So, you wanna deploy cookstoves to every corner of the world? McKinsey & Co. has one word for you: networks

In a meeting this week with the folks from Acumen Fund, we were asked what was holding up the large-scale deployment of improved cookstove worldwide?

After all, at 2.5 to 3 billion people, the market for clean technology and sustainable alternative biomass briquettes is huge and set to grow. And the technology is pretty much there, too, compared to, say, carbon capture or designing a car battery that last more than a few hundred miles.

Plus, the advantages delivered by clean burning stoves add up to substantial savings and benefits to households, society, and the planet, which is probably why they call improved cookstoves the “low-hanging fruit” for carbon emissions reduction/indoor air pollution/poverty alleviation/and ecosystem-services-and-biodiversity-protection.

Acumen says they’ve been looking at investing in cookstove projects for years but they can’t make them work from their “patient capital” investment perspective.

So what’s the holdup?

The truth is there is no simple answer.

For one, the chicken-and-egg situation seems to apply: lack of adequate capital investment in manufactured stove companies and products keep unit prices too high to prime the demand pump. (Yes, even if the stoves are inexpensively manufactured in China.) Add to that shipping and import duties and the price rockets from, say, $10/unit FOB to $20 or more.

This means that tariff barriers on clean cookstove technology must be eliminated in favor of strong national and international policies supporting manufacturing and deployment.

Many, including us, have argued that securing funding from carbon credits sold from cookstove projects around the world is vital to sustaining and growing their deployment. But consider the challenge of selling carbon credits generated by improved cookstove offsets in the absence of efficiency and emissions standards, as Aprovecho‘s Dean Still pointed out to us in a recent interview. 

What’s more, uncertainty about the future of the carbon credit market does little to inspire investments that depend on the sale of carbon offsets from cookstove projects. It’s nice to make projections when Certified Emissions Reduction (CERs) credits sell for almost $30 (Dec.2008) but things don’t look as attractive when they’re worth only $15 (today).

Social marketing is another important factor. Just because the stove cuts down on emissions and smoke doesn’t mean people will rush out to buy it. Cell phones are different. Buying and using a cell phone is cheap compared to getting a land line in a developing country. Plus, there are no viable alternatives to personal telecoms, whereas three-stones + a pot + cow patties = tried and true technology.

Add to the mix a well-intentioned but disorganized stoving community, a handful of international development agencies with their own agendas, and no shared script among stakeholders and the prospects of large-scale deployment of improved cookstoves starts receding even more.

Through the twitter transom today came the beginning of the answer. It arrived from McKinsey & Co. via the Aspen Network of Development Entrepreneurs (@aspenande.) The McKinsey article, by Raj Kumar, titled Social Enterprise: It Takes A Network, is definitely worth a read.

Here’s the essence:

“…how can social enterprises maximize their impact without having to achieve the financial scale that would make them major players in whole sectors of the economy? The answer lies in networks. Where one social enterprise may be limited in the impact it can have, a network of social enterprises can create opportunities for substantial financial scale and impact.

Those social enterprises that focus on the most difficult markets, often through bottom-of-the-pyramid business models, can use networks to share technology, jointly produce goods and services that meet tough environmental and social standards, and purchase fair-trade inputs as a group—effectively getting the value of a larger enterprise while remaining a focused social enterprise. This can help individual social enterprises to compete against bigger businesses that have lower cost structures due to economies of scale.

Social enterprises can also use networks to educate consumers and set market standards. Where meeting high environmental and labor standards may entail greater costs for social enterprises, through networks these groups can work together to educate consumers about the difference between their products and those offered (possibly at lower prices) by other businesses. In the United Kingdom, the Social Enterprise Mark is a brand used to identify social businesses so that consumers who want to support social and environmental goals know which products and services to favor. The mark also connects these social businesses to each other and to social-enterprise networks throughout the country.

Finally, networks can also be effective in lobbying government and regulatory agencies to create a social enterprise-friendly business environment. The business and NGO communities use networks (often called trade associations in these cases) for precisely this reason, influencing tax policies and regulations that benefit their form of organization. Social enterprises, given their relative small size, will have to work together if they hope to sway government to support them as a group distinct from traditional for-profit and non-profit enterprises.

“… those who wish to scale social impact would do well to focus on supporting robust networks—essentially the infrastructure of the social-enterprise industry—in addition to individual social entrepreneurs. In time, the social-enterprise community may find that measuring scale and impact at the network level (rather than at the level of the individual enterprise) is a more accurate measure of the true scale of social change and a better way for investors to gauge the return on their social investment.”

Whatever your thoughts are about taking directions from large management consulting services used to serving multinational corporations, there are good ideas worth considering in this free advice.

This is why on our to-do list for tomorrow is fortifying the network of global stakeholders who share the goal of making improved cookstove technology and better fuels more easily available to our world’s energy poor.