MaFI Synthesis              MaFI SynthesisLead Firms in Pro-Poor Market DevelopmentA pragmatic approach to impact at scale...
Within these discussions, further questions were also raised, such as the                    Contentsone proposed by Kamra...
Defining ‘Lead Firms’Most people agree on the basic definition of lead firms – that they are keydrivers of structural chan...
and enough incentives to bring about change in the market system in a       sustainable way should be approached as leads ...
do not have any other choice to improve matters (as the middlemen can offer aportfolio of unmatched services)” and the oth...
Self-SelectionIs self-selection the only practical method of identifying these innovativeand visionary market actors? Or h...
which has been mostly neglected or overlooked. The Relationship Matrixiv as anM&E tool could be useful to monitor this rel...
Creating win-win situationsKey things to consider when drafting successful action plans andpromoting sustainable relations...
Kamran Niazi picked up on this point on creating a negative reputation, bysuggesting that larger companies might have bett...
2. The NGO becoming too involved and actually handling contract     negotiations. Implicit hand-outs have a way of “sneaki...
may have changed. In the for-profit world, people are encouraged to take risks(not too many though), so the question is, a...
quantities, and help with contract negotiation” could therefore be considered asa sort of non-financial subsidy in itself....
Acknowledgements and creditsSpecial thanks to the following MaFI members for making this discussion possible:        Alex...
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MaFI Lead Firms Synthesis, ver15dec11

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This is the new and improved version of the synthesis document of the Lead Firms discussion which took place in MaFI in 2010. We hope that this new layout (with the “navigation bar”) makes reading easier for busy people like you; it was designed to help you spot key questions, convergences, divergences and additional resources without having to read the whole document. If you have comments about the content or ideas to improve the layout, please feel free to post them in the comments box here below. Thanks again to all MaFI members who made this discussion possible and to David Brownjohn and Olivia Comberti who helped with the synthesis and layout respectively.

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MaFI Lead Firms Synthesis, ver15dec11

  1. 1. MaFI Synthesis MaFI SynthesisLead Firms in Pro-Poor Market DevelopmentA pragmatic approach to impact at scale or a risky road to exclusion?IntroductionLead firms are an essential component of any market system. They are keyinfluential actors, which have the potential to influence other businesses, andprovide products or services that can address the constraints and challenges thatface small businesses or micro-enterprises. Those with a willingness to commitfinance, personnel or time in benefitting the value chain are the most likely tobring about useful and sustainable change, and so many lead firms are largecompanies, however they can also be small firms, or even cooperatives – the keyfactor is their ability to influence and drive change. Lead firms are thereforestrategic partners that can help inclusive market development organizations tobring about sustainable change for marginalised people.MaFI Featured Discussion SynthesisThis document builds on the Lead Firms discussion paper produced by RichardIlliffe and Lucho Osorio in May 2010i, which was circulated to MaFI membersto spark a debate on some key issues with lead firms. The document summarisesthe results of this debate, which was held over a period of three days on theMarket Facilitation Initiative (MaFI) online forum from 27th-29th July 2010.The discussion was divided into the following thematic areas:Day OneFocussed on the definition of lead firms, creating vision for change, methods ofidentifying lead firms, getting buy-in, striking deals and co-designing businessstrategies.Day TwoLooked into effective methods for implementation, building trust, solvingconflicts and monitoring progress.Day ThreeFocussed on the topics of crowding-in, phasing-out and detecting trendstowards sustainability, including the barriers involved in publicising aproject’s success. July 2010 1
  2. 2. Within these discussions, further questions were also raised, such as the Contentsone proposed by Kamran Niazi on whether the community itself could beempowered to act as a Lead Firm, and discussions on the motivations andreputation of lead firms. For simplicity, the report has therefore been Introduction 1categorised into the following sections: MaFI Featured Discussion synthesis 1  Defining ‘lead firms’  Incentivising lead firms Defining ‘Lead Firms’ 3  Cutting out intermediaries  Self-selection Incentivising lead  Building relationships at the bottom of the pyramid firms 4  Creating win-win situations Cutting out - Incentives and building reputation - Other key considerations intermediaries 4  MoUs – what to look out for in the small print Self-Selection 6  Risks  Knowing things are going well – and how to communicate this to Building Relationships shareholders at the Bottom of the  Confidentiality vs. publicising success Pyramid 6  Avoiding taking all the credit Creating Win-Win  Measuring the strength of relationships Situations 8 Incentives and building reputation 8Navigation Bar Other keyKey points from the discussion are summarised in the side bar. They are split considerations 9into the categories of: MoUs - What to look out for in the small Convergence print 10 Where contributors reach an agreement on a topic Risks 10 Divergence Knowing things are When contributors’ viewpoints differ on a topic going well – and how to communicate this to shareholders 11 Pending Questions Where a conclusion on a topic has not yet been reached, or the topic Confidentiality vs. was not discussed publicising success 11 Resource Avoiding taking all the Further resources and information on the topic credit 11 Measuring the strength of relationships 12 Acknowledgements 13 MaFI 13 2
  3. 3. Defining ‘Lead Firms’Most people agree on the basic definition of lead firms – that they are keydrivers of structural changes in market systems to overcome bottlenecksand constraints to the market, and that this definition is independent of A lead firm does not have to betheir size. a large organisation. Even anHowever opinions diverge on the finer details. For example, whilst empowered farmer’s cooperativeEkanath Khatiwada believes that minimum ethical standards should can act as a lead firm.apply, this is countered by Lucho Osorio’s observation that this may be The market size and scope aredifficult to enforce in practise. key to the definition, as different types require differentThe discussion was started with Lucho Osorio-Cortes’ proposed definition of skills.lead firmsii, based upon the FIELD Facilitation Working Group’s WorkingPaper “Defining Lead Firms and Principles of Facilitation”: Only firms which have potential and enough incentives to bring “Lead Firms are formal or informal enterprises of any size or about change in the market individual entrepreneurs who buy from or sell to firms of similar or system in a sustainable way smaller size or to individual entrepreneurs, and who are innovators who should be approached as leads can influence their providers or clients to upgrade their capabilities, firms. business strategies or structures guided by visions of increased productivity, efficiency and sustainability”This definition was expanded on further by Ekanath Khatiwada, whosuggested including the size of the markets that the lead firms cover – both interms of their physical size and their geographical scope (local-national-international). This distinction was highlighted because the set of facilitation 1. Should minimum ethicalskills needed at different business levels is different. Some firms are working standards be applied to leadwithin meso-level business environments whereas others may be dealing with firms, and if so, how could these be measured?more complex systems (ie. meso- macro – international environment). Similarly,the incentives and services required may differ at different levels. 2. What is the difference between lead firms and valueEkanath Khatiwada also suggested the possibility of defining lead firms in chain drivers?terms of their “cleanliness”, proposing a minimum ethical standard that theymust adhere to in order to fit within the definition. Whilst this may help toaddress her concerns regarding monopoly, conflict and exploitation, it waspointed out that enforcing this could be very difficult.Linda Jones noted the similarity between the preliminary definition given oflead firms and that of ‘Value Chain Drivers’, which highlighted a need to clarify You can find the synthesis ofthe differences between these distinct terms. the MaFI Local Learning GroupsAlso, as Alison Griffith explained, the "innovators" term in the definition could discussion and definition of leadbe a loaded term that implies risk taking. This could be viewed as a positive or firms at:negative thing, depending on the circumstances. http://www.slideshare.net/marke tfacil/summary-paper-llg-bd-on-The first ever MaFI Local Learning Group (LLG) in Bangladesh proposed the lead-firmsfollowing regarding the definition of Lead Firms:  There should not be a specific definition of lead firms for each country. The definition should be broad enough to serve the demand of all countries.  Different development organizations define lead firms in different ways. It is however generally acknowledged that only firms which have potential 3
  4. 4. and enough incentives to bring about change in the market system in a sustainable way should be approached as leads firms.They also pointed out that lead firms do not always have to be big companies:"A local service provider or input seller can act as a lead firm if they provideservices needed to improve the situation of the producer and if the users arewilling to pay for the services”.Incentivising lead firmsA key role of facilitators is to create an environment and visions forchange that will attract lead firms to work with marginalised actors. How facilitators can induceHannah Schiff responded to the question of how facilitators can create this lead firms to work with target groups:environment for lead firms by highlighting two important considerations:1. Make sure there is a solid business case for the transaction. Facilitators - Make sure there is a always need to carefully identify the incentives for both parties to engage in a solid business case for transaction that we would like to see repeated after our exit. We can use a the transaction. variety of mechanisms to buy down risk, but we have to make sure that our - Build on existing financial contributions alone are not the incentive and that our vision is relationships. practical in the long-run.2. Build on existing relationships. The lead firms may not want to work directly with the poor or marginalized -- and indeed, they may not have to. It can be a good idea to look for existing intermediaries who are close to our target populations, as they can bear some of the risk involved and better understand the needs and limitations of the target group.Linda Jones agreed with these points and pointed out that the incentive canoften take the form of increased access to raw materials or the potential foropening new markets. In this situation a lead firm can be open to working withsmaller producers, with or without an intermediary.Cutting out intermediaries“Why can’t the community itself be empowered to act as a lead firm?”Kamran Niazi proposed the question: “why, as facilitators, do we want the lead Whether to cut out the middlefirm to work with the marginalised communities? Why can’t the community man or not depends largely onitself be empowered to act as a lead firm? We (as facilitators) should be able to context, ie. what function thecut out the middlemen and deal with the people directly.” middle men are carrying out,However, he also pointed to the paradox of whether facilitators should support and whether this can bethe middlemen. Whilst a lot of the middlemen serve a very useful function, there replicated without them.are many instances of them “squeezing” the producers, for example they makemoney, while the producer is left with nothing. But even though they are takingadvantage of the producers’ lack of market knowledge, he points out that “we 4
  5. 5. do not have any other choice to improve matters (as the middlemen can offer aportfolio of unmatched services)” and the other option of trying to dosomething else “might not succeed also”.The Local Learning Group in Bangladesh addressed this issue in theirdefinition of lead firms, saying that “a local service provider or input seller canact as a lead firm if they provide services needed to improve the situation of the When bypassing or cutting outproducer and if the users are willing to pay for the services. On a local level, lead market actors:farmers can become service providers and take the role of the lead firm, - How to do it in ways thatintroducing new technologies or services.” do not erode the market systems resilience?Hannah Schiff thought that the question “depends a lot on the context, and - Who should do it?more specifically, on whether the ‘middlemen’ in question are fulfilling a usefulfunction or not. In many cases, intermediaries diffuse risk, transmit How can marginalised marketinformation, aggregate product, and perform other such roles. Our job is actors like farmer groups ortherefore not necessarily to cut out or support anyone per se, but rather to local service providers becomefacilitate the best solution or model to addressing a given constraint, and lead firms?then ask ourselves what functions are needed and who can fulfil them (now andin the future)”For Sharad Rai, the question of “cutting out” or “bringing in” intermediaries isnot the issue. He gave the following example of markets in Nepal to supportthis:“In Nepal, where we work with small producers and in (usually) thin To what extent shouldmarkets, there are not many choices for our target group members in the marginalized producers andabsence of various qualitative bottlenecks (skills, knowledge, attitudes) as other actors participate in the design of the lead firm’swell as physical (access to micro finance, health, transportation) business strategy or do the leadbottlenecks. In this context what we try to do is to build individual as well firm and the facilitator knowas institutional capacities of our target groups in order to ensure that they best?can assess the markets by themselves, build relationships and linkages asrequired and decide with which intermediaries or value chain actors towork with - in short enable them to make their own choices.On the other hand, as we are trying to do in our current work in the dairysector in Nepal, we try to rope in lead firms and/or service providers(such as small to large-size dairy plants/industries, micro finance andinsurance providers, private sector feed manufacturers, etc.) to fill in thegaps for making dairy markets work for the poor. We have just started tothink collaboratively with these critical market actors to pilot a fewinnovative interventions – for example micro financing models withbanks, market assurance schemes with small and medium sizedbuyers/plants, and research on low-cost feed with private sector feedmanufacturers and others. While we are sure that the results of these pilotmodels will be significantly important in learning and applying lessons interms of systemic development, we will still need to do more in terms ofbringing about a sustainable model.” 5
  6. 6. Self-SelectionIs self-selection the only practical method of identifying these innovativeand visionary market actors? Or have you used other methodssuccessfully? What are the risks and problems with self-selection?The only mention of self-selection came from Alison Griffith, who noted that Have any other approaches“it is becoming common to advertise open calls (e.g. in the media, on the web) worked?to invite companies to be part of an initiative. Sometimes these can be quiteformal processes, such as the Africa Enterprise Challenge Fund (where NGOs Does self-selection helpcannot apply; the main applicant has to be a private firm). The idea is to get facilitators to identify the most reliable and effective leadcompanies to invest their own resources and to take a lead. In Bangladesh I firms?think the Katalyst program initially had difficulty getting interest from lead firmsin the vegetable seeds sector and much discussion and negotiation was requiredbefore they could move ahead. In other cases there is more competition to beinvolved and it is important to ensure that selection processes are transparent.”Building Relationships at the Bottom of the PyramidAlison Griffith notes some interesting research on the Bottom of the Pyramidapproach that could be relevant to the understanding the motivation of leadfirms. “Hart presented at the [2009] SEEP Conference a reviewiii of the last 10 Building relationships and understanding betweenyears showed that in many cases BOP initiatives did not work because companies and communities iscompanies did not invest in relationship building. Some big companies had key to the success of BOPtheir fingers burnt” As a result the next phase of BOP is paying much more initiatives.attention to these aspects.“For us facilitating lead firms this means we need to consider how we will helpbig and small players develop relationships; how we will build capacities ofdifferent players to become more ‘market literate’ (particularly getting a moresystemic understanding of the market); and how we will deal with power andgovernance issues).” For short term partnerships, isExpanding on this, Peter Edward added that “one issue for big companies can it worth the time, resources andbe not that they dont invest in relationship building between the company and potential harm to a facilitator’s reputation to work with largethe local community but that they can overlook the need to develop companies? Will this helpunderstanding within the company of how the BOP activities contribute to smallholders to move up theoverall company strategy and are valued within the company. For these large value chain?lead firms, building and maintaining internal relationships and networks can bevital to ensure the lead firm’s project staff do not feel too disconnected from thefirm’s core business activities - I suspect that aspect often gets overlooked whenprojects are started.”Sharad Rai gives an example of how building relationships at the bottom of thepyramid was important. “One of the challenges for the current dairy project inNepal will not only be testing innovative smallholder farmer-privatesector/service provider linkages models, but also to see how we can build andmaintain healthy relationships between critical market actors –between smallholder farmers and relevant market actors in particular. I think this is one area 6
  7. 7. which has been mostly neglected or overlooked. The Relationship Matrixiv as anM&E tool could be useful to monitor this relationship building process.”Chris Piennar takes the concept of relationship building one step further,pondering “what would happen if everything began from the viewpoint,values and passion of not just the farmer/producer but anyone within thecommunity who may wish to take forward some enterprising actions oftheir own choosing but which could find a market locally? In working inthis manner the passion and energy comes from those driving their ownenterprises but working interdependently with other enterprises within the areafor mutual benefit –retaining their own independence to channel their ownpassion yet operating interdependently for the benefit of all. The driving is in thehands of the producer (no dependency and maximum energy) and the lead roleswitches to one of facilitation of the initial ‘spaces’ or events for people to stepforward, the coaching of the start-up process and support networkdevelopment.” He sees this as not necessarily being mutually exclusive of leadfirms, but rather removing the main focus from these, so that they can simply“be formed in due course where beneficial by those operating interdependentlyor contracted into on an agency basis”.In terms of trust and working together, he suggests a simple tool used on hiswww.pluggingtheleaks.org programme called Perspective Wheel – Groups,which he is happy to forward to anyone by request.He claims that “the tool has been effective at teasing out the variousperspectives held by different stakeholders within an initiative, building respect Perspective Wheel Groups –for these perspectives and allowing them to be “mainstreamed into the approach Helping stakeholders to work together, understand eachbeing taken. In doing this, everyone is valued for their views, the others other’s perspectives and buildunderstand their motivation much better and perhaps most crucially, in this way trustthe values, passions and energy of all members are harnessed and pointingforward to the best initiative that can be in the eyes of all of the stakeholders.”As the saying goes, “time is money” in business, and so a lead firm’s investmentof time in a project must be carefully balanced by a facilitator. Linda Jonesnotes that “lead firms are often concerned about the investment of managementand staff time,” and therefore “the upside of dealing with smallholders or smallproducers has to be a strong incentive. This is one area where a facilitator canmake a big difference as the initial stages of any such arrangement are timeconsuming and the process can easily go off the rails.”Kamran Niazi picks up on this, questioning whether, when companies such asMcKinsey and individuals such as MBAs at Harvard want to work with largefirms for a limited amount of time, it is worth working with them at all.Investment of management and staff time concerns by the lead firm, in additionto requiring them to change their mind set from working on million poundbudgets to hundred pound budgets may mean that the help that they can give tosmall holders is limited, and so may not be worth the extra time and resources ofthe facilitator, or potential damage to their reputation. 7
  8. 8. Creating win-win situationsKey things to consider when drafting successful action plans andpromoting sustainable relationships: minimise the involvement of theNGO, carefully select the lead firm, and understand the motivations Reflecting upon potential(financial or otherwise) of the parties involved. motivations from the perspective of the lead firm canIncentives and building reputation: be very useful in cultivating successful businessKamran Niazi kicks off the debate on what to consider in the planning of a relationships and identifying risks.project by pointing out the importance of having a financial incentive: “there hasto be a clear reward for the lead firm and it should be considered as a business. It can be risky working withUnless we can create win-win situations for all concerned, the lead firms whose mainintervention is not going to last.” motivation is reputation building, as they may not haveHowever whilst the monetary aspect is clearly important, Peter Edward warns the interests of theagainst only focussing on this, arguing that “the rewards need to be understood smallholders in mind.as more than just monetary. Building or insuring reputation, or developingbetter political influence and positioning can be strong motivators for alead firm.To be able to truly understand the lead firms, and hence draw up an effectiveplan, Peter argues that “it is important to step back from our desire to seedevelopment take place and instead to reflect on what is motivating the leadfirm” by putting oneself in the lead firms position. This, he suggests, can help tobuild up a “clearer (and perhaps ruthlessly cynical) understanding” of how they Is money or reputation theoperate, in order to identify risks, and understand motivations and the ways more important motivation tothose motivations might change in the future. He later clarifies that “if we want consider for the lead firm? And what risks and benefits areto understand the motivations of a lead firm –and hence their likely associated with each?commitment to driving a project in the long-term […] rather than merelyusing the project to build a good [image and influence amongst powerfulactors], we need to look beyond the contract and the project aims andfunding.” In that way, “if (when?) the project starts to drift from its originalaspirations and timeframe, [the facilitators can envisage] what the drivingmotivation are for the lead firm at that time.” Do motivations of the lead firmThe flip side of focussing on reputation, as Kamran Niazi points out, is that matter if they are doing theirthere is a risk of the lead firm having the wrong priorities. He recalls: “I have job of leading transformationsseen lead firms spend more money on the launch ceremony than on the in market systems?program itself”.Linda Jones discusses the equally important issues of negative reputation,noting that reputational issues don’t just involve lead firms using a project toraise their profile, but can also be “a lead firm concerned that a poor project willharm the company. This might be true, for example, when large companies have Podcast from Mesopartners:had more of a plantation style in agriculture and are reaching out to How to manage expectations ofsmallholders. Their actions might be seen as a land grab (which indeed it could both the lead firms and thebe) and a company with the best of intentions will want to be very careful smallholders.around this.” http://ledcast.libsyn.com/index. php?post_id=340268 8
  9. 9. Kamran Niazi picked up on this point on creating a negative reputation, bysuggesting that larger companies might have better PR departments which could“project the smallest of success in to seeming to be a paradigm breaking one.”Christian Pennotti suggests a useful resource that may help clarify many of theissues on reputation: Think Big. Go Small - by Oxfamv. He explains: “Thereport is written with a multi-national corporation audience in mind and does acouple of things that may be useful to [this] conversation: Think Big. Go Small - by Oxfam  It discusses about what sorts of information and opportunities prospective – a report covering information lead firms may find attractive –though admittedly, very sophisticated lead and opportunities that are attractive to Lead Firms, to firms such as MNCs. A key message in the report is the potential brand clarify reputation issues and reputational value that firms can generate through socially-conscious http://www.oxfam.org/en/policy/ smallholder engagement. think-big-go-small  It provides a number of useful cases illustrating how companies have actually worked as lead firms to advance smallholder engagement in their supply chains.  It outlines a framework and principles for effective smallholder partnerships with lead firms in the food and beverage sector: - collaboration and innovation - linkages - transparent governance - sharing of costs and risks - access to servicesOpinions seem to converge in the discussions around the dangers of reputationbuilding and the importance of understanding the lead firms’ motivations, asPeter Edward summarises: “I have in mind here some projects I have seen thathave been launched with much political fanfare and very good intentions by allparties but when they went wrong the priorities for the lead firm were tomaintain reputation nationally and with political elites rather than to address thelocal issue of development failure. I recall, for example, one project (which canremain nameless) that notably failed to deliver development benefits but wenton to become a celebrated and fairly widely publicised success story for the leadfirm in popular business magazines in the ‘developed’ world. I am sure many Trying to do too much too soonothers in this forum have similar experiences.” is a bad ideaOther key considerations Using a checklist of issues or standard framework may beEven if the incentives have been carefully calculated from each aspect, there are helpful in guiding agreementsseveral other key points that must be considered. Kamran Niazi points out for with individual lead firmsexample that poor execution can kill a project, so the team of the lead firm hasto be dynamic.Alexandra Snelgrove builds upon this warning with a list of critical mistakesthat organisations should watch out for when trying to develop linkages betweenlead firms and producers, which include: 1. Trying to do too much too soon - i.e. introducing a range of finance and How to empower farmers to negotiate effectively without services on day one as opposed to a more gradual process of trust building getting too involved in contract between diverse actors. negotiation? 9
  10. 10. 2. The NGO becoming too involved and actually handling contract negotiations. Implicit hand-outs have a way of “sneaking in” to the model. 3. Failing to conduct sufficient due diligence on the lead firms to make sure that they have a growing end market for their product; not to mention the capacity and willingness to invest in their supply chain. How to build capacity and 4. Failing to introduce competition and only working with one lead firm "market literacy" of lead firms which increases dependency of producers on one buyer. and other market actors (including government agencies) to make marketLinda Jones notes that, as with any type of partnership, “having stakeholder systems more inclusive,meetings, a management plan and committee, and designated leads representing productive and efficient?each party (with the time and resources to fulfil their responsibilities) are ways tokeep the lines of communication open and things running smoothly”.Peter Edward asks whether there is “a ‘checklist’ of issues that a facilitatormight want to work through with the lead firm at project set up? If so, does ithave (or should it have) a set of issues that can be discussed relating to theinternal workings and motivations of the firm? It is too easy to assume that largefirms understand what they need to do to get things right internally but oftenthey dont. And the time to raise these matters is surely up front before theproject starts to become contractual.”MoUs - What to look out for in the small printMemorandums of understanding are legally unenforceable documentsbetween two parties outlining the finite and collaborative nature of theiragreement. They are preferable to contracts to avoid both over-formality Read over the MoU carefully,and over-reliance between organisations, however checking the wording get others to check it, and beis no less important. clear about what you, and they want from the partnership.Kamran Niazi recommends readers of the MoU to “Trust but verify. Checkout the complete MoU, have 2-3 different people look at it independently andthen have them cross check each others comments. Be very clear aboutdeliverables, M & E procedures and termination clauses.”Peter Edward agrees with the need to check small print carefully, however Are the facilitators taking riskssuggests that a better way to ensure that you are on the same page as the lead by trying out new strategies orfirm is to have a clearer understanding of their motivations –to identify risks by partners, or is it a risk averseunderstanding their motivations, and likely ways those might change in the culture that frowns upon thefuture. This reduces reliance on the small print when things go awry. implementation of new ideas? Risk-aversion can differ between lead firms, smallholders and facilitators. IsRisks this creating tensions or lost opportunities?Aside from the risks already discussed regarding motivations and reputations ofthe lead firms, Kamran Niazi also points out that, for facilitators, the main riskis the selection of the wrong lead firm. “Too many times, people select the leadfirm on basis of its past performance, not realizing that, the team or the culture 10
  11. 11. may have changed. In the for-profit world, people are encouraged to take risks(not too many though), so the question is, are the facilitators taking risks tryingout new things, strategies or partners or [are they bound by] a risk averse culture How to show evidence offrowning upon implementation of new ideas.” progress in projects that, when done well, may take time to produce measurable results?Knowing things are going well – and how tocommunicate this to shareholdersKamran Niazi presents another dilemma regarding showing evidence ofprogress in projects that, when done well, may take time to produce measurable How to ensure that the donors are kept happy by showingresults – “A lot of the projects, we work upon are time bound and the donors progress and results, and at theexpect results at once. How do we ensure that we keep the donors happy by same time set the ground for ashowing progress and at the same time set the ground for long-term paradigm long term paradigm shift?shift? Lack of focus on this will give rise to conflicts between the donor,implementer and the beneficiary.”Confidentiality vs. publicising success How to deal with conflictsHow can facilitators balance confidentiality with the need to publicize between different stakeholders? What are the most commonsuccessful cases to motivate other firms to adopt them? conflicts and what cause them?Peter Edward asks whether confidentiality is ever a major issue. “It often seemsto me that at the local level the community becomes quickly aware of how andwhy a good project is succeeding. I could imagine that on a wider perspectivethe lead firm, if it is looking to expand geographically, might want to publicise itssuccess as it enhances the firms reputation and hence supports their ability tomake the most of their first-mover advantage. I wonder if anyone has exampleseither for or contrary to my perception on this?” Is a successful lead firm likely to want to enhance its reputation by publicising this success, or is confidentiality anAvoiding taking all the credit important issue to consider? If so, how can this be dealtHow to demonstrate that lead firm’s success is not the product of the with to still allow other firms tofacilitator’s help and subsidies? hear about successful cases?Linda Jones countered this question with the suggestion that “facilitation ishelp, isn’t it?” Even when we question instead whether the lead firm’s success is“the result not of subsidies or provision of services by the facilitator, but ofindirect support (facilitation) that can be replicated by others in similarcircumstances, she argues that facilitation could still be considered as a sort ofsubsidy, in that the partnership of communities, support groups, lead firms and Is facilitation not a kind of helpproducers may not be replicable by a different lead firm and producers without in itself? And is the lead firm’sthe help of facilitators. To “mobilise communities, support group formation, success not largely down to thedevelop capacity of groups to deliver on time in the desired qualities and supportive work done by the facilitator? 11
  12. 12. quantities, and help with contract negotiation” could therefore be considered asa sort of non-financial subsidy in itself.Measuring the strength of relationshipsMarkets are constantly prone to change, whether from the effects of newpolicies, production yields, or simply changes in demand. In order to The indicators we use have anendure future market changes, how is it possible to know that the impact on capacity buildingrelationships between lead firms and marginalized producers are processesbecoming stronger?Christian Pennotti offers a suggestion based on the work done by CARE in itscountry offices: “One of the key things we are working on is to apply aframework similar to the DCED standards framework, breaking anticipatedoutcomes across three domains -womens empowerment, enterprise-level andsector-level outcomes. Were then working with teams to really think criticallyabout leading and lagging indicators of progress. So, on the leading side, a strong How to partner with lead firmsfocus is on understanding the desired knowledge, attitudinal and practice to influence policy? Producingchanges we want to see not only in producers but in those with whom they are evidence of success for government agenciesworking. This is intended to help our field teams pick up clues toward progressin strengthened relationships and also helping them think critically about how How to defuse tensions withthey can best facilitate this transition rather than intervening directly.” other firms around the use of public resources to give a fewLucho Osorio-Cortes responded requesting clarification on the meaning, and firms a competitive advantage?examples of “leading” and “lagging” indicators. He also expressed hisenthusiasm for the approach, and that the indicators are designed to detectchanges not only in “desired knowledge, attitudinal and practice changes inproducers [but also] in those with whom they are working”. He points to theinsight it provides regarding the link between the indicators of increasedownership and leadership on the side of producers and the process of becomingbetter facilitators – “The indicators we use have an impact on capacity buildingprocesses!” 12
  13. 13. Acknowledgements and creditsSpecial thanks to the following MaFI members for making this discussion possible:  Alexandra Snelgrove  Alison Griffith  Christian Pennotti  Chris Pienaar  Ekanath Khatiwada  Hannah Schiff  Kamran Niazi  Linda Jones  Luis E. (Lucho) Osorio-Cortes  Peter Edward  Sharad Rai  Discussion facilitated by Lucho Osorio  Synthesis edited by: Olivia Comberti and David Brownjohn  Graphic design: Olivia Comberti  Coordination of synthesis production: Lucho Osorio (responsible for the mistakes or omissions in this document. Corrections or comments are welcome at luis.osorio@practicalaction.org.uk)MaFIThe Market Facilitation Initiative (MaFI) is a working group of the SEEP Network with technical supportfrom Practical Action. MaFI promotes learning and peer support amongst practitioners working in thefield of inclusive market development facilitation. It also assists practitioners to move from design toimplementation by advancing principles, techniques and tools.Endnotesi http://www.slideshare.net/marketfacil/lead-firms-discussion-paper-finalii Based upon the FIELD Facilitation Working Group’s Working Paper “Cycle 1: Defining Lead Firms andPrinciples of Facilitation” (2008, page 1) as a starting point for this shortened definition.http://www.microlinks.org/ev_en.php?ID=26643_201&ID2=DO_TOPIC )iii The original SEEP webpage where this document was stored does not exist any longer. For relatedinformation about Hart’s ideas, go to http://www.brinq.com/resources/bop/criticisms-and-developmentsand www.bop-protocol.orgiv http://practicalaction.org/pmsd-relationship-matrixv http://www.oxfam.org/en/policy/think-big-go-small 13

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