Jonathan Barnow: Designing Win-Win Relationships between Business and Smallholders

By Jonathan Barnow, Associate Vice President, Strategic Initiatives, TechnoServe

Around the globe, there are about 200 million smallholder farmers involved in commercial supply chains. And while many multinational corporations have made commitments to increase their investments in sustainable supply chains and distribution models that engage these smallholders, these initiatives have often struggled to gain real traction.

 

That observation spurred a unique partnership: with support from the Ford Foundation, TechnoServe worked with four leading companies to design inclusive business models that would create value for both smallholders and the businesses. The four pilot projects span diverse settings, from mango farming in India to seed distribution in Kenya.

 

In the process of creating these four initiatives, we confronted some of the most common challenges facing companies building sustainable supply chains and distribution models: turning broad commitments into action; creating a concrete and quantifiable business case that could help mobilize resources; and aligning internal incentives and stakeholders to drive implementation. We have captured the lessons from the design process, and how each of the four companies addressed these challenges, in a series of case studies.

 

We found five common themes across the four company partnerships:

 

  • It is critical to articulate and drive agreement on the commercial objectives of an inclusive agricultural business model, rather than the social objectives alone
  • High level concepts of commercial value and social impact are insufficient: inclusive business models require detailed, quantifiable business cases in order to gain traction within companies
  • Strategy does not stop with the business case: achieving internal alignment is often equally important and challenging.  It is critical to identify internal champions across key departments, such as Procurement, Government Relations, Business Development and Sustainability and bring them along the entire process from the start. 
  • Operational excellence is required to realize that value.  Companies need to clearly defined required capabilities to successfully operationalize the model and map these to available partners if capabilities are not available internally.
  • It is necessary to quantify the social impact and commercial value of an inclusive business model in a focused way (e.g. increasing farmer incomes and lowering costs to the company), while capturing a broader set of social and commercial key performance indicators to ensure holistic delivery

 

Each case addresses these common themes in a unique context. Over the next two weeks, we will be publishing a series of blog posts on Business Fights Poverty, drawing the most important lessons from each of the case studies. It is our hope that this series will help to spur a conversation about what makes these win-win relationships between businesses and smallholders successful and how more companies can adopt inclusive business models.

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