Promoting value chains 2.0


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Promoting value chains 2.0

  1. 1. PromotingValue Chains 2.0Knowledge Managementfor Inclusive and SustainableValue Chain Development
  2. 2. Promoting Value Chains 2.0:Knowledge Management for Inclusiveand Sustainable Value Chain DevelopmentProject: Knowledge Management for Inclusive and Sustainable Value Chain DevelopmentPilotajedeCaféThe ChallengeThe value chain approach wasproposed in the late 1990s andhas been broadly implementedby governmental andnongovernmental agencies in ruraldevelopment initiatives since the mid 2000s asa means to reduce poverty and generateemployment in developing countries. However,much of the effort has concentrated on theanalysis of prioritized value chains to designaction plans for the development of valuechains and less on designing and implementingstrategies to leverage this development.performance but also theirdecision-making and negotiationprocesses, which in turn limits theopportunities for innovationthroughout the chain, reducingvalue chain competitiveness.Bill Gates, in an address before theInternational Fund for AgriculturalDevelopment (IFAD) Governing Council inRome in February 2012, said that the newagricultural revolution will be a digital one. Heurged the research and developmentcommunity to take advantage of the digitalrevolution that is multiplying the rate ofagricultural innovation. Moreover, he statedthat new discoveries are making it possible tobring agricultural science and technology topoor farmers and that new information andcommunication technologies (ICTs) are apowerful tool to improve the reach andeffectiveness of agricultural extension services.It is clear that ICTs will play a major role inimproving information and knowledgemanagement in the new agriculturalrevolution. However, to promote a broader andmore equitable agricultural revolution,important information and knowledge accessbarriers need to be overcome. These include:· Cultural and mental barriers that give lessvalue to information and knowledge as anasset than to physical and financial assets.actors in the chains andthe limited flow of1One of the main difficulties encountered in theimplementation of initiatives to promoteinclusive and sustainable value chains is thelimited access to and use of information.chain actors. This has ainformation betweenthem and other valuenegative impact onnot only theirand knowledge by the most vulnerable
  3. 3. Lessons Learned andRecommendationsMicrosoft2· Physical barriers that prevent a broaderaccess and use of ICTs by smallholders inrural communities.· Human barriers that limit capabilities toeffectively use ICTs to access informationand, more importantly, to effectively use thisinformation for decision-making andnegotiation processes.· Social barriers, generated by weakinstitutions and the lack of explicit incentivesto share information among value chainactors, that prevent the establishment,functionality and sustainability ofinformation systems.· Financial barriers that affect thewillingness of value chain actors, especiallysmallholders, to invest in the establishmentand functioning of information systems,which in turn depends on the benefits valuechain actors anticipate and generate,compared with the operation andtransaction costs involved.Therefore, a major challenge to achieving aninclusive and sustainable revolution is:Based on an extensive review of the literature, the systematizationof selected experiences in Latin America in the application of thevalue chains approach, and especially the lessons learned fromhands-on experience in designing and establishing five pilot projectsfor vegetable and honey value chains in Honduras and coffee, cacao and bean valuechains in Nicaragua, the following lessons learned and recommendations can be made.1. The value chain approach needs to move toward one that explicitly takes intoaccount aspects of inclusion and sustainability.This new approach, referred here as Value Chains 2.0, aims to advance toward animproved conceptual and analytical framework where explicit inclusion andsustainability aspects are integrated into the design, implementation and evaluation ofintervention strategies. This approach places value chain actors, rather than theirfunctions, at the center of the analytical framework, from which the functions they carryout and their performance are considered. This is fundamental for facilitating improvedinformation and knowledge management, since knowledge is an asset that peopleaccumulate and develop. It is not merely a function they fulfill for the performance ofthe value chain. This analytical framework facilitates the design of leverage points andthe implementation of concrete actions.Project: Knowledge Management for Inclusive and Sustainable Value Chain DevelopmentMaria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón MolinaHow to facilitate effective and equitable accessof value chain actors to key information andknowledge, with special emphasis on thoseactors with less access and therefore, lesspower and develop their capacity to use thisinformation strategically for improving theirperformance and for their decision making andnegotiation processes?
  4. 4. The Value Chains 2.0 approach builds on the previous approach but differs in its purpose, objectiveand orientation and, most importantly, in the nature of its organizational structures and processes,the type of relations among value chain actors and how information flows among them. It has astronger focus on institutional strengthening. To illustrate this, Table 1 highlights thesecharacteristics, together with how they need to be integrated into strategic design andimplementation.Table 1. Characteristics of Value Chains 2.0 and its implications for the design and implementation ofstrategies to facilitate their developmentProject: Knowledge Management for Inclusive and Sustainable Value Chain Development3Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón MolinaCriteriaEmphasis in theValue Chains 2.0approachLeverage points Implications for strategy design and implementationPurposeCompetitivenessand economic,social andenvironmentalsustainabilityStrengthenknowledgemanagementcapabilities andvalue chaingovernanceImprove value chain actors’ performance foreconomic sustainabilityImprove decision-making capacity and negotiationpower of smallholder producers and theirorganizations for social sustainabilityFoster the adoption of sustainable practices forenvironmental sustainability and adaptation toclimate changeOrientationDemand-driven,and centered onthe value chainactors whocollaborate tofulfill the demandImprove valuechain actors’capabilities toaccess and useinformationImprove value chain actors’ awareness of theimportance of information and knowledge as anasset (especially among smallholder producersand their organizations)Improve information access and use capabilitiesImprove negotiation power to access relevantinformation for decision makingObjectiveFocus oninnovation to addvalue along thechain system toachieve win-winrelationshipsFacilitatetechnological,process andinstitutionalinnovationEliminate barriers that prevent the timely accessand use of information, especially amongsmallholder producers’ and their organizationsFacilitate the interaction among value chain actorsto promote open innovation systemsOrganizationalstructuresValue chain actorswho recognizetheirinterdependenceand therefore arewilling to shareinformation, risksand benefitsContinuouslymotivate and raiseconsciousness bymaking the valueof information andknowledge sharingexplicitAnalyze value-chain key processes and theinformation needed to improve the performanceof these processes.Precisely Identify and prioritize informationdemands and sourcesDesign strategies to implement concrete actionsfor improving the timely access to and use ofinformation for decision making and negotiationprocesses··········
  5. 5. 4Project: Knowledge Management for Inclusive and Sustainable Value Chain Development2. Efforts need to be made in developing and validating appropriate methodologies and tools anddeveloping capabilities for proper design and implementation of information systems.Broad practical implementation of the ValueChains 2.0 approach requires appropriatemethodologies and a pool of facilitators withthe attitude, skills and tools required tofacilitate the design and establishment of multi-user, custom-made information systems thatrespond to the specific needs and capabilitiesof different value chain actors. Theseinformation systems need to include specificactions to eliminate identified barriers(cultural, physical, human, social and financial)that limit access to and use of information,especially among smallholder producers andtheir organizations—a pre-condition to ensureviability, maintenance and sustainability ofinformation systems.Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón MolinaCriteriaEmphasis in theValue Chains 2.0approachLeverage points Implications for strategy design and implementationType ofrelationshipsTransparent andequitablerelationships thatpromotecooperation andbuild trust amongvalue chain actorsPromote producerorganizations’internalaccountability andopen evaluationprocesses amongvalue chain actorsEstablish and maintain multi-user informationsystems that include management, performanceand impact indicatorsContinue motivation and consciousness-raisingabout the importance of sharing, accessing andusing informationDevelop capabilities for the use and analysis ofrelevant information to establish norms, rules andvalue chain standards and traceability processesInformationflowEffective decisionmaking andnegotiationprocesses basedon the timely flowof pertinent andrelevantinformationImprove theperformance ofvalue chain actorsby fosteringimproved andtimely access toand use ofpertinent andrelevantinformationDesign custom-made information systems thatrespond to the specific needs and capabilities ofthe organizations involved, with an emphasis onreducing barriers (cultural, physical, human andsocial) that limit access to and use of informationEstablish multi-user information systems thatinclude identified and prioritized informationdemands to improve the performance of keyvalue-chain actor processesDevelop the capabilities of different value chainactors to ensure the viability, maintenance andsustainability of the established informationsystems.······
  6. 6. Project: Knowledge Management for Inclusive and Sustainable Value Chain Development5The K4ValueChains 2.0 project, has beenimplemented since 2010 by the TropicalAgricultural Research and HigherEducation Center (CATIE), the InternationalCenter for Tropical Agriculture (CIAT),Catholic Relief Services (CRS) andSwisscontact in Nicaragua and Honduras,and SNV, and co-financed by theInternational Development ResearchCentre (IDRC). The project developed amethodological guide (now in its 2.0version) for the design of informationsystems for the promotion of Value Chains2.0. Following the characteristics of thisapproach discussed above, themethodology includes four phases:Phase 1: Motivation and consciousness-raising with focal producer organizations.This methodology has been tested, adjustedand validated through the design of five pilotinformation systems that aim to respond tothe specific needs of producers organizationsinvolved in the bean, coffee and cocoa valuechains in Nicaragua and in the honey andvegetable value chains in Honduras, as well asthose of their value chain partners whoperform complementary functions along thechain.The principles on which this methodology isbased and that have proved to befundamental to increase the probability ofsuccess follow:· To promote inclusive value chains, smallholder organizations are the focal point for the design ofthe information systems, as they are usually the chains actors with less access to information and,in particular, make the least use of it for decision-making and negotiation processes.Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón MolinaPhase 2: Identification, prioritization and precision of information demands of producerorganizations, based on analysis of their key processes performance.Phase 3: Analysis of information flows between producer organizations and other relevant valuechain actors.Phase 4: Strategy design, negotiation and consensus building to implement concrete actions forimproving the timely access to and use of information.
  7. 7. · Information systems are custom designedfor the specific value chain actors involved inthe process: there is no “one-size fits all”design, and to achieve this, activeparticipation of stakeholders is crucial.· The successful establishment, functioningand sustainability of the design systems willdepend on the commitment of the actorsinvolved, and their active participation in thedesign processes contributes to buildcompromise and ownership with theprocess.· The design, establishment and functioningof the information systems focus on the jobto be done for the value chain actorsinvolved, using ICTs as needed but do notfocus on the technological gadgetsthemselves. Information systems are kept assimple and user-friendly as possible,especially recognizing the limited capabilitiesof smallholders and their organizations.· The information systems should includemanagement, performance and impactindicators that make the value added by thesystems clear to chain actors, increasingtheir awareness of the importance ofinformation and knowledge as an asset,especially among smallholder producers andtheir organizations.Project: Knowledge Management for Inclusive and Sustainable Value Chain DevelopmentThe Way ForwardThe objectives of the designed information systems are described inTable 2. Though designed and facilitated by different persons, the pilotdesigns for the five value chains demonstrate certain commonobjectives. All of them aimed to improve the technical service providedfor value chain development as well as accountability as a means for strengthening collective action.Other objectives common among most of the pilot experiences are support of traceability processesto link smallholders to differentiated markets, integral risk management and adaptation to climatechange.Table 2. Objectives of the five pilot information systems designedThe job to be done by the informationsystems designedPilot value chainNicaragua HondurasBeans Coffee Cacao Vegetable Honey1. Production scheduling to respond tomarket demandX X2. Integral risk management (climate,market and institutional)X X X3. Improvement of service provision forvalue chain developmentX X X X X6Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón Molina
  8. 8. 7Project: Knowledge Management for Inclusive and Sustainable Value Chain DevelopmentThe job to be done by the informationsystems designedPilot value chainNicaragua HondurasBeans Coffee Cacao Vegetable Honey4. Support of traceability processes tolink smallholders to differentiatedmarketsX X X X5. Accountability as a means tostrengthen collective actionX X X X X6. Systematization and diffusion ofpractices to adapt to climate changeX X X7. Facilitate smallholder linkages tomarketsXImplementation of these systems has begunthrough an incremental process, starting withthe priority module and progressively linking itwith the other information modules. Thisgradual approach makes it possible to progressaccording to available human and financialresources, thereby ensuring the sustainabilityof the initiative.During this process it is important to providedirect support and close follow-up to continuewith the action-research activities anddocument the experiences and lessonslearned. Based on this, the pilot experiencesneed to be systematized and documented fordifferent audiences, such as policymakers,research and development agencies, andpartner organizations involved in the designand implementation of the five pilotexperiences. This process will lead to thelaunching of version 3.0 of the methodologicalguide, and other key documents.Once the first phase of the K4ValueChains 2.0project ends in March 2013, it will also beimportant to continue follow-up the pilotexperiences over a period long enough toevaluate changes in the management,performance and impact indicators. This will becrucial to deepen the learning process and tovalidate and/or adjust the proposed approachand methodology. It will also allow verificationof the thesis stated at the beginning of thispolicy brief.A second phase of the project will be neededto scale out the results to other producerorganizations that participated in the pilotvalue chains, and to scale them up to generateinstitutional innovation in the value chain as awhole. The results can also be scaled out laterto other value chains in the same countries orto the same value chains in other countries.Maria Verónica Gottret, Raúl Ernesto Gutierrez and Napoleón Molina
  9. 9. Learning AllianceKm 12½, Carretera Sur, 2 km a la derechaApartado Postal P-116Managua, NicaraguaTel. + (505) 2265 7268Fax: + (505) 2265 7114www.alianzasdeaprendizaje.orgProject Leader: Maria Verónica