Original blog post on valuechaingeneration.com
Late last summer I ran an online Partnership Design workshop with 2 agribusiness social entrepreneurs from Kenya, Peter Mumo (Founder of Expressions Global) and Dysmus Kisilu (Founder of Solar Freeze). In this post, I’ll take you through the process of how a pay-as-you-go irrigation service (Expressions Global) could collaborate with a cooled storage service provider (Solar Freeze). A collaboration which appeared ready to go, but actually wasn’t quite there yet.
Peter, and Dysmus met as part of the Massachusetts Institute of Technology D-Lab project on inclusive partnerships, which is a year-long learning lab on the topic of Co-Designing Inclusive Partnership Models.
When Peter, and Dysmus were introduced to the Partnership Canvas during the first session as part of the learning lab, they were inspired to collaborate with their 2 companies, Expressions Global (EG), and Solar Freeze (SF).
They were aiming for the same customer segments, smallholder farmers, and both companies could benefit from connecting their services. More, high-quality produce in stable supply from better irrigation, and trusty cold storage would mean more interest from well-paying (export) traders, and thus more interest from prospective smallholder farmer clients.
A few months after the initial workshop where Peter, and Dysmus met, I checked in on their progress together with Saïda Benhayoune, who is Program Advisor at MIT D-Lab. We proposed an online workshop to apply the Partnership Design process, in order to analyse the current status of their collaboration, identify next steps, and put the Partnership Design tooling to the test at the same time.
Approach to an online partnership design workshop
Because our aspiring partnering entrepreneurs were based in Kenya, and Saïda was in Boston, and I myself in The Netherlands, we needed to a workshop setup that could operate remotely.
We chose to use miro.com as a virtual whiteboard, which was accessible to all. We used Skype as a means for talking.
Despite the often tricky internet connection with Kenya, the combination of both tech platforms worked wonderfully for the 3 hours of discussion we had together. Especially the miro board provided a very interactive, and immersive way for virtual collaboration.
During our call, we went through all the steps of the Partnership Design process (see visual below, which can be explored in more detail here). The results themselves are discussed in the next section of this blog.
Partnership Design Expressions Global - Solar Freeze
The Partnership Design Process
We started discussing both partners’s business models, using the business model canvas. From there we looked at current priorities, and challenges to both businesses.
For EG the main challenge is to find an well-paying market outlet for the farmers that use their irrigation technology. Without a well-paying market, like a higher-end domestic, or export market, farmers are less inclined to invest in their crops with irrigation.
SF is looking to expand their presence in the market, building new units, and connecting with new farmer groups who would use storage for their fresh products.
Next we explored both partners’ intent to collaborate; why do they need help from a partner to to achieve their priorities?
EG is in need of cold storage capacity in the supply chain of their farmers. That is key to access high-end markets, as it keeps produce fresh during shipment. However, investing in their own cold storage would be expensive, and it would detract from their core business, which is irrigation. It would be better to work with a partner that is specialised in storage facilities.
SF is in need for new farmers to collaborate with. But building those relationships is hard. It would make more sense to collaborate with an organisation that already has those relationships in place.
So it turned out, both EG, and SF have matching priorities, and also need collaboration to achieve them. EG needs cold storage, and access to higher-end marktes, which SF can offer. And from its end, SF needs access to organised farmers, which EG can offer. This is a solid basis for delving further into the design of their partnership.
Design & Compare
Using the Partnership Canvas we started discussing the setup of the collaboration. For EG it was clear what value the partnership needed to create. A cold storage unit, on site, near the farmers that they work with.
One of the key assets that SF needed to realise the construction of their cooling unit was to have land available to place the unit. Peter said that through EG’s relationship with local landowners this could easily be arranged. Also this relationship could provide for security. Operationally it seemed possible to place a functional cooling unit.
The remaining question now was how SF could tie relationships with farmers, so that they would start using the cooling storage facility. Both Dysmus and Peter explained how farmers need to improve their production practice to meet the higher production standards, and how training of farmers was key.
For that reason they thought that it would be appropriate to design a joint training for export markets for farmers, where Peter’s standard training on Good Agricultural Practices could be combined with a Post-Harvest Management content based on Dysmus’ experience. This training could be a way for SF to acquire new farmer-customers for the storage unit.
The Created Value form the partnership is labelled with yellow on the whiteboard
Now that the design for the collaboration was made apparent with the Partnership Canvas, we looked at the big questions that needed to be answered for the collaboration’s business case; the hypotheses behind the partnership (those are labeled in red on our whiteboard).
For EG, the big question was whether the cold storage unit in combination with the training would lead farmers to dedicate more acreage to high quality (exportable) crops, and supply the (stable) volumes of that product. The needed increase in acreage, and productivity could be achieved through the EG’s irrigation service, which would mean more revenue for the business. Also, Peter expected that EG would be able to generate more revenue from commissions, as an intermediary in the trade between farmers, and exporters.
SF had questions about how the training would influence utilisation rates of the storage units. The training would need to lead to new numbers of farmers that would use the unit, and an increase in the volume of product that they would store. This would impact revenue growth from the storage service.
These were questions about conversion from the farmer training to paying customers for storage on the one hand, and then on the other hand about productivity, and volumes of product that these customers would actually store in the cooling unit.
The case for partnering turned out to be clear. The assumptions were reasonable, and if they were to be true, both business would benefit from the collaboration.
The partnership seemed ready to move into action mode, testing the hypotheses in a pilot project. And an obvious first thing to start with would be the farmers trainings, which could even start before building the cooling units. Implementing the training would answer questions that both EG, and SF were facing. But despite this obvious first step Peter, and Dysmus hadn’t started their joint project yet.
When digging into the issue, it turned out that Dysmus had made a wrong assumption in his numbers behind SF’s growth. Where initially he thought that SF could finance placement of new cooling units through its own profits, growth actually required external funding. So, SF’s arranging of funding turned out to be a very important missing priority in the partnership discussion, and was the cause for the hold-up.
This piece of information also increased the importance of utilisation rates for SF’s cooling units, and whether the farmers’ training would actually lead to more farmers signing up, higher productivity of their crops, and more supply to the cooling units. This would be critical for financial viability of SF to bring return on investment of new cooling units.
This additional pressure on the numbers increased the risk to the partnership. Yet even more so, it pointed to the importance of starting of the joint training as that would provide key insights needed to confirm (or invalidate!) the business case in this early stage of the partnerhip.
We left the conversation there, with a clear next step for Peter, and Dysmus to follow-up on. As for the result of the Partnership Design process, it pointed to the importance that a good preparation by laying out the starting situation of both businesses is critical for achieving momentum in partnering. If information is missing in this orientation stage, the partnership will likely run into delays.
We’ll be sure to check in again with the EG-SF partnership again soon to see what insights the implementation of the training has brought.
[PS. Upon reviewing this article, Peter explained that the partnership has run into an additional challenge, namely that exporters demand graded produce. They were assuming that cold storage was their only impediment.
So, despite having the relevant contacts with exporters in place, they still need to work out how to jointly fulfil the exporters’ product, and packaging requirements. The partnership now needs to involve sorting, and packaging facilities, which neither EG nor SF currently has.
Will it be a joint investment? Or will it be assigned as a responsibility to either of the partners individually? What are your thoughts? – Leave them in the comments below 👇]
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