report on field results – and plan for phase 2. It is estimated that about half the applicants will go through to phase 2, which lasts 18 months. Nevertheless Flanders has received about 30 applications under each heading, with a lot of universities figuring among the applicants, but also some NGOs.

Further information

Check out the toolkit and a series of presentations!

‘New’ social economy means non-social economy 15 May 2015

Posted by cooperatoby in social economy, Social enterprise.
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Oh dear another attempt to redefine democracy out of existence.
In the footsteps of the terms social enterprise, social entrepreneurship, social business, social innovation and social investment, all of which, brandished in the wrong hands, seek to take the mantle of the social economy and depoliticise it, we now have a takeover bid for the very term social economy itself. It comes from about as far away from Europe as you can get in this world, California.
In her blog Lucy Bernholz notes that Rob Reich, also at Stanford has “coined” the phrase ‘new social economy’ to mean, wait for it:

    Organizations and financial structures that deploy private resources for shared social benefits – i.e. the sector formerly known as philanthropic, independent or nonprofit.

A presentation setting this out is here and an audio lecture about how the established model of the social economy needs to change is here.

It is simply extraordinary and leaves me speechless that the project is to redefine the social economy entirely in terms of impact investing, with nary a mention of the “social” dimension of any ownership, decision-making, production processes or impacts.

Progress Microfinance not reaching social enterprises 13 May 2015

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The European Progress Microfinance Facility (EPMF) was intended to open up finance to social enterprises as well as other microenterprises. By March last year the 28 EPMF intermediaries had made 13,250 loans worth €125m. However its interim evaluation reports that only 4% of the loans went to social enterprises.

Some reasons for this are that social enterprises don’t make enough profit to repay a loan, and that they require larger loans than other microcredit borrowers (the maximum loan size is €25,000), and hence the lenders demand more collateral, which they don’t have. It notes that in countries such as Bulgaria they lack experience of borrowing and prefer to stick to grants, so instruments combining loan with grant may be more accessible.

The evaluators comment that take-up by social enterprises might have been higher if they had been a higher priority for the microfinance institutions which have benefited from EPMF loans and guarantees.

The EPMF is shortly to be augmented by another fund specifically targeting social enterprises, funded under the EaSI programme.

Visualising the interconnectedness of all things 15 January 2015

Posted by cooperatoby in cooperative, Leeds, Social enterprise.
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Twitter just alerted me to the existence of Wikigraph, a brilliant tool which shows the shortest path between two Wikipedia entries – and all the other pages they and the intervening links connect to. Here’s how close Suma is to being a social enterprise:
Wikigraph

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