Inflection Point

These are exciting and challenging times for the inclusive business community. Interest and momentum are growing. We are seeing more and more enterprises seeking to build viable business models to serve the base of the pyramid (BoP).

Aid agencies, foundations, impact investors, non-profits and other development sector players are increasingly committing resources to develop inclusive business models, and to strengthen the market environments in which they operate. Yet even with this growth in support and resources, much more remains to be done if we are to truly achieve the promise of building a community of sustainable, scalable enterprises that have net positive impacts on poverty alleviation. Some inclusive businesses have scaled, while many others have struggled to develop a viable business model and, if they survive, are perpetually in pilot mode.

With over 4 billion people living on less than $3,000 a year, there is great need to increase both the number and the scale of successful enterprises. To do so requires us to take stock of the current landscape of the IB domain and develop a roadmap for the future. There is clearly much to celebrate, especially when you compare the situation now, to where things were a decade or so ago. But there are some warning signs on the horizon that we must tend to. Overall, there seems to be general consensus that:

• IBs can play an important role in alleviating poverty
• IBs can be profitable and scalable
• Growth in interest and resources
• Conversation has changed; business can be part of the solution

But…

• Do we have sufficient humility?
• Are we improving/learning at a fast enough pace?
• Where is our community?

The challenge before us now is to remain humble in our work, take thoughtful action, and collaborate more closely to achieve the vision of developing a robust pool of inclusive business ventures, supported by partnership ecosystems, that are financially sustainable, and that achieve social impact at scale.

To do this, we need to learn faster, which means learning not only from our successes, but also from our failures. We need to share these learnings more widely, and create a community that benefits from the collective experiences of others, communicates more broadly and collaborates more readily.

To address these challenges, we at the William Davidson Institute have developed and recently released A Roadmap for the Base of the Pyramid Domain: Re-energizing for the Next Decade. This Roadmap is an action agenda that charts a way forward for IBs serving the BoP that asks us to not only act for today, but invest for tomorrow, in order to build a community of sustainable, scalable BoP enterprises focused on the alleviation of poverty.

Building Partnership Ecosystems: Diving Deeper

One area that I think needs particular attention is better understanding the successes and failures of different interventions used by “scaling facilitators” with the goal of developing a greater understanding of best practices from the perspectives of both enterprise leaders and development professionals. Scaling facilitators are organizations that provide expertise and resources to support inclusive businesses in their efforts to achieve impact, sustainability and scale. They operate both at the venture level and at the industry or market environment level and generally work with multiple inclusive businesses concurrently.

Launching successful and scalable new ventures is challenging in any context and especially difficult in BoP markets. In response, the development community and other partners have sought to facilitate the process of venture scaling through a variety of approaches such as incubators, accelerators, challenge grants, impact investing and technical assistance funds. Within and across these different approaches for facilitating scaling, these organizations provide a variety of different types of support, including access to financing grants, debt, equity, technical assistance, management training, market intelligence, market access, public policy advocacy, etc. Despite the increase in the number and types of support, our understanding of the effectiveness of these investments, and the role they play in the success of venture development remains under-developed. Additionally, heterogeneity in terms of industries, enterprise business models, stages of enterprise development, and local context makes it more difficult to generalize findings without careful analysis and evaluation.

For IB leaders, and development community professionals seeking to scale inclusive businesses, understanding this landscape of potential partners is only the first step. From there, we can begin to better address a number of other key questions, including:>

IB Leaders:

• Given a better understanding of the landscape of scaling facilitators, how does an IB identify the “best” portfolio of partnerships?
• Once an IB has targeted a portfolio of partners, how do they build, and maintain these relationships? How should a partnership ecosystem evolve over time to maximize effectiveness?

Development Community Leaders:

• Where are there gaps in the ecosystem of scaling facilitators? Are there opportunities to enhance coordination within the development community to create a more holistic and integrated set of investments?
• How can the development community identify which investments have the greatest “value-add” for IB development?

We are currently engaged in several projects that will tackle some of these critical issues. There is much more to be done though, and we are looking forward to engaging with more partners on this. Our collective success will require greater investment not only in enterprises themselves, but also in better understanding of the factors that influence their success. I look forward to collaboratively building the domain that we all aspire to achieve.