qbl the quadruple bottom line jim mcloughlin university of brighton

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By Jim McLoughlin, Jaime Kaminski, Babak Sodagar Cubist Research & Consultancy Group, Social Enterprise & Socio- Economic Impact Research The Business School, University of Brighton Applying the SIMPLE method of impact measurement {SIMPLE = Social Impact for Local Economies} Making the invisible visible conference, University of Brighton, December 2010 The Quadruple Bottom Line (4BL) and holistic perspectives on sustainability – lessons from the social enterprise sector regarding values, strategies & social impact measurement

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QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

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Page 1: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

ByJim McLoughlin, Jaime Kaminski, Babak Sodagar

Cubist Research & Consultancy Group,Social Enterprise & Socio- Economic Impact Research

The Business School, University of Brighton

Applying the SIMPLE method of impact measurement{SIMPLE = Social Impact for Local Economies}

Making the invisible visible conference, University of Brighton, December 2010

The Quadruple Bottom Line (4BL) and holistic perspectives on sustainability – lessons from the social enterprise sector regarding values,

strategies & social impact measurement

Page 2: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Introduction Social Enterprises in context Research objectives and methodology The SIMPLE Measurement model & the Quadruple

Bottom Line (4BL) Case example of applying the methodology Linking micro impact measurement to macro measures

and sustainable systems. Warnings re measurement & some conclusions

Page 3: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

“…businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.”

Office of the Third Sector, 6th March 2007

Page 4: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Pearce, J. (2003) Social enterprise in any town, Calouste Gulkenkian

Foundation: London

First SystemPrivate

Profit oriented

Second SystemPublic service

Planned provision

Third SystemSelf Help, Mutual, Social purpose

Page 5: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

UK Government’s vision:“To Promote dynamic and sustainable social enterprises, contributing to a

stronger economy and fairer society. This is critical to the successful economic and social regeneration of many communities.”Cabinet Office & HM Treasury(2006)The future role of the third sector in social and economic regeneration: interim report,, HMSO (December 2006)

Social enterprise is an idea “whose time has come.” Support for an “aggressive growth strategy” in the sector.Byrne,L (2009a) Cabinet Office Minister, Voice 09 Conference, February 2009

“ SEs are well placed to provide a blueprint for the kind of ethical and sustainable businesses that will help build a new, more balanced economy” Liam Byrne (2009b), Cabinet Office Minister, Social Enterprise Summit , May 12th, 2009

“Social enterprise is at the heart of a deep and serious reform of public services as part of the Big Society agenda”.

David Cameron, Prime Minister, as quoted in www.socialenterpriselive.com 18th May 2010.

Page 6: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Social enterprises could form part of a “business revolution” where social enterprises “become the business model of the future blending profit and social benefit.”Clark, M. (2009) The Social Entrepreneur Revolution: doing good by making money, making money by doing good, Marshall Cavendish

Key challenges How to build capabilities in the sector to compete effectively?How to measure impact robustly, credibly and cost effectively?

Page 7: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

“While many third sector organisations have a powerful story to tell, the social and environmental value of the impact is often underplayed. As we face tough economic times, It is now more important than ever that we allow for better recognition of those who create social and environmental value”

Byrne, L (2009c) Cabinet Office Minister, Social Enterprise Summit , May 12th, 2009

“Whilst it is possible to measure the amount ofmoney that social enterprises generate … it is far more difficult to measure the wider civic or social impact that social enterprises have and the benefit gained (financial or otherwise) by a community.”

Haugh, H. (2006) A research agenda for Social Entrepreneurship. SocialEnterprise Journal (1),1-12.

Page 8: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

To develop an impact measurement model and methodology for Social Enterprises

Exploring linkages between micro impact measurement and macro measures & systemic change – moving to more sustainable societies

Specific Considerations of the SIMPLE project:

To design and implement a social impact training programme for social enterprises

Practitioner focused Build social enterprise management capabilities and contribute to

improved performance of social enterprise

Page 9: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Action Research Approach

◦ Problem centred, client centred and action oriented(Lewin, K. (1946) Bryman, A. and Bell, E. (2007), Argyris, C., (1985)

◦ Reflective and experiential learning review processes (Kolb, D.A. 1984)

Case Study Method

Over 60 social enterprise cases

Applied SIMPLE (Social Impact for Local Economies) Model

◦ A strategic approach to impact measurement (McLoughlin et al, 2009)

◦ Develop tailored impact measures

Page 10: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Scope It

Map It

Track It

Tell ItEmbed ItEmbed It

The SIMPLE Model: a 5 step approach

McLoughlin,J. Kaminski,J, Sodagar,B et al (2008,2009)

Page 11: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

SE impact contextMacro environment

Funding, policy, legal, social, technology context

Local environmentLocal demographic, political, funding,

competition, infrastructure, social needs, user / client influence

Organisational contextOwnership, governance, scale, location,

product / service offer Management decision makingStrategic direction, Operations, HRM &

organisational culture, Financial, Marketing, Technology strategy, Networks,

alliances & partnerships

SE mission, values, vision and objectives

Who is it serving?Who should it serve?Priorities regarding

impacts

SE stakeholdersWho has a direct interest?

Who has the power to influence change?What priorities and impacts are desired?

Financial (+/-)

Mac

roM

icro

The social

enterprise

External drivers

Internal drivers

Mission-led drivers

Financial (+/-)

Economic (+/-)

Economic (+/-)

Social (+/-)

Social (+/-)

Environmental (+/-)

Environmental (+/-)

Outputs Outcomes Metrics Impact

MAP IT TELL ITTRACK IT

Activities \

\

\

\

\

\

Stakeholder drivers

The SIMPLE Model and the Quadruple Bottom Line (4BL): deep version

Scope It

EMBED IT

Process change

Process change

Process change

Process change

McLoughlin,J. Kaminski,J, Sodagar,B et al (2008,2009)

Page 12: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

The SIMPLE Impact Model &The quadruple bottom line (4BL) - Summary version

EMBED IT

Process change

Process change

Process change

Process change

SCOPE IT MAP IT TRACK IT TELL IT

External Drivers

Stakeholders

Internal Drivers

Mission/Values Drivers

Activities

Financial

Social

Environmental

Economic

Financial

Social

Environmental

Economic

Source: McLoughlin, Kaminski, Sodagar, et al (2009)

Outputs Outcomes Metrics Impacts

Page 13: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Key characteristics

All are Social Enterprises – but different legal forms

All are Social mission driven - different points of focus

(EG: lending to financially (and often socially) excluded, local community development, local economic regeneration, social enterprise lending, Entrepreneurship).

Different business models but nearly all UK CDFIs dependent on public sector subsidies or external grant funding

All share “lender of last resort” role –mainstream banks reject (people, businesses and areas excluded)

Target markets – 3 main Enterprise lending (often with training/mentoring support) Social Enterprises Personal Lending

Page 14: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

“I think some of it (banking) is socially useless activity,”

The financial sector had “swollen beyond its socially useful size” and seemed to make excessively large profits.

(Lord Turner, UK Financial Services Authority chairman, Prospect magazine, August 2009)

Page 15: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

MAP IT: Capitalise Business Services

Three of the 4BL prioritised for measurement in this SE

Page 16: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

CBS: Emerging Impact Measures – A Blended value approach

Social Financial

Economic

CBS Measures

• Businesses created• Businesses safeguarded• Jobs created• Jobs safeguarded• Business survival rates

Turnover created (Gross/ Net)Turnover safeguardedBenefits SavedSocial Return on LendingRecycling of loans

• Socio- economic profile of beneficiaries– gender, IMD, age, ethnicity, area etc

• Business skills development• Personal development & confidence• Social capital & connectivity• Entrepreneurship and business acumen• Financial inclusion• Stories/reflections

• Sustainability ratios:•Operating costs•Operational Self Sufficiency•Loan fund Self Sufficiency

• Loan portfolio performance indicators:•Portfolio growth•Portfolio at Risk•Write off rates

Page 17: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

The SIMPLE Model & 4BL as a Strategic Sustainability Management tool

– Measure It to Improve ItEMBED IT

Process change

Process change

Process change

Process change

SCOPE IT MAP IT TRACK IT TELL IT

External Drivers

Stakeholders

Internal Drivers

Mission/Values Drivers

Activities

Financial

Social

Environmental

Economic

Financial

Social

Environmental

Economic

Strategic ReviewSource: McLoughlin, Kaminski, Sodagar, et al (2009)

Outputs Outcomes Metrics Impacts

Page 18: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

“Once the credit crisis is firmly consigned to corporate history, not only will it have sent some mighty business names to the wall, it will also have been responsible for fundamentally changing the way the business world operates”

“One such example may be in the way that corporate value is determined; will financial measures still be used in isolation as the measure of business value? This approach will soon be challenged”

(Rodger Hill, Head of Financial Management Advisory at KPMG in the U.K.,http://www.kpmg.com/Global/en/Pages/default.aspx , accessed Oct 4th, 2010 ,

Page 19: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

What about the system’s ethical assumptions? Moral Crisis: Neo-liberalism casino capitalism - Now “

bankrupt” philosophyBut its vision has gone unchallenged:

“The unhindered, rationally calculated, pursuit of self interest in free, competitive markets was not just economically efficient but morally right.”

Real culprit in this crisis “Hyper-individualistic, materialistic hedonism of the entire culture”

Deep change needed – economic, constitutional & new moral culture.

Prof. Marquand, D (2009) The moral economy can’t be righted until we accept our own culpability, Guardian, May 27, 2009.

Page 20: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

GDP Unconstrained

Growth Social Sustainable

Product

Profit maximisation Social Impact MaxMin Environ. Damage

Shareholder value Stakeholder Value

Social EnterpriseBusiness Models

Profits before principles Principles before profits

Conventional Business Models

MACRO

MICRO

Systems

Business Strategies

Page 21: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Enabling all people …to satisfy theirbasic needs and enjoy a better quality of life, withoutcompromising the quality of life of future generations.

Securing the future (2005), HMG Cabinet Office, TSO

Page 22: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

“There’s a battle outside and it is ragin’, It’ll soon shake your windows and rattle your walls. For the times they are a-changin’ ( Bob Dylan , January 1964)

“I did something that challenged the banking world. Conventional banks look for the rich; we look for the absolutely poor. All people are entrepreneurs, but many don't have the opportunity to find that out.”Muhammad Yunus Grameen Bank

The Chinese MEANING OF CRISIS –“be aware of the danger-but recognize

the opportunity”

Page 23: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Pearce, J. (2003) Social enterprise in any to Calouste Gulkenkian Foundation: Londo

First SystemPrivate

Profit oriented

Second SystemPublic service

Planned provision

Third System-Social Economy

Mutual, Social & Environmental Purpose

Scope to Grow the Social Economy?

Page 24: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

Monetisation

Financial Social

SROI

Economic Environmental

picture ref: http://www.carnoc.com/

SROL

Page 25: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

"We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of worldly goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missles and nuclear warheads.... It includes... the broadcasting of television programs which glorify violence to sell goods to our children. "And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials... the Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile, and it can tell us everything about America -- except whether we are proud to be Americans."

Sen. Robert F. Kennedy on March 18, 1968, speech at the University of Kansas

Page 26: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

• Argyris, C., Putnam, R. and Smith, M. (1985) Action Science: concepts, methods and skills for research and intervention, San Francisco: Jossey-Bass.

• Bryman, A. and Bell, E. (2007) Business Research methods, Oxford: Oxford University Press.• Byrne,L (2009a) Cabinet Office Minister, Speech ( press release), Voice 09 Conference, February 2009• Byrne,L ( 2009b) Cabinet Office Minister, Social Enterprise Summit Press release, Cabinet Office, May 12th, 2009• Byrne, L (2009c) Social Enterprise Summit Press release, Cabinet Office , May 12th, 2009• Cabinet Office & HM Treasury,(2006) The future role of the third sector in social and economic regeneration: interim

report, Cabinet Office & HM Treasury, HMSO (December)• Clark, M. (2009) The Social Entrepreneur Revolution: doing good by making money, making money by doing good,

Marshall Cavendish• Coffey, P. (2006) Social Impact Measurement: Methodology Assessment, Initiation Report for the SIMPLE project,

SEL/University of Brighton: Brighton.• Haugh, H. (2006) A research agenda for Social Entrepreneurship. Social Enterprise Journal (1),1-12.• Lewin, K. (1946) Action research and minority problems. J Soc. Issues 2(4), 34-46.• Lewin, K. (1947) “Group Decision and Social Change." In T. H. Newcomb and E. L, Hartley (eds.), Readings in Social

Psychology. New York: Henry Holt.• Maxwell,O (2007), Social Enterprise in Brighton and Hove: A profile of the sector with implications for future support and

development, Brighton and Hove Business Community Partnership, In collaboration with the University of Brighton,• Marquand, D (2009) The moral economy can’t be righted until we accept our own culpability, Guardian, May 27, 2009.• McLoughlin,J.,Kaminski,J, Sodagar,B,Khan,S,Harris R and Arnaudo,G. Mc Brearty,S.(2008) Measuring the Impact of

Social Enterprise:a Holistic Modeling Approach, Social Enterprise Research Conference, SERC) Proceedings, London, June.

• McLoughlin,J.,Kaminski,J, Sodagar,B,Khan,S,Harris R and Arnaudo,G. Mc Brearty,S.(2009)A Strategic Approach to Social Impact Measurement of Social Enterprises: The SIMPLE Methodology, Social Enterprise Journal , submitted May 2009)

• Pearce, J. (2003) Social enterprise in any town, Calouste Gulkenkian Foundation: London

Page 27: QBL The Quadruple Bottom Line Jim McLoughlin University of Brighton

http://www.youtube.com/watch?v=77IdKFqXbUY

Sen. Robert F. Kennedy on March 18, 1968, speech at the University of Kansas on the presidential campaign trail

Assassinated less than 3 months later in California.