An article in the Stanford Social Innovation Review discusses the need for global corporates and local social enterprises to engage more effectively in order to generate mutual value creation and broader and faster development impact. Author, Manju Mary George, explains that big business can play a role in supporting social enterprises, which have business models that offer appropriate products and services for the poor, but often lack access to sufficient finance and talent and adequate business knowledge. Businesses on the other hand, have the experience to build large brands and the financial and non-financial resources to support growth, but lack a comprehensive understanding of how to reach the poor. George emphasizes that this gap can be bridged if businesses build sustainability issues into their core business strategies and work more closely with social enterprises. She further cites how such collaborative business models can play a role in India
Big business can join forces with social enterprises to support India’s inclusive growth.
In India, one cannot talk of a development problem without citing staggering numbers—more than 300 million living in poverty many of who lack access to basic services such as healthcare and education, 10 to 30 million unemployed and over 60 million more expected to enter the workforce in the next five years.
It is important that India finds a new model of development—one that does not bank on scarce public and philanthropic capital, and one that ropes in the power and expertise of strong stakeholders, such as the fast-growing India Inc.
The work of social entrepreneurs in India over the last decade exemplifies the power of a business-led development model. Their work has demonstrated that business can “do good” while creating value for itself and that scarce philanthropic capital can and should be used thoughtfully. The microfinance institutions in India fittingly illustrate the significant scale and impact that ingenuous startups can achieve—in 2010, close to 100 million households were accessing microloans. This, however, is not enough; the impacts of social enterprises are often localized, and multiple factors constrain their scale, including lack of access to financing and talent, lack of familiarity with business and scale, and lack of an enabling policy environment. Every conversation we have with a social entrepreneur reveals a rewarding but challenging journey.
Given the magnitude of India’s challenges, it’s imperative that big business gets involved, and that it integrates development and sustainability concerns into its core strategy. Development needs smarter solutions, and greater thought and investment than corporate social responsibility grants can offer. Looking to the poor as consumers, producers, or actors in their value chains will bode well for its long-term value creation. Big business brings distinct strengths, including experience building large-scale value and brands, and deeper pockets. Take the example of Britannia, a food company that incorporated health and affordable nutrition into its business strategy. In 1997, it adopted the corporate mantra “Eat healthy, think better.” It cut out trans-fats, and reduced sodium and sugar levels from its products, and fortified many with iron, vitamins, and micronutrients. Britannia’s popular biscuit brand, Tiger—now fortified with iron—sells 3 billion units every year. A third of its consumers come from households that live on less than US$25 a month.
Such activity today, however, is in its nascence. For big business, the poor are still not a top priority when it comes to market opportunity, and it often struggles to understand or reach them. Many are not ready for a longer-term orientation to value creation and a higher appreciation of innovation needed to do business with the poor. Social entrepreneurs, on the other hand, are adept at creating business models for the poor. Their ground-up models and innovative solutions sync with client needs, whether that’s providing a collateral-free microloan, a portable toilet, or an energy-efficient stove burner. Opportunities exist to combine the strengths of the two for mutual benefit, faster scaling, and greater impact.
There are early examples of what such partnerships can achieve. Fab India, a popular mid-size retail brand in India, collaborates with producer-owned social enterprises across Indian villages, creating significant value to the artisans. One such enterprise, Rangsutra, is owned by 5,000 artisans and reports that artisan incomes have increased two- to three-fold since the partnership. This is still new and unfamiliar territory, and moving forward with these collaborations requires an openness to learn and engage differently. But if done right, they hold the potential to transform millions of poor people into powerful economic actors who can fuel India’s growth