Scaling your business or scaling for impact? Contradiction or powerful synergy?

By Katrin Hauser and Daniel Zimmer

Scaling, the art of deploying new solutions that have successfully passed their proof of concept phase, is most of the time approached from a business perspective, which can be summarised in a simple question: how does one ensure fast and profitable growth in a company? In a world of unicorns reaching their billion valuation in record breaking time (see blog on exponential organisations), this question seems of practical relevance. And if recipes exist, why not make use of them? But why only for the purpose of business growth?

At scaling4good our interest is not necessarily to scale and accelerate the growth of a company but to accelerate the transformations of our economies and societies through the deployment at scale of solutions contributing to sustainable prosperity of society: We call this “scaling for impact”.

Yet what are the differences between “scaling a business” and “scaling for impact” ? What do they have in common? Are we able to use the important lessons learnt from the scaling-up of companies to also help “scaling for impact”?

Scaling is the main goal  of most entrepreneurs. Being successful with a company requires business growth and in order to finance that growth it needs to be profitable. The key objective is economic: assuring the business can survive in a competitive environment and thus maximizing its societal impact is not the first priority of an entrepreneur. After all, growing a business increases its impact through the scaling mechanism of the market economy: more customers, more cash flow, and hence more impact.

Reciprocally, maximizing positive human, social and environmental impact does not come by itself nor first. But if a product with a positive impact beyond profit and job generation is being commercialised successfully, then automatically the good impact is also scaled. For example, when a company can introduce power-efficient products in the market, old and less energy efficient devices can be replaced. The more energy saving products can be sold the bigger are the energy savings –  assuming that the production of the new product does not harm more than the old one and that the old devices are not being used in a secondary market.

So, is scaling for impact at best only an indirect consequence of business growth? Or can companies clearly aim for maximum and comprehensive impact?

At scaling4good we are currently researching and collecting patterns that prove that the usual business perspective can be changed toward scaling for impact and we are convinced it can be done without neglecting the need for business success. We have found cases  where such a perspective can also generate positive business spin for a company. But at the same time this change means addressing the tension between competition and cooperation. In a business world that tension is most of the time being solved through competition instead of cooperation.

Growing or scaling-up a business is about developing the capacity of a company and if necessary, at the expense of others. Scaling for impact, by contrast, implies opening the business to other organisations and cooperating with them to externalise business development and accelerate the systemic transformation of its market. This can take different forms:

• Connecting with similar companies (e.g. competitors that may be in another geographic area) to develop common sales channels, common R&D or similar manufacturing processes or to offer opportunities to impact investors.
• Connecting with other actors in the value chain e.g. if a product is a diagnosis tool for a disease, the companies offering healing/remedial solutions could be interested  in a collaboration. The two companies can use their client networks and thus enlarge the client radius.
• Connecting with NGOs, public authorities, national and international fund givers who are working  towards the same impact.

And yes in turn, this might mean loosing or accepting to share part of the knowledge and know-how, maybe even, but not necessarily, some of the Intellectual Property (IP) owned  by the company. But, the losses can be compensated by a convincing variety of advantages:

• Connecting for systemic change of market behaviour through conforming to an explicit societal impact from a variety of public and private players
• Increased knowledge pool and access to experience and industry know-how
• Easier access to a well established customer network
• Shared branding and enhanced visibility with more established partners
• Shared costs for marketing, research or manufacturing
• Accelerated transformation of the market

Ultimately, a collaborative, impact-driven market strategy can  be a first step for changing market behaviour and developing new, long lasting markets. Finding the right balance between making part of the knowledge open source and developing high-value proprietary segments may be rather different if the IP of the company is a technology or simply know-how. When IP is a chemical formula or a technology, its protection can be managed rather easily. When it is know-how (e.g. ingenious ideas, processes, programming code etc.), it is more difficult to protect, but in this case, a licensing agreement may better than IP protection.

This sounds like disruptive entrepreneurship. Is this feasible or an illusion? It should be stressed that when markets are not well developed (such as in disruptive innovation), sharing and connecting may seem even more risky to the entrepreneur, but it may also be a game-changer for the market. Totally new customer wishes and needs will evolve and open up new business opportunities as demonstrated by Tesla, who opened up their battery licenses to accelerate the market uptake. Thus fundamental questions for the disruptive entrepreneur are:

• How can I ensure  that my solution is sufficiently pervasive to be adopted by more than the early-adopters and really start changing the market?
• How can I strengthen my competitive advantage sufficiently to cope with new competitors?
• How can I manage to aim for large scale societal or environmental impact right from the beginning?

The following table tentatively captures the important differences between business scaling and scaling for impact.  

Even though it is obvious that scaling for impact requires more effort than simple business growth, it is critical to accelerate the transformations needed today such as:

• New ways to decrease poverty
• New approaches of doing business without over-using natural resources
• New forms of:
  • Affordable and sustainable housing
  • Clean mobility solutions
  • Nutrition and food supply, and many more.

Most of these transformations are time-critical for the well-being of our societies. Most of them imply disruption of the existing systems. Most of them attempt to create new markets, new movements and new behaviours. In this context scaling for impact is urgently needed and should be supported by all means.