Inclusive Business or Business as Usual? Evaluations are Falling Short

While we can all generally agree that we need to be collecting more information about business impacts (see Jamie Cross’ post following the May 3 debate on the BoP approach), what do our current evaluations tell us?  There are a few studies that are widely believed to provide a rigorous analysis of business impacts. Specific evaluations include the Unilever South Africa Economic Footprint and the Coca-Cola/SABMiller Poverty Footprint report.  We also have a number of frameworks such as the WBCSD Measuring Impact Framework, and the BCtA Results Reporting Framework (pdf).

A detailed analysis of these evaluations and frameworks, found that they really didn’t provide us the information that we need:

• They did not unpack the assumptions around why a certain business model was inclusive

• They did not actually measure the impact of an inclusive business (i.e. they don’t tell us how things would be different if the business weren’t inclusive)

• They do not report on a complete package of outcomes (i.e. positive and negative, direct and indirect)

But this isn’t all bad news.  The first step in improving something is identifying what needs to be improved.  As we’re in the nascent stages of ‘Inclusive Business’, we have the opportunity to address these issues early on.

So, as we move forward in collecting more information to help us identify inclusive practices, here are some practical suggestions:

• Think through a causal chain: make clear what assumptions are being made about how your business will have an impact, and importantly, who is making those assumptions.  This includes weighing positive impacts against negative ones (recognising that no business model can possibly avoid negative impacts).

• Don’t confuse outputs and impacts.  Selling fortified margarine does not mean that you have improved the nutritional status of your consumers.  It simply means you have sold fortified margarine.  This links back to your causal chain – is fortified margarine a good thing?  Why?

• Think carefully about what you need to and can feasibly measure.  It won’t be possible to capture all impacts of a business.  Start with thinking through all of the possible positive and negative outcomes and impacts of your business.

These guidelines can help provide the information needed to enable donors, businesses, and policymakers to identify and respond to potential opportunities as well as problems. 

I encourage you to read the full report, Measuring the Inclusivity of Inclusive Business, which includes an analysis of the most commonly used M&E frameworks and impact evaluation approaches and detailed suggestions for improving them moving forward. 

I'm hoping that this paper serves to catalyse more discussion on this topic.  So please comment!  What do you think of the current evaluation efforts?  Is there something you think we can be improving?