Hows & Whys

To fellow social entrepreneurs

As our reputation is slowly growing up, I am getting more and more questions from social-entrepreneurs-to-be and friends from the NGO and the private sectors on the implications of operating a social enterprise, on how we can factor in primary business rules and our objectives. Hence, I would like to start sharing a bit of what I had to learn since I created our company. And I’d like to start with the concept of values, because, well, you know, we are a SOCIAL enterprise. So values are somehow important, right? Yes, but mere pragmatism too.

Urban Care is, indeed, a social enterprise. What does that mean practically? That we are at the crossroads between classic business management and an “NGO-orientated” way of thinking in term of values and objectives. And this requires a fair dose of flexibility and pragmatism, especially as our primary market, Vietnam and South-East Asia, is now subject to consequent macro-economic pressures… The current inflation rate in Vietnam is close to 21% on an annual rate, with little evidence it would slow down the next few months. The national Vietnamese debt is rated at junk level with 5-year CDS soaring way above 300 points, international investment is plummeting in the region, and business creation is down 50% from its 2010 level in the country. And now even China is promised by some analysts a hard-landing within 3 years… let alone the current situation in Europe and in the US… it’s all good.

So what does it mean for our operations here? What does it mean to a young company like ours? Would our values shield us from the bad weather? Do values give us business? Is that scary out there? How does it feel just right now?

Oddly enough, it feels good. Real good. Yet, may be not the way one might expect. And I trust it all lies within a strange mix of values and business thinking.

Because this environment pushes us to be fit and flexible, to pay an even greater attention to our clients and our internal functioning. It is the best remedy for self-leniency, and it teaches you the hard way that having “nice values” is just not enough to build a sustainable and efficient structure.

Unlike for most INGOs, our “funding” cycles are short. Whereas a development program sponsored by an international donor would typically be funded for a 3-year period, we mostly rely on short-term contracts – with an average duration of 4 months – although we are luckily moving into developing long-term relations with our biggest clients. Hence we have to be cost-effective. Always. And you can be sure that we are our first customers in term of allocation-resources optimization.

I guess this is the most challenging aspect of running a social enterprise. You have to be consistent, and analyze your environment very pragmatically as a private, for-profit business would. There are excellent lessons to draw from the private sector. I guess it relates to self-reliance, paying real attention to the needs of your clients, and having a strong and adaptive business-model. The bottom line there? Core values. But too often well-intended organizations might fail because of a lack of realism.

As a matter of fact, we are driven by an ideology. To make it short, I would say “earning a decent salary doing a decent job”. Obviously, decent is the operative word here. Yet, what you quickly realize is that your clients simply expect a service, a good service. They need a return on their investment. And your values are just not what they are buying. They might not even pay attention to your greater plan, whether it is making health care more accessible, or clean water, or education. Of course, they might share your values. And practically, all our clients do. Yet, when they contract you to perform a task, they just want your company to deliver something they need. And do not expect any indulgence from them because at some point you trust you are Mr Nice Guy. They need professionals, because they are.

Initially, when setting up our company, I was expecting our values would give us a hedge in term of publicity. I was even considering they could be a component of our marketing plan. And you know what? We have clients because we offer a suit of advanced analysis and M&E services we are the only ones to provide. And we do it well. I quickly realized that, at best, our model was anecdotical to our clients. What they appreciated was the analysis we provided them with. So, we dropped entirely the idea to market our values.

Values are your driving force, they make your ethos concrete. Values translates into the way your team is operating, values infuse into the quality of your work. And this is fair enough. If you uphold those values and put them at work, if your team share them, why would you need any further endorsements from others?

I strongly believe in the development of alternative forms of capitalism. I trust there is out there a place for companies like ours, companies for which the community they live in is the objective, not the mean. Yet, if we want this movement of social companies, coop, and non-for-profit businesses to gather speed and gains for itself a fair place in our greater social system, we have at some point to accept the inner darwinian nature of our daily environment, and be fit.

And let’s rejoice, our values can make us the fittest.

The Whys and the Hows how that social enterprise, part 2

How do you create an enterprise in Vietnam, let alone a social enterprise, when you are a foreigner. Well you’d better brace yourself for the ride! Setting up a social enterprise takes time, money, a willingness to gather and complete a whole lot of paperwork, access to legal advice and, most of all, patience. I have outlined the steps that I followed in setting up Urban Care in Vietnam and have included some tips that will save you time and effort. You would need some cash in advance, patience, some more cash, and a whole great deal of some more patience. Because it really took some time. Quite a bit more than expected in the first place actually. The plan was to sort out all the paper work within a month… well, how about 8?
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The Whys and the Hows how that social enterprise, part 1

Watching a music video recently of Lady Gaga dancing on a table covered with dollars, I was overcome with a feeling that we are on the road to nowhere on this planet.

The economic crisis of 2007 had some people saying that the economic order of the day is over; that the time of making money with money is coming to an end; that it’s only a matter of time before capitalism returns to a natural state of equilibrium, creating and distributing wealth through the “magic wand” of the trickle-down-effect, as in the 1950s.s

I don’t trust magic to solve our problems. That situation needs a push.

It’s now 2010 and the world economic system looks more like former Russian president Boris Yeltsin trying to stand up straight after 9am. The G20 meets every year to lay out itsplan – a plan with frankly no direction nor commitments to regulate this economic order and address the huge inequalities of wealth distribution in both industrialised and emerging economies. with

Looking at the evolution of the GINI indexes during the last 20 years is depressing. Our economic order continues to rely on a huge concentration of wealth and capital in a few hands and the confiscation of profits by those same hands. It is ironic that even in China, the target of industry relocation, salaries are deemed too high now, skyrocketing above US$100a month in some southern factories.

Everlasting public and private debt is not a solution to sustain demand. A new paradigm is needed. Especially for health care, our area of concern.

Yet, most people of my generation, who were in their teens when the Berlin Wall collapsed, might feel in their gut that pure socialism is also not the solution, human somewhat greedy nature being what it is for the time being.

This is where the idea of social capitalism kicks in. What does that mean for us?
Well, Simply put, social capitalism means that private is for public good. Private investment to kick-start a process, benefiting from private management and risk ownership, controlled salaries within the structure, a maximum revenue-spread across the team, and employee ownership of the capital. That means as well not boosting unnecessary demands to inflate profits, a cornerstone in health care where the asymmetry between provider and patient is so huge, especially in low- and middle-income countries. Social capitalism means building a sustainable model of intervention and redistributing a maximum of a controlled profit to the staff ; decreasing costs for the patients to make good-quality care accessible to everyone in keeping with the local laws and regulations.

Urban Care is undertaking its work with such a model in mind. Much more to come about that in the next posts. In the meantime some links you might want to check out:

GINI index
Lady Gaga
Social Enterprise
Our friend Boris having a difficult time

And an interesting link to Asset-based community development, that could nurture some more posts