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?"
