Delve podcast: Scale Deep Not Up for Sustainable Local Entrepreneurship, with Anna Kim and Suntae Kim (Read Transcript)

Delve podcast, November 24, 2022: Scale Deep Not Up for Sustainable Local Entrepreneurship, with Anna Kim and Suntae Kim
Robyn Fadden – host: How would definitions of business growth and success change if entrepreneurship ventures decided that instead of scaling up, they would “scale deep”? While scaling up allows an organization to pursue fast expansion with goals of going national or global, scaling deep lets an organization pursue enduring growth anchored to its original location. Understandably, businesses with such different goals have different impacts on the places, people, and communities they serve. In fact, in economically polarized and impoverished areas, venture-capital-backed entrepreneurship that is often heralded as “transformational” or “revitalizing” might not have as positive or as lasting an impact as alternative forms of resourcing, such as ventures that make do with local resources at hand to solve local problems.
Robyn Fadden – host: You’re listening to the Delve podcast, brought to you by Delve, the thought leadership platform of the Desautels Faculty of Management at McGill University. I’m your host for this episode, Robyn Fadden. Desautels Faculty of Management professor Anna Kim and her co-author Johns Hopkins Carey Business School Professor Suntae Kim studied two entrepreneurship-nurturing organizations in Detroit over 8 years, revealing important differences in resourcing modes and venture growth. In their research paper, Going Viral or Growing Like an Oak Tree? Towards Sustainable Local Development Through Entrepreneurship, these organizations go by the pseudonyms GREEN and ACCEL. ACCEL is a non-profit business accelerator organization owned by a large company headquartered in Detroit, with the explicit aspiration of “turning Detroit into the next Silicon Valley within a decade.” GREEN, on the other hand, was established as a reaction to business accelerators and actually discouraged early-stage fundraising—it is an alternative for-profit business incubator whose main revenue came from renting workspaces to small businesses, upholding a mission of “sustainable revitalization of Detroit.”
Robyn Fadden – host: These two organizations are similar to organizations across the U.S., Canada, and other countries, and comparing them allowed the researchers to investigate far beyond ideas of conventional versus social entrepreneurship. Instead, they found that the two organizations were most critically distinguished by how they developed venture ideas and related resourcing. The question then becomes, what are the processes of venture development for these different types of accelerators and incubators? And what are the real-world consequences for venture growth and impact?
Robyn Fadden – host: Welcome to the Delve podcast Professor Anna Kim and Professor Suntae Kim. As you state in your paper, venture capital backed high-growth, entrepreneurship is popular and successful in some regions of some countries, but it doesn’t always have the same impact in impoverished places. The two different organizations that you studied were successful in their missions, but did one have more impact or success than the other?
Anna Kim: What’s interesting here is also the fact that both organizations, incubators, accelerators, both organizations were very much committed to creating impact in Detroit. So they were both very much committed to revitalizing Detroit. So they had those local commitments or vision, but they took very different approaches. ACCEL very much kind of recreating, the Silicon Valley model in Detroit, and GREEN very much taking an alternative approach. So, you know, not borrowing venture capital money, growing much more organically using local resources, making local connections. And what we observed was that those some of the ventures were successful or more or less successful in different ways. In both places, we actually saw a lot of local impact that stayed in Detroit for many years of from GREEN, from the alternative or locally oriented approach, which we are eventually called scaling deep versus scaling up, because many of the scaling up ventures were actually successful with creating a lot of global impact.
Anna Kim: But what we observed over the course of many years was that many of them were also leaving Detroit, there were reasons why Detroit was not able to support this kind of growth. There were reasons why through this process of business development, because they were very much aiming at scaling up, they were wanting to accelerate, but also they wanted to provide services, or products that were creating impact in many different places. And by nature, they were actually shaping their business models into something very different, much more globally or nationally oriented than locally oriented. And that was actually having an impact on their trajectory. So that’s kind of how we came up with this paper about two different approaches to entrepreneurship, one about scaling up and another about scaling deep. Not necessarily one is better than the other, but they actually create different kinds of impacts, when it comes to scale. Because the scaling deep with the scaling up, did you really create local impact in those are impoverished places? Whereas no, it might be actually difficult to achieve that with scaling up, even though you may achieve other things you may achieve different kinds of global impact.
Robyn Fadden – host: You looked at these two specific organizations, but what you found could apply to other organizations and places other than Detroit.
Suntae Kim: That’s right, this place ACCEL was using this approach that has become standardized and institutionalized across many different places. So what we observed in Detroit, especially in this organization, ACCEL, is something that’s happening in many other places, a lot of these small towns or big cities, or rural or urban, they’re all trying to kind of revitalize their places by turning them into next Silicon Valley. But that doesn’t always work. And what we observed in ACCEL was one of the manifestations of that trend.
Anna Kim: Part of the reasons why we could make those claims was partly because we were observing the phenomena in other places, but also, because we were able to see all why that was happening through some kind of mechanisms. Because what we were seeing at ACCEL versus GREEN was that not just their approaches were different, with those different approaches their business models, or ideas, or even production services were being shaped in very different ways. With the scaling deep approach, or with the more locally embedded approach, because you keep working with those local partners, and you keep utilizing local resources, and you keep making connections in those local contexts, your services and products become very, very meaningful locally. But it doesn’t actually mean a lot outside of Detroit or outside of a certain neighborhood. So it actually anchors them even more deeply in the local context.
Anna Kim: Whereas with ACCEL, with the accelerator or the Silicon Valley model, what we were observing was that, not only that they had intention to scale up more broadly and are going more broadly, geographically and temporally accelerating, to become faster. That was also shaping their business models, services products, in certain ways that are becoming much more generic, much more potentially useful for a large number of audiences populations across the nation or the globe, but not necessarily, you know, specific to the local context of Detroit. So there were reasons why those diverging pathways were happening. Also, conceptually, because of those mechanisms.
Robyn Fadden – host: Before publishing this paper, you already knew that the scaling up approach was fairly standardized by now, like a template for doing entrepreneurship in many different places. But you knew less about how entrepreneurs were approaching scaling deep. What did you discover?
Anna Kim: We knew that there were many different manifestations of what we observed at ACCEL, but what we observed in GREEN, we didn’t have a lot of confirmation about how much this was happening outside of Detroit. But after publishing this paper, and also a natural short article in Harvard Business Review, we actually received so many emails and LinkedIn messages, social media messages from entrepreneurs, on around the word, or we received messages from mature Boston, Philadelphia, also Hawaii, Calcutta, Ireland, and a lot of messages were actually to say that they were in different ways. But still, there were a lot of entrepreneurs who were actually trying to scale deep, and who were actually trying to do entrepreneurship differently, or in much more embedded ways in the local context, or without necessarily, or trying to accelerate or scale up in a conventional sense. So that was really interesting to us, because it really confirmed in a sense that all these patterns were actually also occurring on in many different places, and other people were seeing that in their practice.
Suntae Kim: We’re getting all that kind of requests. And they’re telling us to research them. And that inspired us to continue to this this path. So we would love to learn more about these kind of inspirational attempts at different places of the world, to scale deep in their own areas. So if there’s anybody who’s listening to this podcast and interested in this approach, they should feel free to contact us.
Robyn Fadden – host: Scaling deep sounds like something that people have been doing even if they didn’t necessarily know that what they were doing was called scaling deep. Could you explain what scaling deep means for the types of entrepreneurs you’re addressing and the kind of growth that they’re capable of or interested in?
Anna Kim: When we talk about scale, in this paper, we always thought about time and space together. Although many people associate scaling up with sizing up or like scaling up geographically, we were thinking about the term in both spatially and temporally. So, there is a spatial orientation to go broad across different geographies, but there is also temporal orientation to go faster to accelerate. to become faster. To achieve those geographical growth or expansion as fast as possible, and that is also related to their mode of resourcing because their financing often is a tool to accelerate the growth process. And in doing so, they also have more pressure to speed up, because when they borrow, when they finance, there is even more pressure to make that growth happen, so that they can realize the return. So, this almost goes to ensure full cycle of scaling up with the spatial or expansion, but also temporary orientation towards speed.
Anna Kim: Scaling deep is in contrast, also different both spatially and temporally. So not only that there is the spatial orientation to be fully embedded, deeply embedded in the local context, their temporal orientation is often towards the durability, or the long term or embeddedness in the local context, or the long term creation of local impact, rather than the speed. They probably wouldn’t mind speed, but the emphasis really goes into the duration, where durability or sustainability or long-term impact, not the speed. By extension, that also means that their mode of resourcing is quite different. Because they are very much all locally embedded, their ideas don’t necessarily appear to investors as such, but what they can do is they can actually utilize local resources. Sometimes people are using abandoned kitchen spaces, community networks. And so we saw a lot of what we call local bricolage. They utilize what’s available in their local contexts. And once again, that kind of goes to the full circle, because in doing so, their ideas or their products, services, business models become even more and more deeply embedded in the local context. And that also gives them more motivation to continue in the long term, the local context. But there isn’t a lot of motivation for them to really expand geographically That’s how we conceptualize scaling deep and scaling up both temporally and spatially. Scaling deep, not only involves local embeddedness, spatially, but also the temporal orientation towards the long term impact, rather than the speed.
Suntae Kim: Our paper at the core is the mutual kind of reinforcement between modes of resourcing and scaling. And we’re talking about two different modes of resourcing into two different scalings. So venture capital financing leads to scaling up, scaling up calls for more venture capital investment. So there’s a self-reinforcing circle there. And local bricolage leads to scaling deep and scaling deep leads to more local bricolage. So there’s another self-reinforcement or mutual refunds, reinforcement between the modes of resourcing and scaling.
Robyn Fadden – host: What types of entrepreneurship ventures in these economically challenged places would be become more successful or less successful? And how was success measured, depending on whether a venture was scaling up or scaling deep?
Anna Kim: One thing we did actually, in one of the tables in our paper, was we actually talked about global impact and local impact separately. So I think even the word success, I think can be kind of unpacked in this ways, because we can ask how in what ways those ventures are successful in different ways. because, as I mentioned, we had some of the, or auto scaling of ventures, you know, ventures with scaling up orientation in Detroit, that were very successful in creating global impact. And they were some of the businesses even engaging in some important or social environmental issues, you know, there was a business, developing and installing solar panels, so they were those ventures creating important impact often, because once again, they were more of global impact or national impact. And they weren’t that specific to Detroit. And also, I earlier mentioned the dynamics of some of the, you know, many of the ventures actually eventually leaving Detroit, to be relocated in New York or Silicon Valley, they would typically go to big cities where there are more human resources and financial resources are available to support this kind of growth. So it’s not necessarily a bad thing, it’s a one way of creating some important impact nationally or globally. But we did not observe a lot of local impact in those scaling up ventures, whereas in many of the scaling deep ventures we often observed the reverse. So sometimes, there was some global impacts generated with these ventures, sometimes, especially when they share their knowledge or experiences with other ventures in different parts of the world. But often, their impact through their products and services was really quite specific to Detroit, and they would create jobs, or they would address issues such as the food availability issue in Detroit. Actually there was a venture that was addressing the issues of abandoned tires in Detroit. So these ventures were addressing something very specific to Detroit. And there were impacts on people in Detroit in very, very concrete ways.
Suntae Kim: Successes looked very different across these two places. In ACCEL, some of the firms were successful in a traditional sense, meaning, creating a lot of returns for the initial investors, and also creating some wealth to the founders, individual founders. In GREEN success looked more like solving problems, locally specific problems. Is that’s especially important in places like Detroit, where, you know, there’s not a lot of government role in addressing some of the problems, there are not a lot of nonprofit organizations that can address some of the locally specific problems.
Robyn Fadden – host: When it comes to real sustainability in entrepreneurship, do we need different ways to measure success?
Anna Kim: Yeah, I think so. I think so. We sometimes take things for granted when it comes to, you know, whether that’s the measurement of success or understanding of success. We have reasons as the public, as academics, as researchers, as entrepreneurs, as public policymakers, there are reasons to apply more diverse sets of assumptions and measurements and understandings of what we mean by success, or in entrepreneurship. So I think certainly what we tried to advocate in this paper more of diversity – we didn’t want to completely say one was necessarily better than the other, but we need more diversity.
Suntae Kim: And sustainability itself can be defined that at different scales, reducing carbon emission at the global level is always sustainability. And at the same time, feeding starving families in urban Detroit is also an issue of sustainability. So scaling up is geared towards the problems at the higher level, at the global level, scaling deep could be a good complement, by addressing the sustainability issues at a very local level.
Robyn Fadden – host: You’re pointing out how complex sustainability is to measure and at what scopes we measure it. That said, could you give an example of an entrepreneurship venture that had a stronger local impact in a low-income area and one that had less local impact?
Suntae Kim: One example that comes to my mind from GREEN is this organization that started it with an ambition to create a lot of help, a lot of underrepresented food entrepreneurs in Detroit. So these are female entrepreneurs who didn’t receive a lot of education, but who knew how to cook really, really nice dishes. And what they did was, using again, kind of this is an example of that local bricolage. So they were using this underused kitchen spaces and local churches and daycare centers. And also they were doing that through in those players, these food entrepreneurs got access to the licensed kitchen, which is a big entry barrier for local entrepreneurs. And also they linked them to the local market, local farmers market, they linked them to urban farmers in Detroit. So they were really kind of creating this collaborative, collective platform. And as a result, they were able to help. They started with like 15 food entrepreneurs in the beginning. And later, they had more than 200 food entrepreneurs who were catering businesses or providing their products to like local grocery stores, and some of them open their own businesses. So that’s how that’s one example of success in GREEN, and another one. In ACCEL, there’s one business that’s still going on very actively. And they started with a very kind of simple problem of trying to reduce the wait time for local restaurants and bars and Detroit. And that problem, through the acceleration process in this organization, that problem became really, really big. And now they are providing artificial intelligence solution to reduce and control crowds, in sports venues, entertainment venues, and even conference venues. So they are seriously going global. They are working with large technology company in the West Coast, and they are implementing their services in different states and even different countries. So it’s very different contours of success.
Robyn Fadden – host: Even if local projects receive accolades, which can include awards, attention, and further funding, they aren’t on the same scale of success as companies that scale up globally. Your research points out different ways of scaling but also of measuring success along the way.
Suntae Kim: I don’t want to put them into the equal standings, though, because, as you said, this global level of successes get a lot of attention, a lot of people will get recognized, gets awarded and rewarded, all that. But local level successes, especially in places like Detroit, that doesn’t draw a lot of positive attention from other places, they don’t really get recognized. And they, in a sense, it’s a lot more difficult job for them to create success in those places. They’re different, but they’re not equal.
Anna Kim: And I think that’s partly why our research led to enthusiastic reactions, receptions or responses – because what we often heard, and my understanding is, that there were a lot of people, organizations who were already trying to take an alternative approach to entrepreneurship without calling it scaling deep. They were taking it all very kind of locally embedded, and long-term oriented approach. So they’re local entrepreneurship. And what we realized from the communications with them was that often they struggled to explain, to funders, to the government, to policymakers to stakeholders, to other supporting organizations that this is also a meaningful activity that creates important impact, even though they do not have all the metrics that are typically shown by those successful enterprises in more conventional ways. So in a sense, our work to some people, it seems that it resonated with them, because it provided a language, it provided some explanations they could actually use in their own context, when they talk to those stakeholders about how their efforts or their approaches are also meaningful and can be successful in different ways.
Anna Kim: So I think it is very true that these are still less recognized and, and many people have struggled to get support. And what’s interesting here is that often these organizations don’t even need a lot of support. We actually heard from people in Kansas City, that there is now a grant for local entrepreneurs, or who are working on in alternative approaches to create lasting local impact, the grant is called scale deep grants. And the amount of grant itself is not very large, because often these organizations or individuals do not even require a lot of money. But with some support, often they can actually create something quite meaningful. And they struggle to get the support, because they struggle to explain how their approach is also a valid or meaningful way of doing entrepreneurship. I really hope that our little contribution is used in that way by many aspiring entrepreneurs in different localities around the world.
Robyn Fadden – host: That definitely sounds like an ideal outcome of your research. Are there any other ideal outcomes of your research findings?
Suntae Kim: I can think of two. One is essentially building on what Anna just said, what we’re kind of hoping to observe is what happened to the history of social entrepreneurship. When that concept emerged in the late 1990s. Right, there were a lot of a lot of business owners, a lot of entrepreneurs were saying that, wait, that’s what I have been doing for 50 years, we’ve been we’ve been social enterprise, even before the term social entrepreneurship was invented. So are the receptions that we’re getting from a lot of people here is that we’ve been doing that. But we didn’t have that language. We didn’t have the concept to legitimize to make others understand what we do. So that’s one kind of our big one of one of our big ambitions. And second is really, especially in terms of scaling deep scaling up, we know how to do it, there are a lot of people doing it, our researchers are doing it. The scaling deep is such an underdeveloped area. And the one way that we are describing out of GREEN in Detroit is just one of them many ways that you can do scale deep. And hopefully we could continue this research path and kind of unpack or an earth a lot of different ways to achieve scaling deep. And ultimately, I want that to be some reason for policymakers to think differently when they think about law or development. Still, there are a lot of organizations, leaders, politicians, who pushed for, you know, Silicon Valley style entrepreneurship hoping that their Detroit becomes the next Silicon Valley. But hopefully, if we could continue this story direction, we might be able to provide some different alternative for these policymakers.
Anna Kim: I think I just wanted to add that continuing with the theme of providing languages for practice, but also for research, I think we wanted to really bring the dimension of time and space into the conversations about entrepreneurship, because we often hear all the contrast between more commercially oriented versus socially oriented entrepreneurship. So commercial versus social entrepreneurship, and project oriented towards more sustainability. At the beginning of this project, we received a lot of questions about whether we were not just contrasting more commercial versus social entrepreneurship. And we had to explain many times that actually, it is not empirically true, because we were seeing mixed of those commercial or socially oriented kind of our intentions mixed across those both organizations and ventures incubated out of those organizations. But also, because when we look at examples in the real world, there are many examples of social entrepreneurship or sustainably oriented intrapreneurship that are also taking scaling up approaches to generate global impact or at a faster rate. And there are those intrapreneurship approaches that are much more locally embedded, and long term oriented. So I think although there can be of course some overlaps, in all in practice, I think there is something conceptually quite distinct about this notion of time and space, and the scaling up and scaling the different from the commercial versus social distinction we make in intrapreneurship. So that was another thing we wanted to bring to the conversations in both practice and research.
Robyn Fadden – host: Professors Anna Kim and Suntae Kim intend to extend this research globally, while still looking at entrepreneurship on a local scale. In fact, they’ve already started accumulating a list of organizations that are scaling deep in North America, Europe and other parts of the world. One of their main goals is to shed light on the variety of ventures that are scaling deep and how. From this research comes useful insights that can be applied to many other entrepreneurs who are addressing specific local issues in economically and socially challenging places.
Robyn Fadden – host: You can find out more about this research in an article on Delve at Thank you for listening to the Delve podcast, produced by Delve, the thought leadership platform of the Desautels Faculty of Management at McGill University. I’ve been your host for this episode, Robyn Fadden. You can follow DelveMcGill on Facebook, LinkedIn, Twitter and Instagram. And subscribe to the DelveMcGill podcast on your favourite podcasting app.