Convergence economy: shifting the focus from income to outcome
The convergence of development and commercial self-interest has the potential to transform both the role of NGOs and business in development.
If ever we needed proof that conventional development approaches are failing to address poverty, disease and malnutrition, the 10 year checkpoint for the UN’s Millennium Development Goals provided it. While progress has of course been made, the shortfalls in achievement in parts of Africa and South Asia cruelly expose the limits of our current efforts. Debate has recently turned to how business, governments and NGOs can work together in ways that align commercial self interest with societal value. But the emergence of a ‘convergence economy’ will disrupt incumbent development providers and ask many questions of businesses.
The good news is that the struggle faced by NGOs and governments in the face of seemingly intractable problems such as malaria, drought and extreme poverty coincides with a time when global companies are looking for new markets. Proctor & Gamble claims to have nearly four billion customers and hopes to add a billion more in coming years. Coca-cola is seeking to empower five million women in their supply chain by 2020. That’s reach. That’s influence.
It’s no surprise, therefore, that NGOs and the private sector are increasingly working together. But all too often this collaboration is for one off projects and conducted at arm’s length, missing a large opportunity to harness the transformative power of business and make markets work for the poor.
NGOs will…have a crucial role to play in steering business towards a more inclusive growth agenda.
So what is the convergence economy?
It is based on a merging of issues and a confluence of interests. It acknowledges that access to clean water, sanitation, education and disease, for instance, can only be addressed effectively together. It recognises that the interests of NGOS do not run counter to those of business. This results in a convergence of solutions, where it no longer matters whose logo is on the product or service that is improving the welfare of communities.
Convergence will not just continue to blur, but will fundamentally challenge and redefine the boundaries between the sectors and outdated paradigms of who should do what when it comes to tackling challenges of development. We can expect to see hybrid organisations that genuinely bring together NGOs and businesses in newly formed entities that have joint and flexible value chains at their heart. Danone’s collaboration with Grameen in Bangladesh illustrates this and has resulted in entirely new products to combat infant malnutrition. And who would have predicted that an NGO such as Mercy Corps would buy a bank in Indonesia?
What does the convergence economy mean for NGOs?
Accenture’s recent survey for the UN Global Compact of over 700 CEOs of multinational companies points towards the redefinition of the relationship and purpose of business and NGO interactions. Our survey revealed that, where 27 per cent of CEOs saw NGOs as key stakeholders in areas of sustainability in 2007, that figure fell to just 15 per cent in 2010. NGOs will still occupy a vital and central position in development, but as the delivery of solutions is based on relevant competencies rather than incumbency, NGOs will see a change in their role.
They will act as coordinators instead of being providers. They will attract investment finance as well as seeking grants. They will support free markets as a tool for development. This means adopting new capabilities and, to some extent a new cultural outlook. In the same way private sector companies are used to disaggregating their businesses and outsourcing non-core operations, NGOs will have to redesign their structure and purpose.
Deeper collaboration
The convergence of development and commercial enterprise is not therefore merely about ethical supply chains or profit seekers embracing a broader definition of value. It is also about a far deeper and more profound operational collaboration across sectors. As multinationals enter new markets, they will have to redesign their models and assist NGOS to do the same. NGOs will in turn have a crucial role to play in steering business towards a more inclusive growth agenda. In that way, what could be seen as a marriage of convenience today, can become a more committed and productive long-term relationship in the future.
Written by Gib Bulloch, Executive Director of Accenture Development Partnerships
A full copy of the report, Convergence Economy: Rethinking International Development in a Converging World, is available on the Accenture website.
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