Hybrid Value Chains: new opportunities for business growth while tackling development challenges?

 

Blog written for Business Fights Poverty by Michael Jarvis, World Bank Institue

 

Can social entrepreneurs forge a more productive collaboration with corporations? One that is good for business growth but also tackles development challenges? Bill Drayton and Valeria Budinich suggest just that in a new article in Harvard Business Review.  They introduce the concept of hybrid value chains (HVCs) based around four key criteria – that they create real economic as well as social value, have the potential to go to scale across borders, are profitable and hence sustainable, and offer a basis for new competition. This is an interesting spin on the base of the pyramid business case that prioritizes an integrated role for social entrepreneurs, but I wonder how many settings are conducive to this model.

 

Of course businesses will develop even in the most difficult settings.  As reported recently in the Financial Times, entrepreneurship is alive and well in Somaliland despite lack of clarity on its status and the absence of many typical state structures. Investors are exploring options in such sectors as oil, fishing, power, and livestock exports – including a proposed $9m cold packing camel meat export business. What’s more, the early risk takers tend to be those connected to the country, notably returning diaspora, who are likely to have an interest in broader benefits for their homeland. So is there a role for social and private entrepreneurs to jointly shape private sector development from the beginning? Would HVCs generate sufficient jobs for the poor?

 

It is unlikely that HVCs can be successful without some capacity in the civil sector, but even where civil society is vibrant, how do the complementary company and social entrepreneur find each other?  There are close to a million CSOs in Brazil alone. This is bewildering for companies, who struggle to pinpoint those with good ideas and capacity. It is no surprise that the authors come from Ashoka, an organization that has helped play a broker role between social entrepreneurs and corporations in many of the examples they cite.  How can that brokering be made available globally?  Most of the proposed HVC examples cited by Drayton and Budinich stem from relatively few countries, notably India and Mexico, and target better service delivery – overlapping with oft repeated base of the pyramid cases.  For HVCs to take hold – and join the canon of established acronyms with CSR and BOP – it will need to be proven in more contexts.  Ideas for HVCs in Mongolia or Uganda anyone?

Views: 394

Tags: #Enterprise Development, #Partnerships, #Top Stories, #inclusivebusiness-wp, Enterprise, Social

Comment by Sadna Samaranayake on June 30, 2011 at 19:17

Thank you for this post Michael. You raise great points. Having looked at HVC examples (for Ashoka) in various sectors and contexts, it’s clear that capacity is key.  The success of collaborations that involve diverse actors (private, social and sometimes public) extending themselves in strategic engagements that go beyond their comfort zones is predicated on the capacities and strengths brought to table.

 

As you rightly point out, some level of  brokerage, or catalyzing this type of activity is usually required in new sectors and new geographies. The bet is that once business models have been tested, and where capacity exists, HVC models will make a market, creating new value propositions and new ways of doing business. We see that happening in places like Brazil, Indonesia and Mexico where companies like Danone are engaging with local CSOs to develop and diversify their distribution and RPET sourcing channels. In the affordable housing industry in India, we see citizen sector organizations and developers beginning to see the other’s value in serving low-income housing needs, and increasing market share respectively- goals that for certain BoP segments, are not mutually exclusive. 

Comment by Kristen Schultz on July 1, 2011 at 21:45

Michael, thank you so much for starting this conversation about hybrid value chains (HVCs) and Sada, thank you for your comment. I’m working this summer at Ashoka on part of the Full Economic Citizenship team’s outreach efforts to map and build a global community HVC practitioners – where they are and where (by sector and geography) HVCs are taking hold. We track closely the pilots that our Fellows have created and are seeing some amazing results. What we’re also finding is that private companies and citizen sector organizations are coming together on their own to build HVCs around the globe. And we would love the help of the BFP community to find more of them!

 

We invite everyone to weigh in and share with us HVCs they know of. Many businesses and CSOs may not know that they’ve created an HVC. And that’s okay. I have a similar story myself, upon coming to Ashoka, about in My Journey to Hybrid Value Chain Enlightenment. As you’ve seen, HVC is Ashoka’s name for the innovative framework, an evolution of what others may call “inclusive business” or business-social alliances, or partnerships that use market forces to create social value, particularly corporations and NGOs working to unleash the market potential of the BoP.

 

The four criteria you list above are great for those determining if their project is an HVC or close to it, and we hope anyone working on or knowing of fitting projects will comment here and/or email me at kschultz@ashoka.org to continue the conversation. This will broaden both our research base and network as we share case studies, best practices and other HVC lessons learned by pioneers in the field at all growth stages. To that end, be on the lookout for a wealth of HVC information as we piece together this global landscape of revolutionary new partnerships.

Add a Comment

You need to be a member of Business Fights Poverty to add comments!

Join Business Fights Poverty

© 2014   Inspiris. Business Fights Poverty is the world's largest network of business and development professionals.

Badges  |  Report an Issue  |  Terms of Service

Google+