The Missing Middle

During a meeting last week with Social Enterprise UK, Clearly So and Social Enterprise London, a lightbulb moment ocurred.

We were discussing how the brutal honest truth is that its still a very tiny % of the UK’s social enterprises that have sufficient scale to work directly with the kinds of big corporates that are knocking on our doors, looking to make their supply chains more ‘social’.  Our slightly pessamistic conclusion was that if corporates really want to work with these organisations, they need to play the long-game and invest in them – both with cash and with knowledge – in the here and now, whilst acknowledging that they can’t actually work with them directly any time soon.  

The light-bulb moment was the realisation that there is, however, a short-term win too.  In the short-term, the corporates can make introductions between social enterprises and the corporate’s own suppliers – whether first, second, third, fourth tier…  These are much more appropriate customers for the majority of the UK’s social enterprises.  Customers can be found that work at the right local or regional scale and that offer contracts of appropriate size. 

In addition to these strategic introductions, the corporates can offer hands-on advice on how to grow a business in their industry – including significant clarity on what kinds of products/services are of value in the lower echelons of their supply chains – focusing the social enterprises product set around real-world demand.  They might offer cash too – as grants or investments – or they might fund intermediaries to source that investment for them and generally work on strengthening and scaling the social businesses.   

The corporates at the top of the supply chain should go further, incubating the social businesses, so they may benefit from direct exposure to and support and learning from their teams – principally in procurement but also finance, marketing, IT, strategy… Senior managers in the corporate could mentor senior managers in the social business.  Our learning from the Big Venture Challenge is this kind of industry-specific expertise is invaluable in scaling up.

If – after a few years – things have gone exceptionally well, the social enterprises will have raised investment, won small contracts within the supply chains, strengthened their management team and systems and scaled their delivery.  Then, possibly, they’ll be in a position to have direct conversations with the major corporate at the top.  But even if that doesn’t happen – the corporate who supported them has still benefited by having their own suppliers’ supply chains ‘social’-ised: something that is increasingly necessary but challenging to do.  Intermediaries in the space can offer further support by tracking the social impact delivered as a direct result of working within their overall supply chain and reporting that back to the corporates.