Chapter 6
Maua—Social and Human Capital: A Case Study
Having described the theory, methodology, and some of the drivers specific to our company, the next step is to show how the process actually worked in field trials. Does our new business model program deliver in practice what it promised in theory? Based on our limited but fast-growing experience, the short answer is yes—and beyond our expectations, as we will explain in this chapter.
In 2013, we launched an exploratory micro-entrepreneur-ship, micro-distribution pilot business program among impoverished communities in Kenya called Maua with the purpose to test, in a real and especially tough business environment, the hypothesis of our model. In very practical terms, the business objective for Maua was simply to develop a new, profitable “last mile” route-to-market in select urban slum and rural areas of Kenya where our chewing gum business was unable to reach through its traditional route-to-market: namely Nairobi and the rural Kenyan town of Nyeri.
In research terms, the aim of the program was to validate or invalidate the insights of our preliminary analytical hypothesis, assessing whether it is possible to measure, harness, and grow the nonfinancial resources present in poor communities.1
We were interested specifically in slum dweller social capital and networks, in human capital and knowledge, and in preexisting economic relationships. And we looked to connect these resources with the financial resources that are otherwise scarce, building a business with the objective of solving both a strategic last-mile challenge for the business and a social challenge—the social challenge being to create good jobs and to generate measurable social, human, and financial capital among impoverished communities.
In strategic terms, the intent of Maua was to test—through a pioneering business model experiment based on new performance metrics and unorthodox management practices derived from our approach—whether it is possible to unlock entrepreneurial potential and operate successfully at scale at the so-called base or bottom of the pyramid (BoP) markets. A second goal was to penetrate a hitherto unreachable (for our industry and others) demographic that comprises a huge segment of the population (several billion worldwide) that is expanding rapidly across the less developed and developing world. It is a demographic that is considerably more complex and heterogeneous than the developed markets where most MNCs excel and know how to operate.
Operating successfully at the BoP is a steep challenge for most MNCs, and very few companies have managed over time to scale and earn satisfying returns there, leaving a relatively green field in which to work. If our model worked for a representative sample of this group, such as in the slums of Nairobi, there would indeed be enormous potential for expansion in the coming years, with both manifest business growth potential and deep, lasting social benefits of helping a large segment of the world’s population move out of poverty via rewarding work and scalable business models.
The program, therefore, was designed from the outset to create in a synergistic manner both economic opportunities and social benefits for all parties involved, with a focus on addressing poverty and reaching the base of the pyramid markets. Measuring business performance across multiple forms of capital (social, human, shared financial) and across all stakeholders involved was key. And adjusting business strategies to grow these new forms of capital all together leveraged their correlation with economic performance to make the experimental business self-sustaining and scalable, unlike the typical social business that is treated as a cost by the firm rather than an opportunity. In this context, the Maua approach falls within the framework of the vision of renowned management thinker and writer Professor C. K. Prahalad, who believed companies can “do well by doing good.” Prahalad argued that the engagement of multinational corporations with those in poverty can produce both profits and positive development outcomes.
Maua, as a side note, is the Swahili word for flower/blossom, and it was chosen because the geographic territories in the slums of Nairobi assigned to each of the Maua micro-entrepreneurs quite literally resembled (on a map) a blossoming flower. The fact that the initiative soon was “blooming” much like a flower in terms of its many positive impacts we will now describe helped the program name resonate more strongly with the surrounding community, a factor that helped to brand it locally and which led us to use variations of the blooming name to brand the Maua-like business initiatives that have followed in the Philippines (Bloom initiative), rural China, and soon India. What we did not know when we launched this first pilot business was how significant the mutual benefits would turn out to be for all of the parties involved when a more mutual approach—stressing the interests of the others, or “the means”—was put at the forefront of the model rather than traditional profit maximization, “the ends.”
The context for Maua
The Mars corporation’s chewing gum segment, Wrigley’s, was the business sponsor and host for the Maua initiative in East Africa. Wrigley’s has a chewing gum factory in Kenya and a market share of about 75 percent in the country, but prior to Maua it did not operate in the slum or rural areas assigned to the Maua team. Its main competitor in country has a somewhat lower price point on its gum than the Wrigley’s equivalent local brand, but Wrigley’s gum offerings in Maua have strong, positive brand recognition in the Maua operating territories. The traditional trade for Wrigley’s in Kenya is focused mostly on larger retail outlets, such as supermarkets, as well as smaller outlets such as gasoline stations and drugstores, all working through a master distributor.
By contrast, Maua focuses on a more direct micro-distribution approach via micro-entrepreneurs recruited into the program to move goods by bicycle, for example, from stock points to smaller sellers, such as the kiosks typically found in the lower income areas, along with street vendors, small shops, and some direct sales. Maua is about connecting people with little visible financial capital or the means to earn a living, yet are comparatively rich in human and social capital, with the relatively modest amount of money they need to become micro-entrepreneurs, thereby helping to unlock their potential as their income, well-being, and communities improved. Maua, therefore, was designed specifically to deliver human, social, and financial capital to stakeholders, with the hypothesis that by so doing—focusing on the needs of the others—the company would benefit by breaking into a new demographic. But we wanted to do this in a new way, since we believed the more traditional route-to-market approaches would not work at the base of the pyramid.
Hybrid value system
Rather than rely on the sponsoring firm’s local Kenyan master distributor, which had limited financial incentive or capability to distribute gum into the slums or to less populated rural areas, we opted instead to develop a new management practice termed “hybrid value system” (HVS)—a management practice derived in part from the hybrid value chain concept proposed by Ashoka in 2010.2 The hybrid value chain approach is based on the development of partnerships with a range of nontraditional (for business) citizen-sector organizations (CSOs) to provide social and human capital input through such activities as recruitment and training made possible by the “trust” such CSOs engender in the poorer communities that a typical MNC does not have.
An HVS, defined for our purposes, is an ecosystem that relies on connecting the core assets of several stakeholders. The core business assets Wrigley’s contributed included brand recognition, operational capacity, infrastructure, logistics, and reputation. The core intellectual assets of the new business model consisted of its innovative metrics for the different forms of capital, the anticipated correlation among the capitals, a repository of best practices, and access to local universities to collect the data, among others. The core social assets of the partnering CSOs operating in the country included their knowledge of and access to informal social networks, the ability to mobilize them and to provide technical and training support, and their ability to provide micro-finance and efficient electronic forms of payment, such as mobile banking. And the core micro-distribution network comprised a central stock point (the “stockists”), from where two Maua program groups collected goods: micro-distributors (what we call “uplifters”), who would deliver product to smaller retail outlets, and subsistence traders (known as “hawkers”), who would sell direct to the customer (see figures 6 and 7).
Figure 6. Basic Maua Route-to-Market
1. Stock point. Receives stocks from the distributor and supplies to the Maua uplifters.
2. Uplifter. Receives stocks from stock points and sells door-to-door to retailers.
3. Hawker. Receives stocks from stock points and sells to end consumers.
The HVS approach is an efficient, effective way by which institutional voids (pain points) can be addressed, thereby engendering the kind of trust within the community of stake-holders that delivers the social, human, and shared financial capital benefits which, in turn, drive enhanced business performance. Such a counterintuitive approach, however, requires thinking outside the traditional business paradigm and flexing new muscles, so to speak, by partnering with unorthodox entities that business managers simply do not notice, value, or even know how to access, much less how to enlist them in a mutually beneficial business enterprise.
Figure 7. The Hybrid Value System Approach
The challenges this unorthodoxy posed to business managers were many and take time to overcome. NGOs and microfinance lenders, for example, are not motivated by profit, but very often have more altruistic objectives than businesspeople do, and they must be remunerated in ways that address those objectives rather than simply through cash payments for services rendered—the staple of traditional business practice. Such CSO partners—if properly motivated or enticed to collaborate—can connect business to these impoverished communities in a way that businesses typically cannot do on their own, at least in the initial stages. This new type of partnership model, thus, removes a potential major barrier to entry into this space.
Performance measurement
An important competitive advantage for Maua—and for other initiatives based upon the new model we propose—is the rigorous and robust measurement methodology that our team has developed and calibrated with local academic partners. We use the performance measurement and the different forms of capital described in this book, along with the data being collected through regular surveys of program participants and select qualitative interviews run initially by a group of local students (with the plan to collect this data through mobile technology). The focus is on measuring shared financial impact, social capital, and well-being at work—including aspects of human capital, particularly through knowledge exchange and training, as the key performance indicators (KPIs) for the program.
Moving forward through the three years (and counting) of the Maua program, we have observed that the remarkable success of the operation is ultimately built on the particular strengths of the participating local communities. Hence, we decided to eschew sales and revenues targets and instead gave stakeholders (our value chain partners in the distribution business we set up) human and social capital targets. We determined that since the best and perhaps only viable way to build such a business from scratch to break into such a financially impoverished, yet socially vibrant, demographic was to recruit non-traditional (for business) partners, such counterintuitive (for business) targets would be more appropriate and would lead to higher performance. And this hypothesis was proven correct.
Maua start-up
Our decision to try the hybrid value system approach was largely driven by the fact that the social systems within these poorer Maua communities are largely informal. As such, the standard recruitment processes had to be modified. We worked closely with a range of partners mostly in the voluntary sector, drawing on their expertise and knowledge to identify the best people with whom to develop sustainable mutual relationships.
More specifically, we worked initially with select HVS partners to train and equip the micro-entrepreneurs via a custom-designed formal induction process. This comprised a substantive introduction to the program along with advice and guidance on goal setting, business planning, sales and marketing, and recordkeeping. In that regard, as thoroughly described in a 2015 Mars Catalyst—Oxford Saïd Business School teaching case study, a very important Maua partnership was with the NGO Technoserve,3 which in Kenya focuses on helping women, particularly unemployed single mothers, out of poverty.
We approached Technoserve, in part, because of their deep experience in recruiting and training Kenyan women to be micro-distributors of Coca-Cola products. Technoserve also had relevant experience providing training related to agricultural interventions. Teaming with associates from Wrigley’s in Kenya, Technoserve initially helped train 100+ women micro-entrepreneurs for Maua with a low rate of program attrition (approximately 20 percent). These capable partners deployed field officers locally to help oversee and track progress of those they helped train and, together with Wrigley’s and Mars University (the company’s internal education arm), refined the Maua training regime which Mars University then turned into the Maua Academy to help business managers understand how to operate a Maua model.
By partnering with Technoserve and other NGOs, along with some local religious organizations that were comparatively rich in social capital (trusted by the community), Maua expanded rapidly. We have learned a great deal from partnering with a variety of CSOs on this journey, with some working well, others less so, and we continue to harvest and test new lessons about how to most effectively operate nontraditional partnerships as Maua continues to scale up.
Another fundamental aspect of the Maua program has been the practice of ongoing monthly contact time with the micro-entrepreneurs (two-way communications), partly to offer support, but also to respond to the findings of the Maua team as they explored territory that was new for all involved. This type of routinized sharing experience (which we call “share-out sessions”) has proved to be a highly important continual process of learning about what does and doesn’t work, adjusting approaches, testing new ideas, learning more, and trying again. The Maua share-out sessions are normally very well attended by program participants and are used for continuing training, mentorship, and awards and incentives; sharing best practices; and offering opportunities to hear from and be inspired by guest speakers.
Share-out sessions actually have many useful aspects. In such meetings, for example, Maua participants might learn how to access microcredit or to connect with those who can sell or rent them affordable bicycles with baskets to more efficiently move their goods. They could get help or advice in such things as setting up savings groups, or being made aware of available health insurance programs. And a key benefit has been fostering meaningful fellowship among Maua participants that is engendering more social and human capital, which in turn is driving more visible teamwork and injecting greater energy and effort—which helps explain the correlative effects of the nonfinancial forms of capital with performance.
Maua’s rapid development
Maua entrepreneurs called uplifters essentially move Wrigley’s gum (Juicy Fruit, Double Mint, PK, and Big G) from designated stock points (stockists) to kiosks or other micro-sellers in their Maua territories, often on daily credit. The uplifters get a competitive margin that is slightly above that offered by competitive brands, made possible in part by the generally lower overheads of the Maua program vis-à-vis what we would experience in traditional distribution. The uplifters typically pay for the gum in cash (or are themselves granted credit), visiting their network of sellers later in the day to collect what they are owed once the sellers have earned enough to pay. Sales are tracked by Maua field officers, who subsequently provide bonus payouts as warranted. As Maua matured and entrepreneur earnings rose, M-Pesa mobile banking was introduced into the program to make bonus payments more efficient for busy participants.
An important part of the development of the program that cannot be overemphasized has been providing access for the Maua entrepreneurs to financial capital at the micro level through partnering with local microfinance lenders. Lack of financial capital necessary to purchase bicycles or even backpacks to transport Maua product was/is a key business ecosystem pain point that had to be addressed to jump-start the work of program participants who often join the program with minimal financial resources of their own. As the entrepreneurs have flourished, some have been able to upgrade to motorbikes to increase their reach and working efficiency, and some of these, in turn, have started to recruit and equip their own micro-entrepreneurs as a healthy sign of program scaling. And some top Maua performers have begun to transition into managerial roles and even have become small business owners capable of distributing larger quantities of Maua products.
Another highly important practice of the program is that the Maua entrepreneurs are given the freedom to sell other products—even competitor ones—rather than the company compelling them only to sell Maua goods in their baskets as a requirement to be in the program. Hence, the entrepreneurs are unleashed to truly function as entrepreneurs, so we often see Maua baskets including such non-Maua products as cereal, soap, and safe drinking water, along with so-called “aspirational” or nonessential products like chocolates. This entrepreneurial freedom is one of the key reasons why the Maua program has comparatively little attrition to other social types of businesses that seek to exert more control over the route-to-market.
Reflection on design and results
Overall, the package of support offered to Maua participants is designed to empower them to operate in ways that they want to operate (liberating them), while giving them the type of practical support that can more easily be provided by an MNC than by any other type of organization with less practical relevant experience and infrastructure to draw upon. This approach—providing higher margins and more freedom for micro-entrepreneurs, using nontraditional partners from the nonprofit space to gain community entry and to assist in recruitment and facilitate training, and dispensing with sales and profit targets in favor of human and social capital targets—are some of the many ways in which Maua is proving to be a new and distinctive way of doing business.
Having set up the Maua hybrid value system, the obvious questions to ask are how successful has it been in creating value, and how has that value been apportioned across the stakeholder chain? This is not only value in financial terms, but value in the less well-known areas of human and social capital. As illustrated in table 6.1, the answer is that the Maua program has created excellent levels of measurable value across multiple forms of capital.
Since its launch in September 2013 with an initial seven micro-entrepreneurs operating in one slum area (Dandora), Maua has developed across different geographies and has achieved total retail sales exceeding US $7 million, double-digit growth, and excellent profitability. Maua is now representing a significant part of the local Wrigley’s business and is managed like a business unit with its own organization.
Table 6.1. Maua Profit and Loss
The performance level of Maua, in fact, has been so notable that it led the leader of the sponsoring business segment to pay the new model an amazingly important compliment. He advised our team that the business would deploy the model whether or not it was intended as a social business because it makes good business sense in and of itself. This is what really separates our model from what one might typically find in the CSR or corporate philanthropy spaces, both of which might be described as “doing good at a cost” in contrast to our holistic capitalism approach of “doing good, and well, at scale”—there are solid business incentives for companies to deploy it, rather than wanting to “look good” (CSR) or to “feel good” (like a corporate foundation).
However, the revenue and retained earnings figures are, in a way, more conventional measures of success. Equally important for the Maua work was being able to measure progress in terms of the way human and social capital appreciated over time. We wanted to measure the benefits to the worker by how equitably the financial capital was shared but also via improvements in education, training, and individual satisfaction. In relation to harnessing and growing social capital, we measured the benefits that accrued to the wider community in terms of job creation and micro-entrepreneurship. In addition, we measured the ways in which any institutional voids were filled: for example, the creation of systems that made it easier to do business and to grow trust in business transactions. The results were also very encouraging in these areas.
Within eighteen months of Maua’s launch, the team of entrepreneurs had grown from seven at the start to 450+ people in year 2, on a pathway to 700+ (target plan) by the end of year 3. Maua has delivered excellent levels of measurable value across nonfinancial forms of capital, +13 percent of human capital, +20 percent of social capital, and +20 percent in shared financial capital (a proxy for the financial increase of the micro-entrepreneurs). See table 6.1.
These new micro-entrepreneurs were also drawn from a wide demographic range—youth, parents, and grandparents—and the gender profile was well balanced at roughly 50/50. We also discovered that, when it came to social capital, just three dimensions of this metric (consistent with prior findings testing the metric across various geographies) accounted for 75 percent of the social capital that accrued: (1) social cohesion (willingness to cooperate in group settings) and a mix of (2) trust (faith in the reliability of one another) and (3) collective actions (working together for a common purpose).
There were also correlations (as in earlier experiments) across different types of capital. We found that improvements in social capital and human capital both positively correlated with financial capital—in other words, the more trust there was in the community, and the better trained the micro-entrepreneurs were, the more money the operation made and shared. The benefits accrued for all the parties involved, including the company, which was initially aiming in the piloting phase merely to break even as a way to explore how to deliver more mutual benefits to stakeholders through a new business model approach.
We were also able to measure the fact that the rural operation in Nyeri had a higher level of social capital than the urban operation in Nairobi. This may be due to a number of factors related to differences in who is seen as more or less trustworthy in rural vs. urban settings. For example, rural communities are typically more trusting of fellow townspeople than are urban dwellers because the former have a longer history of living near to one another and, thus, are well known, while the latter tend to be more transient and, therefore, are less well known. Lower-income rural communities also tend to be generally more collaborative because working together may make the difference between eating and going without.
The upshot of designing a new hybrid value system and paying particular attention to the development of and relationship between alternative types of capital (in this case social and human capital) led us to a clear conclusion:
When mutuality drives business performance (rather than just narrow profit maximization), greater value is created in terms of individual and community well-being, along with financial profit, both for the sponsoring company’s retained earnings and for the micro-entrepreneurs’ higher margins.
Taking Maua to the Philippines
Roughly a year after launching Maua, our team launched a “Maua 2.0” program (Bloom) in the Philippines, beginning in the urban slums of Manila, but involving two business segments rather than just one. The living conditions in the Bloom operating territories, as was also the case in Kenya with Maua, present enormous challenges for businesses to operate under, especially multinationals, and for people to live productive and fulfilling lives. The inhabitants often scrape out a meager living by sorting through trash heaps to garner material for recycling, there is rudimentary sanitation and limited access to clean drinking water, and there are very high levels of unemployment, particularly among young people.
The local team named the Philippines business pilot Bloom—in keeping with the blossoming flower theme of Maua. It operates in much the same hybrid value system way as Maua does (see figure 8).
Encouragingly, we saw the same enthusiasm and commitment in Manila that we had experienced in Nairobi and Nyeri. Within just a few months of launching Bloom, we had established a viable network of more than seventy entrepreneurs who were rapidly building their own network of consumers. And the results were equally encouraging: in its first year the Bloom operation sold several hundred thousand units and contributed significantly to profit levels of the two co-sponsoring business segments (Wrigley’s and Chocolate) in the Philippines.
Figure 8. Basic Schematic of Bloom Program
Bloom, in fact, has thus far performed along a similar trajectory as Maua in terms of what it is delivering against the same multi-capital key performance indicators, though in a pilot that has added chocolate products to chewing gum and sweets offerings, which meant some additional complexity. As one example, we needed to implement an additional distribution line in Bloom to deliver goods to the initial stock point.
The Maua and Bloom results together have given us an increasing level of confidence that the aforementioned “clear conclusion” about the model is fast becoming a provable fact. And a fact that can help lead businesses to see how they can do both good and well at scale. The business pull for more pilots at the time of this writing is growing fast and is indicative of the convincing nature of the results to date of the Maua and Bloom programs. Our team will soon be launching new supply side pilots in Côte d’Ivoire among cocoa farmers and in Uganda among coffee farmers, and demand side pilots in rural China and India that should add a great deal of new lessons to the mix. While there are the normal bumps in the road in Maua and Bloom that one would expect with any experimental type of entrepreneurial initiative, we are increasingly confident that the model works. It delivers more value in terms of measurable individual well-being, community trust, and social cohesiveness, as well as higher margins for the entrepreneurs, and more profit for the company, all with less investment and overhead than is typical in more orthodox businesses.
All stakeholders benefit in this new approach. Nontraditional partnering stakeholders, such as NGOs and microfinance institutions, are addressing their social objectives through participation and are not being asked by the sponsoring business to adapt to the “cash-and-carry” for “services rendered” type of relationships that typically characterize such business activities. We believe Maua and Bloom, along with the pilots that will soon come on line, can together help prove that what is essentially a mutuality-based business can actually outperform a profit maximization business, not only in the social benefits it creates but in delivering superior revenues and retained earnings. This makes it viable for business, which after all is not about charity.
The big dream
When we first launched Maua, one of our key internal business sponsors at Mars expressed his personal aspiration that the Maua approach, through scaling and replication, could create a million jobs in Africa alone. We were deeply moved by this ambitious vision for the future coming as it did from a seasoned business colleague without the benefit at that time of hard results from a program that was just starting. And while we have a very long way to go to hit that job creation number, we sense that the hard part—developing, refining, testing, and proving that the approach can work and be even more profitable, financially and holistically as we have described, than the old profit maximization default—is now over. Scaling and replication will, of course, take considerable effort, but will likely be more about the “renovation” form of innovation (incrementally improving and growing what exists) rather than the far riskier and more challenging “disruptive” form of innovation (creating a new market and value network) that we believe Maua and Bloom represent. We trust that this million jobs number will one day become a reality.
The game-changing potential
The potentially game-changing nature of this program becomes even clearer when it is compared to alternative strategies that have focused on profit maximization or on CSR approaches. Some MNCs have also tried to employ what they call “social business” strategies, but most are struggling to make a decent level of profit (or in fact any profit at all). In other words, these alternatives are, for the most part, nice, one-off CSR-type stories rather than replicable, scalable models with the potential to truly transform the way business is conducted. Such CSR-type programs use a mix of metrics solely to measure the impact of what they are seeking to do in ways that generally are favorable to their corporate reputation. Since there are few if any truly global standards for what companies disclose in their annual reports, they can pick and choose which metrics tell the best story for their shareholders and consumers, and we have found very few CSR programs that can deliver measurable enhanced business performance.
In contrast, our new business model uses the heretofore missing nonfinancial metrics of capitalism and uses them not just for impact measurement, but rather to drive greater business performance; holistically, yes, but also financially, all in ways that are measurable and trackable over time. This is because we have discovered that the various forms of capital do indeed correlate with one another. And by taking an HVS partnering approach to construct what are complete businesses based on our new business model, we and our colleagues and partners are truly breaking new ground. We are confident now in stating that the model has proved itself already to be a robust theoretical and practical framework.
We assert that this new model, in fact, has the potential to reform business in-depth once it fully scales up and the “good news” spreads. It has the power to move capitalism closer to completion, and by so doing, can heal a broken world on many levels.