Partnering with Business

Hi Rod, it's inevitable that in the future, everyone is going to be in bed with everyone else - government, business, and NGO's - combining public and private capital, to lift the residual prejudices that have existed for so long in societies. The trick will be the way trust is rebuilt.

Dear Jo

Thanks for your comment
You are absolutely right, operational promiscuity is a virtual certainty!
As the social enterprise sector we need to make sure that we emerge from this commercial orgy with our integrity still relatively intact
It would be a shame if we fell victim to the same systematic sleaze that seems to have gripped our MPs here in the UK, or some financial market participants globally!

But, to push the metaphor just a bit further, we cannot remain virgins
If we seek to meet the pressing challenges of tomorrow we require access to the capital, skills, distribution and experience of commercial partners

Thanks again for your comment which "broke the ice"!

regards, rod

Rod, I had no part in the development of the P-CED model, it had been put to the (then) US President in 1996 as a "what if" leading on the the sourcing of a development initiative in Russia which introduced Finca to Tomsk.

This was the model of a profit making business with an additional social return with a trust fund mechanism to provide seed capital. I invited the founder to the UK to set up an instance of it here. Within 3 months, he'd been blocked from re-entering the UK as a visitor and I sought help from politicians.

This included the (then) chair of the SEC, the APPG on social enterprise who both failed to reply. With a director returned to Ukraine, I'd contacted my MP who happened to sit on the APPG for Ukraine, for assistance.

His testy response was "I don't know what kind of business you and your business partner are involved in, but you can't expect me to interfere..."

I resisted the temptation to inform him that it was social enterprise, made part of government policy by his part 2 years earlier. Then the APPG on microfinance rejected the offer of a presentation on microfinance in Russia.

Now this I where I'd disagree with what you'd written about celebrity in that article. From out of left field, we'd experienced only the establishment's cold shoulder, whereas Belu and BIT arrived with great media coverage.

Even now, we find that the social enterprise media doesn't want to know. An illustration being a comment on this article after describing what we'd been doing in 'swords to ploughshares' efforts in Eastern Europe which leverageed US government support by making the case for "economic smart bombs" rather than Cruise missiles.

http://www.socialenterprisemag.co.uk/[…]/index.asp?id=622

On Social Edge, I've engaged in discussion about what we've been doing for 4/5 years and yet there's no connection between this, which started with a suggestion on how capitalism might be made more inclusive to find the same case proposed, inside the Said Business School a few weeks ago. What we contributed, as a social enterprise for over a decade might just as well be obliterated.

For reference, here's the interview on the peace activism and a "new form of capitalism" given in 2004, to the leader of a Washington diaspora.

http://www.iccrimea.org/scholarly/economicdev.html

Jeff

Provocative questions Rod, and my perspective may be unusual because we've always been a business rather than a nonprofit.

Since we set up in the UK revenue is derived from IT services, which in the main supply corporations and government, with a sprinkling of small charity or nonprofit groups. None have any particular interest in what we do with our revenue but we've experienced dishonesty, from central government in particular.

There are sectors, local government for example, who allegedly support social enterprise, though in practice they tend to be very resistant paying for services they've called on.

From the public sector, for example the British Council and NHS I've had to wait up to 3 years for payment. Both in theory are supporters of social enterprise, they just don't expect one to be a supplier. Guardian Media group, with a lot to say in print about social enterprise but in practice a late and reluctant payer.

As we work, in our social context in Eastern Europe we know Telenor also as a victim in that they'd had their business snatched from them. as is the way, in Russia. You're probably aware of their stake in Vimpelcom and the link with British Virgin Islands, the locus of another spat in Ukraine over the funding of Vanco, with bearer instruments to conceal the identity of investors.

Most will know about the way in which BP fought its way into partnership with TNK and we'd been publicly critical of their alignment with Kremlin policy in economic pressures on Ukraine. Again, when their CEO fled Moscow, demanding sequestration of oligarchs assets in the UK.

We've often spoken out about greed in business and no more so when raising awareness of children who perish due to neglect as a consequence. That we seem so deeply involved with our tax havens, our own politicians and businesses is the point at which it reaches obscenity.

Then there's Google, who for 3 years have hosted a smear campaign about our work. Unsurprising, we're not popular where we speak out about graft.

Can we do anything to ensure fairness? Well we're trying, but it's a pretty lonesome place.

Jeff
   

Jeff
Thanks for your comments
There is no monopoly on virtue, but you are right, some companies really push things--but I have also seen some social enterprises behave unethically
regards, rod

Either a partner helps you or they don't.

You are drawing a false distinction: successful partnerships and collaborations do not depend upon IRS tax status or organizational designation, they depend upon practical due diligence and good dating habits.

Tell Grameen to grow up and quit whining; they've been around and are long enough in the tooth to know better.

If one looks into the complaints made by Yunus, there seems to be far more to be concerned about then defining terms of engagement. It reaches into child exploitation, unsafe working practices and allegations of money laundering in association with another firm.

http://www.mytechboxonline.com/[…]/mobility-yunus-0908.html

Yunus takes the entirely justified position that an organisation set up to help the poor is by association, condemned for the acts of a partner that work against that cause.

In recent times, I've discovered a recording made by John Spedan Lewis, earlier in the history of this now omnipresent retailer. In 1957 he refers to the greed and perversion of capitalism which ultimately lead us to a state governed without our consent, or as we might put it today where greed trumps democracy.

We spoke out, or whined about exploitation of children in Ukraine for instance, because their laws oblige both natives and residents to do so, should they encounter it. When corporations become so powerful that they purchase enforcement of law, then to all intents and purposes the state becomes lawless.

Jeff

   

Dear Mark

Thanks very much for your thoughts
You are spot on with both your remarks

As I said above, no sector has a monopoly on virtue
"Good dating habits" are key--I like the phrase!
Social businesses and enterprises need to size up those they wish to collaborate with as potential partners--and as you say, their tax status is pretty irrelevant in this judgement
For good due diligence there is no replacement and laziness in this regard will bring its just "reward"

Tell me about SocialWealth either here or by email to rod@clearlyso.com

best, rod

Great area for discussion, Rod. The question of melding “mission” and “marketplace” is so critically important to the area of social enterprise that it requires the depth of consideration and seriousness of purpose that a destination such as SocialEdge could give. Unfortunately, your introduction of the topic, with its (real or dramatic) biases, pejoratives and hyperbole, is likely to get us off-track of focusing on where we might help each other as a community, namely, what standards should we use for evaluating when (and when not) to enter into these types of partnerships and what learning can the community provide from applying those standards.

In an effort to re-frame the discussion, let me make two points (for the moment).

1. As a starting place, this is not about social enterprises doing good and businesses doing evil, but about properly understanding each organization’s “blended value” and building from there. Often, we are confused in the “mission/market” discussion by the broken, binary thinking that the world has taught us to accept – business and capitalism are greedy and bad, while non-profits and social entrepreneurs are saintly and good.
First, this is false thinking! I've seen some pretty great businesses in my time, businesses that have honored their employees with a more livable wage than many of the non-profits I know, while at the same time taking care of a variety of other stakeholders and provided profitability to investors. I’ve also seen some pretty bad social enterprises, where the outcome was very close to fraud on investors and stakeholders alike. Which of these two organizations would you consider the better “social” enterprise – Patagonia which, among many other things, donates 1% of all revenues to the planet and is working to acquire the land to create the Patagonia National Park, a world class park similar in size to Yosemite, or the Susan G. Komen Breast Cancer Foundation, which organizes the annual Breast Cancer 3-Day walking events nationally, but can only manage to put forward 13 cents to its cause for every dollar it raises.

Second, this type of thinking does an incredible disservice to the field of social entrepreneurship by ignoring the work of people like Jed Emerson. Jed’s “blended value” concept, when applied correctly, would have us evaluate every organization according to its blended value (lack thereof or even negative value) with respect to profitability (or efficient use of capital), planet and people. Thus, his now-famous example of comparing The Girl Scouts of America with Wal-Mart and the value each produces in ways that we might not readily consider (e.g., the economic value to the Girl Scouts of their sales of 170 million boxes of cookies annually versus the positive social value of Wal-Mart’s employment of 1.4 million people world wide).

Once we shift the dialogue from the idea that some organizations are good and some are bad, to measuring the blended value of each organization, then we can begin the right discussion.

2. With existing organizational structures, mixing mission and marketplace is not easy and requires thoughtful consideration of purpose. In my talks on the issue of creating the types of hybrid arrangements (either in one structure or among two or more entities), I often say that melding mission with marketplace objectives raises five friction points. The first such point (from which most of the others follow) has to do with purpose.

Melding the purpose of an organization primarily focused on a social mission with one primarily focused on financial return will always cause challenges. Why? Because the “capital” that is brought to the enterprise by each will be valued differently and will have different objectives. The social capital will value impact and will seek that impact over the short, intermediate and long-term. In contrast, the financial capital will seek an internal rate of return (“IRR”) that is dependent upon both the size of the return and the period over which that return is provided. Thus, I often speak of the need for the social capital to “anchor the mission,” while at the same time seeking to provide the appropriate IRR to the financial capital. This can only happen when both sources of capital are clear about their purpose.

And so, your examples again create false choices. Whether two organizations can partner together does not depend upon some evaluation of what is “good” and what is “not good” or the creation of some false “lowest common denominator” of a purpose below which no social enterprise should be affiliated. (After all, by whose values would “good” and “bad” be evaluated? And even if we could agree on that, isn’t there some concern for the diversity of views that might challenge the status quo, even if the status quo were yesterday’s outlying view?) Rather, the relevant question is one of whether the two purposes can be melded in a way that produces a positive synergy and a benefit to both.

This is where certain partnerships simply would never work. For example, no one would expect the American Cancer Society to partner with a tobacco company. But regardless of your personal view on cigarettes, shouldn’t we be applying standards that would applaud a tobacco company that employed processes to eliminate carbon emissions, produce zero waste, empower stakeholders and also made annual grants to Kiva to help create micro-enterprises in Africa? Whether Kiva would want to accept the funds, on what terms, whether the tobacco company gets publicity from Kiva and all of the other details would be items for negotiation between the two organizations. But at the end of the day, you can’t really be arguing to this community that the money from a tobacco company is too tainted to help save lives in the majority world, can you?

Let's see how the discussion ensues from here.

Again, great topic!

This is defiantly a great idea for a discussion given the fact that cross-sector partnerships are gradually being regarded as central to achieving sustainable ways forward. However it is still an evolving concept and there is considerable flesh still missing from the bones.

The two points that mr. Johnson makes are very important.

Blended values (i haven't heard the term before in that partnering paradigm but it suits very well) are one very important reason why multi-sector partnerships offer something no one else can to sustainable value. however if this cant be achieved then partnering might not be the right solution for a given social/ developmental problem. All sectors bring in different expertise and capacities. A successful partnership is able to appreciate these different competencies and build on them. Traditionally the private sector is assumed to bring with it funding and technical contributions, the public sector monitoring and regulation and civil society links to the community (among other things as this is defiantly not an exhaustive list). The key is that if a partnership is able to recognize the different skills and competencies different actors are bringing to the table and is able to build on these then the partnership is something worth pursuing.

I do agree with the earlier comment that it can be tricky given that different sectors may have completely conflicting priorities and different motivations for entering into the partnership. However a partnership is about trust without this no partnership (whether between sectors or people) should exist. A healthy partnership acknowledges these different priorities and respects them. It is very important for a successful partnership to embark on it with each partner understanding others' incentives and motivations for entering into the partnership as well as what success would look like to each of them. However this needs to be done right at the beginning of the partnership in the form of an open and honest discussion between all partnering institutions (this is suggested by most institutions focusing on Partnering as a sustainable development model including the Water and Sanitation Clusters practitioner note series as well as by The Partnering Initiative's toolbooks) which would allow for individual motivations and goals to be able to be reworked into something that the whole partnership buys into.

Its interesting how all of this sounds like simplistic common sense based comments but partnering in the end is something carried out between humans and is all about proper communication. At the Partnering Initiative we believe that there are 3 principles without which a cross-sector partnership is not a healthy one. These are:

Equity (implying an equal right to be at the table and a validation of all contributions tangible or not measurable simply in terms of cash value or public profile), Transparency (Openness and honesty in motivations, incentives and working relationships) and Mutual benefit (working towards achieving specific benefits for each partner over and above the common benefits to all partners).

If these basic principles are enshrined in the agreements and structures of the partnership there are definite chances that the partnership will be a healthy and successful one, both in terms of social outcomes and relationships between the partnering organizations.

Hi Hanniah,

You'll remember me contacting you some time ago having responded to the IBLF article by Prince Charles which called for 'New models of engagement to combat poverty' and that I was unable to get a response.

I've since contacted IBLF several times, as I've read of suggestions to collaborate with social enterprise and participate in human rights assessment. None have been responded to.

Our main motivation is to extract children, particularly those disabled from hell-holes where they are neglected abused and sometimes 'farmed' for profit and finally recycled to a life of street crime, drugs and prostitution which helps fuel an HIV epdemic on Europe's doorstep. A situation now so critical as to warrant a major conference on 'children at risk' but not it seems a response from IBLF.

Like you we believe in an equal right to be at the table, but this remains to be demonstrated as far as we observe.

Jeff


From: "Jeff Mowatt" <jeff.mowatt@btinternet.com>
To: Desiree.Abrahams@iblf.org

Dear Desiree,

As a small business operating as a social enterprise I took interest in the IBLF Human Rights area of operation.

Our UK business funds a mission in Ukraine and in March 2006 this took a turn in the direction of disabled children in care. We published a blog 'Death Camps for Children' which explored solutions to the problem.

http://eng.maidanua.org/node/581

It was followed up with our strategy paper for a microeconomic 'Marshall Plan' which reached the US Senate in October 2006.

From then on we saw responses from both US and Ukraine's government described im my earlier message.

In February 2008 a locally based charity stood up alongside us and spoke out when a boy in care reached such a state of malnutrition as to starve in spite of emegency attempts to save him He went on to reveal graves dug in preparation for the expected 8-12% death rate each year.

http://www.deti.zp.ua/eng/show_article.php?a_id=5219

A conference, 'Orphans and the Church' last month in Donetsk introduced us to another 150 deeply concerned chrch and NGO leaders, who had no so far spoken publicly. Some suggested there was sufficient evidence to support a case at the Hague. A representative of government revealed that 80% of funding is estimated to be taken by mafia.

Whether this has relevance to the forum you have planned I don't know, but we are a UK business standing very much alone on this issue and to be frank, surprised at the lack of response given the apparent congruence of what we do with your own aims.

Regards,

Jeff Mowatt
People-Centered Economic Developmen

Jeff,

I don't think that your comment is appropriate considering the topic of discussion. Additionally posting emails and email addresses would also be a Grey area as far as blogging/ online discussion etiquette would go.

I speak on my own capacity and not that of my institution when i say that I forwarded your requests to relevant people who might be able to work with you as i don't work in your region or sub field, after which it is no longer in my hands. As you might understand our field isn't one of solid answers and is as much about finding something in common with others to work on, as it is about affecting good in general. Just because something is a good idea doesn't necessarily mean that we would get involved. I hoped to get you in touch with someone that you might be able to find something in common with in the IBLF to work on as we have very specific programmes that we engage in.

I however am working for the partnering initiative which is a branch of the IBLF. My comments here are to do with this particular discussion and i would appreciate being able to join in on discussions on the socialedge without the vexation of having to connect everyone to my institution (which i don't mind at all and will always try to do but only if i can find someone interest/working on something similar at the moment and i would very much like that to be respected).

Hanniah, I apologise about the email addresses but I wanted to illustrate that this wasn't an imaginary message. IBLF suggested participation in a human rights discussion on the web site and I responded, having something to contribute.

I'm not aiming this at you personally, but at an organisation which solicits participation and fails to respond to those who do. If IBLF don't have any common ground with an organisation which has been working in the area of business solutions to poverty and human rights for the last decade and has results to offer, then a polite refusal would suffice.

If IBLF don't want to communicate, then I respectfully suggest that they don't invite it.

Regards.

Jeff



 

Jeff/Hanniah
I have to agree with Hanniah on this
I think personal and "off-the-subject" gripes should be kept off-line
We should try to keep to this topic here
Apologies to the readers!
rod

Rod, Please understand that this is far more than a gripe, it's about partnering with business, and being accountable in social purpose.

12 years ago we started in the US with a founding concept of a more inclusive economic paradigm, a 'new form of capitalism' and brought that idea to the UK as a profit for social purpose business in January 2004.

http://www.p-ced.com/about/history/

 Within 3 months, our founder discovered he was not welcome to re-enter the UK as a visitor. I'd approached the SEC chairperson for support, before becoming a member, and was disregarded.

The economic paradigm delivered proof of concept when applied in Russia to pioneer moral collateral microfinance there, by persuading government to invest in a microeconomic strategy. Last month, the same concepts seem to have been up for discussion at Oxford, with none of those attending aware of this early progress, in spite of my discussing it here on Social Edge over the last 5 years.

http://www.p-ced.com/projects/russia/

In Ukraine where our mission is focussed on orphans and the toxic business which exploits them directly there was no concept of CSR, precious little social enterprise, 3 years ago when we exposed the Death Camps for Children.

http://eng.maidanua.org/node/581

It hadn't been the first time of speaking out about corruption or human rights as a business. Nobody stood alongside when our founder made a stand about non-transparency of government in Crimea. That someone was calling out their government shocked a nation, one where a democratic revolution had been simmering.

http://eng.maidanua.org/node/331

After launching in London he was interviewed by and explained this more inclusive capitalism to a diaspora leader.

http://www.iccrimea.org/scholarly/economicdev.html

Now, when an organisation calling for engagement on these same issues refuses to communicate, they appear to be unaccountable. When a University discards research and progress, there is no learning and when a government locks out those with more progressive ideas than their own, there can be no democracy.

We are making a stand in Ukraine for those most disenfranchised, the ultimate victims of greed based capitalism and toxic business. Where assets are stripped by business to remove fundamental healtcare provision.

http://www.deti.zp.ua/eng/show_article.php?a_id=5219

As a social enterprise, what we produce is an investment into social purpose, and the strategy paper based on the concepts I've related above has begun to create change, but not enough and not quickly enough.

In 2008 at Davos, US government response to the call for a 'Marshall Plan' based on the 'new form of capitalism' was the East Europe Foundation which them began encouraging CSR and 'sustainable community enterprise'.

http://www.p-ced.com/projects/ukraine/national/

Back in the UK, which might well read as back in the USSR when one considers the closed experience of social enterprise orthodoxy, none of this is known, let alone understood because there's a conviction that it hasn't been invented here yet.

         

Dear Hanniah

Thanks for your post

It is hard for me to comment because I agree so much with everything you said. Of course it just sounds like common sense, but what is wrong with that? Things need not (and SHOULD NOT) be so complicated to work effectively, and if they are too complex, they are very likely to fail

What you do at the Partnership Intiative sounds interesting (can you give us your URL please?). I have copied out your three rules and sent them to a potential partner we are working with right now.

Thanks again
rod

Dear Rod,
More agreement on this side on things being made simple. Last year i was developing a CSR self assessment tool for small companies in the developing world and was told to give a presentation of it to someone quite accomplished. I felt quite embarrassed doing it because i felt that it would seem too simplistic to someone who had been working on integrity for the better part of a decade with large multi-nationals. When i mentioned that later, he really made me feel better by saying that the most intelligent thing we can do in our field is to make it simple. I guess the soft side of sciences (social sciences etc) have always had to justify themselves by sounding intellectually lofty and this really should change. Human relationships are simple and value based and should be portrayed as such.
The partnering initiative would loosely be a unit that has lots practical experience in supporting individuals, organizations, and systems to promote and develop partnerships for sustainable development. Things like the principles and our toolbooks etc have all been put together through practitioner feedback and from the field and all of it looks like common sense... i think that is the beauty of it. It keeps things assessable. our URL is http://www.thepartneringinitiative.org/. Give it a visit, it is filled with resources... in particular i would suggest downloading our tool book series (if you download the pdf its free) that help support every stage of partnering cycle from initial planning, to communicating within and outside the partnership, to moving on when the objectives are reached. The entire series is available to download for free on http://www.thepartneringinitiative.org/publications.jsp....
i find them very logically set out and filled with helpful suggestions to the partnering process healthy.
Hanniah

Dear Hanniah
Hear's to simplicity!
And thanks for sending the links through--will have a look
best, rod

Dear Todd

Thanks very much for your thoughtful and thorough post

Your challenge regarding what the real issue is a fair one
With respect to my introduction, you should appreciate that its purpose was to evoke a discussion of some if the issues, which I think it has done
Please don't get too worked up about the examples I chose--they are all only mean to highligt in a vivid way, some choices social entrepreneurs and businesses do face

And I accept fully the notion that there is good and bad in all structures--a point you make very clearly on a couple of occasions

In terms of the disservice I do to some, it was not intentional on my part
Social Edge gives us a certain number of words and it is all we can to flesh out some arguments in the space alloted
In addition to Jed Emerson I am sure there are dozens of people whose contributions I coul have usefully included--apologies to them all

Lastly, I really like your example of Kiva and whether or not it should take cash from a tobacco company--and for that matter, whether or not the American Cancer Society should have aything to do with them
very thought provoking

Thanks again
rod

This is one of the questions that we have been asking ourselves for the past five years, and we have reached the following conclusion:

[Corporations, businessses, NGOs, civic organisations, SEs and goverments are made-up of various "human" bodies, some good, some bad, some indifferent and some evil.] ... a true russion salad.

So, for us anyway, the question is not about structures but about people, more specifically at the "singular" level.

A few years ago, we integrated components of the "blended values framework" from Jed Emerson into our model, ammended it to suit our purpose and currently it is one of the key components in our own model.

Jed was an inspiration ... in that a "lot" of what he says made common sense.

Then we found Raymond Kao, again his economic framework refered to as entrepreneurism ... also made sense.

as well as the likes of John Elkington views, etc ... too many to quote here, plus our own views, values and purpose.

So back to the issue ... we "identify" PEOPLE we can work with, people that is within the same space as us ... and yes, some of them work in the most unlikly places ... and we see them as "internal" agents of change.

In Portuguese we have a say "soft water that keeps on dripping on a rock, will eventually break trought the rock and create a channel" (it is an idiomatic sentence ... so I hope it makes sense in English) ...

Having identified the above, the next question confronting us was:

How can we "empower" those individuals to be facilitators of change ... change to motivate a shift from greed, thirst for power and unabated consuption ... to addressing the needs of generations to come, the people, nature and the planet?

This took us back to the drawing board, and we asked ourselves what is our role as "humans"?

We realised that our role is one of custodianship and stewardship ...

So, now, if we partner with "anyone" on specific proects, we transfer our custodianship and stewardship role to our partners ... and by doing that it acts as a "natural" selection process. Because with transfer of cusodianship comes inherent responsability and accountability.

We beleive in the principal of "value exchange" in all that we do, and it must not have negative impacts on either humans, nature or the planet or negativly affect the survival of future generations.

With that as the benchmark, the rest is easier ...

We are now setting up the very first project using those methodolgies into action ... and we have had some hilarious responses, some interesting ones ... and lots of buy-in.

Take care
Laurinda Seabra
Empowerment Gateway Group

Dear Laurinda
Thanks for your comments--on this new discussion
You catalog some of the other names I neglected to mention--people whom have contributed ideas to the debate--thanks for that

Also, I love your Portuguese quote
It captures well the spirit of the sector
If one perseveres, even softly....much can be achieved

Lastly, you are right about what one transfers to partners
If we take transfers as seriously as you have we are on the right course for a successful partnership

best regards, rod

First, let me thank you all for some outstanding and incredibly insightful comments. I am trying to reply to each individuallly but am "experiencing technical difficulties" with the site. Hopefully I can reply shortly. In the meantime, appreciate your patience.

regards, rod
rod@clearlyso.com

Having had umpteen partnerships with public and private sector organisations over the years, some of which have worked and some of which haven't, I'd say it's all about the terms of engagement and getting them right at the start and taking the time to do so. My worst experiences have been with public sector partners because of the capital P politics so often involved. At leatw ith a privae business you often know exactly where they are coming from! In my experience the best partnerships are always mix of self interest and good will on both sides. And good lawyers!
I dont know the details of the Grameen phone problem but I do know that Professor Yunus does often rush into things in his passion to help the poor of Bangladesh - a trait too often seen in social entrepreneurs. The more recent danone venture went live very quickly and nearly fell over because of that. Passion is a must but so is hard headed pragmatism and patience.
It is so vital to spend lots of time not only scoping out the business deal but also the cultural and relationship issues.
Good news is that more and more businesses are interested in partnering. I wonder though if there are enough social entrepreneurs with the business smarts, scale and resources to be able to really leverage the opportunities?

Dear Liam

Astute as ever--thanks for your contributions--my comments;

1) There is no substitute for hard work right at the beginning. Both partners should challenge themselves that they are each getting value and each should challenge the other quite hard to ensure they both know where the other is coming from!

2) You know my views on politics and politicians. I cannot publish them here as this is a family programme! What is often true is that motivations are cloaked--a violation of rule 1) above.

3) Rushing in can be dangerous, but so many great social entrepreneurs do so due to their passion, which you mention. I reckon this guy (Yunus) has made mistakes, but then again he has got a Nobel Prize, so he must have got a few things right--I bet he also has a great team behind him!

4) many more partnerships are coming. Good for the movement and your business! I doubt there are enough good partners for business--hopefully that meansthe premiums coporations will pay to work with the good ones will increase!!

best, rod

To me, for me, the issue is a deep, systemic one.
Interbeing.

Interbeing means no separation between this or that me or you.
Anyone working as or with a corporation, NGO or government can lead a team with this deep harmonic energy and change everything.

When partnerships do not share a common aim, greed, fear and corruptive power can take over in individuals or awaken what was sleeping inside them. A few people with the rooted power of a mountain, but the softness of flowing water can model a behavior with transparency and purity that will embarrass others or even better inspire others towards this common aim of good.

Whether it works or not, is this not worth working for?

luaP

Hi Paul,
very curious about the concept of Interbeing you mention... i am always swimming through terminology for cross-cultural leadership/management but it is hard to find concrete work... is there some work done on this/examples from the field etc?
Many thanks
Hannaih

Dear Hanniah

Our sector is relatively bereft of good cases!
A challenge for all business schools and others

As for terminology, I prefer less to more

Have a great weekend

rod

I heard it at a seminar entitled, "Awakening the Dreamer", conducted through the Pachemama Alliance.

Dear Paul or luaP

Thanks for your contribution
Never heard of Interbeing before but what you say makes sense
and I can assure you, it does work
Hard to pull off, though

best, rod

Truly.

What I am offering is either an ancient, rather indigenous way of living or certainly the path I'm walking now in my businesses.
A path where few are going so deep beyond the mere transaction and profit motives.
I spread this message in all meetings, interactions and on my sites.

For instance, you can start to follow a video series I'm beginning to create about how to combine 21st Century marketing and sustainability, interbeing, etc.

Informal, unscripted simple conversations.

Perhaps this is a beginning? You are invited to post text or even link to video replies if you are savvy.

Good ideas here btw, glad to participate.

luaP (who until 2006, spelled his name more commonly as Paul)

Paul/luaP
Thanks for participating and for your kind words
regards, rod

I would say that these questions reflect a dichotomy between 'business' and 'good' that is fading. Furthermore, in some areas and sectors, it is doing so very quickly!

There are many indications to suggest that business can't, and shouldn't, avoid pursuing so-called 'social interests', in an era of rapid population growth and resource limitations.

Based on Coke's water pledge as an example of social initiatives pursued by businesses, Jacqueline Novogratz suggested (The Lexus and the Water Pledge,
http://blog.acumenfund.org/[…]/) that "many of the world’s new standards are likely going to come from corporations who increasingly see themselves as global citizens."

Jim Collins also identifies the outdated separation between for-profit and for-good enterprises in his addendum to Good to Great for the Social Sector. Here's hoping that, as R. Mark Hanna posits above, the business/charity becomes (entirely) "a false distinction: successful partnerships and collaborations do not depend upon IRS tax status or organizational designation, they depend upon practical due diligence and good dating habits." We will no longer judge organizations (for partnership potential, performance, or 'citizenship') based on their

Perhaps then we'll also be able to address the problems raised by misallocated human resources between the 'doing good' and 'doing well' sectors. Dan Pallotta follows Michelle Obama's motivational commencement address with the assertion: "The notion that people should be compensated on the basis of the value they produce can no longer be denied to those who save lives while it is given freely to those who sell sodas and bounce basketballs." (http://blogs.harvardbusiness.org/[…]/for-a-charity-or-the-money-you.html).

Very well said. In places the boundaries are quickly blurring. I spent the day recently with the owners of a UK business called Timpsons - a well known high street brand with some 1,000 stores around the country. As i listened to them talk about the way they manage and support their colleagues and about the training academy they have set up in UK prisons to train and recruit offenders when they leave jail (including picking them up at the prison gates to help them avoid falling straight back into the homelessness/unemployed/reoffending cycle), it struck me that they are having a much bigger 'social' impact than most charities or social enterprises. They dont use this language but they have embedded a blended value business culture.
Of course not all businesses are like this (and it no doubt helps that Timpsons is a family owned company), but more and more are and there is something really compelling trying to be born in the world. Im meeting entrepreneurs and business leaders all the time who are trying to find ways of aligning their brands, business practices with their sense that the world needs urgently to reduce inequality and some see hooking up with social entrepreneurs as one way of doing this. There are two big challenges (at least!). One is faced by business: how to change the culture in order to embed the 'blended value' approach across the company even if the CEO is behind it. Middle managers who have spent a career focussing on one bottom line do not change easily. The other challenge is for social entrepreneurs. In the UK anyway, social enterprise has become too close to government and is too public sector minded. Connectivity into the private sector - beyond the CSr department - is very weak. Few social entrepreneurs really understand how the private sector works and what it takes to develop an enduring relationship with business benefits for both sides. This is partly why I co-founded Wavelength last year, to help tune people in to each other. But long term I don't think the big changes will come through partnerships between sectors but will come through a significant part of the business world doing it themselves. It may be that partnering with much smaller, underesourced social enterprises - often run by really awkward buggers! - is just too much hassle. Timpsons, for example, can do their prisoners thing completely on their own, working direct with the prison service.

www.thesamewavelength.com

Liam

Thanks for your comment

I do not know Timpson but like the sound of what they are doing
And you are right, many big changes will simply come through business, which are powerful and credible and have staff who wish to make a difference
what you are doing at wavelength to help business is most encouraging

best, rod

Dear Nell

Thanks very much for yourtr comment

I agree with what you have said--the dichotomy is utterly false
We need to move beyond it into a more productive realm

also thanks for the link to the HB blog
Great read--I have tweeted on it already

best, rod

That's one concept P-CED described in the founding paper I mention above. Here is a relevant extract, from web archives of 1999

http://web.archive.org/[…]/page2.html

"The P-CED concept is to create new businesses that do things differently from their inception, and perhaps modify existing businesses that want to do it. This business model entails doing exactly the same things by which any business is set up and conducted in the free-market system of economics. The only difference is this: that at least fifty percent of profits go to stimulate a given local economy, instead of going to private hands. In effect, the business would operate in much the same manner as a non-profit organization. The only restrictions are the normal terms and conditions of free-enterprise. If a corporation wants to donate a portion of profits to its local community, it can do so, be it one percent, five percent, or even fifty percent. There is no one to protest or dictate otherwise, except a board of directors and stockholders. This is not a small consideration, since most boards and stockholders would object. But, if an arrangement has been made with said stockholders and directors such that this direction of profits is entirely the point, then no one will object. The corporate charter can require that these monies be directed into community development funds, such as a permanent, irrevocable trust fund. The trust fund, in turn, would be under the oversight of a board of directors made up of employees and community leaders."

Thanks Jeff
Regards, rod

Well said.

Let me offer one last thought to support your point that the lines are blurring. The research doesn't suggest that they were ever that distinct to begin with. Of course, there are hideous examples of greed out of control, but for every one, there are also examples of companies run well, with social impact clearly in mind.

Again, Rod's premise (as part of his space constraints and desire to spark discussion) suggests evil on the side of business. That would suggest that the mission would be to find the rare (if possible) business that is good, in order to have as a partner. As I stated before, I believe that is a false premise.

If it were true, however, you would expect that it would show itself in another bastion of "protected good" from the evils of business: academia. But, as Denisia Mindruta just published from her research of academic/business research partnerships, that is not the case. In her paper titled "Value Creation in University-Firm Research Collaborations: A Matching Approach" she notes:

"existing literature has not answered these questions . . . because most of the studies have investigated the benefits from collaboration from the perspective of either firms or universities, and have failed to look at them jointly. In this study, I present a theoretical framework that captures the co-determination of value creation and the ability to attract desirable partners under competitive conditions, when both parties’ preferences are taken into account. I build on the idea that insofar as university-firm research alliances are formed intentionally to capitalize on partners’ knowledge, the innovative output depends on the synergy between the capabilities brought to the relationship by both scientists and firms. Drawing upon the economic theory of two-sided matching (Becker 1973; Roth and Sotomayor, 1990) and the resource-based view (Barney 1986; Lippman and Rumelt, 1982, 2003) I analyze the alliance formation as an endogenous matching process, in which partners sort themselves by attributes relevant for knowledge-creation. Further, this theoretical framework is applied to examine the combination of complementarity and substitutability in knowledge capabilities of scientists and firms that drive their matching in research alliances."

Blended value again! Understanding the purpose and the values brought to the partnership is absolutely THE most important point. If the relationship is not producing value for BOTH sides (even if the value is only psychic or marketing), then it is bound to run amok. (Just as things eventually did for Grameen in its Telenor relationship.)

More on this in response to other comments.

Todd

Once again, you have hit the nail on the head

Thanks for your list of research on the phenomenon of two-sided matching
It seems obvious to me that each side needs to understand and contribvute to the value of the ultimate partnership

I do not know enough about Grameen or Telenor to know if steps were neglected, or if their respective views merely drifted

regards, rod

Hi to you all.

Got a bee in my bonnet! -:) as usual.

Could the Social Franchise model be integrated into a multistakeholder partnership that include large businsses?

What are your views?
How would you structure such an MSP? and Why?
What risks are there?

Any other suggestions, comments or just ideas are welcome.

Take care
Laurinda Seabra
Empowerment Gateway Group

Laurinda,

First, let me say, "don't let the bee get away. Treat it well. There are far too few bees."

More seriously, let me take a stab at your question (first with a not so helpful approach, and then more helpfully).

"Could the Social Franchise model be integrated into a multistakeholder partnership that include large businsses?"

Yes, of course. Buy why? What is your purpose? What is the purpose of the partners?

I fear that most people who are pursuing the social franchise (or micro-franchise, or social micro-enterprise franchise), are seeking the silver bullet -- the form that will FINALLY prevent bad things from happening in these types of structures. Personally, as one who has spent 22 years developing structures, I would say that the social franchise with an MSP is a recipe for disaster (unless there is a very specific reason to use it that cannot be obtained in some other form).

A frachise model is a difficult model (not so much in structuring it, as there are many fine franchising lawyers out there who can provide the mechanisms needed to protect the franchisor), but rather, to enforce. Remember, a franchising model is really just a scaling mechanism. (I've got the idea, the IP, the model, and you are willing to invest the capital and take the risk locally to profit from it, so we partner, me as franchisor and you as franchisee.) But whether the purpose of using the franchise model is purely economic (a la fast food or cars), or rather to anchor a social purpose, the model only works if the franchisor is prepared to enforce the arrangement to control the standards of franchise operations (qaulity or social purpose). And here is where things break down.

First, most social enterprises and social entrepreneurs are not set up to monitor and enforce franchise operations, locally, much less nationally or (even harder by a magnitued of 100x) internationally. Without enforcement of the franchise standards, the franchisees end up with free reign and, ultimately, can destroy the purpose, model, IP or social impact.

Second, assuming for the moment that the idea of your MSP was to enforce the franchise operation, then this creates a wholly new set of challenges -- some operational based upon the need for a governance (which will now take on a multiplier effect in difficulty in direct proportion to the number of stakeholder classes involved), but also in terms of efficacy. Going back to my original post regarding the friction points for combining mission and marketplace, let me walk through one example -- the exit.

To do this, I'll have to make some assumptions, including:

1. You are the franchisor (the one with the idea, IP, model, etc. of value)(e.g., small, inexpensive water purification device that can erradicate 99.9% of all bad stuff from water for a few pennies) and it includes a social mission (which is to distribute the device through the developing world at the bottom of the pyramid, where you can have the greatest impact on saving lives, rather than selling it to water companies focused on the developed world).

2. You decide that the way to scale this opportunity most quickly, is to permit fanchise operations in countries around the world, but in doing so, you want to be sure that the value (IP, etc.) doesn't start leaking to other businesses that might exploit it. You also desire to ensure that the device is always used properly (which requires proper maintenance). (And remember, each of your franchisees will be a stakeholder with interests in these points as well, as it goes to the value of their business, whether you are enforcing the franchise agreement properly.)

3. You enter into the franchise arrangement with local business people in various countries in Africa and, as part of the franchise agreement, you build in all of the protections regarding the social mission and the reputation and value. You also seek to have that value enforced through a multistakeholder partnership.

Now, several years down the road, some of your franchisees are seeking to sell their businesses. For the most part, these business people were focused on making a handsome IRR for their money (which they will now do, if they can sell), but some of the buyers are either unsavory companies, companies with long track records of exploiting workers, companies that are massive water companies serving in many jurisdictions (including the developed world), etc.

In a case with no MSP, just you, the franchisee and the buyer, this already presents some difficult questions. Should your social and quality missions always win out over the economic focus of the franchisee? What is the franchisee's opportunity to exit, if the answer to the first question is yes and no suitable buyer can be found? How do you draft into an agreement up front, all of the various trade-offs that might be made around this one issue? And even if you could, what is the body (or stakeholder representatives) that will make the value judgments required in order to assess where a trade-off sits and on what side of the line?

But now, let's add the MSP on top. Taking the broadest stakeholder class (employees, customers, suppliers, creditors, sharheolders, and contracting parties including other franchisees), chances are quite probable that you will have classes of parties that will disagree signficantly on the "right" answer.

Then what? What happens to the directors of the franchisee (assuming for the moment that we are talking about a US corporation)? In the exit scenario, they have a duty to do what is in the best interests of the company and its shareholders (other stakeholders excluded) and to maximize shareholder value. Does this mean that they may have to breach the partnership agreement to avoid being held liable? Are they likely to get sued by someone, no matter what they do in that situation?

And now that you've convened the MSP governance structure, won't your creditors be thinking of ways to pull their credit, now that they have a front row seat to the disarray in coming to an exit decision? Will customers start to look for other product solutions (at least in the short term) until things settle down? Will new credit dry up? Will suppliers start to tighten their creidt terms?

And now take your example and make the company a large business. (We actually have a couple of those large business, multi-stakeholder conversations going on right now in the auto industry.)

Personally, I am guessing that your purpose and intent can be met through a MUCH simpler structure.

But maybe I've missed something.

Thanks Todd for your in-depth comment, which expressed my own original view when I originally started thinking about the idea. I looked at it from within a traditional business "ownership" concept.

But what if we were to replace "ownership" with "custodianship" ... how would that change the prospects?

Taking into account that custodianship would flow right through the channel.

The Programme: The Adopt-a-Pothole project

Purpose of programme: Repair road infrastructure (potholes), create jobs, reduce poverty, provide social value add.


For example, Us as in Empowerment Gateway (Not having a traditional franchisor role but as a concept custodian within a specific mandate ... think of us as the architects – we design the building, test the design in small scale, make the necessary modifications … and issue a “ready for construction” blue print to other custodians)

One or more master franchisees operating under a custodianship social franchise type license. Master franchisee structured within a Trust framework … trustees being appointed both by the concept creator (EG) and by Patrons of programme (The MSP - businesses, goverment, community, etc.

In turn, they appoint an executive team, who are responsible for managing the programme appointed on a “custodianship contract” rather than an “employment contract”

This team is then responsible for recruiting, selection and support of Franchisees within pre-determined communities. Again, franchises are appointed as “custodians” of programme deliverables.

Trusts deeds would identify who beneficiaries are along the channel and what benefits apply where and how.

Hope I am making sense.

Take care
Laurinda


 .

Dear Todd and Laurinda

Your discussion seems to be going so well I hate to interrupt
And thanks Todd for such detailed insights and examples

All I would add is that I like to think as franchising in the social enterprise area more from the standpoint of partnership, rather than asset protection
In the end, if someone "steals" your idea, this is irritating but, unlike the commercial world, one at least knows that good will come of the theft

best, rod

Not sure if you guys already know about this, but from your question, Rod, and from the wealth of answers, it sounds very much like what Heerad Sebati and friends are doing over at Fourth Sector Network.

http://www.fourthsector.net/[…]/fourth-sector-networks

Might be worth checking out.

Cheers!

Leanne

Leanne

You are totally correct, FSN has been looking for solutions for over a decade. We ourselves have been testing numerous concepts embbeded within the 4th sector model, as well as Blended Values, Entrepreneurism, Social Responsability ... you name it, we have looked at it, tested it, modified it and integrated it into what we are doing.

but the challenge is

Finding a single legal structure that enables it to fly fully.

By going back to first principles once again we may have a solution at long last ...

The best legal platform are via trusts with very clear trust deeds ...

there is still a lot of work on advocacy for this to take route ... but according to various legal experts that we have consulted they showned surprise, but all have told us it could be done.

the next challenge is tax brackets ... we now at this stage.

Take care
Laurinda Seabra
Empowerment Gateway Group

The major challenge is that there are still too many vested interests within "THE MARKETS" ... there's too much greed and thirst for power coupled with FEARS. Goverment are still dictatcted by the markets, self-interest is still a decisive factor.

So what is needed is a massive paradigm shift ...

It is slowly happening ... and the MARKET self-imploding is assisting in this (such as the case for the financial crisis affecting the globe currently)

Take care
Laurinda

Dear Leanne

Thanks for this post and link
An amazing site, although a bit complicated for me--especially late at night!

Will probably add link to our site

Thanks--rod

Hi Rod,

For the longest time I felt that big business was bad, no matter what. Now I have begun to question that. Is Walmart so horrible? Certainly there is a lot more this devil could do, however the strides they have made environmentally and with their supply chain have been a good starting point. I guess the way I see it social enterprises may start out partnering with big business and perhaps this will begin to change the way corporations operate- at least on some level. Obviously, large corporations are attempting to partner for image reasons, or because their board or CEO's feel a need to affect social change (highly disputable, but it could happen as with Ray Anderson). Regardless, social entrepreneurs need funding and this can be a great way to make a huge and lasting change. If these concepts and attitudes rub off on the large corporation what could be better?

~Caitlin

Dear Caitlin

Thanks for your comment

As time has gone on I find that much of what I assumed to be true was false, but that's another story!
Certainly, pretty much all blanket truths (apart from in maths) have proven false in my experience

All businesses are not evil
All charities are not good
Even (dare I say it here) all social entrepreneurs are not virtuous!
Virtue resides in the individual anyway, not the collective

If social entrepreneurs can get funding they should take it from where they can
The capital of even the most cynical CSR credo seeking companies can make a world of difference
If there are ethical issues attached, that is another consideration (Cancer Research UK may not with to take funding from British American Tobacco) and the conditions pertaining to funding must be clearly studied, but again, its the particular rather than the general that should be the guide

regards, rod

Its critical for social services to partner with businesses. Social services need funding and businesses are looking to improve brand image through donations. As the article states, it is up to the respective organization to determine which partnerships are uncouth.

Dear Andy
Grateful for your support!
Thanks--rod

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