• DATE March 19, 2014
  • URL oneinstitute.com/tile/values-scale/

Values & Scale

Joel Montgomery fell out of love with impact investing, but that's not the end of the story.

During his field placement in Pakistan as part of the Acumen Global Fellows Program, Joel Montgomery sought to leverage impact investing to bring drip irrigation to small scale farmers, in an effort to help lift the community out of poverty. Having recently completed his MBA at Thunderbird School of Global Management, he was “mesmerized” by the potential of social enterprises to address complex, intractable problems through market-based solutions.

As Montgomery would discover over time, however, solutions aren’t so simple—especially in countries where corrupt officials expect kickbacks before designated funding is allocated to development projects. This sobering realization led him to rethink the merits of impact investing and to consider other models.

“Business is an incredibly powerful tool for solving problems of all types, but the real power of business lies in its ability of scale,” he says. “While there are certainly some great success stories of social enterprises that have scaled, they remain the exception to the rule.”

In Montgomery’s view, the four main weaknesses of social enterprises lie in their limited pipeline, ignoring business fundamentals, lack of accountability, and lack of real-world pragmatism. In the end he concludes, “Impact investing has a place, but I still believe that well-run, scalable businesses can have just as much if not more social impact as most social enterprises.”

Today, Montgomery is working on a new project aimed at “building a blueprint for running and evaluating values-based businesses” based on one simple conviction: “Business can do amazing things, but only when it is harnessed within a scalable model and managed by a strong set of values.”

Others are asking similar questions and proposing new models as well. A movement of influential families called One Thousand & One Voices, for example, has introduced a three-pronged model, investing relational, intellectual, and patient financial capital in rising markets.

“Our families believe that the pathway to economic freedom—real prosperity for millions living in poverty—is through values-based private investment grounded in the time-tested principles of free enterprise,” they write. “The collective ‘one thousand & one voices’ of this movement echo more powerfully than any single voice and will represent a consortium of aligned families from around the world.”

You can learn more about One Thousand & One Voices here and see the latest from Joel Montgomery here.