Small meets big: How partnering with large corporations can scale impact of sustainable entrepreneurs
Are locally-driven social and environmental enterprises too small to have an impact? We at SEED don’t think so, and Organic Africa demonstrates that. In 2007, when everyone was leaving Zimbabwe due to political and economic turmoil, Dominikus Collenberg started to train smallholders in the organic production of herbs, spices and oils. By 2009 the enterprise had already contracted 450 farmers and collectors of wild herbs, a number that increased ten-fold within the next five years.
That begs the question: How is such a success achieved? One of the success factors of the enterprise is its strong linkages with leading international buyers of organic herbs, spices and oils; these provide reliable market access to the farmers for the organically certified products.
SEED supports enterprises like Organic Africa, a 2009 SEED Award Winner, and helps build favourable ecosystems to unlock the potential that social and environmental enterprises can contribute to sustainable development. Their potential is large, not only because small, micro and medium-sized enterprises (SMME) account for the majority of output and employment in most economies, but also because of their nimble footedness, innovative approaches, and potential to achieve scale. Co-creating value with large companies is one way for social and environmental enterprises to seize opportunities and overcome what would otherwise be barriers to growth.
Which opportunities do partnerships with large companies offer to local social and environmental enterprises?
Access to markets, finance, technical skills, and qualified human resources are among the well-known challenges social and environmental enterprises, and SMMEs in general, face. Joining forces with large companies can help them to enter global value chains, and marketing and distribution networks. Larger partners can directly help with financing needs through loans or equipment, and renowned partners have the potential to improve credit-worthiness. Their expertise in technical, business or other areas can be accessed and transferred permanently through capacity building measures.
Partnerships in action
There isn’t one form for partnerships between social and environmental enterprises and larger players; they take multiple forms, depending on their purpose. As suppliers or distributors for large companies social and environmental enterprises can be integrated into global value chains, large companies can help scale or replicate innovative ideas of their smaller counterparts, and innovative products or business models can be conceived together.
Organic Africa is an example of how smallholders can be integrated into global value chains. On the supply side, the enterprise builds the capacity of smallholders to grow organically certified herbs, spices, medicinal and aromatic plants, such as Papaya leaves, and to collect wild herbs such as Harpagophytum (Devil’s Claws). On the demand side, Organic Africa provides smallholders with a secure income and market through partnerships with large cosmetic companies which are sourcing raw materials.
On the other side of the world and in its quest to recycle hard-to-recycle materials, Proplanet, the first enterprise in Colombia recycling Tetra Paks, partnered with Tetra Pak Andina to set up a recycling facility in Antioquia, Colombia. Tetra Pak provides equipment under a loan-for-use agreement to help increase the rate of recycling of one of this year’s SEED Award Winners.
And in a completely different sector, Water Sanitation for the Urban Poor (WSUP) is partnering with Unilever, one of the largest consumer goods companies in the world. Together they are set to transform the sanitation system at the bottom of the pyramid. The social enterprise ‘Clean Team’ sells portable eco-toilets to customers in Ghana. The new product and innovative business model are the results of Unilever’s focus on research and development combined with WSUP’s understanding of the sanitation sector in developing countries.
How to make partnerships work
Strengthening the relations between small and big for greater impact was the focus of the SEED Africa Symposium 2014: Making growth sustainable: co-creating solutions through social and green entrepreneurship. The key factors in building successful partnerships were considered to be:
- Common values shared by all partners form the basis of any successful partnership.
- Defining clear goals, expectations and responsibilities at the beginning is a difficult task and takes time, but it is indispensable in identifying common ground and diverging interests that could jeopardise the collaboration.
- Documenting the goals and contributions of each partner, and exit clauses, in the form of a Memorandum of Understanding, exchange of letters, or contract, is essential for the successful management of a partnership
- Recognising that partners might need to change, depending on the particular stage of an enterprise’s development.
- Flexibility and adaptability are needed to bridge differences, keeping in mind that without a common vision partnerships are prone to failure.
- Transparency in decision-making allows all partners to have their voices heard, and influence where the partnership is going.
- Knowledge of the benefits accruing to all members of a partnership and the sharing of benefits are needed to manage expectations and build good relations.
- In heterogeneous partnerships building trust and attempting to understand the background and context of the other partners are essential.
- Partnerships take effort: awareness of the need to nurture the partnership and readiness to engage human, financial and other resources make partnerships work.
Finding partners: a difficult task?
Different partners are needed at different stages: finding the right partner at the right time is the first challenge – both for an enterprise and for a larger company. Yet not only social and environmental enterprises stand to gain: partnerships between businesses come with many advantages for the larger partner. They present opportunities for product and business model innovation, a testing ground for new ideas, a way to tap into the market at the bottom of the pyramid, a chance to improve quality and productivity of suppliers, access to know-how about customers and local markets, a motivating factor for employees and more.
Based on the belief that social and environmental enterprises can be one of the driving forces for sustainable development, SEED provides a forum for small and big enterprises to meet such as through the SEED Symposia and builds the capacity of SMMEs at the grassroots. The support phase of the SEED Award makes social and environmental enterprises partnership-ready: their business model is consolidated, objectives refined, and appropriate tools that focus on partnership management developed.
Next year we are looking forward to continuing our efforts to make social and environmental entrepreneurship stronger and count even more for sustainable development. Don’t miss our call for applications for the SEED Awards 2015 in February and join the SEED Africa Symposium 2015 from 9-10 September 2015 in Nairobi, Kenya – either in person or through social media.