So why does everyone want to be a social entrepreneur?

Tuesday, 5 February 2008

It may seem very strange for me to be cynical about the drivers to be a social enterprise. I have been running a successful social enterprise for over 3 years, am an active member of the Social Enterprise Coalition, am heavily involved in the NHS Network’s Social Enterprise Network and evangalise at pretty much any opportunity on why social enterprises are (potentially) fantastic. So why am I getting a bit cynical?

There has been a huge sea change in the NHS over the last 12 months. A year ago, the mention of social enterprises would result in a puzzled expression from most NHS managers. Six months ago it seemed to be the buzzword of the moment following the publication of the white paper and everyone wanted to know what a social enterprise is. Now it seems that more and more PCTs are very very keen to create social enterprises (even though they may have some strange ideas about what one is). So why is this and why are many of these probably doomed to failure?

There seem to be 3 popular drivers for NHS organisations wanting to become social enterprises:

  • Looking impressive to political masters
  • Trying to stay one-step ahead of the next organisational restructuring
  • Pure cold-blooded knee-trembling fear
Driver 1 - looking impressive to political masters. 
Social enterprises are sexy and the current ministerial team is very very keen on there being lots more social enterprises. There is always a desire for boards to want to look cutting-edge and be seen to be the most modern of the modernisers. This was seen in the first wave of NHS Trusts, the first wave of Primary Care Trusts, the first wave of Foundation Trusts, etc and there is clearly a bit of a race to be in the first wave of “NHS Social Enterprises” (even though these have been in the NHS for nearly 30 years).

Driver 2 - trying to stay one-step ahead of the next organisational restructuring. 
NHS managers love nothing more than trying to read “the political tea leaves” and there are very clear messages that the Department of Health would love to see large numbers of NHS staff create social enterprises (even if the recent judicial review from the RCN saw some of the guidance being watered down). There is feeling that today’s optional transformation may become tomorrow’s compulsory transformation and the history of NHS Trusts shows this to be well substantiated. Some managers feel that if they push for an early transformation to a social enterprise model then this will give them more control over the pace, the structure and the management arrangements.

Driver 3 - pure cold-blooded knee-trembling fear. 
Sadly, the most common reason I often hear from people keen on becoming social enterprises is “this is the only way to protect the service”. There is a very real fear in the NHS that overseas organisations and some private sector organisations will be given more and more primary care and community services to manage. Whether this is real or not is largely immaterial, the fear of this happening is very real and is widespread. Some managers feel that the only way that they can keep their services intact is for the whole service to move into a social enterprise, managed and run very much as it is run now.

So why are organisations created for these reasons doomed to failure? First of all, there are many fantastic reasons for creating a social enterprise and for nurses who want to provide new types of services free from beauracracy it can be ideal. Social enterprises can enable you to run services the way you feel they ought to be run and will allow you to be innovative in an extremely personally-fulfilling way. But there are risks. Social enterprises are businesses and it is harder to run a successful social enterprise than to run a successful traditional business. There are three characteristics of a social enterprise which could cause you real problems if you can identify with any of the three drivers:

1) Your staff may control your organisation. Most organisational models involve your staff becoming members or stakeholders of your social enterprise and this means that they have ultimate control over the appointment and removal of directors and can change the organisation’s way of working and long-term strategy. If you are pushing the move to become a social enterprise because of driver 1 (looking impressive to political masters) and your staff are not keen (or worse are openly hostile) then your staff may stop you forming a social enterprise or may remove the entire board at the earliest opportunity. How many managers would comfortably allow a free vote of their staff that could result in their removal? If your staff are totally behind this move then them having control of the organisation could be fantastic but if they are reluctant or hostile, this could cause you massive problems.

2) There is no way back. Once you make the transition to becoming a social enterprise, you will no longer be part of the NHS. Even though you may still receive NHS pension benefits and have your terms and conditions transferred across, your organisation may never be able to return to the NHS ever again. Whereas most NHS Trusts are rescued if they get into serious financial trouble, private sector providers will be allowed to fail and become insolvent. If you are pushing the move to become a social enterprise because of driver 2 (trying to stay one-step ahead of the next organisational restructuring.) then this may be your last ever restructuring. If your social enterprise fails, then it will fail and the NHS is extremely unlikely to bail it out.

3) It’s a lot lot scarier than life in the public sector. Running your own business can be a very scary experience. Entrepreneurs as a breed are very comfortable with risk and are happy to trade increased control and freedom for increased risk. If you are the director of a social enterprise, you may well be asked to use your personal security to secure lending and external finance. Most organisations require external finance in the early stages of their life and your lenders will want personal guarantees from the directors before they lend you their money. In a nutshell, if your business fails, you could lose your house and become bankrupt. Every time an invoice is late or a contract is changed, you may find yourself months or weeks away from personal financial ruin. If your driver is driver 3 (pure cold-blooded knee-trembling fear) then you may find life far more scary as a social enterprise.

If you are still interested, then being a social entrepreneur may well be right for you and whatever happens, it will be a fantastic journey.


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