NextBillion.net - Development Through Enterprise - Does BoP Success Require the Moral Imperative? - Comments

morality and money

David — Sun, 23 Dec 2007 22:01:16 -0500

I personally would like to see the Muhammad Yunus' and Bill Drayton's continue to drive this sector forward. I think when an organization is driven by profits and for the maximization of personal wealth of the investors the tendency is to make decisions that favor the investors first and the clients second. I am not against business or money per say but I think profit seeking has a strong tendency to inspire greed, widening between classes and drifting away from the best interests of the poor. It can be entered into with good intentions but over time the allure of wealth is a strong pull on mission drift. I think it is better to start with a strong moral imperative and seeing business and money as the tools instead of the end. I like the language that Yunus is endorsing of a "no-loss" company. I think you must be competitive in salary to attract good talent but offering financial compensation slightly below the private sector also acts as a filter to attract those who will work and serve in the best interest of the clients, in this case the poor. I don't think poverty will ever be completely eradicated without a moral decision by the majority to voluntarily sacrifice on behalf of others.

The Connection between the Moral and Economic Imperative

Ali Wyne — Sat, 22 Dec 2007 17:55:36 -0500

I agree with Professor Abraham's point on sustainability. While history offers many examples of countries that have sustained short-term, or even intermediate-term, economic growth without possessing a middle class, it offers none, to the best of my knowledge, that have been able to do so indefinitely. India and China risk political upheaval if they fail to address growing socioeconomic disparities. China, in particular, faces a critical problem: learning how to innovate. It grew to be a formidable economic power almost exclusively on the back of manufacturing. Now, however, that it's experiencing diminishing returns in this arena, it has to conceive of novel ways in which to contribute to the global economy. I'm digressing, though. BoP success requires the moral imperative because it increasingly anchors the economic imperative. Many corporations are now beginning to adopt environmentally, socially, and politically sustainable policies in their countries of operation because their shareholders demand this course of action. Whether their reversal of course derives from sincere or pragmatic considerations is an interesting question, but one that strikes me as being of minimal consequence.

Though true that the Acumen

Anonymous — Sat, 22 Dec 2007 07:09:43 -0500

Though true that the Acumen Fund manages to attract top talent, and that it is a leader in driving a new understanding of development, this does come at a price. Though a little aged, the 2005 990 form shows this beautifully: http://204.203.220.33/EINS/134166228/134166228_2005_02B0D090.PDF Costs are 10x investments and thus not sustainable, and not anything like a VC. To be nimble is not good enough, you have to be cheap too. This is where bottom-up learning is valuable and should be supported. Companies in developing countries have lower infrastructure & HR costs and try to keep them that way as competition maintains focus on sustainability. In short, organizations such as Aavishkaar are far better placed to be effective for development than orgs based in NY.

social enterprise for profit

Tara Robinson — Fri, 21 Dec 2007 13:39:52 -0500

Hi Nitin,

Thanks for inviting my comments.

I'm not sure about forgetting about the moral imperative altogether, but I certainly believe that social innovation can, and should be, profitable. My experience as a conservation biologist and a business owner tells me that people do things more often when there is a monetary advantage. I have always believed that rainforest will only be conserved when there is a strong economic reason for allowing it to remain in its primary state, for example. (And perhaps global climate change will do that. I don't know.)

My guess is it depends on who you talk to as to how folks will respond. My friends in the NFP realm balk at the idea of profit. My entrepreneurial friends all support doing good and doing well at the same time. For me, doing just one or the other (doing well or doing good but not both) is a false dichotomy. I think we can be moral and kind, generous and professional, open-hearted and savvy, all at once.

I'll end with a "moral" thought. When Jesus sent his disciples out into the world, he told them "be gentle as doves and wily as serpents." As Jesus is the source of my own "moral imperative" to do good and be kind, that tells me that I, too, can be gentle and wily--both at once. :)

Peace be with you,
Tara

Does BoP Success Require the Moral Imperative?

Nitin Rao — Fri, 21 Dec 2007 09:16:06 -0500

When I first read the seminal article "Serving the World's Poor, Profitably" in HBR, I found the direction it pointed to elusive. Instead of tugging at sympathy, the paper pointed to an exciting and fast growing market - the immense collective entrepreneurial capabilities and buying power of the world's poor. Looking back, made easy by NextBillion, I wonder how organizations are using different approaches (read - for profit and non-profit) to social innovation.

According to Prof. Reuben Abraham at the Indian School of Business, Hyderabad, the first step to understanding BOP Markets is to "Forget the Moral Imperative."

Point number one is forget the moral imperative. Let’s look at the economic imperative of why this market is important. Everybody tends to emphasize the moral imperative of why economic growth needs to spread, but I think there is a strong economic imperative why growth needs to expand beyond the 15 per cent, say, in India that actually enjoy the fruits of the current economic growth. Because ultimately, if there are a billion people and only 150 million people are participating, that is not sustainable. That is not sustainable for a bunch of reasons because there will ultimately be saturation, and there will also be all sorts of political ramifications to this as there is a disconnect between aspirations of people who live in these markets and the elite in these countries. So, there is definitely an economic reason for why we should look at these markets.

The questions are: Are we doing this? And indeed, should we? After all, some organizations might pride themselves on their non-profit approach - right?

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