Barriers to scale can jeopardize the potential advantages of social enterprises, but authors in Forbes and Pioneer Post provide a few solutions.
In the Pioneer's Post, Deloitte's Ahmed Irfan and Nidhi Hegde discuss how Monitor Inclusive Markets faced and overcame such barriers in providing positive alternatives to slum housing in India to participants in the informal economy:
While our analysis revealed a strong business opportunity in selling high-quality affordable houses to low-income customers, there was little interest from large housing developers. We spent the first few years developing the business model, and promoting the idea to existing and potential developers. When the first developers came on board, it seemed that the industry was poised for growth. However, we also found that a key piece of the value chain was missing - housing finance for customers working in the informal sector. Street vendors, rickshaw drivers, owners of small shops and workshops were a segment banks were unwilling to lend to. Unable to get mortgages, they could not purchase these new homes. So Monitor Inclusive Markets worked with our partners to help develop an alternative housing finance model. Today, there are ten housing finance companies providing over $160 million in loans to low-income customers, helping realize the dream of owning a home. The role of actors, who might not necessarily be participants in the industry themselves, to help overcome stubborn scaling barriers outside the firm – a practice that we have termed industry facilitation – continued to resonate as we researched case-studies from across Asia and Africa.
The group was inspired to research and produce Beyond the Pioneer, a new report and microsite that examines hurdles preventing social enterprises from growing to scale and explores ways that a multiplicity of actors can work together to overcome these barriers:
When you give away your work, you’re facilitating the idea’s spread and replication, and that means more rapid social impact. By contrast, “when you monetize your idea,” he told us, “by the laws of economics, demand goes down. Something that is free is easier to sell than when it must be paid for.” Not to mention that those who can’t pay are often the ones who could benefit most... But can an organization really survive by giving everything away? To be fair, Project ECHO does sell its time when asked for major training assistance by groups who can afford to pay – like the Department of Defense or Veterans Affairs. Sanjeev’s team is neither naïve nor reckless with its time; it has simply adopted a philosophy of openness. Ensuring the idea gets independent traction is the scaling strategy. Embedded is an implicit recognition of the limits of any one organization to produce systems change, an argument Eric Stowe made so well last fall in the Stanford Social Innovation Review, and one that guided Tesla’s recent decision to make its patents available to all.
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