Facebook, for example, knew that saturating its first college campuses required that most students were already on board at launch it made school networks available only after it had enough student requests to guarantee that more than half the campus would be on the system from day one.Ī second type of business model innovation revolves around distribution strategy. Contemporary examples include Facebook with social networking and eBay with online auctions the more people who use a given platform, the more valuable the platform becomes to each user. The first involves “network effects,” where the value of a network increases with each additional node. So what defines business model innovation? Let’s discuss two examples. They also need to be prepared to manage quick growth, and be willing to accept the risk and a lack of efficiency that come with it. But to do so, nonprofits often need a radical new business model or an innovative new approach to scaling their existing one. Situations like these can open the door to dramatically growing impact in a very short time.
An organization builds a platform for social good that requires network effects to be effective, such as the Janaagraha Centre for Citizenship and Democracy’s I Paid a Bribe reporting platform.There is some massive need, and an organization hits upon a business model (such as microinsurance) that can solve it at scale and can grow rapidly.An organization receives a philanthropic “ big bet” to significantly expand its efforts (such as George Soros’ $100 million gift to expand Human Rights Watch into the developing world in 2010, or UK Department for International Development’s £12 million investment in Camfed, which allowed it to quadruple the number of destitute girls it supported to attend school in Zimbabwe).A sudden, major event in the world (such as a natural disaster or unexpected election result) causes donations to flood in to an organization at an unprecedented scale, requiring a massive, immediate response.They do, however, sometimes face the need and have the opportunity to scale up rapidly. You could argue that nonprofits are fundamentally different from for-profits when it comes to scaling-that they don’t face the same competitive pressures and potential for massive investment (and returns). Rather, they are about blazing-speed business model innovation-a process my co-instructors and I call “technology-enabled blitzscaling” in the class we teach at Stanford. Yet as models for nonprofits seeking to scale up quickly, the lessons we can glean from them aren’t so much about geography, local cultures, or even stunning technology. Of the 13 publicly traded technology companies worth more than $100 billion, six are headquartered in Silicon Valley.
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