The purpose of private sector development

Posted on by Bart Doorneweert

Ask any donor agency, or executing NGO: their role in private sector development is temporary.  “We scan the situation, we design an intervention to nudge an economic system, and exit once we have the ball rolling”.

But the reality of executing private sector development projects is that this premise is lost somewhere along the line. “We don’t fully comprehend the situation, we create a big promise, which seems to make sense on paper, and we actually couldn’t tell at what point we think we have achieved our goal”.

So here’s something I have been meaning to write for a long time, something which might help bridge this gap between intent and action. The purpose of a private sector development project is not to deliver impact on people, planet and profit (ppp). How could a 4 to 5 year stint ever deliver a tangible social and environmental result? Yes, your impact evaluation might show that the project delivers impact, but that only indicates what is feasible given the input you have provided. But what does that mean for the long-term business viability of your idea, and is your idea desirable enough for your intended entrepreneurial audience to take over, once the impact has been demonstrated?

Rather than focusing on the results of a project, I propose to take a different perspective on the purpose of private sector development. The task of a private sector development project is to create a temporary organizational vehicle, which is geared to search for the new business model that will deliver replicable and scalable ppp impact. In other words, it’s not the impact itself we’re after, it’s the business model that will deliver the impact. Private sector development, as a complementary coalition of for-profit, and non-profits, should limit its resources to validating such a model, ie. a feasible, viable, and desirable model. Exit comes after such validation.

Over-focusing on the results agenda in development is harmful to private sector development. It assumes PSD projects already know what they need to execute on. It’s a promise, which seems to be necessary to make all the time to obtain funding, but it’s a promise that will never hold. The reality is that every PSD project on day 1, is faith-based initiative. If you neglect that fact, then you will be tracking reality throughout your project.

Rather, give yourself time in your private sector development project, time to:

  1. focus on your targeted demographic
  2. immerse yourself into the nature of the problems you aim to tackle
  3. prototype, and iterate to validate solutions

Gear your impact assessment to metrics that validate your new business model: execution will take care of itself thereafter.

A human-centered approach to private sector development.

Posted on by Bart Doorneweert

Anyone would acknowledge that development aid is not as effective as we would want it to be. The shift in mindset from development as charity to development as business is by and large based on this recognition. Focus is now on supporting the development of emerging markets. If you are able to build stable business in those markets, then you will be set to profit from a large and upcoming cycle of growth.

This is a promising outlook, which is bound to bring refinement to the way development is practiced. However, from the work that I have been doing with Niti Bhan over the past month I have come to an important realization on the task which lies ahead for attainment of a business focus in development.

The focus in development has always been to addressing the needs of people; beneficiaries. Business, rather, attempts to create or latch on to aspirations and desires; those of its customers. It takes a broader perspective by also considering peoples’ wants. So, if we aim to bring a business focus to development, then we need to emphasize empathy, and broaden our perspective to addressing the full spectrum of both needs and wants. This is the actual shift, which needs, and is yet to take place.

There are two major benefits, which will come from more lateral thinking in development project design. Firstly, when you immerse yourself in a lateral view of what your intended target groups (your customers) want, then you will become naturally attuned to humility in your attempt of placement and adoption of your ideas in your customers’ pattern of living. Why would they care for your idea? Can you ask them for some of their time to listen to what you have to offer? If you offer your idea, would they buy it, and use it in the way you intended? These questions lead to better problem definition, and will most likely result in better formulation of solutions.

Secondly, your target groups are transformed from beneficiaries, who are recipients, to customers, who are active agents. The big difference is that customers give out signals about your activities. This type of engagement creates feedback loops during the course of a project, which weren’t there before. If they care for your idea, then they will compliment if it’s good, or complain if it isn’t; performance feedback you’ll never catch in a beneficiary survey.

We have lost touch with a human-centered focus in development in some way. It’s high time we regain that, and start approaching our beneficiaries as customers!

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Over the coming months Niti and I will be looking further into the processes by which private sector development is organized, and reflect on what place there could be for human centered design in this category of development projects.