Business best practices that development organizations should adopt

Despite increasing collaboration between business and the development sector, it’s often hard to ignore the palpable differences between the way development organizations — be them donor agencies, national governments, nongovernmental organizations or other implementing partners — and the private sector operate. In this era of competition, value for money and intense scrutiny over development projects, adopting private sector rigor and practices — particularly in the areas of people, process and technology — can increase the efficiency and competitive advantage of development organizations. Devex explored this issue by surveying a small group of our members who have significant experience working in both the private and nonprofit sectors. The results were fairly clear: despite the cultural shift and upfront investment required to build private sector systems and processes, there are huge payoffs in terms of winning donor projects, staffing those projects, streamlining delivery, and measuring and reporting on results. Based on our survey and interviews, here are five private sector best practices that can help small, medium and large development organizations improve their operations. 1. Know your customers. “Customer” is a seldom used term in international development, but there’s a lot development organizations can learn about how businesses engage with the recipients of their goods, services, products or ideas to serve them better. Before any product or service is launched, successful businesses invest heavily in understanding potential customers and markets and use these early insights to guide design and go-to-market planning. As products and services are rolled out, businesses closely monitor how each is perceived by customers and how this may affect their overall brand and sales. Development organizations often assume that their goods, services, products and ideas will be well-received because their intentions are good. They can fall short of reaching a thorough understanding of the customer and the problem their product or service will solve for them. The needs of these customers are complex, diverse and constantly changing. What works in one community may fail in another. Development organizations should institutionalize customer and market research strategies such as interviews, formal and informal consultations, surveys, and focus groups both at home and in the field to get to know their customers. These strategies will generate data and information about customer perceptions and preferences and automatically involve them in the design and delivery of interventions. 2. Communicate strategically. Mobile devices and social media are opening up new avenues for strategic communication that development organizations are just beginning to leverage. To their credit, some development organizations are already using these technologies to communicate effectively. Some of the top humanitarian agencies and global development NGOs have been using social media for their fundraising and awareness campaigns. Prominent NGOs such as Médecins Sans Frontières, the World Wildlife Fund and RED have also been cited for their focus on strategic communications using the latest social networks and technologies. Major social networking venues such as LinkedIn, Facebook and Twitter allow any development organization to interact with a wider audience, advertise events and programs, and recruit more donors and volunteers. MSF, for instance, uses social media to gain access to affected communities during crises and to exert pressure on pharmaceutical corporations to reduce the cost of essential medicines. After the 2010 Haiti earthquake, MSF circulated a press release calling for the U.S. government to allow its planes to land in Port-au-Prince. The planes carried essential supplies for MSF’s medical teams operating in its field hospitals. NBC News anchor Ann Curry tweeted the press release, which helped secure a positive response from top U.S. military officials. WWF’s Twitter hashtag #wwf24 allowed people to participate in a worldwide conversation about what they were doing to help the planet, while its project “24 Hours in the Life of WWF” featured an interactive map that displayed Twitter updates on the work of anyone in WWF over a single day. Both helped communicate WWF’s activities directly to a global audience that might otherwise not have been engaged with the group. 3. Innovate. International development, like most other industries, is changing. Most businesses acknowledge that keeping pace with industry changes through innovation is a basic cost of doing business today. While donors and their partners are beginning to harness new technologies and approaches, many development organizations operate on a short-term horizon of prioritizing urgent deliverables, which leaves little space for exploring and testing new ideas and processes that can lead to better project outcomes and reduced costs. There are some success stories, however. In 2011, Devex awarded 40 development innovators based on a survey of more than 2,000 aid workers that posed questions about investment in R&D, use of new business models and market-based approaches, and record of incorporating new technologies into operations and programs. One Devex development innovator, the global health organization PSI, focused its R&D activities on identifying more cost-effective ways to deliver products and services to those who need them most. In India, for example, PSI experimented with delivering condoms through the same channels that moved tea across the country. As a result, condoms were made available through hundreds of thousands of small shops rather than being limited to the reach of the public health system. Another awardee, Save the Children, believes that innovation starts with accepting the need to change. Dr. Amy Jo Dowd, senior director for education research at Save the Children, said that between 2005 and 2008, the organization had to confront the harsh reality that its continued investment in education was not yielding expected results. In response, Save the Children developed Literacy Boost, a program that supports the development of reading skills in young children by using assessments to identify gaps in five core reading skills, mobilizing communities for reading action, and training teachers to teach national curriculum with an emphasis on reading skills. Literacy Boost has moved beyond the first phase of field testing to program sites in Malawi, Nepal, Mozambique and Ethiopia. Successful field tests in Malawi, Nepal and Pakistan have shown significantly greater learning gains vis-à-vis comparison groups, even across languages and large class sizes. 4. Invest in human resources. At the end of the day, development is a people business. And people require nurturing and attention. Many private sector businesses have built reputations for treating human resources as strategic assets. They have an unrelenting focus on attracting and keeping the best and brightest talent, accepting that growth and performance are inherently tied to their staff’s ability to innovate and lead. While many development organizations do want employees with a passion to change the world, they should also be searching and competing for the top talent and offering both general and specialized training that contributes to staff members’ professional development. Development organizations should also not be hesitant to reward good performance and directly address bad performance. “Investing in highly qualified people may require more spending initially, but it saves you money in the long run because it reduces the likelihood of program delays and inefficient spending,” Matthew Bohn, Millennium Challenge Corp.’s resident country director in the Philippines, said. Bohn worked nine years in the private sector before joining MCC in 2004. Bohn explained that for its Philippine office, MCC hired an executive firm to recruit employees on a purely performance-based approach, instead of relying on personal networks. MCC also determines competitive pay rates by viewing comparable institutions in the market, studying their salary and benefits packages, and matching the lower or middle parts of the range. Development organizations should also endorse and sponsor professional development and training to sharpen existing skills and build new ones. In 2011, the U.S. Agency for International Development and the Brazilian Agency for Cooperation, or ABC, undertook an exchange program for mid- to senior-level staff. Both organizations aimed to increase the knowledge of their staff to reduce reliance on external consultants, with USAID keen on learning from Brazil’s agricultural technology expertise and ABC interested in USAID’s expertise in monitoring and evaluation, program design and public-private partnerships. Despite providing adequate and additional training, development organizations may still have to deal with delinquent and nonperforming staff. While organizations should try to provide opportunities for such employees to perform to expectations, they must also recognize when to let these team members go. Keeping delinquent staff not only hurts the efficiency of an organization, it can also lower the morale of more competent team members and lead them to become less productive as well. 5. Evaluate performance and results. Results are more easily measured in the private sector because there is an automatic focus on black-and-white data such as profits. The development sector deals with more intangible issues, but there is no substitute for capturing data accurately, especially in an environment where donors are increasingly focusing on aid effectiveness and requiring implementing partners to demonstrate that more money reaches the target beneficiaries themselves. This means being able to attribute impact to your intervention in a way that you can defend with rigorous evidence. Bohn clarifies that results are not about “how much money has been spent,” which is more input than result. The more important question is whether the money spent is less than the value generated. The focus on human interest stories is not bad, but it is really a form of strategic communication, which cannot be a proxy for impact evaluation. It is important to develop a clear data model, including processes to collect, validate, analyze and address data. MCC has a monitoring plan that includes a series of indicators that are tracked from the beginning. The organization performs baseline data collection and midline and end-line surveys to identify the effects of any intervention. Thinking about results from the start can be helpful. Bohn shared that MCC views results along a “continuum of outputs.” In a technical assistance project with farmers, the number of farmers trained is not a measure of impact. The questions that need to be addressed are how much more they are producing and how much more are they earning. Development organizations are beginning to appreciate the vital role technology can play in improving everyday work processes, tracking and monitoring data, and engaging stakeholders and funders. More sophisticated technology systems can also improve business intelligence and results gathering and analysis. 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