Ever since the Mahindra Rise meetup last Saturday, Iâ€™ve been thinking a lot about the question of scale, especially because of what Impact Circle project manager, Mr. Digbijoy Shukla, had to say during the panel. It turns out that a large number of social innovation projects remain unfunded due to the lack of a business plan that indicates scalability.
However, as an another participant pointed out, scalability tends to be only thought of a quantitative, rather than a qualitative, consideration. The minute a venture is successful in one village or community, the question is asked about whether it can remodeled in another community, another state, another country. Why arenâ€™t we satisfied with a limited impact, if it is in fact meaningful? And, as this participant asked, shouldnâ€™t we look at scalability in terms of the potential and depth of impact that that innovation could have within that same community? Maybe this isnâ€™t something that venture capitalists need to do, since they serve a different sort of function, but it seems to me that this merits further consideration.
As Professor Madhukar Shukla said in his keynote address, scalability is a very corporate concept – not a social one. It is corporations – especially the large globally successful ones that develop one-size-fits-all models that can be replicated everywhere, and often end up displacing local businesses and communities. This may work for WalMart or McDonalds, but is that really the model to pursue for social change? Iâ€™d say no, that what we need is for social development initiatives to be responsive to the particular context, and to support that particular community. If a small initiative can make a considerable impact, even in a village of 500, it should be supported. Many of these initiatives require very little financial support for a fairly large and meaningful impact. In fact, many could possibly even be taken to other areas and â€˜scaledâ€™ as well, with small tweaks and alterations, but that is often not the goal of the local entrepreneur looking only to solve the problems of her community.
This, to me, is where the business model for social innovation tends to fail, and where governmental funding or other philanthropic support is needed. While venture capitalists and the business-profit models they support can certainly contribute to entrepreneurial attempts in rural India, not all social change can be made into profitable ventures. This is why state supported entrepreneurship is equally essential, which needs to support the kinds of initiatives that may or may not see much profit and may not be scalable, but yet do make a difference.
The hybrid model for social entrepreneurship, therefore, makes a lot more sense. It anticipates that not all social innovations can be successful businesses, and that philanthropy and state policy and funding continue to have a big role to play. That said, however, perhaps we can also start looking at new and innovative models of venture capitalists and seed funding as well, which could support even smaller initiatives with low returns, something like the microfinance model, which in fact became an immensely business as well, due to the rate of turnover and loan repayment. More suggestions, thoughts and comments welcome.