My Journey to Hybrid Value Chain Enlightenment
This time last year, I was heading to business school to “gain the skills necessary to be great at doing good” – a lofty goal, but the true reason I was pursuing a business education. I knew my passion for social impact was unwavering; I just needed the tools to make it happen.
I was thrilled to find students in my MBA class at The Ross School of Business at The University of Michigan who had been teachers, Peace Corps volunteers, nonprofit professionals, and environmental stewards and that we shared similar goals with the financial analysts, bankers, and tech guys (and gals) who were there to polish powerful business skills. It became clear that my values were shared by so many in my generation. We were entering business school to fuse our passion for social impact with our desire to implement it successfully, sustainably, and profitably.
Ross offers its business students many ways to become involved in social impact: work on a team of community consultants to increase the capacity of nonprofits, convene stakeholders to revitalize Detroit and cities like it, sit on the board of the school-supported social venture fund, become a part of the country’s best Net Impact Chapter, connect with the William Davison Institute, and learn from professors like Ted London, who focuses on how market forces can be used to alleviate poverty at home and abroad.
For me, it was the seven-week, full-time consulting engagement where teams of end-of-first-year MBA students apply what we learned in a real corporate setting that crystallized my vision of how business skills and social concern could come together in my life’s work.
My team of six included students with backgrounds in marketing, finance, technology, base of the pyramid (BoP) field work, and nonprofit management. We arrived at the headquarters of a globally-known, multinational auto manufacturer (the project is not yet public) to work with the manager of social sustainability and a senior technical leader in research and innovation. We were charged with creating partnership models and value chain scenarios which could leverage the company’s expertise in mobility and connectivity to help female entrepreneurs in India (one of the U.S. State Department’s women empowerment zones) and which could be scaled globally.
Our team did extensive research on low-income urban and rural Indian women and the issues they face daily: scarce resources in primary health, lack of safe drinking water and education, and almost no access to business training, capital, or economic opportunities as they strive to be family providers through entrepreneurship. We explored a wide range of technological solutions and innovative business models, and we interviewed many people working to develop BoP markets and innovative strategies to empower women and alleviate poverty.
We delivered a business plan that was economically sustainable, that could be scaled in size and reach, and that was rooted in market-driven business while making transformative change in the industry and in the lives of the underserved. The team’s work was built largely on the teachings of the late C.K. Prahalad, the preeminent thinker in the space who remains a hugely important figure at Ross, and guidance from our two faculty advisers, Thomas Gladwin, who specializes in sustainable enterprise, and M.S. Krishnan, a co-author with Prahalad of The New Age of Innovation.
As our project ended, the team was informed that what we had conceptualized would actually be implemented – an incredible, real-world honor for six MBA students. More importantly, it confirmed for me that business can be a force for change for the good of all, while still serving the “enlightened” self-interest of the company.
The concept is revolutionary, yet so obvious, simple, and critical for those who want to be great at doing good. The magic comes in creating the vision for a profitable and purposeful project, and in pulling together the right players: the large multinational to provide resources, scale, and operational capacity; the citizen sector organizations to co-develop the right products and services for the market, tailor distribution, and aggregate demand; the financial institutions to develop applicable instruments to grease the wheels; and the convening partner to articulate, and in many cases translate, the goals of each partner (which, while not identical, are certainly complementary).
I was hooked, and I wanted to learn more. To that end, I landed a job at Ashoka this summer working with the Full Economic Citizenship initiative, mapping where else in the world these kinds of business-social alliances exist. In designing the research, I learned that the models my MBA team used derive from deeply respected business and historical concepts, and that they have a name: Hybrid Value Chains (HVCs). All my prerequisites for functional business models with social value are included in Ashoka’s HVC definition:
- Leverage a business’ core competency
- Build an economically sustainable, market-driven plan
- Include trusted partners to co-create new value for all stakeholders
- Develop a model that can be scaled globally
- Design the model to make transformative changes in the industry and the society
My MBA team and I had built a Hybrid Value Chain and we didn’t even know it. Now, as I sit in Ashoka’s global headquarters and we explore HVC examples in major industry sectors affecting billions of people, I’m fully realizing the power of this business model. Like me, you may not know you’ve formed an HVC, but you may be part of one: They’re sprouting up all over the world, jump-started by leaders who see a future where business and social value are created together in innovative ways.
My mission this summer is to help Ashoka engage with the many HVCs we know are out there, staffed with people from business and citizen sector organizations who want business to generate big wins for communities and families as well as for their investors. So if you are part of an HVC, or know of one, please contact me! If you’re not sure your project is an HVC, read here for the Harvard Business Review article, post a comment below, or contact me [email protected].
By Kristen Schultz