3 mistakes to avoid for social enterprises looking to scale their impact fast



As a social entrepreneur aiming to improve the world, it is only natural that when your social enterprise reaches a certain maturity, you’ll want to scale it and expand its impact as much as possible. However, this can conflict with two different elements.

  • On the one hand, you want to scale well, fast and without using too much of your resources. In that sense, you may want to collaborate with other entrepreneurs so they can take on your initiative and replicate it elsewhere.

  • On the other hand, you want to keep control over your “baby”, so you want these entrepreneurs to respect your brand, handle it with care and you want to keep control over the replications.

So the key question is: how can you scale your solution in a way that enables its rapid spread while keeping control of it? [Note: scaling can be defined as “increasing the impact […] [of an approach] to better match the magnitude of the social need or problem it seeks to address” (Dees - 2008)].

Having supported hundreds of social enterprises of all kinds and helped them replicate their initiatives across Europe, we have identified some key mistakes to avoid. Here are three lessons learnt and open recommendations that social entrepreneurs can hopefully take into account when planning their social enterprise’s expansion and scaling!


“Perfect is the enemy of good” (Voltaire)

The trap of structuring your company too much before passing it on to others


It is no secret to anyone that an average of 9 startups out of 10 fail. This stat is surely even worse for impact-focused startups, which have to make it work both financially and from a social/environmental standpoint.


Therefore, it is no surprise that when a groundbreaking impact startup turns out to be a great success, it is highly encouraged to scale and expand, which the founding team considers quite quickly.


For the founding team, figuring out how they will scale their social enterprise is the beginning of internal chaos. One million questions pop up within the organisation with a major fear of losing control…


  • Where should we expand?

  • With whom, how and what is the best way for us to scale?

  • What is our strategy to make it happen?

  • Is our model 100% proven to be replicated?

  • How do we transfer our knowledge to anyone?

  • How do we make sure people deliver the project with the same quality standard?

  • How can we guarantee they will respect our vision/mission?

  • How do we find the right people?

  • Who is in charge of expansion within our team?

  • Shouldn’t we raise funds first?

  • Should we own an IP for our work?

  • What if people take it away from us?

  • We must structure our processes more!

  • Let’s structure our governance and legal department as well!

  • And so on and so forth.


gif

After a long process, the majority of successful social enterprises decide to adopt a centralized or very tight franchise model, which not only are the best-known models to scale (we are indeed all influenced by how McDonald's, Starbucks, etc. managed to massively scale!) They also appear to be the most efficient way to monitor and control what partners will do.


As a result, it takes an average of 2-5 years for these teams to structure their processes and be ready to scale. But guess what? People don’t wait that long!


Indeed, when a project is proven and successful, other entrepreneurs start copying right away. The fact that Rocket Internet Group exists (startup studio building startups that clone the business models of U.S. internet giants such as Amazon, Uber, Airbnb, etc.) tells it all.

In the social entrepreneurship field, it is not rare to see entrepreneurs directly reaching out to the initial teams to learn directly from them before launching their projects. But 99% of the time, the answer they receive is: “we are not ready yet, come again later.”


The problem is: that they can sometimes wait several years before the initial teams are ready to share anything with them. Oftentimes, it is because the time dedicated to working on their scaling strategy is underfunded (read explanations in this article) and have tons of other priorities to deal with. However, in the meantime, the concept stops being innovative, losing competitive advantage (cf. the innovation lifecycle). Why would they wait?! So they start copying it before it reaches that tipping point.

From a systemic viewpoint, it sadly results in a loss of time & effort, in people reinventing the wheel and reproducing what already exists. As a result, new competitors enter the market, where you could have collaboration & allies instead (cf. lesson 3 below). Without mentioning the amount of time lost, while social and environmental issues urgently need to be solved to avoid a disaster. What a waste!


To avoid such a waste, social enterprises should rather iterate on their scaling model and test it with “beta testers” (early “replication” adopters). Indeed, while structuring your scaling model is necessary, initial teams oftentimes don’t realise how much they know and can already share with others. Thus, engage in conversations, learn what model fits your social enterprise best by doing and iterating. In other words, adopt the so well-known “lean startup” approach when it comes to your scaling process.


LESSON #1: DON’T WASTE TOO MUCH TIME STRUCTURING YOUR PERFECT SCALING MODEL BECAUSE YOUR PROJECT WILL BE COPIED IN THE MEANTIME. GET THE BALL ROLLING INSTEAD!


“Thanks, But No Thanks.”

Too much time to structure an offer that’s NOT attractive.


We said earlier that on average, it takes the initial teams about 2-5 years before they engage in their scaling process. And when they finally do, they communicate on their model (mostly centralized, franchise or tight license models as seen above) to recruit their future regional directors or franchisees. The partnership offer to these people more or less looks like this:

  • You will be the franchisee / regional director of our brand locally

  • You will have to pay franchising/licensing fees of X€

  • You must respect our brand guidelines

  • You are not allowed to change x,y,z without our consent

  • You must report your work to the HQ on a regular basis

  • Major decisions engaging the brand must be taken together

  • Major changes to adapt it locally must be validated by the HQ

  • You will be held accountable if the project does not work locally - we do not have any responsibility here

gif

The bad news? For many reasons, we found out those partnership proposals:

  • Attract the wrong people (Impact-driven but not Entrepreneurs or Entrepreneurs but Not impact-driven).

  • And do not attract the right ones! (Impact-driven Entrepreneurs)


It attracts the wrong people.


> They are Impact-Driven but Not Entrepreneurs

The idea of replicating a proven project can be appealing to people who are risk-averse. They are attracted by the idea of becoming an entrepreneur “safely” as they are guided and supported by teams who’ve done it before.

While the latter is true, there are other obstacles to take into account, which require strong entrepreneurial mindset and skills. When they realise what/how much needs to be done, they give up.


> They are Entrepreneurs but Not Impact-Driven

We’ve also had experienced entrepreneurs reaching out to Snowball Effect, interested in trying out an entrepreneurial experience in the “impact” field. However, once they start working on a social enterprise, they often realise it does not always match their financial expectations, they don’t align with the values and/or don’t necessarily have a good human fit with the initial teams. It often ends up in a failed attempt at collaboration.



It does not attract the right ones.


> The Impact-Driven Entrepreneurs: “Thanks, but No thanks!”

What is not acknowledged enough is that replicating an existing project requires not only important collaboration skills, but also strong entrepreneurial ones.

Indeed, “replicators” must validate a need in their local environment, implement and adapt the project locally, raise funds if necessary, sell and find customers, build teams, etc. - which all require an incredible amount of confidence and determination, networking skills, good time and money management,... skills entrepreneurs have.

And those who have such entrepreneurial skills are looking for projects where they have enough autonomy, flexibility and ownership!


Hence, if you set up a tight replication model that does not give enough ownership and flexibility, your ideal future "replicators" will run away!

gif

→ The paradox: initial teams spend a lot of time and money structuring a tight replication value proposition that future replicators - with REAL entrepreneurial skills - will most of the time not want!


LESSON #2: A REPLICATION VALUE PROPOSITION THAT’S TOO TIGHT WILL MAKE THE IDEAL “REPLICATOR” GO AWAY! DESIGN A LOOSE REPLICATION VALUE PROPOSITION THAT FITS THEIR NEEDS.


Too many elements beyond your control.

Low probability of everything lining up for a successful brand replication!


When a replicator is interested in replicating an existing social enterprise under the same brand, there need to be two critical fits: the product-market fit and the human fit. Each criterion hides many underlying criteria, and having those two large criteria validated is hard and beyond anyone’s control.

> THE PRODUCT-MARKET FIT:


The replicator needs the replicated project to answer a local problem, for which customers are willing to pay. Only then, the business model can be viable and the project can sustain itself.


It is a common misbelief that if the project has worked somewhere, it will work elsewhere, no matter what. But that’s not always true. The problem might be different, the clients might be different, etc. This is why it is crucial to innovatively adapt a concept instead of copy-pasting the project.

Indeed, after having done some initial feasibility study, the replicator might find out that this concept has no potential locally because the reality is different. This is something we cannot know nor control beforehand.


> THE HUMAN FIT:


Another aspect that’s not predictable is how well the initial teams and the replicators will get along. Although it can be assessed during the initial recruitment (e.g with deep questions, personality tests, etc.), the relationship might evolve over time as negotiations will necessarily emerge on several topics (e.g. the need to bring changes to the original concept, etc.) The human fit cannot be guaranteed and the initial team and the replicator might realise after two months of collaboration that they don’t want to work together.


By asking replicators to validate all the above criteria that are so hard to control, it makes the chances of a successful replication very low.


LESSON #3: BRAND REPLICATION REQUIRES TOO MANY ELEMENTS BEYOND YOUR CONTROL TO LINE UP, WHICH MAKES THE CHANCES OF SUCCESS VERY LOW. SPOILER ALERT: LET THEM REPLICATE THE CONCEPT INSTEAD!

So, what is the fastest way to spread a proven solution? The answer is… the Affiliation Model!



It is repeated over and over by experts: the world’s biggest challenges such as climate change and poverty are on a global scale. To solve a global issue, targeted actions at the local level are one of the most effective leverages to achieve widespread and timely impact.

As proven models already exist to solve those identified issues, it is urgent to accelerate their spread across the world. So coming back to the million-euro question: what is the best way to make it happen?

In our humble opinion, there are two options:

  • The easy first step: start sharing your learnings and experience with aspiring social entrepreneurs! Plenty of channels are possible: videos, podcasts, articles… The ideal being to offer mentoring sessions to the most promising ones.

  • The more structured way: set up an Affiliation Model! This model is not as strict as a brand replication, not as loose as an open source one, but something in the middle.

The concept: you create an umbrella organisation that your replications can join. Together with them, you form a large federation composed of different initiatives of the same concept. Each replication can have its own brand, but they are part of this federation. You share learnings with one another and can freely decide to share revenues.


The Affiliation model enables an organisation to scale its impact:

  • By empowering replicators to reproduce the concept through knowledge sharing, access to other available resources (CRM, Website…), etc.

  • While enabling a high degree of local adaptation by giving them enough flexibility, as they can replicate the concept but can create their own strategy, brand, legal entity, etc.


In other words, they have a formal partnership where new “replicators” become part of a federation/network, where all the members are committed to achieving the same goals with the same impact vision.


gif

To only name a few, Skateistan launched the GoodPush Alliance, la Cloche launched the Chime, Cycling without Age has its own network of affiliates, and the same goes for Points of Light.


For the initial teams, the benefits are multifold:

  • Recognition: they are recognized as the reference leader/pioneer in this field, as others want to learn from them.

  • Influence: by helping others get started, they establish a network of Allies from whom they can learn - instead of creating competitors. Organisations can choose whether they want to keep the same brand or not. They usually do it only if it represents a business advantage for them (more clients or legitimacy for instance).

  • Revenues: empowering others to replicate the same concept doesn’t necessarily mean doing it for free. Charging a fee for training, coaching or mentoring sessions is possible. Or initial teams can decide that each replication joining the umbrella organisation will pay a commission (proportional to their revenues) to give back to the initial teams or to feed a “common pot”.

  • Efficiency: they save lots of time and money as they don’t need to structure everything before sharing it with others. Oftentimes, the initial teams don’t realise how much they know and can share already, which makes it easy to get the ball rolling.


Compared to a centralized model, the affiliation model requires letting go and accepting that some parts of the concept will change to be most relevant to another context. We strongly believe letting go and adopting a loose replication model fosters a quicker and faster spread of solutions. By letting go you start inspiring others and gain influence. Therefore, as paradoxical as it may sound, replicating your concept will reinforce your brand awareness!


OUR RECOMMENDATION: LET GO AND ENABLE OTHERS TO REPLICATE YOUR CONCEPT (INSTEAD OF YOUR BRAND!)

To read more about how all these learnings led us to change our model, read the article: why “spreading” should be the new “scaling”, rethinking the way we scale impact.


Also, a second article will come next with an in-depth analysis and illustrations/case studies of organisations which scaled massively on an Affiliation model. If you want to be notified when the article is published, leave us your email address HERE!