Empowered Social Enterprise: The Next Frontier?
How This All Started
This paper arose out of a my concern that as long as the delivery of ‘public goods’ – by that I mean traditional public services and charitable activity funded by the tax payer – continues to rely on some variant of the present top down ‘command and control’ management model, many of the hopes vested in Scottish devolution would not be realised; greater local accountability and control would not feed through into more efficient, responsive, let alone human-centred services. The current demoralising and counter-productive trajectory of ever growing numbers of managers, regulators and targets and less time – and discretion – for those on the ground to ‘do the work’ would continue.
Since conventional privatisation merely offers another variant on a broken system, but with the added overhead of having to extract a shareholder return, it is clearly not tenable. However, social enterprises taking on this poisoned chalice are likely to either get financially burned or end up apeing their private sector peers in a race to the bottom.
I therefore looked for other approaches and first turned to the work of Edwards Deming, which underpins the operation of highly successful companies such as Toyota and VW but is now being adapted for human service delivery systems. This in turn led me to a recent book by Frederic Laloux entitled Re-inventing Organisations that illustrates a radically different and seemingly far more promising approach.
What Is Laloux On About
Laloux’s thesis is simple yet persuasively argued. It is that over the last 10,000 or so years civilisation has made periodic shifts in the way it organises itself with new more productive models emerging and expanding in influence only to eventually be overtaken – but not necessarily entirely superceded – by even newer forms offering more power and fitting more closely with evolving world views. He goes on to argue that as a result of the acceleration in the pace of change and the evolution of more inclusive worldviews in the last 60 years that another shift is both necessary and imminent.
What makes his book riveting rather than just interesting is that he has located functioning examples of this emerging new wave and it is case study material on them that provides the meat of the book. Amazingly not only do they exist but they have been quietly thriving for many years, successfully expanding to embrace hundreds and in several cases thousands of employees and operating across a very diverse spread of sectors from brass foundries to mental health hospitals to power generation.
What Makes These Organisations So Different?
There is no quick and easy label that fits the reality of this new operating system; perhaps ‘radical worker self-management’ gets closest.
Here are some ways in which it differs from conventional organisations:
• The most obvious surface characteristic is that these new organisations operate with no recognisable managers or hierarchies nor any of the functional specialisations that are common in larger organisations. Management roles exist but they move about between team members based on the exigencies of the moment. Teams – and generally small face-to-face teams – take responsibility for running almost every aspect of the business subject to clear but simple processes of consultation if a decision could have wider impacts.
• They are driven by a ‘purpose’ that is not short-term and instrumental let alone financial. It is something that team members care passionately about. For some, it might be considered ‘a calling’. Furthermore the staff motivation that is released isn’t constrained by the organisation framework but seeks ways to continually manifest itself in the work, be it by innovating new approaches to the task at hand, by empowering clients or by creating whole new products or services.
• They do not require employees to conform to some one-size-fits-all template of what it is to be a worker or an employee. They give the freedom for those involved to bring all of themselves into the workplace. What they do require is that all involved take responsibility for their part in fulfilling the organisation’s purpose. This combination of autonomy with responsibility seems to be highly motivating and to release an enormous amount of hitherto untapped energy.
As a consequence such organisations are very agile and responsive to needs on the ground, highly productive and extremely cost-effective. Those that operate in commercial markets have proved more than capable of meeting the challenges of low cost competition from Asia while those providing public goods cost the taxpayer far less overall while garnering plaudits from their clients and end users.
One way of looking at it would be to say that their behaviour seems to change the rules of the game in which they are operating. For example, a community nursing organisation spends significantly more face to face time with clients – at a higher cost per client – but empowered staff are empowering clients and their carers resulting in far fewer repeat referrals or demands being made on the overall system.
What Relevance is all of this to Social Enterprise and Social Entrepreneurship?
In my view, the social enterprise sector in Scotland now exhibits/confronts two paradoxes:
• On the one hand, the sector has grown enormously in size and legitimacy over the last 10 years but arguably this has been paralleled by a decline in its innovative character and again arguably a weakening in its clarity of purpose. Many new initiators seem to see it as just a more congenial way to earn a living and – encouraged by funders – their focus is one of building a business or ‘going to scale’.
• Growing access to public contracts has been achieved but within an essentially command and control commissioning framework that pits contractors against each other and squeezes margins to the bone.
Perhaps introducing the ideas contained in Laloux’s book into the sector would not only finesse these paradoxes but re-energise the sector by bring it back closer to its roots? Indeed one could argue that with an empowered staff team social entrepreneurship and innovation will become more broadly based within an organisation; not reliant on a single individual in each case but ‘hard-wired’ into the fabric of the organisation.
A second benefit could be the ‘demonstration effect’ that such a renaissance might have on the way mainstream public services are managed. At the very least it would re-energise a debate that has gone stale and lost heart.