Much Ado About Scale
A few months ago I was involved in a long discussion about hybrid organizations on Social Edge. From that conversation, I ended up writing a post called “Dear Social Entrepreneurship Thought Leaders” about my views on the metrics and definitions we are using for social enterprises.
Recently, I was lucky enough to be asked to synthesize these thoughts for the latest addition of Beyond Profit magazine where this piece is now featured: Much Ado about Scale.
If you have not been to Beyond Profit’s website before, please do! They have a blog featuring interesting social ventures and ideas from around the world and from their site you can subscribe to their social enterprise magazine. I am a big fan of what they are doing and am delighted for the chance to write for them!
The text from the article is below but click on the link to see it laid out: Much Ado about Scale
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The social venture movement grew out of a rebellion against big business and international non-governmental organizations (NGOs). We shook our sticks at self-indulgent big businesses and turned up our noses at the waste and inefficiencies in the traditional non-profit world believing we had a better way to do things. We claim to be the outliers, looking to make an impact on the people and problems the traditional sectors have left in their wake, but have we really chosen a different path?
Like a middle child, stuck between businesses and NGOs, the social venture movement clamors for attention. We are quick to point out flaws but, like our sibling sectors, social entrepreneurship has drawbacks, too. Although we try to distance ourselves from our siblings, we continue to hold profit and scale as our markers of success. Groups supporting our sector, like The Skoll Foundation or the new Unreasonable Institute, choose projects that “expand to a new country within three years” or “reach over 1 million people.” Have we forgotten the value in knowing the place of origin and its people? Often, that is precisely what makes a program successful. By limiting the conversation—as Skoll and Unreasonable and many others do—to for-profit, scaleable, sustainable enterprises, we are ignoring the good work of many entrepreneurs and organizations.
Some things can be scaled easily, the processes can be repeated, and the results in one place might be similar to another. Take, for example, Colgate. The company reaches millions of people with their products, encourages good dental hygiene, and makes a nice profit while doing so. Is this what we aspire to be? No, most of us are not seeking a fortune at the bottom of the pyramid; we’re trying to create lasting change.
We need to speak differently about the realities of improving lives, whether it is through for-profit or non-profit means. But we limit the conversation when we only value one or the other. Changing lives involves working closely with communities and the men, women and children within them. Lest we forget, people don’t change their habits overnight, nor can we move them out of poverty overnight. By demanding that all “social enterprises” in need of investment be card-carrying members of the “scale up” train, we are going to miss out on groups that have quality, lasting, bottom-up impact.
The fact is, scale can often dilute impact. Practitioners are often forced to choose between improving the quality of a product/service, or offering a more affordable product or service. For example, take microcredit. It can be profitable by itself. But, a microfinance institution that sinks time and money into education, vetting, and training, resulting in an improved product, does so at the expense of profit and scale. Or, take the case of water. Which would you support? A water filtration company with the most sophisticated techniques, which ensures clean water? Or a less effective product which is profitable and can scale?
We should take lessons from those large-scale international NGOs implementing projects which have lost touch with the people and communities they are claiming to support by “scaling up.” We can also learn from some of their solutions: partnering with small community-based projects which have the understanding and flexibility to tailor offerings to local needs. When working with people, it’s not always the solution which can be scaled but rather the process which led to success. Rather than providing incentives for initiatives to scale, perhaps we should start looking for successful localized initiatives and incentivize them to train “competitors” in other areas to spread their impact while keeping localized solutions.
We need to find ways to reward those who choose impact over income and success over scale, as they will be faced with those dichotomies with more frequency. As a sector, we should create new and previously unimagined possibilities. In order to do that, we need to support people who are not satisfied with providing just enough, but instead are focused on the quality of what they are doing.
Investing in groups that have a commitment to quality and impact is harder to track and measure than focusing on scale and profit margins. That requires a thorough understanding of the project and issues they are facing, but that is the point! We need to do the research to know if the impact and their commitment to quality is there, not just the easy task of looking at profits and size. Let’s take “Supporters of Scale and Profit” off our doors and get to the core of what we want to be: “For quality and impact.”