The doughnut and the hole

A message for social change-makers seeking ‘impact on scale’ even as sources of funding dry up: Stay focused on the purpose (the doughnut) and not the scale and brand of your organisation (the hole). Innovate. And learn to be a catalyst

Arun Maira

[Image by Gerd Altmann from Pixabay]

The Covid-19 virus has battered India’s economy. India’s GDP reduced by 24% in Q1 2021, the largest drop amongst all countries. India also has the largest number of young people in the world. They are expected to provide a ‘demographic dividend’ to India’s economic growth—provided they are educated and employed. Education and employment in the country has been shaken by the pandemic. What will their future be? Meanwhile, millions who were employed have lost their jobs and incomes and are suffering great hardships.

Covid-19 also revealed the abundance of human spirit and energy in India’s youth. They took initiatives to provide relief. Many had been working before in a variety of social enterprises, to improve health, education, and livelihoods around the country.

India has around 4 million social enterprises registered as NGOs. There would be many more informal ones, not counted. Social enterprises were hit very hard by the economic crisis. CSR funds have dried up because donors’ businesses were hard hit too.

Airlines instruct passengers to make sure they have oxygen before they help others. How will social enterprises, on whom so many are depending, survive?

Place mats on tables in a New York coffee shop offer good advice. The message is, “As you go on through life, brother, keep your eyes on the doughnut and not on the hole.”

Many young people in India are on a mission to make the world better for everyone. The numbers of people who have set out to make a difference in the way India is developing gives me great hope. All these people with an urge to have a big impact have the same challenge. Often it seems that the only resource they can count on is their own passion. Financial resources are becoming harder to come by. Therefore, what they need are innovations in their models of organisation that can produce the outcomes they want with less financial support.

Some of these young people turn to me for advice about their strategy and the design of their organisations. They expect I can guide them because I have worked for 20 years in international consulting companies, even leading strategy and organisation consulting practices in them. Also, I have served on many boards—of business corporations, NGOs, and educational institutions too. Besides, when I served as a member of India’s Planning Commission, I listened to scores of leaders of civil society organisations who, while placing their needs before me, also consulted me about their strategies.

My first piece of advice to social change-makers: “Don’t scale up!”

When young change-makers set out to change the world, their aspiration often is to have ‘impact on scale’. They believe that to have impact on scale they must have a large organisation. They take the conventional approach, for which they can hardly be blamed, because that is how it has always been done so far, and which is what their management consultants also advise them.

They design an organisation structure—much like a conventional pyramid, with a board of eminent persons on top. They may even imagine a smart building in which they will house their staff. They feel compelled to do this because it is the usual thing to do, and also because their potential funders want a plan in a conventional form. Thus, their energy gets diverted from their passion for their work (the doughnut) to the building of their own organisation and to scurrying for funds to support it (filling the hole). When funds are hard to come by as they generally are, they become disheartened.

Some of the largest entrepreneurial organisations in the ‘for profit’ sector began with a couple of young people in a university dorm, or in a garage, who had an idea they hoped would grow into a big enterprise.

The entrepreneurs then gathered a few people around them with the knowledge and capabilities required to give substance to their idea. When the idea developed further, they began to increase their organisation’s size, and to look out for investors to support them.

Initially, the small organisation was held together by a shared vision and minimal critical rules. It had creativity and flexibility. As it scaled up it became formally organised. While adopting conventional methods of organising to scale, it began to lose its creativity and flexibility. Some of the original creators, missing the earlier spirit of entrepreneurship and creativity, left. Those who remained were bound together by expectations of a large financial award. Outside investors were attracted. They had expectations which were often not in alignment with the founders. Clashes of values ensued, and governance suffered.

A tragic example of this was the flaming out of SKS Microfinance, which brought down the entire Indian micro-finance industry ten years ago. It was the rising star, which tapped successfully into venture funds and stock markets for resources to scale up its operations. The management cultures, and values, of the world for profit and the world of social change were not compatible. 

A fundamental difference between creative enterprises ‘for profit’ and creative enterprises ‘not for profit’ is the purpose of the enterprise. A business enterprise must provide products and services that people want to buy. Otherwise it will not be able to earn revenues and make a profit. However, the purpose of entrepreneurs who go into business is not an altruistic one: it is to make profits. They hope the business will be highly valued by the stock market when it is listed. Before they get there, they need support from investors, most of whom hope for an early ‘exit’ with big financial gains.

Social entrepreneurs need financial support too. However, their purpose in life is to help others, not financial gains for themselves.

Both, business entrepreneurs and social entrepreneurs, provide services to the community. Both have need for money. Business entrepreneurs want to make more money: it is a marker of their success.

Social entrepreneurs need money too, but only to support a public cause. Their financial size, if large, may be a warning sign that they are slipping into the form of a conventional organisation. They have put on too much weight and are spending too much energy (and money) to manage their internal processes and not serving the community as much as they could.

The lesson for not-for-profit social impact enterprises is this. Do not be obsessed with the scale and brand of your own enterprise. Stay focused on its purpose.

The scale of the outcomes you stimulate matters: not the scale of your organisation. Learn to be a catalyst. Catalysts play critical roles in chemical processes, though the quantity of catalyst required is not even included in the chemical equation.

My second piece of advice to social change-makers: “Don’t focus narrowly: Think systems”

The novel coronavirus has created global panic. It spread very easily and fast. There was no effective cure for people infected. The only solution that medical experts could recommend, until a vaccine is developed, is ‘social distancing’—i.e. physical separation of people.

The strong medicine of social distancing was prescribed without thorough drug testing. Very soon people everywhere began to suffer from its side-effects, some even dying. The disruptions by social distancing to supply chains stopped the supply of essential goods for people’s well-being. It prevented the treatment of people with other medical ailments. Many suffered greatly, some dying prematurely for lack of care they usually would have. Education of children was disrupted and alarm bells are ringing about the impact of lockdowns on the future of children.

Strong actions focused on only one part of an interconnected system can have large unintended consequences on other parts of the system. Therefore, experts in any part of a complex system that needs fixing, must understand how all parts of the system are inter- connected.

Indeed, this is a lesson that medical practitioners should never lose sight of. A specialist in ailments of the heart may cause damage to other parts of the body if he does not understand the connections between the cardiac system and other vital systems that keep a human being healthy.

Specialisation within the sciences has enabled great advances in many fields. However, the largest breakthroughs often create the greatest hazards in other areas because the impacts of narrow solutions on the whole system are not understood. The use of fertilizers has undoubtedly contributed to the increase of food production. Damage to soils which is reducing their ability to sustain food production has become a problem. Advances in digital  technologies have provided means of communication that have benefited people everywhere. Now humanity must find solutions to prevent breakdowns in social harmony they are causing.

Humanity is confronted with many inter-connected problems for which solutions must be found urgently. These problems are listed in the UN’s 17 Sustainable Development Goals (SDGs) that all countries have adopted. They are systemic problems: climate change, gender inequality, depleting water sources, persistent social and economic inequality, inadequate public health and education, etc.

The 17th goal prescribes the solution for all the other goals; viz. partnerships. All stakeholders—governments, civil society actors, and businesses—must collaborate to meet any of the goals. Also, there must be collaboration among the teams working on all the goals because they are interconnected: solutions for faster economic growth and for creation of jobs must not harm the environment; solutions for clean energy must support creation of more jobs, etc.  

The SDGs conceptually break apart a complex, interconnected system into smaller parts so that relevant expertise can be focused on each part. This is the ‘scientific’ way to solve problems. It conforms with how all large organisations are designed—whether a large company, a government, or the UN. Create verticals and divisions to focus on the parts. The problem that follows is that the focused divisions become silos, competing for resources and recognition.

The conventional way of organising to manage complexity is to break Humpty Dumpty apart. And then, as the 17th goal says, Humpty Dumpty must be put together again. Which, as the children’s nursery rhyme says, is very difficult and requires all the King’s horses and all the King’s men too.

Local systems solutions

The science of complex system suggests a better way to solve complex problems. It says local systems solutions are required to solve large systemic problems.

The various problems listed in the SDGs are visible in many parts of the world. They combine with each other in different ways in different contexts. For example, problems of environmental degradation and water resources take different forms in the grasslands of Kutch in India and in the hills of Himachal Pradesh. The problem of livelihoods and incomes of people, which combines with these problems, has different challenges in Kutch and in Himachal Pradesh. In every locality, the solution must be a systems solution because it must address all problems simultaneously, otherwise the solution of one may make others worse.

Experts in the headquarters of the UN, or in national and state capitals, cannot find locally apt solutions for everyone—even if they were to collaborate with each other better at their high levels, which they should. Stakeholders must come together locally to design solutions for their own systems problem. They must find locally apt solutions. And they must implement the solutions collaboratively on the ground.

The people at the top have expertise no doubt, and financial resources, as well as authority to change the rules. A fundamental change in orientation is required in all large-scale organisations that have the resources the change-makers on the ground need to support them. All of them—in governments, development agencies, the corporate sector, and even the philanthropic sector—operate in a similar manner, as expert problem solvers and top-down controllers. Their role must change. They must learn to be coaches and supporters of change-makers on the ground, to help make the world better for everyone.  

I tell my young friends who are worrying about the hole in their doughnut that, no doubt they will need support. Since support will be harder to come by, they must be very firmly focused on their purpose of building the capacity of local communities. They must not yield to the temptation of accepting much needed financial support if the provider of the support is not aligned with their purpose.

As the hole in their doughnut grows larger, the doughnut itself becomes thinner.

Their funds provider may expect them to focus only on his preferred cause and not the rest of the system—say only education in the local community. The provider would also expect accurate reports of outcomes achieved in education. Therefore, my young friends will be compelled to bite too much into only one side of the doughnut. It will break up their mission. Their work will no longer be systemic.

Movements of change

The numbers of young people who have set out to change conditions on the ground in India gives me great hope. They include thousands of women running self-help groups, increasing numbers of social entrepreneurs, and even government officials who are bringing about change through their support of local communities.

None of them is the boss of a large organisation. They are lit up by an internal passion to make a difference. They have few resources. They are like fireflies who have an internal light. When many fireflies arise together, they can lift human spirits with their sparkles.    

Millions of change-makers are required, catalysing millions of local movements, to improve the world for everyone. The scale must be in the movement of change, and the outcomes it produces, and not in the sizes of the organisations that make the change.

As Robert Kennedy said in a speech in South Africa, at the height of tensions in that country:

“It is from numberless acts of courage and belief that the human story is shaped. Each time a man stands up for an idea or acts to improve the lot of others or strikes out against injustice, he sends forth a tiny ripple of hope. And crossing each other from a million different centres of energy and daring those ripples build a current that can sweep aside the mightiest walls of oppression and resistance.”

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About the author

Arun Maira
Arun Maira

Former Chairman, BCG India & Member, Planning Commission

Former Member, Planning Commission of India
Former Chairman, Boston Consulting Group, India
Chairman, HelpAge International

Any discussion on policy and the future of India is enriched with Arun Maira’s views, and not just because he was a member of the Planning Commission of India for five years till June 2014. Arun is one of those rare people who have held leadership positions in both, the private as well as the public sector, bringing a unique perspective on how the two can work together to foster growth for India. He has led three rounds of participative and comprehensive scenario building for the future of India: in 1999 (with the Confederation of Indian Industry), 2005 (with the World Economic Forum), and 2011 (with the Planning Commission).

In his career spanning five decades, Arun has led several organisations, including the Boston Consulting Group in India. In the early part of his career, he spent 25 years in the Tata group at various important positions. He was also a member of the Board of Tata Motors (then called TELCO). After leaving the Tatas, Arun joined Arthur D Little Inc (ADL), the international management consultancy, in the US, where he advised companies across sectors and geographies on their growth strategies and handling transformational change.

Another decade later, Arun was back in India, this time as the Chairman of the Boston Consulting Group, a position he held for eight years till 2008. The other leadership positions he has held include being the chairman of Axis Bank Foundation and Save the Children, India. He was also board member of the India Brand Equity Foundation, the Indian Institute of Corporate Affairs, and the UN Global Compact, and WWF India.

Recognising his astute understanding of both macro as well as micro policy issues, Arun has been involved in several government committees and organisations, including the National Innovation Council. He has been on the board of several companies as well as educational institutions and has chaired several national committees of the Confederation of Indian Industries.

In 2009, Arun was appointed as a member of the Planning Commission, which is led by the Prime Minister of India. At this minister-level position, he led the development of strategies for the country on issues relating to industrialisation and urbanisation, and drove the formulation of policies and programmes in these areas. He also advised the Commission on its future role.

With his vast experience and expertise, Arun is indeed a thought leader. He is invited to speak at various forums and has written several books that capture his insights.

His recent books include An Upstart in Government: Journeys of Change and Learning; Redesigning the Aeroplane While Flying: Reforming Institutions (published in May 2014); Remaking India: One Country, One DestinyTransforming Capitalism: Improving the World for Everyone; and Shaping the Future: Aspirational Leadership in India and Beyond.

His book, An Upstart in Government: Journeys of Change and Learning (Rupa), was published in August 2016. The theme of the book is: the progress of nations and organizations has to be a cooperative endeavour. A good society is one that enables each individual to realize his or her aspirations. Everyone must cooperate to create such a society. The book should be of great interest to leaders in government, in the private sector, and in civil society organizations also. For they must all create better cooperation systems within their enterprises and with each other too.

Listening for Well-Being: Conversations with People Not Like Us, was published in 2017. The book is an incisive analysis of the causes for the increasing divisiveness in societies, aggravated by the shallowness of public discourse, and the break-down of communications between people with different beliefs and histories. He suggests ways to reverse these dangerous tendencies and make the world better for everyone.

His latest book is titled Transforming Systems: Why the World Needs a New Ethical Toolkit. In the book, he says, while economies have been growing, systemic problems of social inequality and environmental unsustainability are becoming intolerable. This realisation led to the Sustainable Development Goals, which all countries signed up to achieve. A new toolkit is required to attain these goals that go beyond the precepts of good business management and prevalent best practices in government as well as civil society organisations. This toolkit has to be founded on disciplines of systems thinking, ethical reasoning and deep listening.

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