The other day I read a very interesting post in the Harvard Business Review Blog about “Inclusive Business Models that Indian companies have (and are still) developing and delivering on, in order to – quote..”that can deliver affordable housing, healthcare, education, and financial services to those living in the middle and bottom of the pyramid.”
Reading the article set me thinking about why such “community benefit” oriented business models are not there.Through a discussion forum in Linked In some great points were provided.(My thanks to Anees Zaidi, Prakash Menon and Tuba Terekli for their perspective and thoughts). Perhaps it’s because we are, almost always, talking about stakeholders profit maximisation. Unfortunately, though the community is one of the stakeholders, it’s always at the bottom of the pile in terms of stakeholder priority. But is that where the community should be for a business?
Michael Porter’s The Competitive Advantage of Corporate Philanthropy provides a very logical formula as to why the corporates favour quick wins instead of basing their business objective on value creation for the community and how it comes back to haunt them. Whereas those who do focus on the community value tend to have sustainable businesses.Today the consumer environment has changed drastically. The global financial crisis and explosion of social media (as two immediate critical factors) has led consumers, geographically, to group together on the basis of common interests and sharing of information on anything (from personal status to their daily brands and the corporates owning these brands).
Consumers spending has undergone drastic change resulting from the lack of trust (between consumers and corporate brands). In sum, people are now not just communities (by traditional parameters) but by virtue of their needs, interests, opinions, thinking and pre-disposition towards the corporate world. And within this huge group of “people” are thousands of subsets(each with its own set of values, believes, perceptions) which make up the individual consumer clusters for all businesses, across all industries.
So, with such immense changes in the consumer landscape, wouldn’t a community value based business model be more efficient in achieving financial goals?
Developing a community value based business model would be sustainable, strong and profitable as it would clearly give benefits to the community and increase trust.Increasing trust would lead to increased transactions and thus to profits. The purpose of this post is to stimulate a discussion on how:
- such inclusive business models, delivering clearly identifiable value benefit to the community, can be developed
- and if such business models would change the way profit maximisation is achieved today
- and if these will come about from the entrepreneurial side or from the multi-national corporates.
Of course the question remains — do we want to give value to the community to build sustainable businesses or do we want to stick to the (age-old) stakeholder profit maximisation only?
- What business are you in? (benefitpoint.wordpress.com)
- Indian Tales of Inclusive Business Models (blogs.hbr.org)
- What is Meant by Environmental Sustainability (brighthub.com)