BDS Services: The Nicaragua Approach of Group Consultation Methodology
The point of departure for this approach is the "Joinville Model" in which 'nucleos' (nuclei) of trades were introduced as a service of the chamber of industry and trade in Santa Catarina, Brazil. These nucleos (groups of trades, most of them SMEs) are based on the principles of moderated group discussions with the purpose of identifying joint issues and problems as well as the exchange of experiences (learning by interacting). These processes also resulted in a more structured demand for commercial business development services. However, the most important result was the development and professionalisation of the organisation as a respected counterpart for government agencies. The chambers expanded their membership considerably (in particular SMEs) and democratized their structures.
In Nicaragua, the structures of the chamber were too weak to implement this model. NGOs and service providers had relatively better structures and more contact with the target group of SMEs. Therefore, the Joinville experience was introduced as an approach to develop innovative BDS.
Trades specific group consultation was also the point of departure. Moderated meetings of different enterprises (about 10) were the backbone of this service. The aim was to strengthen entrepreneurial motivation, problem analysis, coaching during the identification of solutions and decisions, and motivating communication and interaction.
The group meetings took place once per month in the immediate vicinity of the enterprises and did not last longer than 3 hours. The first two meetings had clear structures, after that the concept was adapted more flexibly to the needs of the group (but there was always a prepared "script").
The consultation was complemented by the entrepreneurs' mutual visits (problem identification and monitoring during implementation of the improvements) and occasionally individual advice from the consultants.
Specific trainings were arranged and conducted in the group (such as technical or management trainings).
Trainings were conducted by a local consulting firm specialised on CEFE, participatory planning, and business consulting. The enterprises (furniture sector) were in one region ("cluster") and had different sizes, from micro to medium-sized enterprises. Competition varied, resulting in rivalry and tensions but also in networking for joint delivery (economies of scale).
During the first phase of eight months, the enterprises paid 20% of the costs for the consulting firm according to a ratio obliging them to pay the last quota in case they were satisfied with the service. The firm received a bonus for new entrants to the group (incentive-oriented subvention).
Methodology
During the first session the issue of goal setting would be raised: what is an entrepreneurial objective? (challenging, measurable, tangible etc.; CEFE exercise MAREAR). Then, entrepreneurs would define their objectives for the current year considering few objectives but those that had a chance to be realised (strategy of direct implementation and achievement through one's own initiative). Objectives were supposed be noted on a flip chart and hung up visibly in the workshop.
The next step were the mutual visits of the entrepreneurs. The purpose was to verify the realisation of entrepreneurial objectives and further exploration of weaknesses and potentials of the enterprises (methodology: walking through the business premises, noting and exchanging observations).
Step by step, activities would become more specific, starting with cleaning up, the rearrangement of machines, rationalisation of operations, then energy efficiency and better use of raw materials for cost reduction, market analysis, production techniques, cost calculation, staff management, on-job-training, etc.
The next sequence of the process was networking to manage joint delivery or subcontracting. In addition, enterprises would begin to shape their environment (negotiations with the municipality to buy a plot of land, using assistance opportunities such as workers' professional training in the public vocational training institution, access to credit and exchange of experiences with financial institutions, technology, export, etc.).
Cost-benefit analysis of the pilot projects was positive. Further rationalisations will be possible in the case of higher degree of maturity of the product. Roughly calculated, the consulting contract cost US$ 10,000 - i.e. US$ 1000 per enterprise for approximately one year. In most cases, increases in turnover surpassed these costs easily. Enterprises which could not follow these dynamics (subsistence enterprises) would usually fail to show up after the first or the second meeting already, not for cost reasons but due to lack of motivation (principle of self selection).
Another effect was an increasingly critical assessment of existing assistance opportunities and a public discussion about this (on the occasion of round table talks, "encuentros" with ministers, NGOs, donors etc.).
The effect was also positive with regard to entrepreneurial self-confidence and initiative. Better market integration effectively took place.
Formal organisations were not founded. This is a "red rag" in Nicaragua but is often required by the government (political control). Practising business oriented cooperation relationships was one of the biggest successes of this project.
Lessons learnt/Constraints
Availability of well trained consultants with enterprise experience and experience in participatory, interactive methods
The methodology may be part of organisational development of associations or a stand-alone Business Development Service
The product needs to be marketed, initial commercial structures in the market for business development services are required
In case of success there is a danger of "appropriation" through government institutions or donors with the risk of exaggerated support or of undermining the principle of partial payment
In principle, sustainability is possible, through partial subvention the approach functions probably much better with regard to quality and outreach. Supervision of the consultants is also expedient (quality, methods, innovation promotion, monitoring and evaluation)
Promotion of clusters is not an instrument for subsistence economy. Qualification methodologies for the informal sector would be more appropriate in that case. Competition-oriented business consulting by means of interaction and networking requires entrepreneurial motivation, a certain degree of differentiation between enterprises and a potential for specialisation.
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