Making it big: steps for scaling up

Development practitioners are learning that there is more than commercial viability to an investable and scalable business proposition. 

One of the biggest challenges facing market development projects is how to achieve impact at scale. All too often we get stuck at the pilot stage which is disappointing considering 'scale' is a key selling point of the market systems approach. Where we seek to innovate there will always be risks and failures.

But based on my experience, the problem of scaling up lies with a lack of strategic thinking about scale – not the market systems approach itself. Like private investors looking for a big return, development practitioners are also looking for clever solutions to big problems. Critical commercial analysis combined with an understanding of what makes a scalable business, is what turns an inventor into an investor.

Our success rates can substantially increase if we integrate a robust scaling up strategy into the intervention strategy from the very beginning. Here’s an outline of a pre-intervention analytical framework which can help you achieve impact at scale:

There are three key concepts that underpin a pathway to scale: relevance, affordability and accessibility. These concepts were first defined in practice for market development projects in 2009 when I was working for the Katalyst programme in Bangladesh, and have been developed and applied with success in other contexts. For example, some of the investment projects supported by the Afghanistan Business Innovation Fund are already scaling up.

Staring with relevance, ask does this project solve a problem that our target beneficiaries (whether consumers or producers) recognise and care about? The danger is that we design solutions to problems that don't exist or are not priorities among the target demographic, or we propose solutions that carry too much risk. Look at the world from the beneficiary's point of view to understand what really matters to them.

Affordability is about the beneficiary's cashflow. This is not the same as the ratio of the benefit to the cost, it is about absolute cost, the timing (and the risk) of return, and the financial capacity of the target beneficiary to consume or invest. We need cheap and cheerful, rather than state of the art and expensive solutions.

Accessibility is about linking the partner to large numbers of beneficiaries – probably the biggest scaling up challenge. The partner may be the supplier of a new product or service looking for large groups of consumers, or the partner could be a processor in need of large numbers of producers. The solution may be relevant and affordable but without a distribution or aggregation capability, it's going nowhere.

Our approach to tackling accessibility is to break it down and consider the presence and capacities of: the route to scale, the scale agent and the scale players. If any are missing in an intervention, it may be doomed as another pilot.

An electrical analogy
Think of the supplier as an electricity generating plant. To reach thousands of homes and businesses, it needs transmission and distribution wires (the route to scale). It also needs engineers to maintain the network, agents to recruit consumers, meter readers and payment collectors (the scale agents). And from the consumer's point of view, the more competing suppliers (the scale players) the better. With all three in place, lights can go on not just in one city, but all over the country.

The route to scale can be physical or virtual infrastructure that links a supplier to large numbers of individual consumers, or links the processor to producers. For example, a physical network of wholesalers and retailers (if working with an input supplier), or provincial and district offices (working with government or BMOs), or a virtual network such as a mobile phone service (for information based interventions). The route to scale may not be owned or controlled by the partner, but at the very least the supplier should have certainty of access and the infrastructure should be fit for purpose.

Scale agents are the people the business model relies on. The most important 'scale agent' is the project champion in the partner firm, but consider who else is going to make the business model work and why. Ask: do the scale agents have the financial, organisational and managerial capacity to make their planned contribution to scaling up? The scale agents may not be directly employed by the partner firm, but there should be reasonable evidence that the partner firm has scale agents at their disposal.

The scale players are the competitors of the original partner. Assuming that the purpose of the intervention is to change market systems (rather than an individual firm's business model) there have to be viable competitors ready and able to respond. They too will need their routes to scale and scale agents. One warning sign: if a project is struggling to find one partner, the chances of others crowding in are limited. And where competitors are absent, supplementary interventions may be required to induce competition. Such scaling up interventions will have the advantage of the ‘demonstration effect’ based on the original investment project, and will potentially work with different types of partner and/or employ different approaches. This is not about replicating the original intervention.

Relevance and affordability are essential pre-conditions to a scaling-up strategy, but not all three accessibility conditions - route to scale, scale agent and scale players - have to be met in advance. For example, the presence of a relevant and affordable product or service may drive the accessibility solution. The important thing is that realistic potential (rather than just wishful thinking) is needed at the start. 

A scaling up strategy is essential to any intervention planning process. And I would subject it to rigorous assessment, just like a commercial investor would to an investment opportunity. More upfront time and effort, but surely an investment that will pay off in terms of results. 

James Blewett is the Practice Leader, Economic Policy and Strategy at Maxwell Stamp. He is also a shareholder and member of the Advisory Group of In Frontier, a UK private equity firm investing in pre-emerging markets, and an investor and Director of Qaria Ltd, a start-up social enterprise producing pure cashmere yarn and garments in Afghanistan. James was the Design Team Leader and the Fund Manager of the Afghanistan Business Innovation Fund implemented by Landell Mills on behalf of DFID/DFAT (2011-14). He can be contacted at jblewett@maxwellstamp.com.