The future of business

Michael Devlin looks at how the RSA is building on its Enlightenment heritage to foster the growth of social enterprises

Born out of the Enlightenment, the RSA was set up to be what we might now call a social enterprise. At the time, prosperity and happiness were seen as dependent on the free market, the proliferation of commercial enterprises and support for inventions and creativity. Enlightenment thinkers such as Adam Smith recognised that sustainable solutions to social problems could only be achieved through the empowerment of the individual.

The RSA's current work around enterprise reflects this history but takes place in the context of public funding cuts and high unemployment. Encouraging entrepreneurship is vital to reducing long-term unemployment, with all its negative implications for people's health and wellbeing. Individuals who have been unemployed for a long period of time often find it harder than their peers to get new jobs and, on re-entering the job market, may struggle to adapt to new conditions. Once engaged in entrepreneurial ventures or new businesses, however, they are able to put their skills and passion to good use, unhindered by the stigma that they might face in employment. Involvement in enterprise can give individuals the confidence boost that they need to return to being economically active citizens.

This means encouraging ordinary people to collaborate on bold new ventures that respond to emerging challenges. Such an approach demands a closer examination of the culture and capabilities needed for entrepreneurship to flourish. It also means moving away from a view of enterprise as solely a means to job creation and exploring how it can drive broader social change. The growth of community enterprises and other types of 'social business' is enabling entrepreneurs to have a tangible impact on society and, in particular, on the environment. According to Social Firms UK, the social firm sector has grown by 32 percent since 2006, despite an overall reduction in the number of new start-ups.

With this in mind, the RSA is currently developing a new project that will look in more detail at what capabilities will be needed by tomorrow's entrepreneurs. It will investigate ways in which both the government and organisations such as the RSA can help foster these skills. In addition, RSA Fellows have set up a network looking at business purpose and profit, prompted by a question from the outgoing director of the CBI, Richard Lambert: "How do we get heads of business to put their heads above the parapet?" when it comes to environmental, social and economic impact. The Profit with Purpose Network will look at how traditional business models can overcome existing hurdles to deliver sustainable solutions.

In the Summer issue of the RSA Journal, we announced the launch of the Social Entrepreneurs Network, which is enabling Fellows to share their experiences of social enterprise, collaborate on the development of early ideas and discuss how to tackle particular barriers to success. Those involved have identified common issues that social entrepreneurs face: getting governance and structures right; securing funding; defining a clear mission; developing a business plan; communicating with external audiences; finding and supporting new talent; selling the product; learning and continuous development; how to scale up without losing focus.

Of course, all of these are key concerns for businesses. However, a critical question for the Social Entrepreneurs Network is how to measure social impact and value. The group was interested in the relationship between early ideals, development phases and growth, and was keen to explore how this changed over time.

In doing this, the Network, which now meets quarterly and has more than 100 members involved in its online forum, has undertaken to research and examine nine case studies in different phases of development. These will be launched at an event in November at the RSA and will include, among others, firms encouraging sustainable living and local consumption, and firms aiming to inspire young people to turn their lives around. The Network will follow the progress of these firms over a year, with the aim of disseminating findings and sharing experiences with the wider network online, culminating in an event in late 2011.

"There is some evidence to suggest that the boundaries between traditional enterprises, the voluntary sector and social business are beginning to blur," says Alex Watson, Networks manager, RSA Catalyst and Support. "We hope that the enterprise work taking place at the RSA, both project and Fellow-led, will provide practical information about the kind of capabilities needed in this environment, as well as increasing collaboration and support among the enterprise community."


Michael Devlin is head of networks at the RSA

If you would like to get more involved in the Social Entrepreneurs Network, or can offer support or a venue, email Malcolm Scovil FRSA or Sarah Tucker. You can also join the RSA Social Entrepreneurs Network and Profit with Purpose Network.

Get involved

RSA Skills Bank is a growing skills bank helping Fellows all over the world to easily pledge their expertise, time or knowledge, in whatever quantities, to help projects led by other Fellows. RSA Support enables Fellows to work together in a spirit of trust and generosity and offer skills such as mentoring, brokerage, web design, financial or legal support, and project management. After completing a few simple questions, the RSA will match you to projects emerging from regional networks or the Catalyst seed fund process that need advice and practical support. Please register for RSA Skills Bank.


Case study: Good returns

Every business has a responsibility beyond profit, but financial sustainability is essential to any company's long-term future. As the co-founder of Ecomodo, a social enterprise that has been trading since March, my mission is to channel responsibility into profit and vice versa.

Ecomodo is an online marketplace that enables people to lend and borrow everyday objects, skills and spaces with confidence. My aim was to reinvent the concept of lending for modern society by creating financial incentives; lenders negotiate how much (if anything) borrowers pay for their item and decide whether to keep the cash or donate it to a charitable cause. The benefits are environmental – reducing wastage by encouraging the reuse of resources in any given community – and social, in that the scheme creates opportunities for people with limited financial means. With the coalition government's Big Society concept gathering momentum, our secure 'lending circles' and optional insurance can help restore people's trust in one another and inspire greater community involvement.

A sound business plan is crucial to the success of social as well as commercial enterprises. Ecomodo currently has 650 members and we are aiming to increase penetration in our local (and most successful) market from 0.4 percent to 2 percent by the end of the year. We are currently self-funded but our goal is to reach a level where the business pays for itself. By creating a largely automated system, we've been able to focus on building membership and establishing partnerships with local businesses and government. Collaboration is at the heart of our business model: not only do we facilitate it among our customers but we also depend on it to extend the reach of our membership network.

I believe that business culture today is beginning to change. People who might never have envisaged themselves as entrepreneurs are embarking on new ventures, and we need to foster this spirit of innovation by providing a broader and more visible range of training and educational opportunities, as well as better ways of controlling risk. The challenge for this new generation of entrepreneurs will be to combine their commercial talents with a social and environmental focus.

Meriel Lenfestey FRSA is the co-founder of Ecomodo