What does successful inclusive business look like? Final findings from the BIF pilot
Success in inclusive business depends on getting the business model right. But so far there is little known about which business models work, how long the journey takes to develop inclusive business, what success looks like, and what role technical support plays. Today the BIF team are delighted to provide our answers to those questions.
Of course there is no single answer and no simple solution, but drawing from 3.5 years of engagement by the Business Innovation Facility with over 300 companies, gives us a rich, diverse and frank window into the realities of inclusive business.
The 4Ps of Inclusive Business: how perseverance, partnerships, pil... is the final report of BIF targeted at Inclusive Business practitioners.
The 4Ps explores business models that have worked – or not – for inclusive businesses that reach Base of the Pyramid (BoP) consumers, and source from BoP producers. Consumer-focused models have had to innovate more than they expected - not just to deliver an affordable product, but to create a market and a distribution channel. Producer-focused businesses have seen partnerships rise and fall, and some have learnt the hard way about the role of intermediaries and of credit.
There are few standard solutions, except the need for:
- Perseverance because the journey takes about a decade form inception to scale, and takes a zigzag course to its destination
- Partnerships – to enable companies to go out of their comfort zone
- Pilots – (usually more than one) to keep iterating the business model until it works
- Passion - to provide the vision and an extra boost to determination until commercial returns start to show.
Commercial returns are compared across the portfolio: meagre so far on average, but the trend lines are steep. This was an early stage portfolio, and only five are in profit so far. But the strategies for scale are emerging. Results among households at the Base of the Pyramid are also emerging: the portfolio reaches around 100,000 households so far. We have taken company estimates for the next few years, revised them down based on business progress to date, and calculate a ‘revised for realism’ estimate that they will reach over 1 million households in around 2 years from now, and 3.7 million in 3-4 years from now.
So where did the Business Innovation Facility fit into all this? What role did technical assistance play? Our companion report asks exactly that. In the vast majority of cases, it helped them on their zigzag journey to a more robust business model. We don’t and couldn't claim credit for every success of the portfolio, but estimate that companies’ reach to 0.5 million BoP households in around 2 years, and to 1.5mn households in 3-4 years can be plausibly linked to BIF support.
Adding value to innovation? Lessons on donor support to inclusive ... draws on this BIF experience to interrogate the two fundamental assumptions that underpin spending by the UK’s Department for International Development on BIF:
- Technical assistance makes a difference to inclusive business progress: yes, the added value can be remarkably high ($80,000 worth of support can make a big difference to a business model). But it’s useful for some companies at key times in their journey and needs to be tightly targeted.
- Inclusive businesses makes a difference to lives at the BoP; yes, some do, some will. Impacts can be substantial, reaching millions and affecting behaviour of others. We have good news for donors, that those reached are often living on, around or under $2 per person per day. But a tolerance of risk is needed as some will fail.
In both reports we have been as transparent as possible about the results delivered to date: graphs, trend lines and tables abound. But we have worked hard to review the processes that got there, identifying what worked and what could be done differently. So The 4ps concludes with implications for inclusive business: most of all expect to innovate, pilot and partner, not once but again and again. And Adding value to Innovation? concludes with implications for donors and providers of technical support: invest in technical support and knowledge sharing, adapt language, operations and monitoring protocols, and expect years to be able to truly demonstrate results.
These reports and other final findings of the Business Innovation Facility are available on the BIF findings page.
The BIF pilot has now closed. A new phase of BIF is underway in Malawi and Myanmar.