Beyond the Business Case - From the Why to the How
By Yana Kakar and Tania Beard.
The case for inclusive business is clear and compelling. Companies in the latest State of Inclusive Business Survey cite 3 key benefits – access to new markets (worth $12 trillion), improvements in brand equity and reputation, and competitive advantage. Beyond this, there is growing evidence to show how inclusive business can spark innovation (e.g. Safaricom’s M-Pesa), and drive product development for use in richer markets (e.g. Grameen America’s micro-loans). However, doing good and doing well isn’t always clear or easy. So, while you must make a compelling business case, this is just the beginning. Capturing these opportunities is all about “the how.”
At Dalberg, we spend much of our time advising businesses on making inclusion work—from procurement through to after-sales in sectors aligned to the Sustainable Development Goals (SDGs). The 17 SDGs provide a framework for inclusive business opportunities and signpost where efforts should be directed. To take advantage of these opportunities, corporations typically ask me three questions. Where do I start? Do I have to change my whole business model? Who do I partner with to successfully deliver? Here are some lessons we have learned along the way.
Where do I start?
One way is to think about what you do well, and identify where there is a need—social, economic or environmental—that you could fill doing what you do well today. Then, explore this intersection to find an opportunity that makes business sense and will deliver that social, economic, or environment benefit. To give you an example, we recently advised a pharmaceutical company in India active in diabetes care. They first identified critical levels of diabetes and hypertension in low-income populations and found that this was driven by limited awareness and high costs of screening and treatment. But, they didn’t know how to serve them profitably. So, they started with two pilots: an innovative highway campaign and low-cost promotional kit, costing 20 cents (USD) and containing 45 tablets of three different drugs. This led to improved visibility for the company, initial brand recognition, and consumer acquisition via distribution of free samples. Not only did this make business sense, but it gave them a first mover advantage on an untapped growth segment, and today, they are a leader in diabetes care for the mass market.
Do I have to change my whole business model?
No. Your fundamental business model can remain the same, but you will need to make some shifts to meet the needs and realities of your suppliers, employees or customers. These realities range from limited purchasing power and low education, to hard-to-reach consumers and disaggregated supply chains, to poor market data and information. Safaricom, Kenya’s largest mobile operator, faced many of these challenges when targeting the smallholder farmer segment in Kenya. But, through partnerships with MercyCorps, local businesses and NGOs, they developed a mobile app called DigiFarm. Today, close to 1 million smallholder farmers are registered on DigiFarm to receive advice, buy seeds and fertilizer and access loans. Safaricom still leveraged its core business strength but shifted the types of services it provides in partnership with others to meet the needs of a new customer segment. Key to this innovation was an understanding of the needs, preferences and behaviours of their customers and suppliers. The Human Account is a resource that can help bring much-needed nuance to the picture of this varied population. This unique set of behavioral and psychometric data on 35 segments representing 1.98 billion people in six emerging economies can help all of us better understand, invest in, design for, and engage the underserved.
Who can I partner with?
Lastly, although the $12 trillion value at stake is substantial, most of it cannot be unlocked by the private sector acting alone. This space is typically unfamiliar territory for many businesses and investors, and there are many partners to choose from. How do you know which partners are credible and worth the time investment? Among the many tools and resources out there, one innovation bridges this gap by connecting credible partners for co-investment in SDG-aligned sectors. Convergence, the world’s first blended finance platform, is a platform we designed to connect, educate, and support credible private, public and philanthropic investors to execute blended finance transactions for the SDGs in emerging markets. Through an online Investor Marketplace, private investors are able to find and connect with each other to co-invest in deals.
I hope that one or more of these learnings prove useful to you on your journey to do good and do well. We agree that the business case is critical—but it is only the first step in a broader journey to ensuring real impact at scale. When done well, inclusive business represents an unprecedented opportunity to create value for business, investors and the world.