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How the World Thinks About Capitalism?
• [-] Big Businesses are Not Clean; Not Ethical
• [-] Poor gets Poorer in Capitalist Economies
• [-] Favour Protectionist Measures rather than ‘Open Economies’
• [+] Free Enterprise System Better for Poverty Alleviation than Government
• [+] Government should invest more on infrastructure than welfare benefits
• [+-] India – Business and Society’s Interests Match Well; Other Nations do
not agree.
Source: https://social.shorthand.com/montie/3C6iES9yjf/what-the-world-thinks-of-capitalism](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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- 2. 2 How the World Thinks About Capitalism? • [-] Big Businesses are Not Clean; Not Ethical • [-] Poor gets Poorer in Capitalist Economies • [-] Favour Protectionist Measures rather than ‘Open Economies’ • [+] Free Enterprise System Better for Poverty Alleviation than Government • [+] Government should invest more on infrastructure than welfare benefits • [+-] India – Business and Society’s Interests Match Well; Other Nations do not agree. Source: https://social.shorthand.com/montie/3C6iES9yjf/what-the-world-thinks-of-capitalism
- 3. 3 What is Changing Globally? • Global Development Agendas – SDGs • Globalization & Base of the Pyramid Business Models • Impact Investors, Incubators and Accelerators • Better Connected, Better Informed - Internet & Telecom • Environmental Degradation • Rising Population and Consumption Trends • Increasing Scarcity of Resources • Significant Population in Extreme Poverty
- 4. Global Focus on UN Sustainable Development Goals (2014-2030) 4 Source: www.un.org
- 5. 5 Reality Check - The Bottom 4 Billion • Significant Unmet Needs • Dependent on Informal or Subsistent Livelihoods • Live and Transact in an Informal Economy • Face BoP Penalty • Need Scalable & Replicable Solutions • Government, NGOs, CSOs lack ability to scale and implementmarket oriented business models
- 6. Business can engage with society in three ways “Giving Back” Business must fulfill community obligations Shared ValueCorporate Philanthropy “Finding business opportunities in social problems” Meeting social needs can be a source of profit and competitive advantage “Minimizing harm to society and the company” Business should be responsible Corporate Responsibility Past efforts have emphasized the friction between business and society instead of the synergy
- 7. • The long-term competitiveness of companies depends on social conditions − An educated and skilled workforce − Safe working conditions − Sustainable use of natural resources − A flourishing local economy • Business has an essential role to play in solving social problems − Only companies can create prosperity that funds government and civil society − Companies can create solutions to many social problems in ways that governments and NGOs cannot − Companies have the incentive to take risk − Competitions fuels innovation, efficiency, and adoption − For-profit models are scalable and sustainable Societal and corporate success are inextricably linked
- 8. • Shared value is defined as policies and practices that enhance the competitiveness of companies while improving social & environmental conditions in the regions where they operate • It is a business strategy focused on companies creating measurable economic benefit by identifying and addressing social problems that intersect with their business What is Shared Value ? • Shared Value IS: ‒ Strategies that simultaneously create value for the business and for society • Shared Value is NOT: ‒ Sharing the value already created ‒ Personal values ‒ Balancing stakeholder interests
- 9. Shared value is self-sustaining and scalable • Creating new opportunities for the business by meeting societal needs • Impact scalable because shared value is self sustaining • Redistribution of value to meet societal needs • Impact dependent on scale of finite resources CSR and Philanthropy Shared Value
- 10. Business has an essential role to play in solving social problems − Only companies can create prosperity that funds government and civil society − Companies can create solutions to many social problems in ways that governments and NGOs cannot − Companies have the incentive to take risk − Competitions fuels innovation, efficiency, and adoption − For-profit models are scalable and sustainable Societal and corporate success are inextricably linked
- 11. All profit is not equal 11 • Profit involving shared value enables society to advance and companies to grow faster • Profit at the expenses of society is self-defeating • Incorporating societal issues into strategy and operations is the next major transformation in management thinking Shared value thinking represents the next competitive frontier of capitalism All profit is not equal
- 13. Adding a Social Dimension to Strategy • Shared value opens up new needs, new markets, and new value chain configurations • This creates new strategic positions, and new opportunities for extending existing positions • Companies should incorporate a social dimension to their value proposition • Shared value can reinforce and even anchor a company’s strategy The social dimension of strategy can be more sustainable vs. competitors than conventional cost and quality advantages Adding a social dimension to strategy
- 14. 14 Defining Shared Value • Policies and practices for Competitive Advantage • Corporate Strategy for creating unique business value by integrating socio- environmental benefits with economic gains • Not Philanthropy or CSR Activity Reconceiving Products and Markets Redefining Productivity in Value Chains Enabling Local Cluster Development
- 15. Shared value operates at three levels Reconceiving Needs, Products, and Customers • Meeting societal needs through products • Addressing underserved customers • Driving productivity through better utilizing resource, employees, and business partners Redefining Productivity in the Value Chain • Improving skills, supplier base, and supporting institutions in the communities where a company operates Enabling Local Cluster Development 1 2 3 These levels are overlapping and mutually reinforcing
- 16. • Shared value can be created by producing goods and services that directly benefits the underserved sections of the society Example – VisionSpring • VisionSpring’s mission is to ensure affordable access to eyewear across the globe. The company identified the need for vision treatment at the bottom of the pyramid • Reconceived products and created distribution channel in the developing countries to make affordable eyeglasses accessible • Reaches people through two different models: • Partnership Model: Partner with hospitals, NGOs & Corporations across India. Works at the village level and trains thousands of village level entrepreneur in dispensing eyeglasses • Hub & Spoke Model: Started its standalone optical stores and got associated with leading eye hospitals to set-up their stores on their premise. Also partners with eye hospitals for effective community outreach activities • The company has distributed nearly 2,763,000 eyeglasses & have created $280 million in economic impact • People using their glasses have reported an increase of about 20% in their income and 35% increase in their productivity Reconceiving products and markets
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- 18. Aravind Eyecare (1976) • To eliminate needless blindness irrespective of the paying capacity. • Outreach: 4000 beds, 32 million patients, 3 million surgeries • 2009-10: 2.5 million outpatients, 0.3 million surgeries, 1.2 million IOLs Unique features • McDonald factory based model for diagnostics, surgery & product offerings • 30:70 (Paying : Non-Paying) • Training / Capacity building (>300 ophthalmologists & >600 paramedics per year) • 2600 operations per year by each doctor (6 times the average) – 10 min per operation • Strong community outreach and setup (8 hospitals; 40 Vision centers; Aurolab; LAICO) 18Simultaneous surgeries at Aravind Manufacturing intra-ocular lenses at Aurolab
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- 20. Novartis Aarogya Parivar (2007) • Enable access to health awareness and affordable medicines to rural families • Outreach: 10 states, 100 medicine types, 0.5 million villagers (health awareness, diagnosis) Unique features • Focus on health education and awareness, diagnostics, affordable and reliable medicines • Strong link with 22000 doctors & reaching 28000 pharmacies in remote areas • Adaptability - Communication, product packaging and training as per local conditions • Scalable across states and countries - Vietnam, Indonesia, Kenya • Local skill building and engagement as health workers 20
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- 22. Selco (1995) • Enabling access to customized clean energy solutions for the underserved. • Outreach: Six states; >2,00,000 households; 5000 Institutions; 4 solar entrepreneurs Unique features • Solution based approach – Custom product offering, door-step financing, & support • Setup Selco Foundation and Selco Incubation Lab • Scaling by Impact based innovations and offerings • Local engagement and embeddedness – Micro-entrepreneurs, locals as employees • Strong community outreach and setup (45 energy centers; 30 financial partners; 25 community partners) 22
- 23. Example – Narayana Hrudayalaya • The hospitals group is model for accessible & affordable healthcare that provides healthcare facilities at a nominal cost, especially the cardiac surgeries • On an average, a heart surgery in this hospital costs $2000 whereas a similar surgery would cost 2-10 times of the cost in other hospitals • Economies of Scale: Larger number of operations and sharing of resources lowers the cost per operation • It has 32 hospitals in 20 cities with 6498 beds and 1861 doctors • In addition, to cardiac surgery facilities, the hospital also performs other surgeries like bone marrow transplant, neurosurgery, etc. and provides other facilities like teleradiology and free telemedicine Affordable healthcare facilities
- 24. Example – ICICI Lombard • In India, the rural economy faces strain due to the variations in the rainfall from season to season that leads to crop failures. It often results in farmers under heavy debts • On recognizing this need, ICICI Lombard came up with weather-based crop insurance program • The insurance program protects the farmers from the adverse climate effects that may lead to crop failure • Filing claims is a hassle free process and payments are released on certifying deviations from normal conditions measured by weather data collected from independent third parties • By mid – 2010 it had implemented the model in 14 states, comprising 64 districts and covering 26 crop varieties Crop insurance for farmers
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- 26. Janta Meals (2013) • To make nutritious, hygienically prepared and affordable food available to the urban low- income working class and migrant labourers – health benefits and cost savings • Served 10.8 million meals till date Unique features • Hub and Spoke model with central kitchen and franchises • Local engagement and skill-building as micro-entrepreneurs; women for cooking • FSSI certified suppliers, licensed infrastructure 26
- 27. • Redefining how value is created and sustained through supply chains (for example, through repurposing or recycling products to reduce waste, while creating new cost savings or revenue streams) Example HUL – Project Shakti • Hindustan Unilever is implementing shared value by tapping opportunities into their value chain and expanding their reach through • The project empowers underprivileged rural women by training them in health and hygiene and allowing them to undertake income-generation activities • Project Shakti Entrepreneurs who are commonly known as Shakti Ammas reach out to over 4 million households across 1,65,000 villages spread over different states • HUL provides a means of livelihood to approximately 70,000 women entrepreneurs and ensures a source of revenue for itself Redefining productivity in the value chain
- 28. Example – Mother Dairy • Mother Dairy’s business philosophy is inherently linked with the co-operative movement in India and is focused on serving farmers, rural societies, and consumers fairly • The business model adopted by Mother Dairy assures a platform for farmers to sell their products • They have a simple process of sourcing milk from the farmers by providing the best price for it. Nearly 80-85% of the revenue accrued by the company goes back to the farmer • Mother Dairy ensures that milk producers and farmers continually receive market price for offering milk, milk products, and other food products • Addressing the social challenges in the area of agriculture they have positively impacted 250,000 individuals across the country and have spent more than 1600 crores on these activities (as of FY 2013) Redefining productivity in the value chain
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- 30. Mirakle Couriers (2009) • 6% Indians (10 million) are deaf; 66% (6 million) unemployed • Mission driven for-profit business that employs low-income deaf youth in the logistics space (courier delivery) Unique features • Training and engaging deaf youth for back-office and delivery operations thereby enabling financial independence and empowerment for the deaf community. • Communication is done using ISL (Indian Sign Language) along with SMS and emails. • Delivery and collection done via public transport leading to low carbon footprint • Setting a better role model and inspiration for corporates and society 30
- 31. • Companies can use clusters for supporting their long-term growth through the development of their suppliers and other stakeholders beingimpacted bytheir business operations Example – Godrej Industries • Godrej Good and Green initiative, which moves beyond business and plans to have trained and provided useful skills to thousands of rural and semi-urban youth. • In FY 2013, Godrej under its various verticals have trained nearly 16800 people with a particular job skill will impede business growth • The group has set a goal to train 1 million youth by 2020 • The skill development initiative ensures overall development of society by ensuring a source of income for the youth and commercial success for the business Enabling local cluster development
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- 33. Jaipur Rugs (1978) • Offering hand-knotted rugs globally , which are being manufactured by tapping into the creative capabilities of a network of artisans across the villages • 20+ branches, 40000+ artisans (6 states, 600 villages), and distribution across 40 countries Unique features • Unskilled rural poor are made rug artisans by community mobilization and skill training • Fair wages, no exploitation, training and sustainable livelihood at doorstep • Access to global markets, doorstep delivery of raw material and collection of rugs • Financial independence & empowerment to rural women & flexibility to work from home • In-person connect artisans with customers 33
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- 35. Adani Agri Fresh (2006) • Setting up an integrated apple supply chain empowering the apple farmers while delivering high quality apples to consumers • 3 Controlled Atmosphere facilities (23000MT), network of 15000+ farmers, 700+ villages Unique features • Empowerment, Fair wages, no exploitation, training and sustainable livelihood at doorstep • Promoting good health and well-being of farmers through rural healthcare units • Fully-automated technology driven processes for high quality apples grading & selection • Making available scientific orchid management techniques and agri-inputs near to farms 35
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- 37. Under The Mango Tree(2009) • Promotes beekeeping to increase agricultural productivity, enhance incomes and improves livelihoods of marginal farmers in India while offering all-natural honey to consumers • 6 states, 3000 farmers, agricultural productivity increase of local plants due to pollination Unique features • Utilizes the power of market forces to provide poor farmers with a lucrative income stream by training them on bee-keeping and establishing market access for the honey produced. • Focus on the indigenous bee, the Apis cerana indica, an excellent pollinator. • Provide training, sustainable livelihood and improved agricultural productivity (due to cross-pollination) for the farmers and marginalized communities • Partnerships with rural organizations, technical experts, corporate entities 37