Cross-Sector Convergence: A New View of Global Development -- Full Text

No doubt there will be some good news. But the audience is also likely to hear many explanations for lack of progress in others—the reality is that, to drive high performance, a transformational shift in how we think about achieving the MDGs will be required, and in particular, how the latent power of the business world can be harnessed for greater development impact.

Based on our unique perspective as an organisation that sits at the intersection of the corporate world and the international development sector, Accenture Development Partnerships believes that successful development in the next decade will be characterised by what we term “cross-sector convergence”; a convergence of challenges, a convergence of approaches and a convergence of solutions. Development practitioners, irrespective of the sector or the organisation they work in, will need to break free from the shackles of traditional mindsets on the roles and boundaries of each sector—public, private and civil society—and embrace new thinking and approaches that are somewhat agnostic on inputs and intermediaries, but instead are focused on optimising outcomes and impact.

What is cross-sector convergence?
Cross-sector convergence is the meeting of business opportunity with positive social, economic or environmental impacts on global development. Cross-sector convergence manifests itself in many forms—from inclusive business models driven by corporations, to complex publicprivate partnerships for delivery of public services that are initiated by governments. At its most extreme, it will manifest itself in new hybrid models that transcend the traditional attributes of a single sector. But at its core, this trend is about re-thinking the traditional roles of the sector in order to focus on new and innovative solutions to development challenges.

Solutions characterised by this cross-sector convergence mindset are many and varied, but share a number of core principles in common:

Outcome over input—A cross-sector convergence solution starts with the desired outcome and impact, and then looks at which entities have the capabilities to best achieve that outcome. In this mindset, solutions are not about a standalone project delivered by one entity, but about collaboration among stakeholders in a particular ecosystem, each of whom bring distinct capabilities.

Sustainable and scalable—Cross-sector convergence looks towards solutions that are sustainable over time, not towards projects with a three- or five-year life-span that go away when a defined funding source dries out. Such solutions often—though not always—are market-oriented, looking to the power of market forces to drive sustainability and scalability.

Organisationally agnostic—Cross-sector convergence is organisationally agnostic. Inputs can be sourced from entities across the public, private or nonprofit sectors, and both locally and internationally. While one organisation will often play a lead role, the solution itself will most often be delivered through an array of entities working together.

What is driving cross-sector convergence?
Business and development sector players are both being driven towards cross-sector convergence—but the drivers for each are quite distinct.

For business, Accenture research shows that companies everywhere are being forced to adapt to the rise of the multi-polar world—the reality that emerging markets today possess increasing economic and geopolitical clout, and represent the greatest future source of growth in a globalising economy, of new markets and customers, and of new talent and innovation. So in one sense, business is being driven towards cross-sector convergence by a traditional set of business drivers:

• Growth opportunities in emerging markets—In new markets, growth opportunities and new customer segments call for thinking and acting in terms of inclusive business models—for example, tapping the growing spending power of India’s rural communities.
  
  
• Consumer demand in developed countries—In developed markets, there is a growing need to respond to increasingly savvy consumers’ demands for sustainable and ethical products. Accenture recently completed the second United Nations Global Compact CEO study which found that 58 percent of the CEOs surveyed cited consumers as the most important stakeholder group that will affect the way they manage societal expectations.
  
  
• Licence to operate—Companies need to demonstrate higher levels of corporate responsibility in order to gain access to emerging markets and their resources.
  
  

However, in another sense, business is being driven to cross-sector convergence by the realisation that its success in emerging markets requires not only accessing customers and resources, but in building sustainable societies.

The multi-polar world is inextricably intertwined with the multi-polarised world. This is the world that is not yet integrated into the global economy; it is the world in which 2.7 billion people still live on less than US$2/day; where more than 1 billion people lack access to safe and clean drinking water; and where up to 30,000 children die of easily treatable diseases each day. Enlightened business leaders understand that poverty inhibits prosperity; that infectious diseases reduce the productivity of a company’s employees; and that child mortality and malnutrition impact long-term talent markets. All of these are prerequisites for long-term business growth, and, thus, all are areas where business can play a role—and has a self-interest in doing so.

In contrast, development sector players are being driven towards cross-sector convergence by their missions of achieving development impact. They are increasingly realising that partnering with the private sector can, in many circumstances, help enhance the scalability, sustainability and long-term impact of efforts ranging from health to education, to livelihoods and job creation.

How does cross-sector convergence manifest itself?
Collaboration across the sectors—private, public and civil society—is not new, and partnerships are on the increase. But these partnerships are often defined by a single issue or single geography and they struggle to scale, replicate or deliver more than piecemeal change.

Cross-sector convergence on the other hand goes a step further. More complex forms of collaboration are emerging—coalitions that comprise a variety of different players and seek to affect systemic change on issues ranging from malnutrition to access to medicines. These more complex collaborations are likely to have a far more disruptive effect on traditional value chains and sector boundaries, creating a new set of development approaches which involve hybrid business models, hybrid funding models and hybrid delivery models.

Hybrid business models will seek to combine profit with broader societal impact. They will share many of the attributes of what is loosely termed “social enterprise,” but be driven by corporations and have an inherent ability to scale. Examples include Grameen Danone Foods Ltd, which targets the rural poor with a new blend of affordable and nutritious yogurt known as “Shakti Doi” (meaning power yogurt).

Hybrid funding models reflect an increasing willingness on the part of donors to fund innovation that delivers tangible development impacts, even if this may result in public money feeding private sector investment in cases of market failure. The UK’s Department for International Development’s new Business Innovation Facility, the Gates USAID Challenge Fund for cash-for-work mobile payments in Haiti and the aspiration to create a Dow Jones Global Fund 50 Index for investable products to fight HIV, TB and Malaria are all good examples.

Hybrid delivery models apply the distinctive competences of one type of organisation in an adjacent value chain or sector. The muchcelebrated M-PESA mobile phone-based banking and money transfer product saw a mobile operator, Safaricom, enter the financial services sector in Kenya as a technology-enabled market opportunity that has had a massive impact on financial inclusion in Kenya. M-PESA captured 6.5 million subscribers by May 2009 and manages 2 million daily transactions in Kenya alone.

Implications
It is clear that the interests of the development agencies and businesses are converging, with implications for all.

For business, cross-sector convergence means looking at emerging markets more holistically, not only as new customers or sources of raw materials, but as societies to strengthen—and thus serve—as future sustainable markets for goods, services and talent in the long term.

For development funding agencies, it suggests being “softer” on inputs and intermediaries and harder on outcomes and impact—and funding non-traditional entities or initiatives that go against the prevailing orthodoxy

For NGOs and other implementing organisations, it suggests looking to partner more strategically with business to achieve scalable and sustainable long-term solutions, not just as sources of funding for short-term projects. It could even mean a degree of reinvention in parts of their traditional value chain to embrace new hybrid models of delivery or funding.

And for all, Accenture Development Partnerships believes cross-sector convergence can be a positive force for change—a force for achieving the MDGs in a way which harnesses and aligns the distinct capabilities—and distinct interests—of each sector to deliver high performance.