Download - Hybrid Value Chain

WHAT IS ASHOKA’SFULL ECONOMIC CITIZENSHIP INITIATIVE?1

FULL ECONOMIC CITIZENSHIP (FEC) PROVIDES EVERY CITI-ZEN THE OPPORTUNITY TO EXERCISE HIS OR HER ECO-NOMIC, SOCIAL AND CULTURAL RIGHTS. TO ACHIEVE FEC, A CITIZEN MUST HAVE ACCESS TO THE ESSENTIAL PROD-UCTS AND SERVICES REQUIRED TO ENABLE THEIR ACTIV-ITY AS A CONSUMER, PRODUCER AND HOLDER OF ASSETS. FEC SEEKS TO END THE EXCLUSION OF TWO-THIRDS OF THE WORLD’S POPULATION FROM GLOBAL MARKETS.

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FULL ECONOMIC CITIZENSHIP

”Valeria Budinich, Chief EntrepreneurFull Economic Citizenship

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ASHOKA IS PROMOTING FEC THROUGH HYBRID VALUE CHAINS (HVC). HVC IS A NEW OPERATING FRAMEWORK THAT TRANSFORMS MARKETS BY LEVERAGING THE STRENGTHS OF BUSINESS AND SOCIAL ACTORS.

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HOW DOES HVC WORK?

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A FARMER STORY

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PEDRO DOES NOT HAVE A TRACTOR OR A TRUCK AND IS SELLING HIS PRODUCTION TO A LOCAL “COYOTE” WHO IS TAKING MOST OF THE MARGIN. HE LACKS ACCESS TO CREDIT TO INVEST IN PRODUCTIVE TECHNOLOGY. 40% OF HIS COSTS ARE FOR AGROCHEMICAL FERTILIZERS WHICH MAKES HIM VULNERABLE TO OIL PRICES.

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FORMAL MARKETS ARE NOT ATTENDING FARMERS LIKE PEDRO. THERE ARE OVER 2 MILLION IN MEXICO ALONE AND MANY MORE AROUND THE WORLD.

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SOLUTION: ASHOKA’S HYBRID VALUE CHAININ ORDER TO TRANSFORM THE WAY MARKETS WORK FOR SMALL FARMERS, ASHOKA IS BUILDING AN ECOSYSTEM OF PARTNERS

Buyers who integrate farmers to their supply chain and provide them the chance to build their technical skills and get rid of unwanted intermediaries (Gamesa, Fairtrasa to date);

Providers of technology and inputs who innovate to provide competitive solutions adapted to the reality of small farmers (Amanco and Netafim to date);

Financial institutions who give them a chance to invest in their own growth through a guarantee fund that mobilizes 1 mn in credit (Banamex Accion, Ve Por Mas, ANEC Sofom to date);

Social entrepreneurs who change mindsets and mobilize and organize the farmers so that they can aggregate demand and play in the markets (Arturo Garcia, Victor Suarez).

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CURRENT SCENARIO: 2 MILLION FARMERS IN MEXICO HAVE LESS THAN 5 HECTARES OF LAND AND LACK ACCESS TO IRRIGATION

SOLUTION: HYBRID VALUE CHAIN IN ACTION AMANCO & ASHOKA FELLOWS

COLLABORATIVE ENTREPRENEURSHIP

Arturo Garcia, Juan Jose Consejo and Patrick Struebi, Ashoka Fellows, are playing a key role in organizing farmers to bring them access to new opportunities such as commercialization. They have also identified the need for better technological solutions.

HVC INSIGHTS

Ashoka, Amanco and selected Fellows are working on access to irrigation technology for small-farmers. This requires adapted technical solutions and new credit processes. The scheme is strengthened by a network of agro businesses to reach out to small farmers who have access to markets. This HVC is changing mindsets and helping farmers see their farm as a business. Transparency International is a key partner in the alliance to help address rampant corruption.

TRANSFORMATIVE IMPACT

50% to 300% is the increase in production that farmers can expect to have with this new irrigation technology.

$100,000 dollar Fund created by Ashoka with the support of the Walmart Foundation.

1,500 small farmers benefitted from productive projects.

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ASHOKA AND ITS PARTNERS BELIEVE THE ANSWER TO UNLEASHING NEW MARKETSIS A NEW FORM OF BUSINESSdesigned to generate social impact at scale not philanthropy!

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A HEALTH STORY

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JASMEET KAUR HAD SEVERE ABDOMINAL PAIN. SHE COULD CHOOSE A “QUACK” IN THE VILLAGE OR SPEND TIME AND MONEY TO TRAVEL TO A LARGER CITY FOR MEDICAL CARE. UNABLE TO TAKE TIME AWAY FROM HER FAMILY AS HER HUSBAND WORKED, JASMEET VISITED A QUACK AND WAS GIVEN ASPIRIN BUT HER PAIN PERSISTED. SHE MUST FORGO QUALITY HEALTHCARE DUE TO LACK OF ACCESS AT THE VILLAGE LEVEL.

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VILLAGES TYPICALLY DON’T HAVE CLINICS AS MANY DOCTORS AND NURSES OFTEN DO NOT WISH TO STAY AND WORK IN REMOTE AREAS. DIAGNOSTIC TESTS AND MEDICINES DO NOT REACH THESE AR-EAS. WATER IS NOT CLEAN, INCREASING THE BUR-DEN OF DISEASE.

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CURRENT SCENARIO: LIFE EXPECTANCY IN INDIA IS ONLY 54 YEARS OF AGE. DIARRHEA IS RESPONSIBLE FOR 20% OF CHILDHOOD MOR-TALITY UNDER THE AGE OF 5. IN A COUNTRY WHERE TOTAL EXPEN-DITURE ON HEALTH IS ONLY 4.9% OF GDP, NEW SOLUTIONS FOR HEALTHCARE PROVISION MUST BE PROVIDED.

SOLUTION: ASHOKA + HEALTHPOINT SERVICES (EHP)


Al Hammond, Ashoka’s Senior En-trepreneur, founded Healthpoint Services (EHP), a new social en-terprise that brings quality, afford-able healthcare to villages in rural India through an innovative deliv-ery model. Amit Jain, CEO of EHP and Indian social entrepreneur, is using his local knowledge and expertise to launch and manage the EHP model in India while en-suring that products and services are designed appropriately for the target market.

HVC INSIGHTS

The combination of ad-vanced technology with a new business model allows doctor consultations over telemedicine, diagnostic tests, treatment, and clean water to be provided at prices villagers can afford. Electronic health records and novel social marketing schemes allow for maxi-mum impact in health and business.


20,000 patients seen since launch

120,000 patients expected to be seen by endof 2010

60,000 water people per day

2 pilots launched in new geographies using the EHP model in Latin America and Southeast Asia

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A HOUSING STORY

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CURRENT SCENARIO: 24% OF THE COLOMBIAN POPULATION IS IN NEED OF ADEQUATE HOMES.

SOLUTION: KAIROS,APRODEFA & GRUPO CORONA

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Internal Champion at Grupo Corona called Ashoka to investigate the potential to launch its first ever affordable tile product line in alliance with Ashoka Social Entrepreneurs. Collaboration has expanded to include several other corporations in order to expand their product offer along the housing value chain.

HVC INSIGHTS

• Build a network of community based promoters, building material companies, technical assistance providers, financial institutions to developa new market and social organization.

• Citizen sector generates new sources of revenue.


28,000 low-income families improved their homes

$12 million in sales 178 community promoters earn US$200 monthly

8 cities where the model has been replicated

HYBRID VALUE CHAINS AND THEIR POWER TO TRANSFORM INDUSTRIES

CITIZEN SECTORBUSINESS

GOALS• Access to markets

• Greater profitability

ASSETS• Essential goods and services • Ability to operate at scale

• Investment capacity

• Operational capacity

• Infrastructure and logistics

GOALS• Improved products & services to communities

• Increased funding & income streams

ASSETS• Deep knowledge of communities and consumers

• Ability to aggregate demand

• Social Networks & behavior change capacity

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CITIZEN SECTORBUSINESS

ASHOKA HYBRIDVALUE CHAIN

• Enables collaborative entrepreneurship at a country and global level

• Identifies and engages partners providing complementary competencies

• Demonstrates how to deliver integrated solutions at scale

• Spread knowledge, learning and specific know-how emerging from HVC applications

HYBRID VALUE CHAINS AND THEIR POWER TO TRANSFORM INDUSTRIES

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WHY HYBRID VALUE CHAINS NOW?

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GLOBAL CHALLENGE

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• LARGE SCALE SOLUTIONS TO GLOBAL

SOCIAL ISSUES ARE URGENTLY NEEDED.

MANY SOCIAL PROBLEMS TODAY ARE

UNTAPPED ECONOMIC MARKETS WAITING

TO BE FULFILLED

• CURRENT BUSINESS MODELS AND

VALUE CHAINS ARE BROKEN

• MARKETS ARE NOT REACHING THEIR POTENTIAL AND BUSINESSES EXCLUDE POTENTIALLY PROFITABLE CUSTOMERS

• CSOS ARE MOVING FROM AID TO CAPITAL BASED MARKETS AND ARE EMERGING AS VIABLE BUSINESS PARTNERS• SHORT TERM CAPITALIST MODEL HAS PROVED ITS LIMITATION

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WHY HVC ARE GOOD FOR BUSINESS?

FINANCIALUNLEASH OPPORTUNITIES FOR GROWTH AND PROFITABILITY. BUSINESSES SEEK INNOVATION, MORE VALUABLE SUPPLY CHAIN AND DISTRIBUTION PARTNERS. THEY SEEK A CHANCE TO EXPAND CURRENT MARKETS FROM BILLIONS TO TRILLIONS.

ESTIMATED MARKET SIZE FOR THE 4 BILLION MARKET EXCLUDING FOOD THAT ACCOUNTS FOR US$3.6 TRILLION

SIZE OF GLOBALMARKETSIN US$BILLION

Energy

Housing

Health

553

424

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Source: The Next Four Billion report, (increased 2007 numbers by estimating a conservative 5% annual growth for each market)

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$6.4 TRILLION UNTAPPED MARKET !

KNOWLEDGECOMPANIES THAT PIONEER HVCS WILL RUN UP THE LEARNING CURVE, LEAVING COMPETITORS IN THEIR WAKE. HVCS HAVE THE CAPACITY TO DISRUPT AND REVERSE INNOVATION FROM DEVELOPING TO DEVELOPED COUNTRIES.

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TALENTHVCS REQUIRE ENTREPRENEURS WHO CAN SPOT OPPORTUNITIES AND DEVISE CREATIVE SOLUTIONS. IT ATTRACTS PROGRESSIVE THINKERS AND INCREASES COMMITMENT TO THE FIRM BECAUSE WORKING ON THIS NEW FRONTIER OF BUSINESS IS EXCITING, SOCIALLY RELEVANT, AND CHALLENGING.

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WHY IS THE CITIZEN SECTOR A GOOD BUSINESS PARTNER?

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TALENT

The citizen sector attracts highly talented, systemchang-ers, creative leaders and inno-vators who are focusing their effort on the world’s most pressing issues and markets.

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BRAND VALUE

Businesses that partner with the citizen sector and so-cial entrepreneurs on issues like housing, energy and healthcare add value to their brand’s personalities and how they are perceived in the marketplace.

ACCESS TO NEW MARKETS

By partnering with the citizen sector and social entrepreneurs, businesses can reach new net-works of potential customers and suppliers in viable under-served and under-valued markets.

HVC DELIVERA WIN-WIN SOLUTION

CUSTOMERS WIN

THEY GET ACCESS TO HIGH-QUALITY PRODUCTS FOR LESS COSTS, BE IT BUILDING MATERIAL OR LIFE-INSURANCE

CITIZEN SECTOR WIN

SUSTAINABLE MODEL DELIVERING SOCIAL IMPACT AT LARGE SCALE

BUSINESS WIN

NEW PRODUCTS AND SERVICES THAT INCREASE THEIR PROFITS AND DELIVER SOCIAL IMPACT

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WHY ASHOKA?

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WORKED WITH MORE THAN 3,000 SOCIAL ENTREPRENEURS OVER THE PAST 30 YEARS, AND WE’VE SEEN THE CITIZEN SECTOR GROW AND MATURE.

THROUGH OVER 50 BUSINESS/SOCIAL PARTNERSHIPS ASHOKA’S FEC PILOTS IN 6 COUNTRIES ARE DELIVERING IMPRESSIVE RESULTS AND PROMISE EXTRAORDINARY GROWTH.

ASHOKA IS COMMITTED TO EVERYONE A FULL ECONOMIC CITIZEN

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JOIN US

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CURRENT PARTNERS

FEC Partners Business Citizen Sector

State owned

Foundations

HOW CAN YOU JOIN THIS MOVEMENT?

CONSUMERS -ORGANIZE TO DEMAND GOODS & SERVICES FROM COMMUNITY LEADERS, AND VENDORS.

- FOCUS ON ABILITY TO PAY & START WITH LIFE NEEDS AND NOT WANTS.

- SEEK TRANSPARENCY IN PROMOTER COMPENSATION WITH LIFE OF LOAN.

CITIZEN SECTOR -FOCUS ON HOLISTIC NEEDS OF CONSUMERS & SMALL PRODUCERS. FROM PRODUCT USE TO ABILITY TO PAY.

- LEVERAGE COMMUNITY TRUST TO MOVE FROM COLLABORATION TO CLIENT-VENDOR RELATIONSHIP.

- BUILD BUSINESS SKILLS & ORGANIZATIONAL CAPACITY.

- MANAGE INCOME FLOW FROM BUSINESS WHILE TIGHTENING CREDIT AND COLLECTION STANDARDS.

BUSINESS

- LEADERS MUST COMMUNICATE VIGOROUSLY ABOUT IMPORTANCE OF INNOVATION AND ORGANIZATIONAL FLEXIBILITY TO FIND NEW CUSTOMERS AND TAILOR PRODUCTS -IDENTIFY INTERNAL CHAMPIONS

- REDESIGN FIRM STRUCTURE/VALUE CHAIN TO TRULY INNOVATE FOR ALL POTENTIAL CUSTOMERS

APPENDICES

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VISION

MISION

EVERYONE A FULL ECONOMIC CITIZEN

UNLEASH MAJOR MARKETS THROUGH A NEW OPERATINGFRAMEWORK THAT LEVERAGES THE STRENGHTS OFBUSINESS AND SOCIAL ENTREPRENEURS TO DELIVERUNPRECEDENTED SOCIAL IMPACT GLOBALLY.

HIGH PRICETICKETITEMS

CONSUMERS NEED TO INVEST IN ORDER TO EITHER SATISFY ESSENTIAL HUMAN NEEDS (E.G., SHEL-TER, HEALTH AND WAATER) OR SIG-NIFICANTLY TRANS-FORM THEIR INCOME GENERATING POTEN-TIAL (E.G. IRRIGA-TION SYSTEMS).

PRICE IS NOTTHE PRIMARYBARRIER

A SERIOUS OF SYS-TEMIC FAILURES ARE INHIBITING DEMAND (E.G. ACCESS TO FI-NANCING, LACK OF TECHNICAL SUPPORT, AVAILABILITY OF LO-CALLY BASED RETAIL INFRASTRUCTURE).

TRUST-BASEDSOCIALNETWORK

MARKET SEGMENTS IN WHICH PACK-AGED VALUE ADDED SERVICES REQUIRE AN EXTENSIVE SO-CIAL NETWORK CLOSE TO END CLI-ENT ON A RECUR-RENT BASIS.

HUMANAND SOCIALCAPITAL

FOR ALL TO REAL-IZE FULL MARKET POTENTIAL THE INITIATIVE MUST ENHANCE THE PARTICIPATION OF ALL: COMMUNITIES SERVES, CITIZEN SECTOR AND BUSI-NESSES.

CRITERIA FORSELECTING HVC OPPORTUNITIES

1. A PRODUCT THAT TRANSFORM LIVES

2. A BUSINESS MODEL THAT IS COMMERCIAL IN NATURE

3. AN INITIATIVE WITH THE EXPLICIT ASPIRATION TO BECOME A “BEFORE AND AFTER INDUSTRY. (I.E. HEALTHCARE, EDUCATION ETC).

4. A BUSINESS MODEL BASED ON VISIONS FROM BOTH BUSINESSES AND CSOS.

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CRITERIA FORSELECTING HVC SOCIALENTREPRENEURS

For More Information Contact: Pilar Martinez [email protected]