All organizations must continually innovate to adapt their practices to the current business environment.
Even before the pandemic, entrepreneurial support organizations, which provide capacity development and other business services to entrepreneurs, were already adopting digital tools and practices to deliver services.
Last year, the pandemic made the ability to shift operations online even more pressing, and often a matter of business survival. Digitalization is crucial to provide support to entrepreneurs globally through training, mentorship, networking opportunities and other services.
A new report by the Aspen Network of Development Entrepreneurs (ANDE), Dalberg, and the Argidius Foundation explores the digitalization of such entrepreneurial support organizations, or ESOs, particularly in the context of the COVID-19 crisis.
Motivations for digitalization are diverse. Top reasons include achieving scale and driving new client engagement (91%) and increasing flexibility to clients (82%). Organizations also note that digitalization may allow them to mitigate risk, reduce operational costs, or better meet client demand and specific needs. The pandemic also brought a new reason: “responding to COVID-19” rose to third among motivation factors for surveyed ESOs to digitalize their services.
Prior to the pandemic, about 24% of ESO services were digital, rising to 72% by November 2020, but ESOs expect only 62% of services to remain digital in the future. Digitalization can look very different across organizations, depending on the services they provide and their ability to invest in technology.
Enhance, shift, transform
Some organizations have gone online temporarily, for example by hosting events virtually instead of in person, but expect to return to their typical offerings once it is safe to do so. In this model or digital pathway, categorized as Enhance, an organization maintains its focus on offline services but complements them with pre-existing online tools.
For example, ANDE member Sinapis provides small and growing businesses (SGBs) with training, coaching, advisory services, and networking across a range of developing economies. It moved almost all its programming online during the COVID-19 crisis. But Sinapis plans to return to a mainly offline service model, with online or hybrid options available only to those who can’t access the physical classes or network opportunities.
Other organizations were already invested in virtual tools and platforms to deliver their services. Organizations following the Shift model have adopted through the pandemic and made digital a central component of their long-term strategy. Pro Mujer, a highly regarded women-led ESO in Latin America, had already been digitalizing before the pandemic, and has shifted further to pilot tools to widen their service offerings, such as a chatbot and app to introduce clients to its financial services. It has also introduced a mobile wallet for clients and is using Whatsapp for entrepreneurship training.
Some organizations are making digitalization central to their strategy and offerings, developing their own digital tools, and making significant investment into their technological infrastructure. Newer organizations may be born digital, developing innovative service models that prioritize digital delivery, although offline elements may add additional value.
Organizations falling under the Transform digital pathway have a digital-centric strategy, with in-house capabilities and resources allowing them to develop their own platforms and products. Bridge for Billions is a social enterprise that creates and manages innovation programs around the world. The “digital-native” organization was inspired by Duolingo’s learning-by-doing model, offering its own program as well as customized programs for other organizations.
Such programs offer a personalized learning journey carried out almost entirely online, with community building through local partnerships, allowing Bridge for Billions to scale its impact rapidly. In the context of COVID-19, MicroMentor, a longstanding network of mentors offering support to under-resourced entrepreneurs to help their businesses to survive and grow, was able to quickly scale its existing online platform to provide thousands of entrepreneurs around the world with the critical mentoring resources needed to face the massive long-term effects of the pandemic.
There is no one “right way” to digitalize. The report provides useful guiding questions as ESOs grapple with developing both short-term and long-term digital strategies. When ANDE surveyed members about the support they need in responding to COVID-19, one third of respondents indicated that with additional funding, they would adjust their delivery mechanism or go entirely digital.
Digitalization and digital transformation will continue to play an important role across the entrepreneurial ecosystem, including for SGBs and the organizations that support them, through the provision of needed technical and financial assistance, as well as incubation and acceleration services.
Many questions remain: How can digitalization ameliorate (or worsen) existing digital divides – or digital chasms – among those with and without reliable and affordable access to electricity, technology, or the digital literacy to use digital tools? How can it be used to help support equity for women, people with disabilities, or other underserved groups? What is the role of the SGB sector in leading this transformation with these considerations in mind?
To help answer these and other questions, ANDE is embarking on a new digitalization project across key developing economies, in collaboration with the Mastercard Center for Inclusive Growth, which aims to foster sustainable economic growth and financial inclusion while leveraging technology and data.
Working together, we will join with ESOs to examine aspects of this evolving digital transformation across the SGB sector in developing economies. We will identify the types of support that ESOs themselves require to digitalize, connect them to tools and resources to help them in this process, and surface new opportunities that digitalization can provide for them and the small businesses they support.
As digitalization and digital innovation increase in relevance, the SGB sector must be mindful of how to best support SGBs and ESOs in approaching their journey in a thoughtful and intentional way.
Richenda Van Leeuwen is the executive director at the Aspen Network of Development Entrepreneurs.