From Collaboration to Convergence

The Perfect Storm

Globalization, the leitmotif of the past two decades of human development, has lost some of its shine. Our world in 2009 appears to be in the eye of a perfect storm; a fuel crisis, followed by a food crisis, exacerbated by an economic crisis. And lurking in the background is of course, the over-arching threat of climate crisis. Quite a year by any standard! The sad irony is that the countries and populations of the so-called developing world, who have been least responsible for the causes of these crises, are the ones who bear the brunt of the effects. Experts warn that we're in danger of losing a decade of development, as great strides in lifting people out of poverty, improving health outcomes and advancing education are under threat.

So whose responsibility is it to solve these problems? In a developed country context, citizens look to governments to take the lead on global problem solving, lobbied into action and held to account by non-governmental organizations (NGOs) and civil society. Business has largely been left to its own devices; creating wealth, providing employment and paying tax. Is that not enough? Is that not their role within society?


Growing interdependencies

Not quite. Things are changing. Talk of a developed world and a developing world are being replaced by the notion of a multi-polar world, where the battleground for resources, customers, talent and technology are heating up. The so-called multi-polar world is characterized by increasing interdependence across both geographies and the sectors, as society faces an increasing number of global challenges: Climate change does not recognize arbitrary borders between countries, and its impacts are indiscriminate between businesses, governments and charities. The challenges of water access and its responsible management are as strategic to beverage companies and food producers as they are to the WWF or indeed a village in India. The scourge of HIV/AIDS destroys the livelihood of a community in the same way as it destroys the productive capacity of a workforce. Are the 900m poor in sub-Saharan Africa a target for charity and donor aid, or do they represent an attractive "bottom of the pyramid" market for the products and services of business?

Recognising that no single sector is immune to these challenges or has a monopoly of solutions, we've witnessed an increasing propensity for collaboration across the sectors in recent years. But is collaboration enough?

Convergence - A lightening rod for collective engagement

It's likely that development in the next decade will be characterized less by collaboration and more by convergence -- a convergence of challenges, of approaches and of solutions. Businesses are increasingly engaging in activities that were once traditionally the exclusive domain of governments and NGOs. And simultaneously, NGOs are starting to adopt market-driven approaches to global challenges ranging from poverty alleviation to environmental protection - approaches that actively engage businesses, rather than fight against them.

Development practitioners in the 21st century will need to break free from the shackles of traditional mindsets on roles and boundaries of each sector - public, private and civil society -- and embrace new thinking and approaches that are somewhat agnostic on inputs and intermediaries, but focused on optimizing outcomes and impact.

So what exactly is convergence ? Who are the actors and how will it evolve?

What is it?
In simple terms, convergence is characterized by where the vested interests of each sector align with the needs of society as a whole - the confluence of business opportunity with positive social, economic or environmental impacts on development. It may take many forms, sometimes driven and initiated by business or, in other instances, by civil society or government. But approaches and solutions will tend to share a number of attributes. Namely, they're predominantly market driven, have a bias towards outcome over input and are economically and organisationally sustainable, scaleable and replicable.

There is growing recognition that business is playing a critical role in advancing development, yes in partnerships, but also in its own right in independent business strategies At the same time, international NGOs are coming to terms with the notion that business thinking and approaches may be part of the solution, as opposed to part of, if not most of, the problem. And governments and multi-lateral institutions are waking up to the increasing importance of markets and enterprise approaches to poverty reduction. The UN's Business Call to Action is just one example of this growing recognition that there can be a symbiotic relationship between the sectors. And when it comes to trust, businesses can learn a lot from NGOs as they look to re-build battered reputations.

Who are the actors?

Convergence is manifesting itself in wide variety of thematic areas or "nodes." These nodes range from health and education - traditionally viewed as exclusive domains of the public sector - to financial inclusion and economic development - traditionally viewed as more private sector territory.

Within the broad area of Health, there are a number of individual nodes of convergence such as access to medicines. Unitaid, a non-profit housed within the UN's World Health Organisation (WHO), will seek to work collaboratively with "Big Pharma" to develop a patent pool to accelerate development and extend affordable access to antiretrovirals for treating HIV/AIDS. Another powerful symptom of convergence was the recent announcement by Cancer Research UK that they will undertake phase 1 clinical trials for an anti-cancer drug from GlaxoSmithkline (GSK), in an effort to bring effective treatments to market more quickly.

Still within health, nutrition is another powerful convergence node. The Global Alliance for Improved Nutrition (GAIN) is a hybrid organisation spun off from the WHO to explore market-driven approaches to improve nutrition. They are agnostic on who they fund - for profits or non-profits, focussing instead on how they can have a positive impact on malnutrition.

The private sector is increasingly engaging in education at the primary, secondary and tertiary level. Aga Khan Education Services operates more than 300 fee based schools and advanced educational programmes across the world, which are improving enrolment rates and delivering formidable academic results. Cisco have applied their core capabilities of technology and data networks to education through their famous Networking Academies and plan to build a further 1000 such sites in Egypt alone as part of their support for the Egypt Education Initiative.

Natural resource management and water management is a convergence node that is particularly powerful. A single litre of beer produced by SABMiller requires 155 litres of water to across the entire value chain for the cultivation of sugar and other crops! The fact that the Worldwide Fund for Nature(WWF) have decided to partner with SABMiller on a water footprinting study, may be anathema to many environmental campaigners, but more enlightened supporters recognise it as having a massive potential impact on water usage. Similarly, the Better Sugar Cane Initiative (BSI) is a non-profit dedicated to bringing together not just beverage companies but food companies and energy companies, all of whom require the very thirsty crop of sugar cane in order to make their products.

Water and Sanitation for the Urban Poor (WSUP) is another classic convergence initiative. It brings together private sector giants like Unilever and Thames Water with NGOs including CARE and the WWF, in an effort to bring turnkey solutions to water and sanitation in poor urban areas that the market has not reached traditionally. This initiative is a standalone non-profit joint venture where public money from the UK government was used as seed funding.

Access to Finance is a convergence node which is impacting banks, NGOs and even Telcos in developing countries through their moves into mobile banking. In India, ICICI Bank have been active champions of inclusive business models for many years and have extended micro finance to over 3 million households. But few would have thought that an NGO would buy a bank. That's exactly what Mercy Corps did in Indonesia with their "Bank of Banks" initiative -an effort to expand their microfinance footprint in the region, supported by funding from the Gates Foundation and the International Finance Corporation (IFC).

The fact that the fastest growing provider of financial services in Africa is not a bank is equally counter-intuitive. It's M-PESA, a product of Safaricom, the Vodafone subsidiary. Following the supply of a small amount of initial seed capital, again from public bi-lateral donor funds, they've made incredible strides to help bank the "unbanked" in Kenya. In a similar vein, ANZ's new subsidiary in Cambodia, WING Telecom, is linking up textile workers in factories in Phnom Penh with their dependents in rural communities to allow them to transfer domestic remittances more safely and cost effectively. Initial concerns about public money subsidising private benefit largely subsided when the unprecedented growth and effectiveness of these gambles became apparent.

Whether in financial services, food production, water or health, the pervasive force of convergence is becoming increasingly apparent.

Catalysts of Convergence

So what's driving the convergence trend and how will it shape the business and development sectors in the future?

The progression of exciting new technologies such as wireless and eLearning are likely to be catalysts of the convergence phenomenon. They allow new thinking to be applied to old challenges of sustainable development and help to drive innovation and break down the traditional boundaries of the sectors. Similarly, entrepreneurial individuals within large organisations will play a key role to effecting change from the inside out. These social "intrapreneurs" - young, socially aware, hungry for change and well networked, will more often be working bottom -up,, vs. top-down, within organisations.

Emergence of Social Enterprise within a Corporate Context

Social enterprise and entrepreneurship has captured a lot of media attention in recent years. Profit maximisation of traditional business is replaced by profit optimisation, in conjunction with social or environmental outcomes. Most of these social enterprises are relatively small and face the same challenges of scale that normal businesses face. But we're seeing the emergence of what could be described as "Corporate Social Enterprise" - new spin-offs or partnerships that have the ready-made scale and reach of the corporate parent, but are established to pursue a different agenda.

Effecting a relatively small change in large organisations is analogous to changing a super tanker's direction by one degree - the impact downstream can be significant. Coca Cola are the largest employer in Africa, P&G have 3.5 billion customers (and will add another one billion from emerging markets in the next decade according to their new CEO, Robert Macdonald), and Anglo American uses more electricity than the whole of Finland! Surely harnessing and channelling this economic power in new and different ways has the potential to have a profound impact on our world. The scale and impact of one corporate social enterprise could be worth 100 of their smaller siblings.

An unrealistic dream? Well, there are already signs of new convergence-oriented business models emerging. Muhammad Yunus, Nobel Laureate and Founder of Grameen Bank, has led calls for a new type of "social business." While sharing all the characteristics of a normal enterprise, it is explicitly not about profit maximisation, but more about maximising impact on the poor. His innovative venture In Bangladesh with Danone, the French water and dairy products giant, is probably the best example of a social business. They jointly created Grameen Danone Foods Ltd, which targets the rural poor with a new blend of affordable and nutritious yogurt known as "Shakti Doi" (meaning power yogurt). Launched in 2007, the venture has made significant impacts on level of malnutrition and employment amongst the poorest communities in Bangladesh.

Accenture Development Partnerships didn't start out to be a "corporate social enterprise" when it was created by a group of employees in 2002, but this is how our organisation is being described in the outside world. We are a ring-fenced not-for-profit group within Accenture that provides affordable business and technology consulting expertise to the international development community on a not for profit basis. This is made possible by voluntary salary cuts of rotational staff and the firm forgoing margin and overhead recovery. The goal is cost neutrality for Accenture shareholders but a leadership development programme and talent retention tool for the firm's employees.

It is likely that over the coming years, convergence will drive the formation of more of these new hybrid organisations or "corporate social enterprises." Some will be started by business, some by NGOs and others by government bodies, but all will exude the best attributes of all the sectors.

Implications for Leadership/ Conclusions

So who has more impact on financial inclusion in Africa? The World Bank or Vodafone, through its mobile banking product, M-PESA? If I want to reduce malnutrition in Bangladesh, should I donate to UNICEF or buy shares in or perhaps yogurt from Danone?

Right now, the answers to these questions are unclear. But what is clear is that those who are funding and defining the development agenda will increasingly be seeking an answer. They'll be soft on inputs and intermediaries - hard on outputs and outcomes. Resources will flow toward those who can demonstrate and articulate a positive socio-economic impact and away from those whose stories are ambiguous. Certainly, the era of Convergence marks the end of any particular sector or entity having privileged access to funding or resources on the basis of a legacy brand or a charitable or non-profit status. hat will mean change for the incumbents.

Business too must change and let's face it, is badly in need of a makeover. It's likely that in a converging world, global businesses will have far greater roles to play in positively impacting development than they've had to date. We prefer to dwell more on the greed of bankers and excessive bonuses than on the many positive benefits business brings to society at large. But make no mistake; the latent power of the private sector is colossal: more than half of the largest economies in the world are businesses. Harnessing and re-directing this power for positive socio-economic impact is going to be one of the major challenges of development in the 21st century. Leaders in all sectors -- public, private and civil society -- should recognise and embrace the Convergence trend and understand the important role their organisations can play in driving change.

Gib Bulloch
Executive Director
Accenture Development Partnerships