Management Practices: The Key to Overcome Internal Barriers and Bring Inclusive Business to Scale?
All companies starting an inclusive business want to reach scale, but how often do they examine their own management practices as a means of attaining it? Two years ago, we started our journey into inclusive business management practices by asking ourselves this precise question.
For the last 10 years, Business Call to Action (BCtA) has been engaging closely with the most innovative inclusive business globally, dissecting different business models, analysing constraints and opportunities for impact, and finding collaborative solutions. We have been working with local organisations and our UNDP colleagues in Asia, Africa and Latin America to understand external barriers to scale, from international and national legislations to the technical complexity of the Base of the Economic Pyramid (BoP) markets. Most of our findings have been presented in different knowledge products and have benefited hundreds of companies and partners globally.
But while external barriers to scale are critical to understanding why inclusive business are not reaching the expected scale, it is important to recognise that they are not the only story. Barriers can also exist inside the four walls of these firms.
Our new report launched last Friday at the BCtA 9th Annual Forum, What Does it Take to Go Big: Management Practices to Bring Inclusive Business to Scale, identified four key barriers, adopted from the paper Bottom-of-the-Pyramid: Organizational Barriers to Implementation: 1) conflicting mindsets, which is a cognitive barrier; 2) radical change to routines, a process-related barrier; and two structural barriers, 3) initiative evaluation criteria, and 4) reward structures. In our publication, we examine how to overcome these organisational barriers, drawing from examples of successful companies who are already doing this. We also offer steps that companies can take to adapt their management practices to become more inclusive business friendly.
While some internal barriers are sector-specific, many are transversal and can be collectively analysed. Solutions to common issues can be replicated across sectors to achieve greater IB impact and growth. Understanding where those barriers lie and how to overcome them is key to ensuring the long-term success of inclusive business models.
Between 2017 and 2019, we spoke with 25 Business Call to Action members who were either multinational corporations or large national companies, and all confirmed that successful inclusive businesses apply principles that differ from traditional business approaches.
So, what are these management practices?
Our report draws on the range of management practices applied among BCtA’s extensive and diverse membership to produce a typology of the 10 most relevant IB practices that drive value, impact and sustainability of IBs.
In-depth stakeholder engagement was one management practice that was valued highly by successful inclusive businesses. This requires the engagement of stakeholders, including engaged BoP individuals, local communities, local governments, employees across relevant units, suppliers and potential partners where the IB operates. For Mastercard, whose inclusive business initiatives focus on increasing access to financial services, partnerships with both public and private sector actors have enabled the company to deploy more innovative and profitable initiatives and advance their efforts to engage BoP populations much more extensively than they could have done alone. Its mindset for inclusive business partnerships is rather unique compared to its other branches of operation.
The report also examines talent recruitment and retention practices, which have the potential to build skilled loyal staff, as demonstrated by DBL Group, who established a Bandhan Fair Price Shop after consulting with their employees. To minimize staff attrition, the Bangladeshi textile company offers various non-financial benefits to incentivize and retain its workers, well beyond what is required by law. Besides having introduced these ‘fair price shops’ that serve to create employee loyalty through convenience and low prices, DBL also offers on-site healthcare, breastfeeding rooms and childcare to its employees.
Prioritisation of planning and management of IB performance was also another important management practice. Mahindra Home Finance, for example, views performance and social impact data as a tool to better communicate the value of their products and services to their customers, while also providing vital information on outcomes and overall impact made by the business.
These are just three of the 10 management practices we identified and discuss in our publication, and each is substantiated by a concrete example from a BCtA member company.
These practices allow companies to gain critical insights to improve their models and communicate their impact and business value better, thus gaining greater internal support for the sustainability and replication of IB initiatives.