Size 10s

There is no doubt that size plays an important part in our society and arguably in particular within the Civil Society. Not many articles or commentaries go by without someone mentioning size and social enterprise in the same breath. Normally in these situations social enterprises are generally linked to the size-challenged end of the scale rather than being the Goliath but this is not always the case. I think it is important to address this issue because the size argument can stunt growth - even deny life, and in many circumstances commissioners would be better placed directing their budget where it will be better managed rather than a larger but less well run organisation.

Growing the Business

Better profit levels and growth and increasing size become more important as the business develops rather than on day one. This is because it becomes increasingly important to have places for good people to go to - to be promoted and to keep them happy. If the business is doing well it will be winning tenders and the business and its “delivery” arm will need to develop as well. Ultimately, creating a critical mass within the team means jobs can be won and done without constant pressure. How well an organisation can do notwithstanding size - whether it will it perform the required services to the required specification, whether it will it be influential, whether it will achieve good results - are all perhaps better questions to be asking. Size questions are often confused with ability to deliver the required services. Before partnering with any social enterprise you need to ensure they have the capacity and investment to deliver. The Impetus Trust is a strategic investor in social enterprises; the Director of Strategy & Policy, Asheem Singh comments: “The biggest risk is a Council offering a contract to an organisation that is not investment ready. It could be a costly mistake”. Quite right too. However, it is important to note that small social enterprises can be as “investment ready” for their particular roles as any larger organisation.

Governance

Organisations can fail notwithstanding size. We have all seen in recent times how large organisations can fail - Lehman Brothers, Enron and World Com. Common themes can be detected or have been self evident and one of the big themes is poor governance. Organisations can lose internal control: not enough checks and balances in key areas; failure to detect wrongful or fraudulent behaviour; people losing sight of what they set out to achieve and the principles by which they agreed to work. Conversely, the smaller and leaner organisation may be more in control and can have an impact beyond size: it is running a tight ship; it knows the importance of sequencing and linking in the different parts of its business to emsure that contracts are not entered into until full ramifications are known and directors are provided with all of the the right information in order so that they are able to make informed decisions. Yes, the smaller organisations may have less reserves to off-set against unforeseen costs and expenses, but equally they may have considerably fewer unforeseen costs and expenses.

Joint Ventures

A smaller organisation can also benefit from its inability to act in the market place without regard to its competitors. It needs to stay on top of its market if it is to survive and be ahead of the game as far as possible and therefore it is important to be at the cutting edge and provide something different. If it is not in a dominant position it needs to offer something different, something more expert in a particular area. Or, importantly, it can team up with others and joint venture and pool expert skills that interface to the benefit of all.

In a recent article BBC News’ Chris Summers looked at the cuts in the British Army and the claims that it will be the smallest size since the 19th Century. He asked just how an Army that was so successful in times of the Empire was still so small? The answer was perhaps in the joint venture created between the Royal Navy and a system of indigenous constabularies, overseen by a small but very professional British Army. Military historian Nick Lloyd stated the success was mainly down to teamwork, logistics and organisation. The same principles might be applied to some of the smaller social enterprises. How clever can they box? What strategies can they bring to bear to make the best use of their available skills and resources? Who can they work with to ensure they achieve maximum effectiveness?

Commissioning Social Enterprises

I think the 19th Century British Army’s strategy of working with other forces is an interesting one. To put it in commercial terms, there is a bit of canny sub-contracting going on here. The Army knew they could not do everything on their own so they brought in people who could do some of the required services better than they could. The whole was better than the sum of its parts. So, in current discussions about commissioning social enterprises there is much talk of using relatively small social enterprises as “prime providers”, responsible to commissioners for the delivery of healthcare in an area but where the prime provider will sub-contract parts of the service to Hospitals, GPs, private and other providers. The importance here is that there is one organisation responsible for delivery to the commissioner; risk -taking is accepted with a corresponding ability to make a difference and create change in the delivery of services and where there is also a network of sub-contract relationships backed up by cross-indemnities and responsibilities. The idea must be to have in place arrangements that can deliver, where money can follow patients and the arrangements contain robust risk management techniques and processes whilst still having multiple providers delivering services, all of whom experts in their particular fields.

A quote from John Stuart Mill has received much publicity recently following some tragic events, but the words are interesting in the context of any discussion on size: “That one person with a belief is equal to the force of 10,000 who have only interests.”

Chris Brophy is a partner with Capsticks, specialising in commercial and contractual work for healthcare bodies, social enterprises, mutuals and charities.

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