April 27, 2017

CEO reflects on learnings from SSE’s experience in Australia

Michele Goldman, CEO of the School for Social Entrepreneurs Australia in its final year of operation, reflects on the organisation’s learnings and how they could be applied to support the social enterprise ecosystem going forward.

Michele Goldman SSE Australia
Michele Goldman, CEO of SSE Australia during its last year of operation

Founded in London in 1997, the School for Social Entrepreneurs (SSE) is one of the leading social enterprise development organisations in the world. A charity that supports people using entrepreneurial approaches to tackle complex social problems, SSE has supported the development of over 2,000 enterprises in five countries.

SSE Australia was one of the first intermediaries in the social enterprise sector in Australia, alongside Social Traders. Since its establishment in 2009, SSE Australia has supported over 450 social entrepreneurs to be more effective changemakers.

In late 2016, after eight years of operation, SSE Australia bowed out of the Australian market. This article shares some of the insights and learnings about (operating in) the sector that will hopefully support the social enterprise ecosystem to become stronger.

SSE Australia’s mission was to inspire and equip changemakers and social entrepreneurs to develop social ventures that foster social and economic participation, and create a lasting impact within disadvantaged communities. It achieved this through its intensive incubator, accelerator and tailored place-based programs delivered over a period of months, enabling social entrepreneurs to build confidence, clarity, skills and networks to support them in developing sustainable enterprises.

What distinguishes the SSE approach from many other programs is its focus on the development of the individual alongside their venture, and the integration of action learning and peer-to-peer support as core pillars of its approach to learning.

Given the context of starting or trying to establish a venture, program participants were limited in the financial contribution they could make to the program. SSE Australia’s business model operated initially with the support of a government grant, and subsequently through philanthropic donations and diversifying revenue streams to include corporate sponsorships.

Over 84 per cent of alumni interviewed as part of a research study in 2016 were still working on their social enterprises since completing SSE Australia programs. Twenty five percent were still in the pilot phases, and 29 per cent were attempting to scale their ventures.

Finding Australia’s Social Enterprise Sector (FASES) research estimates there are 20,000 social enterprises in Australia. Social enterprises are located in every state and territory, with a greater concentration in urban areas and more populous states.
The research describes key sector characteristics:
– The large majority operate locally (75 per cent)
– The majority are small (73 per cent), or medium (23 per cent).
– The dominant business model is fee for service, (68 per cent).
– 38 per cent have been operating for more than 10 years, and 34 per cent for 2-5 years.

Since SSE Australia set up, the social enterprise sector has evolved considerably. However, the sector is still in a relatively early phase of development. According to the Finding Australia’s Social Enterprise Sector (FASES) research[1], 60 per cent of social enterprises started operating in the last 10 years.

An increasing number of intermediaries have emerged to support the sector. Their offerings are vast ranging from intensive incubators of up to nine months’ duration, to shorter workshops, to tailored individual consulting. There is no peak body and the fragmentation makes it confusing for social entrepreneurs to navigate.

In early 2016 SSE Australia realised it needed to review the sustainability of its approach. To do so, it took a step back to better understand the needs of social entrepreneurs (see below). It also considered the broader sector and how it might work differently with other providers to address those needs.

Qualitative research insights suggest room for improvement

In March 2016, SSE Australia commissioned the Social Impact Hub to conduct qualitative research to understand social entrepreneurs’ needs – to inform future approaches. This included exploring how SSE Australia could create value for its alumni and better support them along their journey in developing, and scaling, their social enterprises.

… the ongoing and long term needs of social entrepreneurs are not being met.

The research consisted of 49 in-depth telephone interviews and two focus groups drawn from SSE Australia’s pool of around 400 alumni.

PROJECT ROCKIT SSE Australia alumniRosie Thomas, and her sister Lucy, were determined to tackle the issue of bullying in school communities. The result was PROJECT ROCKIT, a youth-driven organisation that runs interactive anti-(cyber)bullying and leadership programs in school communities. Rosie participated in an SSE Incubator in 2012, providing the environment to interrogate and refine the business model. In 10 years, PROJECT ROCKIT has reached over 200,000 school students.

The overarching finding was that the ongoing and long term needs of social entrepreneurs are not being met.

Developing a social enterprise is a long, challenging and lonely journey. Whilst participants in the research value the various programs on offer by intermediaries, they spoke to the need for support along the duration of these journeys. They want continued support, over time.

Key needs highlighted by the majority of participants included;

  • Mentoring and coaching (90 per cent) to help them address and overcome challenges that inevitably present themselves
  • Networking (88 per cent) – facilitated and informal opportunities, potentially organised around particular themes for relevance, social events to connect with like-minded individuals and re-energise
  • Funding (86 per cent) – the opportunity to be connected with funders and investors.

Other suggestions included alumni programs so they could be and remain connected to their peers, support others through procurement and sharing, and to seek support from those further along the journey. They also suggested more educational opportunities via workshops and courses.

SSE Australia’s decision to wind up

After carefully considering how it might evolve to better meet the needs of the sector, work more cohesively with other players in the sector, and ensure a sustainable business model, SSE Australia took the decision to wind up operations in late 2016.

There were many compounding factors which contributed to this decision. Some of these are discussed below in the form of reflections and learnings.

SSE Australia had grown over the previous few years, and put in place a structure to scale the number of programs delivered. Unfortunately, at the time there was not sufficient recurrent income to achieve this planned growth. The business model was heavily dependent on corporate sponsorships and philanthropic donations to subsidise programs, and whilst some success had been achieved in building fee-for-service offerings, these were not sufficient to support the costs of an increased operational base.

If SSE Australia had continued, the revised business model would probably have included diversifying to offer shorter, more accessible, affordable courses, and activities in a fee-for-service model.

SSE Australia also explored opportunities to merge with existing providers to protect the assets that had been developed (brand, database, relationships, contracts), and ensure that support for early stage social entrepreneurs would continue to be available. Whilst this did not eventuate, conversations with other intermediaries were illuminating and support the views that are shared in this article around potential focus areas to continue to evolve and strengthen the sector.

Reflections and learnings from SSE Australia

As a microcosm of the larger system, SSE Australia’s experience provides lessons that may be relevant to the broader social enterprise ecosystem, and indeed to other social entrepreneurs.

1. Consider the broader context in which you operate

SSE Australia had sought to scale operations and developed a base to support the delivery of an increased number of programs in a variety of areas across Australia. Were these growth ambitions realistic?

SSE Australia found there was neither the requisite number of social entrepreneurs at a stage ready to participate in an intensive accelerator, nor the funding support required to subsidise the planned number of programs. This put pressures on the fixed cost base that had been created (and initiated a review of the business model).

In hindsight, SSE Australia might have given greater consideration to the broader context in which it operated to ensure growth objectives were feasible in what is a constantly changing environment.

2. Know the market and its needs

To be successful an organisation needs to first and foremost solve a problem — meet an identified need, and do so sustainably. Insights about customers and their needs has to drive the evolution of programs and services. There needs to be a clear value proposition to customers. SSE Australia’s research identified valuable insights. If conducted earlier, there may have been a longer lead time to evolve programs and services.

How might the sector focus on and respond to the needs of social entrepreneurs to drive the evolution of current programs and support services?

3. Maintain agility to be able to respond to the changing marketplace

SSE Australia’s core offering was intensive programs which involved a long lead time to secure funding, recruit suitable participants, develop and plan tailored programs, and deliver over a period of months.

Committing to a number of programs and a high fixed cost infrastructure to support anticipated growth made it difficult to adapt quickly when it became clear that the model needed to change. Resources were largely directed to delivering commitments rather than being available for a flexible response to a changing environment.

How might the broader sector structure itself to be agile and able to change direction in response to market needs?

4. Demonstrate the value that social enterprises and sector intermediaries contribute in both economic and social terms

SSE Australia undertook a comprehensive evaluation of its programs in 2012 to identify the short term outcomes achieved in its first few years. The evaluation provided good indications that program aims were being achieved.

In the final year, we explored how we could evaluate the longer term outcomes for program participants and their enterprises. It would have been invaluable to have an estimate of the social and economic value created by SSE Australia alumni’s enterprises to validate the organisation’s value in building the sector capacity. This would have supported funding approaches with internal and external stakeholders.

It would also be useful to identify and better understand the characteristics of those who went on to establish successful enterprises, and conversely the characteristics of those who didn’t, to inform more deliberate recruitment strategies and program design and to be able to maximise the return on investment.

5. Resist the temptation to be led by funders rather than the market

When funding is scarce, it is easy to be led by funders’ needs in designing programs and services.

SSE Australia applied for a philanthropic grant from an organisation interested in supporting social enterprises creating employment for 18-25 year olds in Western Sydney. Previously SSE had chosen to work with older cohorts  who had amassed some life experience they could draw on. In this instance, the young cohort proved to be outstanding, and are operating a number of enterprises delivering value to their community. However developing networks in a new market to identify talent was extremely resource intensive and diverted key people away from other important projects.

Ideally organisations confirm market needs and costs before commiting to delivering programs.

6. Consolidate growth to ensure the base for further growth

SSE Australia had plans to continue its positive growth trajectory of recent years. However, it hadn’t consolidated the systems, knowledge and practice to establish the requisite base for further sustainable growth. Staff turnover meant a significant amount of invaluable organisational knowledge was lost.

How might the sector consolidate learnings and experiences to establish a strong base of knowledge, insights, and capability to support the ongoing healthy development of the entire sector? A thriving sector will create a healthy market in which intermediaries in turn can further develop their businesses and supports.

7. Building the pipeline of social enterprises

SSE Australia played a critical role in developing the confidence and skills of early stage social entrepreneurs. This helped to build the pipeline for other intermediaries with a focus on supporting more developed enterprises to achieve sustainability or attract investment.

The development of early stage social entrepreneurs is critical, and without SSE Australia building the pipeline there will be less of a market for those offering support down the track. Others may need to invest in early stage development to build their own pipeline i.e vertically integrating programs. This may be a better model for the sector than one organisation having it as their sole focus. Given that participants are limited in the fees they can pay, the resulting business model is necessarily highly dependent on philanthropy, grants and sponsorship.

Building on current approaches to further strengthen the sector

As Albert Einstein wisely said “The definition of insanity is doing something over and over again and expecting different results”.

Current approaches have got the sector going, but what is required for its continued evolution?

Efforts need to be directed at external factors such as government policy, access to funding and investment etc. However, there are other factors within the control of the intermediaries and social entrepreneurs.

A vision for the sector

What would a strong and thriving social enterprise ecosystem look like?

What are the characteristics and conditions (enablers) that would support the social enterprise ecosystem to thrive? Conversely, what are the factors (barriers) holding it back?

Some key principles, I would suggest need to underpin our collective efforts:

  1. A sector that puts consumer needs first and which effectively and efficiently responds to the market needs. SSE Australia’s research clearly demonstrates that social entrepreneurs are trying to navigate the sector to access a variety of supports for their ventures.
  2. Having the ability to clearly demonstrate the value the sector contributes in both economic and social terms, and specifically the contribution intermediaries play. It’s time to consider a sector approach to measuring value.

How do we get there?

A year immersed in the world of social enterprise gave me great insights into whole new ways of working, ways in stark contrast to the traditional and more conservative approaches of the non-profit sector.

Given the need for the social enterprise sector to orient itself more strongly around the needs of those it seeks to serve, I believe it would be beneficial to consider how the ecosystem can be redesigned to better meet the needs of both social enterprises and social entrepreneurs. It could be worthwhile employing design thinking principles to optimise the system for those for whom it is designed. This would help ensure a system which is easier to navigate, offers effective supports and delivers better outcomes.

Further progress will be accelerated if existing intermediaries consider how they can leverage the broader system, and work more cohesively, to ensure a more coordinated and collaboratively functioning ecosystem. A collective impact approach may be useful to guide this work, convening all willing stakeholders to collaborate to define a shared vision and goals, and activating all parts of the broader ecosystem to achieve measurable progress against these goals over time.

Adopting different and innovative approaches will ensure the sector continues to adapt and evolve to effectively support the development of social enterprises.

School for Social Entrepreneurs continues to operate globally in the UK, Canada and India. Find out more at http://global.the-sse.org


About Michele Goldman

Michele’s career has spanned the corporate, non-profit and social enterprise sectors. A strategic thinker with a strong background in marketing and leadership roles, she is passionate about driving collaborative approaches to achieve progress where single organisations are limited, and developing partnerships to increase organisational capacity and impact. Michele is currently CEO of Asthma Australia, Chair of the Board of The Housing Connection, and a Director on the Board of Jewish Care.


Notes

[1] Finding Australia’s Social Enterprise Sector (FASES) research was a joint initiative of Social Traders and CSI Swinburne, Swinburne University of Technology,