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For-profit organizations today have an opportunity to collaborate with citizen-sector organizations CSOs on large-scale problems that neither group has been able to solve on its own. The power of such partnerships lies in the complementary strengths of the participants: Businesses offer scale, expertise in manufacturing and operations, and financing.
Social entrepreneurs and organizations contribute lower costs, strong social networks, and deep insights into customers and communities. But to work together effectively, they must focus on creating real economic as well as social value. We believe they can do so by forming what we call hybrid value chains HVCs , which capitalize on those complementary strengths to increase benefits and lower costs.
HVCs can now be found in many industries all over the world. Collaboration between corporations and CSOs has reached a tipping point: It is becoming standard operating procedure. Before we explore the inner workings of hybrid value chains, it may be helpful to look at how we got here.
In the s business became entrepreneurial. Upstarts devising faster and more-efficient ways to produce goods ushered in the Industrial Revolution. They introduced innovation after innovation, ultimately changing the world.
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But while the for-profit sector enjoyed sweeping progress, the citizen sector languished. It faced little outside market pressure and relied heavily on funding from governments that, as monopolies, feared competition. CSOs felt little push to innovate; as a result, they fell far behind in productivity, performance, pay rates, confidence, and reputation. By the imbalance between the business and social sectors of society had become intolerable.
We had great TVs but lousy education. New opportunities emerged across the world except where governments got in the way , and the citizen sector restructured itself to become entrepreneurial and competitive. Since then, the citizen sector has been creating jobs about three times as fast as have other employers in the Organisation for Economic Co-operation and Development countries.
In Brazil the number of CSOs rose from about 36, to nearly a million over the past 20 years. Today millions of these groups attract talented individuals who long for challenging and lucrative work that is consistent with their personal values and goals. Take David Green, who helped start Aurolab, an India-based nonprofit that produces intraocular lenses to restore sight to cataract patients. Aurolab is the manufacturing division of Aravind Eye Hospitals, which charge patients for the lenses on a sliding scale depending on their income. Or consider Rodrigo Baggio, who created a chain of computer schools serving hundreds of slums across Latin America and Asia.
He persuaded one organization after another to donate, warehouse, and transport their used computers, and thousands of slum dwellers to set up and run the schools. These schools now boast some , graduates. We could go on and on. But our point is that many social entrepreneurs are already out there changing the world—and businesses have largely been overlooking them. It was previously safe to ignore the citizen sector, because this segment of the economy was relatively small in scale and low in productivity. The companies that work with and learn from the sector and its leaders will reach large new markets.
They will also gain competitive advantage from new business models and first-mover benefits. The time is ripe for collaboration because the two sectors are now equally innovative. Together they can promote changes as powerful and widespread as those produced by the Industrial Revolution. Hybrid value chains represent a systemic shift in the way businesses and CSOs interact. They are collaborations that redefine value in game-changing ways, with each side clearly understanding and willingly accepting the risks and rewards.
Consider the housing industry. Until recently, that was nearly impossible, because the business world acting alone—with its existing cost structures and limited understanding of local markets—could not reach those customers. Nor, for their part, had governments or CSOs figured out how to serve them.
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What would it mean for your business if you could unlock the potential of a trillion-dollar housing market? They collaborated on market research and developed a business plan. Kairos, in return for fees, recruited and managed a female sales force. That model generated income for previously unemployed women and pushed the product into the hands of potential customers, rather than waiting for a storefront to pull them in.
Other local CSOs performed administrative functions in return for a percentage of revenues, which they reinvested in community projects. These consumers often have a steady source of income but lack proof of stability and therefore are ineligible for mortgage loans. Within this new-construction HVC, CSOs can serve as demand aggregators, bringing groups of consumers to for-profit developers, or as full design and investment partners.
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Agriculture is another market that profits from hybrid value chains. But Ashoka and local citizen groups persuaded Amanco, a maker of water-conveyance products, otherwise. Viewing these farmers as a significant market opportunity, it is reengineering its business model to increase the value of small individual transactions. CSOs are critical to this effort: They organize farmers in loan groups, promote irrigation technologies, and even install systems.
The customers have become more-efficient farmers and enjoy higher and more-certain yields of multiple crops, sometimes tripling their prior income. HVCs unleash many opportunities for growth. Moreover, if a business can construct an HVC to profitably serve lower-income consumers, it can often provide those services to higher-income consumers as well. Companies that pioneer HVCs will run up the learning curve, leaving competitors behind. And as they gain experience, they can carry their new knowledge into different environments. HVCs require entrepreneurs who can spot opportunities, devise creative solutions, and collaborate with a diverse group of partners.
They give companies a chance to identify and encourage talented leaders. They also attract progressive thinkers and increase commitment to employers, because working on this new frontier of business is exciting, socially relevant, and challenging. CSOs will gain at least as much, beginning with access to cheaper capital. This will allow them to scale up, driving costs down further. CSOs will attract and retain talented people who want their work to make a positive difference on a large scale.
And, last but not least, CSOs will vastly improve the lives of the people they sought to help in the first place. Customers, too, benefit greatly from an HVC. They get lower-cost access to high-quality products, from building materials to medical diagnostic kits. Not every situation calls for an HVC, of course. Three kinds of opportunities are particularly ripe for this form of business strategy:.
In markets such as energy and the environment, customers are often asked to make big compromises because existing business models are inflexible.
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HVCs can help organizations figure out ways to lessen those compromises. For instance, in many parts of India people use stoves fueled by kerosene or wood to cook and to heat their homes, at great cost to both their personal health and the environment. On the advice of the late C. Prahalad, BP partnered with local manufacturers and two Indian Ashoka fellows, Muthu Velayutham and Prema Gopalan, to manufacture and sell biofuel for stoves.
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Although this business is still in its infancy, the goal is to reach 20 million households in rural India by BP has decided not to continue, because it considers the business outside its core product line, but local Indian companies in partnership with CSOs and rural retailers have stepped in to fill the gap. Innovative pricing and new approaches can lead to goods and services that deliver both traditional and new value.
Microcredit comes to mind: Thanks to the work of Grameen Bank and similar lending organizations worldwide, microborrowers have been able to create their own businesses—spurring economic growth in their communities—while generating a multibillion-dollar finance industry. From our experience devising HVCs and working with organizations involved in them, we offer the following advice to executives who are ready to build their own:.
The value chain concept, developed simultaneously in the s by Michael Porter and a group of McKinsey consultants, replaced a framework called the business system, which essentially created a product, made it, and sold it. The value chain involves choosing, providing, and communicating the value. It forces managers and strategists to examine the relationship between benefits and price. It pushes executives to think deeply about how customers define price: Do they focus on purchase price or lifetime costs? How price sensitive are different segments? For forecasted years, the U. For all other years: latest year annual percentage change equivalent assuming homogeneous change in the preceding five year period, calculated through reverse compounding.
Yearly Change : For absolute change in total population increase or decrease in number of people over the last year from July 1, to June 30 For all other years: average annual numerical change over the preceding five year period. Migrants net : The average annual number of immigrants minus the number of emigrants over the preceding five year period running from July 1 to June 30 of the initial and final years , or subsequent five year period for data. A negative number means that there are more emigrants than immigrants. Median Age : age that divides the population into two numerically equal groups: half of the people are older than the median age indicated and half are younger.
This parameter provides an indication of age distribution. It is calculated as the average number of children an average woman will have during her reproductive period 15 to 49 years old based on the current fertility rates of every age group in the country, and assuming she is not subject to mortality.
Urban Population : Population living in areas classified as urban according to the criteria used by each country. Country's Share of World Pop : Total population in the country as a percentage of total World Population as of July 1 of the year indicated. Global Rank : Position held by India in the list of all countries worldwide ranked by population from the highest population to the lowest population as of July 1 of the year indicated.
India Population - Country Continent World. The current population of India is 1,,, as of Wednesday, September 25, , based on Worldometers elaboration of the latest United Nations data. India population is estimated at 1,,, people at mid year according to UN data. India population is equivalent to India ranks number 2 in the list of countries and dependencies by population.