Saturday, 14 December 2013

Livelihoods Promotion: Quest for Scale

In spite of the creditable growth of the Indian economy over the last two decades, the proportion of rural population living in poverty is still unacceptably high. While many models have successfully supported the livelihoods of the poor, very few have achieved the desired scale.

In this backdrop, 'Quest for Scale' was chosen as the theme of one of the Panels in the 2013 edition of the Livelihoods India Conference.

Dr Rajesh Tandon of the Society for Participatory Researchin Asia, Mr Brij Mohan of ACCESS Development Services, and Dr Subhashish Gangopadhyay of India Development Foundation and I were the Panelists in this session, moderated by Dr Sankar Datta of Azim PremjiUniversity

I argued that the default model chosen by most organisations for 'Scaling Up' is 'Spreading Wide'. This involves codifying the solution that worked, and then executing that code in new geographies. This would work so long as the new context is similar to the one where the solution worked in the first instance. And the organisation must have capacity to manage scale, be it the management bandwidth or the quality of execution. 

For example, if a Microfinance Organisation perfected the process of social mobilisation, risk assessment of the borrowers, efficiency of cash disbursements as well as collections etc, the same process can be successfully replicated in a different geography, unless the socio-cultural or livelihoods context is quite different.

In many cases, the scale reduces the 'Unit Costs', but in several cases, the scale can raise the management costs disproportionately. One must be cognizant of these issues also before 'Spreading Wide'

If the new context is very different, the original solution won't work; and if the organisation lacks capacity to manage scale, the consequences can be disastrous.

There are more ways to scale than Spreading Wide. Depending on the 'transferability of the solution' and the 'capacity of the organisation', one can choose from any of the four other Scaling Models.

2.       Scaling (or Mining) Deep: This involves bringing more products and services to serve the other current needs of the existing customers. If the infrastructure and the relationships built to deliver the original solution can be converted into a platform, it can facilitate access to other relevant offerings from third parties, who otherwise find it difficult to reach out to these customers. Continuing with the same example of Microfinance Organisation, Mining Deep model could go beyond lending and bring complementary solutions such as Capacity Building, Risk Management, Access to Quality Inputs, or Linking to Output Markets.
3.       Scaling (or Evolving) Along: This involves adapting products and services to serve the evolving needs of the existing customers, as time goes by. For example, as the incomes of the current borrowers improve, or as they reach different age bracket, their borrowing needs would change. A successful push-cart vendor, selling vegetables, may like to borrow ten times as much amount and set up a Grocery Store. This might mean a completely redesigned process compared to the process used for the earlier loan size. This is an often ignored, but smart, scaling opportunity.
4.       Scaling (or Stepping) Out: This involves adapting the solution to a completely new value chain. For example, the business model that worked for building an inclusive agricultural supply chain, could very well be adapted for skilling human resources for the employment market. While the Mining Deep model works wherever morphing into platform is feasible, this model can be explored where value chains are somewhat similar.
5.       Scaling (or Multiplying) Through: This is like the conventional franchising model. The code is handed over to a franchisee or a licensee for execution. One can spread wide, scale along or out, using this model. If  the organisation would like to retain control on the franchisee, there is a need to find a 'stickiness' factor, eg. shared services at low cost riding on the scale of multiple franchisees (accounts management, quality audit, training, legal services etc).

Thus, in my view, the foremost question in the quest for scale is "which model of scaling is right for me?"


  1. Interesting thoughts on scaling and nice deconstruction imo. However, we also need to ask the question 'why' scale. Scale is a limiting mindset – you could think of it as something carried forward from industrial thinking – and somewhat outmoded in the connected era. Think multiplier instead perhaps.

    1. Thanks Sunil.

      The first paragraph mentions why we need to scale.

      'Scaling Deep' and 'Scaling Through' are the models relevant for the connected world.

      Multiplication by new organisations, with the help of the original organisation (sharing the code free; relevant in the not-for-profit space) or independently (copying the model; reflects a poor strategy on part of the original organisation, if it is a for-profit) can occur. What would be other ways of 'multiplying'?

      Rgds / Shiv

    2. Shiv, I'm not sure my understanding of scale is the way you mean it. In my view, scale has to do with size of one and multiply has to do with many of one. My problem with monolithic scaling is that of limited reach. This gains significance in the context of marginalized populations, viz. poor, BoP, underserved, etc.

      My 2p. Sunil

    3. Sunil:

      Do you call the following "monolithic" scale examples "limited" in reach?

      Coke (Spreading-wide), Amazon (Mining-deep), Johnson & Johnson (Evolving-along), ITC (Stepping-out), and McDonalds (Multiplying-through)...

      Rgds / Shiv

  2. Sir,

    Interesting insights as usual.

    How about creating the base model and then customising the model per the geography requirements while implementation? For example this is what i see in CCD, their format was not standard (atleast for a long time), they evolved multiple formats to suit everyone's requirement, while concentrating on their core competence of selling coffee/ experience. Probably this is akin to Scaling deep that you articulated?


    1. Thanks Vijay.

      This is "spreading wide", using multiple store formats. Most Retailers do this. They standardise three to five models, each suitable for a different context, and then replicate them in similar contexts in new geographies. 

      "Mining Deep" would be when they start offering complementary services such as 'Conference Rooms' or 'Making Movie Bookings' and so on to serve other needs of their customers beyond Coffee and Snacking...

      Rgds / Shiv 

    2. Thanks Sir. Would be interested to know if there are any examples in each of the scenario that you outlined?