Sector labels don't work for unconventional innovative business
It's lucky my living room floor is quite large. One evening, about two years, I started to tabulate the main sectors of the grantee businesses in the Innovations Against Poverty portfolio. What started as a simple job for a table in a report became an intelligence puzzle with paper strewn across the floor. The businesses didn't fit into sector boxes. So I used the floor to map them all out, working out the overlaps: finance and agriculture, agriculture and food, food and health, health and water, water and sanitation, sanitation and recycling, recycling and energy, energy and health, and of course ICT across nearly all.
What I could see on the floor that night has been a repeated theme during the last few years: many of the most innovative inclusive businesses defy sectoral labels. Let me go further and suggest that it is precisely because entrepreneurs step outside sectoral norms, that they find new ways to innovate and serve the BoP.
Our theme this month is 'unconventional business' and I was reminded of this theme as we pondered the unconventional businesses that are profiled on the Hub. One of the most exciting, in my view, is the Stanbic Smallholder Finance Scheme in Nigeria. Of all the agribusiness ventures in the portfolio, this is the only one run by a bank, and seems to be one with considerable chance of success and scale. It is precisely because it is run by a bank that it was identified as having high potential, when we looked across the portfolio of the Business Innovation Facility and produced final case studies. As a bank it can provide finance, tackling a key constraint, it can work with players up and down the value chain (which is not always the case for large agro-businesses high up in the chain, nor for those working at the farmer aggregation level), and most interestingly, it has an approach to minimising risk that other agribusiness ventures sometimes lack.
Sanergy is another interesting case, one of the strongest performers in the IAP portfolio continuing to gain awards and recognition. It's known for making strides in what was a pretty unconventional area - fee paying toilets in slums. The business rests on the fact that it is combining sanitation services to slum residents, with fertiliser production for agriculture. Crossing sectors again.
This may seem a blindingly obvious point. But I notice the assumption that simple sector labels will apply in my work in monitoring and evaluation: forms and databases typically have one box for 'sector' and tend to categorise results by sector. Entrepreneurs may be awake to the reality of crossing sectors, but not everyone is.
It is well established now that innovative inclusive business often relies on partnerships, to blend skills and networks that are unconventional partners. Partnerships are likely to bring players together from up and down the value chain. It seems to me they will often also be bringing together players and expertise from different sectors. Sector boxes on M&E forms may not matter, but let's make sure that in taking inclusive business forward, we don't all stay and talk in sector silos.
The latest version of the diagram that emerged on the living room floor is on page 10 of From Paper to Practice, the IAP knowledge exchange report of 2013.