Code of Conduct

I have decided to put up a few guidelines for people who may be interested in buying in my support.  I have published an interim Code of Conduct while I await the development of an appropriate code for professional co-operative and social enterprise advisors.  This is really just crystallising what I already do, but I thought you should know, dear reader!  Check it out using the link in the menu bar.

Housing Co-ops coming home to roost

My first paid role as an advisor was working as a Housing Co-operative Development Worker back in 1998.  The wheel seems to has turned full circle as I am currently working with a number of Housing Co-operative initiatives.  I am working with 2 new Housing Co-ops for Olmec Co-operative CIC who themselves are sub-contracted to deliver the support for the Co-operative Enterprise Hub.  One is based on water!  I have also just started a piece of work through my co-op Co-operantics with a well established Housing Co-op to review and improve their governance system.  As an associate of CAN I am assisting the fledgling Housing Development Co-operative which aims to address some of the systemic barriers to the development of co-operative housing.  When you add to that conversations with the Wales Co-operative Centre about support for housing co-ops it seems like Housing Co-ops are flavour of the season.

Graphic Novel review: The Co-operative Revolution

Last night I attended an event that I found inspiring.  I am not good at these kind of events normally as I want the speakers to stop speaking so I can get on with networking.  But not in this case.   I was at the launch of The Co-operative Revolution: The Graphic Novel and was treated to some genuine and amusing speakers from the Co-operative Group and a chance to hear Polyp, the artist.  I was pleased to hear people directly challenge the "selfish gene" myth and we were treated to Polyp's insight into what he thought those original RADICALS who founded the Rochdale Pioneers Equitable Society might have been thinking & what Rochdale in 2044 might look like to inform his art, before being treated to a "behind the scenes" look at how a graphic novel is constructed. When I arrived at the venue (Waterstones in Picadilly) I was blown away by the queue round the block before realising they were probably there for the Jessie J book signing!  We've got 13 million members of the Co-op movement in this country so an easy mistake to make....


Onto the book:
If, like me, you enjoy graphic novels you will realise that £5.99 is an absolute steal - the reason being that The Co-operative Group has subsidised the printing of this 71 page treat which has been produced by New Internationalist.   They realise that the message is more important than turning a profit on this project.  That's the difference with the co-operative movement - it's not all about economic return, sometimes we do stuff for the social benefit!  And they have also made it available to read online for free.  But for less than the price of 2 pints, why not have the book gracing your radical bookshelf?

The graphic novel element of the book takes us through several stages - Yesterday, Today, Always, Tomorrow. "Yesterday" brilliantly recounts the struggles and victories of the early pioneers of the Co-operative movement and is the best introduction you could possibly give someone.  It really brings it to life, and puts the co-op movement's founders in the context of social upheaval and protest movements and struggle for democracy of the time.  For instance, did you know that the first Toad Lane store had a green door?  Green because it was the colour of the Chartist movement.  "Today" treats us to some key facts about the current co-op movement with interesting graphics and a couple of pastiches of classic British comics which would make damn fine posters.  "Always" might be the most important section of the book as it illustrates how co-operation is the key for survival of all creatures on the planet and debunks the selfish gene myth.  In digestible form, this could be the key text to educate young people about the alternative to the mainstream individualist approach they have rammed down their throat at school.  "Tomorrow" is the science fiction chapter. 2044.  A Mars landing led by a Rochdale co-op with a woman at the helm.  Pioneers to the last.

Although I believe the graphic approach is the best way to tell a compelling and important story of our radical movement, it is really useful that the book is topped off with a Timeline of key co-op movement events, and on the last page is a call to action.  Something you can do simply and quickly. But I won't spoil the surprise.
 
So at the risk of sounding like some kind of co-op evangelist, I recommend you to get this if:

• You like graphic novels
• You are part of the co-op movement
• You are interested in co-ops
• You are a social entrepreneur - find out about the roots of your movement and an approach that has sustained for 160 years
• You are interested in radical politics

In the words of Father Ted "Good luck with the book"

To get The Co-operative Revolution visit http://www.newint.org/books/politics/cooperative-revolution/  or to read it online visit http://www.co-operative.coop/graphic-novel

Legal Structures

Having recently developed a Social Enterprise Legal Structures training day for delivery to clients of Olmec, I thought I should unleash it to the world, so you will see a new page on this site for Legal Structures training and consultancy!

Social Enterprise or Social Purpose - Clarity is the best policy

The recent attempt by Salesforce to trademark the term "social enterprise" and the amazing response led by Social Enterprise UK (Not in our name) to defend "our" term resulted in the trademark application being withdrawn.  WIN!  The recent ruling that A4E cannot describe themselves as a "Social purpose" organisation in advertising was a similar step to clarifying where we stand with these terms.
However, "social enterprise" and "social purpose" are labels applied in such wide and varied ways that they are almost opaque. What do they even mean any more?

As more and more people and businesses see these labels as holding a commercial advantage, we have seen the term adopted by a wider and wider constituency and from my point of view it has become increasingly watered down.   The terms are being devalued.  Sometimes I wonder if they are worth defending at all when charlatans can use them to make a quick buck, but what I really believe is we need to ensure the terms are clear and effectively auditable by the lay person.  "If it looks an elephant and sounds like an elephant..."

I don't believe that legislation defining the term social enterprise is the answer.  Let's keep our movement (if it is indeed a movement) out of the hands of the government and civil servants who will twist it to the changing agenda of the day.  After all, most social enterprises are pragmatic responses to socio-economic situations that politicians have failed to address. We can make a difference now, while a political solution may take 10 years, 15 years, or never even happen.  All that time and energy can be applied directly in the economy to MAKE A DIFFERENCE now rather than lobbying. And if there is a change of government, so what?  They don't own us, they don't control us, we carry on doing what we do. 

We are taking direct action by operating lots of little bits of the economy and making them work for the benefit of stakeholders rather than investors.  And if all those bits complement each other and add up to a sizable lump of the economy the country will change in a way governments never quite achieve.  You could call it an alternative to capitalism if you like.  Just a bit of an evolution rather than a revolution - rather than storming the gates we are just ripping up the road that leads to them.

I also don't believe a "kitemark" style system is the answer as ultimately some who can demonstrate they are social enterprises will fall short of the necessary boundaries that have to be drawn for such a system to work.  And with the work involved in administering and monitoring such a system it can become a case of "paying for the right to be".  And why pay for the right to deliver social benefit when you could pay for a kitemark that assures your quality for customers (ISO 9000x)?


So if legislation and kitemarks are not the answer, surely, it is up to us to pro-actively demonstrate how we make a difference.  "PROVE IT!" as I have said in many training sessions.

If you have to use a complicated diagram and lengthy discussion to enable me to understand how you MAKE A DIFFERENCE then I may think it looks like a smoke and mirrors trick to hide what is really going on or feel like I am visiting the snake oil salesman. It would also lead me, as a support provider, to question whether your business model is actually ineffective or inefficient taking a meandering rather than direct route to achieving your objectives.   Keep It Simple Stupid!

Teasing out the difference between organisations that happen to trade in a sector with a primary purpose to benefit investors or shareholders (e.g. a Health sector recruitment company) and those which exist to MAKE A DIFFERENCE requires CLARITY, TRANSPARENCY and OPENNESS.  The bullshit will tend to bubble to the surface.

Newsflash!  You don't have to tell people you are a Social Enterprise or Social Purpose driven organisation to make a difference.  But if you are making that claim you should expect some scrutiny in return for the potential marketing benefits of these claims.

Tell us about it!
Here's my suggestion.   Ask yourself these questions and then make sure you broadcast the answers.  Then people will be able to make an informed choice about whether or not they like what you do!

• What is your social purpose?
• How do you deliver on this?  Is it through the service/product you make?  Is it about what you do with profits?  Is it about how the business is managed and owned?
• If social purpose is primary, what happens about profits? How do I know this isn't a lucrative seam that enterprising capitalists are mining for private gain? Who owns your enterprise?
• Who gets to decide if you should cease trading or wind it up?
• What happens to residual assets  (any money or property left over)?
• Can you explain in simple terms who benefits from the enterprise and to what degree - investors, employees, customers or end users, community? 

Social impact reports and Social Return On Investment are great tools, but we all need to start somewhere so don't be afraid to tell us in your own words.  The more you tell us - the outside world - the more we can trust you.
And if you won't tell me how you deliver on the social element of your "social enterprise" is that because you are a con merchant or you are wasting resources?  What have you to hide?

Just a few cynical thoughts.  Call it playing Devil's advocate..... 

Principles really do matter. How Co-ops can succeed.

Over the years, I have noticed that many co-operatives I have worked with or known who had suffered some sort of business crisis have had something in common.  They had lost sight of the Co-operative Principles at the heart of the business and the business problems were a symptom of a failing organisation.

The Co-operative Principles imbue co-ops with what is referred to by co-op geeks (hands up!) as "The Co-operative Advantage", a very real but ever so intangible attribute that enables co-ops to succeed where other businesses might fail.  In all the focus on this wonderful advantage or celebrating the benefits that being a member of a co-op brings, it is sometimes easy to forget that they are a product of the application of the principles.

So what can you do to ensure your co-op stays a co-op in deed as well as name?  Here are a few tips.

Get back to basics.  Be clear about your purpose or aims

A co-operative is based around common economic, social and/or cultural needs.  It is central to the internationally agreed definition of a co-operative.  Clarity about the needs you hold in common and want to address is vital to success.  Ignore the importance of shared and regularly acknowledged purpose at your peril.  There is a risk that ignoring your purpose can lead to "mission creep" as members with differing needs try to bend the co-op to meet those needs.  This can especially be the case if your membership processes require attention.  Eventually  the co-op could cease to deliver what it was established for, or break into factionalism.  Sometimes your co-op may be able to address the developing needs of members, but this should be done as a strategic priority,not by stealth.  Sometimes the needs of the membership change but if an individual's needs cannot be met by the co-op they can always leave - and start another one!  The open and voluntary nature of co-ops applies equally to leaving as to joining.

Sticking to the principles

It is not that difficult to audit yourselves on how you apply the Co-operative Principles, although sometimes some outside assistance can be useful.  It is also a highly educational experience for members both new and old alike.  As time, members, the trade sector and the technological environment change we may find better ways to implement the principles for shared benefit.

Take the 7 principles and then examine each one by one:

• How does your co-operative implement the principle? 
• How does this contribute to your purpose or aims?
• Do the ways you implement the principle pro-actively put that principle into practice or is it routine and "it's what we've always done"? 
• Are members clear about why you implement the principles in that way?
• Is this the most effective way to implement the principle?
• Does the current way of implementing the principle cause friction or resistance among the membership?
• Could this be done in a better or different or easier way?

Why Asset Locks matter

This subject seems to have come up in discussion again and again so I thought I might as well blog this and air my views.
In my opinion asset locks do matter in the world of Social Enterprises.  However, I need to clarify what I mean when I am talking about asset locks.  Having an asset lock means that upon winding up, an organisation can only pass what is left in the coffers once all debts have been settled, outstanding money owing collected, fixed assets sold off to an organisation with a similar or stronger asset lock and, frequently, similar objects.  It also means that assets should not be disposed of while the organisation is still running for less than their value (e.g. you can't sell off a £300 laptop to a staff member for 1p).

What do I mean by "asset lock"? 
Asset locks come in varying forms but generally will be recognisable as one of the following:

• Statutory Asset lock - this means that you cannot touch the assets without reference first to a regulator, or you could be breaking the law.  The assets can only be passed to other bodies with a statutory asset lock.  The asset lock can not be removed.  Statutory asset locks exist for Charities (regulator: Charities Commission), Community Interest Companies (CIC regulator) and for Community Benefit Societies.
• Voluntary asset lock - this means that the members of the company or society have opted to put an asset lock clause in their governing document so that upon dissolution the residual assets can only be passed to an organisation with similar objects and a suitable asset lock.  Voluntary asset locks (also referred to as "members asset locks") can be removed subject to the requirements of Company or Society law.
• Common ownership - particular form of words for a type of voluntary asset lock, generally in worker controlled business.
• Trust - the terms of a trust are decided when it is registered and the Trustees remain personally liable.

Some voluntary asset locked organisations can distribute profits to individuals, but any profits reinvested immediately become assets and protected.  It is worthy of note that some statutory asset locked organisations allow payment of bonuses to staff and have no cap on Director remuneration!


So why do asset locks matter?

Asset locks are a matter of protecting the "offer" that is made:

• People establish social enterprises to achieve a social purpose and pass ownership onto others.  They need to know that purpose will continue to be achieved to be able to leave
• They preserve value which was often created by people committing time and/or money freely to make a difference, not to make individual business owners wealthy. 
• The life of the organisation's benefit is protected and lengthened.

How robust are these asset locks?

Asset locks can be circumvented by a devious mind.  They are part of the solution and not the answer in themselves:

• An asset lock is only as strong as the membership of the organisation.  If you have participatory governance, an inclusive membership and accounts open to your members then the scrutiny provided by your community of interest adds to the strength of your chosen asset lock.  This applies equally to statutory asset locks.  If there is no whistle blower, how does the regulator know something amiss has taken place.  Especially when you consider that the CIC Regulator has a small staff team to monitor 6000+ CICs.
  For example, a small membership CIC (using CIC Regulator model) of 2 people is only answerable to its Directors and to the CIC regulator through annual Returns and accounts.  Any assets remaining at dissolution can only be passed to another asset locked body.  Safe you might assume.  However, the assets may also be used to achieve the objects of the organisation.  It would be completely legitimate for the Directors to pay themselves to pursue the objects of the CIC.  After all, that's what it is there for, not to sit in a bank account devaluing.  But who is to say that the Directors are providing Value For Money?  The Directors are allowed to decide how much they should remunerate themselves.  Are they actually converting the assets into wages under the guise of achieving the objects of the organisation so they can declare nil assets upon dissolution? Providing the Report to the CIC Regulator shows sufficient benefit to the declared Community they will serve would anyone know?  No-one but those 2 Directors gets to see "under the bonnet" of the business.  This is why I argue that the asset lock is only as strong as the membership is vigilante.  Some would argue that sections of the charity sector have become a gravy train for personal benefit of employees over benefit to beneficiaries for years - and all legitimately.
  And interestingly even the private sector is witnessing shareholders holding Senior Managers to account over their remuneration!
  
• Your business model adds to the strength of the asset lock.  If your members stand to gain more in the long run by the organisation existing to serve them they will fight tooth and nail to protect it.  If they stand to lose very little they can be bought off in some way.  Just look at the demutualisation of building societies in the 90s.  People were bought off with £250-£1000 to convert their society into a plc.  And within a short space of time services changed from meeting the needs of borrowers and savers to meeting the needs of shareholders.  Some ex-members were probably more than £1000 worse off within a year.  FAIL!

It is arguable that an organisation of 50 people with a voluntary asset lock is more protected than a small CIC! Mine is a somewhat contentious view - an "Emperor's new clothes" moment if you like - especially for those who see the CIC legal form as a panacea, but I have been working with social enterprises since before the CIC existed.  I have also dismantled and reassembled a large number of different legal structures which maybe puts me in a position to view it objectively.  I made this point in a Guardian online Q&A session (https://socialenterprise.guardian.co.uk/en/articles/social-enterprise-network/2012/may/11/community-interest-companies-live-qanda).  No-one challenged what I said, including the CIC Regulator who was taking part.  They have missed the comment or it may be an uncomfortable truth.


Conclusion
The only conclusion I can come to is that even for a statutory asset lock, the asset lock is only as robust as a vigilant membership.  This makes a clear argument for stakeholder led social enterprises as opposed to the crop of "entrepreneur led" social enterprises that are flooding the sector - encouraged by a number of high profile, well resourced programmes.  If your enterprise is truly social, in my opinion it needs more than just social aims: it requires some form of social ownership and clear accountability through its governance structures and management practices.  Only then can you be certain what you have established will sustain its social benefit in the future.