SCALE

Much Ado about Scale

The buzz word in social enterprise is scale. Investors, incubators, competitors, and networks all want to know, Will it scale? Social entrepreneur Daniela Ruby Papi is tired of the endless search for scale and thinks that what we should look for is quality.
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 conversationas Skoll and Unreasonable and many others doto 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
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doing so. Is this what we aspire to be? No, most of us are not seeking a fortune at the bottom of the pyramid; were 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 dont 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, bottomup impact. The fact is, scale can often dilute impact. Practitioners are often forced to choose between improving the quality of a product or 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 learn from those large-scale international NGOs that, in implementing large projects, have lost touch with the people and communities they are claiming to support by scaling up. We

can also benefit from observing 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, its not always the solution which can be scaled but rather the process which led to success. Rather than providing incentives for initiatives to scale, 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. Lets take Supporters of Scale and Profit off our doors and get to the core of what we want to be: For quality and impact.

Daniela Papi is the Director of PEPY, an educational development organization based in Cambodia.

beyond profit april-june 2010

Photo Credit: Vincent Callebaut Architectures

In this issue, we asked, Whos your favorite author?

Matias Echanove and Rahul Srivastava WHO: Matias Echanove studied economics at the LSE in London and urban planning at Columbia University in New York. He is currently completing a Ph.D in participatory planning and information systems at the University of Tokyo and resides in Mumbai. Rahul Srivastava studied social and urban anthropology in Mumbai, Delhi, and Cambridge (UK), and later taught at Wilson College, Mumbai. He also writes fiction and splits his time between Mumbai and Goa. WHAT: They founded The Institute of Urbanology and co-founded Dharavi-based URBZ with Geeta Mehta. Their writings on urban development, the informal economy, unplanned settlements, participatory politics, and information technology can be found on www.airoots.org. They share their perspective on the development of Dharavi, Mumbais largest slum, on p28. AUTHOR: Were both big fans of Ivan Illich. Daniela Papi WHO: Daniela is Director of PEPY, an educational development organization based in Cambodia. WHAT: Having funded the construction of a school in Cambodia, Daniela and her friends realized that providing quality education would take more than building school and have worked to create an organization focused on leadership and capacity building. To provide a responsible tourism option and increase understanding about development lessons, Daniela founded PEPY Tours. Read Danielas article, Much Ado about Scale on p44. AUTHOR: William Easterlywhile some of his conclusions are extreme, the first 100 pages of White Mans Burden should be required reading for anyone working in the social sector Andrew Kassoy and Beth Richardson WHO: Andrew Kassoy is co-founder of B Lab along with partners Jay Coen Gilbert and Bart Houlahan. Beth Richardson oversees the development of GIIRS, NC Business Development, and auditing for B Lab. B Lab is a nonprofit organization whose mission is to create a new sector of the economy that harnesses the power of business to solve social and environmental problems. WHAT: Andrew Kassoy and Beth Richardson are helping launch a new entity within B Lab called GIIRS which rates the comparative social and environmental performance of private equity/venture capital investments. B Labs vision is that GIIRS Ratings will make it easier for new investors to enter into the impact investing marketplace freeing up additional capital to flow to companies and funds generating positive social and environmental impacts. Learn more about GIIRS on p25. AUTHORS: Beths favorite is Gabriel Garcia Marquez. Andrew loves Wallace Stegner.
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CONTRIBUTORS

Sarika Bansal WHO: Sarika is based in Mumbai and enjoys short stories, guerilla art, and hats. WHAT: Sarika is a freelancer focusing on international development, microfinance, and Indian society. She has previously worked in microfinance and in management consulting. See her analysis of Thrust Funds on p36. AUTHOR: Its a toss-up between Isabel Allende, VS Naipaul, and David Sedaris.