The Size of the Enterprise Debate

Debaters participating in the showpiece event at a Sydney conference came to one consensus – size does matter when it comes to social enterprise.

Adjudicated by Former Democrat leader and Social Business Fellow at the Centre for Social Impact Cheryl Kernot, the debate at The Social Marketplace centred on the proposition that the best way to get a social enterprise to scale is to start small and grow sustainably over time.

The duo of Celia Hodson, CEO at the School for Social Entrepreneurs, and Paul Steele, from the Difference Incubator, were declared the winners, arguing with passion and often cheeky innuendo that large-scale social enterprises were “more investable, more capable and could generate more social value”.  

“Bigger social enterprises in my view are actually bigger for everyone. There’s a reason Maccas ask you if you’d like to go large with that,” Celia Hodson began.

Larger enterprises, Hodson said, were able to provide more diverse services, were more sustainable and attractive to investors due to their ability to create more measurable social value and have greater a chance of retaining and nurturing talent.

They also had opportunity to look for larger funding and commercial opportunities along with government contracts.

“It’s becoming increasingly difficult for small social enterprises to manage the tension between ego and logo,” she said.

She spoke flippantly of the potential risks.

“If some folks get hurt when a social enterprise goes bust … that’s the way life rolls.

“What’s with all that soft and fluffy stuff anyway?”

A stand-out for his impassioned approach, Paul Steele also dared the audience to think big.

“We have this self-fulfilling prophecy that somehow we need to stay small … we sold ourselves a myth,” he said.

“We want a different community, we want a better world … if we think we can do that by a whole lot of small organisations, we are kidding ourselves.

“Scale has advantage. Scale allows us to bring impact not possible in other ways.

“We can take large organisations inject a real social mission if we just think about it.”

“A big ‘hell yes’ for the small enterprise, but a big ‘why not?’ for the big end of town.”

The opposing team of Steve Hawkins, from the Benevolent Society, and Ian Learmonth, from Social Ventures Australia, argued that slow growth and scaled-down community-based approaches were more suited to the model.

Learmonth, an investor in social enterprises, adopted a risk-averse perspective.

“People putting money into those sorts of high-risk propositions are definitely going to be cautious,” he said.

“There’s the very practical element of funding – raising vast amounts of money for social enterprises is incredibly difficult to do. It’s hard enough to do for a ruthlessly for-profit organisation.

“A private sector person would look at STREAT and think those guys are small. We look at them and think those guys are vast because they’ve got more than two operations.

“It’s about keeping it real!”

Learmonth emphasised the logic in community-based approaches.

“It’s very much think global, act local. I think it’s ringing very true with what’s being achieved and why it makes sense to start at a grassroots level,” he said.

“At the nerve site of social enterprise is dealing with a social issue and there’s a want and almost a need to start at community level.”

In support, Steve Hawkins drew on his experience with The Benevolent Society, one of the nation’s largest social enterprises.

“The ability to get consistent practice across our services is incredibly challenging. If you are focusing on social markets … your ability to scale to the next suburb is very questionable,” he said.

“These economies of scale are not there and I would argue these are diseconomies of scale.

“It’s a very harsh reality taking something small and just assuming it can get bigger.”

The event, hosted by the Centre for Social Impact in Sydney and convened by Sandy Blackburn-Wright, former Head of Social Innovation at Westpac brought together investors and social enterprises with the intent of exploring what an impact investment market could look like in Australia.