November 28, 2016
Many successful entrepreneurs like to repeat to those at the beginning of their journey – Go big or go home. While it's quite clear that entrepreneurs should be dreaming bigger about how to automate a shirt ironing process (most importantly, how to bring value to those overlooked by the formal system), the literal component – how to scale a business – is not such a trivial question. And the value of the advice we mentioned gets down to zero if nobody explains how exactly you go big with social innovation.
Fortunately, entrepreneurs nowadays have plenty of resources to get information and support on how to direct their efforts to scale a startup. Support comes from boards of advisors, VCs and angel investors, experts in accelerator programs, the government, experience of the startup community around the world and even financial institutions. One of such organizations, Nesta, a non-profit innovation foundation in the UK that helps people and organizations bring great ideas to life, published a report a month ago called What Does It Take to Go BIG? outlining four key areas that every social innovation looking to scale must get right to succeed:
Source: Nesta, What Does It Take to Go BIG?
Analysis of over 50 innovations trying to scale over three years revealed to Nesta that the most successful of them had a plan to "go big" from the start. They valued the feedback and intelligence that good evidence gave them about where to place emphasis in their innovation and quickly codified the core of the model, keeping its fidelity in scaling to ensure that impact on the ultimate beneficiary was not compromised.
In other words, it's important to put efforts in scaling what actually works, even if it means leaving behind the initial vision of the model and significantly pivoting the idea and the solution. As Ty Walrod, CEO of Bright Funds, noted when the company pivoted its all-in-one platform for charitable giving, "Make sure the opportunity you are pivoting towards significantly outweighs the original market. After that, don't straddle the fence. Make a decision to pivot, then go all out and capture that opportunity."
Scaling what works requires from entrepreneurs a deep and complete understanding of their business model. Nesta emphasizes that successful entrepreneurs know which parts of their innovation make the greatest difference to users or beneficiaries, and which don’t. They know which elements are reliant on a certain context or staff member and which can be replicated anywhere, and they’ve got a realistic proposition to make all elements of the model work in the future.
Moreover, the best ones rely on evidence in their decision-making process when it comes to the most effective ways of using limited resources, the ways of converting users or buyers, signing up volunteers and more.
Deliberative experimentation with the business is important for successful scaling. Entrepreneurs should be able to quickly test, learn and adapt the innovation, and be open to feedback and evidence. It’s also important to then ‘lock down’ core elements of the model which have an impact and can be replicated (in new contexts or with new users), and focus on scaling it, as the study suggests.
The most successful in scaling entrepreneurs are loyal to the idea of truly disruptive innovation and relentless in their ambitions to improve lives for the beneficiaries, setting clear goals and creating multiple pathways to reach new users.
Nesta found that the organizations that were most successful in scaling had a crystal clear view of the difference in the world they want to make for people. They also recognized that a grand vision was only one small part of the puzzle that needed to be partnered with a detailed understanding of the problem they were seeking to address or opportunity they are seeking to exploit and who, specifically, will benefit from their work.
Moreover, the best ones build clear referral routes through public services, creating demand for their innovation and thus, a clearer pathway to scale and sustainability.
There are three important hallmarks successfully scaled businesses had: they had a clear and ambitious goal to meet a specific need, they knew how to reach new users/beneficiaries and they created demand from a buyer (and had a model to meet that demand).
At the end, it all comes to a focus and a clear understanding that the business cannot solve everything for everyone. In the quest of being a hero for everyone, there is a high risk of not being able to solve anything for anyone at all.
The approaches selected by the most successful organizations generally fall into four categories (although the borders are often blurred):
Organizational growth is reported to be the most popular route to scale. However, the growth can come in a variety of forms – growing central teams, growing central and regional teams, or growing the team a little and using technology or systems and processes to scale leanly.
Nesta emphasizes that the best organizations thought creatively and smartly about the ways to grow leanly, creating capacity through digital approaches, or sharing responsibility with other teams in the organization.
Summarizing the successful cases, the study notes that the most successful innovations in our portfolio that scaled through organizational growth:
There are four things emphasized in being critical to successfully scaling through a licensing or franchising approach:
The study of over 50 successful innovators revealed that partnership approaches provide an ideal way to access skills, competencies, resources, and reach users, volunteers or markets that would not otherwise be possible. Varied in formality and depth, partnerships act as catalysts for growth, which requires an establishment of trust and a clear purpose for collaboration.
The most successful innovations from the study that scaled through partnership approaches: were systematic and strategic in their choice of partners, were clear about roles and responsibilities and identified what needed to be controlled tightly and by whom, to ensure the efficacy of the innovation.
Nesta suggests that the most successful organizations are scaling through replication: they knew from the start that replication is not simple, created blueprints, manuals and other system shortcuts, were clear on what was essential to maintain fidelity of the model and established effective ways to learn and share across the delivery network.
Although every approach is distinctive, in real-life organizations can choose to mix them, making the most of circumstances and opportunities as they arise. The understanding of the right scaling model does not come overnight; it can come through a process of experimentation.
The assessment of the most successful cases revealed that innovations were successful in scaling because they:
The most successful innovations in scaling quickly recognized that they needed to acquire additional skills (such as finance, business development or marketing) and capacity in their wider teams to create the capability for growth.
...the skills and capabilities needed in the early stages of an innovation are quite different from those that are needed to scale-up. Founding skills are different from scaling skills, which in turn requires different skills from managing and sustaining established innovations. In the corporate world, new hires often take on the leadership of organizations in different phases of growth and we saw this too in some of the innovations as they scaled.
The most successful innovations knew that it was important to not just give staff, volunteers, partners, or licensees and affiliates handbooks and materials, but also pass on the culture and ethos of their innovation. Culture and ethos can be invisible in the early stages of developing an innovation, but can greatly affect how it should be delivered to achieve impact.
It's important to be able to explicitly communicate culture in company materials, messages, language, systems and behaviors across the team and partners.
...the best innovations develop standardized models, policies and procedures as soon as they start to scale. As the company grows, it's critical to migrating unique knowledge and experience of the founding team into the system in order for the company to not be heavily reliant on experienced members of the team and to be able to transfer knowledge in a scalable way.
Scaling any business is a very complex task. Scaling a social innovation is even more difficult. Although the study focused on social innovation, all the abovementioned elements of a successful scaling apply to any startup and require from the leadership and the initial team the ability to experiment with business models deliberately and use evidence in decision-making processes, a focus on solving a limited number of problems and a clear strategy for expansion among other things.
It would be easy to assume the journey to scale is linear and that the four elements we have outlined in this paper can be followed as a roadmap to go big. The reality, of course, is not so simple. Scaling all but the simplest of innovations is no easy feat, the foundation notes.
The study also outlines four key habits and behaviors in the most successful innovations: innovations were bold in their ambition; they were open, comfortable with tight and loose scaling moments. Most importantly, innovations valued simplicity and avoided complexity.