There are many variations of a “social” business — where do they originate, how do you define each category and does it make sense to separate them at all?
As universities seek to broaden their impact from research, one of the key commercialisation tools that, to date, hasn’t really been tapped is the area of social business. Or do I mean social ventures? Or social enterprise? And all this comes from the social sciences, right?
The physicist Enrico Fermi, when describing particle physics is purported to have said: “If I could remember the names of all these particles, I would have been a botanist.” When I worked at the University of Oxford, I was at one point the “innovation lead for social sciences and humanities” and “social enterprise lead” which became “social venture lead”. In the end, I thought it would be easier to call myself “head of other”.
For those who are from a core technology transfer/venture capital background (as I was), it’s worth attempting to separate out the “other” and give a few facts and figures on early trends in this new area of commercialisation for universities; when we are talking about this stuff, it isn’t half useful to make sure we are talking about the same thing.
Let’s start with the term “social”. When people use social in this context, do they only mean social? Well, I’m afraid the answer here is no. In my experience when people talk about a social anything they can equally mean something of relevance to environmental, sustainability or cultural matters. The thing is, it becomes a bit of a mouthful to put all of this into a company description, so social is the word to collect all of these ideas together in one term.
A better collective description of these businesses would be either an “impact-focused” or “impact-led” business, where a business isn’t purely focused on providing a return to shareholders. In the real world, very few businesses do only focus on the money. Importantly though, there is a spectrum where there is a varying balance between impact and money. A charity, let’s put it on the left of the spectrum as it is more associated with the political Left than Right, is dominated by impact, with money purely a means to achieve it. You can have many flavours of social business in between, with mainstream pure “for-profit only” businesses on the Right.
A social business is a company which has a social purpose, but that doesn’t necessarily have anything in the company documents describing or forcing that business to follow through on that purpose. Most of them do, however.
A social venture would have a clause written into its constitution/bylaws/articles of association that states the purpose of the company, which would bind the directors in the decisions they make and could only be removed or altered if all shareholders agreed to a change.
A social enterprise is a subset of a social venture, where you have more constraints on a company’s operation. You are usually mandated to recycle the company profits to the purpose of the company and you will have an “asset lock” which means that you have a restriction on how much you transfer out of the company as a proportion of its turnover or value. The Community Interest Company (or CIC for short) is an example of such a company in the UK.
A social enterprise I would consider to be towards the left of the spectrum. A B Corp (or Benefit Corporation) I would place to the right. B Corp is a certification process that a company can choose to pay to go through and which meets high standards of social and environmental performance, transparency and accountability. This will usually mean additions to your company documents, but not in a way which may constrain you in a way that a social enterprise might.
The complication is that around the world the gap between charities and mainstream business varies depending on country. In the US and France, for instance, the gap is very small with the consequence that social business isn’t really “a thing”. In the UK the gap is quite large, so there are many flavours of business that can be made between a mainstream for-profit business and a charity.
And what of social sciences? Well, firstly a social business, if based on academic research, is as likely to come from science and technology as it is from the social sciences, humanities and the arts (SSHA). Indeed, at Oxford, my growing social venture pipeline at the time I left was made up equally of projects from the sciences as SSHA.
Of equal importance, roughly half of spinout projects in SSHA were social ventures. This was not the case from the sciences, where social ventures made up a much smaller proportion. This means that, though the pipeline of projects in SSHA was much smaller than in the sciences, social ventures were a much more important commercialisation mechanism than creating mainstream companies. But don’t forget, this still does mean that half of SSHA commercialisation projects are still mainstream, for-profit spinout companies. Examples of social ventures would be in social care, education and health where the interventions were directly related to people and positive outcomes which at the same time needed to be based on sound ethics. Examples of the mainstream would be economics, business and geography, where the data can be used to help businesses make better decisions.
And is all of this an Oxford thing? The answer is no. I am currently working on two projects. One is to capture the impact of the UKRI-funded Aspect project, which focuses on commercialisation from SSHA in the UK’s universities. Here we are seeing exactly the same trends as at Oxford, with half the spinout pipeline made up of social ventures. On another project led by UCL Business, we are seeing social venture pipelines which are made up equally of research coming from the sciences and SSHA.
And how much of this is there? At last count, Oxford had 18 social ventures. There were roughly the same amount in the pipeline (depending on how you count). The Aspect programme is likely to generate similar amounts in the next three years (having started three years after Oxford). University College London currently supports 20 social ventures which will need funding in the next three years. And that’s the biggest challenge — the infrastructure and finance required to help these companies grow is threadbare at best.
So why do it? If you look at the analysis done by Oxford, their social ventures address 13 of the UN’s 17 Sustainable Development Goals. This breadth in impact simply isn’t addressed by the mainstream portfolio, and if universities are to successfully carry out their third mission, social business is surely a core component of the offer.
Mark Mann is the managing director of his own knowledge transfer and strategic innovation consultancy which provides a variety of services and advice across the UK and Europe. You can reach him at mail@markmann.org.uk.
