January 2012 Editor's Choice: Mission, Margin, and Mandate: Multiple Paths to Scale
Taking innovation to scale is much discussed, but not well understood. So it is refreshing to get analysis from Acumen Fund, of 3 strategies that have worked.
This month’s Editor’s Choice focuses on ‘mission, margin and mandate’ as three routes towards the ideal of scale and sustainability.
At first sight, the authors, Brian Trelstad and Robert Katz (both at Acumen Fund), appear to be presenting three quite distinct paths, relevant to different players: non-profit organisations such as Scouts grow through a compelling vision which attracts volunteers and philanthropy; Walmart and other business successes generate the margins that secure investment and growth; while it is government that provides the mandate that requires or subsidises changed behavior at scale.
But the authors reject simple distinctions. Most successful social enterprises have in fact used some combination of each at different times: a healthy margin alone can be necessary but not sufficient. At some point in time, a strong vision to attract softer funding, or the backing of a strong government mandate, can help tip the balance to achieve true scale. Indian company, Husk Power, provides an ideal example.
Understanding these three routes at least helps to frame the questions facing a social enterprise navigating their journeys to scale:
- At what point do you evangelize your solution to raise mission-based grant capital or volunteer support to work on that new product?
- At what point to you buckle down and simply execute on sales and service to grow your margins?
- When do you approach the government for changes to policy that might help get that mandate to scale?
For each company, the choice varies, but will a different skill set and time-frame. Looking across companies, we will eventually learn more about the power of subsidy to distort or support a market, and how different types of capital can best support scale and sustainability.
This article draws on experience of social enterprises supported by Acumen Fund. It is one contribution in a special edition of innovations, (a quarterly journal published by MIT Press), with a thematic focus on Impact Investment. The same edition contains plenty more on topics of high relevance to inclusive business.