Developing an Eco-social Enterprise Session 3 Thursday, 30 March, 2017 Tim Crabtree, Schumacher College Inputs What inputs will you need? In other words, what inputs will be transformed during the operations processes? Natural capital • What natural capital will you require: • Resources • Sinks • Services Physical capital • What is required? • Buildings • Equipment • ICT • etc Human capital • What will your enterprise require? • Staff? • Volunteers? • Trainees/apprentices? • People disadvantaged in the labour market? • Board members? Social Capital • Start with the RULES of the organisation – the constitution or governing document which sets out the legal structure • E.g. • Foundation • Company • Co-operative • Define the MEMBERSHIP Key stakeholders and their motivations • Paid workers • Volunteers • Service users (inc. volunteers) • Commissioners, e.g. local government • Suppliers Consumer aspirations Producer aspirations Trusteeship aspirations Investor aspirations Stakeholders may have divergent aspirations What do stakeholders have in common? What rights will the members have? Potential stakeholder Membership: Yes or no? Voting rights? Income rights? Property rights? Consumer Worker Supplier Investor Financial capital • Who will provide this? • Grants? • Loans? • Equity? • What rights do they get? Three types of finance Investment in Human Capital Investment in Physical Capital Investment in Natural Capital Increased Financial Capital Investment: grants Woodland operations Woodland services Investment: loans Investment: equity working capital 3 types of finance • Grants – these do not require a financial return. However, they do require the recipient organisation to demonstrate the social or environmental return that is being created. • Loans (or debt finance) require interest payments and the repayment of the amount borrowed (i.e. it is investment with the expectation of repayment of the principle sum as well as regular interest payments). • Equity is investment in exchange for a stake in the organisation, in the form of shares. This stake usually entitles shareholders to a share of the profits of the organisation, or interest payments once a certain level of earnings has been achieved. Key principle 1: Different types of finance might be appropriate at different stages of development Key principle 2: rights to control • Grants do not confer any rights, beyond the contractual obligations that a grant may entail. • Loans carry with them an obligation to repay, but no other rights • Equity can carry voting rights, income rights and/or a claim on the assets of the organisation. • Equity has therefore proved to be problematic for organisations in the social economy (including charities, social enterprises and co-operatives ) Key principle 2: rights to control Rights to vote at general meeting Rights to net surplus Rights to the net value of the assets Democratic rights Property rights Income rights Key principle 3: equity can be important in the early stages of development • Loans are marked on the organisation’s balance sheet as a liability and they usually require security e.g. a building or demonstrable income streams. • Loans may not be attractive in a situation where the organisation is trying to develop new projects or income streams because it will take time for these to generate financial returns. • Unlike a loan, investors providing equity finance are effectively sharing the risk with the organisation and are likely to defer any expectation of a financial return for some time. Equity is treated as an asset on the organisation’s balance sheet. Secured loans Unsecured loans Equity Low Risk High Risk 84% 11% 5% Community share issues using a Community Benefit Society (IPS) • Wessex Community Assets developed a set of model rules for raising share capital at low cost • This means members of a community can invest directly in community projects and services • It is cheap to set up and acceptable to independent financial advisors Wessex Community Assets a secondary structure helping communities raise local finance through share issues and loans £152,775 raised £105,000 raised Dorset Community Energy • Funding was secured from the Big Lottery to set up a new co-operative, Dorset Community Energy • Initial target 6 community owned solar PV projects on schools and community buildings in Bridport, Dorchester and surrounding parishes Partners A simple systems model of a firm Operations Inputs Output Ever larger agri-business Ever larger processors Ever larger retailers & caterers Natural capital as key input Resource depletion Pollution Waste Concentration of ownership Health Concerns Social injustice The dominant food system Two types of food system “Linear” food systems Even larger agri-business Even larger processors Even larger retailers & caterers Over-use of natural capital Consumers “Circular” food systems Waste Operations: Primary Production – Processing – Distribution – Marketing – Retail / Food service Inputs Waste Consumption A simple systems model of a firm Operations Primary Production – Processing – Distribution – Marketing – Retail / Food service Inputs Waste Output Natural Physical Social Human Financial School Farm CSA • A community supported agriculture enterprise • Run by ex-students of Schumacher College Source: Damon Steed The Business Canvas The Business Canvas Inputs Operations Outputs Customers Overall: Support the protection & enhancement of the AONB. Customers understand how to develop projects without adversely affecting landscape character • Householders proposing developments. • Small, medium & large scale developers. • Parish councils, NGO’s, resident groups seeking to respond to planning proposals. • Local Authority, Environment Agency, Marine Mgt Org & Natural England seeking input on preplanning advice. • Pre-planning advice • Advice to objectors • Advice to Neighbourhood Plan groups • Prepare publications • South Hams District Council • Devon County Council • Natural England • Env. Agency • Marine Mgt Org • Other AONB’s • Professionally qualified planning advisor • Administrative support • Marketing of service • Planning advisor – 0.5 fte = £20,000 • Admin support – 0.2 fte = £4,000 • Marketing – 0.1 fte = £3,000 £27,000 expenditure = 270 hours @ £100 per hr = 67 x 4 hour advice packages Or 54 pre-application advice packages @ £500 • Website • Printed publications • Events • Dedicated officer time for each client • Back-up resources on website From local food to local wood, evolution of woodland social enterprise • Over the last 20 years, the local food sector has become more established and influential. Range of strategies have been developed which potentially relevant to the woodland sector: • Assurance and provenance schemes. • Direct links between producers and consumers, e.g. Farmers’ Markets and Veg Box schemes. • Adding value rather than selling primary produce to wholesalers. • Building local enterprise networks and clusters. • Secondary structures to promote innovation, enable local processing, access finance or support joint marketing. Primary Production Basic Processing Value Added Processing Distribution Retail/Food Service Consumption Community owned shops Veg box schemes Farmers’ Markets Country Markets Pick your own Wholefood Distributors Community gardens City Farms CSA’s Care Farms Farm shops Organic farms Local farms Community orchards Community bakeries Local flour mills West Dorset Woodfuel Co-op • Developed by Bridport Renewable Energy Group CIC • Using Bridport Energy Services IPS as the vehicle • Funded initially by Dorset AONB • Now funded through lottery programme (Communities Living Sustainably) • Working with Dorset County Council Ranger Service Forestry “systems” Primary Production Basic Processing Value Added Processing Distribution& Retail Consumption Self-supply woodfuel coops Community supported forestry Community owned woodlands Community managed woodlands Volunteer programmes Care farming Forest school “Tree stations” / processing “platforms” Machinery rings Woodland owner / contractor co- operatives Processing hubs for food from woodlands Greenwood & Coppice products Secondary marketing cooperativesVocational training Community owned shops selling woodland products Biomass ESCO’s Woodland systems Inputs: Forests People Equipment Operations Outputs Energy Housing Food Health & care Recreation & culture Education & skills Environmental enhancement & biodiversity Community development Local economic development Outcomes Arnside and Silverdale Primary Production Basic Processing Value Added Processing Distribution& Retail Consumption Arnside & Silverdale: Developing the woodfuel supply chain Landowners NGO’s Forestry Commission PRIMARY PRODUCTION DISTRIBUTION & RETAIL PROCESSING • Woodland Audit • Accessing WIG’s to bring woods into productive use • Promoting demand • CSF scheme • Logs for labour • Kitemark • Platform / Hub • Supply co-op Network Community Contractors The Business Canvas The Business Canvas Inputs Operations Outputs Customers Equipment for extraction Storage facilities Equipment for distribution Finance – CSF model? Initial focus = extraction of “waste” wood Storage Processing Distribution Volunteer support Initial focus has been wood waste Question: Scope to buy in from contractors / woodland owners? What scale of operation? What is the potential customer base? Initial focus on Silverdale? Draw on existing household energy audits or undertake new ones? Resources Activities Product / Service Customers Arnside & Silverdale Logbank Impact framework for woodland social enterprise Framework Outcomes Need/baseline Activities Outcomes for children & families Impacts for the community Health & well-being - Increasing incidence of obesity in children & young people - Increasing incidence of dietrelated ill-health, e.g. type-2 diabetes - Roll-out of Bridport scheme to 4 new schools in West Dorset - Establishment of new hub kitchen in Blandford - Recruitment & training of new staff team - Development of school meals service with a second cluster of schools, on the basis of “standardisation” & “codification” of procedures and systems - Launch of Food Clubs at schools for bulk purchase of healthy/sustainable food - All schools to join Food for Life Programme - Campaign to improve takeup of free school meals - Improved health - Improved sense of well- being - More parents feeling they are making a positive contribution - Improvements in health reflected in reduction in costs of obesity & diet related ill-health Community development - Limited opportunities for parents to get involved and contribute - Limited opportunities to sit down as a family or with others - Reduced links between the generations - Reduced isolation through greater opportunities for socialising over food - Inter-generational links created through work with schools - Volunteering opportunities - More people volunteering - Improved community cohesion - Greater cross-generational links - A more positive food culture, with more people eating together Economic development - High cost of better quality food - Affordability is a major concern for families on low incomes - Limited capacity to produce meals for children in Dorset - Lost opportunities to create local jobs or provide a market for local producers - Improved affordability of quality food - Improved accessibility through range of initiatives - Employment opportunities - Training opportunities - Reduction in “food poverty” - Jobs & training opportunities created - Opportunities for local suppliers - Import substitution: local economic activity created - Local multiplier improved - Increase in value added locally (GVA) Environmental sustainability - Environmental impact of food transportation - Limited sourcing from sustainable food producers - Consequent pollution - Enhanced understanding of food provenance & the sustainability implications of food choices - Increase in sustainable food production - Reduction in carbon output has positive impact on climate change Impact framework for Local Food Links’ school meals programme Framework Outcomes Need/baseline Activities Outcomes for older people Impacts for the community Health & well-being -High incidence of malnutrition in older people -High incidence of diet-related illhealth, e.g. cancer & heart disease -Mobility restrictions, e.g. getting to shops -Disability restrictions, e.g. difficulties preparing food -Local Food Clubs (food cooperatives) established -Supply of prepared fruit & vegetables into Food Clubs -Provision of catering for lunch clubs in community settings -Lunch clubs linked to Cookery workshops, e.g. older people sharing skills with younger people, lessons for single men, etc -Community Kitchen sessions at Centre for Local Food -Produce meals & soups to be cooked in older people’s homes -Creation of catering services operating from hub kitchens & satellites - support catering services in day centres and care homes/ nursing homes -Reduction in malnutrition -Improved health -Improved sense of well-being -More older people feeling they are making a positive contribution -Reduced sense of dependency -Improvements in health reflected in reduction in costs of malnutrition & diet related ill- health -Older people able to stay at home longer Community development -Increasing isolation felt by some older people -Sense of dependency felt by some older people -Limited opportunities to get involved and contribute -Pressure on existing carers -Reduced links between the generations -Reduced isolation through greater opportunities for socialising over food -Inter-generational links created through work with schools -Increase in the number of carers drawn from older people -Volunteering opportunities -More people volunteering and caring for others -Improved community cohesion -Greater cross-generational links -A more positive food culture, with more people eating together Economic development -Affordability is a major concern for older people on low incomes -Limited capacity to produce meals for older people in Dorset -Lost opportunities to create local jobs or provide a market for local producers -Improved affordability of quality food -Improved accessibility through range of initiatives -Employment opportunities -Training opportunities -Reduction in “food poverty” -Jobs & training opportunities created -Opportunities for local suppliers -Import substitution: local economic activity created -Local multiplier improved -Increase in value added locally (GVA) Environmental sustainability -Environmental impact of food transportation -Limited sourcing from sustainable food producers -Consequent pollution -Enhanced understanding of food provenance & the sustainability implications of food choices -Increase in sustainable food production -Reduction in carbon output has positive impact on climate change Impact framework for Local Food Links’ older people’s food programme Simple systems • Predictable; • Mechanical; "Reductionism produced a "machine view" of the world, a view captured in the work of Sir Isaac Newton. Metaphorically the world was likened to a sealed clock, a closed system, perpetually running on fundamental laws like "to everything action there is an equal and opposite reaction." Hutchins, Systemic Thinking, 1995 Complex systems From representations of systems to participation in dynamic processes • We are immersed in problems of organised complexity – these are situations where you have a moderate number of variables, but strong non-linear interactions amongst those variables. • This involves dealing simultaneously with a sizeable number of factors which are interrelated into an organic whole. Complex behaviour • Complexity theory builds on Systems Theory • Complex systems are non-linear and their specific behaviour is unpredictable • Complex behaviour arises from interaction • Complexity theory focuses on relationships • The distinguishing feature of complex systems is that they can create new order Source: Eve Mittleton-Kelly ‘Complexity Thinking’ approach • Self organising: encouraging a system which will spontaneously emerge as the actions of autonomous participants come to be interlinked and codependend on each other. • Evolutionary: the system will be able to change its structure and processes as it adapts to maintain its viability within a changing, dynamic context. In other words, the system will be designed to learn from its experiences. Patricia Shaw: Systems theory & complexity science “We make representations of the relatively stable patterns emerging in our ceaseless activity so that we can look at them together and agree on changes we can identify and plan for. This is why organisations, institutions and the civic realm are full of models, 2 by 2 matrices and mappings of various kinds. But representations can never capture real complexity because that complexity is a flow in time not a static image or model. The representations are always not just inadequate but useful approximations, they can really mislead and falsify - taking them literally easily leads to frustration.” Tim Ingold: The “firming of form” Tim Ingold suggests that the “hylomorphic” model, whereby a form is created in the mind then applied out in the world, needs to be replaced by an approach inspired by, amongst others, Paul Klee: “Form is the end, death, Form-giving is life” Ingold argues “that what Klee said of art is true of skilled practice in general, namely that it is a question not of imposing preconceived forms on inert matter but of intervening in the fields of force and currents of material wherein forms are generated. Practitioners, I contend, are wanderers, wayfarers, whose skill lies in their ability to find the grain of the world’s becoming and to follow its course while bending it to their evolving purpose.” Patricia Shaw We are used to thinking/seeing/experiencing in terms of a world of separate THINGS apart from ourselves that need to be managed. • Things are clearly defined, identifiable, separate, bounded, stable, graspable, measurable, countable entities. • They may be material things or intangible conceptual things such as organisations, jobs, managers, systems, leaders, resources, strategies, plans, goals, targets, budgets, meetings, cultures, visions…… • Such things can be connected, arranged, ordered, organised by design into structures. • Such ordering connections are universal, linear, rational, sequential, predictable, neutral. Complexity invites us to think/see/experience in terms of a world of PATTERNED FLOW in which we are inextricably immersed. • This dynamic flow is not uniform but patterned as events and activities emerging in webs of interdependent relating. • Patterning (irregular regularities) emerges spontaneously through self-organisation at many scales simultaneously. • Such self-patterning processes are local, reciprocal, non-linear, lateral, unpredictable, improvisational in which both individual and social identities are emerging simultaneously. • Continuity and change are emerging simultaneously as exploration of the adjacent possible with all its creative / destructive potential. Robin Murray For the spread of a social innovation what is needed is to establish the relative autonomy of new practices from the prevailing ‘contextual forces’ and attract others into this emerging sub-system - extending its strength and deepening its complexity Robin Murray’s 10 characteristics of ‘enlivened’ civil economy i. driven by idea (purpose or mission). ii. formation/formacion iii. process as significant as outcomes iv. strong element of the voluntary v. management as mobilisation. vi. collective intelligence & sharing of know how vii. human centred technology viii. not scale but organic distributed growth. ix. expansion of network rather than expansion of enterprise x. social financing From scaling to complexity Starting point not a particular project or technology but emerging ecology of projects each of which has its own generative capacity, and constanly creating new networks with other projects Capra’s principles of ecology: • Networks • Cycles • Solar energy • Partnerships • Diversity • Dynamic balance