Session Title:
Civil Society & Social Entrepreneurship

Date of talk or publication:
2005

Speaker Name / Title:
Valeria Budinich, Kimberly Manno Reott, & Stephanie Schmidt

Organization:
Ashoka

Description:
Today millions of people still do not have access to products and services that meet their basic human needs. Over one billion people live in inadequate housing, two billion do not have access to electrical power and as many are unbanked without access to any type of financial service. However, the unprecedented growth and rapid increase in productivity of the citizen sector in the last three decades - spearheaded by social entrepreneurs and their innovations - have created a foundation for a different type of highly-leveraged partnerships to better serve low-income markets and foster human development.

Through a mosaic matrix, this paper introduces examples of market-based social innovations and synthesizes the experience of Ashoka; Innovators for the Public, in distilling the main principles emerging from the work of its global network of 1,600 social entrepreneurs. Through a case study of small-scale farmers in Mexico and their access to irrigation systems, Ashoka’s concept of “Hybrid Value Chain” (HVC™) explores the multiple needs of small farmers and the market opportunity for companies as well as why current value chains that serve large farmers are unlikely to be transferable. The paper outlines the challenges ahead for the widespread adoption of HVC™ in multiple industries, in a way that could deliver significant and sustainable economic and social impact for all the actors involved.

Long-term commercial partnerships between large companies and citizen-sector organizations with a focus on low-income populations have the potential to create mutual value for all and ensure deeper social impact. Businesses can enter low-income markets segments more effectively by leveraging the innovations, market knowledge and assets of citizen sector organization’s (CSOs) primary constituent markets. On the other hand, CSOs can scale their impact significantly if they learned to leverage the infrastructure and resources of large businesses. While providing affordable and adequate products and services to their low-income communities, CSOs can also generate additional sources of revenues for their organization to reinvest in development programs. Hybrid Value Chain™ partnerships are distinct from current models of collaborations between companies and social sector organizations. Unlike philanthropic relationships, an HVC™ is commercial in nature and is based on the premise that company and social entrepreneur can interact commercially as equals. An HVC™ relationship is a long-term relationship where both parties recognize their own organizational strengths as well as weaknesses – and join together to create sustainable, lasting value and profits for all players. Hybrid Value Chain partnerships are indeed replicable across sectors and particularly in industries serving basic human needs such as water, shelter healthcare or education that guarantee a greater alignment between the partners’ missions. Another key component of these partnerships is the commitment to leverage the production potential of low-income communities as much as possible to create new business models that contribute to local economic development while creating new wealth for businesses, investors and CSOs.