'Success' in IB: Journeys of a decade that take unexpected zig-zags
This blog is the second in a mini-series called 'Success' in inclusive business published in partnership with Business Fights Poverty.
An established Nigerian bank seeking to catalyse a whole new approach to smallholder farming and rural banking, a start-up developing a commercial approach to off-grid power in Malawi, and a summer tomatoes contract farming venture led by a Bangladeshi agribusiness conglomerate.
The portfolio of innovative inclusive business models that have been supported as part of the Business Innovation Facility pilot over the last three and a half years was selected to be intentionally diverse. Diversity allowed for a high degree of learning about the key ingredients for models that work as well as likely reasons for when things do not work. Across the portfolio of 40 companies ranging from small start-ups to established multinationals in five countries, we are struck at how clear some cross-cutting issues are that companies are facing on their inclusive business journey.
One of these cross cutting themes is that the inclusive business journey is long and can take unexpected ‘zigzag’ directions.
The inclusive business journey can go slowly for many reasons. Given most companies supported by BIF are four to five years from initial concept, we estimate a decade from inception to scale.
The figure below shows a rough timeline for the three BIF companies I referred to above and who see themselves on a journey towards scale.
The first two are large companies, which started their initiative to diversify into inclusive business around three to four years ago. They are at the end of piloting or relatively early in operational roll-out, and plan to be operating at scale around five years from now. Thus, the journey will have taken the best part of a decade. The third business in the diagram, MEGA is a social enterprise aiming to transform energy access for households living in mountainous areas with fast flowing water, where there is potential for micro-hydro power generation. It is just completing validation, with the first micro-hydro site now coming on line. It is also five years since inception, and anticipates another five to roll out the model. We do not have the same depth of information for all businesses in the portfolio, but do not have reason to think these are atypical.
In addition to our findings on how long the journeys take, more importantly, we see strategic shifts of direction as a major – but under-recognised – element of the inclusive business journey. As companies alter and improve the business model in response to reality they often navigate the business in a new direction entirely. We have seen consumer-focused companies re-invent the product, distribution channel and target market as they learn by doing. Producer-focused companies have transformed how they engage, and who engages, with their supply chain.
Two examples of consumer-focused inclusive businesses that changed course are iSchool in Zambia and mKRISHI® in India, illustrated in the diagram: iSchool has slashed cost per pupil per term of its rich e-learning resource from $15 to $4, but in the process it overhauled the product and adapted its target segments and channels. The mKRISHI® initiative of Tata Consultancy Service in India similarly transformed the core product, from interactive advisory services on a mobile phone, to a cloud based solution for a host of agricultural and rural transactions that will enable farmers to reach up and down the value chain. As the product changed, so did the partnerships, marketing, distribution channels and revenue system.
Not every business in the BIF portfolio has such clear turning points and new phases, but these two are far from alone. Such 'zigzags' are a strategic response and should be expected and accomodated by those working in this field.
A journey that takes about a decade form inception to scale, and takes a zigzag course to its destination requires perseverance for success. In our report “The 4Ps of inclusive business: How perseverance, partnerships, pilo...” we provide detail on each of the “4Ps”, why they matter and explore how success in inclusive business depends on getting the business model right. The report draws on findings from the portfolio of projects supported by BIF, and also presents the commercial and social results realised to date.
Read the other blogs in this series:
1. Not a blueprint but a jigsaw with moving parts: business models tha...
2. Is there any evidence of inclusive business results? Findings from ...
3. What, no cash? Does technical assistance really help inclusive busi...