Paul Bloom: Scale like a triathlete
“Stimulating market forces” is the idea that by participating in some kinds of markets it can be helpful to your organization both on the revenue generation side so that it helps with your earnings generation but also it can stimulate or encourage behaviors that you want people to engage in that they might not engage in otherwise. So it’s not just for purposes of generating earnings for their organization. They seek to achieve social change in scale.
Those are seven capabilities that you want to be strong at rather than weak at, but it’s not necessary to be strong in all the areas for all organizations to scale. So if you’re starting a scaling attempt with limitations in a certain area, then there are corresponding capabilities that you have to build more effectively.
Q: What are some examples of how this would work in practice?
If you’re starting a scaling attempt and you’re not particularly strong in your human capital, then you have to develop your capability in the staffing or human resources area.
Or, if you’re already strong in human capital, then there’s a ceiling effect and it’s not as important perhaps as building up your earnings generation or your replicating or your stimulating market forces capability. You’re not going to have as big a return on investment on staff, because you’re hitting these ceiling effects if you’re already strong.
That can be an issue. There’s an awful lot of emphasis for these kinds of organizations to say, “Oh, we’ve got to get good people.” Well, you may already have some good people, and maybe you need to focus on some other things. Good people alone can’t accomplish scaling.
If you’re broke or if you’re always struggling for money, for example, then the whole thing is about finding earned income sources or getting some kind of government funding or some type of loans or financing from a financial institution or a foundation or a donor.
Q: What are the mistakes that social entrepreneurs make as they try to scale?
Everybody seems to be trying to do it, but the success stories of scaling are limited, so a lot of people are making mistakes.
I think one of the biggest mistakes is flying by the seat of your pants and not doing research and evaluation.
Q: What should social entrepreneurs evaluate and research before decided to scale? What questions should they ask themselves?
They need to think both about their resources and, to some degree, their capabilities in those seven SCALER areas, and then what their theory of change is. They need to see if they have an adequate pool of resources and are capable of building on those resources in the future. Can they be good at recruiting new people or developing a replication system using franchising or finding markets that they can enter?
Part of that is looking at your own resources, but then part of that is also looking at the forces and trends in the external environment and understanding the ecosystem.
What’s happening with the economy? What’s happening in terms of culture? What are some trends and forces out there that might affect your resources or your capability in the future, and how well do you match up with where the trends and forces are going?
If the economy is tanking, then obviously earnings generation will probably become a more important capability, because it’s probably going to affect your financial resources or your financial capital.
If young people are becoming even more involved with social media than they have been in the past, then it’s going to be hard to develop a replicating system or a communication system that doesn’t use social media.
You’ve got to pay attention to what’s happening outside, and you also need to pay attention to other organizations. This can overlap with social capital. But what other organizations are out there that you can form alliances with or that could present obstacles for you that are in a sense potential enemies or challengers? And are there some people or organizations out there who have been bystanders who you could potentially convert?
Q: What’s the difference between scaling for impact and scaling your organization?
One way of scaling is to develop branches or grow your organization or franchise or MicroConsignment [http://en.wikipedia.org/wiki/MicroConsignment] or whatever it might be. In many cases that’s the way you have to go. But in some cases you can scale effectively by building on or creating a social movement, or disseminating an idea very effectively.
Greg Dees, my colleague at Duke who is kind of the father of social entrepreneurship, always talks about hospice as something that was scaled in terms of impact. The promotion of hospice or palliative care is something that has not been done through one organization; it’s been done through dissemination of the pros and cons of it, the approach and the idea.
Another example is the Campaign for Tobacco-Free Kids. This was a small organization that had a staff of five or six people, but they really set the tobacco industry on its ear. They did so through filing lawsuits, lobbying very cleverly, and persuading other allies to join them in trying to seek changes in tobacco laws and tobacco availability. That’s scaling for impact more than scaling the organization.
Q: How much of successful scaling is dependent on the organization’s leader?
I think charisma helps a lot, both in terms of being able to attract others to work with you and in order to be able to attract funders and donors.