Scale Makes Me Scream

In both for profit and social enterprise, people talk about creating a business that scales. And it is said as if there were no other way worth doing it. It is said as if you don’t have a successful business if it doesn’t expand in size. And you don’t have a successful social business if your impact isn’t scaling.

It makes me want to scream. Or inside I am already screaming.

There are organizations that are best at scale. And laudable well scaled social enterprises exist too. I am not denying that. I am saying the glorification of any of those without pointing to small business or local enterprises diminishes the power and results of an organization that is not scaling ever upward in our collective awareness. Where are the HBR or SSIR articles on local social business and impact?

When uniqueness is part of the experience you pay for…

Think about your favorite local family owned restaurant. Should it scale? Doesn’t a little part of you die if you hear they are scaling? As if the personality of the place has been turned into a factory like process with measured perfection and efficiencies that stop being unique and by hand. What about your local farmer? The local farmer’s market? Should those scale?

Big scale, no fail, organizational obesity in a fragile market…

Aren’t businesses that have scaled part of the problem in our current economy? Much like people have a dunbar number – the number of people you can know (and know who they know) which tends to be about 150, organiz

ations have a scale limit. When they exceed that limit, the costs of the necessary organizational bureaucracy to operate outstrip the efficiencies of being bigger. Think of an organization as a organism. You need food (income) to survive. And what is surviving without a purpose? Social organisms make sense. And we as a society want to see them fed, at least. But lots of organizations grow and grow until they bloat and become obese. And unhealthy. Additionally, at such massive scale, society becomes invested in the ongoing success of the obese organization, ruining the market mechanisms capitalism professes to use to make an organization healthy in the market. Too much concentrated power. Why are we glorifying movement in that direction without adequate critique and qualification? From the articles I read, it seems we do so without any question. And that makes me scream,”Wait, stop, think about this!”

Layers of impact, axis of scale…

Is it more important for the social business to scale or for there to be impact that goes to scale? Which is more important to you: 1 business (with 5 staff and a group of investors) that gives 1 million people access to water or 1 business model is replicated a thousand times locally, producing a living income for 1000 local entrepreneurs? If they both produce the same impact: 1 million people with access to water, but the first benefits a handful of people in a single organization and lines the pockets of investors OR the second gives living income to 1000 local people. In our current market and media, the first model is celebrated.

When social entrepreneurship looks at scale, we want it to mean scale of impact. What it really means is that investors think that enough transactions at a low margin of profit to the bottom of the pyramid, a profit can still be made. Or they mean, enough wealthy people in search of meaning will pay premiums for the latest moral crisis to be off their conscious. I am not saying that either of these are bad in and of themselves. I think it is good that we explore how to give people at the bottom of the pyramid a greater experience of agency – if that means buying products and services or creating their own small businesses. (You don’t see Kiva donors asking to see if their entrepreneur is taking a business to scale.) And I think it is good that socially conscious people can make more informed decisions and advocate those decisions through social cause purchases. What those two paths miss are the other axis by which social change can happen. What if 10,000 of us all start a MakerSpace in our town? None of our businesses will probably scale (some may merge over time). But if Make Media puts out a blueprint, and thousands of us run with it, enabling lots of innovation and tinkering in our towns, is that a social entrepreneurial effort worth celebration? Should you look at the impact of a single town or could you say the overall movement has touched how many lives, led to how many inventions or customizations, or created how many small businesses…. Sometimes scale comes through tight models that can be replicated. Barcamps. Jellys.

What about the revolving loan or cascading good efforts? Let’s say I start a project where 10 of my friends get together and help 10 people improve their lives, and each person donates $10 to that effort. Each “receiver” is then required to give 10 hours to helping someone else’s life. $2 are used as an administration fee for tracking the cascade forward. The receiver then gives forward their ten hours and $10 to 10 more people and on down the line. Does that count as a social entrepreneurship? Even if the main organization never has to grow beyond 1 or 2 staff? What if loans are passed forward instead of back – so as you prepare to pay your loan, instead of giving the money back to the bank, you have to find someone to give it to who will follow the same condition and mentor them so they can pay it forward to. That might have a lot of social impact over time, but it won’t look sexy at SOCAP. Not glorious or big enough for investor interest, which is what drives media interest and behavior at SOCAP.

Speaking of time…

What “they” also mean when “they” unquestionably glorify scale is that the timeline for scale needs to be rather short term – say 3-7 years. We are talking about cashing out investor money here, and they need to know they can get it. And yet, deep transformative social change happens over decades. So we end up with lots of hot, sexy, quick fixes that scale fast instead of deep and thorough long term social transformation efforts. And with all the glamorization of for profit investment into the social change space, the growing trend for philanthropic dollars to be tied to business like outcomes increases. Why fund long term social transformation when you can get quick neat little measures of incremental improvements as a social impact investor? Slow Money is a small counter effort to this, of course.

Please

Can we please be sure to qualify statements about scale – as a subset of all ideal business development options. Please.  Can we stop glamorizing investment capital and start to celebrate slow evolution, iterative crowd-funded efforts that make a difference locally or have long term deep and transformative impact?