Successful inclusive businesses create real value for people living in poverty and companies. Think of BASF: the chemical company produces vitamin A and other micronutrients – ingredients urgently needed to eradicate malnutrition and enable healthier, fitter lives for billions of people.* But company and customers are only two parties in a dense ecosystem of players that make inclusive businesses successful – and all of them need to realize value from the business.
In the case of micronutrients, food fortification may need to be mandatory for suppliers to reach the base of the economic pyramid. Oil fortified with vitamin A usually exists on the market, but producers employ the fortification as a differentiating factor that justifies a higher price – which poor customers are neither willing nor able to play. In order to make fortification standard practice, government agencies need to collaborate with producers and donors with NGOs, and all have to find a common perspective and each one its unique role to achieve the goal.
Food fortification may sound like an unusually complex example. However, most BoP markets are complex, whether its energy, water, healthcare, education, agribusiness or housing. These markets are characterized by the existence of a multitude of players with diverse missions and agendas, and companies need to plug effectively into this system.
In order to build in the strengths of the existing players and create value for all, companies can think about inclusive business like conducting an orchestra of many voices. First, they need to understand which voices are present. Second, they want to understand the ideas and motivations, the strengths and weaknesses of each voice by working with each individually. Finally, they bring the whole orchestra together, multiplying the reach of each individual voice, building on strengths to close gaps, and adding their own unique skills and vision to create something new out of the many pieces.
BASF joined forces with German development agency GIZ to create the Strategic Alliance for the Fortification of Oil and other Staple Foods (SAFO). Together, they started to strengthen the ecosystems for food fortification in Tanzania and other countries. They employed consultants to undertake a diagnostic of the players in the ‘orchestra’ and talk to each one individually. They approached the National Food Fortification Alliance and organized a dialogue to revive the drive for mandatory fortification, and identified gaps to fill. Tanzania now has a law that makes fortification of oil with Vitamin A mandatory, and BASF has trained the major companies on how fortification works and provided testing kits to food inspectors. The SAFO initiative reached more than 140 million people by 2012, excelling its own expectations.
Open innovation and co-creation may just sound like two more buzzwords in the already buzzword-heavy BoP space. But these concepts capture an approach that is at the heart of inclusive business success: an open mind for the strengths companies can build on in their target low-income markets, and open dialogue with stakeholders to identify joint agendas and coordinated action. Companies often end up with unusual allies, including government agencies, NGOs, and development agencies, whose backgrounds, outlooks, organizational logic and cultures first seem foreign. Being open and appreciative of these different roles is not a talent, but a skill inclusive business managers need to acquire.
The first module of the Inclusive Business eLab provides an introduction to inclusive business and key frameworks for innovating with stakeholders.
*Note: More info on the SAFO case is documented in the case study “Building a Strategic Alliance for the Fortification of Oil and Other Staple Foods (SAFO)” written with the CSR Initiative of the Harvard Kennedy School and available on the Endeva website and also available on the website www.food-fortification.com
This blog was authored by Christina Gradl and originally posted on Business Fights Poverty.