92589 Capacity Development briefs S h a r i n g k n o w l e d g e a n d L e ss o n s L e a r n e d The Network Value Chain By Evan Bloom, Matt Reeves, and Aaron Leonard In response to a growing demand for evidence of effectiveness, scalability, and accountability in interna- tional development initiatives, the international development community has begun to ask increasingly hard questions about the costs, risks, and assessment challenges associated with its capacity develop- ment initiatives. The delivery of capacity development services through networks represents an important and growing segment of the engagement strategy being embraced by development practitioners. Despite this growing interest and application, the understanding of how networks for capacity development oper- ate and how to maximize their impact remains limited. This CD Brief suggests applying a value chain approach to network development and explores how it can be used to build systematic partnerships to solve social problems. What do value chains have to do with networks? settled on a network value chain that consists of three Sometimes the best way to understand the future is key domains—connect, develop, and scale-up. Each of to look back into the past. The network value chain these domains, in turn, can be subdivided into specific pushes managers tasked with improving the perfor- functions (figure 1). The three domains of the network mance of networks to adopt a tailored, end-to-end value chain are broad enough to apply to a range of approach to generating, converting, and diffusing solu- different network forms, while simultaneously being tions to social problems. This is a process of transform- flexible enough for adaptation to regional and local ing single-actor solutions into an integrated flow. The realities. network value chain is an approach that can help chart a future for systematic partnership and new coalitions. Value Chain for Networks Applying a value chain approach to networks means mapping the activity “ecosystem” and undertaking an analysis of individual actors, their collaboration Connect potential, and likely program synergies. At its best, a value chain perspective helps development profes- The principles of idea generation and innovation are sionals deconstruct how social action in key sectors, thoroughly researched, and a convincing body of evi- such as health, livelihoods, or conservation, evolves. dence now suggests that idea generation is most active From there, they can better understand how individual institutions, coalitions, and unaffiliated networks are positioned to meet specific challenges and then broker new partnerships and alliances that lead to powerful About the Authors and scalable ideas. Evan Bloom is Founder and Managing Partner of Nonprofit management researchers and consultants Root Change (www.rootchange.org). Mathew Reeves to organizational networks have long been interested is Senior Program Office at Pact, Inc. Aaron Leonard in what triggers collective action and high-performing is a communications consultant at the World Bank networks. In an effort to find common elements, we Institute. February 2009 N U M BER  3 0 Figure 1: Value Chain for Networks for Capacity CONNECT DEVELOP SCALE-UP Connect talented people, Turn ideas and tools into Spread best practice and high-potential ideas, and services that influence scale-up of social impact critical resources. development outcomes Bringing Discussing, Generating Turning Refining Delivering Encouraging Fostering Embedding together sharing, innovative ideas into delivery services to peer regional best people and and ideas tools, strategies target learning and and global practices knowledge discovering content, audiences action scale up and impact around an solutions and across issue approaches networks when groups of diverse people and ideas are brought New ideas built through the intersection of diverse together, forming new relationships and social net- individuals and organizations, rather than by in- works.1 Thus, innovation is overwhelmingly seen as house experts, is essential to facilitate deep connec- a process of taking apart and reassembling ideas and tions across sectors. This involves “bridging” the experiences in new combinations. The first domain capacity development world, a function well suited to of the network value chain is about facilitating these the World Bank’s multidisciplinary orientation and connections of diverse actors for idea generation. its position as a connector and facilitator across the Key tasks within the “connect” phase of the value global capacity development community (box 2). chain include bringing people and knowledge together “Connect” strategies that bridge traditional sectors around an issue or challenge; discussing, sharing and lead to expanded stocks of social capital by doing the discovering solutions; and generating new perspec- following: tives (box 1). • Strengthening groups and networks. Activities help people to organize themselves and mobilize resources to solve shared problems. Box 1: Leading Practice: LinkedIn • Building trust and solidarity. Activities enhance the level of trust among individuals in communi- The new movement to utilize social networks in pro- ties, while others build trust between individuals fessional circles is illustrated powerfully by LinkedIn. and institutions. Founded by Reid Hoffman, formerly Executive Vice • Promoting collective action and cooperation. President at PayPal, LinkedIn provides an efficient mecha- nism for using broad networks of connections, while Activities support individuals and groups in tak- maintaining the quality of interaction. It is regularly used for looking for a job, finding new companies with which to partner, connecting entrepreneurs, finding consultants, and locating industry experts. In 2007 PC magazine called 1 See Frans Johnansson (2004), The Medici Effect: Breakthrough it the “leading career-oriented social networking service,” Insights at the Intersection of Ideas, Concepts, and Cultures, with more than 12 million registered users, spanning Harvard Business School Publishing, Boston, MA; Philip 150 industries and more than 400 economic regions. As Evans and Bob Wolf (July-August 2005), “Collaboration of February 2009, it had more than 35 million registered Rules,” Harvard Business Review 96-104, Harvard Business users, spanning 170 industries, according to official School Publishing, Boston, MA; Kathleen Eisenhardt and LinkedIn figures. Charles Galunic (January-February 2000), “Coevolving: At Last, a Way to Make Synergies Work,” Harvard Business Like Facebook, Ning, and the many new social networking Review, Harvard Business School Publishing, Boston, MA; platforms in use today, LinkedIn users begin by creating a profile that summarizes their professional accomplish- Eric Von Hippel (2005), Democratizing Innovation, MIT Press, ments and then have the opportunity to link with others Cambridge, MA; W. Chan Kim and Renée Mauborgne (2005), based on shared profiles. A critical characteristic is that Blue Ocean Strategy: How to Create Uncontested Market Space users do not automatically get to connect with any mem- and Make the Competition Irrelevant, Harvard Business School ber. Although any LinkedIn member can see the basics Publishing, Boston, MA; Henry Chesbrough (2006), Open about others, they must get an introduction from a direct Innovation: The New Imperative for Creating and Profiting connection before being able to connect with someone. from Technology, Harvard Business School Publishing, Boston, This process helps to establish meaningful linkages, rather MA; Andrew Hargadon (2003), How Breakthroughs Happen: than the excessive connection invitations frequent on The Surprising Truth about How Companies Innovate, Harvard other social networking sites. Business Publishing, Boston, MA. february 2009 N U M BER  3 0 approaches and delivering services to local actors. Key Box 2: Leading Practice: InnoCentive tasks within the “develop” domain of the value chain include turning innovative ideas into tools, content, Launched in 2001 as an e-business venture by Eli Lilly and approaches for capacity development initiatives; and Proctor and Gamble, InnoCentive illustrates how insti- tutions are successfully relying on broad decentralized developing and refining effective delivery strategies for networks to resolve difficult problems. The InnoCentive interventions; and delivering services and interven- marketplace is an online community in which institutions tions to target audiences. post unsolved research and development (R&D) prob- New ideas do not get converted into practice without lems for scientists around the world (currently 90,000 registered) to solve. Dubbed “Connect and Develop,” the proper screening and funding mechanisms. Instead, marketplace allows companies to tap the talents of a global they can create bottlenecks and headaches across scientific community quickly and efficiently without hav- agencies (“too many ideas and not enough execu- ing to employ contributors full-time. Prior to utilizing a tion”). In many organizations, tight budgets, conven- connect and develop strategy, Proctor and Gamble spent US$1.5 billion on R&D annually, but operationalized only tional thinking, and inadequate skills can handicap 10% of its patents into new products—a poor return on the idea conversion process. By taking a value chain investment. perspective, individual organizations can work with other institutions that are more suited to the develop- InnoCentive works similarly to eBay; companies or “seek- ers” anonymously post R&D problems on the Innocentive ment and execution of new ideas and projects within Web site, while “solvers” submit solutions in a bid to an overarching strategy (box 3). capture cash prizes. Proctor and Gamble Chief Executive Officer A. G. Lafley points out, “Someone outside your organization today knows how to answer your specific question, solve your specific problem, or take advantage Scale-up of your current opportunity better than you do. You need to find them and find a way to work collaboratively and productively with them.” According to Harvard Business The last domain of the value chain involves the dif- School Professor David Wessell, who has analyzed fusion and scale-up of new ideas and best practices InnoCentive, the further a problem is from a solver’s exper- within the broader community through promotion of tise, the more likely he or she can solve it, showing that organizations can reap benefits from external knowledge productive partnerships that transcend their individual that they may never generate internally. constraints and organizational boundaries (box 4). Key tasks within the scale-up domain of the value chain include encouraging peer learning and action among local networks of organizations, fostering the ing collaborative action to solve social problems or further common interests. • Promoting social cohesion and inclusion. Activities enable individuals to work together to Box 3: Leading Practice: Ashoka’s address common needs, overcome constraints, or Changemakers stake out common ground in the face of diverse Launched in 1994 as a magazine based in Calcutta, interests. Spaces that foster inclusion are fre- India, focused on social entrepreneurship and innova- quently created or extended. tion, Ashoka’s Changemakers went online in 1998. • Enhancing the flow of information and commu- Changemakers is a “collaborative competition” that awards cash prizes for the best models that address certain social nication. Activities enhance both horizontal (peer- change themes. Although a panel of expert judges selects to-peer) and vertical (both upward and downward) the finalists, the online community is critical to selecting information flows that build trust and cohesion. challenge winners. The Changemakers competition involves more than discovery of good ideas; it incorporates peer pro- duction or “crowd sourcing” through community dialogues Social capital is the fuel that propels the creation of that lead to refinements in submissions until the competi- vibrant, sustainable networks. By connecting talented tion deadline. people, high-potential ideas, and critical resources, the Approaches like Changemakers.net provide new ideas, but “connect” domain of the network value chain fosters they excel at cross-pollination and idea conversion. The new relationships and trust among actors. ability to investigate a potential new market in a timeframe that would not have been possible if researched by a single team was a value-adding mechanism for the Robert Wood Johnson Foundation sponsorship of a challenge focused Develop on innovative approaches to combat domestic abuse. Even after the competitions on Changemakers end, proposed solutions stay online so that collaboration and dialogue The second domain of the value chain involves continue and “the whole body of ideas lives on.” For more developing ideas into innovative and practical details, see http://www.changemakers.net. Box 4: Leading Practice: The CORE Group Box 5: Leading Practice: The Impact Alliance The Child Survival Collaborations and Resources (CORE) Launched in 2001, the Impact Alliance is a global learning Group formed in response to a donor, and initially, any- and action network bringing together leaders of organiza- one who received a Child Survival Grant from the U.S. tions and networks who seek to improve their effective- Agency for International Development (USAID) was a de ness and maximize their impact in the communities that facto member of the network. As relationships deepened, they serve. It promotes the discovery, connection, and many of the members felt that they would derive more application of best practice and creates the space for exper- benefit by forming a collaborative body and leading their imentation and partnership to develop next practice. own capacity development. They sought assistance from USAID to do this. Many years later, CORE became a regis- The Impact Alliance focuses thematically on the cross- tered nonprofit as a dues-paying membership association. cutting drivers of impact—open innovation, leadership, and As of November 2006, it had 47 member organizations network effectiveness—that are shared by actors across working in more than 180 countries. As a network of sectors. As a network, the Impact Alliance organizes its nongovernmental organizations, CORE enables its mem- services around the “connect, develop, and scale-up” value bers to collaborate on strategies, approaches, tools, and chain—focusing special attention on the need not only to best practices of all kinds. It avoids the “reinventing the enhance knowledge exchange and learning, but to foster wheel” syndrome and decreases duplication of effort. partnerships and joint action that enable great work to go CORE also brings organizations together to collaborate at to a larger scale for even greater social impact. the country level. For more information, see http://www. coregroup.org. For more information visit http://www.impactalliance.org regional and global scale-up of best practices, and Diffusion of learning and best practice entails bridg- embedding high-impact practices (box 5). ing different “worlds” and recognizing how people Concepts that have been funded, developed, and and ideas found in one world can be useful to others. implemented still need buy-in for scale-up and rep- Diffusion requires patiently building a network of lication to happen. The international development information brokers who are connected to people with landscape is littered with good practices stuck at fresh ideas and to stories of high-impact practices the national and subregional level that never break (box 6). through geographic boundaries, promising practices implemented by civil society organizations that never Key Roles in the Value Chain reach through to national and subnational govern- ment, and successful practices well documented within individual organizations that rarely span organiza- Value maximization at each stage in the value chain tional boundaries. Capacity development institutions for capacity development depends on the interaction must work proactively to get the relevant constituen- of a wide range of actors, each playing a number of cies to support the spread of good practices across geo- different roles within the system. A review of the lit- graphic, political, and cultural lines. erature and previous research in the area of networks Box 6: Leading Practice: Microcredit Summit Campaign Through an enabling networking structure, active volunteer base, and high concentration of social capital, the Microcredit Summit Campaign was critical in putting microcredit at the forefront of the development agenda. As Prime Minister Driss Jettou of Morocco puts it, “the Microcredit Summit Campaign has played a determining role in the worldwide success of micro- finance.” The campaign began in 1997 as a summit with 2,900 delegates from 137 countries, who launched a nine-year campaign to reach 100 million of the world’s poorest families with microcredit by the end of 2005. In November 2006, the campaign was launched with two new goals: reaching 175 million of the world’s poorest families and ensuring that 100 million families rise above the US$1 a day threshold, adjusted for purchasing power parity, between 1990 and 2015. Outcomes of the campaign have been impressive, although the original goal of reaching the 100 million poorest has only been 80 percent achieved. As of 2005, more than 3,000 microcredit institutions had reported reaching more than 130 million clients, of which 82 million were among the poorest when they took their first loan. Of these poorest clients, 84 percent or nearly 69 million were women. Of the microcredit institutions, 847 submitted an institutional action plan in 2006; these 847 institutions account for 88 percent of the poorest clients reported. Assuming five persons per family, the 82 million poorest clients reached by the end of 2005 affected some 410 million family members. For more information see http://www.creditsummit.org. february 2009 N U M BER  3 0 has highlighted a number of roles (table 1). Each role Conclusion is described and the value chain phases in which this role is particularly important are noted. It is important Value chain analysis of networks provides managers to note that roles should not necessarily be assumed to with an important tool for performance improvement. correspond always to one person. An individual may With this systemic view of networked action, we are fulfill multiple roles, or multiple individuals can per- able to bring greater alignment and synergy among form similar roles. actors working to solve social problems. Figure 2 situates these various roles within the net- By promoting a tailored, end-to-end approach to work value chain. The key question for any organi- generating, converting, and diffusing solutions to zational or individual actor to consider is where they social problems we can also turn competitors into peer are best positioned along the value chain to maximize collaborators and turn old adversarial relationships effectiveness, scale, and accountability. Unifying these among citizens, nongovernmental organizations, gov- actors along the value chain will improve network ernment, and the private sector toward partnerships effectiveness. that are systematic, if still uncharted. Table 1: Roles within a Network Key domain(s) Role Description in value chain Visionary/founder Individual or organization with a compelling idea or vision of the future and who Connect sets out to realize this vision Magnet Individual or organization able to bring others to the table through financial power, Connect high-profile brand, or past successes Investor Individual or organization willing to provide seed money to support a new initiative Connect Relationship broker Facilitator of initial connections among disparate groups who encourages sharing, Connect discovery, and idea development Develop Subject matter expert Knowledgeable and experienced individuals who contribute information, participate Connect in discussions, ask questions, and provide leadership in their topic area(s) Develop Marketing/ Individual or organization that packages and communicates features of an initiative Connect communications for and to external audiences and existing members and leads outreach efforts Scale-up Resource provider/ Individual or organization that provides sponsorship and support for a functioning Develop sponsor network or initiative Scale-up Member Members who participate in initiatives and network, because of the value that they Connect generate both for themselves and others Develop Scale-up Knowledge manager Individual or organization that integrates information across an initiative Connect Develop Scale-up Mentor/advisor Individual who provides oversight and assistance to an initiative as needed or Connect requested Develop Scale-up Service / technical Individual or organization that delivers services or content to the beneficiaries of an Develop assistance provider initiative; should also be involved in service development Scale-up Coordinator Individual who guides the community’s purpose and strategic intent, energizes the Develop process, and provides continuous nourishment for the community Scale-up Manager of operations Individual who addresses the day-to-day needs of the network, its members, and Develop staff, including configuration of resources and capabilities Scale-up Figure 2: Value Chain for Networks for Capacity Development including Roles CONNECT DEVELOP SCALE-UP The development of capacity Turning ideas and tools into The spreading of best practice development tools, approaches services that influence and scaling-up of social impact and best practices development outcomes Bringing Discussing, Generating Turning Refining Delivering Encouraging Fostering Embedding together sharing, innovative ideas into delivery services to peer regional of best people and and ideas tools, strategies target learning and global practices knowledge discovering content and audiences across scale up and impact around an solutions approaches networks issue Visionary/founder Magnet Investor Relationship broker Subject matter expert/content provider Marketer Marketer Resource provider/sponsor Member Knowledge manager Mentor/advisor Service/technical assistance provider Coordinator/systemizer Operations/financial manager About World Bank Institute (WBI): Unleashing the Power of Knowledge to Enable a World Free of Poverty The World Bank Institute (WBI) helps countries share and apply global and local knowledge to meet development challenges. WBI's capacity development programs are designed to build skills among groups of individuals involved in performing tasks, and also to strengthen the organizations in which they work, and the sociopolitical environ- ment in which they operate. WBI Contact: Mark Nelson; program manager, Capacity Development Resource Center Tel: 202-458-8041, e-mail: mnelson1@worldbank.org Ajay Tejasvi; program coordinator, Capacity Development Resource Center Tel: 202-458-4064, e-mail: anarasimhan@worldbank.org Visit our website for more information and download the electronic copies of all Capacity Development Briefs at http://www.worldbank.org/capacity February 2009 N U M BER  3 0