Thinking strategically about partnerships and social impact metrics: three take-home thoughts

Good business models owe a great deal to good underlying strategies. Even more so in inclusive business, which pushes companies to test innovative approaches, take risks and operate outside of their comfort zones. Our recent workshop in Lusaka focused on partnerships and social impact measurement as two strategic tools that inclusive businesses can use to strengthen their business models and get their ideas off the ground.

We kicked off the workshop with a first-hand account of a local fruit and vegetable sourcing partnership, delivered by Mr Charles Bota, Deputy Managing Director of the supermarket chain, Shoprite. The seven year partnership he described was between Shoprite and the local farming community of Luangeni, who supplied the a nearby Shoprite store with their fresh produce. While it led to increased farmer incomes and an improved reputation for Shoprite, the partnership faced challenges that ultimately ‘did not inspire a future for it.’ This fascinating case-study provided a concrete anchor for our discussion and a useful example to refer to.

The different presentations, case study exercise and wider discussion that followed offered a good deal of food for thought, but what I ended up taking from the workshop were three very simple points about these two strategic tools:

1. It has to make business sense

Ultimately, inclusive business is about business and therefore about commercial return. So any partnership or social measurement exercise needs to make business sense. A key issue Mr Bota identified as contributing to the decision not to renew Shoprite's partnership with the local farmers was that it no longer made commercial sense for Shoprite to source its fruit and vegetables from the Luangeni community. With perishables representing only a small percentage of the store’s total business, and given the issues the community faced with meeting quality standards and demand, the commercial incentives to carry on the partnership were lost.

Interestingly, the same principle also emerged as a key consideration in the case study simulation on measuring social impact. Several participants in each group noted that whichever approach a company uses to track its social impact, it must be in proportion with the scale of the business.

2. You manage what you measure

In the Shoprite case, it was clear that the partnership with the Luangeni farmers had significantpositive impacts on the local community. As Mr Bota highlighted in his presentation, ‘their incomes grew. So did health and education. We became heroes in the eyes of the public.’ You might think it strange then, that Shoprite would end a partnership that had built up its reputation so positively. But as Mr Bota put it: ‘we didn’t measure that. How do you quantify the impact of good will?’

Certainly, tracking social impact is tricky and far harder to quantify than commercial results or operational efficiency. Yet what emerged clearly from the presentation and discussion on social impact metrics is that, for inclusive businesses - where the success of the business hinges on social and commercial results - measuring social impacts is as important as tracking profits. In a sense, a company whose business model incorporates development objectives could compromise its entire business model by not tracking social impacts in some way.

Perhaps, if Shoprite had been able to measure its wider impacts on the local community and the impact of the partnership on its brand reputation, there might have been a stronger case to continue the partnership?

3. It’s not a quick fix – it’s got to be for the long haul

The final point that stood out strongly for me was already encapsulated in the title of the workshop. Both partnerships and social impact measurement can be very powerful tools, as long as you think of them – and invest in them - as strategies. A good partnership can bring new resources, expertise and even open up new markets, but it needs to be properly identified, managed, regularly reviewed and maintained. In the Shoprite case, Mr Bota pointed out that the partners were ‘aloof’ and not ‘in it for the long haul,’ and commented that partnerships have many hurdles to be worked out and cannot be treated as a ‘quick social fix’ for a business.

Equally, while there are different approaches a company can take to track its social impact, companies are likely to get the most complete picture of the social value they create by investing in monitoring impacts and regularly tracking a wide range of indicators over the lifetime of the business.

One of Mr Bota's closing statements was that despite the eventual failure of Shoprite’s partnership with the local community, ‘partnerships are the way to go.’ Leveraging the potential of partnerships or the power of social impact data does require a certain commitment from the outset, but it is within the reach of even the smallest inclusive business if they have the right tools, approaches and know-how to manage it.

Feedback from participants:

When asked what was useful about the workshop, one participant cited ‘hearing first hand experience (Shoprite example); breaking down how to separate measurement approaches and when to apply each.’ This view was echoed by four other participants. Of 14 participants, eight stated that they would ‘reassess’ or ‘re-evaluate’ their partnerships and social indicators as a result of the workshop. One participate stated that they will ‘assess what items we are socially trying to measure, since they are currently not focused/scattered approach.’ When asked one thing they had learned, one participant stated ‘the need for all partners to understand and explicitly state what they intend to achieve from partnering in business, ’while several others cited ‘impact assessment tools,’ and ‘publications on the Practitioner Hub.’