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Scaling up social innovationV I J A Y M A H A J A N

IF we see progress as an improvementof our collective ability to addressvarious issues – from material concernslike the provision of adequate liveli-hoods to all, to socio-political onessuch as how we relate to each otherand govern ourselves – then socialinnovation is central to progress. Socialinnovation largely results from thework of passionate individuals whoestablish or use diverse platforms foraddressing issues that bother them.Because of deep feelings towards thecause they espouse, such individualsact through their own will; hence suchaction is dubbed voluntary.1

Most social innovation in mod-ern times has arisen from the volun-tary sector, in part because it is hardfor individuals to pursue their passionin either state or market institutions.However, our hypothesis is that toscale up, social innovation has to movefrom the voluntary sector to state andmarket institutions. We will illustratethis with some examples, mainly fromthe field of social innovation that theauthor is familiar with, namely liveli-hood promotion.

Loosely defined, livelihood pro-motion is an organized effort to enablemillions of poor people to earn a liv-ing adequate to support themselvesand their families with food, clothing,shelter as well as basic services likehealth care and education. There havebeen many efforts at livelihood promo-tion. We look at some of the prominentones with a view to draw lessons aboutthe origins of social innovation and

the processes by which it can be fos-tered. The idea is not to extol a few ofthe many who have contributed, butto elicit lessons for the promotion ofsocial innovation so that faster andless costly progress can be achieved.

The pioneer of voluntary actionand social innovation in modern Indiawas Mahatma Gandhi. Among severalinterventions, Gandhiji promotedkhadi, hand-spinning of cotton intoyarn, both as a symbol of the freedomstruggle as well as an attempt at giv-ing every poor person a means oflivelihood while meeting a basic need– clothing. To institutionalize the ideaof khadi, he established the All IndiaSpinners’ Association. This organiza-tion constituted the beginning ofvoluntary action in India for liveli-hood promotion. Gandhiji’s disciple,J.C. Kumarappa subsequently workedon a number of village industries –from edible oil extraction using bul-lock-driven ghanis to pottery andblacksmithy. An entire network oflocal voluntary institutions emergedaround the country to promote khadiand village industries, replicatingthe original social innovation byGandhiji.

After Independence, theseorganizations received support fromthe Khadi and Village IndustriesCommission (KVIC). Though not aparticularly dynamic institution, theKVIC is responsible for at least gene-rating part-time wage employmentfor millions of poor rural householdsand, in that sense, has taken the origi-nal ideas of Gandhi and Kumarappato scale, a case of social innovationgoing to scale with state sponsorship.

In 1951, watching the grow-ing violence linked to the issue ofunequal land ownership in rural India,

1. In popular thinking, as well as in litera-ture, there is some confusion between volunta-rism, which means ‘of one’s free will’, andvolunteerism, meaning ‘working withoutremuneration’. We believe volunteerism is asmall though important subset of voluntarism,which describes self-willed action.

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Gandhiji’s foremost disciple, AcharyaVinoba Bhave decided that he wouldmake it his mission to persuade land-owners all across India to voluntarilygive part of their land to the landless.Between 1951 and 1967, Vinobaundertook a 25,000 mile long pada-yatra, convincing land owners to giveup part of their land and in the processmanaged to gather pledges for over4.2 million acres of land. Bhoodanwas a major social innovation for moreequitable distribution of a primarymeans of livelihood – land. However,as much of the land was barren andneeded substantial investment, this in-novation got stuck in the secondphase.

In response to this predicament, seve-ral Gandhian leaders came together toestablish the Association for SarvaSeva Farms (ASSEFA) in 1979 as aNGO. ASSEFA raised funding frominternational supporters, state govern-ments and banks, and established SarvaSeva Farms on Bhoodan lands in Tamil-nadu and several northern states.Under the leadership of S. Loganathan,ASSEFA was successful in establish-ing Bhoodan allottees on their landand undertaking cultivation. It alsodiversified its work beyond land andwater resource development and agri-culture to include dairy and villageindustry, primary education, commu-nity health and housing. It furthermodified its funding strategy fromseeking largely foreign grants to pri-marily self-help group based creditfrom banks.

Today ASSEFA works with overa million poor families in close to10,000 villages in eight states of India.In its ambit are two community ownednon-bank finance companies, withtotal assets of over Rs 200 crore, andfive milk processing plants with acapacity exceeding 100,000 litres perday, and marketed in pouches as

Seva brand milk. ASSEFA scaled upVinoba’s social innovation using mar-ket institutions such as finance anddairy companies.

Another of Gandhiji’s initiativeswas the trade union, Textile LabourAssociation (TLA), Ahmedabad, setup in 1916. It became the main unionof textile workers in Ahmedabad. Ayoung woman, Ela Bhatt, joined it inthe 1950s but found the TLA insuffi-ciently responsive to the plight of self-employed women workers such asstreet vendors. So she branched outand set up the Self Employed Wom-en’s Association (SEWA) as a tradeunion of street vendors, push-cartworkers and home-based womenworkers. SEWA members in turn setup the SEWA Bank to take care of theirsavings (over Rs 100 crore) and creditneeds. SEWA and affiliated organiza-tions inspired by it today serve nearlyone million poor women, and havealso come a long way from their roots.

Another Gandhian, ManibhaiDesai, started the Bharatiya AgroIndustries Foundation (BAIF) in Puneand through it established large pro-grammes in several states for cattlebreed improvement through artificialinsemination. He innovated the ideaof motorcycle borne artificial insemi-nators servicing cattle in a number ofvillages. The idea has since spread allover India with government support.

BAIF set up a chain of bull farms andliquid nitrogen plants, for semen col-lection and preservation, as also amodern factory to produce animalvaccines.

The second generation Gandhianleaders of these organizations, thoughstarting off in the voluntary sector wereable to significantly build bridgeswith state and market institutions. Allthe three Gandhians described above– Loganathanji, Elaben and the lateManibhai – recognized the need forusing ‘modern’ inputs – be it legalforms such as a bank to raise capital,or technology such as artificial insemi-nation, or methodology such as estab-lishing a large number of self-helpgroups. More importantly, they recog-nized the need for well educated pro-fessionals to run their organizations.

Through them came not onlynew ideological influences and meth-odological innovations, but alsonew networks and support systems.Thanks to such pioneers, social inno-vation has come to assume a very dif-ferent meaning in 2009 as comparedto 1909, when Gandhiji wrote HindSwaraj.

Let us think of social innovation asa (good) virus – SIV or the socialinnovation virus. SIV is born in thesupportive ‘petri dish’ of voluntaryinstitutions, but seeks to replicateitself using the more vigorous medium

SIV-S-G which usesgovernment

programmes for scaling

SIV-S-A whichrelies on advocacy

for scalingSIV-S which

replicates throughstate institutions

SIV-M whichreplicates throughmarket institutions

Social Innovation Virus(SIV), incubated in

voluntary institutions

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of state and market institutions. In theprocess, like a virus, it has to mutate,ideologically and methodologically.Two broad strains of SIV emerge –SIV-S, that is capable of thriving in thepolitical environment of state institu-tions and SIV-M, which thrives in theeconomic environment of market ins-titutions. Within the SIV-S strain, againthere are two variants – SIV-S-G,which primarily uses government pro-grammes and machinery to replicateand the SIV-S-A strain which pri-marily uses advocacy as a means ofengaging with state institutions.

State institutions include cons-titutional institutions such as pancha-yats, statutory institutions like primaryagriculture credit cooperatives andwater users’ associations, and statesponsored informal institutions suchas self-help groups for linking withbanks for credit or joint forest man-agement committees and watershedcommittees. Of course, governmentdepartments and programmes are verymuch part of state institutions, as arestate owned banks, promotional andregulatory institutions. SIV-S tries tomodify the behaviour of these institu-tions into becoming more participa-tory, more equitable and inclusive,and more conscious of sustainability,both financial and environmental.

Since the 1970s, many voluntaryagencies not only engineered socialinnovations but actively engagedwith state institutions to scale them up.One such voluntary institution isMYRADA. Under the leadership ofAloysius Fernandez, Myrada pio-neered work in the field of rural credit.The need of poor households for credit,consumption, as well as productiveactivities, has never been adequatelymet. They are buffeted between aplethora of state sponsored institu-tions offering subsidized credit, whichis difficult to get in practice, and

expensive moneylenders. Myradainnovated a methodology to extendcredit to the poor in the late 1980s.

Myrada formed self-help groups(SHGs) of women from poor house-holds and encouraged them to save,using the pooled savings to lend to afew among them. Later it linked theSHG with a local bank to extend morecredit to the group, which was madeavailable to its members. Myradaworked with NABARD to replicatethis SHG-bank linkage model throughthe public sector and regional ruralbanks that have a large rural branchnetwork. The large scale replicationof the SHG-bank linkage model tocover over four million SHGs by 2008is a classic example of how socialinnovation can be scaled up by stateinstitutions.

One person who mastered the artof scaling up voluntary sector socialinnovation through state institutions,or the SIV-S-G strategy, was the lateAnil Shah, who retired as a civil ser-vant and, among other posts held, wasthe planning secretary and rural deve-lopment secretary in Gujarat. He wasthe first executive director of the AgaKhan Rural Support Programme(AKRSP) in Gujarat. Under AnilShah’s leadership, AKRSP did path-breaking work in the fields of jointforest management and watersheddevelopment. In 1994, on retiringfrom the AKRSP, Anil Shah estab-lished the Development Support Cen-tre, DSC, Ahmedabad.

One major initiative by DSC isin Participatory Irrigation Manage-ment (PIM), where farmers in a canalcommand area undertake the manage-ment of the irrigation system. Basedon DSC’s work in PIM and watersheddevelopment, Anil Shah shaped NGOsector thinking about generic princi-ples for community based naturalresource management. Known as the

Bopal Principles, their influence isevident in the 11th five year plan docu-ment and the formulation of the newwatershed guidelines.

A number of civil servants have beenable to scale up social innovations inthe field of livelihood promotion evenwhile working in government, usingthe SIV-S-G strategy. MeethalalMehta, a retired chief secretary ofRajasthan, was a key architect of theAntyodaya programme under whichfive poorest families in a village wereidentified by the gram sabha to whomthe government provided an incomegenerating asset. This was in 1977.When Indira Gandhi came back topower in 1980, she adopted this ideaand replicated it as the Integrated Ru-ral Development Programme (IRDP),which has run non-stop since then(renamed as SGSY since 1999) and isarguably the world’s largest, thoughnot very successful, self-employmentprogramme having reached over 75million households.

In 1999, T.K. Jose, a young IASofficer from Kerala, designed andran for over seven years a poverty alle-viation programme called Kudumba-shree. It is based on neighbourhoodgroups of poor and vulnerable house-holds federating into area develop-ment societies and at a higher level,community development societies.Much acclaimed, this programmenow covers almost all the poor fami-lies in the urban wards and ruralpanchayats of Kerala, offering themsavings and credit services with banklinkage and training, alongside com-mon facilities and marketing supportfor a number of production activities.

Bigger than Kudumbashree innumbers and again based on a threetier structure of self-help groups, vil-lage organizations and mandal mahilasamakhyas (women’s cooperatives),is the Velugu or Indira Kranti Patham

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(IKP) programme run by the Societyto Eliminate Rural Poverty in AndhraPradesh. Velugu was conceived on thebasis of work done earlier in theUNDP’s South Asia Poverty Allevia-tion Programme (SAPAP) by K. Raju,a highly committed IAS officer. Thiseffort was influenced by Shoaib Sul-tan Khan, head of the Aga KhanRural Support Programme, Pakistan.SAPAP led to the design of the muchbigger, Rs 2200 crore World Banksupported Velugu/IKP programme.Initially led by K. Raju, it is arguablyIndia’s largest and most successfulpoverty alleviation and empowermentprogramme, reaching over 12 millionhouseholds through women’s self-help groups. Just to provide an idea ofits scale, over Rs 6500 crore of creditwas extended by banks to these SHGmembers in 2007.

A large number of social innova-tions are embedded in governmentprogrammes like Kudumbashree andVelugu. This is a new phenomenon,where many government programmeshave adopted the ideology (e.g.empowerment) and methodologies(self-help groups, village organiza-tions) of the voluntary sector. Yet,once they succeed, there is danger ofa social innovation scaled up throughstate institutions being hijacked bypoliticians for their own ends. Forexample, the SHG-bank linkage pro-gramme in Andhra Pradesh becamepoliticized at the time of the state elec-tions in 2003. The incumbent ChiefMinister, Chandrababu Naidu, patro-nized the movement and put pressureon banks to lend money to SHGs in abig way and reduce interest rates fromthe then prevailing 12% to 9%. In thecompetition for pre-election give-aways, Y.S. Rajshekhar Reddy prom-ised to subsidize the interest ratesfurther, so that SHGs would have topay only 3% per annum. He won the

elections and implemented the scheme.The SHG movement in AndhraPradesh has grown in scale and bankfunding increased enormously (get-ting nearly Rs 9,000 crore of loansin 2008). Fortunately, even as SHGmembers attend political ralliesin large numbers, the movementhas (so far) not become an organ ofthe state and retains its grassrootsmomentum.

The alternative approach to workingwith state institutions is advocacy,or the SIV-S-A strategy. This maysometimes include militant activism.Examples of this abound. The Chipkomovement of the 1970s, to protectcommunity rights over village forestsin the Uttarakhand hills, used theunique method of hugging trees toprevent them from being felled. Even-tually this led to the heightening ofpolitical aspirations of the hill peopleand the formation of a separate Uttara-khand state out of Uttar Pradesh. Thesame is true of the tribal rights move-ment in the Santhal Parganas andChhota Nagpur belts of Bihar, whichthen separated to become the tribalstate of Jharkhand.

Medha Patkar led the NarmadaBachao Andolan (NBA) from the mid-1980s to draw attention to the plightof ‘project affected persons’. Herefforts changed the way the eco-nomics of large dams was hithertoconceived, with the benefits beingoverstated and the environmentalcosts of inundating forests and socialcosts of displacement of tribals beinggrossly understated. All this haschanged in a major way due to thework of the NBA and related activists.Medha Patkar’s efforts also led tohuge changes in the formulation andimplementation of rehabilitation andresettlement packages, culminatingin the National Policy on Rehabilita-tion and Resettlement, 2007.

Another successful example ofSIV-S-A is the work of Aruna Roy andNikhil De at the Mazdoor KisanShakti Sangathan in Rajasthan whichinsists on transparency and account-ability in public works at the villagelevel. This was highly influential andeventually led to the Right to Informa-tion Act, 2004. A related campaign, toensure wage work for the rural unem-ployed, which had its roots in theMaharashtra Employment GuaranteeScheme, 1973, led to the NationalRural Employment Guarantee Act(NREGA). This transformed a long-standing but not very effective gov-ernment programme of rural wageemployment into an enforceableright to paid work for up to 100 daysa year.

There can hardly be a betterexample of ‘scaling up’ or mainstream-ing than this, of a social innovationidea (food for work or employmentguarantee) into a nationwide pro-gramme positively impacting millionsof poor households every year. Yet,despite the Congress claiming creditfor its sponsorship of the NREGA andseveral ground-level reports of poorpeople not being given work, whilevested interests fill up false musterrolls and pocket the money, suchattempts at making political capital ormoney on the side from the NREGAdo not take away from its overallaccomplishment.

Today, with markets getting inte-grated, technology creating disruptivechanges in both demand and how it ismet, and the increasing need for capi-tal, many activists have taken a busi-nesslike approach to make livelihoodpromotion efforts more sustainable.Hence social innovation is metamor-phosing into a new form called ‘socialentrepreneurship’. Here, the innova-tion aims to use the power of marketinstitutions to scale up. Elements of

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this include new generation philan-thropies like the Gates Foundationwhich are more like social venturecapital funds rather than grant makers.Another element of their strategy isthe use of highly paid but cause-drivenprofessionals in place of volunteerhuman resources. High technologyand marketing savvy, including target-ing what C.K. Prahlad calls The For-tune at the Bottom of the Pyramid, isan integral part of this paradigm.

The SIV-M, strategy works well inthose set of circumstances where thesocial problem is amenable to beingaddressed through a businesslikeapproach. This is true, of course, forincome-generating activities such ashandloom and handicraft production,which has seen the involvement ofseveral social enterprises like FabIndia, Anokhi and recently, Ranga-sutra. Together they provide work for,or seen another way, marketing outletsfor, thousands of weavers and crafts-men. One such social enterprise is FabIndia, set up by John Bissell in 1960with a single outlet in Delhi. Subse-quently, his son, William, expandedthe number of outlets and the produc-tion base in the late 1990s. One of theinnovations to ensure that weaversand craftsmen become partners andnot just piece-rate workers, was theestablishment of several ‘regionalsupply companies’ where weavers arealso shareholders.

Even social services like eyecare, sanitation, lighting, and waterpurification can be converted into asocial enterprise. Examples of this arethe Aravind Eye Hospital, Madurai,which conducts a large number ofcataract operations and even has aworld-class facility for manufactur-ing intra-ocular lenses. The SulabhShauchalaya network was establishedby Bindeswari Pathak, initially asan attempt to do away with the prac-

tice of headload carrying of humanexcreta by sweepers. This has nowbecome a large network of pay toiletfacilities in the country, providingmuch needed services to the publicwhile improving sanitation in citiesand also upgrading the working con-ditions of persons engaged there.

SELCO in Bangalore, set up byHarish Hande, is a pioneer in solarlighting systems. Similarly, ByrrajuFoundation set up by RamalingaRaju of Satyam Computers has con-structed a large number of waterpurification plants at the village levelwhich are run by franchisees, andprovide safe drinking water at a rea-sonable price, while being financiallysustainable.

This is a brave new world still find-ing its form and purpose. However, inone sub-field, microfinance, it hasreached maturity and that example isworth describing briefly. The Bangla-desh Grameen Bank (BGB) model isemulated by microfinance institutionssuch as SKS, whose staff helped formgroups of landless women and offermicro-credit to them through fundsthat SKS borrows from banks. VikramAkula, founder of SKS Microfin Ltd,which today is India’s largest micro-finance institution, grew up in the USand came to India as a young studentto work with an NGO. In search ofa solution to the poverty he saw,Vikram visited the Grameen Bank,Bangladesh, established by ProfessorMuhammad Yunus. Vikram began a‘Grameen replication’ by setting up anNGO in the 1990s.

Slowly SKS grew to a scalewhere donations and friendly loanswere not adequate and Vikram wasconstantly searching for lendingfunds. He built a strong team to carryout the work, while he went back tofinish his doctorate from the Univer-sity of Chicago. Later he joined

McKinsey for a couple of years,where he honed his vision for scalingup SKS. In 2005, SKS Microfin, nowtransformed into a non-bank financecompany, raised private equity capi-tal and among the investors was VinodKhosla, the Silicon Valley venturecapitalist. Vikram has received manyaccolades for his work, and wasnamed among the 50 most influentialyoung people in the world by Timemagazine. Over the last couple ofyears, SKS has raised over 100 milliondollars as equity and five times asmuch bank loans. It works with overthree million households.

L ike SKS, several other micro-finance institutions have shown anability to reach scale way beyond any-thing that was imaginable for the ear-lier generation NGO microfinanceinstitutions. Along with this, thediscourse has changed – the word‘equity’ which was used by the earlysocial innovators to mean equalityand social justice, is now used by thenext generation social innovators tomean share capital. Time will tellwhether this will lead to a more effec-tive addressing of social problems,or result in ‘mission drift’ that severalmicrofinance institutions are alreadycharged of.

Just as in the case of SIV-S,where there is danger of a social inno-vation sponsored by state institutionsbeing hijacked by politicians for theirown ends, in the case of SIV-M, thereis a danger of the social innovationbeing misappropriated by people outto make a straight business profit.But, despite the dangers, we argue thatsocial innovation incubated largelyin the voluntary sector must learn toembrace state or market institutionsfor scaling up. Otherwise, a thousandbonsai innovations may bloom, butsociety’s big problems will remainunresolved.