The Social Procurement Challenge Brief

Social Procurement Challenge

When creating and reality-testing your solutions to the Challenge question, you might like to be guided by some of the key themes (and open-ended questions) which were discussed at the Eidos ‘The Place’ Conversation on Social Procurement (you can listen to the full discussion on this page). You will also discover a list of issues you need to cover within your application contained within the process and selection criteria section.

The below is by no means an exhaustive list. Any or all of them might be the conceptual keystone which holds your solution together or the spark which ignites your problem-solving fire.

No problem-solver should feel constrained by the below. You are encouraged to draw upon your own experience and that of those in your networks and your knowledge of the subject of the Challenge when developing your solution and discussing the Challenge on the Eidos Challenges Sandbox.

If you think of any other key themes or concepts which ought to be shared with others, please upload your thoughts to Eidos Challenges Sandbox. We are keen for the solution to what is truly a matter of national and global importance to be a product of our shared intelligence and collaboration.

What's the value at stake?

Many of the criticisms levelled at what we are calling ‘good procurement’ (variously known currently as ‘social procurement’ or ‘social enterprise’) flow from a traditional and narrow understanding of ‘value’ in terms of both input and output.

Existing systems in public and private sector procurement and approaches to analysis have traditionally not coped well with modelling complex inputs and have been ineffective at working out exactly how to capture the value of the positive externalities associated with good procurement. In a practical sense, this has the potential to hamstring procurers by impacting the justifiability of using good procurement models (closing off the possibility of all the good that this model of procurement can do) and makes the social impact of these types of procurement difficult to quantify.

Is there a way to ‘price in’ the value of the social benefits associated with this model of operation? Maybe we need to fundamentally reassess how we conceive of value? Maybe there needs to be a blended model of social and economic analysis against which we model outcomes. Perhaps the pricing mechanisms associated with social bonds could provide inspiration.

Or is there a solution which draws upon the strengths of purposeful businesses and leverages them to create competitive advantages such that even in a world where the value-capture mechanisms are inadequate, good procurement will thrive?

Who owns the problem?

At the core of this Challenge are the stakeholders. No group has primacy and their interests must all be considered.

However, given the nature of good procurement (and purposeful businesses and organisations), pay special attention to those people and groups who are intended to be the direct and indirect beneficiaries of the social good that the business or organisation is seeking to promote, whether they be the employees, a local community, or a particularly disadvantaged group. Think about their agency, their empowerment, and their unique interests.

Do we need to change attitudes?

Some organisations which are considered leading drivers of social change have abandoned the term ‘social enterprise’ because of its negative connotations – connotations of business-backed welfare and tokenism which have the potential to disempower employees and communities. Businesses and organisations which provide services considered as good procurement (purposeful businesses) want to be assessed on their merits. They are top-notch enterprises of which their employees can be proud. There is meaning in that pride.

Do we need to drive attitudinal change? Is the problem in some senses a marketing and messaging one? We have already flagged the change to nomenclature which we suggest. Do you have an alternative and is it part of your solution? It could be that we need to expand the public understanding in this space or that we need to eviscerate the distinction so that we level the playing field.

Is this a simple marketing problem?

Is the problem simply a market problem for which you have a market-based solution? Is there even such a thing as a problem which is simply a market problem (or a simple market problem, or a problem caused by a simple market!)?

In some regions domestically, demand for services provided by purposeful businesses is far outstripping supply. Passionate and talented entrepreneurs whose businesses already operate in the world of good procurement (on the service-provider side) are crying out for support. They are finding opportunities which they simply do not have the resources (in terms of personnel, funding or infrastructure) to take advantage of. In this space unlike other types of enterprise, missing the opportunity does not simply mean that a financial windfall is being passed over but rather that there are needs and social issues which are not being met or ameliorated respectively when an entrepreneur was ready and willing but just not able (through no fault of theirs) to step into the fold.

Is the solution about pushing up supply? Do we need to create an environment which encourages more people to become entrepreneurs in this space? Better support networks? Do we need targeted subsidies or to promote the emergence of alternate funding models?

Perhaps the solution is about better matching supply and demand via the creation of marketplaces and platforms and the emergence of intermediaries. It might be the case that there is an element of market design married with a change in messaging and mindsets which would be the curative needed in this space. Do we need a (government or private sector-backed) good procurement ‘sandbox’?

Are the incentives right?

Does the fault lie with outdated procurement models and the ‘procurers’ or their masters themselves? Organisational incentives might be misaligned currently. Are there sufficient and appropriate incentives in the public sector to encourage those who are in positions to move this issue forward positively to do so?

In the private sector, are there issues with the tax treatment of good procurement service providers or outmoded funding models which, if overhauled, would allow them to scale and thrive? There are arguments to be made that the financial viability of these businesses and organisations are the most important element of their longevity and ability to scale and have impact.

Is the solution opening up channels for funding, irrespective of the legal status of the enterprise? Are Australian capital sources too risk adverse? How do we effectively de-risk social enterprises to provide access to mainstream funding opportunities? Do we need government policies such as tax incentives for funding investments? Is the growing impact investment market the answer, and if so how do we open up and access these opportunities?

It is also entirely possible that existing supply chains and procurement models are inflexible and are not yet developed enough to deal with the future of good procurement. Perhaps you want to take up the gauntlet and devise a new model of procurement (and perhaps a new model of service which plugs into it) and an ethical supply chain which looks to the future. With the focus on big data, gamification and automation, procurement at we know it may cease to exist in the future.

Are the regulations helping or hindering?

Do we need regulatory change first or is your solution a disruptor which will precede regulatory change? For big corporates, a ‘pro bono’ element has in some circumstances become a checkbox to be ticked. Do you think we need to create a new, more specific box to be developed by regulators and used as an overlay to drive change or is the regulatory environment immaterial?

How do we promote trust and minimize risk?

We live in a world where trust when doing business and risk allocation and minimisation are paramount. Have you come up with a solution to de-risk good procurement models? Existing social enterprise development organisations and intermediaries help to de-risk the model by providing a third party ‘stamp of approval’ and facilitating relationship building. Do you have a model of your own? Would you supplement or augment an existing model to promote trust and minimise risk?

Is scale important?

When you are thinking about the Challenge, think about scale as breadth and depth. It is important to recognise that in this space ‘scaling’ may mean building a deeper and richer service in one area or in response to a specific social issue rather than becoming ‘bigger’ in terms of size or the development of a broader reach given the function of these enterprises.

What does the solution look like?

The issues which good procurement (and purposeful businesses and organisations) are seeking to address are diverse and disparate (in terms of their subject matter and in their locality) and warrant collaborative and decentralised solutions (or at least a centralised solution which recognises their diversity and meets it). What is the optimum structure or medium for collaboration at scale?

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