April 2018, Erin Worsham, Executive Director
At CASE we are obsessed with a few things – supporting social ventures and impact investors to become more effective at achieving lasting social change, training the next generation of impact leaders through our MBA programs, and trying to answer what we believe is one of our field’s most critical questions: how do we help social entrepreneurs leap the chasm from idea to sustainable impact at scale?
We’ve been thinking about the challenge of scaling impact throughout our history. We’ve outlined the various pathways to scale, talked about how to harness your ecosystem, and shared lessons from some of the world’s leading social enterprises through Pivoting to Impact and several deep dive case studies as part of our Scaling Pathways series, just to name a few.
What is clear in all of this work is that the road to scale is not straight, predictable, or assured. In our experience working with and studying social entrepreneurs, we rarely find a venture that gets scaling right the first time. Even if the road to scale has been smooth, the problem may evolve, partners and ecosystems change, and funding sources come and go. Scaling a social venture’s impact is complex and there is no one formula for impact.
It is always a pleasure to bring together leading social entrepreneurs who are grappling with scaling impact and are willing to share their insights. In a recent conversation with Ella Gudwin, President of VisionSpring; Terry Tucker, CEO of Families First; Maya Ajmera, President & CEO of Society for Science and the Public and Publisher, Science News; and Alden Zecha, Co-Founder of Sproxil, we discussed some of the challenges that they have faced on the road to scale and shared some key pieces of advice on how to overcome these challenges.
Navigate the complex funding landscape by setting a clear vision and balancing external and internal sources of revenue
Financial viability is one of the most fundamental challenges that any entrepreneur faces. And this challenge only gets harder as you scale. As Maya stated, “people love to seed things. They also love to do some mezzanine. But when it comes to the real big capital [needed for scale], there are very few players who are willing to take that risk, unless there is a really clear return on investment.”
To add to the challenges of funding scale, types of capital continue to evolve – we outline 12 distinct types in our Smart Impact CapitalTM tools. And capital providers continue to evolve their approaches – innovating around performance based financing, exploring new vehicles through impact investing, and more. Navigating finance for scale can be complex for even the most advanced social ventures.
Maya and the Society for Science and the Public (SSP) have tried to navigate this by setting a clear vision for scaling, attracting a variety of funders (including individuals, foundations, and corporate sponsors) that align with that vision, and also finding opportunities to derive revenue from their own operations (i.e., SSP sells individual and classroom based subscriptions for their print publication, Science News).
Our advice is to set clear scaling goals and then work to find capital that fits that strategy (versus letting your scaling strategy be dictated by the whims of available capital) and to determine a funding strategy that considers both external and internal sources of capital. We’ll share more on this topic in a paper that we’ll be releasing next month at the Skoll World Forum (and we be available at www.scalingpathways.com).
Invest in the infrastructure needed for scale
It may not be the sexy side of scaling, but systems – from human resources to financial management to data tracking and more – are critical to the success of an organization as it moves from the early stages to scaling. Some social ventures pride themselves on their ability to bootstrap and funders often incentivize keeping administrative and overhead costs low. But these mindsets can become toxic as you move to scale. If you are expanding geographically, you’ll need IT infrastructure to manage remote operations, as an example. If you are scaling through partnerships, you’ll need systems in place to communicate progress and facilitate hand-offs from one partner to another.
Terry shared a story about the challenges he faced in a previous position when, after raising $28 million dollars in 8 months, the organization was not ready to deploy the capital due to a lack of systems and infrastructure. In his current role at Families First, one of his first priorities as CEO was to audit the financial systems of the organization, consolidating duplicative systems and ensuring that the numbers were reliable so that they were prepared to tackle scale. Ella spoke of VisionSpring’s time spent developing and implementing a 3 year IT infrastructure strategy to integrate their ERP and CRM systems. She celebrated being able to turn on her phone and use Salesforce to track the sales numbers from VisionSpring’s Nigeria operations in real time, allowing the leadership team to make real time decisions about operations.
Our advice is to prioritize investments in both physical and systems infrastructure, ensuring that you have strong financial, program management, monitoring and performance management systems in place. And then don’t forget about the people! A system is only as good as the people using it and you must invest the time and resources in to training and, most importantly, behavior change.
Hire slow, find fit fast
The panelists spoke about the criticality of hiring the right people. Alden said that one of the biggest mistakes that he and his co-founder at Sproxil made was hiring people that were purely mission driven but did not have the skills needed for the role. In his words, “Mission alignment is necessary but insufficient.” Alden shared some of his thoughts on this topic in an early blog post, “3 Elements When Hiring Talent for Your Social Venture.”
We’ve spoke with Ella before about some of VisionSpring’s challenges related to hiring the team needed for scaling and she and her team continue to evolve VisionSpring’s hiring process. They now ask 3 sets of questions to ascertain fit: Why VisionSpring and why now? What challenges do you anticipate we have for this particular function and what skill set do you bring to that? How do you know if VisionSpring will be a good fit for you?
Another critical aspect of human capital is a social venture’s Board. Terry explained that a limiting factor on scale can be “the knowledge and experience of your Board and their understanding of how to scale and what that means and what the risk is.” All of the panelists underscored the need to evolve your Board over time to find aligned Board members who understand scale and are willing to take the risks and make the investments needed to achieve impact at scale.
Our advice is to be clear on what skills and values are critical to your organization. Hire slowly, especially for senior roles, and then make decisions quickly about whether that person is the right fit. And continue to evolve your Board over the course of your scaling journey. The best Boards understand the risks and investments needed to fuel scale, and are patient since scaling takes time and experimentation.
Telescope from big picture scaling strategy to implementation
As a leader, time is your greatest resource. But as Ella stated, one of the core challenges when leading an organization scaling impact is “the ability to telescope up and down, minute to minute, hour to hour, between the operating details of the day and the 3 year (and beyond) horizon.” Ella uses her quarterly Board meetings to make “compass point corrections”, discussing the big questions that VisionSpring needs to focus on before going into the minutia. On a similar note, Elisa Villanueva Beard, CEO of Teach For America, recently shared with me that she sets aside one day a month to block her calendar from meetings and emails and reflect on the bigger picture, the progress her organization is making and where they might need to innovate and adapt.
Our advice is to have a regularly planned time to review the big picture vision and set longer terms goals, otherwise, those bigger picture strategies can get lost in the rush of day-to-day implementation.
Of course, there are many more challenges to overcome on the path to scaling your venture’s impact but we hope these lessons learned will help to leap the chasm from idea to sustainable impact at scale.