With the partner network in place, the Team’s efforts shift to outlining a business plan for the proposed venture. Five key tasks are involved in this process: co-creating a set of metrics for assessing community value creation, co-developing a business plan, retaining alternative business models, clarifying the MNC’s strategic intent, and creating internal alignment.
Participatory methodologies play a critical role throughout this process. Both the process and the results should be documented and made available to the broader community through the local enterprise office.
Establishing Metrics for Community Value Creation
Though general criteria for local well-being have already been generated through the Opening Up process, the expanded Core Team’s task is to create specific metrics that link the operation of the proposed venture with these criteria. In collaboration with the greater community, the Core Team should create a “scorecard” that identifies these various dimensions of performance, along with a set of indicators by which to track the venture’s effects. Target levels to be achieved by specified dates will help chart the venture’s progress and alert the Team to unintended consequences.
Care should be taken that the scorecard is meaningfully employed even during the early stages of the venture’s formation and that people be trained to take and to interpret the measurements. This entire cycle of collecting and analyzing meaningful performance data will help ensure that the MNC and the new venture adhere to the implicit social contract entered into by virtue of engaging with the BoP community.
Co-developing the Business Plan
Unlike a “traditional” business plan, the business model for the venture needs to be jointly developed with the ecosystem partners. Indeed, all of the partners should have “ownership” of the business plan and feel that they will meaningfully benefit from the partnership. To that end, it is important to explicitly discuss how the venture will generate value along the various dimensions – economic, social and environmental - identified by the Core Team and the greater community.
It is important that everyone involved in the venture should share in the benefits. In addition, the Team should consider the potential negative impacts of the venture on the local community and plan accordingly. This process is fundamentally about creating a shared vision among the various partners.
Retaining Alternatives and Creating Options
During the co-development of the business model, alternative models may be suggested by which the same or other products or services can be produced and delivered. The Core Team should document all of these models, as they may become viable or attractive opportunities in the future. In addition, the Team should make some provision for those ideas that it chooses not to pursue but for which there are supporters within the community. Support may take a variety of forms, from providing access to the partnership network to in-kind or financial assistance.
Clarifying the MNC’s Strategic Intent
In developing the business plan, the MNC Team needs to clearly articulate its strategic intent with the enterprise and how the enterprise will advance corporate-level strategic objectives. This process entails creating an architecture that maps out the specific outcomes desired – financial, competency-based and otherwise – and the interim steps that need to be taken in accomplishing each objective. Metrics play an important role in this process, as they provide the means by which progress against the various goals can be assessed and by which to communicate the contribution of the BoP venture to the corporation’s strategic position.
Care needs to be taken in the choice of metrics, as those traditionally utilized in Top of the Pyramid markets may be ineffective in capturing the contribution of BoP enterprises. In particular, due to the high uncertainty yet high potential upside at the BoP, a real-options based evaluation framework is advised. In addition, given the potential size of the BoP market, financial metrics ought to focus on the net marginal impacts of the venture (e.g. Return on Capital Employed) in place of gross product margins.
Creating Internal Alignment
It is important that the MNC Team establish an incentive structure for its own team members that reflects the uncertainty of the new venture and can be utilized internally to community the Team’s performance. Though short-term profits are possible, it is important that financial targets be balanced with longer term, non-financial criteria in order to provide the Team with the necessary flexibility in adapting to contingencies.