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Whether it’s at the country, corporate or individual level, this blog considers how to gauge and measure impact.

Friday, February 08, 2013

Pushing Back on ‘Scalable’: Reconsidering the buzz word for a successful social enterprise

By Daniel Ferratoni

Flickr credit: Paolo Marga

This post originally appeared on NextBillion Brasil in Portuguese. 

 

I had the chance to take part in the Khemka Forum on Social Entrepreneurship, a trade fair highly regarded in India about social businesses. The forum took place Dec. 7-8 at the Indian School of Business in Hyderabad with some 200 participants, including people who work in social businesses, investors, entrepreneurs, and other stakeholders.

During the forum, the most resounding word was “scalable.” Of course, it refers to the easiness with which a business or start-up can scale. But many writers imbue this buzzword in the minds of investors as material to success, after the main goal, which is, of course, profit. In the view of entrepreneurs, the main goals are different, namely self-sustainability of the business and social impact itself.

Each in its role, however, there were a few issues that made me ponder. First, there's the matter of social business: Are they or should they be scalable? Do all business need to grow, expand and multiply? Or are those paradigms that multinational corporations (without a social mission) seeking to maximize profit by increasing scale and reducing costs poessess?

If a social business improves people's lives by helping them overcome the poverty line by fulfilling their needs, I can't believe scalability is the key for its success. I believe its purpose should be and is to become self-sufficient, with fair wages for employees within the law. How can this not be considered a success?

If scale is instead contemplated as a byproduct of a company’s ability to manage operations without hurting other aspects of the business, then, great. If not, it does not mean it would be a failure. I think, rather, that the word “scalable” is a lot more related with a quantitative vision in which more is better, according to this definition: “Scalability is conceived by gauging it to magnitudes.” But, is that the real quality of the marketed product or service?

I understand that if the objective of expanding a business is to serve more people, this can be accomplished in several ways – tangible and intangible. This includes anything from being an inspiration to being an “open source” in which companies do not patent their discoveries and even teach others how to copy them.

Besides, we cannot forget that the target group of these businesses are people at the BoP, that is, people with unstable economic conditions who are highly vulnerable to even the slightest change.

And that makes me wonder, do we want to create large social business in the hands of the few, or do we want to make sure a social business is something anyone can create? Do we really want social businesses to be complex and difficult to replicate, or rather something simple and straight-foreward, so that anyone can be an entrepreneur?

There's room for everyone in a new model with several definitions and few hardened conclusions. I believe that the essence of the intent to help thy neighbor is to eliminate a modest dividend or completely reinvesting profit. That is why utter care must always be taken to avoid using the base of the pyramid as a means to solely gain more profit. Rather, it should be a way to improve people's lives.

Daniel Ferratoni is a business manager at Grassroots Journeys, which is dedicated to reducing rural poverty in India through tourism.   

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