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When it comes to alternative capitalism, is scale the un-asked question?

In preparation for starting to read Tim Jackson’s book Prosperity without Growth, I’ve been watching his TED talk from a couple of years ago.

What worries me about this talk, given more people watch talks like this than read books like his, is the paucity of practical solutions within them.

Jackson talks of creating “an economics fit for purpose”. This is about “a more meaningful and less materialistic society”. Fine, I get that. On board. No problem.

He also talks of the need to create “community spaces to learn and collaborate”.

Definitely agree. One of the reasons I created a media and events business and a stakeholder research/engagement company I suppose.

And living though the development of certain parts of London in recent years we can see that trend taking hold. It’s great to see and experience. (Despite the slightly sterile design of modern community spaces in the city)

But his talk linked above, as with so many, seems to present the alternative choices without discussing how they reach scale to the point where they make a substantive difference.

I will gladly offer a mea culpa if I am wrong, but the Amazon reviews of the book appear to reflect this.

Search for “scaling social enterprises” on Google, and the top fifteen or so links don’t show many solutions. That’s a worry.

The options for more sustainable change seem to be, according to many who talk about reforming capitalism between:

Corporations
Governments
Community Interest Companies
B Corporations (More on these, here)
Social Entrepreneurs
NGOs
Public institutions

All discussed, of course, with longer term investment cycles and new technology investment and roll-out thrown in.

What no-one I have seen, has so far addressed, leaving aside finance and technology for a moment, is how and whether social entrepreneurs, B Corporations and Community Interest Companies can reach scale. This video tries, but doesn’t address historic challenges of scale.

Currently Patagonia, a small but very sustainably-minded outdoor clothing firm, is the largest B Corporation out there.

Does this matter, when so much of GDP and jobs in most countries comes from small business?

I think it might: Given how powerful large companies are and their commensurate ability to raise cash and roll out products and services at scale.

The key question to address is whether social entrepreneurs, B Corporations and Community Interest Companies can be managed to scale. Are they to be replicated in two dozen cities / communities and beyond, or should they simply grow larger?

As someone who teaches on a Corporate Governance MSc, I’ve seen the historic literature that suggests that stakeholder-managed businesses struggle hugely with scale, lacking as they do the advantages of command and control capitalism.

Even European and Asian corporate governance models utilise those advantages of more simple decision making and ability to raise capital.

It’s not unique to Anglo-Saxon companies or markets.

So if our future does depend on the nascent forms of new companies, from social entrepreneurs, B Corporations and Community Interest Companies, is scale a challenge we need to talk about?

And what do we mean by scale: Growth in organisational size or the ability to be replicated quickly? I’d suggest the latter is more likely.

Perhaps this question is something we ought to address urgently, alongside our constant conversations around technology, it’s roll-out and subsidies, and our long overdue hand wringing over short term financial markets. (who are often driven by the pension funds some of us depend on)

All this is not to say that newer forms of more sustainable capitalist models mentioned above cannot overcome the challenges that stakeholder managed companies such as the Body Shop or GM’s Saturn brand faced.

But we need to be talking about scale, both as a challenge and opportunity, rather than simply getting excited about new models.

How do we take these organisations from 5 to 50 to 500 people to 5000 or 50,000 people? Or do we create 50 companies of 500 people instead, all doing similar work, just in different places?

Surely questions worth asking, that need discussion and research.

Of course, I am now open to the criticism I levied at others at the top of the post: More challenges than solutions. So here’s a few solutions:

1) Let’s map which academics have tracked which differing models of success have worked, and highlight their work so it is not lost in unread, unreadable papers (Any of us could do this) Here’s perhaps one example.

2) Let’s put smart young researchers on breaking down the challenges of scale and working out what the solutions are. These can be qualitatively researched AND crowdsourced (A job for SRI firms, academics and media outlets, surely?) We need a lot more detail than this, for example.

3) Let’s set some targets and reward alternative models that have demonstrated solutions to scale issues from within. (Create a foundation-funded or corporate-funded prize perhaps?)

4) Let’s start holding public events and getting these key messages around beating the challenge of scale to business people, entrepreneurs, students, investors, governments and anyone else who will listen.

I’m happy to support any efforts however I can, through dissemination in Ethical Corporation, my newer business and my work at Birkbeck at the School of Management.

I may be able to have students look at this problem as research projects in 2012/13.

What will you do?

And now, once I have finished the latest Jo Nesbo novel, I shall get on with reading Tim Jackson’s book, and in a week or so, report back on any further insight, or how I should have held my tongue…

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