Rethinking international development in a Converging World


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Although NGOs and government agencies have been able to slow some of the effects of poverty, disease and other chronic global development problems, they are nowhere near to overcoming them.
However, new research points to promise in the coming convergence of solutions among businesses as well as NGOs and governments.

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Rethinking international development in a Converging World

  1. 1. Convergence Economy: RethinkingInternational Development in aConverging WorldGib Bulloch, Peter Lacy and Chris Jurgens
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  3. 3. Contents Gib BullochIntroduction........................................................................................................................... 4 . Executive DirectorForeword................................................................................................................................. 5 . Accenture Development PartnershipsConvergence Economy: Rethinking International Developmentin a Converging World......................................................................................................... 6New definitions of “convergence”................................................................................... 8 .What’s driving convergence now..................................................................................... 10Toward the convergent value chain................................................................................. 14Convergent business models...................................................................................................................... 14Case Study: Mercy Corps and Fulwell Mill............................................................................................ 15 .Case Study: Refugees United..................................................................................................................... 17The case for convergent delivery models............................................................................................... 18Case Study: Bed nets to control malaria in Rwanda.......................................................................... 19Case Study: Barclays CARE Plan "Banking on Change"..................................................................... 21Considering convergent approaches to funding.................................................................................. 22Case Study: Fonkoze, Swiss Re and Caribbean Risk Managers Ltd................................................ 23Case Study: The Southern Agricultural Growth Corridor of Tanzania (SAGCOT)....................... 25Imagining the future............................................................................................................ 26Case Study: PATH Malaria Vaccine Initiative........................................................................................ 27Authors.................................................................................................................................... 30Acknowledgements.............................................................................................................. 31 .Specific References.............................................................................................................. 32Case Study References........................................................................................................ 33About Accenture Development Partnerships................................................................ 34 3
  4. 4. IntroductionIn 2009, Accenture Development but 78% of CEOs believe that their of our respective teams all workingPartnerships wrote its first Point companies should engage in industry at the ‘coal-face of an increasinglyof View entitled "Development collaborations and multi-stakeholder convergent economy, for their valuableCollaboration: None of our Business?". partnerships to address development perspectives on the nature of cross-It sought to share insights from goals. And while they are making sector convergence.over five years of privileged access real progress, they told us about the We hope you enjoy reading it as muchto the "engine rooms" and indeed challenges of achieving scale and real as weve enjoyed writing it. Mostboardrooms of some of the largest ‘systems solutions’. importantly we offer ‘The Convergencenon-governmental organizations Set against this backdrop, of an Economy’ as a platform for dialogue,(NGOs) in the world. The core thesis increasing reality of and desire for debate and action that catalyzescentered around the crucial role convergence amongst both our real impact through accelerating thethat international NGOs had to play development sector and commercial alignment of global market forces andin influencing and channeling the clients, we felt it was time to stretch international development.latent power of the private sector this thinking further, and also totowards improved development create our first collaborative pointoutcomes. Success would require of view. We are witnessing a moretransformational change however; profound discontinuity which goesin strategy, organization and in beyond collaboration to convergence;governance. Collaboration would a convergence of issues, of interestsbe core to success. The ensuing and therefore by necessity, ofglobal credit crisis has acted as a solutions. The world of developmentcatalyst for these trends and an is changing dramatically and the nextopportunity for bold leadership decade will be quite different fromto accelerate transformational the last. The new paper "Convergencechange within the sector. Economy: Rethinking InternationalIn parallel, Accenture Sustainability Development in a ConvergingServices embarked upon an important World" is an attempt to share some Gib Bullochstudy for the United Nations, of the learnings from Accenturepartnering with the Global Compact Development Partnerships combined Managing Director, Accentureto conduct the world’s largest study with the experience of Accentures Development Partnershipsof global CEOs on their attitudes to commercial practice, particularlysocial, environmental and governance within Sustainability Services, but alsoissues – “A New Era of Sustainability”. elsewhere across our business, acrossThe study found that more than 766 our recent work operating increasinglyglobal business leaders across 25 at the nexus of the sectors;industries and 100 countries believe public, private and civil society.aligning business strategies, operations We dont pretend to have all theand supply chains with sustainable answers. But it is an attempt to builddevelopment outcomes was not only on our own project experience, on in-desirable from a societal perspective, depth client interviews, and on otherbut also increasingly a business Accenture research, to imagine a veryimperative. More than 93% of CEOs different future for development. Atold us that they believe sustainability future where silos give way to systems,will be important or very important to competency trumps incumbency and Peter Lacythe future success of their business. markets matter more than historical orEven more importantly, from the Managing Director, Accenture outdated mandates.perspective of the ‘Convergence Sustainability ServicesEconomy’, they believe cross- We are very grateful for all the support weve had from many Europe, Middle East, Africa and Latinsector collaboration is essential to clients during the interview process. Americaachieving their business objectivesand sustainability goals. Not only has Also, we would like to give a hugethe number of companies engaged thank you to our co-author, Chrisin multi-stakeholder partnerships Jurgens who is Director of Globalaround development issues risen Programs for Accenture Developmentby nearly 50% between 2007-10, Partnerships, as well as other members4
  5. 5. ForewordThis new paper by Accenture governance institutions that combineDevelopment Partnerships focuses a hybrid of commercial, public andon two important trends in the field philanthropic resources and interests –of international development that what Accenture describes in thishave been gathering momentum paper as ‘cross-sector convergence’.over the past decade. First, the These trends are still at a relativelyincreasingly strategic engagement early stage. The jury is out onof corporations in helping to address whether they will become mainstreamcomplex development challenges in approaches and whether they canways that harness their core business scale. They call for new ways ofcompetencies, skills and interests and thinking and operating that crossthat explicitly aim to create value traditional organizational, functionalfor both shareholders and society. and sector boundaries. They call for Jane NelsonSecond, is the emergence of multi- rigorous analysis and evaluation on Director, Corporate Responsbilitystakeholder alliances between for- what works and what does not. And Initiativeprofit companies, social enterprises, they call for increased dialogue andnon-governmental organizations shared learning between leaders Kennedy School of Government,(NGOs), foundations, public donors from different sectors. Drawing on Harvardand governments that are moving examples from some of the world’sbeyond one-to-one project-based leading corporations and NGOs, thiscollaboration to deliver solutions at a paper makes a useful contribution tomore systemic level within particular the dialogue and captures the spirit ofdevelopment sectors and/or particular innovation that is needed to tackle thelocations. In some cases these complex development problems thatalliances are leading to the creation the world faces.of totally new business, financing and Jane Nelsondelivery models or new 5
  6. 6. Convergence Economy: RethinkingInternational Development in aConverging WorldAlthough NGOs and government agencies have beenable to slow some of the effects of poverty, diseaseand other chronic global development challenges, theyare nowhere near overcoming them. However, newresearch points to promise in the coming convergenceof solutions among businesses as well as NGOs andgovernments. Already there are positive signs ofcollaboration that spans sectors. Here’s what cross-sector convergence could look like—and why it must beconsidered as part of a portfolio of responses.Will we ever be able to eradicate that recognizes convergence, not Later in this paper, we’ll give a detailedmalaria? Can humankind make a real just cooperation among NGOs, the definition of convergence as wedent in childhood malnutrition or in private sector, government agencies and our international developmentgender inequities in primary schools and others involved in international partners think of it. For now, suffice itworldwide? Is it realistic to expect that development. Already organizations to say that it refers to the alignmentmost people on the planet will have such as Barclays, Care and Plan are of issues, interests and thereforeaccess to clean water within the life working together on a large-scale local solutions across all sectors. It isspans of those alive today? community finance project that aims becoming apparent in the new forms to reach 300,000 to 500,000 people of business-NGO collaboration nowNot if we have only our present across Africa, Asia and South America. in play. And it is relevant to largesolutions and structures to rely upon. complex development issues—fromThat’s the blunt answer to these Put simply, Accenture Development childhood malnutrition to access toand many similar questions about Partnerships anticipates a cross- medicines or primary education—international development. Entrenched sector convergence of solutions to that are treated largely as isolatedproblems such as these—and let’s development problems—an approach problems today.label them problems, not challenges, that puts the needs of those mostbecause that’s exactly what they are affected squarely at the heart of As Accenture Developmentto those who must endure them day the matter. Whereas cooperation Partnerships sees it, cross-sectorafter day—have long resisted the very among development partners to convergence will be entirely inclusivebest efforts of the most able non- date has been largely episodic and of business, and the presence ofgovernmental organizations (NGOs) event-driven, convergence implies corporations will be its most visibleand the most committed governments constant shared commitment with sign. Of course, that in no way impliesand development agencies. recognized “wins” for all parties. But that the private sector somehow what best characterizes such cross- knows best. However, NGOs and theThese hard truths have been exposed sector convergence is that it is not public sector would now be wise toin surveys, interviews and focus groups constrained by the original structures apply the leverage that the for-profitconducted recently by Accenture and behaviors of the organizations sector can bring to global developmentand its partners in the international that have the resources to help. problems. Fully 53 global businessesdevelopment community. Collectively, today have revenues so large that theythe findings point to another way could be ranked among the world’sto address these problems—a way6
  7. 7. ‘We need to know priorities, and have clear objectives—in that way the advantages will outweigh the disadvantages.’‘The best way to understand the future is to shape it.‘Most of the time the term‘partnership’ was theoretical and didn’t actually work in reality. Now is the time for action.’top 100 economies. Procter & Gamble the Fortune Global 100 in 2010— And among business leaders, there ishas almost four billion customers on a gives us a valuable vantage point a clear sense that their sectors haveplanet of less than seven billion—and for our convergence perspective. a duty—as well as an opportunity—toclaims that it will add another billion Our Sustainability Services practice make a the next decade. That is influence. recently teamed up with the United So the question for leaders in business,That is reach. Nations (UN) Global Compact to in NGOs and in government offices poll more than 750 chief executivesTo be clear: Convergence is not the is about how best their organizations worldwide on the outlook for“silver bullet” and it is not a revolution. can open up to new approaches to sustainable performance in emergingIt is an emerging option. Development entrenched development challenges. markets. And Accenture Developmentproblems are so complex, so large, This paper frames our point of view Partnerships—chiefly serving NGOs—so persistent, so fluid that they in ways that we hope spark fresh has hosted workshops and ledrequire a wide range of approaches. debate and action. We welcome interviews with a wide range of globalSo while we believe that in many thoughtful critiques—and we urge development leaders from non-profit,cases, convergent models will bring readers to share their ideas with us public and private sectors as well asthe desired outcomes more quickly, in and with others in the international from academia.more scalable and more sustainable development community.ways than has been possible with The collective results of our researchhistoric aid-driven approaches, those show that just as the for-profit worldtraditional approaches will endure is being pushed and pulled by thebecause they will continue to play forces of globalization, so the world ofvital roles. NGOs will still do essential international development is changingcommunity-based work; organizations quickly, and for the better. There issuch as UNICEF will still lead the a growing realization among non-charge on humanitarian relief. profits that new answers are required to combat today’s most intractableWe believe that Accenture’s problems. There is greater willingnessextensive work with both for-profit to relinquish rigid developmentand non-profit organizations—our approaches that have their originscommercial practice served 93 of in the years following World War II. 7
  8. 8. New definitions of “convergence”Figure 1: World Economic Forum: Risks Interconnection Map 2011Copyright World Economic’s start with what development Convergent solutions will not have entrenched those mindsets are. (For theconvergence is not. It does not refer to neat straight lines around them with record, the UN has begun investigatingbasic partnerships between, say, NGOs clearly defined organizational and a more integrated approach toand businesses—occasional cooperation sector boundaries. Accenture sees presenting and pursuing the MDGs.)or arm’s-length agreements—or an opportunity for more complex The World Economic Forum usesthe more usual types of funding of forms of collaboration that involve a global risk map to highlight thedevelopment initiatives by government multi-stakeholder coalitions and that systemic nature of challenges facingagencies (recognizing that there are not seek to affect systemic change on our planet today (See Figure 1.)really standard funding approaches). wide-ranging issues. It’s important toIt is absolutely not about short-term, note that convergent solutions willone-off projects and programs. be anchored in two prerequisites: Convergence of interests convergence of issues, and convergence Convergence of interests refers toAccenture defines convergence, in the of interests. Each is worth a closer look. the growing number of scenarios incontext of global development, as the which what’s good for NGOs turnsconvergence of issues and interests and,most importantly, of solutions, with an Convergence of issues out to be good for business and vice versa—the opposite of the conventionalunwavering emphasis on the outputs Convergence of issues refers to wisdom that says that the objectivesand impact rather than on organization the many instances where global of businesses and NGOs are often atstructures and long-established development problems are not easily odds. For instance, General Electricand often stereotypical roles. defined, let alone dealt with in isolation and Vodafone have discovered that from one another. For instance, diseaseConvergence of solutions means that the process of tackling emerging- prevention has clear links to lack ofall participants pivot continually market challenges such as healthcare access to education and to clean wateraround the same sets of requirements or access to finance can become an and sanitation. When issues are soof those in need. Those living in poor invaluable source of innovation. Both tightly interconnected, it is especiallycommunities clearly do care about companies are actively looking to bring difficult to try to resolve them usingobtaining access to clean water, health the learnings and innovation from their conventional approaches rooted incare, and education – but exactly how emerging-market solutions back into siloed mindsets. The very fact that thethese services are delivered and paid traditional Western markets. Many UN’s Millennium Development Goalsfor makes little difference, provided others are doing the same. (MDGs) themselves are discrete ratherthe services meet the needs of the than systemic gives a clue to howcommunities themselves.8
  9. 9. Convergence of interests is already partner or partners that have the best ‘There needs to becoming to light in the many early capabilities for delivering, regardless ofexamples of cross-sector convergence sector, tax status or brand. an understandingwhere roles of and boundaries of responsibility andbetween public, private and non- Convergence of solutions expectations—for us it’sprofit sectors become less distinct. Convergence of solutions also means not just about challengingIt will lead to a renegotiation of a higher premium will be placed onroles and responsibilities across collaboration among parties, not only resources but rolling ourvalue chains and ecosystems—afundamental recalibration of among agreement-bound partners sleeves up and getting our but among a wide range of potentialglobal development systems. contributors throughout a development hands dirty and getting That does not mean that cooperative “ecosystem.” It will also shine a light on involved fully.’ agreements and familiar business- the distinctive competencies of each NGO partnerships will have no place player, forcing a re-examination of who ‘If you think modus operandi is in tomorrow’s global development does what best—again, with the best bringing funding, then you are landscape. In practice, they will outcomes in mind. At root, it is about occupy one aspect of a spectrum the alignment of business opportunity removing 75% of the value of approaches, while, cross-sector with positive social, economic or you could bring to the table.’ convergence characterized by new environmental impacts on development. convergent value chains that involve We also characterize convergent“mix and match” delivery and hybrid approaches as sustainable and funding models will occupy another. scalable—providing solutions that are maintained over time and notAccenture Development Partnerships dependent on any one funding source.believes that tomorrow’s convergent Those solutions may harness theapproaches will share several power of market forces. Althoughattributes. To begin with, they will the solutions may become quitebe organizationally agnostic, always complex—and will often involveputting output before input. So they considerable customization—they willwill first evaluate what outcomes become scalable when they have beenare required, and then identify the developed and proven systemically. 9
  10. 10. What’s driving convergence nowFigure 2: Almost all CEOs believe that sustainability issues should be part of ‘NGOs often view peertheir organizations’ strategies in future organizations that engage Very Important Important the private sector with a mixOverall 54% 39% 93% of disdain (for potentially selling out on mission) andAsia Pacific 57% 41% 98% envy (for gaining access toLatin America 78% 19% 97% the private sector’s resources). The question is always—“HowAfrica 97% 60% 37% tainted is the money?....HowEurope 48% 45% 93% close is the smoking gun?”’North America 59% 31% 90% ‘We need to focus on outcomes over organisationalMiddle East & North Africa 22% 57% 79% parochialness.’Source: United Nations Global Compact CEO Survey 2010 (based on 766 completed responses)If ever there was any doubt that Considering cross-sector of talent, and sources of politicalconventional development approaches convergence as one important new stability—or turbulence. Accenture’sstruggle to respond to the world’s category of response, it’s worth 2010 report—“Africa: The new frontierbig problems, it was dispelled in examining what is driving the for growth”—gives a glimpse of this.September 2010, at the 10-year trend. Here is what we’ve found. In aggregate, African nations havecheckpoint for the UN’s Millennium seen a sharp increase in economicDevelopment Goals (MDGs). Although The rising power of performance, with their combined GDPmany East Asian nations have growing by an average of 6 percentsucceeded in meeting and in some the emerging-market between 2002 and 2008, makingcases even exceeding their MDGs, consumer. Africa the world’s second fastest-the shortfalls across parts of Africa, growing region. Businesses have woken up to the factSouth Asia and elsewhere—especially that what they once deemed social isin countries wracked by conflict—are now strategic to their organizations. People are alreadynothing short of tragic. Not only do they understand that rethinking capitalism.This is not the place to dwell on facts there is money to be made in doing Capitalism 4.0, by Anatole Kaletsky,about aid budgets being frozen and good, but they see long-term makes the point that capitalism’sresources being trimmed. We know value in presenting themselves as strength is ultimately about itsenough about the broken promises exemplary corporate citizens in adaptability. Kaletsky describes threeof the G8 summit in Gleneagles in terms of social responsibility. waves of capitalism, as defined by2005, and about the impact of the With the rise of the multi-polar the tension between government-recent financial crisis on international world—a world defined by multiple led economies and market-led ones.development budgets. Similarly, centers of economic activity in which In the 19th century, the two wereone doesn’t need to look far for emerging markets possess increasing distinct; right up to the 1980s,statistics that confirm the prevalence geopolitical and economic clout—it notes Kaletsky, the idea was thatof diseases such as malaria or the becomes clear that those at what has the government knew best. Frompersistence of poverty worldwide. been called “the base of the pyramid” the 1980s onward, the prevailingThese are reasons enough to think in emerging nations represent sentiment was an almost religiousanew about how society can respond. powerful mass markets, sources belief in the power of markets in every10
  11. 11. part of society—often at the expense expense of the community—business Changing role for NGOs asof government. The recent recession leaders need to believe that creatingproved that thinking to be flawed. societal benefit is a powerful way they warm to business. to create economic value for the It has become increasingly clear thatNow, Kaletsky argues, there is room firm. Many examples are emerging if society is to make real progressfor a new version of capitalism—a that demonstrate that there doesn’t in the next decade and beyond, themore pragmatic form that is guided have to be a trade off between profit development community must harnessby needs and capabilities. In this and societal value. Porter continues the latent socioeconomic power ofcontext, convergence is a pragmatic, that companies are starting to business. “The role of the privateoutcome-based trend that breaks understand that when they think sector is increasingly importantdown preconceptions about which about the environment for example— for humanitarian assistance,”sector “should” deliver development they reduce energy consumption noted António Guterres, UN Highgoals and replaces it with which sector and travel—and make more profits. Commissioner for Refugees. “Lending“could” best deliver those outcomes. Also that products don’t need to be their knowledge and expertise…Coincidentally, Harvard Business contrived. Food products that are is crucial as many of these projectsSchool professor Michael Porter has nutritionally good and environmentally would otherwise be outside of ourspoken out recently on the topic good are what consumers want—and reach.” Adds Barbara Stocking,in his “principle of shared value”–a that again leads to more profits. Oxfam’s chief executive: “Businessesterm brought to the forefront by FSG are starting to consider how they Framed in this context, convergenceSocial Impact Advisors. In Porter’s source their produce to have an impact is not only about a new era ofmost recent article-Creating Shared on the lives of people living in poverty. development; it is also a new,Value: How to reinvent capitalism—and New ethical business models which pragmatic trend toward sharedunleash a wave of innovation and incorporate marginalized farmers are value in capitalism as a whole.growth–he expands this principle– an exciting step forward and a solution This perspective breaks downasserting that to create shared value, that can bring business benefits too.” preconceptions about whichwe need to think differently—and that She cites Unilever as among the first sector should deliver developmentultimately what’s good for society global food manufacturers to make a goals and replaces it with ideasis actually also good for business. commitment on this scale. about which sector can bestInstead of assuming that making a deliver development outcomes.profit is all that matters—often at the 11
  12. 12. Figure 3: Nearly 60 percent of CEOs view consumers as the most important ‘It’s about playing to yourinfluencers of their organizations’ approaches to sustainability strengths—each sectorOver the next five years, which stakeholder groups do you believe willhave the greatest impact on the way you manage societal expectations? bringing something to theRespondents identifying each factor in their top three choices table. Business can bring 58% capital and knowledge onConsumers 50% how to shape things in aEmployees 39% 45% commercially viable way.’Governments 32% 39% ‘This will be a journey ofCommunities 28% education—showing examples 29% 26% of successful projects as wellRegulators 25% as demonstrating that brandMedia 25% 24% recognition is so much higherInvestment 22% in emerging markets thancommunity 19% expected.’ 15%Suppliers 5% 15%NGOs 27% 14%Boards 16%Organized 7%labor 7% 6%Other 4% 2010 2007Source: United Nations Global Compact CEO Survey 2010 (based on 766 completed responses). 2007 data fromMcKinsey UN Global Compact survey.In 2010, only 15 percent of CEOs Business leaders “get it” The same study shows that 78 percentpolled in our UNGC study identified of CEOs believe their companies shouldNGOs as a key stakeholder in terms and are getting involved. engage in industry collaborations andof influencing their approach to There is now plenty of evidence multi-stakeholder partnerships tosustainability, compared to 27 percent that today’s captains of industry are address development 2007. (See Figure 3.) This may keen to understand fully the broader That confirms the gradual shiftpoint to the fact that NGOs are no impacts of their businesses, both away from the purely philanthropiclonger setting the agenda in terms of good and bad. For instance, nearly narrative hitherto typical of business.policy and issues, or that the degree four-fifths of the CEOs polled in Interestingly—and importantly—CEOsof pressure that they are exerting the Accenture-UN Global Compact in emerging nations are even moreon business is beginning to wane. survey indicated that collaboration is convinced of the need for convergenceBut our conversations with CEOs the only way in which they can keep and tackling sustainability issuestell a different story. Indeed, they their sustainability commitments. than are their developed-worldindicated that although NGOs may Certainly, most attuned CEOs now counterparts. Those corporate chiefshave shifted their tone and strategy have a sense of the carbon footprints are particularly affected by theover recent years, they remain an of their business operations and are proximity of sustainable developmentimportant and influential player. taking steps to reduce them. More challenges—in other words, many ofThrough our discussions, we have seen progressive businesses are also trying the most pressing development issuesexamples of NGOs partnering and to understand their “water footprints” are right in their backyards.collaborating with business to achieve or even their “poverty footprints”—aspecific, local development objectives,part of a wider shift from NGOs as term developed by Oxfam. Socioeconomic metricspressure groups to delivery partners. Fully 93 percent of the chief are a reality.In addition, some 78% of CEOs told executives polled in the recent Accenture-UN Global Compact study Some for-profit organizations areus that they believed their company say they believe that sustainability dropping quarterly earnings guidanceshould engage in multi-stakeholder issues should be fully embedded within to the investment market in favor ofpartnerships to address development their strategies and core businesses in a focus on long-term performance.goals—although there is currently the future. (See Figure 2.) That’s what Paul Polman, chiefa performance gap that varies by executive of Unilever, did not longindustry. (See figure 4.) after joining the company. Non-profits12
  13. 13. Figure 4: 78% of CEOs believe that their company should engage in ‘If there is no conflict ofmulti-stakeholder partnerships to address development goals. However,this ambition isn’t being met and varies by industry interests the partnership can be done very well. The majorPerformance Gaps between ‘companies should’ and ‘my company does’engage in multi-stakeholder partnerships to address development goals. problems come when the% Respondents who ‘Agree’ or ‘Strongly agree’ Performance Deltas private sector organisation is 78% merely trying to promote theirOverall -14% 64% 86% own products and/or haveAutomotive -29% 57% alternative agendas to the 83%Banking 68% -15% NGO.’ 83%Health & life sciences -12% 71%Communications 59% 81% -22% ‘NGOs are often worried aboutUtilities 80% -4% ‘selling their soul’ – but they 76%Professional Services 79% -9% also recognize their own 70% 79% limitations in that they areEnergy -5% 74% not known for performance- 79%Metals & Mining 66% -13% focused delivery. NGOsInfrastructure & transportation 66% 76% -10% may find themselves moreIndustrial equipment 45% 76% -31% acceptable in governmentConsumer Goods & services 64% 75% -11% situations if business is also atElectronics & high-tech 72% -13% the table.’ 59% 71%Chemicals -4% 67% Should Doesare active too. Oxfam has developed Technology is enabling Agricultural Commodity Exchange hasa comprehensive methodology for linked up with Safaricom, the country’smeasuring the positive and negative new collaborations. largest cell phone provider, to equipsocioeconomic impacts of the broader The proliferation of collaborative farmers with up-to-date commoditybusiness operations of a number of software, the growing popularity market prices over their phones. Themultinationals. The methodology of cloud computing (think Google’s GSMA Development Fund—affiliatedcame out of Oxfam’s and Unilever’s Gmail service), and the surge of with the GSMA, a trade group for theseminal study of 2003, which smartphone sales all help make it worldwide mobile communicationshighlighted just what enormous power easier for organizations of every industry—leverages the expertise ofbusinesses can have, not by exercising type to work with one another. New its members to accelerate mobiletheir corporate social responsibility communications channels and media— solutions for people living on under(CSR) budgets but by leveraging tools such as Cisco’s Telepresence US$2 per day.their core business operations. videoconferencing system—are becoming more affordable. Some,Citizens want such as Skype and Google’s video chatsustainability. service, are free.Citizens are consumers and employees At the same time, e-learningtoo. The Accenture-UN Global is transforming education. ItCompact CEO study found that 58 is expanding the capacity andpercent of CEOs cite consumers as the effectiveness of teachers, opening upmost important stakeholder group that access for hard-to-reach communities,will affect the way that business will and enabling simultaneous modes ofmanage societal expectations. (See education. Mobile phone technology isFigure 3.) CSR is not just an agenda arguably the most important enablingitem in the West; it is on the rise factor in e-learning. Globally, theas consumer demand in developed number of mobile phone subscriberscountries seeks more sustainable and has increased dramatically. In Kenyavalue-driven approaches. Businesses alone, the number of mobile phoneare responding accordingly. subscribers increased by 300 percent between 1999 and 2007. The Kenyan 13
  14. 14. Toward the convergent value chainFigure 5: Cross Sector Convergence Sector Axis Industry/Thematic AxisFrom “Issue” To “Outcome” Supply Comms & R&D Operations Chain Marketing Resource Field Monitoring & Advocacy Mobilisation Programmes Evaluation Service Social Policy & Reg Treasury Delivery Security Private Sector Third Sector Public SectorConvergent business be autonomous, standalone entities or encourage social business initiatives. they may reside or be incubated inside This financial tool was launched inmodels another organization and operate December 2007 with a clear mandateSo if we assume that convergence of semi-autonomously within a broader to expand Danone Foods by buildingsolutions has a place in the portfolio governance structure. additional plants in Bangladesh, toof tomorrow’s development responses, support social business consistent There are already quite a fewwhat exactly will convergent with Danone’s mission, and to expand examples of these models. The bestdevelopment organizations look like? the fund’s support community. and most celebrated are the “socialIn the future we are likely to see a new businesses” created by Muhammad The convergent business modelsbreed of organization that doesn’t fit Yunus’s Grameen organization in can be initiated by for-profitneatly into the standard descriptors conjunction with multinationals such organizations (Danone’s Riboud wasused in the private, public or non- as Danone, Adidas and BASF. Grameen certainly a prime mover) but theyprofit sectors. These will be hybrids— Danone Foods has placed social are not exclusively a private sectororganizations that have some of the and environmental concerns at the phenomenon. For instance, Mercyattributes of each or all. Their leaders heart of its business model. Its first Corps recently spearheaded the launchwill think and act in terms of a hybrid offering was a dairy product aimed of a fair trade raisin-growing andvalue chain—a flexible model in which at combating infant malnutrition export business in Afghanistan. (Seedifferent participants play different in Bangladesh. Launching the new page 15.) The non-profit partneredroles at different times, according to venture in 2006, Franck Riboud, with British food producer Fullwell Millthe recipients’ needs and according to Chairman and CEO of Groupe DANONE, and received funding from USAID towhich entity has the necessary mix of commented: “Im deeply convinced set up an unusual partnership withskills and resources. that our future relies on our ability a regional Afghan raisin producing to explore and invent new business association. For its part, Fullwell Mill,The convergent development models models and new types of business a niche company, sees the venture as awill resemble conventional social corporations.” strategic opportunity to succeed amidenterprises but they may or may not many far larger players. Customersbe profit-making; however, they are Since then, Danone and Grameen such as Community Foods, a Britishvery unlikely to be profit-maximizing. have gone on to set up a social supplier of natural and organic driedThey will combine a market orientation innovation fund with a target food, have agreed to buy the Afghanwith a broader social impact. They may value of €100 million, designed to raisins this year and next.14
  15. 15. Mercy Corps and Fulwell MillConvergence Project Type Convergent Business ModelIndustry AgricultureAbout Mercy Corps has launched a raisin export business model in Afghanistan in an effort to bring the practices and profits of the fair-trade movement to Afghanistan, a country now synonymous with conflict and war. Since 2001, Afghanistan has re-entered the global market for raisin production, with output hovering at 25,000 to 30,000 metric tons annually for the past several years. The country now accounts for 3 percent of the world’s raisin production, with the biggest producers — the United States, Turkey, China, and Iran — collectively supplying roughly three-quarters of the world’s consumption. With competition stiff and Afghanistan still struggling to recover from the destruction of war, farmers have been hard-pressed to sell their goods any farther away than Pakistan, leaving them at the mercy of local markets — and local prices. So Mercy Corps and Fullwell Mill set out to change that with a new model of delivery. The Parwan Raisin Producers Cooperative (PRPC), a network of farmers formed by Mercy Corps, has begun working with Fulwell Mill—a niche food supplier based in the UK—to provide Fairtrade-labeled raisins to British consumers. Following a process of due-diligence and consideration, the Fairtrade Labeling Organizations International (FLO) chose not to send staff to war-torn Afghanistan. To earn an exceptional form of Fairtrade status, the farmers and the NGO-led team had to provide detailed product information and undertake intense negotiations. The raisins—25 metric tons of them this year—will be the only Afghan Fairtrade item sold in the UK. The effort, which includes two months of technical training each year for the 300 Parwan farmers in the program, is part of a three-year, $2 million Mercy Corps program started in June 2008 with financing from the U.S. Agency for International Development.Business Rationale New markets: Accessibility to global markets for local farmers; opportunity to benefit from Fairtrade certificationDevelopment Impact MDG 8: Develop a Global Partnership for DevelopmentGeographic Scope Afghanistan 15
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  17. 17. Refugees UnitedConvergence Project Type Convergent Business ModelIndustry TelecomsAbout Ericsson, UNHCR & Clinton Foundation have worked together to create a service that reunites refugees via mobile phone technology. In support of the hundreds of thousands of refugees who have fled from conflict and disaster areas, Ericsson and Refugees United, in partnership with the United Nations High Commissioner for Refugees (UNHCR) and mobile operator MTN in Uganda, have launched the first project to locate and reconnect refugee and IDP (Internally Displaced Persons) families (displaced by war, persecution or natural disasters), through the innovative use of mobile phones and internet. The innovative system allows people with even the most basic of handsets to quickly register their details via SMS, and be matched up with those looking for them. The program enables refugees to use mobile phones to register themselves, search for loved ones and connect via an anonymous database. It is estimated that 36 million refugees globally could benefit from this service, which is being piloted in Uganda with plans to roll out elsewhere. At present more than 4,500 refugees have registered, a considerably higher number than possible with traditional methods.Business Rationale New MarketsDevelopment Impact MDG 8: Develop a Global Partnership for DevelopmentGeographic Scope Uganda (pilot scheme) 17
  18. 18. The case for convergent to leverage their assets more fully. thinking about what constitutes (See “Development Collaboration: a value chain and where it mightdelivery models None of Our Business?” 2009.) In the apply. So, for example, an NGOConvergent value chains will involve case of international development, might use one value chain to addressdelivery models that break with however, the alliance will span not malnutrition issues in a particularthe NGO convention of delivering just organizations but sectors. geography and another in the sameservices using their own resources. geography to tackle deficiencies in Specifically, convergence will seeEven when non-profits partner with primary-level education. The issues more NGOs actively seeking tobusinesses—companies that may would remain the same, but there harness the technology, logisticsbe quite used to outsourcing non- would be different goals, different expertise, skills, competencies, people,core parts of their operations—the partners and different outcomes. and scale of partners from otherbusinesses usually assume that the sectors—particularly the private In other situations, re-evaluationnon-profits will be the organizations sector. Just as many corporations have of the delivery model may involvethat directly “touch” those in need. disaggregated their “value chains”— more use of local resources than hasBut these days, NGOs—and breaking with vertical industry been typical previously. In Rwanda,government agencies, for that models and outsourcing the parts for instance, the partnership amongmatter—may not be the best at of their businesses that are not core the Heineken Africa Foundation,managing the necessary delivery competencies—so NGOs may need to Bayer Environmental Science (ES),channels. It’s well documented that follow suit. After all, the typical NGO’s the Rwandan Ministry of Health,Wal-Mart was far more effective advocacy work calls for very different BRALIRWA brewery, and Rwandanin its response to the devastation skills and resources than does its on- textile manufacturer Utexrwawrought by Hurricane Katrina than the-ground, in-country relief work. responded to a need for bed nets inwas the US or state government. Rwanda with a sustainable, locally Convergence forces all participants sourced solution. The Heineken AfricaSo there is a strong case for NGOs to challenge conventional wisdom Foundation purchased 140,000 bedto think in terms of the airline about the value chain—to think about nets over three years and also helpedalliance model, where, rather than disassembling the elements of the Utexrwa to invest in equipmenthaving many airlines’ planes flying chain and re-assembling them with for infusion of insecticides into thepartially empty to and from the same non-traditional components and netting material. (See page 19.)points, the airlines work together contributors. It even calls for fresh18
  19. 19. Bed nets to control malaria in RwandaConvergence Project Type Convergent Delivery ModelIndustry HealthcareAbout The partnership among the Heineken Africa Foundation, Bayer Environmental Science (ES), the Rwandan Ministry of Health, BRALIRWA brewery and Rwandan textile manufacturer Utexrwa responded to a need for bed nets in Rwanda with a sustainable, locally-sourced solution. The Heineken Africa Foundation purchased 140,000 bed nets over a period of three years as well as helping Utexrwa to invest in equipment for impregnation of insecticides into the netting material. Before the partnership began, all antimalaria bed nets in Rwanda were produced in other countries. The partners focused on transferring technical knowledge to the only textile manufacturer in Rwanda, Utexrwa, so that the company could produce World Health Organization-approved, long-lasting insecticide-treated bed nets within the UN’s country. Heineken brought more than 50 years of experience working in Rwanda, along with seed funding for the project, while Bayer ES contributed its knowledge of pesticide production and bed net treatment, as well as carrying out quality control activities. The current program is expected to generate up to 150 new jobs for Rwandans in the near term. Following a plan to scale up production to 4.5 million nets per year, the enterprise is expected to employ 1,000 people. Heineken contributed its knowledge of Rwandan business and government and its beverage distribution networks-which will be used to distribute bed nets as they are produced. Bayer ES meanwhile put its core competence in pesticide manufacturing and bed net treatment to use in order to build local capacity.Business Rationale Fighting disease, creating jobs, local capacity building, extending links with Rwandan business and government.Development Impact MDG 6: Combat HIV/AIDS, malaria, and other diseases MDG 8: Develop a Global Partnership for DevelopmentGeographic Scope Rwanda 19
  20. 20. From Uganda comes another excellent Indeed, convergence may demandexample. There, communications- some topsy-turvy thinking aboutequipment maker Ericsson, the UN’s efficiencies. Coca-Cola is a case inHigh Commission for Refugees point. A paragon of high-volume(UNHCR), and the Clinton Foundation efficiency, Coke and its bottlershave teamed up to create a service might be expected to set up largethat reunites refugees via mobile warehouses to achieve economies ofphone technology. Working with the scale when entering new markets. ButNGO Refugees United and with mobile Coke went in the opposite direction—operator MTN in Uganda, the partners and is significantly burnishing itslaunched the venture in September CSR credentials as a result.2010. It has been strikingly successful: In nations such as Tanzania andMore than 4,500 refugees have Ethiopia, Coca-Cola SABCO, one ofregistered, a far higher number than Coke’s largest bottlers in Africa (it ispossible with traditional methods. It 20 percent owned by Coca-Cola), usesis now being extended to Congolese micro distribution centers (MDCs) tocamps in western Uganda—with more distribute its products. Collectively,than 70,000 women and children—and the MDCs employ tens of thousands ofDadaab camp in Kenya—the world’s women entrepreneurs to disseminatelargest refugee camp, with more products. The MDC approach has beenthan 500,000 people. (See page 17.) validated by the UN’s call to actionNGOs are not the only entities that to empower young women—arguablymay need to rethink their delivery the most effective developmentmodels. The private sector may intervention that can be made. Thefind value in engaging NGOs— effort is in no way peripheral tobeyond the usual arm’s-length Coke’s business; the beverage makeragreements managed through the expects that the MDCs will soonCSR department—to reach new account for a sizable proportion ofconsumers in emerging markets. its product distribution in Africa.20
  21. 21. Barclays CARE Plan ‘Banking on Change’Convergence Project Type Convergent Delivery ModelIndustry BankingAbout Barclays, CARE International and Plan International are working together on an initiative to extend and develop access to basic financial services to people across Africa, Asia and South America. This ‘Banking on Change’ partnership consists of microfinance projects which support the creation and development of savings and loans groups managed by local communities themselves. The programme focuses on meeting the needs of populations who are excluded from or have limited access to formal or informal financial services through development of new add- on services (such as enterprise training) and improvement of existing savings-led community finance methodology. Barclays is investing £10m in Community-based Finance over three years to work with Plan and CARE to reach up to 400 000 new clients in eleven countries. The Accenture Development Partnerships team was asked to help set up the three-way partnership, which included drafting the three year strategy for the Initiative, establishing the governance and management structures, developing the Monitoring & Evaluation approach, the learning approach and implementation plan for the initiative. The program leads the way in cross-sector partnerships by moving away from the standard donor-charity relationship. Each organization takes an active role in the partnership at the global level and within the project countries. As a global financial institution, Barclays supports the program by increasing access to banking products and services. As non-governmental organizations specializing in developmental projects, CARE and Plan contribute to the partnership through their extensive experience in community finance and their knowledge of local communities.Business Rationale New markets – reaching customers who were previously ‘unbanked’ Research opportunities – ways of linking the formal and informal financial sectors Intellectual Property - the partnership continuously identifies and tests improvements to the community finance methodology to maximize the potential of savings-led community financeDevelopment Impact MDG 8: Develop a Global Partnership for DevelopmentGeographic Scope Africa, Asia and South America With the exception of Peru (which is listed as “high”), each country has been listed as “low” or “medium” on the UNDP 2010 Human Development Index ranking and CARE is leading projects in Uganda, Mozambique, Vietnam and Peru whilst Plan is leading projects in Tanzania, Zambia, and Indonesia. In Kenya, Ghana and Egypt their field offices are working collaboratively to implement projects and share knowledge and resources. 21
  22. 22. Figure 6: Convergence Economy - Possible Future StateFrom “Issue” To “Outcome” Private Sector Third Sector Public SectorConsidering convergent Already there are signs that donors are There’s another powerful example increasingly willing to fund innovation of hybrid funding models at work.approaches to funding in the development sector. One of the The PATH Malaria Vaccine InitiativeIn the same way, funding models most visible and oft-cited examples (MVI) is a global program establishedare starting to shift. The traditional is M-PESA, the mobile-phone-based at PATH in 1999 with a vision of a(or more regular) approach has seen money transfer service operated world free from malaria. The program,donors funding non-profits that by Safaricom in Kenya. Initially backed by the Bill & Melinda Gatesare then tasked with delivering on sponsored by the UK’s Department Foundation, is currently active in sevendevelopment programs. Conventionally, for International Development (DFID), African nations: Burkina Faso, Gabon,NGOs write proposals to solicit grants M-PESA has been a huge success Ghana, Kenya, Malawi, Mozambique,from bodies such as The Wellcome in Kenya. Versions of the service and Tanzania. (See page 27.)Trust and the Ford Foundation. Public have been rolled out in Tanzania andfunding can play a role, although the South Africa and are being plannedline is drawn at public funds that could as far afield as India and Egypt. Todaybenefit private businesses. there is healthy competition between operators.These paradigms are now being re-examined. A whole school of thought DFID is now forging closer linksis emerging around social investment; with the private sector. Its Businessthe concept of a “social stock market,” Innovation Facility, launched in Marchwhere investors fund companies and 2010, is intended to strengthenventures that support the causes partnerships between DFID and thethey believe in, has been voiced by private sector. The objective is to takemicrofinance pioneer Muhammad advantage of market opportunities inYunus, among others. We contend that developing countries and to make theNGOs need to develop something of most of the transformational impacta venture capital mentality, viewing of business by including the poor asfunding as investment rather than consumers, employees and producers.the giving of grants and embracinginvesting concepts such as patientcapital and blended returns.22
  23. 23. Fonkoze, Swiss Re and Caribbean RiskManagers LtdConvergence Project Type Convergent Business ModelIndustry BankingAbout Fonkoze is ‘Haiti’s Alternative Bank for the Organized Poor’. Serving more than 45,000 borrowers, and more than 200,000 savers, Fonkoze is the largest microfinance institution (MFI) in Haiti, with 41 branches across the country. Since many of the small-scale traders who make up the informal sector in Haiti are particularly vulnerable to natural disasters, Swiss Re - one of the world’s largest reinsurers - has formed a partnership with Caribbean Risk Managers Limited, Guy Carpenter Micro Risk Solutions, and Fonkoze to design a micro- insurance scheme for catastrophes in Haiti. The project will allow vulnerable Haitians and micro-entrepreneurs in Haiti to protect themselves from natural disasters at reasonable cost. Previous efforts to establish micro-insurance schemes in Haiti have found it difficult to establish a model that meets the needs of the low-income clients, and is simultaneously able to remain attractive to international reinsurers. The new initiative overcomes this problem by using parametric indicators to identify disaster-affected zones - and by creating a capital fund to cover severe losses outside these zones. Institutions such as the International Development Bank (IDB), The UK Department for International Development (DFID) and Mercy Corps will provide capital for this fund to establish a structured, targeted mechanism that has the ability deliver relief rapidly. In the event of a natural disaster, the insurance will provide for a lump-sum payout directly to affected clients, as well as the repayment of the client’s loan – protecting the client through both short- and medium-term economic assistance. Fonkoze will be the first partner to offer the product to its borrowers.Business Rationale New markets – insurance customers Economic stability and GDPDevelopment Impact MDG 7: Ensure Environmental Sustainability MDG 8: Develop a Global Partnership for DevelopmentGeographic Scope Haiti 23
  24. 24. ‘The distinction between the state, not for profits and the market is valuable. It’s important not to blur the boundaries too much, as we don’t want this becoming one indistinguishable enterprise.’24
  25. 25. The Southern Agricultural GrowthCorridor of Tanzania (SAGCOT)Convergence Project Type Convergent Business ModelIndustry AgricultureAbout Launched at the World Economic Forum in 2010, The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) is a public-private partnership aiming to boost agricultural productivity in Tanzania. A partnership between private sector local and international agribusinesses, the Government of Tanzania and donor organisations, SAGCOT aims to deliver rapid and sustainable agricultural growth, with major benefits for food security, poverty reduction and reduced vulnerability to climate change. Tanzania’s southern corridor links the port of Dar es Salaam to Malawi, Zambia and the Democratic Republic of Congo. It benefits from good ‘backbone’ infrastructure – including road, rail and power – and passes through some of the richest farmland in Africa. The area could become a globally important producer of crops and livestock. Today, however, its agricultural potential is largely dormant and the majority of the rural population remains poor and food insecure. By catalysing large volumes of responsible private investment, the initiative will provide opportunities for smallholder producers by incentivising stronger linkages between smallholders and commercial agribusinesses – enabling smallholder farmers in the vicinity of large-scale farms to access inputs, extension services, value-adding facilities and markets. SAGCOT will also support smallholder producer associations, helping them enter into equitable commercial relationships with agri- processing and marketing businesses. The SAGCOT Investment Blueprint describes how at least $2.1 billion of private investment will be catalysed over a twenty year period, alongside public sector commitments of $1.3 billion. The result is expected to be a tripling of the area’s agricultural output. Approximately 350,000 hectares will be brought into profitable production, much of it farmed by smallholder farmers, and with a significant area under irrigation, and it is anticipated to permanently lift more than two million people out of poverty.Business Rationale New Markets Economies of Scale Increased production and profitability ‘Early win’ investment opportunities where rapid progress can be madeDevelopment Impact MDG 1: End Poverty and Hunger MDG 7: Environmental Sustainability MDG 8: Global PartnershipGeographic Scope Tanzania 25