Ashoka Plays Matchmaker to Businesses and Social Entrepreneurs

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Source: Ashoka

Mexican social entrepreneurs Carlos Cruz was admittedly suspicious of big business when a group from Danone SA sought his help training low-income women to sell yogurt on the street.

For six months, their teams met in neutral locations, hashing out how Cruz might adapt a life- and job-skills program he’d designed for his citizen sector group Cauce Ciudadano to make the vendors more productive.

Three years later, more than 200 Cauce-trained saleswomen are now expected to sell 50,000 kilograms of Danone yogurt and 75,000 liters of water, more than triple 2009’s sales. According the food-products giant, that growth was possible because Cauce came to recognize the power of profits and Danone learned the value of investing in its saleswomen’s lives.

For that kind of business-social partnership to be successful, “you always have to put yourself in the other side’s shoes,” Cruz told a workshop in Mexico City this week. As a result, he added, “today we have a business that has ethics and that’s doing business, too.”

Scores of social entrepreneurs joined representatives from 25 companies – including Microsoft, Banamex and bread-maker Bimbo – to hear the Danone-Cauce story and to explore their own potential alliances at this week’s forum, which was organized by Ashoka and the Mexican business foundation Fundemex.

Since 1981, Ashoka has pioneered the concept of “social entrepreneurship,” supporting a global network of more than 2,000 social innovators. Now, it’s promoting so-called “hybrid value chain” alliances between corporations and civil society groups, tapping each sector’s separate strengths to sustainably serve the poor.

“Businesses know how to do things that we as social entrepreneurs, frankly, have no idea about; just as social entrepreneurs know how to do things that businesses can’t even imagine,” Ashoka vice president Valeria Budinich told the workshop. “That’s where the opportunity for complementary roles is born.”

A model hybrid value chain – or “HVC” – forms a kind of win-win triangle, empowering businesses to create new markets and improve their image, citizen sector groups to earn stable incomes and up their social impact, and low-income families to benefit from new products and services.

A case in point: Mexican microfinance group AMUCSS works with global insurance giant Zurich Financial Services to sell micro- life insurance to the rural poor. The alliance gives Zurich access to AMUCSS’s distribution network and local market knowledge; AMUCSS gets Zurich to assume the financial risk, underwriting the initiative’s growth; and low-income policyholders help their families withstand the economic shocks associated with losing a primary wage-earner.

More than 27,000 low-income Mexicans have bought life insurance through the program, paying annual premiums of US$2 to US$50 – and Zurich sees a domestic market of as many as 70 million more people.

“Zurich doesn’t have the infrastructure, not in Mexico and not in the world, to be able to serve these communities,” Eduardo Becerril, director of mass markets at Zurich Mexico, told the gathering. “This alliance is a strategic arm for us. Without it, we absolutely wouldn’t be in this market. We couldn’t be.”

Still, business-social partnerships often develop slowly, and potential partners have trouble matching up. In breakout sessions and a one-hour round of speed-date-like meetings this week, both groups cited that lack of initial contact as a primary concern.

“We’re ready, and I see that companies are really ready to do this, too,” said Estela Villareal, founder of Unidos, a Mexico City-based group for disabled children. “What’s missing is that link to say, ‘You need this, I need that; let’s couple up,’ – like an internet page where people look for a husband.”

Hoping to play matchmaker, Ashoka is planning five additional workshops and a social investors’ roundtable in Mexico this year. Those sessions will focus on developing HVC models for housing, health, ecotourism and agriculture, training partners to bridge gaps in their disparate in organizational cultures.

Martin Lopez, who runs Mexico’s anti-poverty business group Movimiento BDP, was familiar with the strategy, but sat sketching the HVC triangle in his notebook nonetheless. “We have a clear idea what to do, but it takes time and tools to even out the different degrees of knowledge” that business and citizen sector groups bring to the table, he said.

Contributed by the Ashoka Mexico team.