4 Steps Which Can Help Businesses Launch An Inclusive Initiative
So you are excited by the opportunity to achieve both commercial success and development impact through inclusive business. Wonderful, but where do you start? Members of the Business Call to Action (BCtA) have found that launching a new inclusive initiative requires four primary steps:
Build the business case: assess risks and new opportunities
Just as in any other business venture, the bottom line matters in inclusive business. But, this doesn't necessarily mean that the expected returns for the company must all be financial. New market development, product innovation, risk management, and improving the value and reach of the brand are all critical considerations. Find out what matters most to the executive team of the company, and design the pitch of your inclusive initiative to directly address those concerns.
For instance, in launching a new nutritional foods program for children and mothers in Ghana, Ajinomoto, the Japanese food and chemical corporation, built on the company's expertise in food technology and made an important contribution to the nutrition of low income populations. The effort strengthened its brand value around nutrition, offered its employees development and leadership opportunities, spurred innovation, contributed to income generation in rural communities, and built a long-term customer base for Ajinomoto's line of products.
FOSTER A MOVEMENT, FIND A CHAMPION!
Inclusive business often requires companies to step outside of their comfort zone. A large part of the work of launching the initiative will be to build a movement of supporters who are willing to go the extra mile to see that the initiative succeeds. In addition to building a network of internal allies across multiple corporate functions—from operations to marketing to finance—this might also include exploring collaborations with new kinds of partners, such as development organisations, governments, NGOs, or even other companies. Where the initiative requires skills and resources that are beyond the reach of your company, you will need to identify the partners that can fill the gap, while benefiting mutually from the engagement.
As an example, in participating as a founding member of the Better Cotton Initiative in 2005, IKEA has broadened the reach of its own training programs with cotton farmers in Pakistan and India through partnering with other companies—some even direct competitors. Each organisation takes on a piece of the larger challenge of unsustainably grown cotton in developing countries, which produce 75% of the world's cotton. Through this non-traditional partnership, IKEA not only ensures a more sustainable supply of cotton for itself, but also takes a leadership role in a global movement to transform the entire industry and return greater value to farmers.
It may sound obvious, but managers who run BCtA initiatives have identified that buy-in at the executive level is the most critical for survival. Management champions are critical for protecting and promoting the initiative through successes and failures, recessions and leadership transitions.
INCUBATE THE INITIATIVE, TEST AND PILOT
Research has shown that it often takes from three to 10 years for inclusive businesses to break even, depending on the market. Multiple pilot projects may be attempted before the company identifies the best approach. Because of this long and necessary lead time, project managers of inclusive ventures may find that they need to negotiate an incubation period for the initiative, offering it some time and space to develop outside of the pressures of quarterly reporting. This might mean that the initiative is initially hosted by the innovation or corporate social responsibility departments, only becoming formalized as their own business unit once they are ready to scale.
For example, in 1998 CEMEX began to develop its signature inclusive business, Patrimonio Hoy, which provides low-income families with access to building materials such as cement, concrete blocks, and steel, while also offering technical assistance, financing plans, and logistical support tailored to the individual needs of each customer, enabling the poor to safely self-construct their own housing. Patrimonio Hoy was launched in 2000 within the CSR department of the company, became profitable in 2004, and moved to the office of the Commercial Vice-Presidency in 2012, where it can gain greater resources to grow to scale. Patrimonio Hoy is now building on its success with a commitment to reach an additional 125,000 low-income families with customised services to build and expand their homes by 2016.
Measure and evaluate: that which is not measured, is not noticed
Finally, measurement and evaluation is essential. Just as important as developing the initial business case, tracking the progress of the programme and making adjustments along the way is critical to ensure that it succeeds. Regular monitoring also helps to provide the data needed to promote the programme internally, even as it grows and adapts to market conditions. Some companies find that setting an ambitious goal for the programme also helps to align corporate interests in support of the initiative.
For example, ever since BASF launched the Samruddhi initiative in 2006 to train small-holder soybean farmers in India on improved farming practices, it has been diligently tracking the progress of the initiative. BASF agronomists work together with farmers to show how they can secure reliable yields in the long term under fluctuating climatic conditions by protecting the plants from pests and disease. A core team of business unit leaders, marketing managers, and crop managers monitor and review the progress of the program on a regular basis. This culminates with an annual review, when learning from the previous season is incorporated.
Two critical indicators demonstrate the continued success of the program: the company has recorded 60% annual growth in business with crop protection products for soybeans from 2006 to 2009, and farmers have benefited from 25-30% increase in crop yields year on year since the launch of the program. Due to this continued success, BASF has committed to reach an additional 120,000 soybean farmers by 2020, and is launching new services tailored for onion and potato farmers.
While every inclusive initiative is different and faces unique challenges and opportunities, the basic steps of building the business case, fostering alliances and corporate leadership, protecting the initiative while it is under development, and measuring and evaluating the program's progress, are key to launching a successful new inclusive business initiative.
“IT’S AFRICA’S TIME”, the TV series, is a partnership between the United Nations Development Programme (UNDP) and business to promote and encourage the adoption of the inclusive business model as a component of corporate growth strategy in Africa. It features examples of responsible corporate engagement across the African continent, illustrates profitable core business models that also yield a sustainable social and environmental impact and demonstrates how this approach can make a contribution towards meeting the UN’s Millennium Development Goals (MDGs).
It’s Africa’s Time is broadcast across Africa with a viewership of over 260 million.
See www.itsafricastime.org for more details.