Why scale inclusive businesses models collaboratively?
Inclusive businesses must scale to meet needs of the millions of people that are at the Base-of-Pyramid (BoP), which refers to the poorest two-thirds of the economic human pyramid, a group of more than four billion people living in poverty. At the same time, these inclusive businesses must stay financially self-sustaining. However, the majority of inclusive businesses remain small, failing to deliver and capture the value they intended to create.
More and more tools have become available to support inclusive businesses in developing a strategy to increase the number of beneficiaries, expanding their services, and increasing their income. Yet too often, these tools neglect two important conditions to successful scale an inclusive business. They must (1) adapt their business models; and (2) involve key partners in the scaling process. These two requirements form the basis for the ‘5-steps to scale inclusive business models collaboratively’.
Business model adaption
Initially, inclusive business models often are high touch because of the socio-economic, institutional and infrastructural challenges in the BoP context. These high-touch business models are extremely expensive and difficult to scale due to their high level of human interaction. On top of that, inclusive businesses are greatly dependent on high volume to become financially sustainable and create long-lasting
value for the poor. To meet these volumes, the business model often must develop from a high-touch business model towards one that involves less intensive contact with value chain partners. Thus, inclusive businesses need to rethink their business models before they are able to scale.
Inclusive businesses usually intensively collaborate with actors in the inclusive business’ ecosystem to overcome market gaps in the BoP contexts, such as limited knowledge and skills, ineffective regulatory environment and inadequately physical infrastructure. On the one hand, these actors are needed and support scaling of inclusive models. On the other hand, the diversity of actors in perspectives, capabilities, goals requires alignment which can slow down and hinder the flow of inclusive business’ scaling.
Therefore, it is crucial that inclusive businesses develop scaling strategies that align and strengthen their entire ecosystem. This entails developing strategies and associated business model adaptations that critical ecosystem actors are willing and able to implement. To achieve this, it is important that inclusive businesses actively engage the key actors in the inclusive business’ ecosystem in the scaling process.