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Whether it’s at the country, corporate or individual level, this blog considers how to gauge and measure impact.

Thursday, December 16, 2010

Inclusive Business Has Buy-in, Now We Need Action

By Daniel Gonzales

The Inclusive Business concept has been adopted by the United Nations, the International Business Leaders Forum, the World Business Council for Sustainable Development, many leading corporations and governments in developing countries like Ecuador and Colombia. (As further evidence, check out these two UN reports here and here).

This terminology puts social inclusion as a priority and low-income communities at the top - not at the bottom. These organizations are unlikely to use the concept if it hadn't been proven in practice, and it would be a waste of time to debate on what is the right terminology at this juncture.

But what puzzles me is that almost all of the initiatives have a very low scale. Even for the larger corporations, the social or economic impact is marginal given the size of these businesses. Can we really expect that they will change the way they do business for the sake of social and environmental impact? I doubt it. Convincing multinational corporations was a critical step in validating and positioning market-based solutions as profitable ways to create wealth and prosperity. But how will we really achieve scale?


First. We need to shift focus from the usual suspects and easy fixes, and focus on emerging companies. Companies that grow at an accelerated rate have proven in the last decades that they have the real power to disrupt and create new markets. This is what really changes corporate behavior: external incentives. Competitive economies thrive on entrepreneurship and innovation, and most of the time, this is carried out by smaller organizations. Yes, we need the resources, research and influence from larger organizations in order to capture value from entrepreneurship and innovation, but large market shifts are often implemented by emerging organizations.

Second. We need to improve the business environment for small and growing businesses and social enterprises. Even if we shift our focus to small and growing businesses, they will face similar challenges all over the world like access to finance and markets, proper regulation and incentives, lack of a qualified labor force, ineffective support mechanisms for growth and the like. We need to promote and increase opportunities for dynamic entrepreneurship, effective accelerators with incentives for success, more flexible financial institutions, updated business school curricula, regulation for hybrid companies and many other measures proposed by the NextBillion community.

Third. In addition to the last two steps, we need to create incentives for the development of inclusive and green businesses, specifically. Tax incentives, simplified legal and reporting procedures, personalized technical assistance, early adoption of cutting-edge technology, platforms for knowledge exchange, visibility in mass media outlets, thought leaders, and more seed funding for early stage ventures.

Not enough challenges to work on? A deep rooted change in the current paradigm of the role of business in society may be the key to unlocking all of the above and take us one step closer to really Inclusive Markets.

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