NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Editor’s note: This post is part of a series that introduces iuMAP, a web-based social enterprise directory developed byAyllu and launched in media partnership with NextBillion. The purpose of the series is gathering feedback from the NextBillion community as the map unfolds, and share some of the information available on the map. You can help triple iuMAP’s size by submitting social enterprises and giving feedback. Read the first entry of the series here.

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As the field of social enterprise grows, and market-based approaches to poverty are tried in more geographies, there is a big question about how to scale the impact of these brilliant ideas to millions more people. Ayllu believes that information is a missing link, necessary for effective market-based solutions to reach millions of potential customers around the globe. This post explores scaling and asks for feedback from the NextBillion community on how to best tackle this challenge.

The majority of market solutions tracked on iuMAP are less than 10 years old and currently meet only a fraction of the existing demand. In the markets where they currently operate, these enterprises are proving that challenges of poverty can be addressed using a business approach, but “scale” is cited as a key challenge by 68% of the enterprises surveyed by Ayllu.

We believe there is actually a bottleneck at the point where a startup is ready to expand and scale their impact, and we compare this bottleneck to missing pieces in a puzzle. Good information can help different players find the pieces they are missing, as explained in the next section.

Why is Scaling so hard?

Social enterprises are spread out across the globe, often isolated from each other and operating in underserved markets where good information and support are hard to find. Peter Eliassen, VP of Sales and Operations at VisionSpring explains: “Too often we have our heads down to the ground trying to determine our optimal operational strategy, and that creates a silo environment. Maybe someone else has already discovered a way to execute a similar strategy and we don’t know about it.”

Peter’s point shows that social enterprises around the world, as well as their supporters (funders, enabling institutions, partners, etc.) are figuring out what works, but often times they are not well-connected, and Ayllu has found that often learning is not widely shared (or even documented). We’ve interviewed dozens of social enterprises in 22 countries that have diverse business models and provide various social products and services. In spite of their differences, we found that most of them share challenges, which can be boiled down to about 10 main categories. These include distribution, access to capital, management, supply chain, and marketing.In other words, each enterprise has a unique recipe, but most ingredients (challenges) are shared throughout.

So what can be done?

Ayllu’s approach is to map the key “ingredients” of social enterprise so we can identify connections across industries and countries. For instance, a social enterprise in Kenya selling water filters may face distribution challenges similar to those of a lighting venture in Indonesia. The Kenyan enterprise may be struggling to manage its personnel and the Indonesian enterprise may have found a solution to a similar challenge in the past. Voila! With the right information, we can match the two enterprises and replicate this process with many others around the globe.

Better information drives better decision making, and a tool like iuMAP can help social enterprises improve their operations and scale their impact. Every day we make iuMAP a richer database, and we’re experimenting with ways to gather and organize valuable information about the social enterprise industry; it’s a process, however, and at the same time we are thinking about ways to make the matching process as cost effective as possible.

Our vision is a “complete puzzle” for social enterprise, and a system that allows us to find missing pieces in an efficient fashion. Vetted and reliable information will give us a better picture of sector and allow us to establish the frameworks and transparency necessary for our young market to become a mature industry.

We would appreciate feedback from the NextBillion community: Do you agree with this notion? If so, do you know of similar experiences that are relevant and whose lessons can help us improve faster? In other words, how can we use iuMAP and move towards being the best connectors in this space?

In subsequent posts we’ll explore the concept of microfranchising and its promise for scale in more detail. In the meantime, here’s an excerpt from a recent McKinsey article relevant to this piece: “In time, the social-enterprise community may find that measuring scale and impact at the network level (rather than at the level of the individual enterprise) is a more accurate measure of the true scale of social change and a better way for investors to gauge the return on their social investment.”