Blog: Four Strategies on How to Build an Impact Industry
Tuesday, October 9, 2018
Note: This article originally appeared on PYXERA Global. It is re-published here with permission.
In 2017, the William Davidson Institute at the University of Michigan collaborated with the Global Alliance for Clean Cookstoves (the Alliance) to assess the lessons learned so far on the Alliance’s journey to accelerate the clean cookstove industry. This blog is based on the article “Accelerating an Impact Industry: Lessons from Clean Cookstoves” first published by the Stanford Social Innovation Review on June 1, 2018.
Announcing the launch of the Alliance in 2010 at the Clinton Global Initiative, then Secretary of State Hillary Clinton remarked that the Alliance would “work toward the goal of 100 million homes adopting new clean stoves and fuels by 2020. Our long-term goal is universal adoption all over the world.” By bringing together leaders from both the public and private sectors, the Alliance aimed to build a clean cookstove industry that could deliver this vision.
For decades, the development community has been investing in programs that seek to harness the power of business to address social challenges. Not only has this meant investing in private enterprises, but also investing in developing the policies, information, institutions and infrastructure that define the industries in which these enterprises operate—what we call impact industries.
Of course, before the Alliance launched there were many efforts to invest in the clean cookstove industry. But like many impact industries, these were fragmented efforts that operated independently of each other and lacked an integrated vision. This resulted in a lack of investment and coordination, and market environments that make it challenging for enterprises to be profitable – never mind reach scale. Rather than being another independent effort, the Alliance was formed to be what we term an Impact Industry Accelerator (IIA)—an entity charged with catalyzing an entire impact industry.
CLEAN COOKSTOVE INDUSTRY
Almost three billion people around the world still cook over open fires or with biomass such as wood, charcoal and dried animal dung. The stoves they use are inefficient, and they expose the user to a variety of toxic gases, chemicals and airborne particulates. These pollutants cause a variety of health issues, including pneumonia and heart disease, and disproportionately impact women and girls who do most of the cooking. Apart from the health impacts, these inefficient stoves and biomass fuels have impacts on climate change and the environment.
The Alliance aims to better understand the links between improved cooking technologies, and changes in these negative outcomes. It works globally to advocate for improved standards for cookstoves and fuels, to promote investment in enterprises that provide them, and to educate and inform consumers about their benefits. At the country level, it works with local governments, non-governmental organizations and the private sector to develop and execute plans to achieve these objectives.
FOUR STAGES OF ACCELERATION
For this research we interviewed Alliance staff and partners in Washington, D.C., Kenya and Bangladesh. In these discussions we talked about what the Alliance has done to accelerate the clean cookstove industry, but also things that the Alliance and other organizations have not addressed yet. This led us to identify four different, but interconnected stages of impact industry acceleration—accelerating investment, collective action, profitability and impact. The Alliance didn’t implement these strategies sequentially, as there were overlaps and iterations. Indeed, the Alliance found itself investing in activities from all four stages at any given time, albeit at different intensities.
Four Acceleration Strategies for the Clean Cookstove Industry
1. Accelerate Investment
The Alliance did three key things to mobilize resources for the clean cookstove industry:
- It created a wide value proposition that allowed many different stakeholders to envision how to meet their specific aims (health, environment, women’s empowerment) through the development of the clean cookstove industry;
- It developed an implementation platform that stakeholders could invest in that had legitimacy and could channel resources appropriately;
- It activated financial and non-financial support in the form of organizational commitments of funding, and access to data, tools and intellectual capital.
2. Accelerate Collective Action
Given the multitude of prior and current efforts to develop the clean cookstove industry, the Alliance had an important part to play in coordinating a collective strategy for action:
- It established a common vision and goals for the industry through the collaborative development of a global strategy and country action plans;
- It demonstrated the social value proposition through research into the impact of clean cookstoves and fuels to provide evidence for urgent action;
- It ensured quality and consistency through the development of product standards, testing and certification that enabled consumers to compare across products and manufacturers.
3. Accelerate Profitability
The Alliance aimed to increase access to clean cookstoves and fuels through healthy markets, and has done three important things to help enterprises achieve profitability:
- It enhanced the enabling environment by advocating for improved policies and regulatory frameworks governing clean cookstoves and fuels;
- It reduced producer costs by engaging with institutions providing subsidies and institutional purchasing arrangements that reduce the cost of sales;
- It energized demand by investing in behavior change and awareness campaigns to inform customers about the dangers of household air pollution.
4. Accelerate Impact
To increase impact and scale, the Alliance has focused on key steps to encourage innovation, scale and learning:
- It encouraged enterprise innovation through grant funding that supported research and development of new products and business model innovations;
- It targeted growth enterprises by providing access to scaling capital for those enterprises that demonstrated potential to scale;
- It shared lessons learned that enabled enterprises to implement best practices and increase their probability of success.
By 2017, the Alliance had experienced important successes in accelerating investment and collective action, and its efforts focused on this latter stage. As it looked to the future, it sought to place greater emphasis on accelerating profitability and impact, and on the creation of a healthy market for clean cookstoves and fuels. However, this shift will likely require new thinking in terms of internal capabilities, as well as new external partnerships. This framework provides a roadmap for that transition.
ROADMAP FOR CLEAN COOKSTOVE INDUSTRY ACCELERATION
While we developed this framework and roadmap for the Alliance, we think these principles can be of benefit to other IIAs in similar impact industries. Frameworks such as these can facilitate improved strategies and approaches that increase the probability that IIAs can turn their visions of impact into reality.
This article is part of a series on “solvable problems” within the context of the UN Sustainable Development Goals. The Global Engagement Forum: Live takes place this October 10–11, 2018, bringing together leaders from across the private, public, and social sectors to co-create solutions and partnerships to address four urgent, yet solvable problems—closing the skills gap in STEM, reducing post-harvest food loss, ending energy poverty, and eliminating marine debris and ocean plastics. Learn more about the Forum here.
Image courtesy of Russ Keyte.