Notes |
The Convergence Continuum
Towards a “4th sector” in global development?
by Gib Bulloch and Louise James
1
Consider this:
• Tanzania has tripled the number of
life-changing treatments it provides
to obstetric fistula sufferers via the
mobile phone platform of a single
company – Vodafone2
.
• Save the Children has a seat on the R&D
board of a pharmaceutical giant—GSK.3
• A consortium of non-profits in Australia
has acquired a large for-profit—and turned
it into a social enterprise.4
• One of the world’s largest restaurant
chains, a mining company and a soft
drinks manufacturer have joined forces to
address, of all things—malaria.5
• The Global Fund has taken donations of
over $50m from one global extractive
industry giant—and invested more than
twice that sum in another.6
Such juxtapositions, unthinkable just a few
years ago, are fast becoming commonplace in
international development. Indeed, they herald
a step change that promises to transform the
way we tackle development challenges.
The background
In 2011, Accenture’s Convergence Economy:
Re-thinking International Development
in a Converging World predicted that a
disruptive trend, moving well beyond
“inclusive business” and “shared value”,
would fundamentally redefine the roles and
structures of international development.
Since then, Accenture Development
Partnerships (ADP),8
which works at the
inter-section of business and development,
has gained deeper insight into this trend.
As the above examples show, we are not
only witnessing such a redefinition, but the
convergence of interests between public,
private and civil society participants in
international development is also starting to
shape a whole new way of doing business in
emerging markets.
Indeed, a continually progressing
Convergence Continuum is driving the aims
and objectives of diverse sector organizations
towards an aligned goal. As the opportunities
for cross-sector cooperation multiply, we
believe we are approaching a tipping point
where the creation of an entirely new
business ecosystem, or 4th sector, becomes
an increasingly interesting option for more
and more participants.
The Convergence Continuum
Towards a “4th sector1
” in global development?
“The digital revolution and innovations in finance are
radically reshaping the convergent forces that define
international development. As new roles, responsibilities
and structures emerge, could a true marketplace for social
outcomes, blending the best aspects of private, public and
civil society into a single ecosystem, be the outcome?”
By Gib Bulloch, Louise James
2
Some Definitions
We acknowledge the complexity of the international development landscape so we are
providing some broad definitions of what we mean by Public Sector, Private Sector, Civil
Society (sometimes known as the 3rd Sector) and, indeed, what we’re referring to as an
emerging 4th Sector:
Public Sector
Governments, ministries, public
regulatory and funding bodies,
bi/multi-lateral donors or any public
institution accountable to citizens.
Private Sector
Multi-national, national corporations
or large publicly traded companies
with boards of directors who are
accountable to shareholders or investors.
Smaller privately owned enterprises
and SMEs.
Civil Society/3rd Sector
That part of an economy or society
comprising non-governmental and
non-profit-making organizations or
associations, including charities, voluntary
and community groups, cooperatives.
4th Sector
A new collaborative ecosystem
(or marketplace), blending the best
aspects of the three existing sectors,
and co-existing alongside them, but
qualitatively different because it focuses
on financial, social and environmental
impacts that aim to deliver positive
social outcomes that are measureable,
profitable, and scalable.
Shared Value
Created when the policies and
operating practices that enhance
the competitiveness of a company
simultaneously advance economic and
social conditions in the communities in
which that company operates.7
An Inclusive Business
Includes low-income communities in its
value chain, without compromising the
profit-making activities that characterize
private companies.
3
This paper is designed to provide an update
on our cross-sector convergence thinking:
Where is convergence today and where is it
going? What’s driving it and what’s holding
it back?
The paper represents a competency-based
view of potential future changes within a
dynamic and exciting environment.
Its publication marks the start of a period of
research and analysis to try to understand the
Convergence Continuum in more detail.
Our aim is to help inform the thinking of
organizations and individuals across all
sectors as they adapt to a converging world.
Our ultimate goal: To ensure that business,
government, civil society and individuals can
evolve to maximize their positive impact on
the resolution of development challenges.
Our purpose
4
A lot has happened since we
published Convergence Economy—
much of it encouraging.
The recent UN Global Compact-Accenture
CEO Study on Sustainability 20139
observes,
for example, that CEOs are beginning
to see a transition toward long-term
partnerships. In fact, 78% of them believe
that partnerships and collaboration across
sectors will help them deliver positive social
and environmental outcomes over the next
five years. And 70% see a need to take action
through on-the-ground partnerships and
projects. Furthermore, 84% of CEOs believe
that business should lead efforts to define
and deliver sustainable development goals.
By putting pressure on traditional aid
budgets, ongoing austerity across much
of the developed world is highlighting
the power of the private sector, its
markets and technological innovation,
to help solve development challenges
and contribute to social outcomes.
This is echoed in the rise of new donors
(notably China and India), which focus
on economic development rather than
aid. Furthermore, as the need to rethink
capitalism is increasingly recognized, a
number of new initiatives have emerged.
Case in point: the “B-Team”, a group of
progressive business leaders whose mission
is “To catalyze a better way of doing business
for the wellbeing of people and the planet”.10
Meanwhile, the non-profit Social Progress
Imperative has just published a new Social
Progress Index11, which recognizes that
traditional GDP and corporate earnings
metrics are inadequate measures of success
in our globalized world. And with the Open
Working Group on Sustainable Development
Goals recently publishing a proposal to
the UN General Assembly on what should
replace the Millennium Development
Goals12, development and human progress
are very much in the spotlight.
Broad, overall acceptance of the notion of
convergence remains patchy, to be sure.
The UNGC study observes that NGOs are
still skeptical of business involvement in
development. And just 45% of CEOs report
that collaboration with CEOs leads to
tangible business opportunities and value.
Long-term partnerships, in short, are only
one “emerging option” among many.
We still believe, however, that the next
decade of development will look very
different from the previous three decades—
and that the Convergence Continuum may
well culminate in the emergence of a 4th
sector that leverages new business methods,
entrepreneurship and innovation to deliver
social outcomes, profitably and at scale.
At the heart of this concept is a competencycentric as opposed to a rigid organization
or sector-centric view if how development
challenges will be solved and by whom.
The context
“We…need to form
strong partnerships with
all stakeholders across the
full value chain to promote
a fair, positive global
market environment where
shared value is created
for everyone.”
Sun Li, CEO of China
National Aviation Fuel
5
The Convergence Continuum defines the
over-arching dynamics that are shaping
future operations and ways of working in
international development.
At one end are basic partnerships between
NGOs and businesses, typically focused on
a single issue with a low level of complexity.
Towards the other end, as multi-stakeholder
projects with large-scale potential steadily
evolve, we are witnessing the emergence of
new hybrid business models that do not fit
within traditional sector boundaries.
In our view, these hybrid business models
and new ways of working are set to evolve
further, driving the ideas of shared value
towards a common agenda that sits at the
nexus of private, public and civil society:
in short an entirely new collaborative
ecosystem, balancing the inter-related core
competencies of key stakeholders.
While not yet a 4th sector per se, we foresee
this new ecosystem (or marketplace) bringing
competing business sectors together with
governments and NGOs. It will complement
their ongoing activities and, as a result of the
collaborative opportunities it opens up, widen
their access to such critical resources as
technology and talent.
The Convergence Continuum shown in
Figure 1 (below) represents a spectrum,
though not necessarily sequential.
An organization involved in small-scale
partnerships, for example, may opt to
leapfrog multi-stakeholder coalitions and
move straight to a 4th sector model. We also
recognize that each element of the continuum
has value in its own right: it is challenging
to work in partnership with others and
different elements may be appropriate in
different contexts.
The key definitions, features, strategies,
business models and governance of each
element or stage of the continuum are
distinct, as can be seen in Figure 2 (right).
The Convergence Continuum
Towards a New, Collaborative Ecosystem
Small scale partnerships
Small bilateral one-o projects
Single country/focus area
Multi-stakeholder coalitions
Multi-stakeholder partnerships
which target systemic change and
potential large scale replication
One-o cross-sector
partnerships focused
on shared-value
Innovative technology and
finance drives partnerships
to new organizations
I II III IV
Evolution of models
Convergence of interests
Convergence
economy
Disruptions in
technology and finance
Issue based platforms
The evolution of a joint oering
that addresses a specific
development need providing
a holistic longer term solution
The fourth sector
New organizations focusing
on financial, social and
environmental impact that
delivers positive social
goods at scale and at profit
Convergence
continuum
Sector-boundaries
evaporate; new
organizations emerge
Figure 1: The Convergence Continuum
6
Figure 2
Figure 3
Basic Partnerships Multi-Stakeholder Coalitions Issue Based Platforms 4th Sector
Features • Often Bi-lateral relationships
• Single Issue, single country,
small scale
• Low complexity
• Combination of social and
economic goals but weighting
different per partner
• Larger mix of stakeholders
• Cross industry as well as
cross sector
• Issue Led
• High complexity
• Combination of social and
economic goals but weighting
different per partner
• Network of organizations
• Multi interrelated issues?
• Combination of social and
economic goals but weighting
different per partner
• Complexity reduces as
partnerships give way to
new “for-purpose” business
models
• Combination of social
and economic and
environmental goals
• Emerging new enabling
environment and regulatory
framework
Strategy • Tactical and often temporary
solution
• Short to Medium term
• Exit strategy for partnership
• Medium to Long Term
• Exit strategy for partnership
• Long term/indefinite
• Evolve in to either a coalition
or new hybrid business model
• Long term/indefinite
• Provide solutions to systemic
issues
• Reframe challenges as market
opportunity
Business
Model
• Transactional
• Unlikely to generate income
independently (likely one
main funder)
• Varied contributions (money,
expertise, products &
Services)
• Competency driven
• No formal legal structure
• Loose network
• Competency driven
• New legal entities and equity
JVs between disparate
partners
• Competency and market
driven
• May be physical or virtual
Governance • Steering Committee/Exec
Board made up of partners
• Vague & divergent
accountabilities
• Steering Committee/Exec
Board made up of partners
• Clearer accountabilities but
growing tension between
them
• No formal governance?
• Standards based
• Enabling or “open source”
bias
• Independent Boards
• Hard-wired social mission
Basic Partnerships A form of operation between two or more organizations that share objectives and goals,
or a commitment to “Shared Value”
Multi-stakeholder Coalitions A grouping of civil society, the private sector, the public sector, and other stakeholders that
come together for a common purpose
Issue Based Platforms The evolution of a joint solution that addresses a specific development and business need and
provides a holistic, longer term view
4th Sector A collaborative ecosystem (or marketplace) for positive societal or development outcomes
driving innovation, entrepreneurship, collaboration and scale
7
The concept of a 4th sector has provoked
considerable debate internally, and in some
external discussions with clients—all of
which has helped shape our thinking about
this evolving phenomenon. We believe it
will comprise new alliances, joint ventures
and ultimately entirely new business models.
We also believe it will be fueled by new
funding mechanisms and require a new
regulatory framework and enabling
environment—much in the way that a
football game requires rules and a referee.
It will, however, be symbiotic with existing
sectors in that it may well improve the
competitiveness or commercial attractiveness
of business opportunities for the private
sector, or the quality of outcomes in the
public sector. To a certain extent, it will also
be porous, admitting traditional public/private
bodies in the same way that we see private
enterprise active in the public sector today.
It is critically important to note that the
eventual emergence of a 4th sector will
not spell the demise of the existing three
sectors—to the contrary. All four will not
only continue to have key roles to play in
tackling poverty, but their work will also be
increasingly inter-related and complementary.
A 4th sector model may, for instance,
help address particular pre-competitive
challenges, health system logistics or
talent development among them, that the
traditional sectors find difficult to overcome
alone, or even in traditional partnerships.
Consider, for example, the Business Platform
for Nutrition Research (BPNR), an initiative
of the Geneva-based Global Alliance for
Improved Nutrition (GAIN), which seeks to
provide a pre-competitive space for nutrition
research and development. By taking a
collaborative, cross-sector approach to
define, fund and disseminate new research,
the BPNR aims to improve nutrition in the
developing world by sharing knowledge about
the underlying causes of (and solutions for)
global malnutrition.
By working together in this new ecosystem
to develop and enable new and innovative
initiatives, all players—governments, NGOs,
MNCs, and private business in individual
geographies—could maximize the impact
of their respective competencies on the
challenges of development.
Meanwhile, there are several existing
instances of multi-stakeholder coalitions,
in the form, for example, of Public Private
Partnerships (PPPs), which are working very
well and whose value we recognize.
Grow Africa, co-created by a number of large
multi-national businesses in conjunction with
African national governments, and incubated
within the World Economic Forum, is a good
case in point (see box below). As this initiative
evolves into an autonomous legal entity,
with a hard-wired social mission to create a
business ecosystem somewhat analogous to
a “Silicon Valley” for agri-business and with
blended public/private seed capital, might
it provide an early example of a 4th sector
hybrid business model?
We acknowledge that progress toward a
4th sector will take time. But we believe
that it is well underway and throughout this
document we highlight case studies that
illustrate initial movements forward.
As the development of new business models
and structures gradually changes existing
ways of working we foresee, for example:
• New, “for purpose” business and
collaborative delivery models Some of
these will be separate legal entities, for
which B-Corps (see below, p13) provides a
blueprint, and some will be more “virtual”
collaborative platforms—either in the
form of collaborative platforms for
innovation (e.g. Development Impact Bonds,
mobile money, m-Health, m-Learning, see
below), or in the form of pre-competitive
platforms across industries that improve
the operating environment for the three
existing sectors.
• Wholly owned equity joint ventures
between corporations, non-profits and / or
development agencies.
• New collaborative sources of capital and
investment, often public or donor funds,
but based on the agreed present value
of future economic income streams
(e.g. energy, talent, improved crop
yields, improved worker productivity
through improved health outcomes).
New, customized governance bodies
whose representatives are accountable
for the delivery of a hardwired social
purpose and are rewarded for competency,
not incumbency.
• Mergers among larger NGOs as they strive
for greater efficiency and maximum impact.
The 4th Sector
A Vision for Tomorrow, Taking Shape Today
Case Study: Grow Africa
Grow Africa is an innovative initiative
that seeks to create a pre-competitive
ecosystem for agriculture across Africa,
based on national agricultural priorities.
Building on public-private partnership
models piloted by the World Economic
Forum’s New Vision for Agriculture
Initiative, Grow Africa highlights the
ability of the public and private sectors
to define new ways of working, focused
on impact at ground level. By enabling
multi-stakeholder partnerships and
expanding awareness of best practices,
it promises to create important new
opportunities and could significantly
improve the way many companies do
business across the continent.
8
9
Our original paper discussed many different
drivers of convergence, including the rising
power of the emerging-market consumer,
the changing role of NGOs, and changing
business leader attitudes.
We now believe, however, that two in
particular stand out as the most powerful
and disruptive, accelerating the pace of
change by encouraging the convergence
of public, private and civil agendas at an
unprecedentedly rapid rate:
• Technology and the Digital Revolution
• Innovative Financing
Technology – Development
goes Digital
Technology (and the mobile phone in
particular) is often credited with having
a transformative impact on development.
Just consider the role of Vodafone’s Text to
Treatment Program for obstetric fistula in
Tanzania, which we highlight above.13
We believe, moreover, that the digital
revolution in international development has
only just begun. Indeed, just as private sector
organizations have recognized that becoming
a digital business requires, in effect, entirely
new, digitalized business models that enable
them to interact seamlessly with customers,
markets and delivery systems, we believe that
the future of international development will
also be predicated on new, seamless business
models built on digital technologies.
A joint ADP and NetHope survey carried
out in 2013 found that over 90% of NGOs
consider data analytics the most important
tool for delivering the better insight that
would help their end beneficiaries.
Analytics and Big Data capabilities, for
instance, which are becoming a key
differentiator for winning private sector
organizations15, could drive truly innovative
change for international development.
The amount of data now available about the
developing world, particularly from mobile
phone usage, has the potential to help
identify needs, provide services, and predict
and prevent crises for the benefit of lowincome populations.
Just imagine the role that Big Data and
Analytics could play in understanding the
underlying metrics of where polio outbreaks
might occur, for example, or in driving
insights into other international development
challenges that organizations have found so
difficult to monitor.
We envision continued technological
advances leading to aligned technology
visions and consolidated agendas across
all sectors. We recognize that digital
collaboration does not necessitate a new type
of entity, but it does anticipate breakthrough
innovation enabling “virtual” entities built
via collaboration. And we foresee digitalized
business models emerging in international
development that are characterized as
much by private-private (P2P) partnerships
as by the now ubiquitous public-private
partnership (PPP) arrangements.16
The Drivers of Convergence
Consolidated Technology
Agenda Case Study 1
DataWind aims to bridge the digital divide by
delivering Internet access through a lowcost Android tablet, Aakash, which provides
access to the Internet and educational apps.
The tablet, which retails at around US$40
but is being offered to students for as little
as US$20, has been rolled out across India
to students and school children in a program
subsidized by the Indian government.
Consolidated Technology
Agenda Case Study 2
Not Impossible, a California-based media and
technology company is using 3D printing to
provide hands and arms for amputees in
South Sudan and the war-torn Nuba
Mountains. In November 2013, Not Impossible
printed a prosthetic hand that allowed a
teenager to feed himself for the first time in
two years.17 The team is now teaching others
to print and assemble 3D prostheses.
A joint ADP and NetHope survey carried
out in 2013 found that over 90% of NGOs
consider data analytics the most important
tool for delivering the better insight that
would help their end beneficiaries.14
“With the steady growth
of private investment into
and within Africa and
Asia, the most valuable
thing that governments
and development agencies
can do is to ensure that
the poor benefit from this
opportunity now and in the
future. Developing business
models that ensure benefits
are equitably shared will
both help the excluded,
and, in the long run, the
companies and those who
invest in them.”
Mark Goldring, CEO, Oxfam
10
Innovative Financing –
Impact as a Proxy for
Shareholder Value
As private capital seeking a blended ROI
supplements traditional sources of aid, the
financing of social and economic development
will look very different in the coming decade.
Already, the rise of FDI (in China, for example)
is driving economic impact and improving
the quality of life. We still need to find
innovative ways of delivering private finance
to SMEs, entrepreneurs and social business
initiatives that drive inclusive growth whilst
managing the associated risk.18 But a number
of emerging models indicate the enhanced
role that private finance could play in
delivering public goods and social innovation.
Among them, Impact Investing: an approach
that seeks to deliver both a financial return
and a positive social impact, both of which
are actively measured.
Impact investing has the potential to
reconcile key shortcomings in traditional
financial markets by providing investors
in social outcomes with realistic returns.
Indeed, the range of actors involved in
funding (or “investing in”) international
development is expanding. We are seeing
increased civil society interest, for example,
as civil organizations position themselves
in the impact investment market to attract
funding, or to act as honest broker—
determining whether or not such investments
really do deliver what they promise in terms
of social impact. Consider, for example,
LeapFrog’s successful exiting of Express
Life, to Prudential PLC (see box right).
To date, less than US $40 billion of capital
has been committed cumulatively to impact
investments, but growth forecasts for
the industry are promising, ranging from
US $500 billion by 201919 to US $1 trillion
by 2020.20
There is, however, an ongoing lack of viable
investments, despite the capital available.
Key requirements include:
• Worked examples of different impact
investments, either to larger scale or
as purely commercial investments (e.g.
Leapfrog sale of Express Life in Ghana to
Prudential21).
• More evidence of available investable
opportunities. One major issue is the due
diligence process pre-investment, which
currently lacks enough business data of
high quality.
• Better understanding of the role of
analytics platforms and investment
readiness assessment methodologies in
addressing this issue.
• Earlier training of entrepreneurs in basic
accounting, management and business
planning skills.
Meanwhile, the Centre for Global
Development has been exploring another
new development financing mechanism,
Development Impact Bonds (DIBs).22
DIBs bring together private investors, nonprofit and private-sector service delivery
organizations, governments and donors to
deliver positive social impact efficiently and
cost-effectively. With no DIBs currently in
operation, this exciting new concept remains
unproven. Key issues relate to the legal/
corporate structuring of the investment
vehicle, the acceptance of risk transfer from
donors to investors, long timelines to impact
and therefore return (5-10 years) that are
limiting real life application. We do, however,
anticipate successful growth in this area,
which will drive the systemic change defined
above by attracting new private capital or by
changing the business and/ or delivery model.
LeapFrog Investments
LeapFrog Investments is a leading
organization in purpose investing,
building companies that maximize both
financial and social return. LeapFrog
Investments supports financial services
businesses - mostly companies that
provide insurance — in Africa and Asia
where there is the greatest potential for
both financial returns and social impact.
LeapFrog successfully exited Express
Life, to Prudential PLC, in a deal
announced in December 2013. Express is
a high-growth provider of life insurance
and savings in Ghana’s burgeoning
insurance market. The country is an
exciting, stable market, and one of the
fastest growing economies globally, with
the life insurance sector alone growing
52% per annum. Yet less than 2% of
Ghana’s 25 million people have access
to insurance, offering a significant
opportunity for quality, relevant and
affordable products to fill this gap.
LeapFrog’s investment in Express was
the largest private foreign investment
to date in Ghana’s insurance industry.
The successful exit highlighted the
potential return from ventures focused
on social returns as well as profit.
11
Innovative Financing
Case Study 1
One of the more progressed DIB
proposals has been created by the
Social Enterprise Instiglio in partnership
with a local NGO, Educate Girls, and
aims to help educate 40,000 girls in
150 schools in Rajasthan, India.
Innovative Financing
Case Study 2
The Health Impact Fund (HIF) proposal is
promoted by Incentives for Global Health,
a non-profit committed to advancing
market-based solutions to global
health challenges. The HIF incentivizes
the development and delivery of new
medicines through pay-for-performance
mechanisms. By registering new medicines
with the HIF, a pharmaceutical firm
would agree to provide its drug, at cost,
anywhere it is needed, and in exchange
for foregoing the normal profits from
drug sales, would be rewarded based on
the HIF’s assessment of the actual global
health impact of the drug. Governments
and other donors would finance the HIF.
We believe there is similar scope for
an expanded private sector role in the
financing of education—traditionally the
exclusive preserve of government—in
the form of Education Impact Bonds.
Under-resourced state education systems
would receive much-needed help. And
companies would be acting in their own
interest because they need to develop
talent and skills (see Case Study 1 below).
We sought to address this trend in
education by looking at how developing
talent has moved from a social or CSR
focus for business to being highly strategic.
Our work with Brookings and other partners*
in essence makes the case for private
investment in education and suggests that
countries that under-develop their talent will
experience a business skills crunch (Fig. 4).
Developing a robust performance framework
for educational outcomes is, to be sure,
hugely complex. But our report examines the
potential ROI for far-sighted businesses that
engage in education as a pre-competitive
issue. It also considers what some of
the new legal structures and financing
mechanisms could look like—and concludes
that such structures will likely become
increasingly prevalent in the future.23
In the meantime, in Peru, the government
is seeking in-kind contributions to social
development programs, in lieu of traditional
corporate tax. Companies including Backus,
the SABMiller subsidiary that is Peru’s
biggest brewer, Telefonica Peru, and Banco
de Credito, the Andean country’s biggest
bank, have opted to pay part of their tax
bill in the form of regional infrastructure
works in some of Peru’s poorest regions.24
“DIBS are a financial instrument that can bridge the
gap between investors and opportunities, and between
financial returns and social benefits”
Centre for Global Development
12
Age of the individual
Note: This is a non-exhaustive list of costs and benefits
Strategic growth drivers Maximize revenue by securing ‘skilled’ talent
Manage talent management costs
Indicates educational costs Indicates benefits to business
+
Benefits
-
Costs
0 5 18 22 65
Educational Costs
Early childhood education, Primary
education, Secondary education,
Tertiary education
Finally, when considering these future trends,
it is worth noting the important role that
monitoring and evaluation (M&E), already
a critical element in defining programs
and their impact, will play—especially
in driving the success of an emergent
4th sector. M&E, we believe, is a key
component in creating outcomesbased marketplaces and will be crucial
in providing the evidence base for such
new business models as DIBs. Indeed,
the success of the thoughts and ideas
in this paper will in part be determined
by the robust outcome performance
management framework underpinning
impact measurement and outcomes.
Figure 4
“As the leading innovator in global health, PATH’s core
work hinges on cross-sector collaboration. We team
with the private sector, governments and other NGOs
to deliver millions of people life-changing solutions
that disrupt the debilitating cycle of poverty and poor
health. As we see growing opportunities for creative
hybrid business models, we are investing in talent and
infrastructure that take our relationships beyond our
traditional transactional and philanthropic models to
create maximum impact.”
Steve Davis, President and CEO, PATH
13
Partnerships are complex. The more partners
involved, the harder it becomes to make
the partnership work well. Among the many
challenges:
• Moving away from a donor/beneficiary
relationship and becoming true partners
• A lack of clarity around objectives or
potentially conflicting objectives
• Unfocused outcomes
• Surviving through changes in personnel
• Complex governance mechanisms
• Lack of investment in the running of the
partnership
However, the evolution of the Convergence
Continuum is highlighting the potential for
new partnership opportunities that are less
complex and cumbersome.
We would note, in particular, new hybrid
business models, new “private-private”
partnerships (as opposed to Public-Private
Partnerships (PPPs), and social intrapreneurs.
Hybrid business models—
Sustainability at Scale
In the Convergence Economy we presented
a vision of a new breed of organization
that does not fit neatly into the private,
public or non-profit organizational sectors.
Convergent or “hybrid” business and
delivery models are now emerging that
have some attributes of each or all of the
three existing sectors and that integrate
social impact with business approaches.
A good example of a hybrid organization
that delivers social impact while generating
profit is the JITA program, now running in
Bangladesh. Initiated by the NGO CARE
International to generate income and
employment opportunities for the rural
poor, the program has created a rural sales
force of destitute women called Aparajitas:
a Bengali word meaning “Women who
never give up”. These women are trained to
purchase and then sell on products aimed at
the “bottom of the pyramid” from companies
including Unilever, Bata, BIC, Square, Lalteer,
Grameen Danone and d.light (a solar energy
provider). In 2011 JITA was spun out as an
independent, for-profit business to enable
the initiative to scale and be sustainable.25
Just as building a new house from scratch
may sometimes be better than trying
to extend an old one, new forms of
organization with an explicit focus can
be more dynamic (and successful) than
complex cross-sector partnerships, which
need to accommodate the different goals
and interests of a diversity of parties.
Such organizations can be flexible when
establishing themselves as a new type of
legal entity (e.g. a private sector organization
becoming a not-for-profit in order to receive
grants and a favorable tax status, or a notfor-profit becoming a business in order to
earn revenue and reward shareholders).
All, however, will still need to reward “fit for
purpose” business models and create a real
marketplace for positive social outcomes.
Consider, for example, the rise of the
B-Corps – organizations that are “purpose
driven and create benefit for all stakeholders,
not just shareholders”, in the US. B-Corps
organizations also “envision a new sector
of the economy”26 - a 4th sector of “for
benefit” organizations. There are already
500 such corporations registered in the US
and legislation is in place to expand them.
New models, partnerships and players
Hybrid Business Model
Case Study 1
The UN-backed Medicines Patent Pool
aims to lower the prices of HIV medicines
and improve access to them in developing
countries by effectively engaging with
the pharmaceutical sector, generic
manufacturers, donors and NGOs.
Hybrid Business Model
Case Study 2
Novartis Social Ventures build local,
sustainable capabilities for healthcare
worldwide by addressing issues that impact
access to healthcare, including the need for
education, infrastructure and distribution.
The Arogya Parivar (“healthy family” in
Hindi) program in India, for example,
recruits and trains “health educators”
in remote villages to work with doctors
in mobile clinics that provide access to
screenings, diagnoses and therapies.
The program also increases access to
80 medicines, including some over-thecounter products sold in smaller, more
affordable packages. Since its launch, it
has given 42 million patients across 33,000
villages better access to essential drugs.
14
Private-Private (P2P)
Partnerships—Driving
Innovation
As Paul Polman, CEO of Unilever, recently
commented: “The challenge is likely to
encourage a much more collaborative form
of capitalism. Companies will have to work
with each other, not just with governments,
nongovernmental organizations (NGOs), and
civil society”.27
There is, in other words, huge potential for
private-private partnerships, incorporating
a wide range of industries, in international
development. Companies are clearly looking
to develop beneficial, unconventional B2B
relationships. And while traditional PPPs
remain important, collaborative business
provides an additional opportunity to drive
innovation and sustainable change.
The key will be to focus on mutually
sustainable benefits and complete discussions
upfront on how best to work productively
together. Only by aligning on key principles
in advance, and eliminating the traditional
competitive element, will the parties be able
to drive forward new models for collaboration.
An excellent example of this is the partnership
between Barclays and GlaxoSmithKline (GSK),
which is detailed below.
Social Intrapreneurs—
An emerging breed of
corporate change maker
Much has been made of the potential for
open innovation—the process by which
companies seek ideas for new products,
services and business models from beyond
the factory wall. However, the latent
innovation and entrepreneurial potential
that lies within a company’s own workforce
is also considerable. And by innovating from
within some of the world’s largest companies,
social intrapreneurs are developing scalable
solutions to some of the world’s most
intractable challenges—from health and
education to the environment.
Passionate about social issues and needs,
they look not for margin but to make a
difference. And by leveraging their talents,
and an ability to see the potential beyond the
traditional focus areas of the organization,
they are developing pragmatic solutions.
We believe that social intrapreneurs will
play a growing role in driving innovation
in international development, creating
new market opportunities for commercial
businesses both at home and in new markets.
Their increasing involvement highlights the
shift in thinking towards aligned initiatives.
Private-Private Partnership
Case Study
Barclays and GlaxoSmithKline (GSK) are
collaborating on an innovative partnership
in Zambia, which aims to increase access
to affordable healthcare and medicines
while supporting economic growth
through small business development
and job creation. The program has four
focus areas: building a cost-effective
private sector medicine supply chain;
establishing small enterprise health
outlets; testing an affordable micro
health insurance product; and embedding
healthcare education in existing
community finance networks. A dedicated
team representing both organizations
is working in Zambia to implement
the £7m program over three years.
Social intrapreneurship
Case Study
ADP has engaged in a large initiative
to foster social intrapreneurships.
Accenture was, for example, the
main convening sponsor of the
League of Intrapreneurs, a global
competition gathering more than
200 entries related to individuals
within companies who have an idea.
Graham Simpson, a researcher at
GSK, is one of the competition’s
winners, awarded for utilizing the
opportunity to explore simpler,
more effective diagnostic testing.
15
We firmly believe that national governments,
accountable to their populations, remain a
critical part of this new, evolving ecosystem.
Indeed, they already play a unique role.
Consider, for example, the International
Finance Facility for Immunization (IFFM)
an initiative of the Global Vaccine Alliance
(GAVI), which pulls together the specialist
skills of all the main players in immunization—
the World Health Organization (WHO),
UNICEF, the World Bank, the Bill & Melinda
Gates Foundation, donor governments,
developing countries, international
development and finance organizations, as
well as the pharmaceutical industry—into
one decision-making body. The IFFM has
raised US$4.5 billion from investors through
sovereign-backed bonds to help ensure
predictable funding and more efficient
operations. A recent independent report
commended the IFFM for its financial model,
which has not only generated “extremely
good” returns, but has also helped GAVI
save more than 2.1 million lives.28
However, the role of government may
change in the future. Instead of functioning
as service deliverers, governments may
begin to act more as “choreographers” of
services. They will continue to provide the
regulatory environment, ensure the rule
of law, set targets or educational criteria,
and even provide fiscal incentives—yet they
will remain agnostic as to how services
are delivered. And they will increasingly
harness the power of private investment,
innovation and entrepreneurship to deliver
public services, and play a critical guiding
role as they recognize the potential benefits
of shifting away from projects and pilots
and toward longer-term solutions.
The role of government
16
We plainly need a new paradigm for
international development, which currently
suffers from a high degree of centralized
planning. Critics, indeed, would argue that
development funding is driven more by what
donor governments are prepared to pay for,
and less by what citizens actually require,
or by what could be sustained through
market-based demand: a situation analogous,
perhaps, to the Soviet “command economy”,
which was driven by the dictates of central
planners, not the needs of citizens.29
We acknowledge there are counter arguments
to this view30, but it is the central thesis
of this paper that the steadily evolving
Convergence Continuum is showing us
the way toward a new paradigm: a new
collaborative space—the 4th sector—blending
the best aspects of private, public and
civil society and turning them into a true
marketplace for social outcomes at scale.
After all, the big, collective development
challenges we face – access to energy,
health or education - may actually be
market opportunities in disguise, and
could be reframed as such to engage
the private sector more effectively in
development. With one billion people
served by health facilities without power,
and 293 million children in primary schools
that lack electricity, energy access must
surely be an opportunity for utilities and
power companies, for example. Just as
nourishing the next billion people on the
planet represents a huge opportunity for
food manufacturers.
The private sector could therefore be seen
as an engine of economic growth, which in
turn needs to be as inclusive as possible.
In the long run, we envision the potential
for some truly radical developments as
private business starts to play a larger and
more diverse role.31 Could pay-as-you-go
electricity have the same transformative
effect on energy access as it’s had on
access to mobile telephony, for example?
Could the drones now used in a variety of
commercial contexts be leveraged to deliver
essential goods and services to the remote
rural poor? Might we see the equivalent
of an amazon.com for aid logistics?
We recognize, of course, that some
organizations are moving faster along the
Convergence Continuum than others, and
that it will take time to realize the full
promise of the 4th sector’s collaborative
ecosystem. We also recognize that the next
wave of United Nations’ initiatives—likely
to be around sustainable development—will
impact on the Convergence Continuum,
and thus influence the development of the
4th sector, in ways yet to become clear.
In the meantime, we offer some key
considerations for all three existing
sectors (see Key considerations below)—
and stress our readiness to work with
each of them, singly and collectively, to
catalyze, co-create, challenge, disrupt
and nurture new ideas and approaches.
This report has focused more on “what”
the Convergence Continuum and 4th sector
are, rather than on “how” we achieve
them. But it only marks the beginning of
a process of engagement and dialog with
a wide group of clients and stakeholders.
We anticipate a wide-ranging program
of both physical and virtual seminars and
roundtable discussions, whose outcomes
will be disseminated via articles, blogs and
opinion pieces. We welcome feedback and
support as we embark on this journey.
Meanwhile, we are keen to help you move
from pilots to platforms, from silos to
system solutions: in short, to help you
achieve the scale and strength that we
believe holds the key to poverty eradication
worldwide. The time to join us is now.
The future—toward a true marketplace
for social outcomes
Government / Donors
Differentiate between funding and
service delivery
• Consider shifting from end-to-end delivery
to becoming a “choreographer” of public
services across a diverse set of partners
and stakeholders.
• Harness the power of private investment,
innovation and entrepreneurship in
delivering public goods and services.
Shift funding focus from projects
and pilots to platforms and solutions
• Make initial investments in market-based
solutions to help address failures and build
the foundations for an ecosystem that
rewards development outcomes.
• Invest in experimentation with new funding
models such as Development Impact Bonds
to attract and catalyze new investment
in development.
Business Leaders
Consider re-framing development
challenges as market opportunities
• Consider the notion that challenges in
health, education, and nutrition might
be market opportunities in disguise, and
that a challenge in one value chain could
be a business opportunity in another.
What, for example, might the opportunity
cost in terms of productivity impact be
if consumer goods companies were to
address the challenge of malaria among the
hundreds of thousands of farmers in their
supply chains? Might this also be a market
opportunity in disguise for pharmaceutical,
technology or micro-insurance players?
Shift your mindset from PPP to P2P
or “Private-Private” Partnerships
• Consider developing a partnering capability
not only cross sector but also within the
private sector.
• Leverage your existing strengths and
experience to enhance the power of B2B
partnerships as part of new platforms and
outcome-based business models.
• Embrace latest thinking on new M&E and
performance frameworks.
Embrace disruptive change from
within
• Allow ideas for new business models and
innovation to emerge from your employees
as intrapreneurs.
• Create “safe-spaces” for experimentation,
incubation and scale-up.
Imperatives for Civil Society/
NGOs
Seize the opportunity to engage with
business around development issues
• Seek to harness the latent power and
socio-economic impact of progressive
corporations; think less in terms of
donations and more about how to
encourage their support for more inclusive
business practices.
• Leverage your core competencies to design
new products and services, tapping into the
“intrapreneurial” and innovation potential
of your supporter base, particularly those
who are employees of global corporations;
seek opportunities for hybrid spin offs
from within.
Build understanding and capability
around new funding models
• Replace “income” (or fundraising) with
“outcome” as a core barometer of success
(it will make current debates about NGO
executive remuneration moot).
• Diversify your funding base by exploring
new revenue generating business models
and social enterprise structures.
• Enable the delivery of such structures by
ensuring that technology is leveraged to
provide the organization with the data it
needs to communicate and track impact.
Revamp your skills base
• Consider that the skills and experience
of the past may even be redundant in
the future.
• Develop (or acquire) new skills in areas such
as impact investing, digital & analytics.
• Plan ahead around skills acquisition (and
retention) as part of refreshed human
capital strategies.
Key considerations for
17
18
Copyright © 2014 Accenture
All rights reserved.
Accenture, its logo, and
High Performance Delivered
are trademarks of Accenture. 14-5183
About the Authors
Gib Bulloch, Senior Managing Director,
Accenture Development Partnerships
Gib Bulloch is Founder and Senior Managing
Director of Accenture Development
Partnerships. With more than 15 years’
experience in the field of Corporate
Responsibility, Gib travels and works
extensively in developing countries and is
a regular speaker and blogger on the role
of business in development, cross-sectoral
partnerships/convergence and has played
a key role in promoting the emerging
concept of social intrapreneurship.
Louise James, Managing Director,
Global Programs
Accenture Development Partnerships
Louise James is a Managing Director in
Accenture’s management consulting
practice where she has worked since 1997.
Within Accenture, Louise is the Global
Programs Director for Accenture Development
Partnerships where she oversees the
organization’s work with international NGO’s,
donors and Foundations and has a particular
focus and interest in cross-sector partnerships
between the private sector and civil society.
About Accenture Development
Partnerships
Accenture Development Partnerships
collaborates with organizations working in
the international development sector to help
deliver innovative solutions that change the
way people work and live. Its award-winning
business model enables Accenture’s core
capabilities—its best people and strategic
business, technology and project management
expertise—to be made available to clients in
the international development sector on a
not-for-profit basis.
About Accenture
Accenture is a global management consulting,
technology services and outsourcing company,
with more than 293,000 people serving
clients in more than 120 countries. Combining
unparalleled experience, comprehensive
capabilities across all industries and business
functions, and extensive research on the
world’s most successful companies, Accenture
collaborates with clients to help them
become high-performance businesses and
governments. The company generated net
revenues of US$28.6 billion for the fiscal year
ended Aug. 31, 2013. Its home page is
www.accenture.com.
1. This term is not brand new and to our
knowledge was first defined online (http://
www.fourthsector.net/) and referred
primarily to blurring boundaries between
the public, private and social sectors. Here
we use it in a slightly different context to
describe an emerging business ecosystem
that is expanded upon throughout the paper
2. http://www.vodafone.com/content/dam/
connectedwomen/pdf/VF_WomensReport_
V12%20Final.pdf
3. http://www.gsk.com/en-gb/media/pressreleases/2013/gsk-and-save-the-childrenform-unique-partnership-to-save-thelives-of-one-million-children/
4. http://nonprofitquarterly.org/
management/22220-unlikely-takeover-athird-way-to-scale-social-enterprise.html
5. https://www.devex.com/news/how-arestaurant-chain-pioneered-a-socialimpact-bond-to-fight-malaria-82212
6. http://www.anglogold.com/subwebs/
informationforinvestors/reports09/obuasimalaria.htm & http://www.theglobalfund.
org/en/partners/privatesector/chevron/
7. The concept of shared value has its
supporters but also its critics. See, for
example, the forthcoming paper in Volume
56, No. 2, Winter 2014, of the California
Management Review, “Contesting the Value
of the Shared Value Concept” by A. Crane,
G. Palazzo, L.J. Spence and D. Matten
8. www.accenture.com/adp
9. http://www.accenture.com/microsites/
ungc-ceo-study/Pages/home.aspx
10. http://bteam.org/about/vision/
11. http://www.socialprogressimperative.org/
12. http://www.un.org/apps/news/story.
asp?NewsID=48327#.U_OyzaP8LDc
13. http://www.vodafone.com/content/dam/
vodafone/about/foundation/ccbrt.pdf
14. Technology in Development Chapter 3, p2
15. Remaking Customer Markets: Unlocking
Growth with Digital paper highlights key
trends in this area. For example: 71%
of respondents cite at least one digital
capability as critical growth enablers,
including data analytics (50%), mobile
computing (48%), social media (46%),
and eCommerce (38%).
16. http://www.businessweek.com/
articles/2013-07-30/myanmar-ablueprint-for-international-development
17. http://www.notimpossiblelabs.
com/#!project-daniel/c1imu
18. http://www.pwc.co.uk/governmentpublic-sector/international-development/
publications/reducing-funding-risks.jhtml
19. http://www.monitorinstitute.com/
downloads/what-we-think/impactinvesting/Impact_Investing_Exec_
Summary.pdf
20. http://www.rockefellerfoundation.org/
uploads/files/2b053b2b-8feb-46ea-adbdf89068d59785-impact.pdf
21. http://www.ventures-africa.com/2013/12
prudential-plc-acquires-ghanas-express-
life-insurance-business/
22. http://international.cgdev.org/publication/
investing-social-outcomes-developmentimpact-bonds
23. http://www.accenture.com/us-en/Pages/
insight-investment-global-educationstrategic-business-imperative.aspx
24. http://blogs.ft.com/beyond-
brics/2013/05/17/peru-a-new-kind-of-
corporate-tax/#ixzz2ZlJBrpxZ
25. http://www.jitabangladesh.com/
26. https://www.bcorporation.net/what-areb-corps/the-b-corp-declaration
27. http://www.mckinsey.com/features/
capitalism/paul_polman
28. http://www.gavi.org/funding/IFFIm/
29. Acknowledgement to Easterly, William
(2014) ‘The tyranny of experts’
30. http://www.economist.com/news/financeand-economics/21612183-new-researchsuggests-development-aid-does-fostergrowthbut-what-cost-aid
31. http://eriksimanis.com/wp-content/
uploads/2014/06/Simanis-Vantage-PointCornell-Enterprise-Spring-2014.pdf
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