March 01, 2018
In the Shoes of Social Enterprise “Shareholders”
“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”
-Adam Smith, The Theory of Moral Sentiments
A standard developed business or enterprise has shareholders or owners who have a vested financial interest in seeing this business succeed. These individuals have power over and even weigh in on the key decisions of the business and its financial operations, and the business is typically highly accountable in some way to these shareholders. A standard business grows, shifts, and adapts over time to ensure that its shareholders are maximizing their profits. Financial accounting helps to keep these owners and potential future owners informed on financial performance and how to maximize their financial returns.
But who are social enterprises really accountable to? Social enterprises do not always have shareholders and focus on expanding the reach of their social mission and impact on beneficiaries in addition to maximizing profit. Because beneficiaries of social enterprises often have no financial stake in the business or a say in its decision-making, social enterprises must take the extra step of ensuring that targeted beneficiaries are receiving maximum social impact from any growth, shifts, or adaptations in the social enterprise’s operations. Because the costs and benefits of social impact can’t be tracked or measured using conventional financial accounting methods, a new way of measuring value that accounts for social and environmental impact must be created and normalized. This often involves leaders of social enterprises stepping into the shoes of their beneficiaries, in order to better understand what they demand from, receive, and how they respond to the social enterprise. The social enterprise, in turn, must make necessary changes to ensure that social impact is being maximized.
This was the focus of a talk by Jeremy Nicholls, Chief Executive of Social Value UK and Social Value International, to a group of think tank, NGOs, and private sector individuals in early February on maximizing social value. Following the talk, Nicholls led a workshop on how to maximize social value for founders, executives and staff of early and growth-stage social enterprises that are part of the SoUK.LB support program. The workshop focused on getting social enterprises to think about how they approach, measure, and maximize their own social impact. Some questions that Nicholls had the social enterprise participants consider included:
- Are you having as much social impact as you possibly can?
- What do your beneficiaries take away from your project, and how does this align with what you intended for them to take away?
- Could what you’re doing be reorganized with the same resources to increase your impact?
Nicholls observed that in order for any social enterprise to confidently say “yes” to the first of these questions, they must undergo a relentless comparison of all options available to them, taking into account their intended beneficiaries’ experience and views with regard to each of these options. Social enterprises left Nicholls’ workshop with a better understanding of this need to put themselves in the shoes of their beneficiaries and the various ways to do so effectively.
As one of Lebanon’s oldest social enterprises and a SoUK.LB beneficiary, L'Artisan du Liban has kept Lebanese artisans and the culture of Lebanese art alive by enabling consumers at home and abroad to buy their crafts. The business also provides training, workshops, and one-on-one technical coaching to teach and perfect the disappearing art of handicrafts.
During the workshop, L’Artisan du Liban had to identify challenges and think about how beneficiaries experience these challenges.
“Technically, our beneficiaries are any artisan in Lebanon who wants to maintain his or her livelihood,” said General Manager Roula Haider. “We’ve been having a challenge in maintaining enough consistent orders to provide artisans with the financing they need to maintain their livelihoods,” she said.
L’Artisan du Liban has been operational since 1979, its 40 plus years of existence already proving that it has a sustainable social business model. The workshop, however, assisted in validating some of the business’ upcoming decisions.
“Jeremy Nicholls’ workshop helped us to think about whether we are doing everything we can to maximize the social impact of our business,” Haider noted. “The workshop helped us reaffirm our decision to soon expand to an online platform so that we can increase our market, customer orders, and revenue for our artisans, especially during low-order seasons.” The online platform is expected to be up and running in March and will allow for artisanal products to be purchased directly online.
Also present at Nicholls’ workshop was Cirquenciel, a SoUK.LB beneficiary and social circus that aims to spread peace through circus arts. Working on three different programs, Cirquenciel runs a circus school, a professional troupe, and a psychosocial support team formed by educators from different backgrounds. The organization also regularly visits refugee camps in order to reach the most vulnerable populations. These circus interventions allow Cirquenciel to convey simple messages related to hygiene, sanitation, water, and health.
Cirquenciel already does extensive tracking of its impact on direct and indirect beneficiaries but is aware of the need to do more and the need to continue to find additional ways to expand its impact.
“The workshop helped us think about what beneficiaries would really be missing if we didn’t exist,” says Ali Sasso of Cirquenciel. “This was an extremely useful exercise as it got us to think about how we can enhance our beneficiaries’ experience and make sure that the program is worthwhile.” Sasso pointed to Nicholls’ emphasis on data gathering and first-hand sampling to understand beneficiaries’ relationship with key outputs and indicators. As an example, Sasso explained that Nicholls walked the group through an example about a program that provided benefits to the elderly. When asked about the program, the elderly beneficiaries indicated that the thing they were taking away most from the program was interaction with others and a lack of isolation, not the benefits themselves.
“We don’t do this kind of data gathering in great detail yet, so we’re trying to look at how to do this now,” Sasso explained. “After our next show, we will likely set up a proper feedback loop with students to see exactly what they are taking away from different aspects of the program, and we’ll make changes accordingly.” Cirquenciel will host its next show on March 3rd.
Another SoUK.LB program participant, SE Factory is a coding academy in Lebanon that aims to teach young computer science and computer engineering graduates the hard and soft skills needed to become highly employable professional full stack web development, with focus on candidates from lower socioeconomic backgrounds.
The organization used Nicholls’ focus on tracking the changing user experience as a check on its current thinking as the organization looks to scale up and expand to other cities in Lebanon.
“SE Factory’s impact propagates from the education that we provide, the learning process, and the courses’ effects on student employability and socioeconomic status,” said Program Coordinator Aya Hoteit. “To scale up, we will really need to hone in on these indicators. We need to grow our numbers without compromising quality, and the workshop helped us identify what numbers we can focus on in order to maximize the standards that we’ve set,” she said.
SE Factory is looking to expand its course load, expand to other cities, and develop an online course.
SoUK.LB continues to offer workshops such as this one to its selected enterprises as part of its goal to support scalable Lebanese social enterprises that seek to create transformational social or environmental change for the benefit of society.
Priya Vithani, guest blogger