RIYADH — Dr. Robert S. Kaplan, influential thought leader in strategy and performance management, presented a new model for inclusive growth, which requires the adoption of new roles by Saudi government bodies, the private sector and society. All of these actors need to work collaboratively to generate sustainable development and overcome economic challenges such as low efficiency, unemployment, and poverty.

Professor Emeritus at the Harvard Business School and founder of Palladium, a leader in strategy management and Positive Impact solutions, believes that the Vision 2030 is presenting the Kingdom of Saudi Arabia and the private sector with a unique window of opportunity to generate unprecedented growth and transform inefficient economic equilibria into profitable, socially-valuable and sustainable ecosystems.

Speaking at an event organized by Palladium in Riyadh, in the presence of a large number of professionals from the private sector and government entities, Professor Kaplan outlined the steps for the successful implementation of these sustainable eco-systems for inclusive growth. These ecosystems maximize resources and reformulate the roles of the different constituents, integrating them into a new equilibrium that more optimally supports its components.

The first step is the identification of projects that generate economic benefits for themselves while creating socioeconomic gains for all other parties involved in the eco-system. Such projects require diverse investments from different stakeholders to ensure that they can be scaled up to other communities and regions.

Therefore, the second step in the process is securing seed financing from private organizations, aid agencies, impact investors and private equity funds, as well as grants, program related investments and mission driven investments.

The third step is to set-up and activate a governance and control system, managed through proven methodologies such as the Execution Premium Process and Strategy Maps to enhance cohesion of the ecosystem by creating consensus, commitment and a common agenda among the executive leadership teams of the company, public sector agency, or NGO.

One of the crucial success factors for a self-sustainable inclusive growth ecosystem, as descried by Dr. Kaplan, is to find a “catalyst” who plays the role of the Office of Strategy Management. This catalyst can be a high-level government committee or experienced consultancy body whose role is to identify and support key intermediaries that connect local corporations to communities who serve as suppliers, employees, and customers. The catalyst is also responsible for helping intermediaries receive government certification for access to credit, insurance, and public program reimbursements, and for establishing the ground rules for sustainable economics among community officials and residents, intermediaries, and others in the ecosystem.

Among the various international best practices that Dr. Kaplan presented was the enhancement of the Uganda Maize Supply Chain by connecting maize growers to corporate customers. Palladium’s role, with financing from USAID, was to identify the different players in the supply chain, and to reorganize them in a new eco-system in which shared value was created. The results were encouraging for all parties: increase of corn farmers’ household income to 100%; increase of crop yield to 65%, and increase of 30%in the median price per ton of maize.

Another example of creation of inclusive growth is the case of El Salvador and its challenge of mismatched supply and demand for talent – on the one hand high levels of unemployment and school drop outs, and on the other hand, increasing demand for employment into the growing services sector (retail, hospitality, business process outsourcing). Palladium set up the Youth with Commitment training program with funding from USAID. Working in collaboration with local retail, hospitality, aircraft maintenance and other services companies, Palladium identified skills and competencies required for entry-level positions, defined new training offered by local training and competency development centers, and helped market the new trainings by the labor ministry to unemployed urban youth. The program succeeded in raising the recruitment rate of applicants who were interviewed from 10% to 90%, and moreover, over the course of four years, 16,000 people received special vocational training, related to nine industrial sectors, with 93% of them being now officially employed.

Faisal Al Rowaili, founding partner of Palladium KSA, and Jose Maria Ortiz, EMEA Managing Director of Palladium, brought the message home by pointing out how the private sector and the society are expected not only to play a significant role in achieving the Vision 20130 but are also required to co-lead as the main drivers of growth.

One of the ways to achieve this growth and diversify the economy is to identify opportunities for inclusive growth in the KSA. This can happen through the dates industry, seafood trade, development projects of remote areas and outermost areas from business centers, addressing youth unemployment, and improving women’s participation in the workforce. Growth initiatives have to engage with local communities, local government, development agencies and NGOs, and securing funding from the private sector and government bodies to transform inefficient, dysfunctional local equilibria into new sustainable eco-systems capable of propelling Saudi Arabia to the achievement of its Vision 2030. — SG