Opportunities for Citizen-Sector Organizations
Private sector organizations can also play a significant role in development.
Today low-income citizens often pay a higher price for basic goods and services than more affluent people, due to inefficiencies of delivery systems and limited options in the marketplace. If businesses with relevant goods and services leverage their core competencies (including technology, logistical infrastructure, economies of scale and investment capacity) and compete to serve these markets, low-income communities will benefit from having tailored, affordable and locally accessible options. Moreover, if businesses find ways to deliver these services profitably as part of their core business strategy, low-income communities will benefit from sustainable solutions that can be scaled up without depending on donations. Successful examples of businesses serving low-income markets include Cemex, the largest construction material company in Mexico that is enabling thousands of low-income families to build decent houses faster and at a lesser cost through their Patrimonio Hoy program. Patrimonio Hoy members enter a savings and credit program, receive technical assistance to plan their construction work and other benefits such as material storage, delivery and price guarantee for two years. Because Cemex operates Patrimonio Hoy as a business, the scaling up potential of the program is much higher than government housing programs limited by funding.
Entering a partnership with companies interested in low-income markets is an historical opportunity for social entrepreneurs to help shape this trend and advance social transformation.
lthough for many years corporations have ignored low-income communities or have not considered them as a priority, the seminal articles of C.K. Prahalad on the "Fortune at the Bottom of the Pyramid" (BOP) are increasingly creating awareness on the business opportunities to serve low-income markets among multi-national companies. This is therefore an historical opportunity for social entrepreneurs and their organizations to help shape this new trend to create a real impact at the grassroots level. Goods and services alone will not create social transformation. Low-income citizens need integrated solutions (including financing, education/ technical assistance depending on the specific good or service) that social entrepreneurs can play a key role to develop. Our vision is that together, business and social entrepreneurs can create empowered consumers by providing accessible solutions adapted to their needs and values, and create social transformation in low-income communities.
Hybrid Value Chain partnerships can allow innovative citizen sector organizations to advance their social mission.
Ashoka's overall mission is to strengthen the citizen sector and support social entrepreneurs in a variety of ways. Core to the approach of the Full Economic Citizenship initiative is to identify Win-Win-Win partnerships where businesses, social entrepreneurs and low-income communities all gain from the new alliance. While the company increases its profits by entering untapped markets, the citizen sector organization is able to generate new sources of revenues by playing an operational role in the partnership and leveraging its "assets" and innovations. Depending on the type of partnership and the value proposition of partners, the citizen sector organization can be a co-designer of a product/ service or a "social engineer" based on knowledge of low-income consumers' needs, values and perceptions; a product promoter or distributor using local networks; or can bring the ability to mobilize communities. By diversifying their sources of funding and reinvesting new revenues in their social mission, citizen organizations can spread their solutions further. In order to make the most of Hybrid Value Chain partnerships, it is important that citizen organizations carefully choose the type of partnerships they engage in to guarantee a strategic fit with their social missions, since developing new ways of doing business with the poor with social impact requires a significant investment in time, creativity and resources. For example, Ashoka Fellow Arturo Garcia, who has been supporting farmers' cooperatives for 20 years, is partnering with a company to provide small-scale irrigation systems to small farmers, complementing his services to his beneficiaries. In addition to new sources of revenues, these hybrid partnerships will allow both sectors to acquire new skills and experiences.
As an initiative of Ashoka, we focus on Hybrid Value Chain partnerships that have the potential to create positive change in the lives of low-income communities.
Although we believe that in some instances large companies are better positioned to provide the best solutions to low-income communities, we also fully recognize that other products and services should remain in the local economy. This thin balance between global and local economies is essential to create Full Economic Citizenship. We are therefore being very selective with the industries we work in as well as with the partners we associate with. First of all, the FEC initiative focuses on products and services that meet basic needs of low-income communities and can create a positive change in their lives. So far we have made the strategic choice to limit our scope to housing, appropriate technology for small producers and healthcare, meaning that businesses involved in Ashoka pilot projects need to have potential products and services that fit with these sectors. Second, both business and social partners must fit core Ashoka/ FEC selection criteria: a willingness to innovate, an understanding of the risk/ opportunities involved in piloting a new concept, a strategic interest in low-income markets, an openness to learn from the "other" sector, ethical fiber reflected by a commitment to social and environmental impact and transparency.
Business-social collaborations are an integral part of Ashoka's philosophy and vision.
Since its inception 25 years ago, bridging the business-social gap has been a core strategy of Ashoka to create a more competitive and integrated citizen sector. It has been an integral component of several programs such as the Citizen Base Initiative, the E2 program, and the business plan competition organized in collaboration with the management consultancy McKinsey. We believe that both social and business entrepreneurs will greatly benefit from sharing experiences and best practices and that the artificial historical divide between the business and citizen sectors has been harmful to society. Hybrid Value Chains suggest another model for long-term commercial partnerships between innovative citizen organizations and large businesses to provide improved and sustainable solutions for low-income citizens and their families. Hybrid Value Chain (HVC) collaborations are a "new generation of partnerships" that go beyond traditional philanthropy or Corporate Social Responsibility, In these long-term and integrated partnerships, businesses and social entrepreneurs collaborate on equal footing — share the economic value created and work towards the goal of serving low-income communities. All partners share active roles and responsibilities to deliver an effective solution to low-income clients and the profit motive allows for sustainability and greater impact. The spread of these partnerships will require a mind-shift for most social and business entrepreneurs to bridge the historical gap between the citizen and the business sectors.
The goal of Ashoka's Full Economic Citizenship initiative is to demonstrate the concept of Hybrid Value Chain partnership to help Ashoka Fellows and other innovative CSOs to engage successfully in collaborations with businesses.
In the initial phase, the goal of Ashoka's Full Economic Citizenship is to test 6 to 8 Hybrid Value Chain collaborations in which we will actively engage to support the design and implementation. We focus most of our resources on these selected pilots, with the intention that successful demonstration of the model will move the social and business sectors towards a tipping point where self-replication of Hybrid Value Chain collaborations is the norm: these collaborations are widely implemented by businesses and citizen organizations and are promoted by consultants and academics. However, beyond these few pilots, we also want to create a larger learning community of Ashoka Fellows and other innovative CSOs to develop the tools and expertise needed to engage businesses independently.
How do I get involved?
Although we do not have the capacity to directly support numerous Fellows and citizen sector organizations to develop Hybrid Value Chain partnerships, we want to encourage all organizations that are ready to initiate and test such approaches. Please contact us and let us know what innovative strategies you have used to best serve low-income communities, what you feel you can offer a business in a Hybrid Value Chain partnership, and what type of business strikes you as a good opportunity for collaboration. We also want to hear about your needs, challenges and suggestions to develop such collaborations. Together with you we want to create a vehicle for learning and sharing innovative strategies to achieve "full economic citizenship" for the world's low-income citizens.
Contact the FEC Team