Inclusive Business is reaching the mainstream but the focus needs to remain on impact and people

Looking back: Inclusive Business is about to enter the mainstream

When asked on how inclusive business has developed over the last years I can only say: “It skyrocketed!”. I still remember having difficulties in finding a professor at my German University, not even 10 years back, who would accept Social Entrepreneurship as a serious topic for my diploma thesis. Today, there is a well-developed academic landscape with own research institutes, specialized professorships and an army of graduated PhDs around the same topic, not only in Germany. But not alone the academic sector grew in light speed around what was a niche phenomenon just few years back. In my first years with Ashoka Germany, we had a hard time finding a venue for our conference in Munich as we were mistaken for cult. Today, the country’s leading business entrepreneurs and biggest corporates and their foundations work tightly with us in order to identify and support leading social entrepreneurs and to ever further push the boundaries between venture philanthropy and impact investing.

The need for transparency, accountability and impact measurement

Social is becoming the new green and Inclusive Business is about to reach mainstream business. This is an important development in order to grow the live up to the concept of reaching the billions of potential customers, producers, distributors or contributors. At the same time, this development shifts the focus away from people (the passionate founders and their impact oriented missions) towards systems (business models, investment readiness and growth potential of the organization). As bigger, commercial players enter the field the need for transparency, accountability and impact measurement rises. This is especially true for the impact investors as currently the whole burden of proofing and reporting impact is with the entrepreneurs / businesses, alone. Looking forward we will therefore need an honest debate on the question on “what is inclusive“, how to measure it and what deserves (tax) benefits to which extend.

Small is beautiful: Especially in Inclusive Business

Firstly, we need to rethink growth for Inclusive Businesses, in the future. We have to focus on scaling impact, not growing organizations. The traditional understanding of growing typically involves adding resources at around the same rate as adding impact or revenue. The implications are primarily operational. Scaling differs in that it involves adding impact at an exponential rate while adding resources at only an incremental rate. Although scaling is also commonly approached from an operational perspective, it typically has significant implications for design, not only in terms of the solution being scaled, but also for the way it is delivered. Instead of trying to copy & paste mainstream business growth strategies onto Inclusive Businesses we should try to explore and support new, more open ways of dissemination. New start-up businesses show the way with shareconomy and platform approaches. If we want to reach the billions we need to leapfrog the old paradigm of closed shop, black box businesses protecting its knowledge against competitors and find new innovative ways of open scaling. In order to support this investors also have to rethink and have to innovate themselves (eventually with the help of philanthropy).

Secondly, we should focus more on SMEs rather than multinationals, only. Many of us have only MNCs in mind when talking about Inclusive Business Models. The truth is that the most successful Inclusive Businesses are local, well adapted social entrepreneurs and SMEs. They are closer to the market, they innovate quicker and are way more agile than big corporate structures. This is why we should focus on inclusive and innovative SMEs even more in the future. Big corporates are good to roll-out and scale proven models but they are rarely the ones to innovate and test them. Therefore, we should also focus more on how we can foster partnerships between multinationals and social entrepreneurs.

We need to re-invent business at its core to make it more inclusive

We came a long way in the past years and are about to enter mainstream. Yet we still need to change our mindset of former niche players and get ahead of the game. Instead of us trying to persuade old school business to enter emerging markets hoping this will have positive development effects we need to innovate dramatically. We will not solve old problems with existing solutions and existing old school business models will not become inclusive just because they are implemented at the BoP. We need to change business at its core to make it more socially, economically and environmentally sustainable, when implemented at home or in the most remote places of our planet. With ever faster developing technologies enabling ever more people to actively co-create and contribute to solutions the chances for real social change are higher than ever before. Social entrepreneurs already make use of these opportunities and show us the way to new, inclusive ways of doing business. Many times they disrupt/destroy old and create new markets through their innovations opening new opportunities for corporates and investors (e.g. Wikipedia, Couch Surfing, Car Sharing and peer-to-peer money lending, like Kiva, Kubo financier, are just some few examples). Therefore, we need more risk taking changemakers than ever before – giving themselves permission to pioneer localized, sustainable solutions to social problems wherever these occur – in order to constantly show us new ways of doing business, inclusively.