Session Title:
Pre-conditions, Limitations & New Models

Date of talk or publication:
2005

Speaker Name / Title:
Kapil Marwaha, Anil Kulkarni, J. Mukophadyay & S. Sivakumar

Organization:
S.P. Jain Institute of Management & Research & ITC Ltd.

Description:
Creation of a progressive, equitable society has been a central concern of thought leaders from every field. A recent proposition in this direction, “Serving the Poor, Profitably,” aims to propel business growth in a manner that alleviates poverty by advocating that businesses should make their goods and services affordable by the poor. This, it suggests, would increase the capacity of the poor to consume while enhancing the market for business. But selling goods and services to those enmeshed in poverty is, per se, a weak business proposition, and many instances of selling goods and services “to the poor” are instances of selling to low-income segments and not to those enmeshed in poverty. Such low-income segments can constitute viable markets for business, but claims that such engagement directly alleviates “poverty” are debatable.

A higher economic and social value can instead be created by a self-reinforcing process, “Being Served by the Poor, as Partners,” whereby business invests to develop the productive capacity of the poor and then leverages such capacity as inputs to strengthen business competitiveness and growth. The essential requirements of this process, its underpinnings and challenges, and the further opportunities it offers were revealed by research on and field visits to seven enterprises in India that ranged across the rural, urban, corporate, and non-corporate landscapes, scales of operation (small to large), and period of existence (established to new). This research suggests that it is indeed possible to create an economically feasible, in fact, competitively superior value chain for business through a self-reinforcing process of developing and leveraging the productive capacity of the poor as inputs to strengthen business competitiveness and growth. This process, driven by committed leadership and administrative mechanisms, begins with a buy-in by business and the poor to the idea of creating self-reinforcing interest and culminates in consolidation of efficient value chains as well as higher scales of operations for business and reduction of poverty and of economic dualities in society. It suggests that businesses can create unprecedented economic and social value by moving to the next level of effectiveness of “being served by the poor, as partners.”