In policy innovation, we recently studied the case of the African Commodity Exchange Initiative of the Nicolas Berggruen Institute (http://berggruen.org/africa). Their objective is to empower development, incomes, productivity, and global economic integration of poor commodity (both agricultural and mineral) production communities in Africa. The project is a perfect exemplar of many of the ideas in Porter and Kramer's article "Creating Shared Value," and also similarly is responsive to some of the ideas in Khanna et al's "Strategies that Fit Emerging Markets."
The current situation in many of these African countries which NBI targets is the exact picture of the product and capital market problems the "Emerging Markets" discusses. Low-tech producers are separated from the global economy by poor physical and institutional infrastructure and, often, exploitive monopolistic intermediaries. These intermediaries operate in the traditional mode of cost-minimization to which Porter and Kramer allude: they use their market power to squeeze their suppliers, preventing any wealth generation in the producer communities.
This distance from the global economy and sustained poverty in these producer communities are massive barriers to any sort of improvement in condition for these poor people. Of particular interest to Porter and Kramer about these situations is that innovation does not happen and productivity does not improve. They contend that purely public- and social-sector efforts to address the social inequity and improve living conditions are generally unsuccessful due to lack of efficiency, lack of sustainability, and inability to target maximization of 'value.' Meanwhile, the purely-profit-maximizing private sector which has no concern at all for the wellbeing of people, looking at the situation through a traditional management lens, may simply see a lack of opportunity for 'efficiency' improvement.
NBI's Commodity Exchange plan aims to solve all of these problems at once, by giving producers physical and information access to the world outside. Producers need access to global information, to understand the value of their assets and production, to claim that value, and to acquire new technology and inputs to improve their productivity and increase their value production. They also need physical infrastructure to be able to execute on these opportunities - better roads, warehousing facilities, logistics services, etc. (The infrastructure which Khanna warns developed-country companies not to take for granted -- it is lacking in these communities.) Along with improved information flow to producers, there will also be opportunities for new information flow from producers. Perhaps most interesting from the development perspective is that this new information will empower better more efficient capital markets, which will again make it easier for producers to make investments to improve their condition.
In this effort, NBI is a visionary, strategist, and convener. They themselves will not effect the development of the pieces, they define the idea and bring together a number of private organizations to build the first essential pieces from which organic development can further continue. Each of those private organizations can be acting on a profit motive. None would do its part alone, for none of the pieces can deliver value alone. NBI is solving the 'chicken-and-egg' problem by coordinating the organizations around the vision, and giving them all confidence that the system will be real and work.
The result should be the kind of whole-community improvement that Porter describes as the great success of the Nespresso example. The providers of the infrastructure and the various intermediaries of the new system will all benefit relative to the status quo, as will their downstream consumers, through greater access to more higher quality product at lower cost. Meanwhile the producers benefit enormously through increased productivity and share of produced value, resulting in increased income.
This all sounds great on paper, but it also sounds like implementation could be really really really hard. Many organizations' commitments, timelines, and finances have to stay aligned for years. Is it lack of vision, or lack of confidence in implementability that has dissuaded such whole-system efforts in the past?
To what degree will success or failure depend on a host of ill-defined or unmeasured locally-unique conditions? If NBI is successful once, will they have a blueprint for repeatable success, or is every case too different for comparison?