INCUBE

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INCUBE - Social firms build on winning ideas

The INCUBE project, based in Berlin, is determined to put the development of social firms on a more professional basis. Dissatisfied with the haphazard growth of the sector so far, it is researching what the best socially responsible business ideas are, and then setting up replication mechanisms to exploit them to best advantage.

CAP Markt Köpenick.JPG
There are some 2,000 social firms in Germany, which trade in the market as a way of integrating disadvantaged people into the labour force, and thence into society. While many of these work with long-term unemployed people in general, some 500 of them focus on one particular target group – disabled people. They are represented by the national federal body Bundesarbeitsgemeinschaft Integrationsfirmen eV (BAG Integration - http://www.bag-integrationsfirmen.de). “Our firms face several challenges,” says Peter Stadler, head of Fachberatung für Arbeits- und Firmenprojekte gGmbH (FAF - http://www.faf-gmbh.de), the federation’s consultancy arm. “They tend to lack business skills, and to choose the business they go into more or less by chance. There is little scientific study of which market opportunities and development methods are most suitable. This means that growth is slow and there is too much dependence on start-up subsidies. We want to change that. There are a couple of business ideas that have taken off in a really big way. Our EQUAL project aims to find more of these ‘winners’, and systematise the business planning process. Our hypothesis is that with our help a new social firm can cut the time it takes to write a business plan by 40%.”

The project is also taking an unfair load off the shoulders of existing social firms. “In the past we have pointed people in the direction of possible models and said ‘go and talk to them’,” says Mr Stadler. “But the hosts don’t always have the time to receive streams of visitors. So we are taking over this burden.”

Contents

Finding the right niche

What makes a good market niche for an integration business, and what enables a second and a third social firm to copy a successful pioneer? Key factors include not only the economic potential but also an affordable level of investment, a range of job openings that will suit different target groups, locations in town and country, and ease of transformation into social firms. INCUBE surveyed a sample of social firms and has harvested a number of possibilities that it is now investigating. According to Anton Senner, the CEO of BAG Integration, they have already dismissed ideas including restaurants, electrical equipment recycling and retailing, and are looking in the areas of facility management, cleaning, gardening and administration.

Perhaps the outstanding example of social firm growth so far is the chain of neighbourhood supermarkets that trade under the name of CAP Märkte (http://www.cap-markt.de). These ‘ CAP markets’ (from ‘handicap’) are the fruit of an initiative to establish a national brand of social firms by taking over small neighbourhood supermarkets in suburbs and villages that have been made redundant by the growth of hypermarkets. They typically have a sales area of 500 m², stock 7,000 lines and employ 8-12 people apiece, two-thirds of whom are handicapped. They:

  • provide jobs for handicapped people, aiding their integration through direct contact with customers
  • bring about local regeneration (accessible facilities for people without cars)
  • counter exclusion by offering services such as home delivery of meals or post office services

The first CAP-Markt opened in Sindelfingen, near Stuttgart, in 1999. There are now about 50 shops, mostly in Baden-Württemberg, trading under the slogan ‘CAP – der Lebensmittelpunkt’ (grocery point/centre of life). They benefit from joint purchasing discounts from the SPAR-EDEKA retailers’ co-operative, and an integrated point-of-sale bar code system. They are run by GDW Süd (Genossenschaft der Werkstätten für behinderte Menschen Süd eG - http://www.gdw-sued.de) which is a co-operative of sheltered workshops, founded in the 1950s to sell the goods the workshops produce. The CAP shops themselves are not members.

According to GDW’s manager Thomas Heckmann, very many local authorities and communities are keen to see a CAP-Markt open in their neighbourhood, and the chain has to reject four-fifths of proposals for new shops.

One of the factors that has led to this success is that it provides multiple benefits to multiple stakeholders. A CAP Markt not only provides satisfying work for disabled people, but also supplies staple foodstuffs within walking distance of people’s homes, reduces car use (which has health, energy and congestion benefits), and regenerates the local economy by recirculating money locally. A second aspect is synergy between different families within the social economy – the shops are owned by a co-operative of sheltered workshops and supplied by a retailer’s co-operative. The chain is still growing steadily, and as demand from local authorities across Germany shows, it has so far only scraped the surface of the potential demand that is there.

INCUBE is seeking more ideas of this nature, which combine a practical benefit for customers with a global benefit. The case of the Palisadio wooden construction system (http://www.palisadio.de), currently being piloted by social firm Neue Arbeit (http://www.neuearbeit.de) in Stuttgart, adds the third dimension of technical innovation. Like an outsize children’s toy, the system is based on a simple basic element, a hexagonal bar of solid softwood some 7 cm in diameter. These are fitted together with acacia-wood dowels to make up girders, columns, walls and floors of any size and shape. The system offers several benefits. Not only does it use local forest products and create local jobs for unemployed and disabled people, but also the resulting buildings are energy efficient and contain no nails, screws or glue – which has health benefits for allergy sufferers.

The pilot was chosen by an internal tender among BAG Integration’s members. BAG contributes help and support in the legal, marketing and personnel development areas. By the end of 2007 it expects to have created a manual, a marketing concept, a staff development concept, a database for financial control and a quality system. If all goes well, it hopes to see employment rise to 100 jobs. Thereafter, if the idea can be replicated between five and 10 times a year, it could create 300 jobs per year.

Scaling up to tackle the European market

INCUBE is keen to exploit new business ideas for the benefit of social firms on the European scale. Its SIPS (Sustainable business concepts for the social economy) transnational partnership (http://www.sips.lt) includes partners from Finland, Italy, Lithuania, Poland and the UK. Its co-operation strategy is finely honed, and is based on effective bilateral meetings complemented with multilateral conferences. A particularly intense bilateral transfer is taking place between Germany and Lithuania. “We are coaching them in how to analyse business plans and training services for social entrepreneurs,” says Mr Stadler. ”We are a case study for them.”

In September 2006 SIPS brought 60 representatives of its partners together in Berlin to brainstorm the future of a European social franchising and replication network. For the visitors, the research element of the event included visits to social firms of various types.

One group travelled as far as Hamburg to visit Germany’s first social firm hotel, the Stadthaushotel (http://www.stadthaushotel.de). Others spent an afternoon in the country at the Kuhhorst organic farm (http://www.kuhhorst.de), in the Havelland, some 35 kilometres northwest of Berlin. This farm, run by the Mosaik association, keeps cattle, pigs and geese as well as growing fruit and vegetables and manufacturing cheese, sausages and pasta. Its produce is sold in the farm shop as well as in organic shops in the region. It provides work for 70 disabled people – but all in all, as it likes to say, it comprises 3,926 hard-working and highly motivated legs. During the study tour, even the meals were taken in social firm restaurants, such as those operated by Mosaik-Services (http://www.mosaik-services.de) in the Martin-Gropius-Bau opposite the Berlin Senate and in the employment ministry building on Charlottenstraße. Mosaik-Services, the largest social firm in Berlin, employs some 180 people, 60% of whom are disabled. It also runs restaurants in such prestigious venues as the Pergamon Museum and the Sony-Center.

The capacity that exists among disabled people to start businesses was shown by a visit to the EnterAbility project in Berlin’s Kreuzberg district. As Manfred Radermacher explained, EnterAbility (http://www.enterability.de) is the only organisation in Germany that helps disabled people to set up their own businesses. Nevertheless it has been remarkably successful, and in its first 2½ years has seen 74 of its clients launched into economic independence, in businesses ranging from an advice service for Russian immigrants to a dog parlour – and even a gymnastics teacher. The service is free to the users, and with a staff of only 3½, overhead costs are very reasonable. The Integrationsamt makes a grant of €300 per month per client for up to six months, and the balance of the project’s costs are met by the charity Aktion Mensch – of which the German President, Horst Köhler, is patron. EnterAbility’s success brings into question the lack of interest many disability organisations show in the issue of entrepreneurship.

Why is EnterAbility the only initiative of its type? First, Mr Radermacher reckons that a population of two million or so is needed to provide the critical mass of customers that would justify such an initiative. But there is a more worrying reason: a failure of co-ordination between ministries. “It is the local Integrationsamt (Integration Office) that bears the cost of our operation, but the savings go to the Arbeitsamt (Work Office). It’s only because of the vision of one individual that we have this in Berlin.”

An Open Space for ideas

The main part of September’s transnational event took the form of an Open space technology conference stretching over three days, hosted in the Karl-Liebknecht-Haus near the Alexanderplatz, famous in history as the headquarters of the German Communist Party throughout most of the 20th century. The ‘Open Space’ technique is what it sounds like: participants volunteer to convene sessions on any topic they like, and these are allocated a time and a place. Everyone is free to attend whichever sessions they like – and, following the ‘law of two feet’ – to leave at any point if they feel they are not contributing or gaining anything. Notes of each session are posted on the wall, so that fresh follow-up proposals can be formulated. It may sound like a skiver’s dream, but despite the temptations participants held 18 separate workshops during the two-day event, and drafted action plans to create a European network and to investigate a number of specific business ideas. The workshops covered:

  • Structural issues: what is a European social franchising and replication network? What are its objectives? What minimum organisational structures do we need? Who should own the franchises?
  • Business ideas: hotels, wood products, care, schools catering, recycling villages, green exercise, renewable energy, facilities management;
  • Other: support structures, transfer from Germany to Lithuania, counsellors, web forum, money, social enterprise legislation.

Several results have already been achieved since the conference took place. ‘Wiki’ technology has been used to establish an online collaborative tool that can be edited by any user.6 The decision has been taken to formally establish ENSFAR, the European Network for Social Franchising and Replication. And work continues in all the partner countries to develop robust business models that create worthwhile jobs for disabled and disadvantaged people.

Project details

DP name: INCUBE
DP ID: DE-XB4-76051-20-20/279
Partners: Bundesarbeitsgemeinschaft Integrationsfirmen eV, Fachberatung für Arbeits- und Firmenprojekte gGmbH, Genossenschaft der Werkstätten für behinderte Menschen eG, Jugend hilft Jugend eV, Sozialunternehmen Neue Arbeit gGmbH

Transnational partnership: TCA 3609 Sustainable business concepts for the social economy (SIPS)

Partners: FI-74 Sustainable Employment in Social Firms (SESF), IT-IT-G2-LIG-009 Welfare, Inclusione, Partecipazione (WIP), LT-13 Neigaliuju verslo pletros bendrija, PL-59 Mazurski Feniks, UKgb-103 Real Employment and Livelihood in Social Enterprise (REALISE), UKgb-123 Inspire
Contact: Peter Stadler
Address: FAF gGmbH, Hedemannstraße 14, 10969 Berlin, Germany
Telephone: +49 30 251 1066
Fax: +49 30 251 9382
E-mail: peter.stadler@faf-gmbh.de
Website: http://www.sips.lt