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Two sides of the same coin - using Positive Impact to address biggest business & development challenges

The global issues that restrict businesses and hamper human development are not just intertwined, they are inextricably linked. They require solutions that bring together the ingenuity and insight of both the private and public sectors.

Positive Impact is a licence to operate
In the last 50 years, we’ve seen the division between social and commercial interests shrink. Citizens, employees, and consumers are increasingly demanding that social, economic, and environmental goals mutually reinforce each other. We’ve reached a point where “giving back” and/or minimising social harm is no longer going to cut it for corporates. Simultaneously, there is growing recognition that business and development are two sides of the same coin. So if governments and donors want to ensure that their program results are sustainable, they need to bring in the private sector. Since the private sector accounts for 60% of GDP in most countries and 90% of jobs in developing countries, they are uniquely positioned to move the needle on development challenges that affect their operations and bottom lines.

At the 2017 Positive Impact Summit, Professor Bob Kaplan said “Governments and NGOs have shown themselves incapable of solving these problems alone, which is why we need businesses to work on them.” Some people would actually take this statement one step further; it is not that governments and NGOs have failed, but that the problems themselves have become too complex for any one actor to solve alone. At the Summit, experts ranging from Professor Mark Kramer to Clare Woodcraft-Scott, CEO of the Emirates Foundation, discussed intractable development and business challenges that will require building new ecosystems.

The road to Positive Impact.

Utilising talent and developing a workforce for growth
One such challenge is the mismatch between supply and demand in the workforce. Almost all economies have large numbers of unemployed youth and unskilled workers. In more recent years, declining commodity prices, coupled with slower economic growth rates across the globe, have led to high rates of unemployment and chronic vulnerable employment. In 2015, over 2 billion working-age individuals did not participate in the labour market while the official global unemployment figure was an estimated 197 million, with both projected to rise in the coming years. The shortage of decent jobs drives many youth to seek opportunities in the informal sector; which is often characterized by low productivity, low pay, and high risks. Simultaneously, employers complain that the lack of workers with the right competencies (often soft skills) is the principal constraint to their growth, ultimately hurting their ability to access new markets, drive profits, and increase efficiencies in their operations. To solve this mismatch, we need to find a way to bridge the gap.

Another ongoing challenge has been cost-effectively accessing and distributing services to the 4 billion people living in extreme poverty. These individuals lack access to health, education, power, water, and financial services. Seen from a business lens, the economic ‘Bottom of the Pyramid’ presents enormous profit potential for companies willing to develop new models and meet the demands of these potential customers. But, private sector and government providers both struggle to develop and maintain distribution channels to marginalised populations, leaving an enormous segment of the global population without basic services while also depressing business growth and entry to new markets.

Partially as a response to these largescale challenges, in 2011, the concept of Shared Value emerged to help companies find business opportunities in social and environmental problems. While companies are increasingly accepting the notion that they must “do well by doing good”, it has become clear that they are struggling to implement this concept, especially with regards to its execution, scaling, and measurement.

Collaboration is not an option, it’s a necessary for progress
This is where Palladium’s Positive Impact comes into play. Palladium creates value across multi-actor systems to successfully execute, scale, and measure the impact of Positive Impact solutions. At the 2017 Positive Impact Summit, Professor Bob Kaplan emphasized that Positive Impact solutions require innovation, cooperation between many actors, and a common understanding of the system itself. As such, Palladium plays the role of a catalyst that brings about change in complex ecosystems. Because ecosystems are typically multifaceted and involve stakeholders from different sectors, taking a holistic approach is central to successful execution. To ensure we take into account the varying needs and motivations of different stakeholders, Palladium has developed five pathways to achieve Positive Impact.

The 5 pathways to Positive Impact.

To respond to workforce development challenges, Palladium has piloted partnerships between companies, educational service providers and governments to bridge systemic gaps in El Salvador. Participating companies saw that proactively investing in human capital had clear returns, and vulnerable populations were able to build competencies and skills to improve their future. Additionally, Palladium’s work on projects like Ujjwal has demonstrated innovative distribution models - a multi-tiered micro-franchise platform for family planning and maternal care services. As such, Palladium’s work on issues like last-mile distribution of services, workforce development and sustainable supply chains provides evidence that systemic solutions can and do create enduring economic and social value across multi-actors systems.

In the coming weeks, we’ll be sharing more highlights and reflections from last month’s #PISummit2017. Follow us on Twitter, Facebook and LinkedIn for all the latest and read our post-Summit article now: Positive Impact. What does it mean and how can we make it possible?

Please contact thoughtleadership@thepalladiumgroup.com with any questions.