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When, why and how does inclusive business really work?

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HomeNewsadmin's blogWhen, why and how does inclusive business really work?
When, why and how does inclusive business really work?

When, why and how does inclusive business really work?

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40 companies, nearly 4 years of collaboration with the Business Innovation Facility, the last 4 months crunching data from an excel file too big for my machine to handle. Have we learnt enough to answer some really big questions that we all have about the reality of inclusive business?
Let's share five conclusions of the BIF team and see what you think:
1. It's all about the business model. Businesses that engage in Base of Pyramid markets cannot pluck models 'off the shelf' so success is all about the process of getting the business model right. But that takes longer and more innovation than expected. It's not a one-off recipe. It's about building a jigsaw with moving parts.
2. Models that engage the BoP as consumers or as producers are very different. Consumer models need to build demand, the market, and distribution channels, aside from an affordable product. Producer focused models need not only a manageable smallholder product and production system, but have to work out how to build in credit and a role for intermediaries. It may sound easy but it's not. A few things are common to both however, particularly the need for pilots to adapt the model, partners to go outside company competencies, and perseverance to adapt when it does not work.
3. The journey from inception to scale is about a decade. It's not just a bit bumpy, due to inevitable things going wrong; it is zigzagging because testing a model on the ground will lead to new information, upheaval of the model, and a new direction.
4. A good share of the businesses should reach viability, but the vast majority achieve only a fraction of their initial projections on time. On track to their destination may be, but not on track against targets. Only some have built in mechanisms to truly scale. Successful consumer focused businesses could reach hundreds of thousands or millions of BoP households, but even the most successful businesses that source from producers may reach 10,000 farmers.
5. Business leaders are showing it's worth it for them. They have strategic reasons to invest and are staying on the train despite slow progress at times. The BIF experience also shows it's worth it for donors. On the one hand external support can make a difference to business - the technical assistance from BIF had relatively high added value. On the other, inclusive business can make a real contribution to solutions to poverty. No panacea, but a massive boost for low-income households that gain access to markets, goods and services, while potentially the business models that work can influence behaviour of others players up and down the value chain or far away. And yes we think the 'BoP' really does include those living on less than $2 per person per day.
Does any of this resonate with reality of others, or is it different from where you sit?
Posted by Caroline Ashley on February 2, 2014
For more information and to read the full article go to http://community.businessfightspoverty.org/forum/topics/when-why-and-how...

24 Feb, 14

 

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