Scaling Growth is a Dynamic Process

This week’s readings covered the efficiency and social impact challenges that social ventures face as they evaluate and implement growth strategies. In addition to considering their short-term and long-term capacity for scaling, a venture’s growth strategy can also be influenced and sometimes strained by the metrics and relationships defined by partners and trends among competitors in the market.

The ubiquitous and traditional idea that rapid business growth equates to success[1] is outdated and not applicable to most social ventures. Oftentimes the success of a social venture must consider the long-term implications of their growth on their mission.  

Depending on the kind of impact that is sought, slow and conscientious development is best. I witnessed these challenges and the like at my most previous position in a human services non-profit that served homeless families in Norfolk, VA. Our goals for growth were often countered by new funding restrictions and guidelines put into place by our donors and even the federal government. For example, the federal government slowly decreased their funding of homeless shelters nationwide and this impacted our growth model.

While we understood how the new funding restrictions were modeled after an approach geared to serve more families, our agency saw how this pressure to serve more families would lead to a decrease in service quality. In the short term, we saw how this approach lead to less stability for the families we served. To counter this pressure to change our program model, we evolved our fundraising team and strategy to fill the gap of less funding. This was a case where our staffing and fundraising partnerships became a growth priority.

In the case of larger benefit corporations, like Patagonia[2], assessment platforms like B Impact Assessment proved to be a useful and effective way for the company to measure their performance and their impact comparatively in the market.

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[1] https://hbr.org/2013/01/its-not-all-about-growth-for-s

[2] http://bimpactassessment.net/case-studies/elissa-loughman

Motivations to Grow Your Social Venture

The week’s readings focused on the mechanisms and metrics involved in the growth and development of a social venture. One of the articles elucidated the organizational capabilities that can be developed in order to scale a social enterprise [1] whereas another article emphasized the need to scale the impact of a social enterprise [2]. Then there was an article which outlined the tricks of the trade towards achieving financial sustainability [3]. These readings made me reflect on the drivers for growth and development of a social venture. What is the primary motivation to scale-up a social enterprise?

I perceive the primary motivation to be two-fold; escalating social impact while achieving financial sustainability.

Escalating social impact is an obvious but often ignored motivation to scale a social venture. It is important for a venture to define metrics to measure the social impact/ROI and embed these metrics into the scaling strategy. While I was a volunteer at Teach For India (TFI), I distinctly remember the brochures flaunting the number of volunteers, fellows and partner NGOs then associated with Teach For India. But they are merely metrics of the scale of the social venture as an organization. The focus should instead be on the number of students taught and the number of schools supported. These metrics define the scale of impact and hence such metrics must be used to define the scale-up strategy.

Another important motivating factor to scale a social venture is financial sustainability over an extended interval of time. The economies of scale can be leveraged to ensure a constant stream of revenue to break-even the operating the costs and in some cases, lead to marginal profits.  However, achieving financial sustainability at scale is a function of the actors involved and the technologies applied to the socioeconomic issue being addressed by the venture [3]. TFI is a good example of shifting the role of the government as an actor in the system by associating TFI fellows as full-time tutors with government schools. Now, more children belonging to low-income groups get access to good quality education while TFI fellows receive a stipend from the government schools [4]. Thus, the model tries to achieve financial sustainability at a higher scale of impact.

In conclusion, the growth and development of a social enterprise should be facilitated by the need to scale impact and achieve financial sustainability. However, social entrepreneurs should be mindful of the chicken and egg problem; should I scale-up to achieve financial sustainability or should I first become financially sustainable and then scale-up through replication?

References:

[1] How To Take A Social Venture To Scale (Harvard Business Review Blog Network, June 18, 2012)

[2] It’s Not All About Growth For Social Enterprises (Harvard Business Review Blog Network, January 21, 2013)

[3] Two Keys to Sustainable Social Enterprise (Martin and Osberg, Harvard Business Review, May 2015)

[4] Teachforindia.org. (2017). Our Model | TeachforIndia. [online] Available at: http://www.teachforindia.org/our-model

 

“For-Profit” Cleanup of India: The Threshold of Social Campaigns and Profit

“For-Profit” Cleanup of India: The Threshold of Social Campaigns and Profit

This week’s theme of venture development and growth provoked me to think about a ‘for-profit’ cleanup of India. This piece is not an attempt to explicitly prototype a project. Instead, I aim to bring insight to the issue of trash disposal in India and make suggestions relevant to the theme of having successful social impacts and formulating growth in social ventures.

I spent my last summer, vacationing in India, unable to refrain from carrying public policy in my mind for the duration of my trip. During the course of my travels, I encountered an artistic project or innovation of some sort, vouching to clean up India. A combination of bright paintings and slogans portraying good moral standards were painted on large walls across the country. This, however, did not disrupt the unsanitary behavior of the country. The status quo of India in plain language: people are living in a garbage dump.

In my journey, I traveled to northern and southern parts of India for over two months and witnessed first-hand, rural parts of India and over-populated cities being central to this issue. As seen in the Washington Post article, India begins ambitious campaign to clean up dirty cities and villages; Prime Minister Modi attempts to tackle precisely these communities. The affluent middle class recognizes this issue and this is seen in the behavior and regional settings of individuals from the upper middle class (and of course the elite). 

Prior to reading this week’s articles, I assumed that the main concern of social organizations is to have an impact, not money. The articles, How Misinformed Ideas about Profit are Holding Back the World’s Poor and Profits at the Bottom of the Pyramid explain otherwise. Important aspects to success are changing consumer behavior and the way products are delivered. The current cleanup campaign ought to consider their product (art) and outcome (the behavior of citizens). The flowery art pieces across the country attempt to promote better sanitation standards yet the population has not budged.

Villagers, residents, and owners of rental properties should be held responsible for the cleanliness of the area in which they reside in or hold ownership to the property of. If this requirement is not met, they should be fined a penalty issued by the government. Having an on-spot fine for littering and overall a no tolerance approach to inappropriate garbage disposal will pertain to a disruption of behavior.

Opponents may argue that the government is profiting at the expense of poor villagers and struggling lower-middle class citizens. The larger impact of cleaning the country, however, spreads results in less pollution, better public health, efficiency, and an economically attractive market in the long term. Should we rely on citizen’s reaction to art in changing behavior against garbage disposal or should the government take a rather profitable measure? 

The Power of The People

My submission speaks to the power that consumers have had throughout American History in altering society and redefining social equilibriums. This relates to this week’s theme because it provides historical evidence of economic actors transforming a system to bring about sustainability.

This week’s readings on venture development and growth touch on effective strategies that social entrepreneurs use to achieve financial sustainability. As outlined in Two Keys to Sustainable Social Enterprise, the key insight that struck a chord with me was the idea that changing the economic actors involved in an existing system can create sustainable financial models that permanently shift the social and economic equilibrium for their targeted beneficiaries. The article also notes that social and economic problems often reflect an imbalance of power among the economic actors involved. Additionally, the article mentions that adding new actors can transform a system. Taken a step further, the removal of actors can have this same effect.

While reading this article, I immediately thought of the critical role that economic boycotts have had throughout America’s history. From the Boston Tea Party, to the Montgomery Bus boycotts during the Civil Rights Movement. The former played a key role in the American Revolution. While the latter contributed to the end of segregated busing in the United States. Each of these events highlight consumers shifting the power balance of the systems in which they exist. Ultimately, they each led to a redistribution of the social equilibrium within their respective systems.

As detailed in It’s Not All About Growth for Social Enterprises, understanding how a venture is growing requires an understanding of how that venture is working. The evidence of how the social movements that I described above worked is now apparent. The United States exists as a sovereign nation and legalized segregation is abolished in our country. Thus, as the article states, social impact is more important than the growth of any particular organization.

Consumers are the key to growth within any social enterprise. However, the success of each of these boycotts only became apparent years after each event occurred. The results of changing actors within an economic system are slow to reveal themselves. In an ever-changing society, where momentum is arguably as important as revenue, can a social venture that wants to maximize its impact afford to wait for this potential payoff?