EOI Course Inclusive Businesses Strategies 2012

7/27/2019 EOI Course Inclusive Businesses Strategies 2012

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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

Generatingprofits

Developingnew markets

Drivinginnovation

Streghteningthe value

chain

Expandingthe labour

pool



What do you think are the

advantages for the poor?



Opportunities for the poor: advancing

human development

Meeting basic needsEnabling the poor to

become moreproductive

Increasing incomes Empowering the poor

• Raising awareness

• Providig informationand training

• Includingmarginalised gropus

• Offering newopportunities

• Conferring peopleconfidence and new

resources of strenghts to escapepoverty using theirown 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) thatallowed for a ‘win-win’ scenario between the enterprise model and theinterests 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 suchas mindsets, beliefs and the like.)Thinking about the impact of the innovation, how were the developmentoutcomes for the poor and the gains for the business optimized? (Theinnovation may be related to an enterprise or a phenomenon outside thebusiness such as a supply chain.)What opportunities are the entrepreneur, the enterprise and itsstakeholders pursuing? (The motivations of the entrepreneur may besocial, psychological, financial and the like.)



Designing and delivering a

project



Designing and delivering a project

Understandbusiness

needs

Understandsocietal needs

Matchbusiness and

societal needs

Defineproject, seek

partners

Measure,evaluate,redesign



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 willprovide 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 throughdistribution?

• 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

Public policy

Social investmentand philanthropy

Core operations andsupply chainoperations

• Advocating for change on public policy

• Engaging in dialogue with governments

• Supporting institional builiding

• Financial contributions including traditionalphilantropy, investing in social venturefunds and other financial mechanism

• Employee volunteering

• Product donations and other inkindcontributions

• Producing goods and services

• Buying ingredints and services• Selling producs

• Providing jobs and developing people

Inclusive business models are concern with changes in core business. The graph below

illusitrates the distiction between this and other socially oriented business activities



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 andimplementes, and next steps determined

In planning and delivering a programme, consider the spheres of influence in which a companyoperates, 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 localpartners to build on their local knowledge, networks and experience

Consider vulnerable sections of society such as women, minority groups and marginalisedcommunities

Define social and business performance metrics and collect data

Share learning experience widely



Adapt products and processes

• Information and communications technologies havecreated opportunities for adaptations – Mobile banking

– Smart cards (used in Africa to buy water)

–

Telemedicine• Restructuring business processes

– Telephony: prepaid cards (smart payment and pricing methodsaccomodating the cashflow of its customers and suppliers )

– Providing infrastructure to a group saves individual householdconnection costs

– Simplifying the requirements (easier use, less documentation)



Leverage the streghs of the poor

• The poors are often an inclusive business model´s most importantpartner.

• By engaging the poor as intermediaries and building on their socialnetworks, a company can increase access, trust and accountability

– Ex. Microfranching

– Employing the poor to gather market information, to deliver, collectand service products and to train others

• Generally, when the poor take over some tasks in the businessmodel,

– the transaction costs for the business fall and

– the poor benefits from rising income, knowlede and skills and socialstanding



• 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 businesscapabilities, should be noted?

• How have these constraints been overcome (using the Matrix and noting othersolutions beyond the 5 strategies)?

• Actors



Actors

• Who are the actors that have shaped the business? (Include all, as well as 2-3critical 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 theywant 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 theirmotivation? What is the effect on the business?

What role do these actors play within the business models? What resources andcapabilities do they contribute?What do they get out of the business?How does the business manage the relationship with these actors? Is therelationship collaborative or transactional? Are there areas of disagreement andtension?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, taxrevenues, etc.)How is the business projected to grow? Where will it find the necessary capital? Does the model have the abilityto 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 generatingenvironmental/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, howcommunities function, international donor involvement etc.?

Documents

EOI Course Inclusive Businesses Strategies 2012