Partnerships for innovation
Inclusive business models invariably require partnership. Companies need to go beyond their core skill set to design and scale products for Base of Pyramid consumers, develop inclusive and durable supply or distribution chains, and manage risk in innovative business plans. In immature markets, companies can also encounter numerous challenges including a lack of basic infrastructure, an unskilled workforce and unreliable market services. Partnerships with other businesses, NGOs and government can help overcome these challenges.
Investing in social, human and environmental capital involves companies working outside their usual zones of comfort, competence, capacity and influence. It requires collaborating with others – with NGOs, the public sector, donors, the UN – who hold key resources from social capital and community knowledge to policy instruments, from loan guarantees to technical expertise, from micro-finance to capacity building. In some cases, it requires combining forces with other businesses to pool expertise and resources to make the most of market opportunities. Partnerships for inclusive business bring together business with other societal actors to develop business models and improve the eco-system supporting those models to help ensure their success. From business-business (B2B) or business-NGO partnerships focussing on a single issue, to much wider multi-stakeholder, multi-sector system-level collaborations to transform markets or develop of sustainable value chains, cross-sectoral collaboration is an essential ingredient for businesses to be inclusive.
Types of partnerships for inclusive business
Partnerships to create an inclusive (core) business model
These are usually partnerships convened by a company that wants to develop an inclusive business opportunity that benefits people through sales of its products or services, creates jobs or opportunities for micro-entrepreneurs, or procures goods from SMEs or small-scale producers. Partners will be selected because they complement the skills and resources otherwise available to the company. Examples include the Ballarpur Industries Limited (BILT) partnership, which benefits farmers growing wood for the paper industry. Many brewing companies are partnering with NGOs to build the capacity of small farmers growing barley or cassava. Extractive companies are working on ‘local content’ partnerships that develop the capacity of small enterprises in their supply chain. Jita is a partnership between Care Bangladesh and the Danone Foundation that has given opportunities to over 7,000 women through sales of socially useful products [see case study below]. B2B partnerships can help address inefficiencies in a market and are particularly useful when companies are seeking to enter an existing market. For example, Indian drug firm Cipla entered the East African market through a joint venture with Ugandan firm Quality Chemicals to produce low-cost HIV/AIDs and malaria drugs.
Partnerships to catalyse a market system change
These are partnerships involving that will benefit the company that convenes them in the medium to long term, either to improve current market conditions or defend against as deterioration that threatens the company. Yara International’s work to develop the infrastructure for fertiliser supply in Tanzania is a good example.
Partnerships to tackle business risks and sustainability challenges
Companies looking to ensure the long term sustainability of their value chain are partnering with others to build competencies and tackle environmental challenges. For example, the major confectionary companies including Mars, Mondelez, Nestle and Unilever are all investing in programmes to protect cocoa supplies from degradation of soil quality and a social drift away from farming.
Networks and platforms to address large-scale market failures
These are often at global or national level to address market-wide issues such as supply-side failures. They are essentially voluntary in nature, with both active and passive members. Examples include the Toilet Board Coalition that supports the creation of low-cost commercially viable sanitation solutions that can scale, Extractive Industries Transparency Initiative (EITI), which provides a standard for countries to provide full disclosure of taxes and other payments made by oil, gas and mining companies to governments, and Roll Back Malaria (RBM) which builds consensus and cooperation, in the global fight against malaria.