Interview: social enterprise guru, Dr Rory Ridley-Duff

New Start recently travelled to Sheffield Hallam University to meet social enterprise guru and author Dr Rory Ridley-Duff. We spoke to him about employee-ownership, creating value for communities that goes beyond money and why football clubs can be an important vehicle for social change.

How has the definition of social enterprise changed over the years?

There are ongoing battles around the definition. People on the ground have fought to keep the definition broad and inclusive. Government interventions in the field want to push it back to traditional non-profit or charity.

I continually remind people of the co-operative roots of social enterprises In the UK, and my ongoing work is still orientated towards that direction, but it does remain a fairly broad church.

I’m currently working with a PhD student with a very interesting proposal around wealth creation. So, rather having social enterprises sort out problems in society, you can make an argument that it contributes much more wealth to society, once you take off the financial lens.

If you look at how social enterprises manage the environment, society, people and intellectual property then it makes a far bigger contribution than organisations in the private sector.

A key part of Labour’s recent manifesto was employee-ownership of companies. Is this still seen as too left-wing to be mainstream?

I don’t think so. The Employee Ownership Association have had great success over 10 years. When I started, you could count employee-owned companies on your fingers. Now across the country, there are hundreds. They gain traction across all political parties. It happens under the radar, but it keeps growing.

Is their success a reaction against zero-hours working culture?

Yes. I have a colleague who studied John Lewis and he found job security and security of income plays very powerfully as a conversion to employee ownership.

In Sheffield, we have a group called Gripple. It was a successful manufacturing company but converted to employee ownership then created spinouts that were also employee-owned and persuaded suppliers to move to employee ownership. The board is wholly elected by employees and they put profits back into the company to build up a culture of membership.

Why do social enterprises fail?

There’s international research that looks at the different models.

There are the enterprising non-profits than come out of the voluntary and charity sector. Even with trading, they remain vulnerable. Another one is social co-ops and solidarity co-ops, some of those are at the cutting edge of tech, so if some of that doesn’t take root they can be vulnerable, too. It goes back to the basics of business, you have to have a product or service that people want.

Another type of social enterprise we look at in our international research is social businesses. They work more through institutions of the private sector and include impact investors etc.

The last type is the public sector social enterprise. These have contracts with many different public bodies. They really can do very well. Greenwich Leisure is one. They ran the leisure service for Greenwich, now they are doing it all over the country and turning over half a billion a year. It’s worker-led and they account for their activity, and not their profits.

What role can football clubs play as social businesses?

Football club foundations receive millions of pounds a year. They are vehicles for their work in the community. At the same time, they are also taking away the voice of fans and the governance of the football club. There’s a social responsibility of the football club that plays well and gets good publicity but at the same time there’s a disenfranchising of fans, it’s a complex dynamic.

FC United are strong on both fronts. Their members are their fans, they’ve put up money to build a new stadium – they just need to be higher up the leagues!

How do you balance teaching social impact with the basics of how to turn a profit?

The two get played off and in some contexts, there’s a trade-off.

LocoSoco has a business model where they take the fastest moving consumer goods, find the most environmentally-friendly version of that product, then sell it through a platform or directly into community businesses. It might be loo rolls, bin bags or detergents. Their goal isn’t to create profit for themselves but to create as much value for their communities.

How have social enterprises been affected by the politics of the past decade?

For the last decade, we’ve had the Social Business Initiative. I’ve been involved with multiple projects who’ve received money off the back of that. David Cameron talked it up through Big Society. They pushed the pathfinder mutuals but withdrew all funding to social enterprise regional enterprise networks and many of them collapsed. But if social enterprise hasn’t got traction, why should it indefinitely receive funding from the government?

What are you working on at the moment?

I’ve just completed a European project on FairShares Labs, which is a multi-stakeholder co-operative model. I was part of the European project able to develop it and the tools to support it. The new book looks at the concept of new co-ops.

I’ll use FairShares as a model but I’m also looking more broadly. There are now online co-ops which is another growth area.

Once you sit down and ask, how is this enterprise going to benefit its founders, workforce, users and community? then you begin to get an enterprise that is not creating wealth for absentee investors, it’s creating wealth for the community, in the fullest sense of the word.