What big business can learn from entrepreneurs at the base of the pyramid.
For over a decade now I have been helping companies of all sizes invest in themselves and their communities around the world. From the Congo to the Caribbean, from Brazil to Bangalore, I’ve helped Fortune 500 companies and eager start-up entrepreneurs with big ideas advance development outcomes while driving their business forward. It’s hard work.
But the world is demanding it and frankly, as we all know, the world needs it. As Official Development Assistance faces massive cuts on the horizon, companies and NGOs will be taking up the slack, whether they like it or not. The Harvard Business Review explained this month in Competing on Social Purpose that “Consumers increasingly expect brands to have not just functional benefits but a social purpose”.
This is not the only change businesses big and small are facing. Radical change will be driven by the likes of bitcoin and blockchain, which will soon sweep through the business community. The effects of climate change and urbanization will be forces to recon with too. These are just a few of the challenges that leaders in the public and private sector alike will have to step up and face as they guide their organizations through our rapidly evolving world.
But are leaders stepping up?
In introducing his new book, Core: How a Single Organizing Idea Can Change Business for Good, Neil Gaught warns, “Though the tides of change are engaging the minds of business leaders, most are still trapped behind their brands and an approach to corporate social responsibility that is out of step with a connected society that increasingly questions ‘who’ these businesses really are and what drives their purpose.”
Those that have invested in defining their purpose beyond making money, Neil explains, are on the journey to change; but there are those that have gone further and translated their purpose into a powerful strategic management tool that has the potential to change their business for good. He calls this a Single Organizing Idea (SOI) and cites in his book several examples, the most famous of which is Unilever’s Sustainable Living Plan.
Applied across the business, an SOI has the power and potential to drive real change for good, he says. It will help ensure that these businesses and organizations are fit for the future and able to “deliver sustainable economic and social benefit; unite people, attract investment, inspire innovation, pioneer new efficiencies, and enjoy positive reputation.”
Lessons from the Base
Like me, Neil’s ideas and conclusions have been based on first hand experiences. Many of the social enterprises I have supported over the years, like LabourNet, already embody many elements of a Single Organizing Idea that benefit everyone, not always by design, but out of necessity. This is where I think big business can learn a lot from entrepreneurs building social enterprises at the base of the pyramid.
Social enterprises don’t have CSR departments, or Corporate Citizenships teams, or Shared Value initiatives. They have lean teams of professionals dedicated to creating business models anchored on strong values that aim to achieve both profit and purpose. They navigate their journeys balancing these aims. At the core of those enterprises that succeed is a Single Organizing Idea that benefits the business and community.
India has been a beacon of innovation in this field, with entrepreneurs creating enterprises that span from sanitation to education improvements. My research on some of these enterprises, published this month in India as a Pioneer of Innovation, Oxford University Press, examines Market-Based Solutions to Poverty Reduction and profiles two case studies. In these cases I examine the factors that enable these enterprises to succeed as a business and at its social or environmental purpose.
Turning the Market as a Force for Good
Throughout all my work with enterprises and designing development programs, I regularly contemplate the fundamental question of: How can we integrate both profit and purpose so the market can become a force for positive development?
This is similar to the question that Paul Hawken challenged us with back in 1993 when he wrote, we must make “acting sustainable as easy as falling off a log” in The Ecology of Commerce.
I’m hearing the business community ask similar question today. At a recent #CoreSOI debate in DC someone asked, “how can we embed sustainability into business so we can promote it, rather than challenge it all the time, and so it doesn’t feel like pushing a rock up a hill.”
Again, I think this is where social enterprises are leading the charge. They’re engaging critical actors and a slice of the public in a politics of structural change that makes their business and societal purpose possible.
Leading Under Pressure
I recently spoke to two social enterprises at the Sustainatopia conference in Boston about the charges they are leading.
Care2Communities spoke to me about how they provide comprehensive, affordable primary health care to families through self-sustaining, community-based clinics, in Haiti. Sometimes they even deliver this in shipping containers. They are driven, at their core, by a strong set of values and an SOI of providing “affordable, quality care.” As they manage their operations, they are constantly analyzing how to adjust fees so that they are affordable and sufficient to maintain their operations. At the same time, they are engaging critical actors of government and donors around the structural changes that sustain these services, from policies to subsidies.
SourceTrace, who digitizes farming to benefit small holder farmers, explained to me that they face pressure from two sides: collecting the modest fees from the farmer coops around the world, while generating a return for his investors. ”Patient capital” was the critical ingredient SourceTrace explained. Businesses also need support from investors and their board of directors. Which raises the biggest issue, Wall Street.
Impact investing is the bright spot in the financial world today. It’s a maturing market and will help nudge businesses to evolve towards generating social and environmental impact alongside financial returns. Likewise, the larger inclusive business community is also growing at pace, as are initiatives like Inclusive Business Action Network (IBAN), which are helping trigger collective action by connecting the dots between the vast number of ideas, people and enterprises like B-Corps, B-teams, Shared Value initiatives and conscious capitalism that make up the ecosystem. But is the pace of innovation fast enough? One thing is certain:
…Business as usual won’t work in the future.
There is clearly a long way to go yet towards more sustainable business. For myself and the leaders I work with, the question is not if but how to usher in reform, continually, because it’s not an end but a journey; and one we need to move quickly and decisively along. Developing a Single Organizing Idea provides the opportunity to address issues of profit, purpose, and values as we navigate towards a more prosperous and sustainable future. Whether the enterprise is for-profit or not, big or small, the world needs more and demands more. We can learn a lot from social enterprises at the base of the pyramid leading the charge.
Photo: Company executives meet with a local community group as part of the Sowing Futures program in Brazil.
Brian English is an independent consultant and author who specializes in helping companies, governments and communities create enduring solutions to intractable social and economic problems.
Market-Based Solutions to Poverty Reduction in India, by Brian English in India as a Pioneer of Innovation, Oxford University Press
Core: How a Single Organizing Idea Can Change Business for Good, Neil Gaught