Marjorie Kelly on the Emergent Ownership Revolution

Do you need something more tangible to use when talking about social business?

Is the 'social purpose' argument a bit thin for you?

According to Marjorie Kelly in Towards Mission-Controlled Corporations: Extractive vs Generative Design there are 5 elements of a generative ownership-driven design framework for social businesses:

1. Membership – How can we have the right people forming part of the business? How can they contribute to the running of the business? What roles and authority can they have?
2. Purpose – What purpose can a business have beyond profit-making for shareholders? What problems might it solve? How is 'wealth', and value spread within the local community?
3. Governance – Who is the board? Who does the board answer to? 
4. Finance – Where does the money come from? Where does it go? How does it circulate through the business? How does it generate wealth and value?
5. Networks – How does the business get access to goods, services, information? How might the exchange be carried out? How might it be non-financial? How might it reach beyond typical boundaries e.g. geography?

Will Starbucks food donations encourage local restaurants and shops to do the same?

Interesting question. Possibly. But as said below by a previous poster the value chain and business processes at large food restaurants look different from those at small restaurants and thus the opportunity for surplus (and thus donations) is different.

Let me add one thought that sprung to mind. In my experience, the other factor that affects the flow of surplus food to the people who need it are the intermediaries in between. For example, small restaurants are not normally able to afford to send/deliver/transport food to charities outside of a couple of miles and small charities are not normally able to absorb this cost either. One idea is that services spring up to help this process/fill a gap. Maybe a group of restaurants band together to hire a van or a group of charities do that ... or even a separate intermediary (maybe... a neighbourhood support scheme paid through by the local authority or even people/citizens/charitable folks who live in the area pay for it). Or possible, someone likes Uber or your local taxi cab company offers this service at a discounted fee.

So, we might see that maybe instead of giving money to charity, people give money in other ways to help restaurants get their food to people who need it.

Originally posted on Quora here

The systems for welfare and safety net programmes

How are welfare and social safety net systems set up?

Broadly speaking and quite simply, welfare and benefits help people through poverty as well as respond and be resilient to unexpected external shocks, such as macroeconomic downturn and job loss, sickness and injury, and other disabilities. Welfare also helps people grow their financial and asset base and are used to supplement incomes that are considered below living wage. Welfare can also help pay for supplementary services to people overcome poverty, respond to shocks and/or grow their asset base, such as childcare or energy subsidies.

Conversely, tax systems are used to generate income in order to redistribute to welfare recipients. Tax can be applied to incomes (and conversely tax can be reduced on low incomes and personal allowance thresholds). Tax can be applied to goods and services deemed harmful to other people and the environment such as cigarettes. Tax incentives (or tax-free activities) can be applied to goods and services deemed beneficial to other people and the environment such as solar panels for household roofs.

Welfare budget - The welfare budget is formed through amount raised in taxes and more precisely, the proportion of tax income allocated to the welfare system. Who decides this proportion? How does this money get allocated? Does the amount reflect the needs of the benefit claimants within the system? According to Open Democracy: "Benefit levels in Britain reflect political decisions on the amount governments in Britain have been prepared to spend, not the total of claimants’ needs."

Welfare eligibility criteria - There are several different categories of eligibility criteria to be able to clam welfare, such as time in work, dependents, length of residency. There are also different categories of benefit types from job seeker support, to housing to sickness to occupational injury. The specific criteria will differ in different countries. Above all, claiming benefits is not an easy task for local claimants or those from elsewhere classified as migrants or immigrants. And certain welfare opportunities are not included in the benefits system because they are public goods (from clean air to access to a universal healthcare system that treats personal injury and illness especially those that are communicable, contigious and treatable) (BBC News)

Multi-territorial welfare system - Across integrated trade and economic zones (where integration includes policies and regulations as well as social networks, culture and learning), such as the European Union (EU), it was found that migrants from wealthier countries (like the UK) have the power to claim benefits from across the water, in other equally wealthy or even less wealthy countries. At times, the number of Britons claiming welfare in the EU can be larger than 'EU migrants to the UK claiming welfare in the UK' (IB Times and the Guardian)

Changes to the welfare system - Changes to the amount in the welfare system (taxation) and who gets them (welfare recipients) are brought about by those operating within the system itself. The Government may seem to have decision-making power but what analysis do they do to make decisions and who does the research? In some cases, the EU can put pressure on member states to make welfare system changes (Social Europe)

Factors that affect the ability of a welfare system to work

• A restriction in money inflows are more of a burden than the increase in the number of welfare recipients
• 
  

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https://www.opendemocracy.net/can-europe-make-it/charlotte-rachael-proudman/welfare-benefits-are-calculated-by-political-objective
http://www.bbc.co.uk/news/world-europe-25134521
http://www.ibtimes.co.uk/britons-claiming-benefits-across-eu-outnumber-immigrants-getting-welfare-uk-1484091
http://www.socialeurope.eu/2015/02/welfare-union/

What is the TTIP and what effect will it have on developing countries?

The TTIP is the Transatlantic Trade and Investment Partnership between the USA and the EU. The gains for the US and EU businesses, particularly large corporations in the USA and emerging SMEs in central Europe are huge.

"Between the two of them, the United States and the EU stand for 40 percent of global economic production; their bilateral economic links are the most expansive in the world. The liberalization of these ties would boost global competitiveness and market confidence in a time of economic crisis, and according to some predictions, could create more than two million new jobs. This naturally lends it significant support from many Central European governments." (Center for European Policy Analysis)

There may even be benefits for the UK as a member of the EU. An open editorial by UK policy advisors for the Guardian makes the following points:

TTIP is about doing away with those barriers on both sides. We believe that the agreement of a transatlantic trade deal would benefit the European economy in the long run by up to £100bn – £10bn a year to the UK alone – an adrenalin boost for jobs and growth in our countries when we need it the most. Crucially, the businesses that have most to gain are not large corporations but small and middle-sized enterprises. They don’t have the big firms’ economies of scale or the in-house lawyers to overcome trade barriers.

The criticisms of the TTIP focus around the fact that firstly, it will exacerbate trade imbalances by putting in preferential trade mechanisms (going over and above simply alleviating trade barriers) between the USA and the EU and secondly, result in huge social cost at local level as well as for the Global South.

The UK Parliament , a briefing paper describes the TTIP as follows:

Average tariffs on trade between the EU and US are relatively low. Much of the negotiation therefore centres around non-tariff barriers to trade, such as harmonising product regulation and standards and on measures to protect the rights of investors. 

and frames the benefits as follows:

The economic benefits of TTIP are contested. A study for the Department of Business, Innovation and Skills estimated that the gains to the UK would be £4 billion to £10 billion annually (0.14% to 0.35% of GDP) by 2027. Critics of TTIP argue that these estimates overstate the gains, and that alignment of regulatory standards in areas such as consumer safety, environmental protection and public health could have social costs

 and frame the most contested issues as follows:

Probably the most controversial element of TTIP is Investor State Dispute Settlement (ISDS). These provisions allow investors to bring proceedings against foreign governments that are party to the treaty. These cases are heard in tribunals outside the domestic legal system. The concern is that the ISDS provisions might affect governments’ ability to determine public policy if they are concerned they might be sued by corporations.

In the UK, the main area of concern has been the NHS – in particular, whether any future measures to reduce the private sector’s involvement might be challenged under these provisions. The UK Government and the European Commission have sought to allay these concerns but critics remain to be convinced. Besides ISDS, there are a number of other areas of concern with TTIP including food standards, public procurement, intellectual property, transport and financial services.

 Here is what the War on Want, a civil rights and advocacy organisation, thinks about the TTIP (War on Want)

"...the main goal of TTIP is to remove regulatory ‘barriers’ which restrict the potential profits to be made by transnational corporations on both sides of the Atlantic

Here is what the head of  UNISON, one of the UK's largest trade unions, thinks about the TTIP (Bond)

"TTIP may be a US – EU trade deal, but its impact will be felt all over the world. Multinational corporations will profit, but millions will lose out. People in Britain are angry about the impact TTIP will have on their lives. Unless we also get them angry about the impact of TTIP on the Global South, we will have missed an opportunity, and millions will be a great deal poorer as a result."

 On the impact of the TTIP on the 'Global South', here is what policy advisors suggest might be the impact (Green European Journal):

"[the Global South] is not a homogeneous bloc, but consists, rather, of a range of extremely diverse states which will certainly be negatively affected by any potential US-EU trade agreement. Such effects will result primarily from the diversion of trade flows, but also from, for example, the bilateral setting of global standards. Countries for whom, say, the US represents a main trading partner will be forced to enter into competition with the EU when the T-TIP comes into force.

and cites the following possible impacts on specific trade zones:

It is Mexico’s economy that will suffer most from the T-TIP, as it maintains very close trade relations with both the EU and the US. (...) With the T-TIP the Mexican garment industry, for example, could face increased competition from Europe. (...) the garment industries of both the EU and Mexico are already in competition for access to the US market and, if T-TIP favours European products by lowering tariffs, this would negatively affect Mexico’s garment industry. Another example is the trade in citrus fruits. In the EU, they are mainly imported from South Africa, Egypt and Morocco. So far, the US’s biggest export markets are Canada, Japan and the Netherlands. A trade deal could see US citrus fruit exports to the EU rise, forcing South Africa, Egypt and Morocco to look for new markets.

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http://www.cepa.org/content/ttip-setting-global-standards
http://www.theguardian.com/commentisfree/2015/feb/16/ttip-transatlantic-trade-deal-businesses
http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06688
http://www.waronwant.org/our-work
http://www.bond.org.uk/blog/119/whos-really-profiting?utm_source=Bond&utm_campaign=995c1d212a-Your_Network_June_2015_W4&utm_medium=email&utm_term=0_9e0673822f-995c1d212a-247690901
http://www.greeneuropeanjournal.eu/the-eu-us-free-trade-agreement-bad-prospects-for-the-global-south/

Do market-based approaches hold too many false assumptions?

This blog post from the Institute of Development Studies (IDS) attempts to reflect the main challenges in implementing market-based approaches. It questions the "false assumptions" of market development and systems thinking for poverty reduction.

In fact, what is most evident is that a very damaging assumption held by policy makers and practitioners alike is that market-based approaches simply mean "business" and "market access". In fact these are two outcomes of a functioning market system - among many others - but not the end-goal. In reality, well-designed market-based approaches that adopt systemic principles also deliver the following benefits:

• Production and supply systems that respond to demand and the needs of the market so that relationships are inherently win-win and about capturing the value within the system 
• Inclusivity of poor, marginalised, vulnerable groups as key actors and influencers (including, women, youth, disabled, etc.) 
• Market resilience and the ability of the system to stay strong and react positively to economic, social, political shocks even after any development intervention 
• Innovation is from within the market itself and emergence of new products and services (both for mainstream as well as niche users)
• Better relationships between market actors and market-driven design and testing and learning so that products and services respond to market needs 

When talking about market-based systemic approaches to poverty reduction, the first step is for all parties to get on the same page. For advisors to development projects, these are some things to look out for:

• An inaccurate understanding of systemic thinking and a persistence towards value chain approaches. The former is about the structures, patterns and cycles in systems, and the systemic constraints that affect the functioning of a system (rather than any specific events or element or value chain). Systemic analyses then lead to solutions and leverage points that generate long-term change throughout the wider system (and not for any particular market actor value chain or sector). 
• Visible conflicts between projects and market partners and disagreements around 'ownership' and 'control'. There can often be a tug-of-war between 'who does' and 'who pays'. The project may be doing too much and be paying too much and can be reticent to relinquish control and allow market forces and systemic pressures to take over. 
• A lack of understanding of what a better functioning market system looks like. Poverty is often considered a 'wicked problem'. As a result, without diversity for multiple viewpoints in problem-solving, there can often be difficulty in envisioning a better future. Some projects also perceive that by formalising all things informal and turning informal activities into formal value chains will somehow naturally strengthen systems. 
• A lack of appreciation for (and a fear of) complexity. As a result, there may be a pattern of efforts to simplify, delineate, isolate and control within specific timeframes and outcomes, leading to tick-box approaches to measuring systems change. 
• A heavy emphasis on quantity over quality in project activities. In particular, a tendency to prioritise activities that promise large impacts for lots of beneficiaries as soon as possible ... over and above interventions at leverage points in the system that take time but draw people into the system and bring about sustainability through relationships, value creation, growth, feedback, market response and evolution 
• A tendency to directly intervene in the market instead of employing facilitative approaches and market-based tactics. Examples: 
• running 'project pilots' instead of working through market actors and offering opportunities for 'market exposure and idea testing' 
• dragging actors into the market through 'cost-sharing' instead of supporting existing interest and willingness for 'early-stage market entry' 
• organising and leading 'stakeholder forums' to get buy-in for the project's bright ideas instead of facilitating membership based groupings around common market constraints 
• when buying down the risk in new markets, offering a heavy amount of 'financial subsidy' to businesses instead of non-financial options such as 'networking, capacity building, coaching, information-sharing and relationship-building' 
• a lack of adequate focus on the incentives, relationships and behaviours in markets. This can be evidenced by projects that make broad assumptions about why the private sector does not already work in marginalised markets. e.g. ICT4Development projects often make the mistake that ICT constraints are primarily technical software issues, and do not spend enough time addressing the incentives and facilitating the relationships and interactions between firms and the market (mostly small rural-based enterprises).

Working with the private sector in market systems projects

What have I learnt working with the private sector in market systems projects?

Identify the systemic constraint and address the change at that leverage point. It is important to identify what is stopping the private sector from already reaching out to these markets. In one project, we found that livestock inputs suppliers were interested in developing distribution networks in very poor marginalised pastoralist communities but what had stopped them in the past was a lack of experience in in these markets. For them, lack of experience made the cost of market entry and market testing too high. The project therefore supported a market entry testing process for the firms. Each one carried out market research, tested their own distribution models and learnt from successes and failures. Over time, specific firms saw market potential and fully immersed themselves in the process, often evolving their strategies to respond to their insights on market dynamics.

From the outset, build in a pathway to market outreach with the private sector. In one project, we solicited proposals from firms to provide business services to agriculture firms working with smallholder farmers. We added a question asking firms to describe a) what they would try and find out about the market through the grant and b) how they would design market outreach and development strategies beyond the grant to continue interactions with market actors. The outcome was that firms better understood the catalyst nature of the grant. This also aligned expectations and incentives and all subsequent discussions between the firms and the project focussed on what was being learnt about the market and how the firm would scale out in the future.

Look at the market actor and seek out evidence of internal leverage points. Many firms will have engaged with hard-to-reach markets in the past. They may have made investments that have not worked out, or at least, invested in some basic research (codified or tacit) to test the water. When talking to firms about partnerships, look for resources that are vestiges of this history (a person, a report, a process, etc.). These can be put into the mix. A project can layer in additional resources, or improve the functioning of the resource, or help scale out out the resource, etc. In one project, we found that a university had set up an internship programme for agribusinesses students. However, this internship was not very successful because the university did not have the networks and knowledge to develop relationships with the private sector in rural areas. The project helped build these relationships. At the same time, the project helped train the interns who then on-trained rural firms> Over time, the university gathered enough knowledge to develop appropriate short courses for these rural firms – incorporating the expertise from the project as well as through the interns.