Lucy Findlay On Balancing People, Planet & Profit With Social Enterprise

Lucy Findlay is the founding Managing Director of Social Enterprise Mark CIC, set up in 2010 and now internationally acclaimed.

In recognition of the pioneering work of the company, Lucy won a Sustainability Champion Award in 2013, and more recently was named as one of the top 100 influential women in social enterprise on the WISE100. Her primary motivation is ensuring that genuine social enterprises are recognised as a legitimate and different way of doing business to change society for the better.

Eight years on from the launch of the Mark, Lucy remains committed to continually adapting and developing robust and credible standards, which support, strengthen and broaden the social enterprise sector as well as committed to running a social enterprise.

Lucy discusses the story behind an internationally available social enterprise accreditation, whilst sharing insights and tips into government collaboration, impact measurement and running a social business.

Highlights from the interview (listen to the podcast for full details)

[Amedeo Watson] - To start things off could you please share a bit about your background and what led you down the path of social enterprise? [2:14]

[Lucy Findlay] - When I first graduated, there was no such thing, no such word, as social enterprise. All I knew was I was very interested in helping people, and that I was interested in my degree, which was originally in geography, and then I followed that with a town planning qualification. The town planning qualification concentrated on the built environment, and I was more interested in people, so I came across (in my research following my degree), this concept of urban regeneration and doing that sustainably, and social enterprise was a means to do that. Although, that wasn't what it was called at the time. So I went out and I interviewed a number of different regeneration schemes across the country and I came across this amazing scheme in a mining community in Wales, where a lady called Judith was helping to regenerate the local ex-mining community by acquiring a number of shops with regeneration money, which came from the government. Basically, the shop income was being used to regenerate other parts of the town. So it was subsidising the work that was going on to keep regenerating that small community. That's how I first came to social enterprise. I then got a job working in that sort of area. So it was working in community-based regeneration with a number of companies that do that kind of thing. There's a very famous example in London on the South Bank - Coin Street Community Builders - where they have an iconic building called the Oxo Tower, which was the old building which Oxo used to own, and used to be lit up apparently in the blitz. It was the one advertising that was allowed, with the words 'Oxo'. They are still there. That is community building and they also developed sustainable housing for people who wouldn't otherwise be able to afford to live in that area of London.

So that was a very interesting experience. And as I say, it wasn't called social enterprise then, it was called community-based regeneration. From then, I became very interested, as the term social enterprise got coined, in the way in which you can actually make a business model essentially fit with being there primarily for social and environmental gain. So I went off and ran a company, now where I live in southwest of the UK, to promote that region and the social enterprise agenda. We received a number of grants from the government. We spent a lot of time raising the profile of social enterprise in the southwest to the UK government, but then a lot of that money disappeared under our current austerity. So we set up a company which we felt there was a market for, which was about identifying where social enterprise is actually creating social and environmental good. We were inspired by fair trade to set up what we now know as Social Enterprise Mark CIC.

It's a fascinating story. Especially how your own personal journey is intertwined with the whole development of what now is Social Enterprise Mark. I'd love to hear a bit more about Social Enterprise Mark. What do you define as the organisation's purpose and vision and what are the primary benefits of the accreditation? [6:06]

We are the only internationally available accreditation. We enable organisations to prove that their businesses create benefits both for people and planet. Because there's no legal definition of social enterprise, although that has changed in some countries, certainly in the UK there's never been a legal definition of what a social enterprise is. So we had a number of social enterprises, in my experience when we were first setting up, who were quite frustrated about not being able to articulate why they were different from other types of companies. On the one hand you had the pure charitable model which has a certain image about really being there for grants and being there for voluntary efforts and maybe being a little less professional. That is certainly the image that can be seen by not necessarily the general public, although that might be the case, but certainly the government. Quite often they expect, if that sector is delivering, to deliver at a lower cost base, which is always a challenge when you're trying to generate income. Then at the other end there was the image of business which is primarily about generating profit for profit's sake and lining the pockets of shareholders. So what social enterprises wanted was to be able to articulate how they were making a difference, and how their operation as a business was doing that in a different way from either the charitable sector, or from the other end, the traditional business model. That's really how we came about.

The primary benefit of the accreditation is being able to prove those credentials. Being able to prove that any profit that you're making is primarily being reinvested back into society and the environment, in whatever way that particular business is operating. That's just quite different from any other accreditation that I have come across, in that the primary motivation of that business is about people and planet and they have to be able to prove that. Over the years we have reinforced that. So we now look at all of our organisations and help to articulate why they're different and how they're creating social value as a matter of parts of the accreditation process. So if you look at our online directory, you'll be able to see exactly how each of our accredited businesses is making a difference.

It sounds like quite a powerful thing for these businesses. [9:34]

Yes. It's different for different levels of businesses. For a smaller organisation that may not have the sorts of resources that a big social enterprise has - you know, there's a lot of publicity at the moment, I don't know whether it's the same in Australia, but...

the term social value and social impact is actually quite problematic because it costs potentially quite a lot for social enterprises to be able to measure or work out how to articulate social value.

So, the service that we offer is to be able to drill down into quite some detail but make the process much easier. It's about asking the right questions and getting that business to think about how it is making a difference. If you look at a number of small social enterprise websites, often you might see what it is initially that they sell on the front page. But the story of how they're making a difference isn't necessarily very evident. And so by having the Mark, they can use that Mark to help them - number one to say this is the type of business we are and we're accredited, but also this is the way that we make difference.

Fantastic. What interesting projects are you currently involved in? [11:09]

Well, we have the Social Enterprise Mark, which we've had since we launched in 2010, but we have also developed something called the Social Enterprise Goldmark, which is a level above the Social Enterprise Mark. So what I articulated to you just now, is what everybody gets as part of the accreditation process, whatever type of accreditation they have from us. But the level above - the Social Enterprise Goldmark - drills down to quite a lot more. It looks at things like how stakeholders are involved in the decision making process in the organisation, what the ethics of that business are and drills into even more detail about the social and economic impact of that business. Quite excitingly, we have been working with a number of universities in the UK who feel that they in fact are social enterprises. So we have 11 universities that now hold the Social Enterprise Mark and that's a very interesting development because that has led to lots of questions internally and externally within the university saying: number one - how do we support young people and students in setting up their social enterprises, but also the students' unions themselves coming on board and thinking of themselves in terms of a social enterprise; and how do we improve the experience of people that are coming into business.

For example - standardly students that come in to study business will be taught a very confined version of what business is. These universities are actually questioning all of that and saying, well, a lot of young people now are looking for something more than just generating a job which is going to give loads of money. At the end of it, they actually want to make a difference. So we've got a group of universities that come together regularly to challenge what they're doing and to challenge each other, which is quite exciting. We've got engagement with the university sector. Another emerging piece of work that we are currently doing, is working with the government in the sphere of disabled employment. We have been working with our government department for work and pensions to enable more social enterprises to take on disabled people in employment and to develop a Mark especially around that.

So that's all in gestation because basically the funding for that type of work is changing. We're working with the government to try and open out that pot of money to more social enterprises in the UK to enable them to employ disabled people, which is obviously beneficial to everybody because if you just look at the workforce without the diversity aspect of it, you're missing out on knowledge and skills that you might have been able to engage in your business, if you'd been a little bit more broad in the way that you've recruited.

That's interesting. You did just mention the role that government is playing in helping facilitate this program around disability employment. I'm quite interested in the role you feel government can play in the development of social enterprise and facilitating the development of social enterprise. What do you think that looks like? [15:01]

I'll try not to be too cynical.

When we first set up the social enterprise, which was a number of administrations ago, my experience with government was that they don't really understand business and they certainly don't understand social enterprise. So trying to work with them can sometimes be quite a challenge.

And if you do work with government, even if they don't put any money into what you're doing, they try and change it because they always know better. So when Social Enterprise Mark was first up, there was this idea - 'if we put some resources into this business, we can launch this thing and it doesn't really matter about the accreditation particularly, but we just want loads and loads of social enterprises to apply so it should be free'. We just said 'well, how the hell are we going to make any money out of that?' And they didn't have an answer to that, because we were kind of at the behest of the government because they were backing us at the time. We ended up having to go down that path. Although it wasn't free, we were charging a nominal fee.

Then of course, six, maybe even less than six months down the line, surprise, surprise, the business model that they had supported - which was going to be thousands of people are going to start applying for this Mark without any marketing or sales drive - isn't going to work. So we spent ages then changing the business model. That is the problem really.

Governments may be interested in what you're doing, but they don't understand the basics of how you run a business, running cash flow and the sort of tensions that are involved in running your business. They run very, very slowly as well, and decision making is very slow.

Then they go back and they change it.

You know, you can make some steps with governments and I'm not denying that. We're working with DWP at the minute, but you'd have to have an incredible amount of patience to keep doggedly at it if you like. Saying, well we make a small step, but it's a quite a big investment, I think, that you have to put in as an organisation into working with governments because they won't necessarily pay you, but you have to see the further goal, and is there a business goal that is going to be achieved as well as obviously social value for social enterprises.

So what is it that you are going to achieve? And trying to see those little steps along the way, in working with government. Because they work at a different speed. They don't necessarily understand the tensions of running a small business. So you know they always want your advice and I'll give it if I'm asked to, but I could be on hundreds of committees but then what is it actually going to achieve for my business?

I think you need really clear focus about what it is that you're going to achieve.

Otherwise you could spend an awful lot of time not necessarily achieving an awful lot for your vision around, you know, making a difference for social enterprises. So I would say working with government is okay, but you need to go in with your eyes open.

Just then you alluded to some ‘tensions’ in running businesses, and in running a social enterprise in particular. What are some of the biggest tensions or challenges you've seen social enterprises face? How did they navigate around them? [19:02]

I think the biggest tension is this issue about the balance between earning money and creating social value, and that's why it's probably a good idea to have some good mentors and a good board.

If you're a small social enterprise, I would say it should be a small board - not a great big board that needs to make decisions by committee - a board that shares the same vision of the organisation. That helps you to navigate that balance. Because as I said at the beginning, what I've seen of social enterprises, certainly in startup, is that they might have a really great idea about how to change the world and all these different things that they're going to do, but if you don't understand the money side of it, you're not going to be able to achieve anything.

Get the money side of it right first before you can start to create the social values.

I think that is one of the hardest things in social enterprise and obviously there are resources out there now through things like social investments, but my experience of social investment is it's like any other bank loan - you need to have a track record. They need to understand that there's credibility behind your business plan, so you need to have done some testing. You do need to have some resources behind you and actually finding that initial resource to start yourself off can be quite a challenge. We were very lucky in that we had an endowment from the company that I was running previously where we generated some income. We could transfer that money over to start the business and lots of social enterprises don't have that. So it's about, well how are you going to gain the initial startup money in setting the social enterprise?

The other thing I think is that when you first set up, and how you know that if you get a big splash like we did - publicity wise - it's about, well, where do you focus?

You can be pulled in so many different directions as a social enterprise. People will want to talk to you and say we could work in partnership on this and we can work in partnership on that, but again, you really need to keep your focus - how is that going to be achieved?

Do these people have the capacity to be able to deliver? Do we have the capacity to deliver? So it's always taking it back to the practicalities really of what your business can do, what they can't do, and being able to say no to what might seem like an excellent opportunity but actually is going to take so much focus away from your business that you end up losing out or potentially losing the business because you'd been pulled in another direction.

It's like steering a ship I think. As it sort of wobbles around, keeping it on the straight and narrow, and navigating the odd storm or whatever that comes along and bringing your team with you as well.

That's something that I've learned - you need to keep articulating what it is that you are thinking. You can't just assume that because you work with people, they know what you're thinking.

I constantly talk about where we're going and get buy in from the staff and the board for the journey ahead.

Lucy, you've been involved in social enterprise, as you said, since pretty much the term was coined in the UK. Since 2001, what have you seen as the main changes in the field of social enterprise? [23:06]

I think the big driver in 2001 was the opportunity that presented itself with the government at the time. The government was quite interested in the externalisation of public services. So pulling the government out of delivering directly to public services and there were a number of models - GLL which is a big leisure provider in London, which shows that actually it was possible to run a social enterprise business model in order to be able to generate a profit from a public service, but that profit obviously being used to reinvest back into the organisation. So that was the big driver, and I think that has been a rocky road because that was one of the reasons why I think it became so popular and why government became so interested in it - because it was in fact seen as an alternative way of delivery of service. But I was always an advocate that it was much more than that.

It wasn't just about delivering public services. I think we are beginning to come around to that. That it is not just about externalising the public sector. It's about opportunities to fill gaps that the market can't provide in.

A traditional business will not go into an area that doesn't have a high enough profit margin, whereas a social enterprise might on a lower margin or a cross subsidy type of business model.

I think that there's been a bit of a shift, certainly in the UK, with there being a bit of a challenge about the externalisation of the public service agenda and saying that it isn't the holy grail.

The answer to public services isn't always to externalise and we've seen a big movement from the public who are getting fed up with things like the fact that our trains aren't running because they are now privatised and they're all broken up into different companies, and one company doesn't talk to the other, and one company blames the other, and the same thing is happening in our health service. So it's led to a very fractured type for delivery of service. There is a bit of a call now for those types of services to be called in. So then, where does that leave social enterprise in its public service delivery? Where it has been quite successful I think is where there has been innovative bits around the edges. The bits that the public sector doesn't deliver - the added social value. So it's probably coming around to where it was originally about how social enterprises can actually fill the gaps that public services can't deliver.

You're talking about the different success that social enterprise can have in delivering those sorts of services. I'm fascinated and wondering - what other inspiring organisations or projects have you come across recently that exemplify the balance of planet, people, and profit? [26:33]

I'll give an international example if I may. The winner of our Social Value Award for last year, Partners for Possibility in South Africa, is actually working with big business personalities. So the people that are put up on stands saying, you know, this is the big business voice for x sector, and they're going to them and they're saying we have this opportunity to work in a local school environment. There's an issue in South Africa because local schools are often run by people that don't have the experience because they don't have enough head teachers. Those schools are having challenges around the management of the school and the skills that are there. So they are bringing those publicly known business people together with those head teachers to mentor them. And the experience of the head teachers has been amazing, the outcome for the schools has being really good and working with the children has been really good.

But what has been perhaps the biggest surprise, although may not be a complete surprise, is the impact that it actually has on the business people. These business people have said that they have gained so much more from working with these schools then they have done from going to Harvard or whatever business school. They've learned about making a difference. Then they've taken that back into their business environment to apply it to some of these big successful businesses in South Africa. So therefore you're seeing a win-win for the local schools in terms of the skills and management of those schools and the relationship with pupils and how they make a difference, but also a change in the business environments within South Africa to make sure that they are more cognisant about how they can make a difference themselves as a business.

A fantastic example. To finish off, what are some great sources or pieces of content you’d recommend to our listeners? [29:13]

Well, you can always sign up to our newsletter. If you go onto our website, I also do a regular blog on that website. But there are also a number of Facebook groups that I find quite useful if people are thinking about setting up a social enterprises. So there's one in particular that I like which is 'Social Enterprise Successes' and on there people are able to pose their problems and the lady that runs it (Heidi), has actually run a social enterprise herself, and she runs one now. So it's all really practical experience.

I cannot recommend particular books to read about social enterprise. Because every time I start to read them I kind of get a bit challenged about the positioning of the definitions around social enterprise. But I think there are some really useful social media groups, so starting to follow some of the leaders on Twitter to get some thought leadership as well. So I would say use your social media really as a means to generate more ideas. And if you're in Australia, obviously there's Social Traders out there. We're meeting with them in September. They have their own mark. I don't know too much about it, but I'll be interested to find out about it when I meet them.