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Thursday, May 14, 2009

Can Big Companies Drive Development through Enterprise? President Clinton and CEOs Weigh In

By Beth Jenkins

Coca Cola's Manual Distribution Center model.

Yesterday I heard former US President Bill Clinton, Coca-Cola CEO Muhtar Kent, and Archer Daniels Midland CEO Patricia Woertz talk about ways big companies can "create value for business and society" on a panel moderated by Brookings Institution Vice President and former UNDP Administrator Kemal Dervi?.  The panel was hosted by Brookings and the Clinton Global Initiative here in Washington DC.

This was my first time seeing Clinton speak in real life, which was interesting.  The guy could probably dictate a book with little to no editing required.  But it was also interesting to hear exactly what was said - and what wasn't.

Given the heat Coke and ADM have gotten for their environmental impacts over the years, and Clinton's public position on climate change, the panelists spent quite a bit of time talking about sustainability.  For example, Coca-Cola's Kent shared the company's progress against its goal of water neutrality by 2020. The speakers' visions for sustainability spilled over into the social and economic realms as well.  For instance, ADM's Woertz talked about a new program, Strong Roots, that will help developing country farmers improve their productivity and put needed infrastructure in place. 

The panel was clear that corporate social investment programs like Strong Roots have the potential to create more enabling environments for development through enterprise.  The panelists also talked a lot about the need for partnership in such efforts.  In our increasingly interdependent world, Clinton advised corporate executives to ask themselves, "What do I have complete control over and where do I need a good government in place?  What can I do cheaper, faster, better if I work through an NGO?"

It wasn't as clear, however, on the extent to which big companies would or should drive development through enterprise themselves, through their own core business activities.  During the Q&A session, CEO of Light Years IP (and Ashoka Fellow) Ron Layton asked, "Are you going to hang onto your existing business models, or will you be able to adjust?" 

Kent responded to Layton's question by telling the story of Coca-Cola's Manual Distribution Center model, in which local entrepreneurs supply small-scale retailers in hard-to-reach, low-income urban markets.  The MDC business model originated in East Africa and there are now more than 2,500 MDCs employing more than 12,000 people and generating an estimated $500 million in revenues a year across the continent.  The company has committed to grow the number of MDCs in Africa by 1,300 to 2,000 - creating between 5,300 and 8,400 more jobs - by 2010. 

The well-done report Monitor released recently makes the point that, with the exception of those that engage the poor as suppliers, "new entrants and small enterprises are more likely than large corporations to lead the development of market-based solutions in low-end markets."  Large corporations aren't necessarily renowned, as a category, for their capacity to innovate.  So what's the scope for them to engage in development through enterprise?  

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