Scaling to New Locations

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In our surveys, we have found that enterprises scale to new locations through:

  • setting up networks of distributors for products;
  • implementing projects or selling large-scale products or services to other organizations;
  • helping others replicate the idea or the business model in new locations;
  • opening offices, plants or branches in new locations.

Scaling Through Distributors

By working through a network of distributors, scaling does not require the enterprise to create its own presence at all locations. This can be a simple and rapid way to grow, allowing enterprises to reach high volumes of sales with low expenses. This model is often appropriate for enterprises providing easily commoditized products (i.e. lanterns, stoves, or LPG tanks). Some distributors are independent retailers (ToughStuff), while others are franchisees (Nishant Bioenergy, AEDC).

Project based scaling

Project-based scaling is often appropriate for enterprises that have an implementable service they offer, or a large product which can be sold or installed for a client in another location. Often project-based scaling involves implementing for the client and moving on. Enterprises using this model generally do not maintain a presence, even if their products remain. However, enterprises are sometimes in maintenance contracts that keep them involved over the long-term. One example is Light Up The World, a nonprofit which implements rural electrification projects for donors in villages, and has worked in over 53 countries. Another is Cows to Kilowatts, which developed a slaughterhouse biogas digester power plant in Nigeria and was recently contracted to build a plant at a slaughterhouse in Nairobi, Kenya.

Replication

This model has a lot in common with the distribution model we identified, called Knowledge Dissemination. Some enterprises are not interested in expanding beyond their initial target location, but would to create a larger impact. These enterprises can scale their impact by helping others copy their work. Some enterprises develop solutions, but rely on others to implement them (i.e. Center for Rice Husk Energy Technology invents rice husk gasifier stoves and shares the design, thus relying on others to manufacture and distribute them). Some enterprises create centers to promote their learnings and research. IDEAAS created a center for learning on decentralized energy generation. blueEnergy helped create the Nicaraguan National Renewable Energy Association and Global Wind Association as well as the Center of Excellence on Renewable Energy. Others, such as Barefoot College, train partner companies or non-profits to create satellite versions of themselves.

New Branches

Scaling to new branches mean new offices from which to run projects (Light Up The World), or support structures for distributors in new countries (ToughStuff). This kind of scaling could also mean placing power plants in new villages (Husk Power Systems, DESI Power) or opening new sales branches across a country, a region, or internationally (Grameen Shakti, SELCO).

Case Studies

Husk Power Systems

Husk Power Systems, which installs and runs rice-husk gasification power plants in villages in India, is focused on scaling as rapidly as possible and expanding from its current 75 plants to over 2,000 plants serving 6 million people by 2014.

Husk’s main strategy for scaling has been to develop an inexpensive ‘plug and play’ type solution which can easily be put into as many villages as possible. Because Husk has managed to keep costs low enough to make individual plants profitable while offering customers power at 1/3 what they were paying for kerosene, it has been able to attract capital to build new plants, which has been a challenge for many other organizations. Husk’s main challenge in scaling has been human resources, since it needs to train 3-5 people to run each plant. Husk is therefore developing Husk University, a standardized training program for village engineers which will have  a centralized location for every 30-40 plants. Part of how Husk keeps costs low and scales more rapidly is by keeping focused on being a utility company, rather than attempting community development projects.