So we’ve almost reached the end of the year 2015, which could go down in the history of global sustainable development efforts as one of the more significant years, with the trifecta of the approval of the Sustainable Development Goals (SDGs), the agreement on the Addis Agenda on Financing for Development (FfD) and the (shortly to be completed) Paris COP21 Climate Summit. Yet, all will depend on how the agreements with their ambitious targets are implemented on the ground.

Effective implementation will require a theory of change—a way to think about how we are to get from “here” in 2015 to “there” in 2030. The key problem is what has very appropriately been called by some “the missing middle,” i.e., the gap between the top-down global targets on the one hand and the bottom-up development initiatives, projects, and programs that are supported by governments, aid agencies, foundations, and social entrepreneurs.

One way to begin to close this gap is to aim for scaled-up global efforts in specific areas, as is pledged in the Addis Agenda, including efforts to fight global hunger and malnutrition, international tax cooperation and international cooperation to strengthen capacities of municipalities and other local authorities, investments and international coopera­tion to allow all children to complete free, equitable, inclusive and quality early childhood, primary and secondary education, and concessional and non-concessional financing.

Another way is to develop country-specific national targets and plans consistent with the SDG, Addis, and COP21 targets, as is currently being done with the assistance of the United Nations Development Program’s MAPS program. This can provide broad guidance on policy priorities and resource mobilization strategies to be pursued at the national level and can help national and international actors to prioritize their interventions in areas where a country’s needs are greatest.

However, calling for expanded global efforts in particular priority areas and defining national targets and plans is not enough. Individual development actors have to link their specific projects and programs with the national SDG, Addis, and COP21 targets. They systematically have to pursue a scaling-up strategy in their areas of engagement, i.e., to develop and pursue pathways from individual time-bound interventions to impact at a scale in a way that will help achieve the global and national targets. A recent paper I co-authored with Larry Cooley summarizes two complementary approaches of how one might design and implement such scaling-up pathways. The main point, however, is that only the pursuit of such scaling-up pathways constitutes a meaningful theory of change that offers hope for effective implementation of the new global sustainable development targets.

Fortunately, over the last decade, development analysts and agencies have increasingly focused on the question of how to scale up impact of successful development interventions. Leading the charge, the World Bank in 2004, under its president Jim Wolfensohn, organized a high-level international conference in Shanghai in cooperation with the Chinese authorities on the topic of scaling up development impact and published the associated analytical work. However, with changes in the leadership at the World Bank, the initiative passed to others in the mid-2000s, including the Brookings Institution, ExpandNet (a group of academics working with the World Health Organization), Management Systems International (MSI), and Stanford University. They developed analytical frameworks for systematically assessing scalability of development initiatives and innovations, analyzed the experience with more or less successful scaling-up initiatives, including in fragile and conflict-affected states, and established networks that bring together development experts and practitioners to share knowledge.

By now, many international development agencies (including GIZ, JICA, USAID, African Development Bank, IFAD and UNDP), foundations (including the Bill & Melinda Gates Foundation and Rockefeller Foundation) and leading development NGOs (including Heifer International, Save the Children and the World Resources Institute), among others, have focused on how best to scale up development impact, while the OECD recently introduced a prize for the most successful scaling-up development initiatives. The International Fund for Agricultural Development (IFAD) is perhaps the most advanced among the agencies, having developed a systematic operational approach to the innovation-learning-scaling-up cycle. In a collaborative effort with the Brookings Institution, IFAD reviewed its operational practices and experience and then prepared operational design and evaluation guidelines, which can serve as a good example for other development agencies. The World Bank, while yet to develop a systematic institution-wide approach to the scaling-up agenda, is exploring in specific areas how best to pursue scaled-up impact, such as in the areas of mother and child health, social enterprise innovation, and the “science of delivery.”

Now that the international community has agreed on the SDGs and the Addis Agenda, and is closing in on an agreement in Paris on how to respond to climate change, it is the right time to bridge the “missing middle” by linking the sustainable development and climate targets with effective scaling-up methodologies and practices among the development actors. In practical terms, this requires the following steps:

• Developing shared definitions, analytical frameworks, and operational approaches to scaling up among development experts;
• Developing sectoral and sub-sectoral strategies at country level that link short- and medium-term programs and interventions through scaling-up pathways with the longer-term SDG and climate targets;
• Introducing effective operational policies and practices in the development agencies in country strategies, project design, and monitoring and evaluation;
• Developing multi-stakeholder partnerships around key development interventions with the shared goal of pursuing well-identified scaling-up pathways focused on the achievement of the SDGs and climate targets;
• Developing incentive schemes based on the growing experience with “challenge funds” that focus not only on innovation, but also on scaling up, such as the recently established Global Innovation Fund; and
• Further building up expert and institutional networks to share experience and approaches, such as the Community of Practice on Scaling Up, recently set up by MSI and the Results for Development Institute.

To achieve the desired outcomes of the Sustainable Development Goals as well as the global targets from the Paris COP21 Climate Summit by 2030, governments will have to find ways to meet the top-down objectives with bottom-up approaches. A systematic focus on scaling up successful development interventions could serve to bridge this gap, or what’s been called the “missing middle.” However, the question remains how to actually address the challenge of scaling up.

When Arna Hartmann, adjunct professor of international development, and I first looked at the scaling up agenda in development work in the mid-2000s, we concluded that development agencies were insufficiently focused on supporting the scaling up of successful development interventions. The pervasive focus on one-off projects all too often resulted in what I’ve come to refer to as “pilots to nowhere.” As a first step to fix this, we recommended that each aid organization carry out a review to be sure to focus effectively on scaling up. 

The institutional dimension is critical, given their role in developing and implementing scaling up pathways. Of course, individuals serve as champions, designers, and implementers, but experience illustrates that if individuals lack a strong link to a supportive institution, scaling up is most likely to be short-lived and unsustainable. “Institutions” include many different types of organizations, such as government ministries and departments, private firms and social enterprises, civil society organizations, and both public and private external donors and financiers.

The Brookings book “Getting to Scale: How to Bring Development Solutions to Millions of Poor People” explores the opportunities and challenges that such organizations face, on their own or, better yet, partnering with each other, in scaling up the development impact of their successful interventions.

Over the past decade I have worked with 10 foreign aid institutions—multilateral and bilateral agencies, as well as big global non-governmental organizations—helping them to focus systematically on scaling up operational work and developing approaches to do so. There are common lessons that apply across the board to these agencies, with one salutary example being the International Fund for Agricultural Development (IFAD) which has tackled the scaling up agenda systematically and persistently.

Following are eight takeaway lessons I gleaned from my work with IFAD:

1. Look into the “black box” of institutions. It is not enough to decide that an institution should focus on and support scaling up of successful development interventions. You actually need to look at how institutions function in terms of their mission statement and corporate strategy, their policies and processes, their operational instruments, their budgets, management and staff incentives, and their monitoring and evaluation practices. Check out the Brookings working paper that summarizes the results of a scaling up review of the IFAD.
2. Scaling needs to be pursued institution-wide. Tasking one unit in an organization with innovation and scaling up, or creating special outside entities (like the Global Innovation Fund set up jointly by a number of donor agencies) is a good first step. But ultimately, a comprehensive approach must be mainstreamed so that all operational activities are geared toward scaling up.
3. Scaling up must be championed from the top. The governing boards and leadership of the institutions need to commit to scaling up and persistently stay on message, since, like any fundamental institutional change, effectively scaling up takes time, perhaps a decade or more as with IFAD.
4. The scaling up process must be grown within the institution. External analysis and advice from consultants can play an important role in institutional reviews. But for lasting institutional change, the leadership must come from within and involve broad participation from managers and staff in developing operational policies and processes that are tailored to an institution’s specific culture, tasks, and organizational structure.
5. A well-articulated operational approach for scaling up needs to be put in place. For more on this, take a look at a recent paper by Larry Cooley and I that reviews two helpful operational approaches, which are also covered in Cooley’s blog. For the education sector, the Center for Universal Education at Brookings just published its report “Millions Learning,” which provides a useful scaling up approach specifically tailored to the education sector.
6. Operational staffs need to receive practical guidance and training. It is not enough to tell staff that they have to focus on scaling up and then give them a general framework. They also need practical guidance and training, ideally tailored to the specific business lines they are engaged in. IFAD, for example, developed overall operational guidelines for scaling up, as well as guidance notes for specific area of engagement, including livestock development, agricultural value chains, land tenure security, etc.  This guidance and training ideally should also be extended to consultants working with the agency on project preparation, implementation, and evaluation, as well as to the agency’s local counterpart organizations.
7. New approaches to monitoring and evaluation (M&E) have to be crafted. Typically the M&E for development projects is backward looking and focused on accountability, narrow issues of implementation, and short-term results. Scaling up requires continuous learning, structured experimentation, and innovation based on evidence, including whether the enabling conditions for scaling up are being established. And it is important to monitor and evaluate the institutional mainstreaming process of scaling up to ensure that it is effectively pursued. I’d recommend looking at how the German Agency for International Development (GIZ) carried out a corporate-wide evaluation of its scaling up experience.
8. Scaling up helps aid organizations mobilize financial resources. Scaling up leverages limited institutional resources in two ways: First, an organization can multiply the impact of its own financial capacity by linking up with public and private agencies and building multi-stakeholder coalitions in support of scaling up. Second, when an organization demonstrates that it is pursuing not only one-off results but also scaled up impact, funders or shareholders of the organization tend to be more motivated to support the organization. This certainly was one of the drivers of IFAD’s successful financial replenishment consultation rounds over the last decade.

By adopting these lessons, development organizations can actually begin to scale up to the level necessary to bridge the missing middle. The key will be to assure that a focus on scaling up is not the exception but instead becomes ingrained in the institutional DNA. Simply put, in designing and implementing development programs and projects, the question needs to be answered, “What’s next, if this intervention works?”

In 2015 the international community agreed on a set of ambitious sustainable development goals (SDGs) for the global society, to be achieved by 2030. One of the lessons that the implementation of the Millennium Development Goals (MDG s) has highlighted is the importance of a systematic approach to identify and sequence development interventions—policies, programs, and projects—to achieve such goals at a meaningful scale. The Chinese approach to development, which consists of identifying a problem and long-term goal, testing alternative solutions, and then implementing those that are promising in a sustained manner, learning and adapting as one proceeds—Deng Xiaoping’s “crossing the river by feeling the stones”—is an approach that holds promise for successful achievement of the SDGs.

Having observed the Chinese way, then World Bank Group President James Wolfensohn in 2004, together with the Chinese government, convened a major international conference in Shanghai on scaling up successful development interventions, and in 2005 the World Bank Group (WBG ) published the results of the conference, including an assessment of the Chinese approach. (Moreno-Dodson 2005). Some ten years later, the WBG once again is addressing the question of how to support scaling up of successful development interventions, at a time when the challenge and opportunity of scaling up have become a widely recognized issue for many development institutions and experts.

Since traditional private and public service providers frequently do not reach the poorest people in developing countries, social enterprises can play an important role in providing key services to those at the “base of the pyramid.”

In parallel with the recognition that scaling up matters, the development community is now also focusing on social enterprises (SEs), a new set of actors falling between the traditionally recognized public and private sectors. We adopt here the World Bank’s definition of “social enterprises” as a social-mission-led organization that provides sustainable services to Base of the Pyramid (BoP) populations. This is broadly in line with other existing definitions for the sector and reflects the World Bank’s primary interest in social enterprises as a mechanism for supporting service delivery for the poor. Although social enterprises can adopt various organizational forms—business, nongovernmental organizations (NGOs), and community-based organizations are all forms commonly adopted by social enterprises—they differ from private providers principally by combining three features: operating with a social purpose, adhering to business principles, and aiming for financial sustainability. Since traditional private and public service providers frequently do not reach the poorest people in developing countries, social enterprises can play an important role in providing key services to those at the “base of the pyramid.” (Figure 1)

Figure 1. Role of SE sector in public service provision

Social enterprises often start at the initiative of a visionary entrepreneur who sees a significant social need, whether in education, health, sanitation, or microfinance, and who responds by developing an innovative way to address the perceived need, usually by setting up an NGO, or a for-profit enterprise. Social enterprises and their innovations generally start small. When successful, they face an important challenge: how to expand their operations and innovations to meet the social need at a larger scale. 

Development partner organizations—donors, for short—have recognized the contribution that social enterprises can make to find and implement innovative ways to meet the social service needs of people at the base of the pyramid, and they have started to explore how they can support social enterprises in responding to these needs at a meaningful scale. 

The purpose of this paper is to present a menu of approaches for addressing the challenge of scaling up social enterprise innovations, based on a review of the literature on scaling up and on social enterprises. The paper does not aim to offer specific recommendations for entrepreneurs or blueprints and guidelines for the development agencies. The range of settings, problems, and solutions is too wide to permit that. Rather, the paper provides an overview of ways to think about and approach the scaling up of social enterprise innovations. Where possible, the paper also refers to specific tools that can be helpful in implementing the proposed approaches. 

Note that we talk about scaling up social enterprise innovations, not about social enterprises. This is because it is the innovations and how they are scaled up that matter. An innovation may be scaled up by the social enterprise where it originated, by handoff to a public agency for implementation at a larger scale, or by other private enterprises, small or large. 

This paper is structured in three parts: Part I presents a general approach to scaling up development interventions. This helps establish basic definitions and concepts. Part II considers approaches for the scaling up of social enterprise innovations. Part III provides a summary of the main conclusions and lessons from experience. A postscript draws out implications for external aid donors. Examples from actual practice are used to exemplify the approaches and are summarized in Annex boxes.

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Now that that the initial revelations regarding the VW scandal have sunk in it’s time to begin assessing the larger significance of those revelations. While the case and, we predict, VW, will continue for years (we are only at the end of the beginning, and far from the beginning of the end), we are far enough along to see five large questions emerging. These questions will tell us much about the economic, corporate and cultural future of VW and German enterprise. 

1) VW was an integral component of Germany's industrial reputation in Europe, across the Atlantic in the United States, and around the world. Now, that hard-won reputation is at risk. How broad will the damage be to German businesses' reputation not just for quality, but for "premium quality?"

2) Turning from the German business sector to the German economy as a whole, the VW scandal has many ironies, not least of which is that the company was a key driver (so to speak) of the famous German Wirthschaftswunder. Economic health propelled a vanquished Germany to the forefront of Europe’s post-WWII recovery and then made post-Cold War reunification a success. Does the VW scandal have the potential to slow down the overall growth of the German economy, and what are the European and global implications of that at a time when the Chinese economy is also sputtering?

3) From a corporate governance perspective, the scandal represents some of the most boneheaded thinking ever. Following disclosure of the fraud, €14bn (£10bn; $15.6bn) was wiped off VW's stock market value. Whoever knew/orchestrated the scheme thought they would get away with it, but did they really not foresee the consequences or even the likelihood of getting caught? We will long be studying the abnormal “fraud psychology" of this case.

4) Germany ranks among the top ten countries for low corruption according to Transparency International. Yet VW is not alone among German companies in making major headlines with massive ethics failures in recent years, joining Siemens, Bayer, Deutsche Bank, and many others. What does this mean for the future of Germany’s role as a force for anti-corruption at home and internationally?

5) Former VW CEO Winterkorn resigned but claimed he knew nothing about the scandal. What does this say about the structure and management culture of Germany’s largest companies? How widespread is “plausible deniability” in German business culture--and in all business culture everywhere? If so, what are the dangers of this going forward, and what should be done to address them?

The eurozone has three problems: national debt obligations that cannot be met, medium-term imbalances in trade competitiveness, and long-term structural flaws.

The short-run problem requires more of the monetary easing that Germany has, with appalling shortsightedness, been resisting, and less of the near-term fiscal restraint that Germany has, with equally appalling shortsightedness, been seeking. To insist that Greece meet all of its near-term current debt service obligations makes about as much sense as did French and British insistence that Germany honor its reparations obligations after World War I. The latter could not be and were not honored. The former cannot and will not be honored either.

The medium-term problem is that, given a single currency, labor costs are too high in Greece and too low in Germany and some other northern European countries. Because adjustments in currency values cannot correct these imbalances, differences in growth of wages must do the job—either wage deflation and continued depression in Greece and other peripheral countries, wage inflation in Germany, or both. The former is a recipe for intense and sustained misery. The latter, however politically improbable it may now seem, is the better alternative.

The long-term problem is that the eurozone lacks the fiscal transfer mechanisms necessary to soften the effects of competitiveness imbalances while other forms of adjustment take effect. This lack places extraordinary demands on the willingness of individual nations to undertake internal policies to reduce such imbalances. Until such fiscal transfer mechanisms are created, crises such as the current one are bound to recur.

Present circumstances call for a combination of short-term expansionary policies that have to be led or accepted by the surplus nations, notably Germany, who will also have to recognize and accept that not all Greek debts will be paid or that debt service payments will not be made on time and at originally negotiated interest rates. The price for those concessions will be a current and credible commitment eventually to restore and maintain fiscal balance by the peripheral countries, notably Greece.