How Can Corporations Develop and Tailor Management Practices to Inclusive Business?

Inclusive Business
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Join us for a live written discussion with a panel of experts to explore how we can tailor management practices to help foster inclusive business

Live Panel

15:00 BST / 10:00 EDT, 25 SEP TO 22:00 BST / 17:00 EDT, 27 SEPT

Background

To achieve inclusive business growth and scale, companies not only need to have the right products, services and business model, but also the appropriate management practices. Base of the pyramid (BoP) markets require the adaptation of traditional management practices or the development of new ones. The multinational corporations (MNCs) engaging in the BoP market are often faced with unfamiliar contexts, new kinds of customers and suppliers, thin and volatile operating margins, and long timeframes to scale and produce financial returns.

Based on the Business Call to Action’s upcoming report documenting the findings drawn from a decade of experience engaging with inclusive business globally, this discussion will explore how innovative management practices tailored to the BoP market can provide competitive advantage, ensure a better understanding and responsiveness to stakeholders, and balance short-term stability with long-term viability.

This event is part of the Inclusive Business Boost series funded by the UK Department for International Development.

Panel

Lauren Wyper, Director of Mission Communications, Essilor International

Firmansyah Sachroni, Corporate Secretary, East West Seed Indonesia

Prateek Ahuja, Program Manager, Medtronic

Elvis Francis, Director, P.A.C.E. Global Initiatives, Gap Inc.

Nazila Vali, Deputy Team Lead, Knowledge, Business Call to Action

Moderator: Tatiana Bessarabova, Business Fights Poverty

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Firmansyah Sachroni here

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Hello and welcome to Business Fights Poverty online written discussion. This event is part of the Inclusive Business Boost series funded by the UK Department for International Development.

Please add your own comments - you need to be logged in - which you can do via the top right of the screen.

We’ll be starting the discussion in 10 minutes.

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As we start the live portion of today’s discussion, I would like to invite our expert panelists to introduce themselves.

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Hello everyone! My name is Nazila Vali and I am the Deputy Team Lead, Knowledge, Partnerships and Country Support at the Business Call to Action (BCtA). BCtA aims to accelerate progress towards the SDGs by challenging companies to develop inclusive business models that engage people at the base of the economic pyramid (BoP) – people with less than US$10 per day in purchasing power in 2015 US dollars – as consumers, producers, suppliers, distributors of goods and services and employees.

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Hello, I am Prateek and I lead the Shruti Program at Medtronic Labs. Shruti is an innovative ear care program focused on delivering awareness, screening, treatment and delivery of hearing aids for the underserved. We are currently working in India. Till date we have screened north of 750,000 people in the urban slums, peri-urban/ rural areas and have linked the patients to the formal ENT-care pathway.

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Hello all, I am Firmansyah Sachroni. Currently is Corporate Secretary of East West Seed Indonesia. Company is the local Indonesia vegetable seed and serving to smallholder farmers for having better life, especially in rural and remote area.

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Hi everyone, I am Lauren Wyper, Director of Mission Communications, Essilor International, the largest ophthalmic optics company. Our business is driven by the mission to improve lives by improving sight and I work in the team focusing on bringing good vision to the 2.5bn people at the base of the pyramid who cannot see well. We do this through inclusive business, strategic philanthropy and advocacy and awareness raising. I am based in Singapore but currently in New York where we have just launched a report, “Eliminating Poor Vision in a Generation” on the sidelines of the United Nation’s General Assembly

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Welcome everyone! Our first question today:

Q1: To what extent are the key management practices identified as part of this study addressing specific inclusive business internal barriers to scale? And are these practices specific to inclusive business?

We’ll hear more about the upcoming report by the Business Call to Action from Nazila and the panelists

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The report and tool that we will launch this Friday at the BCtA Annual Forum (bctaforum.org) was co-created with 25 BCtA companies across 10 sectors and 5 regions. What we found is a strong correlation between the adoption of ​specific inclusive business management practices ​and the continuity and growth ​of inclusive business initiatives​.

Our research shows that successful inclusive businesses apply principles that are quite different from business-as-usual. Management practices tailored to address the BoP market can constitute a valuable source of competitive advantage, ensure better understanding of and responsiveness to key stakeholders, increase IB impact and contribution to Sustainable Development Goals (SDGs), and balance short-term stability with long-term viability.

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While most current debates around inclusive business either outline the business case for it or challenge its features, there have also been some attempts to identify barriers to scale. However, most attention has been focused on the external barriers that prevent both a more wide-spread adoption of such ideas and the scale up of existing models. Until now, little attention has been paid to the internal organisational barriers that, all else being equal, can pose significant challenges to bringing an inclusive business idea to action and to scale, even within the most proficient and forward-thinking MNCs. Internal barriers may include a lack of capital, an aversion to risks, a lack of IB awareness among organisation members, weak buy-in, inadequate top management leadership and unfavourable attitudes among workers and directors with respect to changes in working habits.

While some internal barriers are sector-specific, many are transversal and can be collectively analysed. Solutions to common issues can be replicated across sectors to achieve greater IB impact and growth. Such barriers are usually operational and organisational, rather than technical. Understanding where those barriers lie and how to overcome them is key to ensuring the long-term success of inclusive business models.

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In our upcoming report, we provide four key barriers: 1) conflicting mindsets, which is a cognitive barrier; 2) radical change to routines, a process-related barrier; and two structural barriers, 3) initiative evaluation criteria, and 4) reward structures.
These are adopted from Bottom-of-the-Pyramid: Organizational Barriers to Implementation, a paper by Mette Olsen and Eva Boxenbaum in the California Management Review.

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A1: Any inclusive business within a multinational goes through various stages of growth. Each stage has its own challenges. The practices identified in this study address most of these. At times, the social impact created by the IB justifies a simplified and protected approach to its practices to avoid barriers. For instance, say an IB is working on a new prototype and design & manufacturing can only go through one of the few partner vendors, even if they are multinationals themselves and are geared towards bigger projects. This may not only result in a longer turnaround time but also a far more expensive prototype than what could have been achieved with a smaller/ leaner vendor partner.

Although vital, these practices are not exclusive to Inclusive businesses only. Most of these practices would apply to any new startup within a big multinational.

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Company realized from the very beginning, sustainability business is determined by the right strategy. As a vegetable seed company in Indonesia serving to Millions of smallholder farmers in Indonesia, inclusive business is the answer, where consumer/farmer is becoming the reason we do our business.

This also is being connected with the vision of companies to believe in high quality seeds for a better life and are applied by carrying out the mission to produce high vegetable seeds to improve farmers life and increase vegetable consumption.

Keywords of vision & mission consist of high quality seed; improve farmers’ life, increase vegetable consumption, be a challenge and also opportunity to conquer.

But in the fact, for most Indonesia vegetable farmers which is become the biggest barrier is
• The majority farmers are poor and have low education
• Small business scale with land holding less than 1 hectare
• Do not have access to Resources - finance, seeds and technology

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For instance, the conflicting mindsets can be summarized as ‘trade-off vs win-win’. These two mindsets, which often operate simultaneously, can make contradictory claims about the relationship between a company’s financial performance and its commitment to the SDGs. The trade-off mindset reflects the emphasis on shareholder value as the primary (and only) purpose of any business, and any contribution to sustainability is seen as a cost to the company and not as a potential revenue driver.

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A1: The management practices for scaling inclusive business highlighted in this study are spot on. Their priority might change through the development and maturity of inclusive business, but all four are needed to address the barriers and challenges often faced. Are they different to traditional business practices? At their most basic I don’t believe so. Every business needs to employ good governance and management, manage performance, talent and operations well, but where they do differ is the approach to, and emphasis placed on, each principal. When inclusive business leaders understand this and how to address internal barriers they likely won’t have face in traditional business, is where we tend to see success.

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Thank you, everyone, for the thorough and insightful answers! Our next questions today is:

Q2: How do you see these management practices contributing to the success of your inclusive business?

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I agree. Most of these practices shall also apply to a conventional new business within a multinational.

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Hi Nazila - thanks for sharing this, and I look forward to reading the full report! Can you say a bit more about the factors that stood out that are specific to inclusive business, or particularly important, as compared to general business innovation?

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A2: All four principals have been critical to the success to Essilor’s inclusive business success but two stand out. At the heart of our organisation is our mission to improve lives by improving sight . This drives our business strategy and means bringing good vision to everyone everywhere. Seven years ago our then CEO now Chairman, Hubert Sagnières, reorganised the company into three business units; traditional business (including online), philanthropy (because 1bn do not have the means to pay for products and services) and inclusive business to sustainably address the needs of the 1.5 billion people living at the base of the pyramid who could afford to pay. He appointed a Chief Mission Officer and established an independent CSR Committee at board level which meets once a quarter. Within our Chief Mission Officer’s portfolio was to establish inclusive business. He often talks to the fact that the talent in his team is what drives its success. For examples those that came over from the traditional business had to relearn new ways of working, but as with anything if you’ve got the passion, you can learn the rest. What our inclusive business team have in common is an entrepreneurial or intrapreneurial spirit and drive.

So you can see the mandate for our inclusive came right from the top and with the right governance and talent in place, performance and operations come more easily.

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