This blog is about changemakers, people who swim up river and against the tide. People who will define Africa’s development for the next 50 years and make a significant difference in the newly defined Social Entrepreneurship sector.
This website is the personal commentary of Max Pichulik, and should not be seen to reflect the views of the social enterprise incubator – Heart (www.heartglobal.org) – of which I am a director of.
Although I have a mind for Asset Management (I did my years in the Financial Services industry), my heart is designed to affect significant change in our beautiful country.
I feel that my role in society is defined around investing and developing social enterprises, whilst upgrading business’s role to serving society in a more meaningful way. I believe that sustainable, ‘market-based solutions’ will be the defining feature to addressing our continent’s ’social and environmental’ fractures in our journey to prosperity.
I believe broader Civil Society and Government are important ingredients to change, but the key to unlock our future, lies in the productive / scalable / replicable nature of business which can be aligned to a ‘greater purpose’ and utilised for agendas greater than financial profit, but for the social justice of all.
At this great crossroads in South Africa’s history, I believe that our BEE codes, specifically Enterprise Development, could play a major role in the development of Social Enterprises (SED) and the creation of ‘business vehicles’ which have strong social and environmental agendas.
I believe this blog could really stimulate truthful debate and act as a local reference point for many South Africans interested in this emerging social entrepreneurship space. This blog is evangelist by design, and hopes to point to ‘truths’ as directly as possible, however hard they might be to swallow.
Popularity: 15% [?]
It shouldn’t be a case of one versus another, we should be working together for social aims. Unfortunately one often finds that the social conscience of one organisation doesn’t extend to support or even awareness of their customers or suppliers.
The concept of a business driven to create profit for purpose, an alternative to the nonprofit convention was the subject of a paper delivered to President Clinton’s re-election committee in 1996, a prescription for a new paradigm, business serving people first for a more inclusive capitalism.
http://www.p-ced.com/about/history/
It turned into a practical model when applied to leverage development aid and a microfinance bank in Russia and since 2004 has existed as a UK based software business, with an anti-poverty mission in Ukraine.
As an illustration of “failure to communicate” I offer Richard Branson’s speech at the Ukrainian Lunch in Davos calling for business to focus on social problems.
http://pinchukfund.org/en/news/archive/2009/01/29/986.html
“That’s what we’ve been doing, right there in Ukraine” I tell his Virgin Unite team, “We’re ready to lead the way”.
The response, as is so often experienced, a resounding silence which says “Only with our label on it”.
This “branding” I believe, prevents us from achieving any common purpose.
Nice to see some well thought out comments … thanks Jeff…
You do make some engaging arguments, particularly ‘Unfortunately one often finds that the social conscience of one organisation doesn’t extend to support or even awareness of their customers or suppliers.’
- My sense is that a socially conscious shift in an organisation, is similar to ’shifting the rudder on the titanic’ … Stakeholders of large organisations are locked into an ‘old paradigm of expectations’ and shifting those can take many years, and an entire new management / shareholder structure.
- Sometimes its easier to incubate these new social enterprises from seed, and originate and development the stakeholder base from the ground up, but changing an ‘old energy’ business, and shaping it into a social enterprise is very hard work …
- My sense is in the next 20 years, we will find new age social organisations leading the race, with our older brothers possibly dragging heals and losing market share until they shift past their own internal inertia and sense the opportunity …
Thanks for the well thought out post Jeff!!
Max
Congratulations Max and Peter and Co on the award. Not sure I would agree with you Max about the actual award being beautiful though. Hope they at least had the foresight to use an social enterprise business to design and create the awards and associated paraphernalia. We live in hope that a company’s social consciousness runs deeper and faster than the flow of diatribe around it.
Thanks Max,
I grow ever more concerned that social enterprise offers a flag of convenience for a plethora of hidden agendas.
FWIW you may like to join up on the social business and creative capitalism group on Linkedin, where you’ll find links to others doing business for social purpose as their core mission.
Jeff
cheers Jeff … I have justed joined the Linkedin group …
M
Max, welcome to the blogosphere! I’m excited to see your blog on social enterprise- I was starting to get a bit lonely out there all by myself… now we can have a lekker debate/discussion about social enterprise across blogs. Maybe we will inspire the rest of the sector to join the conversation.
I enjoyed reading this article. Here’s my two cents worth on the subject-
For ages I have been saying that the distinction between NGOs/charities and social enterprises is too blurred. In fact, increasingly, there doesn’t seem to be a distinction at all.
It is quite ridiculous…really- there are glaringly obvious differences between traditional NGOs or charities and social enterprises.
So why the insistence from all corners in putting us all in the same category?
Read what I had to say in my article called ‘Call a social enterprise, a social enterprise’ today on my blog http://www.50stix.com
Max- I share your frustration! (Although I don’t agree with likening social enterprises to conscious businesses because then every business that exists for a larger purpose will call its self a social enterprise and then we’ll have the same problem we have now, but instead of NGOs masquerading as social enterprises, we will have businesses with cool products doing so. Google… naaa, I just don’t see it as a social enterprise, Apple neither.)
But let’s not get ourselves too frazzled about the monkeys hanging from the chandeliers (LOL!!!)- Its all quite normal for such a new sector- one which everyone’s talking about, one which has become quite in vogue, but one which has not been defined properly yet.
Someones going to claim the house sooner rather than later and chase the monkeys out.
I look forward to reading what you’ve got to say next.
Keep ruffling those feathers, makes life interesting!
Michelle Stolz
Hi Michelle,
Yes – i do agree with you that Apple and Google are not Social Enterprises …
but in the future, i share the collective hope that businesses will be become SEs and charities converge similarly and then we can drop the term altogether …
But until then … there is going to be this push / pull scenario – i think the secret in the space, is ‘financial value’ component is still largely missing to charities and the ‘carrot’ of taking grant cash and not utilising it for productive capital is where the shift will come …
[...] http://www.social-enterprise.co.za/2009/04/taffy-adler-and-his-latest-social-enterprise-exploit-the-... [...]
OH! You’re my new favorite blogger fyi
Hey Max,
I got the same article in my inbox a few days ago, and I have to agree with all the comments you made.
Reading it I could feel a CC sales pitch coming through from the get-go. Not devaluing what these organizations offer, but I think that they should discern between a fund-raising attempt (as this seems to be) and viable advice on the industry (as this article is not). It is rather frustrating that someone would give advice based on an unsustainable practice.
NGOs will never disappear, in fact their need will continually grow as mentioned, but honestly they are on an unsustainable avenue that ends in disappointment and eventually degradation of the entire sector. Not only are businesses cutting their spend, but individuals are giving less and government is trying to keep up with very little success.
We all know what the solution is; accessing global coffers of investment capital. In fact, the truth is we don’t even need trillions of dollars to deal with all the ills. We could greatly improve the existence of all impoverished nations and communities by just getting half of the US’ defense budget. Unfortunately governments won’t take that step out of fear. Who is left to fight the social war? Well, society itself. Powerful (high net-worth) individuals, organizations, corporations and funds… these are the ones who should be paying attention.
Does it not make very simple sense to put a structure in place that will alleviate the need for a constant income of grant money? Fortunately the move around the world is aligning towards Social Enterprise, and this opens a whole new world for everyone, rich, poor, impoverished or stable.
Let’s just hope that the rest of the developing world will soon enough realize that there’s a much more practical way to access international currency for poverty relief, infrastructure and many other needs (both social and environmental). It will also be much more promising for funders to turn into investors, allowing a consistent return of investment capital from these people. Imagine using the same investment capital to generate returns, paying out return plus reinvesting that same initial investment into a new (or even the same) avenue. Imagine what we could achieve then!
hey max
on the note of food redistribution, have you looked at the “feedback redistribution” model. would love your comments on this.
Finally! It is imperative that government start realizing there are better ways to get through the societal and environmental challenges than just handing out cash with little or no measurability.
One can also expect that Helen is at the forefront of ensuring her provincial cabinet is making sustainable systematic change, rather than sustaining symptoms.
Bravo!
Great. Is she turning into another Obama? glad to see an endorsement of the SE arena in the new administration. Hope everone else will do so shortly.
Don’t know about you guys, but I am blue in the face with explaining what social enterpreeurship is all about.
What I am missing in both the article and the previous reply is where is the value exchange proposition that will benefit both upstream and downsteam stakeholders?
There is also to much emphasis on the “markets” and its vapourware currency. (As the current economic crisis so well illustrates)
Hi Max
Agree with your comments which also reflect my own personal views. I like both Lisa and Charles, and what they are doing, but I have a problem about “incubators in general and more specifically in SA”.
I also looked at Godisa funded incubators, … and the least said the better.
Having analysed the incubator arena for the pat 5 years, we created what we refer to as a physical and pactical incubation programme, that looks at SROI and ROI in our new Adopt-a-Pothole programme.
The one problem I have always had was:
1. what, where and how much impact is acheived in real terms.
2. what is the value exchange proposition that results in upstream and downstream benefitiation impact on all stakeholders. Can it be quantified and measured?
…
We beleive that it must.
I have read thousands of SR reports … and the majority are very unclear on what is the ratio between Rands and direct visible impact.
Laurinda, your sentiments are echoed throughout the industry. In my experience, donors or investors don’t care, are too scared (or couldn’t be bothered) to determine a true-ish indication of social value … and even in the SROI arena, a standardised measure for social value has not been determined. If you combine that with the fact that most social enterprises are very grassroots and barely surviving, asking them to even start considering to launch into such a project is a ‘big ask’.
Downstream, when the ‘big cash’ is invested, this is when these considerations start becoming more applicable (but then, how many service providers are there to determine the ‘blended value’).
Well Max, your analysis is quite interesting but quite misguided in my opinion. when we analysed why smme’s fail in South Africa ( and most do fail) these were the reasons:
1. costs are too high for any start up ( especially those from PDI areas). This includes renals, telephone, internet etc etc. If Max can change telkoms costs or the landlords then this would go a long way toward helping smme’s. we supply these through ED contributions and I feel even a fairly sound business with a turnover of R 2 million would benefit from this subsidy. I know I would.
2. Vehicle and distribution costs. All businesses need a vehicle if they are serious. Otherwise you find smme’s taking taxis to do quotes. Now Max I am sure your mom bought you a car but its not the same for Sipho from Soweto. we provide this and its a huge benefit to smme’s
3. Mentorship and skills which you have identified. This is vital. schools and even universities dont teach you how to be a an smme, its usually your dad. we provide this.
4. Credit is key but I dont want an smme to use that credit on vehicles and telephone costs. Max, please try and get a loan from a bank without any collaterol? and a loan of a few thousand doesnt go a long way anyway. Max you may be able to get a loan from your mom interest free as this is how most people do it…sans the banks
5. Marketing. You try Max and sell your service or product as a young black smme to anyone. People dont buy if they dont know you or you have a track record. Most people who have had a track record have made their mistakes and learnt.
an incubator allows a 3 year process of growth. Succeed or fail the smme will learn in a safe environment with some subsidy. The black umbrellas process requires smme’s to pay a R1000pm fee and to provide records of their business.
Some will succeed and some will fail. what I love about the space at the moment is that for most young people in south africa there is no longer a choice. The jobs are few for low skilled individuals as unemployed grows to 50% ( my figure)so the only option is starting an smme. if this can be garnered now we could create magic.
In terms of sustaianbility of course we could take equity in every smme in the system like raizcorp does but why should we? I hate the model where a startup has to give almost everything away because he doesnt have the cash. I like the model where if a smme is successful they can come to us and offer us a share or they can help another 3 smme’s because of the support they were given from us ( pay it forward). This means growth.
and why is sustainability so important anyway. Its the new buzz word for NGO’s and social enterprises. However I have a massive amount to say about this and have only found a tiny few who have been truly sustainable ( and they are just businesses without a large social impact) while the biggies have usually been given a massive bequest.