Partnering for Business Opportunity and Development Impact
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PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Beth Jenkins and Lorin Fries
Written by Beth Jenkins and Lorin Fries Designed by Alison Beanland Cover photographs: from left to right, The Coca-Cola Company, Lorin Fries, The Coca-Cola Company
ACKNOWLEDGEMENTS This report would not have been possible without the collaboration of a large number of stakeholders involved in Project Nurture, listed on page 46. The authors are deeply grateful for their openness and generosity with their time. Special thanks go to Jennifer Ragland and Bob Okello (The Coca-Cola Company), Wanjiku Kimamo and Simon Winter (TechnoServe), and Richard Rogers (Bill & Melinda Gates Foundation) for making introductions, facilitating engagement with the broader group of stakeholders, and making a productive research visit possible.
The authors would also like to thank their CSR Initiative colleagues Jane Nelson, who provided invaluable experience, insight, and guidance throughout the research and writing process, and Marli Porth, who provided objective feedback and copy-editing in the report’s final stages.
© 2012 by the CSR Initiative at the Harvard Kennedy School
The material in this publication is copyrighted. Quoting, copying, and/or reproducing portions or all of this work is permitted provided the following citation is used: Jenkins, Beth and Lorin Fries (2013). “Project Nurture: Partnering for Business Opportunity and Development Impact.” Cambridge, MA: The CSR Initiative at the Harvard Kennedy School.
The views expressed in this paper are those of the authors and do not imply endorsement by the John F. Kennedy School of Government, or Harvard University.
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Foreword
2
Executive Summary
3
Introduction
8
Drivers
10
Approach
15
Achievements To Date
16
Roles and Responsibilities Along the Value Chain
18
Partnership Operating and Governance Structures
27
Monitoring and Evaluation
28
Next Steps
29
Lessons Learned
32
Conclusion
44
Appendices
45
Project Nurture Mobilization Timeline
45
Stakeholders Consulted
46
Endnotes
47
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 1
Foreword
Development challenges such as tackling poverty and unemployment, improving food, water and energy security, increasing access to education, health care and nutrition, and adapting to climate change are notoriously systemic. They have their roots in public awareness, regulatory and policy frameworks, market dynamics, institutional capacity, infrastructure, social and cultural norms, and many other factors that shape people’s incentives and drive their behavior. And behind each of these factors is a set of interconnected, interdependent stakeholders.
These structures are complementary and companies often use them in combination, either sequentially or simultaneously. The following case study looks ATæ Aæ PROJECT BASEDæ ALLIANCEæ AMONGæ 4HEæ #OCA #OLAæ Company, the Bill & Melinda Gates Foundation, and TechnoServe intended to bring more than 50,000 smallholder mango and passion fruit farmers in Kenya and Uganda into the Company’s value chain – and to catalyze private initiative by the Company to sustain and replicate those linkages in Kenya, Uganda, and around the world.
The development community increasingly recognizes the private sector as a crucial partner in helping to address these challenges. New technologies, products and services, and more inclusive business models are helping to improve livelihoods and quality of life for millions of low-income households while at the same time improving the efficiency of natural resource use and decreasing environmental degradation. Yet, with a few notable exceptions such as mobile banking, most of these market-based solutions have not achieved business growth and development impact at scale. Many are impeded by a combination of market failures, governance gaps, insufficient financing and inadequate individual and institutional capacity. There is an enormous need for more collaborative solutions that leverage the combined resources and capabilities of business, government and civil society to overcome these barriers.
In this context, the CSR Initiative at the Harvard Kennedy School has undertaken research on the different strategies and structures that companies are using to strengthen the ecosystems around their inclusive business models. We have looked at three approaches that can help overcome barriers to scaling these business models: sæ 0RIVATEæ INITIATIVEæ BYæ ANæ INDIVIDUALæ COMPANYæ ALONGæ
its own value chain; sæ 0ROJECT BASEDæALLIANCESæBETWEENæAæCOMPANYæANDæONEæ
or more other organizations; and sæ 0LATFORMSæTHATæFORMALLYæLINKæPOTENTIALLYæLARGEæ
networks of players for a common purpose.
7HILEæ 0ROJECTæ .URTUREæ WILLæ NOTæ CONCLUDEæ UNTILæ æ we believe that the partnership already offers a rich set of lessons learned for building inclusive and sustainable value chains and for building complex partnerships. It also offers a model with the potential to be adapted in other countries and for other commodities. Adaptation is already underway or under consideration in several places within the Coca-Cola system.
3INCEæ ITæ WASæ FOUNDEDæ INæ æ THEæ #32æ )NITIATIVEæ ATæ the Harvard Kennedy School has worked to bridge theory and practice in the field of multi-stakeholder partnership. This case is part of a series focused on collaboration between business and other sectors to drive systemic change. Our goal is to learn in “real time” how a new generation of collaborative initiatives designed for systemic change and scale are mobilized, and how they work. We hope others will benefit from the experiences of these initiatives and be able to accelerate their own progress in developing models that achieve both business benefit and development impact through tackling some of the world’s most pressing development challenges.
Jane Nelson Director, CSR Initiative Mossavar-Rahmani Center for Business and Government Harvard Kennedy School
2 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Executive Summary
Where business and poverty alleviation were once considered separate domains, there is now growing consensus that the private sector is central to development. The private sector not only fuels economic growth, but also plays a critical role in making growth more inclusive – by engaging the poor as producers, distributors, retailers, and consumers in corporate business models and value chains. However, companies often find inclusive business models and value chains challenging to develop, due to sparse information about supplier capabilities and consumer preferences, low levels of education and skills, limited access to financial services, inadequate physical infrastructure, or ill-suited regulation. Stakeholders in government, the donor community, and civil society have comparative advantages in addressing some of these challenges, and as a result, cross-sector partnership is proving to be an important strategy. This case study describes one such partnership.
About Project Nurture ,AUNCHEDæ INæ EARLYæ æ 0ROJECTæ .URTUREæ ISæ Aæ æ million partnership among The Coca-Cola Company, the Bill & Melinda Gates Foundation, and the international non-profit organization TechnoServe. It intends to double the fruit incomes of more than 50,000 smallholder farmers in Kenya and Uganda by æ BYæ BUILDINGæ INCLUSIVEæ MANGOæ ANDæ PASSIONæ FRUITæ VALUEæ CHAINSæ 0ROJECTæ .URTURESæ CATALYTICæ APPROACHæ combines core business investment and philanthropy to strengthen the entire mango and passion fruit value chains in an integrated manner, ensuring that all the players have the capabilities and commercial incentives to continue doing business together even AFTERæ THEæ PROJECTæ ENDSæ næ GENERATINGæ BUSINESSæ BENEFITSæ and development impacts that can be sustained.
Drivers for the Project Nurture Partnership The Coca-Cola Company, the Bill & Melinda Gates Foundation, and TechnoServe have unique drivers for coming together around a common goal: to bring smallholder farmers into inclusive and sustainable value chains. The Coca-Cola Company sought to secure new SOURCESæOFæSUPPLYæFORæITSæGROWINGæJUICEæBUSINESS æWHICHæ
ISæSETæTOæTRIPLEæBYææ,OCALæSOURCESæOFæSUPPLYæWOULDæ enable it to reduce import costs and keep its products more affordable for consumers. The Gates Foundation’s PRIMARYæ OBJECTIVEæ WASæ TOæ HELPæ PEOPLEæ INæ DEVELOPINGæ countries overcome poverty and hunger, consistent WITHæ ITSæ MISSIONæ 0ARTNERINGæ WITHæ 4HEæ #OCA #OLAæ Company presented an opportunity to help catalyze a sustainable, replicable model with the potential to reach – and impact – millions of smallholder farmers. TechnoServe, which helps hundreds of thousands of smallholder farmers sell millions of dollars worth of produce in developing countries around the world, saw partnering with the Company as an opportunity to target its work for even greater impact, making sure SMALLHOLDERSæ RECEIVEDæ JUSTæ THEæ RIGHTæ SKILLS æ RESOURCES æ and connections they needed to become valuable, long-term players in a high-growth value chain.
Project Nurture Approach )Næ 0ROJECTæ .URTURE æ4HEæ #OCA #OLAæ #OMPANYæ INVESTSæ in product development, marketing, supplier relationships, and procurement systems to satisfy its customers and thereby create a market for the fruit that smallholder farmers produce. Minute Maid Mango, LAUNCHEDæINæ3EPTEMBERææINæ+ENYAæANDæ-AYææ in Uganda, was the first product to use locally sourced JUICEæASæAæRESULTæOFæTHEæPROJECTæ!DDITIONALæCOREæBUSINESSæ investment from the Company and philanthropic funding from the Gates Foundation cover the cost of farmer capacity development, provided by TechnoServe. TechnoServe works to strengthen farmers’ agricultural and business skills and helps them organize into business groups to access inputs and finance, facilitate transactions with buyers, and improve their bargaining power. At the same time, TechnoServe connects farmers with companies offering quality inputs and credit and with buyers in three primary markets: fruit processing, domestic and regional fresh fruit sales, and fresh fruit exports. As a result, a complex array of partners beyond The Coca-Cola Company, the Gates Foundation, ANDæ 4ECHNO3ERVEæ AREæ INVOLVEDæ INæ 0ROJECTæ .URTURE æ including banks, agricultural research institutes, fruit processors and exporters, and government ministries. The idea is not for the three founding partners to
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 3
Executive Summary
do everything themselves, but rather to identify and engage players with comparative advantages in the value chain, helping those players build the business case and capacity they need to do business together EVENæAFTERæTHEæPROJECTæENDSæ)NæTHISæWAY æTHEæFOUNDINGæ partners aim to build a business model and broader enabling environment that will continue creating value long into the future.
Project Nurture Achievements To Date 2ESULTSæ TOæ DATEæ SUGGESTæ THATæ 0ROJECTæ .URTUREæ ISæ contributing to business and development goals that AREæ INEXTRICABLYæ LINKEDæ 0ROFITABLEæ BUSINESSæ ACTIVITYæ creates economic opportunity for farmers, offering them additional income and the stability, resilience, health, education, and other benefits that come with it. Those benefits, in turn, enable farmers to supply high-quality fruit on a consistent basis, contributing to supply chain security and business growth.
Objectives
1. Double the fruit income for over 50,000 smallholder mango and passion fruit farmers through improved production and supply chain linkages
2. Increase local supply of juice and improve local processing infrastructure to allow for the development of The Coca-Cola Company’s local juice business
3. Link project farmers to diverse profitable markets, including fresh domestic and fresh export markets
4. Increase farmer access to financial services and help organize access to farm inputs for their crops
5. Create a successful business model that can be replicated in other markets
Achievements To Date
t.PSFUIBO GBSNFSTJOBQQSPYJNBUFMZ 1SPEVDFS#VTJOFTT(SPVQTQBSUJDJQBUFJOUIF program, 14,000 of them women
t5ISPVHIBDPNCJOBUJPOPGJODSFBTFEWPMVNFTBMFTBOEJNQSPWFERVBMJUZ QBSUJDJQBUJOHGBSNFST annual fruit incomes have, on average, already more than doubled
t.JOVUF.BJE.BOHP UIFmSTUQSPEVDUUPVTFMPDBMMZTPVSDFEKVJDFBTBSFTVMUPG1SPKFDU/VSUVSF was launched in September 2010 in Kenya and May 2011 in Uganda
t,FOZBCBTFE4VOOZ1SPDFTTPST-UEBOE"MMGSVJU&1;-UEXFSFBQQSPWFEUPTVQQMZNBOHPQVSFF to Coca-Cola’s bottling partners
t5IFTFUXPQSPDFTTPSTOPXTVQQMZPGUIFNBOHPQVSFFGPS.JOVUF.BJE.BOHPJO,FOZB 6HBOEB UIF%FNPDSBUJD3FQVCMJDPG$POHP ;JNCBCXF BOE4PVUI"GSJDB
t1SPKFDUGBSNFSTBSFOPXTFMMJOHJOUPUISFFNBSLFUDIBOOFMTGSVJUQSPDFTTJOH GSFTIEPNFTUJD BOE GSFTIFYQPSU BOESFTQFDUJWFMZBTPG0DUPCFS
t7PMVNFTBMFTPGNBOHPCZQBSUJDJQBUJOHGBSNFSTJO,FOZBBOE6HBOEBIBWFNPSFUIBOEPVCMFE volume sales of passion fruit in Uganda have also more than doubled
t.PSFUIBO NFUSJDUPOTPGGSFTIGSVJUGSPN1SPKFDU/VSUVSFIBWFCFFOIBSWFTUFEBOETPME t'BSNHBUFQSJDFTGPSQBTTJPOGSVJUJO,FOZBBOEGPSNBOHPBOEQBTTJPOGSVJUJO6HBOEBIBWF
increased
tMPBOTXPSUI IBWFCFFOEJTCVSTFEUPmOBODFQBTTJPOGSVJUGBSNJOHTUBSUVQDPTUT such as seeds, seedlings, poles, and wires
t4FWFSBMQSJWBUFOVSTFSJFTIBWFCFFOTVQQPSUFEUPJODSFBTFUIFRVBOUJUZBOERVBMJUZPGQBTTJPO fruit seedlings available to farmers
t.JOVUF.BJE.BOHPJTQSPmUBCMF t5IF$PDB$PMB$PNQBOZFYQFDUTUPSFDPVQJUTJOWFTUNFOUJO1SPKFDU/VSUVSFTFWFSBMUJNFTPWFS
in the next 3-5 years through cost optimization and replication in other countries t5IF$PNQBOZIBTJNQMFNFOUFELFZFMFNFOUTPGUIFNPEFMJO)BJUJBOE*OEJB GVSUIFSSFQMJDBUJPO
JTVOEFSDPOTJEFSBUJPOJO;JNCBCXF /JHFSJB BOEPS(IBOB t5FDIOP4FSWFBMTPQMBOTUPSFQMJDBUFUIFNPEFMJOGVUVSFQBSUOFSTIJQTXJUINVMUJOBUJPOBM
companies, local businesses, and governments t)BWJOHTVQQPSUFETFWFSBMTVDIQBSUOFSTIJQTGPSIJHIFSWBMVFDBTIDSPQT UIFGPVOEBUJPOJTOPX
leaving replication to the private sector and governments, and looking to establish similar additional partnerships for widely-grown staple crops such as rice, maize, and cassava
4 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Lessons from the Project Nurture Experience 0ROJECTæ.URTUREæISæAæRICHæSOURCEæOFæLESSONSæLEARNEDæFORæTHEæ partners themselves and for other companies, donors, NGOs, and governments interested in partnering to build inclusive value chains. These lessons relate to building inclusive value chains, building cross-sector partnerships, and building the capacity for scale. The key take-aways are:
When building cross-sector partnerships… manage complexity: Collaboration creates value by channeling differences in perspective, incentives, and capabilities toward common goals. These differences exist among partner organizations and also within them. Internal complexity is often overlooked – yet it is an important factor in making the business case, executing smoothly, and replicating successful models.
When building inclusive value chains… design for sustainability: The comparative advantage of business as a development impact driver is the potential to be self-sustaining. But unleashing this potential requires careful attention to the incentives and capabilities of each player in the value chain and in the enabling environment. The role of government in creating the enabling environment is essential.
When building the capacity for scale… make needed awareness and capabilities mainstream: While crosssector partnerships to develop inclusive value chains are emerging with increasing frequency, they are still a niche phenomenon. Many more are needed to meet today’s business and development goals. This will require raising awareness, changing mindsets, and putting capabilities and systems in place within and across would-be partner organizations.
BUILDING INCLUSIVE VALUE CHAINS: Designing for Sustainability
¯ Make sure every player in the value chain is profitable. A value chain is only as strong as its weakest link.
0ROJECTæ.URTUREæHASæTHEREFOREæTAKENæANæINTEGRATEDæAPPROACH æWORKINGæTOæMAKEæSUREæEVERYæPLAYERæHASæTHEæ assets and capabilities they need to be profitable – from smallholder farmers, to banks, to traders, to buyers, to processors supplying Coca-Cola bottlers, to bottlers themselves. The Coca-Cola Company also had to develop a profitable product: Minute Maid Mango.
¯ Strengthen the enabling environment. It can be equally necessary to strengthen the enabling environment
in which the value chain is embedded – including access to knowledge, skills, technology, financial SERVICES æANDæINFRASTRUCTUREæASæWELLæASæREGULATIONæANDæEFFECTIVEæPUBLICæADMINISTRATIONæ)Næ0ROJECTæ.URTURE æ TechnoServe has played a primary role in strengthening the enabling environment, as a provider of market information and agricultural and business skills training and as an intermediary bringing in other partners with critical roles to play. However, the government role is also critical, and could be expanded.
¯ Build institutional capacity and incentives to sustain impact into the long term. There is some concern that
WHENæ0ROJECTæ.URTUREæENDS æTHEREæWILLæBEæGAPSæINæAREASæWHEREæ4ECHNO3ERVEæHASæPLAYEDæTHEæROLEæOFæSERVICEæ provider – especially of agricultural and business skills training for farmers, who are still in the process of IMPROVINGæTHEIRæCROPSæANDæINæSOMEæCASESæHAVEæJUSTæBEGUNæTOæGROWæNEW æIMPROVEDæVARIETIESæ!SæAæRESULT æTHEæ organization is working to ensure that other partners, including processors, exporters, and government agencies, have the capabilities and incentives to pick up where it leaves off.
¯ Consider how best to engage government. 0ROJECTæ .URTUREæ HASæ ENGAGEDæ THEæ +ENYANæ ANDæ 5GANDANæ
governments at several levels, recognizing the roles they have to play in sustaining, scaling, and potentially
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 5
Executive Summary
replicating the model and its impact. The partners believe there would be value in engaging governments even earlier and more fully going forward, understanding their priorities for the sector; determining how the partnership could drive progress; and identifying actions that governments could undertake as full founding partners – assuming responsibility, sharing risk, and gaining value in return.
BUILDING CROSSSECTOR PARTNERSHIPS: Managing Complexity
¯ Build a clear and comprehensive business case. For any company considering a multi-year, multi-million
dollar commitment, the business case is essential. It is also essential for donors and NGOs that seek to catalyze sustainable, scalable business models that continue generating development impact long after their partnership has ended. Donors and NGOs like the Gates Foundation and TechnoServe may even see the business case in more strictly financial terms than a company – which may also take reputational benefits like positive publicity, leadership, and good stakeholder relations into account.
¯ Align objectives not only among partners, but also within partners. Because today’s global organizations
AREæSOæCOMPLEX æPARTNERSHIPæCANæINVOLVEæJUSTæASæMUCHæINTERNALæCOLLABORATIONæASæEXTERNALæCOLLABORATIONæ)Næ #OCA #OLASæCASE æIMPLEMENTINGæ0ROJECTæ.URTUREæMEANTæGETTINGæITSæ#ENTRAL æ%ASTææ7ESTæ!FRICAæ"USINESSæ 5NIT æ 'LOBALæ *UICEæ #ENTER æ 'ROVEæ æ 'LASSæ4RADINGæ SUBSIDIARY æ 2ESEARCHæ æ )NNOVATIONæ UNIT æ ANDæ 'LOBALæ 0UBLICæ!FFAIRSæANDæ#OMMUNICATIONSæALLæTOæWORKæTOGETHERæ3TAFFæFROMæTHESEæGROUPSæCAMEæTOæTHEæTABLEæWITHæ different backgrounds, perspectives, interests, and incentives, and aligning them took time.
¯ Design efficient, effective partnership operating and governance structures.æ 0ROJECTæ .URTURESæ #OREæ
/PERATINGæ 4EAMæ ANDæ 3TEERINGæ #OMMITTEEæ HAVEæ BEENæ CRITICALæ INæ ALIGNINGæ OBJECTIVESæ ANDæ CHANNELINGæ organizational complexity – among and within partners – in ways that optimize the value of collaboration. They established regular opportunities for individuals in different departments and different organizations TOæINTERACT æUNDERSTANDæONEæANOTHER æFACEæCHALLENGESæTOGETHER æJOINTLYæPROBLEM SOLVE æDEMONSTRATEæFOLLOW through, and build trust. These structures have also facilitated learning and course correction.
¯ Proactively manage the expectations that publicity creates. 0UBLICITYæCANæRAISEæEXPECTATIONSæTHATæTAKEæSTAFFæ
time to manage, but it can also be good motivation for creative thinking and problem-solving when a PILOTæPROJECTæHITSæTHEæINEVITABLEæBUMPSæINæTHEæROADæ0ROJECTæ.URTUREæHASæHITæSEVERALænæANDæTOæMEETæTHEIRæ public commitments, the partners have doubled down and found solutions, and remain on track to meet their targets. The pros and cons of publicity can be balanced, first and foremost by anticipating and planning for them. A dedicated budget and staged approach to communication can help.
¯ Recognize and facilitate the role exceptional individuals play in getting pilot projects off the ground.æ0ILOTæ
PROJECTSæAREæNOTæGUARANTEEDæTOæSUCCEEDæ#OMPANYæSTAFF æASSIGNEDæSPECIFICæROLESæANDæACCOUNTABLEæFORæSPECIFICæ results, can perceive them as extra work – or, worse, extra opportunity to fail. To get pilots off the ground, senior leaders must be thinking about the long-term goals at stake and creating the space for staff to PURSUEæTHEMæ)Næ0ROJECTæ.URTURE æWORKING LEVELæCHAMPIONSæANDæSTRONGæPARTNERSæALSOæPLAYEDæCRITICALæROLES æ even helping to bring senior leadership on board.
¯ Put deliberate strategies and systems in place to bring successful pilots to scale. While exceptional individuals
play critical roles getting pilots off the ground, today’s complex, decentralized organizations need deliberate
6 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
strategies and systems to bring successful pilots to scale – through growth and mainstreaming in their countries of origin and through replication in other countries. The Coca-Cola Company is developing SEVERALæSUCHæSYSTEMS æINCLUDINGæANæONGOINGæSUPPLIERæSURVEY æINTERNALæ''æSTAFFæCOMMUNICATIONS æAæ*UICEæ University immersion program, and its annual Bottler Conference.
BUILDING THE CAPACITY FOR SCALE: Making Needed Awareness and Capabilities Mainstream
¯ Raise awareness of hybrid strategies that create business opportunity and development impact. Strategies
LIKEæ 0ROJECTæ .URTURESæ AREæ STILLæ NEW æ ANDæ MANYæ BUSINESSæ EXECUTIVES æ PHILANTHROPISTS æ .'/æ STAFF æ ANDæ government officials have had little exposure. They might also be skeptical about one of the two primary approaches hybrid strategies combine: philanthropy and profit-making business activity. While more and more organizations have individuals or departments working on hybrid strategies, most need to invest in raising awareness of the potential more broadly before those strategies can go mainstream.
¯ Break down sector stereotypes. Business, government, and civil society have preconceived ideas about each
other, which affect their appetite and aptitude for partnership. Yet previously neat distinctions have started to break down as organizations experiment with hybrid strategies and hire staff with hybrid expertise. In 0ROJECTæ .URTURE æ THEæ 'ATESæ &OUNDATIONSæ PROGRAMæ OFFICERæ WORKEDæ FORæ -C+INSEYæ ANDæ +RAFT æ4ECHNO3ERVESæ PROJECTæDIRECTORæCAMEæFROMæBANKING æANDæONEæOFæTHEæEARLYæCHAMPIONSæFROMæ4HEæ#OCA #OLAæ#OMPANYæCAMEæ from a development NGO. To maximize the opportunity to create value through collaboration, would-be partners must ensure that perceptions of and within their organizations catch up to reality.
¯ Develop a deeper understanding of the core business contribution to cross-sector partnership. )Næ0ROJECTæ
.URTURE æ 4HEæ #OCA #OLAæ #OMPANYSæ CONTRIBUTIONæ ISæ OFTENæ DESCRIBEDæ ASæ æ MILLIONæ INæ CASHæ ANDæ æ million in kind. This description doesn’t convey that the Company has had to conduct R&D, develop a new product, identify and certify suppliers of the key ingredient, negotiate and manage supplier contracts, conduct ongoing quality testing, market the product to consumers, and work with its bottling partners to manufacture, distribute, and sell it. Understanding the core business contribution more fully would enable all partners to design more targeted interventions, monitor and stage them appropriately, and assemble the right teams.
¯ Invest in professional partnering capabilities.æ 0ROJECTæ .URTUREæ ISæ Aæ HIGHLYæ COMPLEXæ PARTNERSHIP æ ANDæ ITæ
has made significant progress thanks to highly professional management from TechnoServe, the Gates Foundation, and The Coca-Cola Company. This is not to say a considerable amount of “learning by doing” was not involved. With partnership an increasingly important mechanism for achieving individual organizational and broader societal goals, it is time for companies, donors, NGOs, and governments to invest in professional partnering capabilities ranging from strategy to talent to organizational structures.
¯ Build partnership brokering platforms. 3COPINGæANDæBROKERINGæCOMPLEXæPARTNERSHIPSæLIKEæ0ROJECTæ.URTUREæISæ
difficult and time-consuming. The Gates Foundation, TechnoServe, and The Coca-Cola Company have done it successfully, but many more partnerships – involving many more companies, donors, NGOs, and governments – are needed to meet global business and development goals. Three emerging models offer systematic ways of making it happen: partnership brokering services, regular forums for cross-sector dialogue, and partnership brokering platforms.
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 7
Introduction
Where business and poverty alleviation were once considered separate domains, there is now growing consensus that “private firms are at the heart of the development process.”æ"YæDRIVINGæJOBæCREATION æSKILLæ building, technology transfer, institutional capacity, and the construction of physical infrastructure; by generating tax revenues for governments; and by delivering products and services that people need to be productive, private sector firms fuel economic growth.æ By engaging the poor in their business models and value chains – as producers, distributors, retailers, and consumers – firms play a critical role in making growth more inclusive. An emerging body of research by the International Monetary Fund and others suggests that inclusive growth is more sustainable and leads to greater gains over time.
Inclusive business models and value chains offer products, services, jobs, and small business opportunities to the poor, profitably. Firms in a range of industries are finding commercially viable ways of doing business in low-income market segments. For example, food, beverage, and consumer products companies are selling to low-income consumers by distributing through small businesses and microentrepreneurs. Mobile network operators are offering users the option to buy very small amounts of airtime on a “pay-as-you-go” basis, as their cash flows permit. Traders and processors of agricultural commodities are buying from smallholder farmers to expand and diversify their supplies. Microfinance institutions – and some large commercial banks – are extending small loans to low-income borrowers using alternative forms of due diligence and risk management.
Inclusive business models and value chains like these are powerful engines of development impact. They generate incomes and access to products and services at levels of quality and affordability that were often unavailable before. These impacts, in turn, generate multiplier effects. For example, the mother who supplements the family income starting a small-scale distribution business can feed her children more nutritious food and send them to school, helping
them tap into better opportunities than their parents had. Similarly, the farmer who can get a malaria diagnosis and prescription in his own village is more likely to get treated and back to full productivity faster, reducing the risk that his illness turns into a serious financial setback for his family. Furthermore, in contrast with traditional philanthropic and aid-based development interventions, inclusive business models and value chains are financially self-sustaining – with the potential to reach scale and inspire replication.
Inclusive business models and value chains are also important sources of business opportunity. As the International Finance Corporation points out, “The world’s leading companies expect emerging markets to generate 70% of global economic growth over the next few years. Those that benefit the most will be the ones that turn underserved populations into dynamic consumer markets and diverse new sources of supply. Companies with inclusive business models are doing both. And in the process, they are developing product, service, and business model innovations with the potential to tip the scales of competitive advantage in more established markets as well.”
However, developing inclusive business models and value chains is often a real challenge. Relatively few companies have managed to realize the potential to do so at scale.5,6 The challenges include sparse information about supplier capabilities and consumer preferences, low levels of education and skills, limited access to financial services, and inadequate physical infrastructure. Regulation is another challenge: while often intended to protect consumers and enhance social welfare, it can limit innovation or inflate cost structures such that companies struggle to break even.7
While companies can address – or work around – many of these challenges, others are beyond their capacity or authority to tackle. Other stakeholders have roles to play in whether or not inclusive business models and value chains succeed and go to scale. For example:8
8 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Beth Jenkins and Lorin Fries
Written by Beth Jenkins and Lorin Fries Designed by Alison Beanland Cover photographs: from left to right, The Coca-Cola Company, Lorin Fries, The Coca-Cola Company
ACKNOWLEDGEMENTS This report would not have been possible without the collaboration of a large number of stakeholders involved in Project Nurture, listed on page 46. The authors are deeply grateful for their openness and generosity with their time. Special thanks go to Jennifer Ragland and Bob Okello (The Coca-Cola Company), Wanjiku Kimamo and Simon Winter (TechnoServe), and Richard Rogers (Bill & Melinda Gates Foundation) for making introductions, facilitating engagement with the broader group of stakeholders, and making a productive research visit possible.
The authors would also like to thank their CSR Initiative colleagues Jane Nelson, who provided invaluable experience, insight, and guidance throughout the research and writing process, and Marli Porth, who provided objective feedback and copy-editing in the report’s final stages.
© 2012 by the CSR Initiative at the Harvard Kennedy School
The material in this publication is copyrighted. Quoting, copying, and/or reproducing portions or all of this work is permitted provided the following citation is used: Jenkins, Beth and Lorin Fries (2013). “Project Nurture: Partnering for Business Opportunity and Development Impact.” Cambridge, MA: The CSR Initiative at the Harvard Kennedy School.
The views expressed in this paper are those of the authors and do not imply endorsement by the John F. Kennedy School of Government, or Harvard University.
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Foreword
2
Executive Summary
3
Introduction
8
Drivers
10
Approach
15
Achievements To Date
16
Roles and Responsibilities Along the Value Chain
18
Partnership Operating and Governance Structures
27
Monitoring and Evaluation
28
Next Steps
29
Lessons Learned
32
Conclusion
44
Appendices
45
Project Nurture Mobilization Timeline
45
Stakeholders Consulted
46
Endnotes
47
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 1
Foreword
Development challenges such as tackling poverty and unemployment, improving food, water and energy security, increasing access to education, health care and nutrition, and adapting to climate change are notoriously systemic. They have their roots in public awareness, regulatory and policy frameworks, market dynamics, institutional capacity, infrastructure, social and cultural norms, and many other factors that shape people’s incentives and drive their behavior. And behind each of these factors is a set of interconnected, interdependent stakeholders.
These structures are complementary and companies often use them in combination, either sequentially or simultaneously. The following case study looks ATæ Aæ PROJECT BASEDæ ALLIANCEæ AMONGæ 4HEæ #OCA #OLAæ Company, the Bill & Melinda Gates Foundation, and TechnoServe intended to bring more than 50,000 smallholder mango and passion fruit farmers in Kenya and Uganda into the Company’s value chain – and to catalyze private initiative by the Company to sustain and replicate those linkages in Kenya, Uganda, and around the world.
The development community increasingly recognizes the private sector as a crucial partner in helping to address these challenges. New technologies, products and services, and more inclusive business models are helping to improve livelihoods and quality of life for millions of low-income households while at the same time improving the efficiency of natural resource use and decreasing environmental degradation. Yet, with a few notable exceptions such as mobile banking, most of these market-based solutions have not achieved business growth and development impact at scale. Many are impeded by a combination of market failures, governance gaps, insufficient financing and inadequate individual and institutional capacity. There is an enormous need for more collaborative solutions that leverage the combined resources and capabilities of business, government and civil society to overcome these barriers.
In this context, the CSR Initiative at the Harvard Kennedy School has undertaken research on the different strategies and structures that companies are using to strengthen the ecosystems around their inclusive business models. We have looked at three approaches that can help overcome barriers to scaling these business models: sæ 0RIVATEæ INITIATIVEæ BYæ ANæ INDIVIDUALæ COMPANYæ ALONGæ
its own value chain; sæ 0ROJECT BASEDæALLIANCESæBETWEENæAæCOMPANYæANDæONEæ
or more other organizations; and sæ 0LATFORMSæTHATæFORMALLYæLINKæPOTENTIALLYæLARGEæ
networks of players for a common purpose.
7HILEæ 0ROJECTæ .URTUREæ WILLæ NOTæ CONCLUDEæ UNTILæ æ we believe that the partnership already offers a rich set of lessons learned for building inclusive and sustainable value chains and for building complex partnerships. It also offers a model with the potential to be adapted in other countries and for other commodities. Adaptation is already underway or under consideration in several places within the Coca-Cola system.
3INCEæ ITæ WASæ FOUNDEDæ INæ æ THEæ #32æ )NITIATIVEæ ATæ the Harvard Kennedy School has worked to bridge theory and practice in the field of multi-stakeholder partnership. This case is part of a series focused on collaboration between business and other sectors to drive systemic change. Our goal is to learn in “real time” how a new generation of collaborative initiatives designed for systemic change and scale are mobilized, and how they work. We hope others will benefit from the experiences of these initiatives and be able to accelerate their own progress in developing models that achieve both business benefit and development impact through tackling some of the world’s most pressing development challenges.
Jane Nelson Director, CSR Initiative Mossavar-Rahmani Center for Business and Government Harvard Kennedy School
2 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Executive Summary
Where business and poverty alleviation were once considered separate domains, there is now growing consensus that the private sector is central to development. The private sector not only fuels economic growth, but also plays a critical role in making growth more inclusive – by engaging the poor as producers, distributors, retailers, and consumers in corporate business models and value chains. However, companies often find inclusive business models and value chains challenging to develop, due to sparse information about supplier capabilities and consumer preferences, low levels of education and skills, limited access to financial services, inadequate physical infrastructure, or ill-suited regulation. Stakeholders in government, the donor community, and civil society have comparative advantages in addressing some of these challenges, and as a result, cross-sector partnership is proving to be an important strategy. This case study describes one such partnership.
About Project Nurture ,AUNCHEDæ INæ EARLYæ æ 0ROJECTæ .URTUREæ ISæ Aæ æ million partnership among The Coca-Cola Company, the Bill & Melinda Gates Foundation, and the international non-profit organization TechnoServe. It intends to double the fruit incomes of more than 50,000 smallholder farmers in Kenya and Uganda by æ BYæ BUILDINGæ INCLUSIVEæ MANGOæ ANDæ PASSIONæ FRUITæ VALUEæ CHAINSæ 0ROJECTæ .URTURESæ CATALYTICæ APPROACHæ combines core business investment and philanthropy to strengthen the entire mango and passion fruit value chains in an integrated manner, ensuring that all the players have the capabilities and commercial incentives to continue doing business together even AFTERæ THEæ PROJECTæ ENDSæ næ GENERATINGæ BUSINESSæ BENEFITSæ and development impacts that can be sustained.
Drivers for the Project Nurture Partnership The Coca-Cola Company, the Bill & Melinda Gates Foundation, and TechnoServe have unique drivers for coming together around a common goal: to bring smallholder farmers into inclusive and sustainable value chains. The Coca-Cola Company sought to secure new SOURCESæOFæSUPPLYæFORæITSæGROWINGæJUICEæBUSINESS æWHICHæ
ISæSETæTOæTRIPLEæBYææ,OCALæSOURCESæOFæSUPPLYæWOULDæ enable it to reduce import costs and keep its products more affordable for consumers. The Gates Foundation’s PRIMARYæ OBJECTIVEæ WASæ TOæ HELPæ PEOPLEæ INæ DEVELOPINGæ countries overcome poverty and hunger, consistent WITHæ ITSæ MISSIONæ 0ARTNERINGæ WITHæ 4HEæ #OCA #OLAæ Company presented an opportunity to help catalyze a sustainable, replicable model with the potential to reach – and impact – millions of smallholder farmers. TechnoServe, which helps hundreds of thousands of smallholder farmers sell millions of dollars worth of produce in developing countries around the world, saw partnering with the Company as an opportunity to target its work for even greater impact, making sure SMALLHOLDERSæ RECEIVEDæ JUSTæ THEæ RIGHTæ SKILLS æ RESOURCES æ and connections they needed to become valuable, long-term players in a high-growth value chain.
Project Nurture Approach )Næ 0ROJECTæ .URTURE æ4HEæ #OCA #OLAæ #OMPANYæ INVESTSæ in product development, marketing, supplier relationships, and procurement systems to satisfy its customers and thereby create a market for the fruit that smallholder farmers produce. Minute Maid Mango, LAUNCHEDæINæ3EPTEMBERææINæ+ENYAæANDæ-AYææ in Uganda, was the first product to use locally sourced JUICEæASæAæRESULTæOFæTHEæPROJECTæ!DDITIONALæCOREæBUSINESSæ investment from the Company and philanthropic funding from the Gates Foundation cover the cost of farmer capacity development, provided by TechnoServe. TechnoServe works to strengthen farmers’ agricultural and business skills and helps them organize into business groups to access inputs and finance, facilitate transactions with buyers, and improve their bargaining power. At the same time, TechnoServe connects farmers with companies offering quality inputs and credit and with buyers in three primary markets: fruit processing, domestic and regional fresh fruit sales, and fresh fruit exports. As a result, a complex array of partners beyond The Coca-Cola Company, the Gates Foundation, ANDæ 4ECHNO3ERVEæ AREæ INVOLVEDæ INæ 0ROJECTæ .URTURE æ including banks, agricultural research institutes, fruit processors and exporters, and government ministries. The idea is not for the three founding partners to
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 3
Executive Summary
do everything themselves, but rather to identify and engage players with comparative advantages in the value chain, helping those players build the business case and capacity they need to do business together EVENæAFTERæTHEæPROJECTæENDSæ)NæTHISæWAY æTHEæFOUNDINGæ partners aim to build a business model and broader enabling environment that will continue creating value long into the future.
Project Nurture Achievements To Date 2ESULTSæ TOæ DATEæ SUGGESTæ THATæ 0ROJECTæ .URTUREæ ISæ contributing to business and development goals that AREæ INEXTRICABLYæ LINKEDæ 0ROFITABLEæ BUSINESSæ ACTIVITYæ creates economic opportunity for farmers, offering them additional income and the stability, resilience, health, education, and other benefits that come with it. Those benefits, in turn, enable farmers to supply high-quality fruit on a consistent basis, contributing to supply chain security and business growth.
Objectives
1. Double the fruit income for over 50,000 smallholder mango and passion fruit farmers through improved production and supply chain linkages
2. Increase local supply of juice and improve local processing infrastructure to allow for the development of The Coca-Cola Company’s local juice business
3. Link project farmers to diverse profitable markets, including fresh domestic and fresh export markets
4. Increase farmer access to financial services and help organize access to farm inputs for their crops
5. Create a successful business model that can be replicated in other markets
Achievements To Date
t.PSFUIBO GBSNFSTJOBQQSPYJNBUFMZ 1SPEVDFS#VTJOFTT(SPVQTQBSUJDJQBUFJOUIF program, 14,000 of them women
t5ISPVHIBDPNCJOBUJPOPGJODSFBTFEWPMVNFTBMFTBOEJNQSPWFERVBMJUZ QBSUJDJQBUJOHGBSNFST annual fruit incomes have, on average, already more than doubled
t.JOVUF.BJE.BOHP UIFmSTUQSPEVDUUPVTFMPDBMMZTPVSDFEKVJDFBTBSFTVMUPG1SPKFDU/VSUVSF was launched in September 2010 in Kenya and May 2011 in Uganda
t,FOZBCBTFE4VOOZ1SPDFTTPST-UEBOE"MMGSVJU&1;-UEXFSFBQQSPWFEUPTVQQMZNBOHPQVSFF to Coca-Cola’s bottling partners
t5IFTFUXPQSPDFTTPSTOPXTVQQMZPGUIFNBOHPQVSFFGPS.JOVUF.BJE.BOHPJO,FOZB 6HBOEB UIF%FNPDSBUJD3FQVCMJDPG$POHP ;JNCBCXF BOE4PVUI"GSJDB
t1SPKFDUGBSNFSTBSFOPXTFMMJOHJOUPUISFFNBSLFUDIBOOFMTGSVJUQSPDFTTJOH GSFTIEPNFTUJD BOE GSFTIFYQPSU BOESFTQFDUJWFMZBTPG0DUPCFS
t7PMVNFTBMFTPGNBOHPCZQBSUJDJQBUJOHGBSNFSTJO,FOZBBOE6HBOEBIBWFNPSFUIBOEPVCMFE volume sales of passion fruit in Uganda have also more than doubled
t.PSFUIBO NFUSJDUPOTPGGSFTIGSVJUGSPN1SPKFDU/VSUVSFIBWFCFFOIBSWFTUFEBOETPME t'BSNHBUFQSJDFTGPSQBTTJPOGSVJUJO,FOZBBOEGPSNBOHPBOEQBTTJPOGSVJUJO6HBOEBIBWF
increased
tMPBOTXPSUI IBWFCFFOEJTCVSTFEUPmOBODFQBTTJPOGSVJUGBSNJOHTUBSUVQDPTUT such as seeds, seedlings, poles, and wires
t4FWFSBMQSJWBUFOVSTFSJFTIBWFCFFOTVQQPSUFEUPJODSFBTFUIFRVBOUJUZBOERVBMJUZPGQBTTJPO fruit seedlings available to farmers
t.JOVUF.BJE.BOHPJTQSPmUBCMF t5IF$PDB$PMB$PNQBOZFYQFDUTUPSFDPVQJUTJOWFTUNFOUJO1SPKFDU/VSUVSFTFWFSBMUJNFTPWFS
in the next 3-5 years through cost optimization and replication in other countries t5IF$PNQBOZIBTJNQMFNFOUFELFZFMFNFOUTPGUIFNPEFMJO)BJUJBOE*OEJB GVSUIFSSFQMJDBUJPO
JTVOEFSDPOTJEFSBUJPOJO;JNCBCXF /JHFSJB BOEPS(IBOB t5FDIOP4FSWFBMTPQMBOTUPSFQMJDBUFUIFNPEFMJOGVUVSFQBSUOFSTIJQTXJUINVMUJOBUJPOBM
companies, local businesses, and governments t)BWJOHTVQQPSUFETFWFSBMTVDIQBSUOFSTIJQTGPSIJHIFSWBMVFDBTIDSPQT UIFGPVOEBUJPOJTOPX
leaving replication to the private sector and governments, and looking to establish similar additional partnerships for widely-grown staple crops such as rice, maize, and cassava
4 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
Lessons from the Project Nurture Experience 0ROJECTæ.URTUREæISæAæRICHæSOURCEæOFæLESSONSæLEARNEDæFORæTHEæ partners themselves and for other companies, donors, NGOs, and governments interested in partnering to build inclusive value chains. These lessons relate to building inclusive value chains, building cross-sector partnerships, and building the capacity for scale. The key take-aways are:
When building cross-sector partnerships… manage complexity: Collaboration creates value by channeling differences in perspective, incentives, and capabilities toward common goals. These differences exist among partner organizations and also within them. Internal complexity is often overlooked – yet it is an important factor in making the business case, executing smoothly, and replicating successful models.
When building inclusive value chains… design for sustainability: The comparative advantage of business as a development impact driver is the potential to be self-sustaining. But unleashing this potential requires careful attention to the incentives and capabilities of each player in the value chain and in the enabling environment. The role of government in creating the enabling environment is essential.
When building the capacity for scale… make needed awareness and capabilities mainstream: While crosssector partnerships to develop inclusive value chains are emerging with increasing frequency, they are still a niche phenomenon. Many more are needed to meet today’s business and development goals. This will require raising awareness, changing mindsets, and putting capabilities and systems in place within and across would-be partner organizations.
BUILDING INCLUSIVE VALUE CHAINS: Designing for Sustainability
¯ Make sure every player in the value chain is profitable. A value chain is only as strong as its weakest link.
0ROJECTæ.URTUREæHASæTHEREFOREæTAKENæANæINTEGRATEDæAPPROACH æWORKINGæTOæMAKEæSUREæEVERYæPLAYERæHASæTHEæ assets and capabilities they need to be profitable – from smallholder farmers, to banks, to traders, to buyers, to processors supplying Coca-Cola bottlers, to bottlers themselves. The Coca-Cola Company also had to develop a profitable product: Minute Maid Mango.
¯ Strengthen the enabling environment. It can be equally necessary to strengthen the enabling environment
in which the value chain is embedded – including access to knowledge, skills, technology, financial SERVICES æANDæINFRASTRUCTUREæASæWELLæASæREGULATIONæANDæEFFECTIVEæPUBLICæADMINISTRATIONæ)Næ0ROJECTæ.URTURE æ TechnoServe has played a primary role in strengthening the enabling environment, as a provider of market information and agricultural and business skills training and as an intermediary bringing in other partners with critical roles to play. However, the government role is also critical, and could be expanded.
¯ Build institutional capacity and incentives to sustain impact into the long term. There is some concern that
WHENæ0ROJECTæ.URTUREæENDS æTHEREæWILLæBEæGAPSæINæAREASæWHEREæ4ECHNO3ERVEæHASæPLAYEDæTHEæROLEæOFæSERVICEæ provider – especially of agricultural and business skills training for farmers, who are still in the process of IMPROVINGæTHEIRæCROPSæANDæINæSOMEæCASESæHAVEæJUSTæBEGUNæTOæGROWæNEW æIMPROVEDæVARIETIESæ!SæAæRESULT æTHEæ organization is working to ensure that other partners, including processors, exporters, and government agencies, have the capabilities and incentives to pick up where it leaves off.
¯ Consider how best to engage government. 0ROJECTæ .URTUREæ HASæ ENGAGEDæ THEæ +ENYANæ ANDæ 5GANDANæ
governments at several levels, recognizing the roles they have to play in sustaining, scaling, and potentially
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 5
Executive Summary
replicating the model and its impact. The partners believe there would be value in engaging governments even earlier and more fully going forward, understanding their priorities for the sector; determining how the partnership could drive progress; and identifying actions that governments could undertake as full founding partners – assuming responsibility, sharing risk, and gaining value in return.
BUILDING CROSSSECTOR PARTNERSHIPS: Managing Complexity
¯ Build a clear and comprehensive business case. For any company considering a multi-year, multi-million
dollar commitment, the business case is essential. It is also essential for donors and NGOs that seek to catalyze sustainable, scalable business models that continue generating development impact long after their partnership has ended. Donors and NGOs like the Gates Foundation and TechnoServe may even see the business case in more strictly financial terms than a company – which may also take reputational benefits like positive publicity, leadership, and good stakeholder relations into account.
¯ Align objectives not only among partners, but also within partners. Because today’s global organizations
AREæSOæCOMPLEX æPARTNERSHIPæCANæINVOLVEæJUSTæASæMUCHæINTERNALæCOLLABORATIONæASæEXTERNALæCOLLABORATIONæ)Næ #OCA #OLASæCASE æIMPLEMENTINGæ0ROJECTæ.URTUREæMEANTæGETTINGæITSæ#ENTRAL æ%ASTææ7ESTæ!FRICAæ"USINESSæ 5NIT æ 'LOBALæ *UICEæ #ENTER æ 'ROVEæ æ 'LASSæ4RADINGæ SUBSIDIARY æ 2ESEARCHæ æ )NNOVATIONæ UNIT æ ANDæ 'LOBALæ 0UBLICæ!FFAIRSæANDæ#OMMUNICATIONSæALLæTOæWORKæTOGETHERæ3TAFFæFROMæTHESEæGROUPSæCAMEæTOæTHEæTABLEæWITHæ different backgrounds, perspectives, interests, and incentives, and aligning them took time.
¯ Design efficient, effective partnership operating and governance structures.æ 0ROJECTæ .URTURESæ #OREæ
/PERATINGæ 4EAMæ ANDæ 3TEERINGæ #OMMITTEEæ HAVEæ BEENæ CRITICALæ INæ ALIGNINGæ OBJECTIVESæ ANDæ CHANNELINGæ organizational complexity – among and within partners – in ways that optimize the value of collaboration. They established regular opportunities for individuals in different departments and different organizations TOæINTERACT æUNDERSTANDæONEæANOTHER æFACEæCHALLENGESæTOGETHER æJOINTLYæPROBLEM SOLVE æDEMONSTRATEæFOLLOW through, and build trust. These structures have also facilitated learning and course correction.
¯ Proactively manage the expectations that publicity creates. 0UBLICITYæCANæRAISEæEXPECTATIONSæTHATæTAKEæSTAFFæ
time to manage, but it can also be good motivation for creative thinking and problem-solving when a PILOTæPROJECTæHITSæTHEæINEVITABLEæBUMPSæINæTHEæROADæ0ROJECTæ.URTUREæHASæHITæSEVERALænæANDæTOæMEETæTHEIRæ public commitments, the partners have doubled down and found solutions, and remain on track to meet their targets. The pros and cons of publicity can be balanced, first and foremost by anticipating and planning for them. A dedicated budget and staged approach to communication can help.
¯ Recognize and facilitate the role exceptional individuals play in getting pilot projects off the ground.æ0ILOTæ
PROJECTSæAREæNOTæGUARANTEEDæTOæSUCCEEDæ#OMPANYæSTAFF æASSIGNEDæSPECIFICæROLESæANDæACCOUNTABLEæFORæSPECIFICæ results, can perceive them as extra work – or, worse, extra opportunity to fail. To get pilots off the ground, senior leaders must be thinking about the long-term goals at stake and creating the space for staff to PURSUEæTHEMæ)Næ0ROJECTæ.URTURE æWORKING LEVELæCHAMPIONSæANDæSTRONGæPARTNERSæALSOæPLAYEDæCRITICALæROLES æ even helping to bring senior leadership on board.
¯ Put deliberate strategies and systems in place to bring successful pilots to scale. While exceptional individuals
play critical roles getting pilots off the ground, today’s complex, decentralized organizations need deliberate
6 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
strategies and systems to bring successful pilots to scale – through growth and mainstreaming in their countries of origin and through replication in other countries. The Coca-Cola Company is developing SEVERALæSUCHæSYSTEMS æINCLUDINGæANæONGOINGæSUPPLIERæSURVEY æINTERNALæ''æSTAFFæCOMMUNICATIONS æAæ*UICEæ University immersion program, and its annual Bottler Conference.
BUILDING THE CAPACITY FOR SCALE: Making Needed Awareness and Capabilities Mainstream
¯ Raise awareness of hybrid strategies that create business opportunity and development impact. Strategies
LIKEæ 0ROJECTæ .URTURESæ AREæ STILLæ NEW æ ANDæ MANYæ BUSINESSæ EXECUTIVES æ PHILANTHROPISTS æ .'/æ STAFF æ ANDæ government officials have had little exposure. They might also be skeptical about one of the two primary approaches hybrid strategies combine: philanthropy and profit-making business activity. While more and more organizations have individuals or departments working on hybrid strategies, most need to invest in raising awareness of the potential more broadly before those strategies can go mainstream.
¯ Break down sector stereotypes. Business, government, and civil society have preconceived ideas about each
other, which affect their appetite and aptitude for partnership. Yet previously neat distinctions have started to break down as organizations experiment with hybrid strategies and hire staff with hybrid expertise. In 0ROJECTæ .URTURE æ THEæ 'ATESæ &OUNDATIONSæ PROGRAMæ OFFICERæ WORKEDæ FORæ -C+INSEYæ ANDæ +RAFT æ4ECHNO3ERVESæ PROJECTæDIRECTORæCAMEæFROMæBANKING æANDæONEæOFæTHEæEARLYæCHAMPIONSæFROMæ4HEæ#OCA #OLAæ#OMPANYæCAMEæ from a development NGO. To maximize the opportunity to create value through collaboration, would-be partners must ensure that perceptions of and within their organizations catch up to reality.
¯ Develop a deeper understanding of the core business contribution to cross-sector partnership. )Næ0ROJECTæ
.URTURE æ 4HEæ #OCA #OLAæ #OMPANYSæ CONTRIBUTIONæ ISæ OFTENæ DESCRIBEDæ ASæ æ MILLIONæ INæ CASHæ ANDæ æ million in kind. This description doesn’t convey that the Company has had to conduct R&D, develop a new product, identify and certify suppliers of the key ingredient, negotiate and manage supplier contracts, conduct ongoing quality testing, market the product to consumers, and work with its bottling partners to manufacture, distribute, and sell it. Understanding the core business contribution more fully would enable all partners to design more targeted interventions, monitor and stage them appropriately, and assemble the right teams.
¯ Invest in professional partnering capabilities.æ 0ROJECTæ .URTUREæ ISæ Aæ HIGHLYæ COMPLEXæ PARTNERSHIP æ ANDæ ITæ
has made significant progress thanks to highly professional management from TechnoServe, the Gates Foundation, and The Coca-Cola Company. This is not to say a considerable amount of “learning by doing” was not involved. With partnership an increasingly important mechanism for achieving individual organizational and broader societal goals, it is time for companies, donors, NGOs, and governments to invest in professional partnering capabilities ranging from strategy to talent to organizational structures.
¯ Build partnership brokering platforms. 3COPINGæANDæBROKERINGæCOMPLEXæPARTNERSHIPSæLIKEæ0ROJECTæ.URTUREæISæ
difficult and time-consuming. The Gates Foundation, TechnoServe, and The Coca-Cola Company have done it successfully, but many more partnerships – involving many more companies, donors, NGOs, and governments – are needed to meet global business and development goals. Three emerging models offer systematic ways of making it happen: partnership brokering services, regular forums for cross-sector dialogue, and partnership brokering platforms.
PROJECT NURTURE: Partnering for Business Opportunity and Development Impact 7
Introduction
Where business and poverty alleviation were once considered separate domains, there is now growing consensus that “private firms are at the heart of the development process.”æ"YæDRIVINGæJOBæCREATION æSKILLæ building, technology transfer, institutional capacity, and the construction of physical infrastructure; by generating tax revenues for governments; and by delivering products and services that people need to be productive, private sector firms fuel economic growth.æ By engaging the poor in their business models and value chains – as producers, distributors, retailers, and consumers – firms play a critical role in making growth more inclusive. An emerging body of research by the International Monetary Fund and others suggests that inclusive growth is more sustainable and leads to greater gains over time.
Inclusive business models and value chains offer products, services, jobs, and small business opportunities to the poor, profitably. Firms in a range of industries are finding commercially viable ways of doing business in low-income market segments. For example, food, beverage, and consumer products companies are selling to low-income consumers by distributing through small businesses and microentrepreneurs. Mobile network operators are offering users the option to buy very small amounts of airtime on a “pay-as-you-go” basis, as their cash flows permit. Traders and processors of agricultural commodities are buying from smallholder farmers to expand and diversify their supplies. Microfinance institutions – and some large commercial banks – are extending small loans to low-income borrowers using alternative forms of due diligence and risk management.
Inclusive business models and value chains like these are powerful engines of development impact. They generate incomes and access to products and services at levels of quality and affordability that were often unavailable before. These impacts, in turn, generate multiplier effects. For example, the mother who supplements the family income starting a small-scale distribution business can feed her children more nutritious food and send them to school, helping
them tap into better opportunities than their parents had. Similarly, the farmer who can get a malaria diagnosis and prescription in his own village is more likely to get treated and back to full productivity faster, reducing the risk that his illness turns into a serious financial setback for his family. Furthermore, in contrast with traditional philanthropic and aid-based development interventions, inclusive business models and value chains are financially self-sustaining – with the potential to reach scale and inspire replication.
Inclusive business models and value chains are also important sources of business opportunity. As the International Finance Corporation points out, “The world’s leading companies expect emerging markets to generate 70% of global economic growth over the next few years. Those that benefit the most will be the ones that turn underserved populations into dynamic consumer markets and diverse new sources of supply. Companies with inclusive business models are doing both. And in the process, they are developing product, service, and business model innovations with the potential to tip the scales of competitive advantage in more established markets as well.”
However, developing inclusive business models and value chains is often a real challenge. Relatively few companies have managed to realize the potential to do so at scale.5,6 The challenges include sparse information about supplier capabilities and consumer preferences, low levels of education and skills, limited access to financial services, and inadequate physical infrastructure. Regulation is another challenge: while often intended to protect consumers and enhance social welfare, it can limit innovation or inflate cost structures such that companies struggle to break even.7
While companies can address – or work around – many of these challenges, others are beyond their capacity or authority to tackle. Other stakeholders have roles to play in whether or not inclusive business models and value chains succeed and go to scale. For example:8
8 PROJECT NURTURE: Partnering for Business Opportunity and Development Impact
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