I would say that IAP, like BIF, found that there is a lot of value from supporting inclusive businesses, even those that are small and/or startups. We started to see small but obvious systemic impacts coming from the IAP portfolio after only a year or so. It's important for donors and businesses to realise this is a new way of doing business and it takes all those 4 Ps: patience, perseverance, passion and pilots!
A really great discussion, and very encouraging to see that both business leaders and donors are supporting inclusive business models. The challenge is continuing to improve what we mean by "inclusion". Women's rights are unfortunately still a side issue in business models, though that is changing. In an Oxfam-Alpina dairy enterprise project in Colombia, women were responsible for cleaning milking utensils on farms, so there was a good business case for the company to invest in training for women. There may not always be a clear-cut business case, but supporting women's rights is nonetheless important. How inclusive do we want businesses to be?
I always wonder how the success rate and breakeven timeline of inclusive business models compare to that of conventional start-ups or new business lines? Sometimes I feel that the expectations for social businesses are higher than for a conventional business despite the fact that in many cases the context for inclusive business is more challenging. Any idea of how inclusive models actually stack up to conventional ones?
Ekanath, you may be interested to look at the DCED standard guidance on measuring results in challenge funds which to some extent starts to answer some of your questions around how much can you ask of the businesses. http://www.enterprise-development.org/page/download?id=2272
Hi Suzanne, love the new 4 Ps. All along I was thinking of McCarthy's 4 Ps. The new definition suits much better for IB models.
For all the findings and results from the BIF pilot, including the reports mentioned in this discussion: visit bit.ly/BifFindings.
For the latest analysis from Innovations Against Poverty, read the IAP Portfolio Review 2013 and the Knowledge Exchange Report 2013
I agree Seth, this is a question that we asked ourselves when looking at the IAP portfolio as well. We tend to forget that it takes any start-up quite a while to establish itself, that there are high failure rates even in established markets with relatively established products and services. Unfortunately I only have anecdotal figures to hand about the comparable lifetimes and success rates of conventional businesses, but it is definitely one to research further.
It's interesting, too, that while there is criticism from some when social ventures are subsidized in one form or another, conventional businesses are often subsidized, as well, through tax incentives, government schemes, etc. There is absolutely nothing wrong with this, but it's only fair to apply the critique evenly.
In conclusion, we named our '4Ps' report after the common features that we could see across businesses in the BIF portfolio. Despite so many themes about diversity, nothing being 'off the shelf', differences between producer and consumer focused models, or large and small companies, we felt these were the common ingredients and named the final BIF report as such:
Perseverance: to continue through challenges, zigzags and the years until scale
Partnerships: to go beyond a company's current skill set do what was not possible alone
Passion: to turn bold vision into reality
Pilots: to test the model, and again, to learn what really works and get the business model right.
The 4Ps of Inclusive Business: how perseverance, partnerships, pilots and passion can lead to success is the final report of the Business Innovation Facility pilot. A 40 page look at the portfolio of 40 inclusive businesses that received some months of technical support from BIF. It considers their business models, zigzag journeys, commercial and social results: bit.ly/BIFfindings