‘What no cash?’ is what some businesses thought on first sight, responding to the offer of technical assistance from the Business Innovation Facility, funded by DFID.
‘Technical assistance can help inclusive businesses to develop faster and/or build more robust business models.’ That was one of the assumptions on which the programme was based, and is one of the headline conclusions from engagement with hundreds of businesses in the Business Innovation Facility pilot, from 2010-2013.
The vast majority of companies are positive about the value added by technical assistance (TA) from BIF. Forty companies received intensive technical support – a consultant for 3-12 months, working on any aspect of their business development with them. Fifty per cent report that their business development is bigger, better or faster due to BIF support. 40% report it made their business easier and/or was useful.
Companies that scored BIF added value as ‘high’ commented:
- “A key component of BIF support was to fund an in-depth supply chain study, which identified key farmer clusters and market dynamics within the different chosen crop value chains. This study has been the backbone of [our] local supply chain strategy.”
- “BIF also funded the design of marketing materials, including product labels, fliers and brochures; which we continue to lever today.” (agribusiness, Nigeria)
- “The BIF project helped highlight the need for access to finance among consumers seeking to purchase [product name] among [our] internal stakeholders.”
- “BIF support brought in access to wider resources and experience from outside the company.” (Large company focusing on consumers, India)
A response from a company that scored BIF support as medium added value sums up the situation for them:
- “Could we have achieved what we have without BIF support? Probably. But, has BIF support helped us achieve it? Yes definitely.” (Agroprocessing company, Malawi)
TA proved to be as useful for large well-resourced companies as for start-ups. It wasn’t so much the cost of the TA that was critical (under £50,000, $80,000, on average). It was the fact that TA provided external expertise, a neutral voice, a critical friend, recognition from a donor, and came at a time when the model was unproven and in a form that could be tailored.
For others, a truly short burst of support can be enough to help move things on. One of the more surprising findings was the massively positive feedback on £10,000 ($16,000) ‘short projects’ and workshops for a cluster of businesses was extremely positive.
The feedback received from companies creates a compelling case for the value of TA that is focused on strengthening the business model. The companies are on a long journey of business model innovation, and TA on a wide range of topics helped them to do that faster, better or more easily. The flexible nature of BIF technical support, tailor-made to each company, increased value.
Nevertheless, TA is no panacea. Some found its duration too short. There is a tension here: donor support should not be so great that a business relies on it. But support that helps design a pilot and is not there to see the pilot translate into operation, can be just too short for some.
For others, the internal or external constraints they face remain obstinately strong in spite of the TA. The advice couldn’t solve their constraints. In one or two cases, the specific consultant or the type of business model recommended simply did not meet with the companies’ approval. Nevertheless, the fact remains that TA inputs that cost just a fraction of the total investment made by the lead company, seem to have been able to make a noticeable difference to progress in so many cases.
This doesn’t mean that all TA is great. Along the way we learnt many lessons about what makes TA useful, of which the most important ones are about the set-up stage. Defining the business proposition and TA input required involved hands-on collaboration with companies. Investment is needed to identify the right resources for providing TA and managing delivery. Put bluntly, often businesses didn’t know what they didn’t know – they weren’t able to identify straight off exactly what TA would help them most. This process took time before the right TA input was designed, and then time again for it to be sourced. For those funding TA, this implies higher transaction costs than a more hands-off approach of a challenge fund.
Another lesson is about the end stage of TA. In BIF, the mandate to learn and share about inclusive business fitted well with the TA mandate. By engaging with companies on the nuts and bolts of their operations, the team was in an ideal position to draw out shareable lessons about the practicalities of inclusive business (taking confidentiality into account of course). So a marginal additional input of just over £0.5 million in knowledge exchange, has led to a wealth of knowledge outputs that would normally have required considerable research.
From the business point of view, the lesson is don’t just think cash. TA that strengthens the business model can help the business get investor-ready, and strengthen much else beside. From the donor point of view, the lesson is don’t just think cash. TA can be a cost-effective input. But also be aware of the need to tolerate failure, state the appetite for risk, catalyse results that are not all easily measurable and certainly won’t all appear within a 3-4 year donor timeframe.
The conclusions shared here are contained within a new report, Adding value to Innovation? Lessons on donor support to inclusive … The report explores two assumptions underpinning the BIF approach: that TA can add value to business, and that business can add value to development solutions.