Social Enterprise Canada

June 20, 2014

The Risk and Promise in Scaling up Social Enterprise


There may be big problems, but there are only many small solutions – The Gazette Company CEO and president Chuck Peters


To create resiliency, we need the highest level of human-capital development and the lowest damage to the environment  — and social enterprise can be a tool to forge both those new realities.

But how does the scale of a social enterprise impact on societal resiliency? Is it a given that the larger an enterprise the greater its favourable impact? Should growth be the ultimate objective and true success indicator?

An Artscape Toronto art piece featuring living room trophies.

A recent news inquiry by the Enterprising Non-profits Canada (ENP-CA) news service reveals mixed views on the answers to these questions by both social enterprise practitioners and consultants. There is, however, a strong proclivity for growth as the path to greater impact.



The Promise

In interviews with a handful of social enterprises, all considered to have “scaled up,” they were able to demonstrate they could provide greater social impact as a result -- with an ability to employ more people who face barriers to employment.

The Toronto-based Out of This World Café is one example. Offering meaningful employment for the psychiatric consumer/survivor community, it has opened up three new locations over the past year.

Scaling up enabled 100 per cent growth in the number of hours the cafe offers to new and existing employees. It offered the new hours to existing employees first, enabling many to go from part-time to full-time work. Currently it employs 40 full- and part-time staff.

“This means that in 2014 we will pay in wages more than we had in sales in 2011,” business manager, Warren Hawke, says.

“Our mission is to provide employment to a marginalized community. It has meant we could do more of that.”

While all the social enterprises interviewed for the ENP-CA series advocated for growth, they did have noteworthy variations on what scaling up means and entails.

That is, by “scaling up,” they did not all necessarily mean enlarging the capacity of a single organizational entity.

The Burnaby, B.C.-based Joe’s Table Café, for instance, plans to grow from one to 10 stores over the next three years across the lower mainland. But it intends to replicate its model, “rather than create this giant organization,” Jenna Christianson-Barker, director of operations, says.

She describes it as “more of a scaling out, rather than up.”

It was noted this distinction underscores the business’ emphasis on remaining community-minded and responsive to communities the social enterprise serves.

Artscape Toronto is renowned as the pioneer of creative placemaking as well as for helping to stimulate some of Toronto's most creative and vibrant neighbourhoods with innovative community assets and cultural hubs. Daniels Spectrum in Regent Park and Artscape Wychwood Barns are two widely-known examples.

CEO Tim Jones says the social enterprise has dedicated much of its attention to scaling its impact and particularly the intellectual capital it has honed over the years around the concept of creative placemaking.

It has done so primarily through coaching -- working with people around the world to support them in introducing their own creative placemaking initiatives.

Artscape Toronto is also now considering the affiliate model  to further increase its impact. “It really means figuring how to create organizations that operate under the Artscape name in other markets, that also have the independence and ability to chart their own course,” Tim says, adding, “that will be an interesting and fun challenge to sort out.”

Regardless of the approach, the underlying theme in all of these stories is that scaling up is the Holy Grail, the ultimate objective to be pursued.

That same focus can be found in social enterprise ecosystems in jurisdictions other than Canada. The U.S. Bridgespan Group, a non-profit consultancy, recently published a series on achieving transformative scale.

Even far-flung or pint-sized choruses for change can wield great influence when they unite and come from a place of deep authenticity -- Katie Smith Milway, "How Social Entrepreneurs Can Have the Most Impact."

"Growth shouldn't be an end by itself. By swapping locality for scale, small batch social enterprises can achieve a sustainable impact while foregoing wide recognition." -- Brian Cognato, "Celebrating Small Batch Social Enterprise."

From my perspective, some of the problems are so significant that only scaled solutions will make a dent in the challenge. -- John Baker, "Scale of problem indicates scale of solution."

People are capable when given the tools and opportunities to create their own solutions and make changes in their lives and communities. It's a message the social sector should take to heart. We need to shift much more of our attention from our organizations to how we position our constituents to be in charge of their own change. -- Willa Seldon, "Give People the Tools to Change Their Own Lives and Communities."

“Increasingly, leaders are asking, how can we move from incremental growth to actually solving social problems,” a recent Bridgespan publication notes. “How can we achieve impact at a truly transformative scale?”

The article outlines nine strategies holding real promise for addressing a number of major social problems at a transformative scale.



The Risk


But while the vote is heavily in favour of growth of social enterprise as a necessary trajectory, a few voices advocate an alternative view.

They propose that  societal resiliency is just as, or more likely, to found in many, small solutions.

“Most local economies live and die on a diverse collection of diverse enterprises,” says Andy Horsnell of the Nova Scotia-based consultancy, Common Good Solutions.

“I think it’s reflective of what a healthy local economy is made up of — a bunch of small, healthy enterprises, versus — to pick an extreme counterpoint — a one-industry town with a mine that goes to massive scale. When that goes under, the whole town dies.”

A recent article in the Nonprofit Quarterly, points to the risks in what it calls the “heroic social enterprise,” which has as part of its defining qualities a desire for scale or a global movement.

Author Brian Coganto notes that a heroic social enterprise is likely to have a stronger commitment to the market, which may or may not overlap with the needs of its proposed beneficiaries.

Another part of the danger in scaling up is that it’s easier to lose focus on the central mission, the raison d’etre of the social enterprise as it grows – whether that’s as a single entity or even in the case of a replication approach. Creating the systems to “handle” the growth may also squeeze some of the entity's life-giving essence.



A Need for a New Question


At the risk of oversimplifying, could it be that the key promise in scaling up social enterprise is the potential to impact more people with a social innovation of note?

And is it possible that the risk in scaling up social enterprise is the potential for it to lessen its potent force as an organization – as well as for the community of which it is a part to become less resilient?

If all of the above holds true, this implies that in the long term, scaling up may not be the answer – not if the containers for delivering the impact – the enterprise and the community of which it is a part – are unable to be sustainable and to thrive as a result.

Though not necessarily speaking only of social enterprise, Chuck Peters of the Iowa-based legacy media firm, The Gazette Company, may have a point when he says, “There are big problems, but only many, small solutions.”

Dare we ask the question then, could no scale or slow scale or scaling down be the new scaling up? Is small the new big?

And if that’s true, what’s the follow-up question? If the ultimate goal is societal resilience, as we started off this article suggesting social enterprise can help enable, is there another question to be asked that probes deeper at what that is really all about?

What if, for instance, we start asking what conditions are necessary for the social enterprise and its beneficiaries and the broader community to thrive?

Call to action: The ENP-CA news service will be hosting a Google Hangout to further explore the subject of scaling up social enterprise. Watch this site and the @enpCAN twitter for updates soon and to find out how you can join.

Stories in the ENP-CA news series:

Out of this World Cafe quadruples in one year

Joe's Table scales out, not up

Part 1 - Artscape Toronto's Tim Jones reflects on elements of scaling-up success

Part 2 - Scaling-up advice and caution from Artscape Toronto

Scaling up doesn't equal scaling impact

St. John's Bakery shares scaling-up lessons

Urban farm suggests social enterprises explore scaling deep

If you want to scale, find your niche first

Industry expertise, diverse customer base fuels growth of Winnipeg food services social enterprise

Social enterprise enables Evergreen to do more

Scale of problem indicates scale of solution

Writer: Michelle Strutzenberger

With files from Patricia Marcoccia, Jennifer Neutel

Out of This World Cafe quadruples in one year

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