Noshua Watson: Generating Evidence of Impact at the Bottom of the Pyramid

Photo: © Arne Hoel/World Bank

By Dr Noshua Watson, Research Fellow, Institute of Development Studies

 

The
 May 3 debate on Bottom of the Pyramid: Responsible Capitalism or Business as Usual ended with a rousing call for more evidence on what works.  But how do we generate that evidence? There are a number of methodologies (BCtA, INSEAD Economic Footprint, Oxfam Poverty Footprint, BIF, IRIS,WBCSD and so on) and a few well-known studies (e.g. 
Unilever,
 Coke and SABMiller, 
Nestle) but how much do these really tell us about business impacts?

 

Elise Wach of IDS finds that the current inclusive business evaluations fall short in a few ways: we need to clearly define inclusivity; clarify the expected causes, effects and beneficiaries; and also examine alternative explanations. ‘Inclusive business’ generally refers to business models that have a positive development impact. But definitions vary with respect to whether it involves the poor as producers or consumers or whether it involves multinational value chains, small and medium enterprises or social entrepreneurs.  When measuring and comparing inclusive business impact, we need to be explicit about who we are supposedly helping and how.

 

How we help can also be confusing because economic, social and moral imperatives can collide. Is it inclusive to include poor people in value chains for tobacco, alcohol or junk food?  Both positive and negative impacts may occur in the same project and Wach recommends examining causal chains of outputs and outcomes to clarify where, how and for whom we expect impact to occur.

 

Finally, many current inclusive business impact studies do not collect sufficient baseline data or examine alternative cases.  How many of the benefits are attributable to the programme and how many would have occurred anyway?  While it isn’t always possible (or ethical) to assign people to experimental control groups, there are other ways of determining the counterfactual ‘what if’ or ‘what if not’ case.   Wach argues that doing so is essential if we really want to know the real impacts of a business.

 

If we want more inclusive business, we need our impact studies to actually demonstrate impact so we know what practices really work.

 

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Comment by Caroline Ashley on May 25, 2012 at 9:42

Elise's paper makes many good points.   From an academic and development perspective, rigour is certainly lacking.   From a practical perspective, there are of course many challenges to understanding the impacts of inclusive business.  The main one being that business people are busy delivering and growing their business and have so little time for investing on the systems that are needed to track results.   In the Business Innovation Facility we are trying to balance practical constraints with a desire to get a better understanding of the results of inclusive business, and of Facility support for a portfolio of up to 100 inclusive business projects.   We have written a short 2-pager that outlines our approach and, perhaps most usefully,highlights some of the lessons and challenges we have already learnt.   It is at: http://businessinnovationfacility.org/forum/topics/tracking-results...

One lesson is that work on tracking results is met with initial hesitation, sometimes reluctance, amongst companies but often is reported to have been extremely useful once we are underway.   I'm sure there are many implications for this agenda in there.

Comment by Elise Wach on May 29, 2012 at 14:42

Thanks for this post, Noshua, and thank you very much for your comment, Caroline!

I agree that we need to find a balance between rigor and pragmatism, and I think this starts with determining what information should be collected by companies and what information should be collected by external bodies that have experience in development and in evaluation.

In the case of M&E, there are definitely areas where businesses can provide information, particularly related to outputs (e.g. goods produced, individuals employed, benefits provided, etc.). However, the process of determining whether those outputs result in development outcomes or impacts (e.g. improved livelihoods, women’s empowerment, improved nutrition, etc.) is where I see the role for external support from actors such as BIF or NGOs.

In the case of impact evaluations, I see complete independence as key. But impact evaluations shouldn’t simply end with a report, but should serve as a basis for engagement and learning that enables businesses to act on evaluation findings.

Comment by Daniel Ticehurst on May 17, 2014 at 14:29

Thanks for this, really useful comments; and sorry for coming in so later. Caroline, you say: " From a practical perspective, there are of course many challenges to understanding the impacts of inclusive business.  The main one being that business people are busy delivering and growing their business and have so little time for investing on the systems that are needed to track results." Don't you think the challenge is all about integrating such 'results' into the systems businesses already use to help inform how and in what ways they can best deliver and grow their business? Some of the 'results' may already be there but not being used to inform decisions, partially explained by how big companies have separate functions and structures dubbed sustainability that often create contrived impact measurement systems and reports that run parallel to those you mention, perhaps anyway.

I am not sure I understand the opportunity being about how to overcome businesses having  " so little time for investing on the systems that are needed to track results" Surely, it is about looking at what information the current systems generate that inform decisions. For example, answers to questions such as: a) who are big businesses such as SAB Miller and Coca Cola reaching and servicing; b) how responsive and attuned are they to meeting the needs of these SMMEs including help to improving the business environment and investment climate; and c) how and to what extent are they growing?

I understand the opportunities around impact in this context to be less about method and other standards in development evaluation, more about those regarding the relationship between these corporations and the SMMEs with whom they work. This is critical to any assessment of change over the long term, and are mutually dependent: For either to prosper, the other must succeed as well. The alternative is something like welfare measures used by organisations such as technoserve who, through business solutions shout about how maize farmers are now a whopping $300/year better off than they were before.

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