Mark Ingram

Business for Development is an independent not-for-profit organisation formed in 2007. Since we began, we have been prototyping how the private sector can work with communities, governments, multilateral organisations and NGOs to solve extreme poverty through inclusive business models in the developing world. So far, we have consulted to over 20 leading multinational companies and have advocated the uptake of inclusive business models to over 4,000 business leaders.

What lessons are being learnt by Inclusive Business Development Services on how to be more effective?

As a broker of inclusive business partnerships, Business for Development has had several successes but also, has seen partnerships fray at the seams because certain fundamentals were not established. There are very strategic consultants in the marketplace, however what sets Inclusive Business Development Service (IBDS) providers apart is the experience to develop tailored solutions to achieve maximum impact in this very difficult market space. Here are just a few of our lessons on how to be more effective when establishing inclusive business partnerships. 

Firstly, to be clear, inclusive business is a business. Although altruistic intentions are at the heart of the framework, it still has to have strong business drivers. This can be increasing profit, strengthening the supply chain, building brand value etc. Even so, inclusive business can be difficult because often the business is shifting to the way things have always been done. As this can be a very challenging environment, it is integral that you have buy-in from the C-level of the organisation who has to have social-DNA and wants to shift the way the business works.

Inclusive businesses require special attention to design and constitution. Baking the social impact into the cake, rather than as icing on the top. This might be through the design of the business model, or the wording of legal documents which ensure that the beneficiary is always considered when making important decisions. This prevents putting profits ahead of people.

Partnering can be one way to improve effectiveness. Businesses investing in inclusive business models tend to enter into partnerships with players who can bring skills that they lack, or networks that reach into a new market. This is where a IBDS is very important in negotiating the terms of partnering agreements.

If approaching a business to partner - work hard on the value proposition to that potential partner. Inclusive business needs to be presented as a legitimate core business opportunity and therefore the partner needs to understand how your services are relevant to the achievement of that opportunity if they are to partner with you. Also, if partnering is critical for the survival of the project, then it is important to invest in partnership management and knowing when to move on if the partnership is not working. 

If, as an IBDS, you are implementing a program in-country, you need to be on the ground over-seeing the project implementation. You can't provide IBDS by "remote control". This is important for a number of reasons but especially because you will need to ensure that entrenched ways of doing business, such as squeezing suppliers, do not prevail. It also means that you can be dynamic in the roll out of the model, countering unanticipated challenges while prioritising the social impact, such as paying beneficiaries a living wage. 

To win the support of the community, business partners, and potential donors, it is important to achieve early stage results to demonstrate impact potential. To create a successful inclusive business takes years and there will be many ups and downs. So make sure your inclusive business venture shows early visible impact to help create buy-in from the community and partners to drive momentum for further expanded funding of the program.  It is also integral to steward clients and funders. No point in designing a great model if it then gets shelved.

There is a lack of precedence in this type of development and business strategy. The way to increase the speed and uptake of the model is through establishing flagship cases that can be selectively adopted and adapted to suit new situations, rather than going back to the drawing board for every new opportunity.

The costs of starting an inclusive business can be greater than a normal business, yet the expectations of what they will cost are lower. As IBDS operators, it is important to be selective and engage with capital providers (donors, social and commercial investors) that can go the distance, holding inclusive business development to a higher standard. 

Inclusive business deserves as much time and talent as fully commercial business. With health development programs you employ doctors to assist, when a disaster hits you engage experts like logisticians. With inclusive business you need business experts who can translate and apply strategic know-how to enterprises. While there are hundreds of consultants who can provide BDS, only some have experience drawing together donor and commercial outcomes. This is a unique art, requiring experienced practitioners to develop and deliver the most impactful outcomes. It is about translating development outcomes into business language and vice versa.

Inclusive business is only sustainable if you do it properly. As you can see above there are several moving parts to be considered and an IBDS often has to have the experience to navigate partners through the journey and ensure its optimum effectiveness and sustainability.

 

This blog is part of the September 2016 series on Inclusive Business Development Services, in partnership with the Inclusive Business Accelerator. Don’t miss the whole series on support available to inclusive business from practitioners, donors and intermediaries including Afrilabs, DFID, Endeva, EY and many more…