Enlightened enterprise - Business Works

Enlightened enterprise

Harinder Mann, RSA

H arinder Mann, Associate Director of Enterprise at the RSA, discusses the potential for businesses to advance social causes as an integral, rather than peripheral, part of their strategy for growth.

Think Tesco’s and instantly, of course, you think of supermarkets and petrol stations. You might perhaps know that they have a corporate responsibility programme supporting schools. But most of us are unlikely to consider them active in tackling some of the UK’s most pressing social problems. However, this April saw the supermarket giant’s announcement that it would enter into the UK housing market. Tesco’s said in their statement that their “mixed use developments would create jobs, civic amenities and social housing in areas that many other developers cannot and will not invest in.”

Tesco’s intervention in this area is just one recent example of an emerging trend for businesses to invest much more of their resources to tackling societal problems that are proving stubbornly resistant to public policy. So have we reached a new socially “enlightened” phase in the evolution of market capitalism, or are we just seeing shrewd businesses moving into potentially fertile territory likely to be left vacant in coming years by the retreating state?

At the RSA we believe that the two are increasingly compatible, even essential, for both our long-term commercial and social health. As we try to pick ourselves up after the financial crisis, and work off the enormous burden of debt confronting society, it is through a combination of market and social enterprise that we will source the ideas and innovations to help us make progress, in spite of our many pressing social needs.

The RSA - or “Royal Society for the Encouragement of Arts, Manufactures and Commerce” to give it its full title – has, throughout its 250 year history, been excited by this potential convergence of commercial and social interest.

RSA in 1800

Founded with the ambition to “embolden enterprise, enlarge science, refine art, improve our manufactures and extend our commerce”, past members have included Benjamin Franklin, Adam Smith, William Hogarth, Charles Dickens and Guglielmo Marconi.

Many of these leading figures in our history considered the question of how markets, commerce, manufacturing and socially-minded enterprise might combine wealth and opportunity creation with the search for solutions to the challenges we all face. Challenges in the 21st century that range from demographic shifts, resource and ecological depletion, climate change, long-term unemployment, loneliness and unhappiness; or in the case of Tesco’s, the lack of affordable housing and the need to regenerate dilapidated cities.

Through our unique organisational structure which comprises of a dedicated Projects team of subject experts in a wide range of fields, an international network of 27,000 active Fellows, a unique London home and a world-renowned platform for lectures and debate, the Society pursues its vision of 21st Century Enlightenment. Famous Fellows from the world of industry include Sir John Banham, Chair of Johnson Matthey, Sir Peter Gershon, Chair of Tate and Lyle, John Kay of the Financial Times, James Dyson, inventor and Sir Tim Berners Lee, internet pioneer. These are but a few of the thousands of Fellows actively involved in entrepreneurship, business and social enterprise.

Luke Johnson, the RSA’s chairman and a noted entrepreneur and business leader in his own right, reminded us of the RSA’s innovative spirit in his inaugural address of 2009. The RSA, he said “was founded as a society for inventions that make the world a better place.”

He called for a renewal of the RSA’s commitment to industrial and social pioneers who have in the past provided the solutions to the challenges of the day. People like George Smart, who in 1805 was awarded the RSA’s Gold Medal for his invention of rods and brushes for cleaning chimneys without employing children, thereby putting an end to a dangerous form of child labour.

RSA title page

In today’s world we are asking ourselves the same questions we asked of ourselves back then. What is it the RSA can do to support the intervention of market and social enterprise – and what should these interventions be? Just as we dealt with the issues facing child labour, how can we support inventions - be they in the fields of policy or technology, to provide solutions to the challenges society is facing? In practical terms, we do this through a combination of ideas, lecture events, our projects and through our networks made up of Fellows who all share the common theme of wanting to add value to the society in which we live.

Of course, the notion of corporate philanthropy and social concern has a long pedigree, going back to the Cadbury’s and the Rockefellers. But the idea of corporate social responsibility being integral to strategy emerged and gradually became part of the mainstream in the 1990s. The RSA acted in its traditional “encouraging” role at this early stage with its Tomorrow’s Company programme back in 1995, which generated a forum and network to advance this agenda.

The last decade has perhaps seen a slackening of attention towards this agenda, as the boom fuelled a heady pursuit of the seemingly – abundant wealth being created by the financial and property markets.

But during this time a quiet movement has been gathering momentum. And post-crisis, it is now coming to the fore. In these times of difficulty and uncertainty it is new forms of social entrepreneurship and enterprise that are growing at a much greater rate than ever before. Social entrepreneurs argue that the answer to changing the previous risk-and-reward-led culture in business that has led us to the credit crunch, is through an approach that looks towards achieving social change, adding value, but not necessarily in financial terms.

Social enterprise benefits society through the application of the entrepreneurial mindset, by extending commerce and encouraging new ways of thinking and dealing with problems in practical ways. The unrealised potential is to deliver public goods and services at a much lower cost for our society, given our current budget deficit.

Social enterprise is flourishing. Recent figures suggest that social enterprises are already contributing £8.4 billion to the economy. Banks and many government-led initiatives are supporting them with EU-led programmes and an office in the White House dedicated to the social innovation they promote. But how best should this be done? Once you leave the buzz words and the rhetoric behind, what actually works in achieving change?

The RSA is working to answer this question by reviving its deep enterprise traditions, through a growing portfolio of projects in this arena. Our projects bring original thinking, rigorous research and practical groundwork to release untapped human potential. Founded in the Enlightenment by society’s “doers” - entrepreneurs and craftsmen - we believe that people can do more than they realise to create the society they want. So we develop new ideas, designs and blueprints to improve aspects of society, and rather than just dream or write about them, we set test them in reality through practical demonstration projects.

For example, in the coming months, new RSA projects will look at how we can bring entrepreneurial opportunities, resources and norms to communities (eg. inner cities) and demographic cohorts (eg. the older population) where a combination of social and economic factors have stripped them out.

An example of this is our recently-launched Social Enterprise Network. The network is starting from a small base of 160 RSA Fellows who all share a passion for social enterprise and the potential to be gained by the dynamism of entrepreneurship with a strong social consciousness.

Some of projects that they have discussed range from previous entrepreneurial RSA initiatives – from water irrigation in India to mentoring of children in inner-city Birmingham. The connection to the founding principles of the RSA was clear. Throughout its history, the RSA has, through its active Fellowship, sought to mobilise small groups to incubate and demonstrate inventions that may ultimately have transformative effects.

Another of our projects, Tomorrow’s Investor, challenges current thinking by developing a new blueprint for the pensions industry that delivers much greater value for the investor and, ultimately, society. Under the leadership of a leading Fellow, David Pitt-Watson, founder of Hermes Equity Ownership, the project has sought to find a solution to how we can still deliver a more prosperous retirement to our citizens. A decade ago this was a reasonable prospect for most families with a combination of final salary pension plans and strong asset prices, particularly in housing. However, this masked the inadequate levels of personal savings by millions of British households.

The project is developing a new consensus and a practical blueprint for a business model in which pension funds can operate to ensure they regain public trust and deliver fairness to the investor, while still delivering commercial value to providers. Cost reduction being the primary concern of most investors, it comes as a shock to citizens that in some funds, nearly 40% of their investment over the life of their pension contributions is lost to administration costs. The project has in its first phase found that by bringing about characteristics such as auto-enrolment, large-scale schemes, collective provision and ensuring trustee focus is on the investor and not on short-term performance, the industry can begin to deliver pension schemes that are more in alignment with what the ‘citizen investor’ wants.

So, while we recover from the credit crunch and begin to see the dawn of a new economy, our innovators and entrepreneurs will look for new ways of creating growth and solving the challenges facing our future. Be they in affordable housing, climate change, unemployment, crime prevention or healthcare. The list is endless and the solutions lie in the heart of promoting our market and social enterprises. The notion that, through a combination of social and commercial aspiration and entrepreneurial zeal, we can foster ‘enlightened enterprise’ is central to the RSA’s emerging work and we welcome all contributions to help us move forward.

To get involved or to find out more about our work as it evolves please visit
w: www.rsa.org.uk/projects

If you are interested in become a Fellow, then please visit:
w: www.thersa.org/fellowship/become-a-fellow

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