Value chain analysis for social impact

Performing a value chain analysis is no longer the domain of seasoned businesses or corporate players. Small businesses and start-ups can likewise use it as a strategic growth tool. Tomorrow Matters Now | TOMA-Now recently worked with the New Economy Accelerator | NEA, a social impact growth accelerator, to offer a 2-day module in their accelerator program, on mapping the value chain.

NEA supports entrepreneurs targeting and/or operating in low-income areas (base of the pyramid). Their aim is to activate local economies in South Africa to build an inclusive and prosperous society. They provide business training and support, one-on-one business coaching, access to peer mentors as well as access to investment networks for social and environmental high-impact start-up enterprises servicing the base of the pyramid sector.

We used a structured approach to introduce the concept of value chain analysis with a gradual development towards growth and sustainability. Some of the topics covered include,

• Defining the value chain: what is it? Difference between supply chain and value chain.
• Understanding where you fit into the value chain.
• What are the drivers both upstream and downstream from your business?
• Developing an integrated approach: Does your product address drivers and gaps in your value chain?

Value chain journey

The workshop was designed with a progressive approach on developing participant’s understanding and ability to examine their value chains. For the purpose of this workshop, value chain analysis was used as a tool to address gaps in the entrepreneur’s business development and identify opportunities for growth. This process relies on the basic understanding of key business driver concepts such as identifying what metrics are appropriate for your business as well as being aware and acting on externalities that impact the business.

During the group work exercises and feedback sessions, entrepreneurs were guided to developing concrete action plans from analysis of their value chains. They were trained on how to obtain clarity in their service offering and business processes. A further positive was the identification of business synergies amongst participants.

Development

Encouraging the entrepreneurs to move outside their comfort zones assisted the participants to grow and look at their businesses from a different perspective. This approach was effective as selected entrepreneurs used the opportunity to create a sounding board for their current businesses or plans for growth. Participants developed concrete action plans to follow up on the completion of the module. An accountability plan set in place by the NEA, will be able to measure the growth of participants after the module.

The entrepreneurs communicated the value of the module and that it was fitting to learn the concept of utilizing the value chain for growth and sustainability in the new economy they are pioneering. We enjoyed watching the participants adopt the concept of value chain thinking and create action plans for their business growth. The approach taken is not unlike that followed by larger organisations with a focus on staying agile in the marketplace. We look forward to these pioneering social impact entrepreneurs using their value chains to grow and create more opportunity locally.

Have a similar story you’d like to share or like to map your value chain? Email us or please let us know in the comments section.