Public-Private Partnerships That Are Changing the World
The Darden School of Business’ Institute for Business in Society partners with Concordia and the U.S. Department of State Secretary’s Office of Global Partnerships to present the annual P3 Impact Award, which recognizes leading public-private partnerships that improve communities around the world. This year’s award will be presented at the Concordia Annual Summit 24–25 September 2018. The five finalists will be highlighted on Darden Ideas to Action on Fridays leading up to the event.
The Partnership: MIPFuturo
- Agropecuaria Popoyán
- Feed the Future Partnering for Innovation
- Universidad del Valle
- Genesis Empresarial
- Fintrac Inc.
The Social Challenge: Economic Development
A lack of economic opportunities in Guatemala’s Western Highlands has left the rural population impoverished and prone to migration. With agriculture as the main economic activity, many farmers use chemical pesticides to produce vegetables for export to the United States, but high chemical levels can lead to U.S. rejection of the produce. A country with a chronic malnutrition problem, Guatemala could benefit from an abundance of fresh vegetables, but the pesticides can lead to devastating health effects, including respiratory diseases, anemia, cancer and stillbirths. Additionally, overuse of the chemicals has resulted in depleted soil nutrients and less productivity potential.
The Idea and the Action:
Biological control products offer farmers a solution that contributes to economic, social and environmental sustainability. Innovations in biotechnology not only provide a healthy and more effective way for farmers to improve their crop yields and incomes, biological solutions work with nature to repair and balance the health of an environment in which pests have become resistant to chemicals.
Feed the Future Partnering for Innovation, a USAID-funded program, and Popoyán, a Guatemalan agribusiness, partnered to commercialize a line of biological products for smallholder farmers in Guatemala. Partnering for Innovation supported Popoyán with seed funding to scale its production and introduce biological control products to a new market segment for commercial sustainability. In addition to achieving sales targets set to ensure product adoption, Partnering for Innovation asked Popoyán to perform a cost-benefit analysis to show farmers the profitability of using biological control products versus chemical pesticides. Additionally, Partnering for Innovation designed a distribution strategy that ensured last-mile delivery and incorporated diverse value chain actors to comprehensively support farmers.
For Popoyán, this meant expanding its market reach to a largely untapped customer base that would benefit economically and socially from their product. The agribusiness constructed a state-of-the-art laboratory for improved production and developed a packaging line appropriate for smallholder farmers. Popoyán set up demonstration plots and trained lead farmers as distributors and trainers in their communities, incorporating the findings of the cost-benefit analysis tool within its training and promotional materials to educate the new customer base. All of these activities were essential to successfully selling the improved products to smallholder farmers in order to achieve development outcomes and significant benefits for the population and environment.
Young farmers have been the earliest adopters of biological products, seeing this product line as a new venture in agriculture. The biological products Popoyán produces and sells through its successful, rural distribution model are providing a pathway out of poverty for farmers. When the pesticide-free crops are accepted in export markets, farmers can earn three times the minimum salary in Guatemala, indicating to a new generation that there are economic opportunities in their communities. Farmers also notice a difference in their health and know they are improving their land. This partnership enables Popoyán to continue serving this market segment, farmers to continue improving their income and quality of life, and Partnering for Innovation to support a sustainable business model to ensure long-term change — key in Feed the Future’s goal to end chronic hunger and poverty.
The Faculty Insight:
Customers are both curious and skeptical of new technologies and ways of doing business. This case illustrates their two minds. Without a doubt, farmers would be interested in using biological pesticides that do not put their health at risk. At the same time, they would be deeply concerned about switching from their current chemical solutions out of worry that the biologicals might jeopardize their yields and hurt profits. In this case, the challenges of switching are even more difficult because the risks are hard to assess — the harm would be immediate and tangible, whereas the potential benefits are long-term and harder to grasp.
This partnership was designed to help overcome the major barriers to adoption. Popoyán worked directly with the farmers to understand how the product worked and helped them see that it was easy to use. Training was provided in the field, and demonstration plots were created. Popoyán established quantifiable metrics to measure production and went one step further by turning these outcomes into clear economic benefits: Popoyán helped the farmers see for themselves that the biological solution was superior to the old way of doing business, which is the best way of overcoming skepticism. They took pains to understand the farmers’ way of bringing products to market, including redesigning the packaging so that it would be easy for them to switch.
It is a myth that superior products simply sell themselves. Old habits are hard to break, and customers often fight change once it starts to become real. It is the seller’s job to demonstrate how the customer’s life will improve and to help them overcome the barriers that might stand in the way.
Darden Professor Thomas J. Steenburgh is author of “How to Sell New Products,” forthcoming in Harvard Business Review.