Reflecting on the Importance of Intangibles

This blog post was written by Christian Pennotti, Learning and Impact Technical Advisor at CARE, following the "Understanding the Intangibles: Trust, Risk, Leadership, and Transparency in Value Chain Partnerships" Breakfast Seminar on November 4, 2011.

Whether it is in the pages of the Harvard Business Review, on enterprise development practitioner discussions boards, or in donor debates on effective private sector engagement, there seems to be a growing acknowledgement that non-financial factors are central to sustainable business models, effective market facilitation, and inclusive development.

In today’s Breakfast Seminar, we provide some concrete examples from Bangladesh on how these non-financial factors – what we are calling the intangibles including trust, transparency, risk and leadership – have influenced our programming and impacted our successes and our failures. 

With support from the Bill and Melinda Gates Foundation, the $4.5 million, five-year Strengthening the Dairy Value Chain (SDVC) project has made substantial progress toward our goal of doubling the dairy-related incomes of 35,000 smallholder and landless farmers. As in all our value chain projects, CARE started back in 2008 by analyzing the dairy sector and identifying a set of priority constraints to address. We set out to overcome limited productivity, inadequate access to inputs and output markets, inefficient means of exchange, and a challenging policy environment. To measure our progress, we focused on a set of accepted metrics including increased use of inputs and services, improved productivity, increased sales, and reduced transaction costs.

What we realized over time though – both through our own observations and through academic research – was that that those metrics, while useful and important, were only telling us half the story. When we really dug into questions about whether our interventions were leading to sustainable change in the dairy sector, there was another whole layer of nuance, another layer – or layers – of complexity that we needed to reflect on in order to understand if we were truly reaching our goals.

Were we having an impact on the degree of trust between market actors?

Were we influencing companies to take a more inclusive approach to their growth or, for those emerging from the development sector, to take a more commercial approach to their operations?

Why did some partnerships succeed while others failed despite seemingly equally compelling business cases?

What we learned was that to answer these questions, we needed to look deeply at less tangible, more qualitative and subtle changes in perceptions, motivation, and commitment. Through this presentation we have tried to share our experience working in that space and how we have been able to broker some successful – and some unsuccessful – partnerships. We also tried to share our thinking about where we need to go next in order to build on these lessons and help make them more central to our work.

Many thanks to USAID for inviting us and to all those that attended and provided so many good, thought-provoking questions. You have given us much to think about and we hope those similarly working to better understand and respond to the intangibles will reach out to share your experiences.