In the business of Social Business – The London Economic

In the business of Social Business

By Guy Dorrell

Social Enterprises

Every turn of the economic cycle seems to bring another fad; 2007, just before the crash, saw food miles as the ‘must talk about’ subject of the moment. The idea that seafood should be fished from Scottish waters, shipped to Thailand for processing and then shipped back to Scotland for sale appeared absurd, because it was.

Then came the economic downturn, with the first run on a bank in 200 years, and food miles slipped down everyone’s agenda.

Since the global economic downturn, or most likely because of it, one topic that caught the public imagination but has managed to stick is Social Business.

Early beginnings

Perhaps it isn’t surprising that social business chimes with consumers. For millennia, all business was intrinsically social business. Marco Polo may have brought Oriental delights from China on the Silk Road, but the logistics making supermarkets, and so spelling the protracted demise of local businesses, really came of age in the 1970s and 80s.

Conversely, some of our most recognizable brands that benefited hugely in the explosion of the supermarket chain, have their roots as social business. Cadbury’s, Rowntree, Friends Provident, Barclays, even Sony have their roots as social businesses; and in their beginnings were social to a degree to which current social businesses have yet to aspire.

Welfare officers, the precursor to today’s Human Resources – but with genuine welfare for their workers as their purpose were a Quaker invention. Rowntree’s, a Quaker family-run business from York, were among the first to employ dedicated Welfare officers. Social and health campaigns were run by the company, as well as educational support, libraries and workers’ bands.

Each of the innovations were designed to make the workers feel a part of something bigger, something intrinsically social. Deborah Cadbury’s excellent ‘Chocolate Wars’ gives an account of the flourishing of her family’s famous company, from its roots as a small Quaker enterprise to global multinational.

Fast forward 150 years and something similar, adapted to the 21st century, is happening. The appeal of social businesses, with their standards and mission, make them the choice of spending, as well as the choice of vocation, for a sizeable demographic.

Banker to the Poor

Muhammad Yunus, Nobel Laureate and founder of the Grameen Bank is credited with the first definition of social business. He defines them as businesses founded to serve a need to solve a social problem. A social business is one that seeks to make a profit, though not to pay out dividend. It’s easy to see, with tax evasion and market rigging a near-daily feature of the news, why this model appeals to so many.

Social businesses are springing up to serve markets that for multinationals it would scarcely be worth avoiding the tax on. They have the agility that multinationals say they value so much, but are seldom able to achieve. Take, for example, the story of Jenny Dawson.

In late 2010, hedge-fund employee Jenny took a trip to New Spitalfields Market. She saw the huge amounts of food going beyond date mark that were almost inevitable with any market. Waste, and her rejection of its inevitability sparked Jenny into creating a social business; Rubies in the Rubble.

Market forces

With a mission to use the fruit and vegetables that would otherwise just be thrown away, Rubies in the Rubble began producing chutneys. Doing the actual making, the chopping, cooking and bottling is a workforce comprising of disadvantaged people – who’ve also previously been treated largely as surplus to requirements.

Rubies in the Rubble’s catalogue of products is capricious; what doesn’t sell in the market today will become a preserve or a chutney tomorrow.

What is a constant is the purpose behind the enterprise, one that does not differ substantially from Muhammad Yunus’s foundations of the Grameen Bank in Chittagong in 1976.

Both of these social businesses created change through small scale manufacturing. Social retailing has hit the headlines recently with the opening of the UK’s first ever social supermarket.

Problems, and their solution, are the bedrock of social enterprise – clearly nobody would speculatively start a social business to feed consumerism. Retailing what other chains deem unsaleable, whether through labelling issues or imminent display until dates, is the model that the Community Shop has chosen.

Born as a social enterprise from parent company The Company Shop, Barnsley’s pilot store is paving the way for a national roll-out of similar stores. Each will serve a community where food poverty is a significant problem.

In addition to simple retailing, Community Shops run support programmes for customers, ranging from advice on budgeting to cookery classes. Plans for a initial supermarket in London are already well underway.

So the customers might be ethically-motivated purchasers of chutney from Waitrose, or they might be those on the edge of food poverty. But who works at them?

Rubies in the Rubble brings people together for the common social purpose, despite originating from polar opposites. From disadvantaged women based in the inner city, to Oxford graduates and former hedge-fund workers, they couldn’t be more disparate.

What is a growing theme is those who opt for working in a social enterprise, rather than working in big business. Research undertaken by the iOpener Institute shows that job fulfilment, the choice of enjoyment over pure financial gain is prevalent among those born after 1980 – the Generation Y cohort.

Combine the groundswell of consumers’ positive feelings towards social enterprises with the lack of choice and availability of roles for young people and new graduates, as well as the public disapproval of the tax affairs of large corporations and social businesses seem to be a fad that won’t fade.

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