Over the past several years, there’s been incredible growth in the number of enterprises that intentionally seek financial viability, social impact, and influence. These impact enterprises can improve the wellbeing of poor or vulnerable populations in unique ways.
But too many of them struggle to invest in their own growth, to continually reduce costs and complexity, and to frame opportunities for investors to support their growth.
So how do we break through this scale barrier? Here are three interesting models:
1. Some impact enterprises tackle the scale barrier by connecting social entrepreneurs with others who have already solved the challenge of achieving scale.
Here’s an example: Teju Ravilochan is one of the founders of Unreasonable Institute, an organization that matches social entrepreneurs with accomplished mentors from the private and social sectors.
After traveling to India as a boy, and seeing real poverty for the first time, Teju asked his father—a doctor—a simple question: “Is there a medical school for people who want to solve poverty?”
And that’s exactly what Unreasonable Institute has become—a kind of med school for entrepreneurs seeking to tackle the world’s greatest challenges. Teju has found a way to provide entrepreneurs with a different kind of growth capital—human capital and the networks necessary to scaling up any enterprise.
2. Others are looking to achieve scale by creating communities of social entrepreneurs tackling similar problems.
Take Ross Baird, for example. When Ross worked with education-focused impact enterprises in Hyderabad, India, he observed a paradox: there was an incredible number of talented enterprises—with no functioning system to support them. So in 2009, Ross started Village Capital, which recruits entrepreneurs devoted to solving problems, and operates a rigorous management training program to help them find business models. At the end of each program, entrepreneurs receive investment capital through a unique peer selection model.
While Village Capital’s original partner programs focused on a geography, Village Capital has evolved to take a problem-based approach—recruiting entrepreneurs solving similar problems, building a community of practice to make real progress.
3. A third model is to think about scale in terms of entire industries—not just individual enterprises.
One example of this ecosystem approach is a Rockefeller Foundation initiative called Smart Power for Rural Development. Here’s the problem: over 400 million people in India lack the electric energy they need to perform basic tasks. At the same time, ongoing growth in the mobile industry has led to the building of thousands of new cell towers in these electricity-poor villages. Right now, without access to the electric grid, these towers consume expensive, dirty diesel fuel—about two billion liters every year. They are searching for cleaner and cheaper energy solutions.
So we’re exploring ways to develop a business model that would attract private energy service companies to build off-grid renewable energy power plants in these areas, leveraging the steady source of revenue that the cell towers would provide—and enabling communities to become customers as well. With this infrastructure for electricity in place, we can create a positive feedback loop that would encourage the development of businesses that create jobs and secure livelihoods in rural areas.
The Rockefeller Foundation and others concerned about this new model recently supported a fascinating new report by Monitor Deloitte called “Beyond the Pioneer: Getting Inclusive Industries to Scale” that addresses how to make it work.
These three novel approaches represent an encouraging step forward in the battle to build scale—and we’re excited to continue to support them.
But I’ve got a nagging question: do we still have a big lesson to learn from the private sector?
Here’s what I mean: a social entrepreneur’s starting point is typically to say: “I see a problem, and I have an idea for how to solve it,” then imagine an organization that could implement that solution—first at a small scale; then, if it works, at an incrementally larger scale.
On the other hand—in Silicon Alley, for example—entrepreneursstart with the desire to reap large scale returns. They’ll start by saying something like, “I have a rough idea about a new use for text messaging and I want to create a billion dollar company. ”
For them, reaching scale is an inherent part of the idea. That ambitious scope is what attracts the investments that give entrepreneurs the ability to finance their growth in addition to their operations.
I’m wondering how we can encourage that kind of bold thinking about realizing scale—from the very beginning—in the social sector. I can imagine the entrepreneur who, instead of starting with a theory about improving a school or developing a new water pump, says, simply, “I want to improve 100 million lives,” and then figures out the best way to get it done.
Something tells me that if we can achieve that shift in thinking, the same dedication that has spurred countless advancements in social entrepreneurship and innovative financing will help us do even more for the people we’ve set out to serve.