Inclusive businesses: opportunities, contraints and strategies to overcome them

What do you think are the advantages for businesses in dealing with the poor?

Opportunities for business: profit and growth

Generating profits

Expanding the labour pool

Developing new markets

Streghtening the value chain

Driving innovation

What do you think are the advantages for the poor?

Opportunities for the poor: advancing human development

Meeting basic needs Enabling the poor to become more productive Increasing incomes Empowering the poor Raising awareness Providig information and training Including marginalised gropus Offering new opportunities Conferring people confidence and new resources of strenghts to escape poverty using their own means

Constraints
Limited market information Ineffective regulatory environments

Inadequate physical infrastructure

Missing knowledge and skills Restricted access to financial products and services

Five strategies at work

Adapt products and processes Invest to remove market constraints

Leverage the strenghs of the poor

Combine ressources and capabilities with others Engage in policy dialogue with government

The strategies matrix

Innovations, challenges and opportunities

What were the most important innovations (private or public sector) that allowed for a win-win scenario between the enterprise model and the interests of the poor? (These innovations could be social, financial, technological, legal, regulatory and the like.) What were the challenges that needed to be overcome in order to achieve this win-win scenario? (These challenges could be social, financial, technological, legal or regulatory or cultural or psychological factors such as mindsets, beliefs and the like.) Thinking about the impact of the innovation, how were the development outcomes for the poor and the gains for the business optimized? (The innovation may be related to an enterprise or a phenomenon outside the business such as a supply chain.) What opportunities are the entrepreneur, the enterprise and its stakeholders pursuing? (The motivations of the entrepreneur may be social, psychological, financial and the like.)

Designing and delivering a project

Designing and delivering a project

Understand business needs

Measure, evaluate, redesign

Understand societal needs

Define project, seek partners

Match business and societal needs

1. Understand business risks and opportunities

Are there concerns around employee productivity? Are employee motivation, attraction and retention a challenge? Is there sufficient talent to pool from? Are there high community expectations that the company will provide jobs? Is there government pressure to support education and or create jobs? Is there a need to localise your employee and supply base? Is there a potential to grow sales by extending brand reach through distribution? Is there a concern around security of supply? Is there a potential to develop products and servicess for small businesses?

2. Understand societal needs

Are your employees unable to find jobs when laid off

Sphere of influence
Inclusive business models are concern with changes in core business. The graph below illusitrates the distiction between this and other socially oriented business activities
Advocating for change on public policy Engaging in dialogue with governments Supporting institional builiding

Public policy Social investment and philanthropy Core operations and supply chain operations

Financial contributions including traditional philantropy, investing in social venture funds and other financial mechanism Employee volunteering Product donations and other inkind contributions Producing goods and services Buying ingredints and services Selling producs Providing jobs and developing people

Key principles to Practical Action

Base the project on a clear business need (profitability, flexible suppliers, specialised workers, etc) Build suffienct time to allow the partnership to be formed, a robust approach developed and implementes, and next steps determined In planning and delivering a programme, consider the spheres of influence in which a company operates, so as to be clear on which stakeholders to involve in the project Seek diverse stakeholders to bring in the needed expertise and resources. Work with local partners to build on their local knowledge, networks and experience Consider vulnerable sections of society such as women, minority groups and marginalised communities Define social and business performance metrics and collect data Share learning experience widely

Adapt products and processes

Information and communications technologies have created opportunities for adaptations
Mobile banking Smart cards (used in Africa to buy water) Telemedicine

Restructuring business processes

Telephony: prepaid cards (smart payment and pricing methods accomodating the cashflow of its customers and suppliers ) Providing infrastructure to a group saves individual household connection costs Simplifying the requirements (easier use, less documentation)

Leverage the streghs of the poor

The poors are often an inclusive business models most important partner. By engaging the poor as intermediaries and building on their social networks, a company can increase access, trust and accountability
Ex. Microfranching Employing the poor to gather market information, to deliver, collect and service products and to train others

Generally, when the poor take over some tasks in the business model,
the transaction costs for the business fall and the poor benefits from rising income, knowlede and skills and social standing

Research Questions 2010 GIM Cases Business Model What is the value proposition of the business? Who sells what to whom? What is the financial model? What objectives shall be achieved through the business (regarding the company, society and the environment)? How is value created and distributed? What are constraints in the market environment the company had to overcome (using the Matrix and noting other constraints beyond the 5 domains)? What other constraints, e.g. from within the organization or regarding the business capabilities, should be noted? How have these constraints been overcome (using the Matrix and noting other solutions beyond the 5 strategies)? Actors

Actors

Who are the actors that have shaped the business? (Include all, as well as 2-3 critical actors) What are the motivations/interests of these actors with regard to the business? (Why would they be interested in the business success or failure? What do they want to get out of the business? What negative outcomes do they worry about?) Who are the actors who hinder the success of the business? What is their motivation? What is the effect on the business? What role do these actors play within the business models? What resources and capabilities do they contribute? What do they get out of the business? How does the business manage the relationship with these actors? Is the relationship collaborative or transactional? Are there areas of disagreement and tension? What did it take to get their support? What are the costs and benefits of coordination and governance? What lessons has the business learnt in coordinating these actors? Have any of these actors changed over time? If so, how? How will they change, if at all?

Results
What is the size of the business (measured, for example, by number of employees, annual revenues, number of customers, market share, number of suppliers or distributors, etc.)? What are the economic results experienced by the actors involved? (e.g. income growth, wealth creation, tax revenues, etc.) How is the business projected to grow? Where will it find the necessary capital? Does the model have the ability to scale up and replicate (and thus improve its results)? Has it been or can it be replicated by others? What are the economic returns for the core enterprise and for other stakeholders? Does the business measure its own social and environmental impact? If so, how? What are the social results of the business? (e.g. health, education, poverty reduction, access to essential services, access to/control of key assets, empowerment, gender equality etc.) What are the results of the business for the environment (e.g. reduced carbon emissions, biodiversity protection, sustainable use of natural resources, rehabilitation of degraded ecosystems, etc.)? What are the trade-offs involved in terms of value creation and distribution? Does generating environmental/social impact come at the expense of generating profit? Who wins and who loses? How have these trade-offs been negotiated by the actors involved? What are other indirect impacts that the business had (perhaps unintended), such as impact on public policy, how communities function, international donor involvement etc.?