Astrid van Agthoven

Since May 2015 I am working for Aqua for All in the Netherlands. I am mainly working for the PPPLab, an action research, learning and exchange initiative in the field of PPPs in food and water (see www.ppplab.org). Before joining Aqua for All, I have worked for UNICEF and the Dutch governement in the drinking water and sanitation sector in several countries in Asia and Africa for 17 years.

PPPCanvas: a simple tool to tackle complex business models of Public-Private Partnerships

Inclusive business models and strategy
Partnerships
4. May 2016

Partnerships – the theme for this month on the Practitioner Hub for Inclusive Business. As PPPLab (see www.ppplab.org) we look at partnerships from various perspectives. We specifically focus on development oriented public-private partnerships (PPPs) in the food and water sectors. PPPs generally include a business case; if not, it would be very hard to engage a private sector party. One of the perspectives of PPPs that I will focus on in this blog is the business models in PPPs.

There are several tools developed for designing or improving business models, of which the Business Model Canvas of Alexander Osterwalder is a very popular one (see www.strategyzer.com). However, these are mainly suitable for companies, that are relatively “one dimensional”: they operate rather independently with one key objective, i.e. maximizing profits. PPPs are much more “multidimensional”: they work in a partnership and aim at creating value for all the partners, which usually means combining different kinds of value and besides financial return on investments also social/ public/ environmental impact is intended. This also means that besides direct customers that are willing (and able) to pay for a product or service, the PPP often has a positive impact on a broader group of people, dubbed “Extended Beneficiaries”.

In the water PPPs we reviewed, partnerships consist of as many as 6 partners on average. Each partner brings certain resources, capacities and expertise, but also comes with its own interests, work culture, expectations etc. It will require significant efforts, knowledge and skills to let the partners function optimally together, deliver the multidimensional values and achieve development impact.

To better deal with this complexity of development oriented PPPs, PPPLab developed the PPPCanvas, a tool based on the earlier mentioned Business Model Canvas. We developed this together with BoPInc and Rebel Group last year as part of a study of the business models in PPPs financially supported by the Dutch Ministry of Foreign Affairs. Key findings of this study have been captured in a publication in PPPLab’s Explorations series “Business Models in Food and Water PPPs”. It includes a brief explanation about the PPPCanvas. In case you are familiar with the original Business Model Canvas, you will recognise that in the PPPCanvas presented below. PPPLab added 4 fields, highlighted in the below graphic: Extended Beneficiaries, Impact, Partnership Governance and Business Ecosystem. These four additional elements add – compared to the original business model canvas - insights in the developmental focus, the partnership arrangements and the often difficult context the PPP operates in.

"The PPPcanvas"
The PPP canvas

PPPLab has validated the applicability and usefulness of the tool through workshops with PPP practitioners. Aqua for All – the organisation I work for – has started to apply the tool to all PPPs it is involved in. It turns out that it is relatively easy to learn to use the tool and that it helps visualizing the PPP in a single page and to systematically develop or scrutinise key elements of the business model. Creating a PPPCanvas together with all the partners in a PPP can help to develop a common language, manage expectations and enhance clarity about key aspects of the PPP; it literally brings people on the same page. This can be a very powerful communication tool, both internally (among partners) but also externally, e.g. for presenting your case to a potential investor.

Development and partnerships are complicated and obviously a simple tool cannot “solve” this complexity, but it can help to deal better with some of the challenges.

On our website, you can find an example of how the PPPCanvas works out for a sanitation business, that turns organic waste and faecal sludge into useable products, i.e. energy and fertilizer. It illustrates how the PPP delivers value to three key customers: the municipality, the electricity company and farmers. However, it has a positive impact on all citizens within the project area through a cleaner, healthier environment. This example also makes clear that the “Business Ecosystem” in which the PPP operates is crucial: feed-in tariffs that the electricity company offers or competition of subsidised chemical fertilizers can make or break the business case.

To allow wider use of the tool, we have developed an interactive user guide that explains the PPPCanvas and provides a step-by-step approach to use it. For each building block of the canvas, the user guide offers:

  1. A description of what needs to be captured in the specific building block.

  2. Important questions to help you think the specific building block through.

  3. An exercise or example that might support filling out the building block.

The user guide (an interactive pdf) can be downloaded from here. We hope this user guide will help interested parties to apply the PPPCanvas to their own case and that it fulfils requests for more information about the PPPCanvas. Enjoy using it!

In case of questions, feedback or a need for more in-depth support to use the PPPCanvas, please contact the PPPLab at info@ppplab.org.