“The facts speak for themselves. In the last 50 years, world GDP multiplied 60 times to reach a level of more than $60 trillion. Yet, two-thirds of the world lives in poverty, with more than a billion people in acute deprivation and hunger. It is obvious that something has gone terribly wrong in the way the world has chosen to pursue economic development and progress.” says, Mr. Y C Deveshwar, Chairman, ITC Limited in his article titled -It can’t be business as usual. (ITC is one of India’s largest companies)
In the same article he goes on to add that, “The need of the hour is to encourage business models that enable companies to co-create, with local communities, opportunities for sustainable livelihoods as well as enrichment of natural capital. At the same time, civil society need to be made more aware of the tremendous change they can bring about by encouraging a preference for responsible companies.”
Forward looking and responsible companies like ITC are realising that things need to change. At the strategic level Trusteeship can be the answer to many of the problems of the 21st century.
Trusteeship as advocated by Gandhiji and by many others talks of “Surplus Wealth needing to be kept in trust for the common good and the welfare of others”.
ITC is a believer in this concept and has made strategic changes that are aligning the company to this vision.
However, ITC is not alone in realising that our current business models are unsustainable.
Corporate India just like the rest of the world is grappling with the question “What are the steps that are needed to make this change happen? How can we design businesses that are financially viable yet benign? How can growth be inclusive?”
Some of the best thinking that I have come across on this is at the ongoing India Economic Summit in Delhi. Here are some quotes from various speakers and my thoughts on how we can make a genuine difference.
1. Create genuine value
- Pranab Mukherjee: We need a multi pronged strategy to provide access to health and education, skill development, employment, green technology.
What can companies do?
For many years we have been buying into the needless products created by marketing. Instead of genuine innovation, we have been led to believe that we genuinely need a new colour toothpaste, a gadget that will last only a few months and clothes that we can throw away every season.
Indian companies today need to start looking at solving genuine problems and not those created by the irrelevant artificially created scarcity model. Hunger, livelihoods, education and healthcare are universal needs that are not being addressed, despite being present at every corner of every street. Co-creating solutions that solve these problems can be a genuine way to sustainable growth. For example: Free vaccinations for the poor will definitely alleviate health risks, but is there a business model for training unemployed youth as health workers and paying for reduced mortality? A better health framework can be created rather than a framework that focuses on rewarding increased incidence of spending on medicines and tests.
Many bottom of the pyramid initiatives by Indian companies simply view the poor as a large market that needs to be captured. If we continue this approach the Indian Micro Credit mess will be replicated in other areas too. The corporate belief that “we are creating consumers” must be genuinely replaced by a “betterness” model that Umair Haque and many others talk of.
2. Inclusive growth through sustainable livelihoods
- Sunil Mittal: Around 320 million children between the age group of six and 16 would need jobs over the next 10 years. If the economy was unable to absorb them then “you will have trouble,”.
- Ellen Kullman: In India, 20% of the GDP is agriculture, but 65% of population is included in it. There is a definite imbalance there.
- Pranab Mukherjee: Financial inclusion is a key determinant of a sustainable and all inclusive growth.
What can companies do?
To ensure sustainable growth and employment we need to look at generating rural livelihoods at a large scale. Many small-scale economic opportunities other than farming can be generated locally, and this can result in a synergy of recirculation of income.
Creation of products, services that empower livelihoods can be a part of corporate initiatives. These initiatives can have the dual benefit of reducing the carbon footprint and simultaneously providing sustainable livelihoods. These initiatives can focus on a 3 step approach driven by Capability, equity and sustainability :
- Capability is the ability to perform certain basic functions, to cope with stresses and shocks and the ability to find and make use of livelihood opportunities.
- Equity is more equal distribution of assets, capabilities and opportunities, and an end to discrimination.
- Sustainability is the ability to maintain and improve livelihoods while maintaining or enhancing the assets on which livelihoods depend
Many companies in the western world are moving away from standardization and mass production to local, sustainable and small. Indian companies too can do this with ease and market not just the products but the place and the people who created them. Value will be not just the product but the lives that we impact positively.
While we create sustainable livelihoods we must also remember the need for financial inclusion and micro credit. The poor need affordable solutions delivered in innovative ways. This was aptly demonstrated by the Grameen Bank in Bangladesh, but a scalable framework of Micro Credit in India is yet to be implemented well.
3. Design and Innovation
- Raghunath Mashelkar: When we are talking about affordable, it should be extremely affordable. That’s what India specializes in.
- Raghunath Mashelkar: Innovation: “Must get more from less, not less from less”, “Make products for the poor and the rich will buy them also”
What can companies do?
Can we develop innovation frameworks that co-create genuine value for bottom of the pyramid consumers? Aruna Roy of the National Advisory Council asked 3 important questions:
- Why can’t the fantastically gifted folk artists and singers become music tutors for a hundred days a year at primary schools in their area instead of digging sand in the desert?
- Can the differently-abled not be encouraged to do work appropriate to their abilities, as long as they engage in “productive employment at minimum wages”?
- Can parts of the country with a dearth of public land, not be allowed to design and evolve their own set of appropriate works?
These are important questions that we all need answered. They highlight the need for innovative ground level thinking. Corporate India can play an important role in driving ground level, affordable innovation in not just products but processes and thinking.
For example: I believe that a big driver of service innovation can be the mobile phone. A universal access device that can be used to drive information dissemination, transparency and reduced cost services. India can be one of the early set of countries to experiment with using technology to drive bottom of the pyramid solutions.
Another trend we can use to drive innovation is the one of digital collaboration. The web is all about sharing. This movement of sharing digital content, formation of communities, solving problems and giving recommendations is not all driven by commerce but for the sake of making connections any many times solving problems. Can Indian companies drive these values to the brick and mortar world?
There is much to learn about how businesses, products and services can be redesigned from the ground up. There are some path breaking frameworks such as the Living Principles that blend design with environment, people, economy and culture. This must become the primary framework for value creation. If we need to drive genuine value in the businesses, products and services we create. Designers, business leaders, and educators can use The Living Principles to guide every decision, every day.
- Indian companies need to start looking at solving genuine problems – Hunger, livelihoods, education and healthcare are universal needs that are not being addressed, despite being present at every corner of every street. Co-creating solutions that solve these problems can be a genuine way to sustainable growth.
- Creation of products that provide livelihoods to people in India needs to gain prominence. Standardization and mass production must give way in many areas to local, sustainable and small. We need to market not just the products but the place and the people who created them. Value will be not just the product but the lives that we impact positively.
- Today’s digital world is about sharing, communicating and solving. Can Indian corporates develop a framework that uses this trend to drive a sustainable business.
- The corporate belief that “we are creating consumers” must be genuinely replaced by a “betterness” model. Living Principles Framework that blends design with environment, people, economy and culture needs to become the primary framework for value creation.
- Instead of CSR departments can we build CSR into the business DNA to impact – value, price and exchange?