What you would like to see come from this network?

Replies to This Discussion

Permalink Reply by Maria Ana Neves on July 19, 2010 at 22:58

Hi Kim
first - thanks a million for starting this group, with such an interesting reflection and starting point!

here are two ideas, which may be interesting to explore together:
1. Paradigm shift: shall we rethink our success metrics from 'more' into 'better' ?
I think one of the problems we are facing is that sucess is only measured in quantity (increase turnover, increase market share, increase profits, etc) would it change if we shift from more into better, and start to improve quality, improve value, improve impact ?

2. shift from ROI into COI
Here the idea is to change the way we evaluate performance, in which the COI (Consequences On Investment) includes measuring the returns (ROI), together with the impact or consequences of the Investment, and this should be measured in multi-layers - all the relevant layers for the triple bottom line - the social impact, financial impact, enviromental impact.

a sucessful business with a good ROI but as a consequence it generates negative impact, if is able to measure it, may also be more capable to act on and rethink its models.
AND also a business that generates lower ROI (measured in financial returns) and is able to create positive returns (which are not being measured, since they were not measured in financial returns) this should be translated in the consequences and reflected in the bottom line (or triple b. l. )

so one of the things we could - as a multi-disciplinary team - co-develop in this group - is a COI model, with metrics and tools to offer to business consultancies and auditors, with a vision to replace the existing ROI!
(I am aware of the SROI concept, and this COI is similar but with a more holistic approach)

Permalink Reply by Elena Harris on July 20, 2010 at 18:18

Hi Kim,

We like this idea a lot as it is quite close to our heart. Our business has a social enterprise arm and whatever proceeds are to be realized from its activities, we would like to set aside into a fund and later create a ''cocoon style'' retirement village with a difference which is to be named '' Renaissance Vie''

www.thebusinessguardians.co.uk

It seems to us that the new Millennium brought in a need in people to redefine their goals, wanting to address deeper convictions on what they want out of life. This coupled up with the last few years developments have not only re-affirmed this trend but also brought in the need for simplicity, return to basics and one would like to convincingly say, more consideration for each other.

With the above in mind, I believe there is a lot of scope in promoting the idea of 'giving back' : where all businesses would allocate a percentage of their efforts to create social value and serve a purpose beyond profits, contributing towards a culture of responsibility and accountability. In years to come it would become 'the norm' to do so and our children will grow up not knowing any different.

I think this quote is very appropriate:
''Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry." Bill Drayton

Best wishes, Elena

Permalink Reply by Jeff Mowatt on July 22, 2010 at 5:53

Hi Kim,

Let me relate COI to how we're doing things at P-CED

We write and maintain software to generate revenue. That revenue is invested in advocacy and development of strategy papers aimed at leveraging investment for social outcomes, call it COI.

First proof of concept was to invest in the R&D to recommend a development initiative in Russia with a ROI for P-CED in a consultancy fee which covered the R&D costs with the consequence of the initiative itself being emergency relief and around 10,000 micro businesses from $6m seed capital which was returned. So the COI might be expressed as the number of people raised from poverty. If each new business supports 3 people then in this city of 600,000, the bottom 5% of population have been helped out of poverty.

So to achieve that level of COI we have invested $10 for each person in the city.

Now microfinance is one way of delivering COI but it can be combined with other social initiatives, namely afffordable broadband, social enterprise funding and childcare reform. Each of these has a COI with varying degrees of cost recovery.

Broadband deployment has the potential for more than full cost recovery whereas though childcare reforms, in this case providing all with family homes, can reduce government expenditure it cannot be expected to provide full cost recovery. Combined together however, the broadband business also delivers COI in underwriting the investment in family homes.

Put together in a 5 year development program it can therefore offer full ROI with large scale COI.

it was delivered to the government of Ukraine 4 years ago and described as a 'Marshall Plan' because the intended consequences are those of the original Marshall Plan to tackle hunger, poverty desperation and chaos.

http://www.p-ced.com/1/projects/ukraine/national/

How we operate in the UK and the COI are related here http://people-centered.net/About.aspx

Permalink Reply by Pascale Scheurer on October 8, 2010 at 16:25

I like this concept of COI, which I hadn't come across before.

And the overall 'profit with purpose' idea.

I run a business and am always curious how profit is portrayed as something inherently bad. I don't believe it is necessarily the case. I believe this notion actually allows 'profit-makers' to think that they are allowed to discount the wider consequences of their activities. "The 'not-for-profit' sector deal with that fluffy stuff..." It reinforces the notion that caring people are hypocrites if they make money, thereby making it less likely that they will acquire an asset base with which they could challenge the status quo.

So I'd be very happy if this group could play a small part in liberating the word 'profit' from its bad-boy tag.

All business should internalise its externalities.





Jeff Mowatt said:

Hi Kim,

Let me relate COI to how we're doing things at P-CED

We write and maintain software to generate revenue. That revenue is invested in advocacy and development of strategy papers aimed at leveraging investment for social outcomes, call it COI.

First proof of concept was to invest in the R&D to recommend a development initiative in Russia with a ROI for P-CED in a consultancy fee which covered the R&D costs with the consequence of the initiative itself being emergency relief and around 10,000 micro businesses from $6m seed capital which was returned. So the COI might be expressed as the number of people raised from poverty. If each new business supports 3 people then in this city of 600,000, the bottom 5% of population have been helped out of poverty.

So to achieve that level of COI we have invested $10 for each person in the city.

Now microfinance is one way of delivering COI but it can be combined with other social initiatives, namely afffordable broadband, social enterprise funding and childcare reform. Each of these has a COI with varying degrees of cost recovery.

Broadband deployment has the potential for more than full cost recovery whereas though childcare reforms, in this case providing all with family homes, can reduce government expenditure it cannot be expected to provide full cost recovery. Combined together however, the broadband business also delivers COI in underwriting the investment in family homes.

Put together in a 5 year development program it can therefore offer full ROI with large scale COI.

it was delivered to the government of Ukraine 4 years ago and described as a 'Marshall Plan' because the intended consequences are those of the original Marshall Plan to tackle hunger, poverty desperation and chaos.

http://www.p-ced.com/1/projects/ukraine/national/

How we operate in the UK and the COI are related here http://people-centered.net/About.aspx

Permalink Reply by Jeff Mowatt on October 8, 2010 at 17:37

Hi Pacale,

What you said about being inherently bad. Chris Cook one of my networking contacts is an advocate for shared asset funding and describes the inception of the UK LLP as a consequence of the Barings collapse. He says that if the road to hell is paved with good intentions, perhaps the opposite is also true of bankers seeking new ways to protect their wealth.

Since joining here, I realise a slight divergence between what I advocate which is profit for purpose and the concept of profit with purpose. That, now I think of it might be the difference between social business and CSR.

What I'm thinking of is a business trading in the free market for profit but with the aim that profit is invested in a social purpose or a community., that being the entire point of the business. Several formal models now exist in the US and UK, this is how it was described in our founding paper.

"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."



Pascale Scheurer said:

I like this concept of COI, which I hadn't come across before.

And the overall 'profit with purpose' idea.

I run a business and am always curious how profit is portrayed as something inherently bad. I don't believe it is necessarily the case. I believe this notion actually allows 'profit-makers' to think that they are allowed to discount the wider consequences of their activities. "The 'not-for-profit' sector deal with that fluffy stuff..." It reinforces the notion that caring people are hypocrites if they make money, thereby making it less likely that they will acquire an asset base with which they could challenge the status quo.

So I'd be very happy if this group could play a small part in liberating the word 'profit' from its bad-boy tag.

All business should internalise its externalities.

Permalink Reply by Jacqueline Hill on December 20, 2010 at 12:28

I am looking for a network that seeks conversations with the as-yet unconverted, for concrete actions that draw in people who can have a real impact on the way economies are conducted, invites them to think more widely than 'received wisdom' and inspires them to join a movement that will set in train economies that support sustainable, equitable living.  How can we use our networks to start a wave of thinking and opinion forming that touches those banks, economists, politicians and corporates that believe there is no other model than the one we so slavishly follow that it now rules us? For example, what forum might I invite City friends to where they can hear, observe and, if they want to, contribute and put their case, so that we have an exchange of views?  May be this is already it.

Permalink Reply by Jeff Mowatt on December 20, 2010 at 14:26

Jaqueline,

Over the past few years I've made several attempts to start up discussions which are non-proprietary. For example, Social Business and For Benefit Corporations on Linkedin which now has a discrete network. It doesn't seem to work, other than in being a promotion space for proprietary campaigns

Cambridge University students recently opened a Beyond Profit society on Facebook and I'm one of two who've attempted to network there. Little indication of any response from them or the brands promoted.

Here with the RSA seems as good a place as any, in being associated  with a respected organisation.

Otherwise, I can show you in some of the work we've done, how it targets government to create influence.

 

Jeff

Jacqueline Hill said:

I am looking for a network that seeks conversations with the as-yet unconverted, for concrete actions that draw in people who can have a real impact on the way economies are conducted, invites them to think more widely than 'received wisdom' and inspires them to join a movement that will set in train economies that support sustainable, equitable living.  How can we use our networks to start a wave of thinking and opinion forming that touches those banks, economists, politicians and corporates that believe there is no other model than the one we so slavishly follow that it now rules us? For example, what forum might I invite City friends to where they can hear, observe and, if they want to, contribute and put their case, so that we have an exchange of views?  May be this is already it.

Permalink Reply by Jeff Mowatt on December 20, 2010 at 18:37

 

To illustrate 'touching people' with ideas I offer an example.  People-Centered Economic Development was a theoretical model delivered to the Committee to Re-elect the (US) President in 1996 and this influence was key in sourcing a proof of concept in Russia , know as the Tomsk Regional Initiative.

In the 2006 paper which prescribed a centre for social enterprise and social investment fund for Ukraine, we described how capitalism could be deployed for human benefit:

“Enterprise is any organizational activity aimed at a specific output or outcome. Once the output or outcome – the primary objective – is clear, an organization operating to fulfill the objective is by definition an enterprise. Business is the most prominent example of enterprise. A business plan, or organizational map, provides a reference regarding how an organizational scheme will operate to produce a specific outcome: provision of products or services in a way to create profit. Profit in turn is measured numerically in terms of monetary gains, the “bottom line.”

This is the function of classic capitalism, which has proven to be the most powerful economic engine ever devised.

An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.”

As you will know the Conservative leader David Cameron made a speech at Davos last year calling for capitalism with a conscience, reflecting the core argument from the 1996 white paper and the above. This year the British Council have launched a social enterprise initiative across Ukraine and the Conservative think tank Respublica have alingned with Ukraine's opposition in a democratic movement called People First.

Most remarkable perhaps was the Vatican encyclical Caritas in Veritate, which includes:

‘This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society’

“Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly — not any ethics whatsoever, but an ethics which is people-centred. .”

In 2008 US presidential candidate Barack Obama described his plans for the Office for Soclal Innovation and Social Innovation Fund (SIF) which opened this year.