Innovative Collaboration Through Hybrid Value Chains

I just read through a great article by Bill Drayton (CEO Ashoka) and Valeria Budinich (Founder Ashoka Full Economic Citizenship Initiative) in the Harvard Business Review (Sept2010).

It focused on the power of partnerships between citizen sector organizations (CSOs) and private businesses, employing hybrid value chains to benefit both CSOs and the cooperating businesses in its design, carrying the potential of large-scale improvements for previously disadvantaged groups in society.

Ashoka Full Economic Citizenship

Let’s consider an example to help understand the idea:

A. Large groups of people are excluded from the formal housing market in Colombia.

B. Enter a collaboration of

1.  a for-profit tile-manufacturer (Colcerámica)

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2. a human-rights-organization (Kairos)

where the tile-manufacturer provides the necessary product+technical and financial know-how, while the CSO adds its knowledge of the local community and problems to recruited a workforce of formerly unemployed women,

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C. and the end result is a partnership that reduced the distribution costs of the business by more than 30 percent, using part of that profit to pay the female workforce, invest in further community projects and start cooperating with other local CSOs.

Thus the partnership creates value that neither of the two actors could have created without the other, is scalable, and based not on charity or CSR, but sustainable in its profitability to both the women employed, families receiving housing, as well as the CSO and tile-manufacturer.

Concluding, it can be said that the hybrid value chain principle holds vast potential for a transformation of the private sector toward creating sustainable solutions for societal problems in win-win-cooperations with citizen sector organizations.

For more information on hybrid value chains click here and here.