Considering the various parameters we have set to quantify success, I would say that a decade sounds about right. We have set aside two years for perfecting the initial business model, the next five years for scale-up and the last three years for moving to a commercial mode. There is buffer in between for course corrections. We are right now transitioning into Phase 2 - the Scale-up mode.
Also note that investors may want to dramatically cut what you think are realistic targets!
So Suzanne, given that some of them had been developing their idea for a while before IAP support, do you actually think 10 years is a tad optimistic?
Again, Polak says you have to design for scale from the start. If you are trying to adapt an existing product or service to the BoP market you face the Irish joke problem - you wouldn't start here. Is achieving real scale inhibited by the ambition of the entrepreneurs or is it structural - the market is too dispersed?
Could you explain more about what you found on the difference?
Caroline, Yes That most be the challenging part of M&E , can business affords to put the records? and what could be the minimum M&E framework you could recommend?
Hi Zunaed - we recently launched a programme - the Intrapreneur Lab - with Accenture Development Partners and Leadership Laboratories - to focus precisely on inclusive business innovation within large established firms. In fact, we are running a special all next week on that very topic. You can find out more here: http://intrapreneur.businessfightspoverty.org/ For me the exciting thing is the opportunity to massively scale.
In our model, each PRIDE typically reaches out to about 3,000 farmers. Once the model is perfected, it is just a matter of replicating the best known methods and practices to other PRIDEs. We are now scaling up to 20 PRIDEs and hope to get to about 100 across India by the end of this year.
This has been a fascinating discussion. Before we finish, can we have thoughts on the fifth, and very positive, lesson from BIF: Business leaders are showing it's worth it for them. They have strategic reasons to invest and are staying on the train despite slow progress at times. The BIF experience also shows it's worth it for donors. On the one hand external support can make a difference to business - the technical assistance from BIF had relatively high added value. On the other, inclusive business can make a real contribution to solutions to poverty. No panacea, but a massive boost for low-income households that gain access to markets, goods and services, while potentially the business models that work can influence behaviour of others players up and down the value chain or far away. And yes we think the 'BoP' really does include those living on less than $2 per person per day.
Any final thoughts?
Yes but I rather disagree with the premise, that you start by adapting something for the BoP. Of course there is an element of drawing on what already exists, but just turning it into a cheaper version is precisely NOT what we found works. That's the point behind the first conclusion I think. It's as much today with starting the the problem that consumers have, as starting with the product the company already has.
I do agree that to do to scale, it should be build in from the start. Not all start-ups actually want to go to scale, they want to grow and thrive, but may not have major ambitions to reach millions. Some though have to invest millions before they start in designing a 'new' product - and I include both iSchool ( a start-up) and mKRISHI (part of an MNC) in that. In this sense they are designed to scale.
Issues of scale are covered more in our report for donors on Adding Value to Innovation - precisely because I think this is a more universal concern of donors bit.ly/BIFDonorreport
I suppose there are trade offs to both ways of working. As someone earlier mentioned, start-ups will always be more nimble and open-minded than large, well established companies. But the resources needed to make a start-up successful - not just money but all the support systems, expertise, social capital, etc - can be much more abundant in an established firm. So there are opportunities and challenges in both models.
Interesting. Is that because they want to be more realistic? Surely they would like high sales, but want to be more confident about the numbers?
We cut down company estimates made to us in our final reports - by 30% across the board for over-optimism, and by a further good chunk depending on business progress. Only based on the various discounts did we estimate total reach of the portfolio (which still comes to over 3.5 million by Year 5 of BIF support).
This highlights the challenge for those of us working with smallholder farmers! Re: consumer-focused businesses, please consider the people working in the retail chain as well. Oxfam's "poverty footprint" study with Unilever highlighted retail (e.g. small family shops) as a very important link between the company and poorer people. Question: is it as difficult to reach poor people in retail, as it is to reach poor people in production?
Ah that is a very big question. Too big for now. A full report on our M&E system will be on the Hub next week, so can we pursue that then?
Certainly identifying the number of Unique individuals is a really basic step that we soon realised wasn't so basic for many businesses that only need to know transactions, not numbers of people.
That's a good question. One IAP initiative that has been quite successful is that of slum sanitation franchise Sanergy. They had a scalable business model from the beginning and their experience seems to suggest that 'designing for scale from the start' counts for a lot. Compared to other initiatives that for example think of scaling only once it becomes an issue!
The BoP market is definitely something which cannot be ignored by any business. Different business models are definitely involved and the time-line is probably longer but once the inroads are made, this market can be as profitable as any other market.
That brings us to the end of this live session. We will leave this discussion open, so please do continue to post your comments.
If you would like to learn more about the topics discussed, take a look at the blogs produced for this week's special by the Practitioner Hub on Inclusive Business:
- Business Models that Engage BoP Consumers or Producers
- Any Evidence of Inclusive Business Results?
- Inclusive Business - How Long Does it Take?
- Does Technical Assistance to Inclusive Business Help?
And be sure to visit the Practioner Hub on Inclusive Business here!
I would also like to highlight the technical assistance provided by number of NGOs out there, who are helping businesses to work with the poor.
Great discussion, thanks to the panelists.
The conclusion mentions business leaders, donors and TA support from the likes of BIF. Let's not forget the role of the home governments to create regulatory and judicial environments in which BoP inclusive businesses can thrive and prosper. I bet you have leant a lot about what works by way of government and regulatory support and what stifles such ventures at birth. Would be great to get that on record too...
Thanks again and see you all soon..
When we first started looking at final results across the BIF portfolio, last September, we got a bit depressed. We saw challenges and delays everywhere. But when we looked into actual company details and feedback, from companies, country managers, and service providers, the enthusiasm was overwhelming. Very few indeed have given up. A few are stalled, usually for good and obvious reason.
When we asked about benefits realised to date, we began to realise why. Though only 5 are making a profit so far, the majority perceive they are already making gains on the more strategic objectives that they identify way back at baseline. i.e. developing new markets and competitive advantage.
The deep dive case studies reinforced this. bit.ly/Deepdives . The profits are often in the future, but it's clear the IB model is part of a very serious shift in positioning of the business, catching a wave whether in technology or market segments, that will be important to the future company. I've learnt a lot from these serious and strategic, as well as passionate and persistent entrepreneurs.