Getting to Scale

How to Bring Development Solutions to Millions of Poor People

Laurence Chandy, Akio Hosono, Homi Kharas, Johannes Linn

• Publisher: Brookings Institution Press
• Year: 2013
• ISBN:
  9780815724209
• Topic: Economia
• Subtopic: Sviluppo sostenibile

The global development community is teeming with different ideas and interventions to improve the lives of the world's poorest people. Whether these succeed in having a transformative impact depends not just on their individual brilliance but on whether they can be brought to a scale where they reach millions of poor people.

Getting to Scale explores what it takes to expand the reach of development solutions beyond an individual village or pilot program so they serve poor people everywhere. Each chapter documents one or more contemporary case studies, which together provide a body of evidence on how scale can be pursued. The book suggests that the challenge of scaling up can be divided into two solutions: financing interventions at scale, and managing delivery to large numbers of beneficiaries. Neither governments, donors, charities, nor corporations are usually capable of overcoming these twin challenges alone, indicating that partnerships are key to success.

Scaling up is mission critical if extreme poverty is to be vanquished in our lifetime. Getting to Scale provides an invaluable resource for development practitioners, analysts, and students on a topic that remains largely unexplored and poorly understood. Contributors: Tessa Bold (Goethe University, Frankfurt), Wolfgang Fengler (World Bank, Nairobi), David Gartner (Arizona State University), Shunichiro Honda (JICA Research Institute), Michael Joseph (Vodafone), Hiroshi Kato (JICA), Mwangi Kimenyi (Brookings), Michael Kubzansky (Monitor Inclusive Markets), Germano Mwabu (University of Nairobi), Jane Nelson (Harvard Kennedy School), Alice Ng'ang'a (Strathmore University, Nairobi), Justin Sandefur (Center for Global Development), Pauline Vaughan (consultant), Chris West (Shell Foundation)

1

Overview: The Challenge of Reaching Scale

LAURENCE CHANDY, AKIO HOSONO, HOMI KHARAS, AND JOHANNES LINN

The challenges of global development can be counted in millions, if not billions: 2 million preventable infant deaths a year from pneumonia and diarrhea, 61 million children out of school, 850 million malnourished people, a billion people living in city slums, 1.3 billion people without access to electricity, 1.5 billion people living in conflict-affected states, 2.5 billion people without access to formal financial services. Meeting these challenges hinges on finding sustainable solutions that can have a transformational impact on the lives of millions of the world's poorest people.

Developed countries have, by definition, solved these problems.¹ These countries are identifiable by both their superior level of income and the institutions through which their societies and politics are organized, which enable their living standards to be sustained. Over the last half century, a handful of countries have succeeded in making the transition from developing to developed, and the hope is that many more will do so in the next.

However, such transitions are extremely hard to pull off. Using past performance as a guide, it would take nearly 6,000 years for the poorest countries to reach the level of income currently enjoyed by the United States of America.² Similarly, improvement in the capacity of poor countries to deliver basic public services to their citizens is proceeding at a glacial pace. Extremely optimistic estimates, using the performance of the fastest-improving countries as a yardstick for what is possible, suggest that the waiting time to eradicate extreme poverty and deprivation should still be measured in generations. For instance, were Haiti to somehow adopt the rate of progress in government quality of the twenty fastest-improving countries in the world, it would be another twenty-six years before it reached the current standard of Malawi.

To speed up this process for today's poor countries would require a recipe for development—something that after years of looking has not yet been found, and maybe never will be. Countless studies have been undertaken examining what countries such as Japan and Korea did to advance so quickly. But it is quite another thing to translate these studies into a meaningful plan for today's poor countries. This explains much of the skepticism around foreign aid. If the role of aid is to encourage countries to grow faster and to accelerate up the development ladder, then it is easy to conclude that the mission has been a failure and is probably futile.

There is an alternative and more hopeful view. It submits that there is much that can be done to address global development challenges without altogether altering the trajectories of poor countries. A number of targeted solutions have been found that can solve specific challenges: vaccines and water treatment to prevent child death; conditional cash transfers to nudge parents to encourage school attendance; micronutrient supplements and the promotion of breastfeeding to vanquish malnourishment. These solutions can permit poor countries today to overcome many of the deprivations associated with their low levels of income and to improve the lives of their people.

To succeed, however, these solutions need to be scaled up to reach poor people everywhere. Herein lies the problem.

Reaching Scale

There are certainly examples of scale being reached in a developing country context. Mexico rolled out its Oportunidades program, a conditional cash transfer scheme, to all of its regions, reaching around one-quarter of the entire population with cash incentives designed to improve health and educational attainment among poor families.³ Brazil dramatically reduced poverty with its Bolsa Família program, which today reaches 12 million families.⁴ Indonesia's Kecamatan Development Program provides grants to half of all villages in the country for small infrastructure projects chosen by the community. Oral rehydration therapy, introduced by UNICEF, has almost halved deaths from diarrhea, cholera, and related diseases. Long-lasting insecticide-treated bed nets have dramatically reduced malaria. China has initiated vast poverty reduction programs, including those affecting millions of poor farmers of the Loess Plateau.

Yet these examples are the exception as opposed to the rule. Many development solutions create more of a whimper than a wave. This is surprising when one considers that scaling up is at the core of the development model that donor agencies purport to follow. They regularly develop pilot projects with the supposed intention of replicating or expanding successes, or handing them over to developing country governments to do the same. But only a small share makes it beyond a pilot phase. This is why donors are more likely to report one-time, localized success stories than examples of transformative wide-reaching progress.

Even when a dedicated effort is made to transition from pilot to program, scale is rarely achieved. The use of fuel-efficient cooking stoves in India, for example, has proceeded very slowly. Ten years after their introduction through the National Improved Stoves Program, improved stoves accounted for less than 7 percent of all stoves in use.⁵

We believe this deserves a full inquiry. Remarkably little is understood about how to design scalable projects, the impediments to reaching scale, and the most appropriate pathways for getting there. Despite its centrality to development, scaling up is rarely studied in its own right and has undergone little scrutiny.⁶ Scaling up has been treated as something that occurs spontaneously and organically when successful development interventions are identified rather than as a challenge in and of itself.

This book is about increasing the number of people who are assisted through development programs so they can be counted in the hundreds of millions and in a time frame that is measured in decades rather than centuries. It asks what could be done to improve living conditions in poor countries in a way that is financially affordable and technically feasible. It is the contention of this book that scaling up is mission critical if extreme poverty is to be vanquished in our lifetime.⁷

Already, the idea of accelerating poverty reduction is taking root among development practitioners. This is evidenced by the Millennium Development Goals (MDGs), which are expressed in terms of the pursuit of results at scale, reflecting the desire to transform lives and to bring about far-reaching, sustainable change. In 2011 the international development community congregated in Busan, Korea, at the High Level Forum on Aid Effectiveness, to discuss how approaches to development need to change if accelerated results are to be achieved. The outcome document for the meeting concludes, “We recognize that progress has been uneven and neither fast nor far-reaching enough…. We reaffirm our commitment to scale up development cooperation…scaling up our support of development results…scaling up the use of triangular approaches to development cooperation…and scaling up of efforts in support of development goals.”⁸ Easier said than done.

But perhaps such pledges are not so unrealistic. What if scaling up was being held back by some well-defined obstacles, which could be overcome through a dedicated effort? This claim has become associated with two schools of thought.

The first can be caricatured as a West Coast “Silicon Valley” perspective. It puts its emphasis on finding innovative technological solutions to development challenges through scientific advances and visionary entrepreneurship. From this perspective, the reason that scaling up rarely occurs in developing countries is the dearth of scalable opportunities. If scientists, engineers, and innovators focused on the problems of poor people, as opposed to those of the rich, new opportunities could be discovered. New vaccines and off-grid lighting solutions are examples of what can be achieved when innovators turn their attention to development problems.

The second camp is associated with what we call the East Coast “Kendall Square” perspective, named for the location of MIT's Abdul Latif Jameel Poverty Action Lab. Researchers there have organized a massive effort to compile compelling statistical evidence of what development interventions work best, based on randomized trials. Their aim is to equip policymakers with sufficient information to determine how resources can be efficiently allocated: in other words, what interventions should be taken to scale and what interventions should be discarded. A good example of the former is the Kenya National School-Based Deworming Program, which has treated millions of school children at modest cost, thereby substantially improving attendance rates and learning outcomes throughout the country. Public backing for the program followed the publication of an impact evaluation that demonstrated the intervention's unequivocal success when attempted on a small scale.⁹

This book argues that the challenges to scaling up are more complex and more numerous than either a lack of appropriate technology or a lack of evidence of what works. Without understating the importance of both technological innovation and rigorous evaluation for development and scaling up, we believe that neither can be viewed as the binding constraint for the failure of many existing successful interventions to reach scale.

Instead, the challenge of scaling up development impact cannot be reduced to a single constraint but is better approached as a process challenge. The business model—the specific combination and design of product, distribution, supply chain, financing, pricing, payment, and sales—is often far more important in determining success than a specific technology or piece of evidence. It is attention to the details of implementation at a large scale that makes the difference between successful and unsuccessful scaling up.

This poses a challenge for the development community. Donors have traditionally resolved implementation problems by breaking up projects into small and “doable” efforts, which they can supervise from abroad. Many governments of poor countries, meanwhile, have limited capacity for scaling interventions competently. The private sector has enjoyed more success when interventions have been proven to have a commercial return—witness the explosion of microfinance through the private sector—but is rarely involved in development activities affecting poor people.

Given this reality, it is useful to try and learn systematically how to scale up development impact by analyzing examples of success and failure. Each of the essays in this book documents one or more contemporary case studies or syntheses of cases, which together provide a body of evidence on the challenges, opportunities, risks, and rewards of pursuing a scaling agenda. Cases of scaling up by the private sector and by the public sector are included. They reveal some hard truths. Scaling up is difficult to plan because it involves transformational change. Tools like cost-benefit analysis, the workhorse for analyzing development projects, are not helpful because scaling up often involves changing cost curves, altering beneficiary behavior, and an endogenous policy environment. Business models to implement scaled solutions cannot be taken off the shelf or easily replicated from one context to another—what is called external validity—but need to be designed and fine-tuned for scale over many years.

There are high risks to trying to reach scale, with more failures than successes. That is typical of most innovations, as entrepreneurs can attest. According to one estimate, it takes an average of fifty-eight new product ideas to deliver one that is viable.¹⁰ This is enough to scare off bureaucrats, whether in donor agencies or governments, whose expected rates of success are set impossibly high. (For instance, the World Bank aims for a project success rate of 85 percent.) Their strategy has been to seek modest impacts across many small interventions, rather than attempting to scale their best investments. By contrast, corporations are usually willing to take on risks, as huge returns from a few successes can compensate for the financial losses of failures, so long as the latter are truncated efficiently. But the same calculus doesn't apply when corporations operate in the development sphere. There, the returns to a successful scaled-up intervention may be large in terms of development impact but are typically small in terms of profits. The financial returns, therefore, do not compensate for the costs incurred in failed pilots.

In each of the cases in this book, we show that the scaling-up challenge can be divided into two. There is the challenge of financing scaled-up interventions, because poor people cannot afford to pay full cost for many services. These costs can be especially high when new markets or products, like solar power, are being introduced. The second challenge is managing delivery to large numbers of beneficiaries. The logistics, training, recruitment, and systems needed to deliver goods and services efficiently to poor people spread out throughout a country are incredibly complex and depend on a strong customer-oriented design. Very few actors—whether governments, donors, nonprofits, charities, or corporations—have the management ability to operate efficiently at scale. Large corporations are most adept at handling this challenge, but development activities are not at the top of their priorities. In every case, scaling up requires sustained commitment from top leadership, something that can be hard to achieve in most environments.

Scaling Definitions

In this book, we are particularly interested in the range of interventions that can transform the lives of poor people. Transformation may entail providing them with goods and services to which they otherwise have no access, such as education, health, finance, and energy, or involving them directly in the design or implementation of development projects, making them partners and providers as well as potential beneficiaries. For example, when poor farmers are linked into commercial agricultural value chains, they can achieve unprecedented improvements in income. Or when children are enrolled in schools that teach them literacy and numeracy skills to a minimum standard, their lifetime earnings opportunities are expanded hugely. When lives are saved through medical attention at birth, and illnesses avoided by reducing indoor air pollution or improving nutrition, the development benefits are startling.

In other words, we define scaling-up development impact in terms of not just reaching large numbers of poor people but doing so with interventions that transform their lives. These interventions often lead to behavioral changes in poor households that trigger further innovations and development: poor families invest more in their children when they are more likely to survive; they save more when they see opportunities for further income advancement; they work more when they are not sick; their children go on to higher education when they excel at the basics.

What constitutes scale can differ according to circumstances. Scale may be defined in terms of the level at which objectives are set: for instance, a mayor's pledge to a city, a government's national development strategy, or the global MDGs. We do not limit ourselves to a rigid definition of scale here, but the case studies are principally oriented to experiences where the goal is transformational impact at the country level. With this definition, we exclude the activities of many small social enterprises and nonprofit organizations, which can have enormous transformational impact on the lives of those they reach but do not have the resources or capacity to implement national programs. However, we do include so-called franchise models, where many of these entities replicate a similar business model and thereby achieve scale in aggregate. In other words, we do not restrict ourselves to scaling up through a single program or organization. Sometimes, a successful business model leads to imitation and replication, and that becomes the process for reaching scale. That has been true for the microfinance and the mobile phone industries, for example.

Although our interest is in understanding how to transform the lives of poor people, we do not focus only on scaling up interventions that reach the poorest of the poor. For the most part, poor people are not a well-defined, static group. Poor families may have good years, when they would be classified as near poor, and bad years, when they fall back into poverty. But if they benefit from a scaled-up intervention when they are just above the poverty threshold, they are far less likely to fall back into poverty at a later stage. Hence the impact on poverty reduction over time can be just as large by including the near poor in the target group compared to interventions that target only extremely poor populations. While the precise target group varies from organization to organization, most of the examples presented here are aimed at those individuals spending less than 4 dollars a day.

Scaling Up Today

Scaling up is an inherently complex process involving the management and organization of vast numbers of dollars and people: dollars, to cover the cost of establishing and running large-scale operations; and people, to manage those operations, serve as intermediaries in the delivery of interventions, and to interface with low-income beneficiaries. In other words, any attempt at getting to scale hinges on establishing a business model—the nexus of finance and delivery—that can support a scaled-up operation.

Figure 1-1 provides a stylized schematic of how this works in practice today. Development interventions are arranged according to whether they require subsidies or can be made profitable. Typically, when subsidies are needed, government, aid donors, or large international NGOs take the lead. Examples range from va...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Preface
• 1 - Overview: The Challenge of Reaching Scale
• 2 - Why Business Models Matter
• 3 - From Scaled-up Budgets to Scaled-up Impact: A Decade of Rising Foreign Aid in Review
• 4 - Scaling up Impact: Vertical Funds and Innovative Governance
• 5 - Incentives and Accountability for Scaling up
• 6 - Angel Investment: Enterprise Solutions to Scale
• 7 - Scaling up through Disruptive Business Models: The Inside Story of Mobile Money in Kenya
• 8 - Meeting the Demand of the Poor: Two Cases of Business-Led Scaling up at the Base of the Pyramid
• 9 - Scaling up South-South Cooperation through Triangular Cooperation: The Japanese Experience
• 10 - Institutional Challenges to Scaling up Learning in Kenya
• 11 - Scaling up in Education: School-Based Management in Niger
• 12 - Scaling up Impact through Public-Private Partnerships
• Contributors
• Index
• Back Cover