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Learning How to Scale Social Impact

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In my blog on Experiments in Scaling Social Impact, I outlined our strategy for helping more social entrepreneurs help more people. Soon, our 2013 GSBI Accelerator cohort will arrive on the Santa Clara campus for the in-residence component of our experimental 10-month program focused on closing gaps that impede impact investments necessary to scale.

Earlier this week, each mentor team provided content leads an updated gap analysis on each social enterprise, facilitated by Center staff. The preceding sentence highlights the resource-intensive nature of capacity development for more advanced social enterprises: mentors, content leads, staff, and, of course, the social entrepreneurs. In contrast, our GSBI Online program, tailored to earlier-stage social enterprises, leverages proven content delivered in on-line modules; a "flipped classroom" model enables social entrepreneurs to explore core concepts with their mentor teams and iterate application of those concepts to their business models.

Although it is too early to predict the outcome of our experiments, emerging data suggests that optimal capacity development paradigms for different stages of social enterprise evolution will involve multiple parameters: content; delivery methods; phenotype of teachers, mentors, and coaches; and engagement of ecosystem stakeholders. ANDE's 2012 Impact Report summarizes the areas of focus for 70 members providing capacity development services and the delivery methods for 66 members, noting that the "majority [of accelerators] focus on seed or start-up stage." As more social enterprises achieve meaningful scale, or implement models for parallel scaling such as open-source franchising, the dimensions of evaluation will necessarily increase.

Monitor Group's excellent April 2012 From Blueprint to Scale report articulates a four-stage model for pioneers in Base of Pyramid markets: Blueprint, Validate, Prepare, Scale. The blueprint or ideation stage requires development of a business plan, prototypes, and a value proposition; the latter relies on an understanding of customer needs. Given human and financial capital constraints, the validation stage relies on lean experimentation to refine the offer and test core assumptions. As ventures prepare to scale, it is essential to understand supply chains economics, develop an organization that can execute, and implement a marketing strategy that creates demand.

Social entrepreneurs at the ideation/blueprint or validation/lean experimentation stages seem to benefit from structured modules that help them apply business model basics to their ideas, test their theories of change, better understand market opportunities, and discern both the financial and social impact value chains. As the enterprises prepare for scaling, mentors or instructors fluent in these concepts help each enterprise apply them to "conduct a rigorous analysis of its business model, the market, and the external environment" and "present convincing applications for funding" (see Omidyar Network's April, 2013 Accelerating Entrepreneurship in Africa report). Impact investors are thus better able to conduct due diligence with specific, structured outputs. In theory if not in practice, capacity development services for earlier-stage social enterprises can be delivered fairly efficiently, with the caveat that a keen understanding of local context is essential; as they move towards scaling, the capacity development services should be more tailored.

The fourth Blueprint to Scale stage entails sustainability reaching large numbers of customers. We define social enterprises as ready to scale when they have demonstrated that their unit economics work through the value chain and that they can achieve defined, desired outcomes. These social enterprises seem to engage best with executive mentors who help them discern and address higher-order issues: governance, corporate structure, human capital and talent management, and scaling strategies. The specific needs differ from enterprise to enterprise much more than for earlier-stage ventures. Meaningful engagement must occur over a long enough period of time to build mutual trust, for mentors to understand the enterprise and illuminate gaps, and for the process to reveal ways to solve these gaps, or at least explain to impact investors how they will be solved. By nature, these forms of engagement are more tailored and personal, and therefore more resource-intensive. While structured content modules can augment progress, executive coaching capacity appears essential.

As discussed in the Omidyar report, access to business advisory services that are professional, affordable, and appropriate may be challenging in frontier economies. With adequate support, capacity development programs for more advanced-stage social enterprises might emulate the Endeavor model, proven successful for high-impact enterprises. For instance, well-placed advisory panels and global connections to effect ecosystem-level change could accelerate large-scale impact for the most promising social enterprises.

Leaders from social enterprise incubators and accelerators will explore these ideas and their own experiences in evolution at a SOCAP Open session on Innovations in Capacity Development, as well as discuss how they need to adapt to better serve the next generation of social entrepreneurs.