I am a convert! -after the BAWB Global Forum in Cleveland, I've been researching more and more about this so-called 'Bottom of the Pyramid' concept -that it is in business's own interest to help society, and the best way to do so is, through doing more business. Sometimes known as 'doing business with the poor', this is not necessarily a new concept: indeed the poor have been integrated into (and benefited) from global supply chains for a while -and will continue to do so.
The 'new' trend (by that I mean a trend that only recently academic studies have discovered is happening and started researching, though i am sure inspired individuals and business throughout time has been involved in this trend for centuries) is basically about how important innovation and entrepreneurship is to doing business with the poor -and therefore I am convinced that entrepreneurs have been doing this for years. It's great that Multinationals are getting more involved, since they can scale-up and mainstream.
The fundamental learning point is very much about understanding the market. The market might for your business yet, but if you can provide a useful service, the market will buy it. The product or service does not necessarily have to benefit society per se; but by creating a successful product or service, it will provide some benefit in its use and in knock-on wealth creation (jobs, distribution etc). There is 1 caveat though, in that these products or services should not be harmful. Writing this, it is clear that the best example of BOP is the illegal drugs market -where there are incredible innovations in supply chain, distribution, marketing and so on -and huge buyers of poor people some how become buyers (unfortunately often through crime).
Now companies are listening more, engaging more and experimenting more: another example of CSR just being good business -a logical evolution of what had been happening previously. Often serving this market requires a new product or service, and often it requires rethinking the associated business functions entirely. Thus businesses need to encourage more entrepreneurship and intrapreneurship, give their employees free-rain, flexibility, and take a long-term approach to profit making. Society needs to encourage innovation more; it needs to encourage entrepreneurship in its educational systems, in its economic frameworks, in its recognition and status socially and so on. Much more needs to be done about this urgently. We need more leaders with more ideas to solve the many challenges we face.
Saturday, November 25, 2006
Friday, November 24, 2006
Supply Chain and Development
After a recent conference on Supply Chain Management I came to realise a few things. The most important is how great a lot of the stuff Brands are doing: they are (for various reasons) demonstrating fantastic leadership and I believe had made a big difference in the last 10+ years. There are of course multiple problems still to contend with; especially considering what they are doing is not driven my much local pressure; and most of what they are doing should, to some extent, be done by the government (enforcing Health and Safety laws, working hours laws etc).
There are some fantastic pilots taking place that really bring 'CSR' to local managers in factories and engage with all stakeholders in such programs (including, crucially, the workers) -so that the managers themselves see the business benefits of CSR -and are actually able to understand CSR as a holistic concept, rather than what they see at the moment (compliance, training etc). There is further to go, not least in addressing the scale-up challenges involved.
Scaling-up is the buzz word in the development world (where I work) and it is clear that the CSR world needs to take a leaf from the development world's book -or at least learn the lessons the development world has gained from many years of failures, and some successes attempting such grand initiatives. The Business world may be great at scaling up marketing, but scaling up CSR/development programs is different. For too long pilots have occurred in the supply chain and not expanded, there has been a lack of involvement of government, policy makers and academics, there has been limited attempts at partnership with other sectors (or with competitors) and not enough capacity building.
Maybe Supply Chain Staff should meet Marketing staff and realise that distributing products requires partnerships and adequate distribution channels, as well as effective communications, effective research and so on.
This takes me to the lesson the Supply Chain only seems to have recently learnt: the need to engage with stakeholders and more than this, provide for the stakeholders to make the decisions. In the development world the community is encouraged to make decisions -an example might be an offer of funding for a community to improve the community. Now, the funder might not actually care what the community chooses to do with the money, what they care about is the process the community went through to make the decision. Thus the community has buy-in and is accountable to itself as well as the funder, and the community will learn the lessons. At the conference people were finally talking about the need for a bottom-up approach; an engagement approach and so on.
There is of course a lack of people around who can facilitate this process, inspire the stakeholders to be involved, or trust the stakeholders enough! But, for Supply Chain Improvements to really take off, that is what must happen. The Buyers will need to reach a stage where they trust their suppliers and step back -audit less not more.
A Factory is different to a village community though, so Buyers need to empower the managers to willingly want to empower and engage with their employees and other stakeholders. Not much sustainable benefit to the buyers doing all the 'csr' on behalf of a factory they do not own! When a Factory manager spoke to us, he was not knowledgeable about CSR as a concept -and indeed most auditors are not 'csr experts' -they are auditors, and this is the problem. Most trainers (either from the company, ngos or consultancies) are training bits and pieces as required by whoever pays their services.
Development looks at comprehensive needs of a community, takes into account external factors, spends as much on research before a programme and evaluation after the programme (plus disseminating learning points) as the programme itself. Development requires spending LOTS of money, but aims to do small things well, then identify opportunities to scale-up -often involving government, business and other stakeholders.
The key to development though is that those being 'developed' want to be developed -they see the benefits, and this is not something the supply chain movement started with; and is something it has tried to create -Brands are having to go in and convince the factories of the benefits of CSR. Will this and other lessons be learnt? I suggest a dialogue between development NGOs and the Supply Chain actors; share some lessons, and then lets make sure that what is happening is sustainable. I don't believe much of the supply chain movement is sustainable. There are some fantastic examples, but these are few, and the sample a tiny proportion of all 'supliers' that exist -which is almost any company that sells something to someone!
Though the migrant workers complained at the conference about lack of training and how they wanted innovative training, career development opportunities and so on; they are much better off than in their villages -if not they would not be there. Ambition is a great thing. How about they take some of these lessons back to the factory outside their village, and take some leadership upon themselves? I think there needs to be some re-thinking about scaling-up. Let's hope that future conferences focus on that. Too much good stuff is happening to be wasted on having such low impact.
Is this great stuff bringing the whole field up? Maybe some of the factories in apparel, toys and electronics in a couple of geographical areas are getting better. Is the entire field of factories getting better, no matter where they are based or what product they are making? No, but some leaders need to start re-thinking, re-planning and being more ambitious.
There are some fantastic pilots taking place that really bring 'CSR' to local managers in factories and engage with all stakeholders in such programs (including, crucially, the workers) -so that the managers themselves see the business benefits of CSR -and are actually able to understand CSR as a holistic concept, rather than what they see at the moment (compliance, training etc). There is further to go, not least in addressing the scale-up challenges involved.
Scaling-up is the buzz word in the development world (where I work) and it is clear that the CSR world needs to take a leaf from the development world's book -or at least learn the lessons the development world has gained from many years of failures, and some successes attempting such grand initiatives. The Business world may be great at scaling up marketing, but scaling up CSR/development programs is different. For too long pilots have occurred in the supply chain and not expanded, there has been a lack of involvement of government, policy makers and academics, there has been limited attempts at partnership with other sectors (or with competitors) and not enough capacity building.
Maybe Supply Chain Staff should meet Marketing staff and realise that distributing products requires partnerships and adequate distribution channels, as well as effective communications, effective research and so on.
This takes me to the lesson the Supply Chain only seems to have recently learnt: the need to engage with stakeholders and more than this, provide for the stakeholders to make the decisions. In the development world the community is encouraged to make decisions -an example might be an offer of funding for a community to improve the community. Now, the funder might not actually care what the community chooses to do with the money, what they care about is the process the community went through to make the decision. Thus the community has buy-in and is accountable to itself as well as the funder, and the community will learn the lessons. At the conference people were finally talking about the need for a bottom-up approach; an engagement approach and so on.
There is of course a lack of people around who can facilitate this process, inspire the stakeholders to be involved, or trust the stakeholders enough! But, for Supply Chain Improvements to really take off, that is what must happen. The Buyers will need to reach a stage where they trust their suppliers and step back -audit less not more.
A Factory is different to a village community though, so Buyers need to empower the managers to willingly want to empower and engage with their employees and other stakeholders. Not much sustainable benefit to the buyers doing all the 'csr' on behalf of a factory they do not own! When a Factory manager spoke to us, he was not knowledgeable about CSR as a concept -and indeed most auditors are not 'csr experts' -they are auditors, and this is the problem. Most trainers (either from the company, ngos or consultancies) are training bits and pieces as required by whoever pays their services.
Development looks at comprehensive needs of a community, takes into account external factors, spends as much on research before a programme and evaluation after the programme (plus disseminating learning points) as the programme itself. Development requires spending LOTS of money, but aims to do small things well, then identify opportunities to scale-up -often involving government, business and other stakeholders.
The key to development though is that those being 'developed' want to be developed -they see the benefits, and this is not something the supply chain movement started with; and is something it has tried to create -Brands are having to go in and convince the factories of the benefits of CSR. Will this and other lessons be learnt? I suggest a dialogue between development NGOs and the Supply Chain actors; share some lessons, and then lets make sure that what is happening is sustainable. I don't believe much of the supply chain movement is sustainable. There are some fantastic examples, but these are few, and the sample a tiny proportion of all 'supliers' that exist -which is almost any company that sells something to someone!
Though the migrant workers complained at the conference about lack of training and how they wanted innovative training, career development opportunities and so on; they are much better off than in their villages -if not they would not be there. Ambition is a great thing. How about they take some of these lessons back to the factory outside their village, and take some leadership upon themselves? I think there needs to be some re-thinking about scaling-up. Let's hope that future conferences focus on that. Too much good stuff is happening to be wasted on having such low impact.
Is this great stuff bringing the whole field up? Maybe some of the factories in apparel, toys and electronics in a couple of geographical areas are getting better. Is the entire field of factories getting better, no matter where they are based or what product they are making? No, but some leaders need to start re-thinking, re-planning and being more ambitious.
Wednesday, November 22, 2006
Market Failure
The Stern Report states that we are witnessing the biggest market failure ever -and the consequences are climate change. It would be hard to argue with this. The report contains many suggestions and most are dependent on someone -business or government mostly doing something; rather than just talking. Whether this will happen or not depends on how sever climate change becomes (and the short-term impacts) and particularly on public opinion.
Public opinion does seem to be, finally, changing. After a recent conference on Supply Chain, I wonder if there are some lessons that could be learned from what has been going on there in the last 10-15 years or so, since public opinion started to become vocal through NGOs (though how much the average public really cared might still be debatable). The labour conditions is actually not a case of market failure: but it is a case of how a non-financial/tangible/measurable matter became a more important driver than economics.. In climate change we cannot wait until we run out of cheap coal before we find alternatives!
It is interesting how, I believe, average people still do not care much about poor labour conditions (often workers do have a choice of going back to the countryside if they wanted to, for lower wages and more poverty) or even about starving people in Africa -since that still persists even though it could be easily solved if there was the individual will. Instead changes come about through a few passionate people and the systems they use to stimulate change: specifically the International NGO and the media -both are leading the campaigns about climate change too. Good job they exist; good job they are doing something. Ironically various Sustainable Development Communication email lists are buzzing with the problem of people being confused with so many messages, and none of them seemingly working. It seems that the more popular an idea becomes, the more competition there is in the arena, the worse a problem becomes the harder it is to mobilise people with a simple message, simple solution, simple actions.
There have been lists around for years about how we could save water or energy, yet toilets still use up way too much water in a single flush than they need, and shops still sell inefficient light bulbs. The simple message is that we need more individuals who are going to make brave decisions: either for ethical reasons or because they can spot a market opportunity. Climate Change surely offers both as well -the World just needs more individuals to make the different, be different, and then they (and the World) can reap the benefits.
Public opinion does seem to be, finally, changing. After a recent conference on Supply Chain, I wonder if there are some lessons that could be learned from what has been going on there in the last 10-15 years or so, since public opinion started to become vocal through NGOs (though how much the average public really cared might still be debatable). The labour conditions is actually not a case of market failure: but it is a case of how a non-financial/tangible/measurable matter became a more important driver than economics.. In climate change we cannot wait until we run out of cheap coal before we find alternatives!
It is interesting how, I believe, average people still do not care much about poor labour conditions (often workers do have a choice of going back to the countryside if they wanted to, for lower wages and more poverty) or even about starving people in Africa -since that still persists even though it could be easily solved if there was the individual will. Instead changes come about through a few passionate people and the systems they use to stimulate change: specifically the International NGO and the media -both are leading the campaigns about climate change too. Good job they exist; good job they are doing something. Ironically various Sustainable Development Communication email lists are buzzing with the problem of people being confused with so many messages, and none of them seemingly working. It seems that the more popular an idea becomes, the more competition there is in the arena, the worse a problem becomes the harder it is to mobilise people with a simple message, simple solution, simple actions.
There have been lists around for years about how we could save water or energy, yet toilets still use up way too much water in a single flush than they need, and shops still sell inefficient light bulbs. The simple message is that we need more individuals who are going to make brave decisions: either for ethical reasons or because they can spot a market opportunity. Climate Change surely offers both as well -the World just needs more individuals to make the different, be different, and then they (and the World) can reap the benefits.
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