06 – The Scalable Impact Principle

[00:00:00] Santiago: Hi and welcome to the IDEMS Principle. I am Santiago Borio, an Impact Activation Fellow, and I’m here with David Stern, Founding Director of IDEMS. Hi David.

[00:00:16] David S.: Hi Santiago. I’m looking forward to a principled discussion today.

[00:00:22] Santiago: Good. This is the first discussion we have about a specific IDEMS principle.

[00:00:28] David S.: Absolutely.

[00:00:29] Santiago: And I’m very much looking forward to finding your views, a bit more in depth, about our Scaleable Impact principle. So roughly, very briefly, what is this principle about?

[00:00:45] David S.: This principle is a really important one for us. It’s central to how we try to work. In social enterprises generally, there is a view that social enterprises are best when they’re local. I absolutely believe in local impact. But if local impact isn’t scalable, then it’s only impacting somewhere in an individual context. We have nothing against that whatsoever. We think this is needed. But this is not the approach that we take as an organization. If we do something locally, we’re also thinking about how that can be reproduced in other cases.

I think as a general rule, this principle plays a double role for us because it’s not only one of our principles, but it’s also used as the header for a collection of our principles. We have three other principles that fall under the scalable impact banner within our organization of the principles and those are Viral Scaling, Sustainable Development, Capacity Building.

Each of those we’ll dig into in their own right but what’s important is that together these all fit into our vision for impact, how we play a role in the world. I think it’s important to get precise with the word. In our short description of the Scalable Impact principle, let me read the following:

“This principle is central to the company vision. It pushes thinking to go beyond just finding individual solutions towards understanding how those solutions can be replicated.”

Now, I don’t like the word replicated, but it is important here. It’s about the fact that we’re looking at how local fits into scalability.

[00:02:33] Santiago: Listening to you now, I can’t help myself but think, blimey, David is definitely a mathematician.

[00:02:40] David S.: Okay.

[00:02:41] Santiago: You don’t just want to solve a specific problem. You want to understand all problems that are similar to that problem and find general solutions.

[00:02:51] David S.: Yes, this is the idea. And in essence, we’re wanting to make sure that in our problem solving, there are always two ways to approach this. You either very much focus on the local and understanding that individual context , or while solving that local problem, you think about how that fits into a more general problem. And we’re choosing the latter. We’re not saying that it’s better to do so. This is important, because I believe there is a need to not take this approach. And I believe that others should choose the opposite.

[00:03:26] Santiago: But there is a risk of misinterpreting this. And maybe I am misinterpreting by stating what I’m about to say. But, we don’t transform every problem that we encounter to a global problem.

[00:03:40] David S.: No, on the contrary.

[00:03:40] Santiago: We look at the individual problem and how it relates to other similar problems.

[00:03:48] David S.: And we’re always thinking, while we’re getting into the local, what is it which is specific about the local and what is it which is just an instance of something more general and more global?

[00:03:59] Santiago: And so there’s nothing stopping us from looking at the local.

[00:04:01] David S.: Well, let’s get more precise because we’re looking at scalable impact, and this comes back to this idea — there’s the Global Innovation Fund and there’s other groups who think in the same way — let’s say, and there’s a lot of people who have done this, look, there’s no school here. There’s an environment, there’s a part of the world, where they’re lacking physical infrastructure, they need a school. We should build a school because that will serve the community. So we’re not saying that we couldn’t get involved with that. We’re saying that if we get involved there, what we would be doing when we’re going through that process is saying, okay, how do we make it easier to build schools when there is no school serving a local community? Are we building something more than just that local school? Is what we’re doing going to enable others to do this better, more easily? Because that’s what the Scalable Impact pushes us to think about. Why do those people deserve to be served over their neighbours other than the fact that we happen to be there?

And that’s part of the Scalable Impact. There might be good reason to serve those people and not others. But the Scalable Impact, this pushes us to always think it’s not enough to just work locally. In working locally, what are we doing towards thinking about how this would serve other communities? How what we’re doing here can serve others, more widely in a scalable approach.

[00:05:30] Santiago: But also how what serves this community could not serve others as well.

[00:05:38] David S.: Absolutely. And let me give a very simple example. There’s a lot of effort which has gone into, in different contexts, thinking about taking technology into certain communities.

I have a very concrete example which means a lot to me and which is central to this approach. So there was a colleague of mine who was part of a project in Malawi which investigated giving cash payments to the most hopeless members of society. This was around an AIDS pandemic period where you had grandparents looking after children because the middle generation had died of AIDS. And those were families which had no hope in some sense because the grandparents were beyond the age where they could easily work. And they had to look after these young children because the productive generation had died because of AIDS. And what they found was very small cash payments was extremely effective at not only supporting them and stimulating them, but it stimulated the whole local economy because they spent that money locally and so your local businesses thrived and the whole community thrived around them and they now had an important place, a role, and it was a really effective approach.

And I still remember these colleagues of mine who had to go around telling these communities that the program was shutting down. Why was the program shutting down? It was shutting down because despite the fact that it was effective, when they’d gone to present to the funders how effective it was, the funders then said, okay well that’s great, how much would it cost to do it across the country? You gotta be kidding. There’s no way that could be afforded. That’s just not possible. it’s not scalable to the country.

So although it worked as a pilot, it was not thought through as a scalable initiative and therefore it was shut down. And that is central to my thinking and which is why I choose to work on the scalable impact. That it is not enough to find things that work, we need to find things that actually can work at scale and can be taken to scale if they work and when they work.

[00:07:42] Santiago: And perhaps we should touch upon this example as well when we discuss Sustainable Development.

[00:07:49] David S.: Well, sustainable development is different. So I think that’s another point, it falls within scalable impact, and sustainable development is an important part of this, but the point which is so important to that example for scalable impact is exactly this idea that if you are doing something locally, which couldn’t scale, it could be sustainable because there’s external funds which enable it or because that particular community has ways to sustain it. So it could be made sustainable.

But if it’s not scalable, all you’re doing is creating inequality. And that’s really important about the scalability, that actually sustaining good initiatives in small environments, you’re creating inequalities because you’re not scaling. So the importance of scalable impact within that is really important. And I have some wonderful examples of that.

There’s another project in Mali, which has done some wonderful work with farmers about seed systems. And it’s been extremely successful at changing the local seed systems, and so you actually have these farmer federations, farmer groups that have become seed producers. And it’s been extremely successful for those villages. And those villages have become extremely wealthy compared to their neighbours. But it’s not scalable, their neighbours can’t do it, because not everyone can become seed producers. Because if everyone’s seed producers, who’s buying the seed? And so it is a wonderful way of those villages going from being what were extremely poor and disadvantaged villages into now very prosperous villages, based on this.

But it’s not a scalable solution for this. Now, understanding how they can serve the other villages and help their communities, that’s a whole different project and that’s exactly what they’re looking at now. But it’s a really nice example of actually looking at the scalable impact. Yes it’s been great. They have benefitted. Their lives have been transformed. But others can’t be transformed in the same way because they’re already doing it.

[00:09:42] Santiago: And if you maintain the transformation for that particular community, what is the impact for other communities?

[00:09:49] David S.: There’s already jealousness.

[00:09:50] Santiago: Yeah.

[00:09:51] David S.: So scalable impact is, it’s tough. This is a difficult, difficult priority and principle for us to take.

[00:09:59] Santiago: You gave two examples that are not directly related to our work. Can we try to bring it back to IDEMS and what Scalable Impact means to IDEMS a bit more concretely?

[00:10:11] David S.: Scalable Impact has been central to a lot of the decisions we’ve been making in different ways. And it’s been challenging. One of the things that it’s, it’s meant very concretely is that the technologies that we’re building, we’ve always been trying to find ways to make them reusable. And it’s this idea even when we are only serving a very niche group, at this particular point in time because that’s what the need is there, we are making decisions in our software development processes, in our general work cycles, which makes our life harder. But which enabled what we’re developing to be reusable.

[00:10:57] Santiago: So, let me see if I can translate that to a bit more concrete. So, in one of our contracts we had to build an app for our client and instead of building an app, we built an app builder.

[00:11:12] David S.: In a sense, yes. But the important part of that, that’s just good business sense. So maybe that’s not about scalable impact. Because if we build an app builder instead of an app, then we can reuse that code. So that’s just good business sense.

The part which relates to the scalable impact, it’s not that we built an app builder, it’s that in building that app for them, we were already trying to discuss with them, well what are the other contexts you’re going to want to use that app? We were trying to understand what were the other apps they were going to need as we were building that app, so that they were able to then reuse what we were building for the other things they were going to need in the future that they didn’t need now, but we knew they were going to need in the future. And so that’s what translated to we went a whole step further and had an app builder so other people could reuse this as well. But it was that approach with them of not just understanding what they want now, what their current need is, but also understanding the future needs, the other people they were serving, and building something which could be reused for them.

[00:12:24] Santiago: And I was involved in bits of that project, and one of the intentions, if not objectives, was to remove the need for developers in the content adaptation.

[00:12:40] David S.: Absolutely.

[00:12:41] Santiago: Is that part of Scalable Impact?

[00:12:44] David S.: Exactly. So this is a really good example of how we were doing. If we were just doing it for commercial gain, then understanding how to keep ourselves and us into future contracts would be central, where it was actually understanding that we’re an expensive part of this, so enabling them to scale out without always needing to come back to us, that’s about prioritising scalable impact, recognising that our business concerns are in some sense in competition with some of the scalability aspects.

And so developing against our commercial interests, those are some of the decisions related to the scalable impact. That even if we could be optimising our own profit in the future by putting ourselves centrally in it, that would limit the scale at which the impact could be felt. Then we choose — we have to be fundamentally profitable — but we choose to prioritise scalability of the impact above our commercial interests. And so that would be a very good example.

[00:13:48] Santiago: But at the same time, we develop other business ventures related to the technologies that we’re creating, like we discussed previously.

[00:13:58] David S.: As a commercial company, we have to be fundamentally profitable. Otherwise we don’t continue to exist and we don’t serve anyone. So this is where being able to do this in such a way that we’re prioritizing the scalability, we’re not trying to maximize our profit. That’s the privileged position we find ourselves in.

We have to remain profitable, otherwise we don’t succeed, we don’t exist, everything else falls apart. But we don’t have to maximize our profit. So therefore we can maximize impact and we can focus on making the impact scalable beyond our own needs.

[00:14:37] Santiago: And that project that we mentioned, there were a lot of learnings that helped us define working methodologies to make sure that we are, for need of a better word, satisfying this principle. So the contextual usability of things that we do, and how that comes into any planning.

[00:14:57] David S.: But I’d argue that was central already, but the implementation processes, there was a real learning process there. And one of the reasons that learning process was so great is that we didn’t realize how current, well-established methodologies go against some of these principles. They’re set up from commercial organizations that are maximizing profitability. And therefore, elements of Scalable Impact are there, but their scalable is all about scaling into profit, rather than scaling into impact. So Scalable Impact is also about scaling impact, rather than just scaling into profit. So this is this idea of being able to scale for the margin, rather than scaling into the commercially viable sectors of society. And that’s a really different aspect. A lot of scaling is about scaling into the people who can afford it rather than into the people who need it. So another element of this Scalable Impact is about how you’re scaling. It’s one thing to say, I’ve got 10 million users. And if all the users contribute to your profitability, that’s easy.

[00:16:11] Santiago: No, that is not a unique vision. You mentioned the Global Innovation Fund. It’s not just scaling to millions of users, but scaling to millions of users who are earning less than two dollars a day…

[00:16:23] David S.: …or less than five dollars a day. Exactly. So we’re not the ones inventing this.

No, we’re learning from others. I would argue Scalable Impact, Global Innovation Fund, Fonds d’Innovation et de Développement, it’s a French version, which is very similar. These are all based on Esther Duflo’s work. Esther Duflo is the second female Nobel Prize in Economics. It’s around randomized control trials getting evidence behind development interventions.

And it’s, I would argue, some quite controversial research. The ideas behind it are wonderful. There have been negatives as well as positives around this implementation. And so maybe a whole other podcast series could delve into some of those issues. But these ideas about trying to find development interventions at scale and how we can scale impact, we’re not alone in thinking about this. This is a whole big sector that thinks about this, that believes that this is the right way to approach it. And if you don’t approach it in this way, then it’s possible you end up creating inequalities rather than resolving them.

So maybe what I’d like to finish on is this issue about…. I have a word here which every time I read…

[00:17:38] Santiago: Replicated.

[00:17:40] David S.: Replicated.

[00:17:42] Santiago: And, is it, as I was saying earlier, we’re looking at how things can be contextualized to the different environments, not replicated in different environments.

[00:17:52] David S.: Well, this word has been very carefully chosen. It grates every time I hear it, but it’s the correct word. The reason it’s a correct word is we’re not saying that they are accurately replicated. Actually, evolution is the process of imperfect replication. And so our Continually Evolving is the fact that that replication is not perfect.

There is evolution happening because the replication includes an element of contextualization, of adaptation, of change. So replicated is the right word, but we need to remember this is imperfect replication. And that’s what gives rise to evolution, Viral Scaling, and so on.

[00:18:31] Santiago: [I wouldn’t say] imperfect replication, I would say adapted replication.

[00:18:34] David S.: Well, yes, but that’s because you’re not mathematical enough. Imperfect replication is the correct mathematical term. Adapted implies consciousness, whereas actually you don’t need that for evolution. One of the real powers…

[00:18:47] Santiago: …not for evolution but for scalable impact.

[00:18:49] David S.: Ah, well, the point is you don’t need it. I don’t believe you need it for scalable impact because I believe what you need is evolution. Evolutionary processes, within the right way, where the right incentives mean that the positive things are recognized and succeed and the negative things are not. That’s all you need. This is what evolution of systems leads to.

So the only thing that is needed, I believe, is the right systems approach. Systems Thinking is a whole other part of what we discuss and do.

[00:19:16] Santiago: But evolution… doesn’t it imply a degree of randomness?

[00:19:21] David S.: Absolutely, it can. It doesn’t have to be. Mathematically, it only requires imperfect. You can be imperfect because there was a conscious adaptation approach, or you can be imperfect because there is just a randomness element.

[00:19:34] Santiago: So again, it comes back to definitions.

[00:19:36] David S.: It comes back to the precise definition of the language. And this is why it grates me every time because, I want the word imperfect in there, but imperfect replication is a whole different story. We’ll get to that with our discussions around this, but that’s why this is the right word, even though I don’t like it. Words matter. Solutions being replicated, within that, there is an implicit element of this imperfect replication, which has all sorts of mathematical consequences, which can be very positive in terms of actually thinking about this.

Anyway, this is the importance of language, the complexity of the thinking. I’m afraid all of this comes into the depth of this. I really believe that the intertwinedness of these different principles is central to what we believe and how we work.

But in its own right, scalable impact is an area of debate. Should we be looking at scalable impact or should we just be looking at scalability? Many people believe that if you can get scalable solutions, the impact will follow. Now, there’s a question there around that and maybe they’re right. Maybe we shouldn’t be focusing on scalable impact. Maybe we should just focus on scalability. But we are making a conscious choice to focus on this scalable impact.

Also, when you’re looking at impact, does it really matter if you can change someone’s life? I’m very grateful to be put in the privileged position that I know I have been able to positively affect a few people’s lives. Getting people on to PhD programs internationally, which has given them opportunities they could never have dreamt of otherwise. Other concrete examples where I can say I’ve been in the privileged position to have an impact on people’s lives as individuals. But what I was doing wasn’t scalable.

Am I right not to value that? I’m not, not valuing that. I really value that. In fact, that’s what I value more than anything; being able to work with individuals, that human element. But as an organization, we cannot prioritize that over things that scale. Even if that impact on the individual is less, but it’s more scalable, that is the correct societal thing for us to focus our efforts on as an organization.

Others can focus on what we can do as individuals, but we as an organization are focusing on what we can do, which is scalable.

[00:21:51] Santiago: We’re striving towards it.

[00:21:53] David S.: We’re striving towards that. This is the vision.

[00:21:56] Santiago: Not necessarily exclusively.

[00:21:58] David S.: Absolutely. We still support individuals. And we come back to that in the Capacity Building principle, and we will talk about that, that it is part of what I believe the scalable impact is. It’s about recognising this tension between these two. It’s about the duality of the individuals versus the scalability.

[00:22:17] Santiago: And as well, the international PhD is not necessarily suitable for everyone.

[00:22:21] David S.: Exactly.

[00:22:22] Santiago: So recognizing who it’s suitable for…

[00:22:24] David S.: Exactly.

[00:22:25] Santiago: …is part of that.

[00:22:26] David S.: It’s part of that. And this is why more holistic approaches and Holistic Interventions is another one of our principles. So we’ll get onto these and these interconnections between these different principles.

[00:22:37] Santiago: Right. That’s been fascinating. Looking forward to the next one.

[00:22:41] David S.: Thank you.