With over 50 years of experience between them, Ted London and Olivier Kayser have some strong opinions on how to successfully scale inclusive business. The webinar held in November 2016 saw a lively discussion between our two expert speakers, littered with useful examples to demonstrate how inclusive businesses can scale without the help of corporates; what challenges arise when working with corporates, public bodies and NGOs; the question of whether we should even be running pilots if they don’t have the potential to scale from the start and some frank talking on what not to do.
This blog lists eight of the top tips discussed by Olivier and Ted. For more, watch the webinar in full, download the presentation and access resources related to the topic of scaling inclusive business on the event page here.
There is a need to separate prototyping/pilot stage and scaling. At co-creation stage partnerships between business, social enterprise and NGOs can be very useful in accelerating the learning process. This needs a trust based alliance, with a group of people who feel that they have more to win than lose from collaboration. Olivier noted that when growing a market for inclusive business it is often necessary to grow the pie, and then argue about shares afterwards.
Example: This was key when Hystra worked with the Toilet Board Coalition. Opportunities arose that had not been foreseen when the coalition was put together, as that many partners, with all their experience in one space, with the will to collaborate, came up with some innovative solutions.
Typically, a region is chosen based on where the NGO that is willing to work with you operates. Once the model works and you are thinking about scaling, a strategy that relies on finding different partners in each region is not sustainable.
Example: A company in India was making water filters and thought that working with MFIs would be a good solution. About 35% of the target market was served by MFIs. 1 in 10 partnerships with MFIs worked. That is only 3.5% that was addressed through this model.
A strategy based on these partnerships shouldn’t be an objective in itself, Olivier argued that in fact we should avoid partnerships at all costs if not necessary.
Ted asked if a pilot isn’t scalable, why are you doing it? A lot of things can be done at pilot yourself, as you’re investing a lot of time and resource to make it work. However, these models often don’t scale without partners. What you want to be doing in the pilot is testing what can go to scale. If you have to find a local NGO in every region you want to scale in, the model isn’t viable. However, there are large non-profits you can work with e.g. Grameen, CARE, Oxfam. Scaling up to nationwide, then replicating this model from country to country can be one model. So, the big challenge here is, if you haven’t built a good partnership strategy then you haven’t thought about it long enough.
Ninety percent of traditional start-ups are sold to a large corporate. They have the brand, the networks and distribution to accelerate a business, so it makes much more sense to sell a business than to do it alone. Olivier argued that the same logic applies to inclusive business. It’s not a general rule, but a large company has the distribution networks to scale a business. Each social entrepreneur needs to think, what assets do I need to scale? Who controls these assets? And can I strike a commercial deal or do I need to sell the company to take advantage of these?
External finance never comes for free. A typical timeframe is 3 years, which is often too early. There is a direct inverse correlation between money invested in marketing campaigns and financial success. This is because those who receive the money for awareness building campaigns are focused on growing their customer based and not servicing their current customers. Your net promoter score is essential, word of mouth is a free, exponential marketing tool. But it takes time and patience.
At the moment, we are investing in enterprises, but not investing in how to build enterprises. Until we as a community do more of that we are going to continue to not understand success. We need to aggregate experiences and push boundaries.
If you are starting a new project, take the time to research what is already out there, ask questions, meet people, and ensure you learn from good practice and failures. We don’t lack ideas, but finding the right model is challenging.
In many cases corporations have been told for years to stick to what they are good at and outsource the rest. But in the BOP market, there may not always be someone there to outsource to. Corporates need to broaden their definition of what their business is and have the willingness to take the risk to go outside their comfort zone. A mentality that says ‘we are manufacturers of cement’ won’t work in BoP markets. A mentality that says ‘our product and skills can help address clients problems of x’ is needed.
Example: Olivier worked with a large consumer goods company who wanted to save the world- as long as it could be sold in a box. But to serve the BOP you need services, which they were unwilling to do. There was no way to get this on the table, so the project didn’t go ahead.
Set yourself up for success. It’s hard to do something different in a corporate organisation, so make sure you have the right talent, you have the right metrics, you’re solving the right problems, you’ve got the right structure and you give yourself a chance. Start thinking this could be a driver of a new business opportunity and it will take time to get to fruition. See it as R&D, create a model that allows yourself to invest in the things that are working and change direction in the things that don’t.
Successful partnerships are a challenge for any business. But inclusive businesses aren’t about partnerships as usual. The question shouldn’t be who you should partner with, but how do you build the right partnership eco-system? It can span partnerships for finance and technical assistance, partnerships for platforms and partnerships for knowledge.
Businesses should think about: what do we need to build the enterprise? How do we build the market around the enterprise? How do we enable action and build capabilities? What am I good at and what not? Addressing these questions one at a time builds a holistic solution. Every time you bring a partner you bring assets and liabilities. Ted recommends each company needs an ecosystem director, someone who understands how to build successful partnerships. Build the capabilities internally to do it well.
In most cases companies start from a blank slate, and people want to be heroes. But we need to be problem centric, not people or company centric. Don’t put yourself in the centre, it’s about people being leaders, not heroes. Don’t blame the system, shareholders, or colleagues. Success will involve engaging a lot of people, on a long journey. Focus on working with others to be part of the solution, not growing your own organisation and don’t let the challenges stop you. Don’t forget it’s good to have friends!
The full webinar recording, presentation and resources related to the topic of scaling inclusive business can be accessed on the event page here.