Why Hybrid Value Chains Matter
Editor’s Note: This is the first of a series of blog posts from Ashoka, (a NextBillion Associate Partner) on the impact of Hybrid Value Chains.
Though my perspective for writing about Hybrid Value Chains (HVCs) is from the healthcare perspective, many of the trends I have seen in the healthcare and innovation space are applicable across sectors. At almost every conference I’ve attended in recent months that is related to social change, impact, international development, inclusive business, innovation, etc. there is always a call for two things: impact data and business models. Whether coming from foundations and the traditional donor community, business executives, NGOs, government ministries, academia, or other subject matter experts in a field, people want to know what is working, what isn’t and how they can make what is working work better, work more quickly and help more people.
Often, however, what is missing from these conversations is the perspective of the social entrepreneur – the person with the system-changing idea who can not only think big, but can accomplish great things. For example, see the recent study that found that within 10 years of being elected to Ashoka’s fellowship, 83% of Fellows have changed a system at the national level in at least one way. Additionally, 72% of Fellows are using market-based approaches to bring about that change.
How do all of the stakeholders mentioned above tap into the power of the social entrepreneur and leverage that power to innovate for social good? Ashoka’s answer is the Hybrid Value Chain. To me, the most interesting piece of the Hyrbid Value Chain model is not that these models typically work best when the market opportunity is $100 million or more, but rather it is the term “mutually beneficial.” When HVCs are created, the fact that this mutually beneficial relationship will lead to a large market opportunity is practically a given. What is most exciting here though is not the size of the market, but that this is a market that did not exist before. If you assume that all of the research and studies that have been done about new markets, the base of the pyramid consumer and financially sustainable development to be true, then the next question is typically: how do we tap those markets? HVCs – and their inherent nature of valuing the skills, network and resources at the disposal of the citizen sector as equal in value to the skills, networks, and resources available on the corporate side – offer a huge opportunity to not only tap into the market, but create markets where currently none exist.
Ashoka is able to connect corporations with citizen sector organizations and financial institutions based on the expertise we have gained in identifying and recognizing systems-changing innovation in addition to our ability to cross boundaries into the business world. With more than 2,500 fellows and partnerships with multiple strategic corporate actors, we can tap into their knowledge and expertise to understand the challenges they face and how to best tackle those challenges from both the corporate and social angles.
Through our work in Housing, Agriculture, and Healthcare, Ashoka has piloted different models for how HVCs can be formed in those sectors. All of the models are designed to scale and include a large learning component. What Ashoka can offer to those looking to build HVCs is access to a network of vetted citizen sector organizations with the ability to scale, a deep knowledge of what makes partnerships between different parties succeed, and the understanding of which sectors and markets are ready to be transformed.
Want a deeper dive into HVCs? Check out a complimentary copy of a recent Harvard Business Review article co-authored by Ashoka CEO Bill Drayton and FEC Chief Entrepreneur Valeria Budinich here.