SharedValueInitiativeIndia

http://sharedvalue.in

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How the World Thinks About Capitalism?

• [-] Big Businesses are Not Clean; Not Ethical • [-] Poor gets Poorer in Capitalist Economies• [-] Favour Protectionist Measures rather than ‘Open Economies’

• [+] Free Enterprise System Better for Poverty Alleviation than Government• [+] Government should invest more on infrastructure than welfare benefits

• [+-] India – Business and Society’s Interests Match Well; Other Nations do not agree.

Source: https://social.shorthand.com/montie/3C6iES9yjf/what-the-world-thinks-of-capitalism

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WhatisChangingGlobally?

• GlobalDevelopmentAgendas– SDGs• Globalization&BaseofthePyramidBusinessModels• ImpactInvestors,IncubatorsandAccelerators• BetterConnected,BetterInformed- Internet&Telecom

• EnvironmentalDegradation• RisingPopulationandConsumptionTrends• IncreasingScarcityofResources• SignificantPopulationinExtremePoverty

Global Focus on UN Sustainable Development Goals (2014-2030)

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Source: www.un.org

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Reality Check - The Bottom 4 Billion

• Significant Unmet Needs

• Dependent on Informal or Subsistent Livelihoods

• Live and Transact in an Informal Economy

• Face BoP Penalty

• Need Scalable & Replicable Solutions • Government, NGOs, CSOs lack ability to scale and implement market oriented

business models

Businesscanengagewithsocietyinthreeways

“Giving Back”

Business must fulfill community obligations

Shared ValueCorporate Philanthropy

“Finding business opportunities in social problems”

Meeting social needs can be a source of

profit and competitive advantage

“Minimizing harm to society and the

company”

Business should be responsible

Corporate Responsibility

Past efforts have emphasized the friction between business and society instead of the synergy

• Thelong-termcompetitivenessofcompaniesdependsonsocialconditions− Aneducatedandskilledworkforce− Safeworkingconditions− Sustainableuseofnaturalresources− Aflourishing localeconomy

•Businesshasanessentialroletoplayinsolvingsocialproblems− Onlycompaniescancreateprosperity thatfundsgovernmentandcivilsociety− Companiescancreatesolutionstomanysocialproblems inwaysthatgovernmentsandNGOscannot− Companieshavetheincentivetotakerisk− Competitions fuels innovation,efficiency,andadoption− For-profitmodelsarescalableandsustainable

Societalandcorporatesuccessareinextricablylinked

• Sharedvalueisdefinedaspoliciesandpracticesthatenhancethecompetitivenessofcompanieswhileimprovingsocial&environmentalconditionsintheregionswheretheyoperate

• Itisabusinessstrategyfocusedoncompaniescreatingmeasurableeconomicbenefitbyidentifyingandaddressingsocialproblemsthatintersectwiththeirbusiness

WhatisSharedValue?

• SharedValueIS:

‒ Strategiesthatsimultaneouslycreatevalueforthebusinessandforsociety

• SharedValueisNOT:

‒ Sharingthevalue alreadycreated

‒ Personal values

‒ Balancing stakeholderinterests

Sharedvalueisself-sustainingandscalable

• Creating new opportunities for the business by meeting societal needs• Impact scalable because shared value is self sustaining

• Redistribution of value to meet societal needs• Impact dependent on scale of finite resources

CSR and Philanthropy Shared Value

Businesshasanessentialroletoplayinsolvingsocialproblems

−Onlycompaniescancreateprosperity thatfundsgovernmentandcivilsociety

− CompaniescancreatesolutionstomanysocialproblemsinwaysthatgovernmentsandNGOscannot− Companieshavetheincentivetotakerisk− Competitionsfuelsinnovation,efficiency,andadoption− For-profitmodelsarescalableandsustainable

Societalandcorporatesuccessareinextricablylinked

Allprofitisnotequal

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• Profitinvolvingsharedvalueenablessocietytoadvance andcompaniestogrowfaster

• Profitattheexpensesofsocietyisself-defeating

• Incorporatingsocietalissuesintostrategyandoperationsisthenextmajortransformation inmanagementthinking

Sharedvaluethinkingrepresentsthenextcompetitivefrontierofcapitalism

Allprofitisnotequal

SharedvaluecreatesavirtuouscycleSharedvaluecreatesavirtuouscycle

AddingaSocialDimensiontoStrategy

• Sharedvalueopensupnewneeds,newmarkets,andnewvaluechainconfigurations

• Thiscreatesnewstrategicpositions,andnewopportunitiesforextendingexistingpositions

• Companiesshouldincorporateasocialdimensiontotheirvalueproposition• Sharedvaluecanreinforceandevenanchoracompany’sstrategy

Thesocialdimensionofstrategycanbemoresustainablevs.competitorsthanconventionalcostandqualityadvantages

Addingasocialdimensiontostrategy

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Defining Shared Value

• Policies and practices for Competitive Advantage

• Corporate Strategy for creating unique business value by integrating socio-environmental benefits with economic gains

• Not Philanthropy or CSR Activity

Reconceiving Products and

Markets

Redefining Productivity in Value Chains

Enabling Local Cluster

Development

Sharedvalueoperatesatthreelevels

Reconceiving Needs, Products, and

Customers

• Meetingsocietalneedsthroughproducts

• Addressingunderservedcustomers

• Drivingproductivitythroughbetterutilizingresource,employees,andbusinesspartners

Redefining Productivity in the

Value Chain

• Improvingskills,supplierbase,andsupportinginstitutions inthecommunitieswhereacompanyoperates

Enabling Local Cluster Development

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Theselevelsareoverlappingandmutuallyreinforcing

• Shared value can be created by producing goods and services that directly benefits the underservedsections of the society

Example – VisionSpring

• VisionSpring’s mission is to ensure affordable access to eyewear across the globe. The company identified the need forvision treatment at the bottom of the pyramid

• Reconceived products and created distribution channel in the developing countries to make affordable eyeglassesaccessible

• Reaches people through two differentmodels:• Partnership Model: Partner with hospitals, NGOs & Corporations across India. Works at the village level and trains

thousands of village level entrepreneur in dispensing eyeglasses• Hub & Spoke Model: Started its standalone optical stores and got associated with leading eye hospitals to set-up

their stores on their premise. Also partners with eye hospitals for effective community outreach activities

• The company has distributed nearly 2,763,000 eyeglasses & have created $280 million in economic impact• People using their glasses have reported an increase of about 20% in their income and 35% increase in their productivity

Reconceivingproductsandmarkets

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AravindEyecare(1976)• Toeliminateneedlessblindnessirrespectiveofthepayingcapacity.• Outreach:4000beds,32millionpatients,3millionsurgeries• 2009-10:2.5millionoutpatients,0.3millionsurgeries,1.2millionIOLs

Uniquefeatures• McDonald factorybasedmodelfordiagnostics, surgery&productofferings• 30:70(Paying:Non-Paying)• Training/Capacitybuilding (>300ophthalmologists &>600paramedicsperyear)• 2600operationsperyearbyeachdoctor(6timestheaverage)– 10minperoperation• Strongcommunityoutreachandsetup(8hospitals;40Visioncenters;Aurolab; LAICO)

18SimultaneoussurgeriesatAravind Manufacturingintra-ocularlensesatAurolab

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NovartisAarogya Parivar(2007)• Enableaccesstohealthawarenessandaffordablemedicinestoruralfamilies• Outreach:10states,100medicinetypes,0.5millionvillagers(healthawareness,diagnosis)

Uniquefeatures• Focusonhealtheducationandawareness,diagnostics, affordableandreliablemedicines• Stronglinkwith22000doctors&reaching28000pharmacies inremoteareas• Adaptability - Communication, productpackaging andtrainingasperlocalconditions• Scalableacross statesandcountries- Vietnam, Indonesia,Kenya• Localskillbuildingandengagementashealthworkers

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Selco(1995)• Enablingaccesstocustomizedcleanenergysolutionsfortheunderserved.• Outreach:Sixstates;>2,00,000households;5000Institutions;4solarentrepreneurs

Uniquefeatures• Solutionbasedapproach– Customproductoffering,door-stepfinancing, &support• SetupSelcoFoundationandSelcoIncubationLab• ScalingbyImpactbasedinnovationsandofferings• Localengagementandembeddedness– Micro-entrepreneurs,localsasemployees• Strongcommunityoutreachandsetup(45energycenters;30financial partners;25communitypartners)

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Example– NarayanaHrudayalaya• Thehospitalsgroupismodelforaccessible&affordablehealthcarethatprovideshealthcarefacilitiesatanominalcost,especiallythecardiacsurgeries

• Onanaverage,aheartsurgeryinthishospitalcosts$2000whereasasimilarsurgerywouldcost2-10timesofthecostinotherhospitals

• EconomiesofScale:Largernumberofoperationsandsharingofresourceslowersthecostperoperation

• Ithas32hospitalsin20citieswith6498bedsand1861doctors• Inaddition,tocardiacsurgeryfacilities,thehospitalalsoperformsothersurgerieslikebonemarrowtransplant,neurosurgery,etc.andprovidesotherfacilitiesliketeleradiologyandfreetelemedicine

Affordablehealthcarefacilities

Example– ICICILombard• InIndia,theruraleconomyfacesstrainduetothevariationsintherainfallfromseasontoseasonthatleadstocropfailures.Itoftenresultsinfarmersunderheavydebts

• Onrecognizingthisneed,ICICILombardcameupwithweather-basedcropinsuranceprogram• Theinsuranceprogramprotectsthefarmersfromtheadverseclimateeffectsthatmayleadtocropfailure

• Filingclaimsisahasslefreeprocessandpaymentsarereleasedoncertifyingdeviationsfromnormalconditionsmeasuredbyweatherdatacollectedfromindependentthirdparties

• Bymid– 2010ithadimplementedthemodelin14states,comprising64districtsandcovering26cropvarieties

Cropinsurance forfarmers

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JantaMeals(2013)• Tomakenutritious,hygienicallypreparedandaffordable foodavailable totheurbanlow-incomeworkingclassandmigrantlabourers– healthbenefitsandcostsavings

• Served10.8millionmealstilldate

Uniquefeatures• HubandSpokemodelwithcentralkitchenandfranchises• Localengagementandskill-buildingasmicro-entrepreneurs;womenforcooking• FSSIcertifiedsuppliers,licensedinfrastructure

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• Redefining how value is created and sustained through supply chains (for example, throughrepurposing or recycling products to reduce waste, while creating new cost savings or revenuestreams)

Example HUL – Project Shakti

• Hindustan Unilever is implementing shared value by tapping opportunities into their value chain and expanding theirreach through

• The project empowers underprivileged rural women by training them in health and hygiene and allowing them toundertake income-generation activities

• Project Shakti Entrepreneurs who are commonly known as Shakti Ammas reach out to over 4 million households across1,65,000 villages spread over different states

• HUL provides a means of livelihood to approximately 70,000 women entrepreneurs and ensures a source of revenue foritself

Redefiningproductivityinthevaluechain

Example– MotherDairy• MotherDairy’sbusinessphilosophyisinherentlylinkedwiththeco-operativemovementinIndiaandisfocusedonservingfarmers,ruralsocieties,andconsumersfairly

• ThebusinessmodeladoptedbyMotherDairyassuresaplatformforfarmerstoselltheirproducts• Theyhaveasimpleprocessofsourcingmilkfromthefarmersbyprovidingthebestpriceforit.Nearly80-85%oftherevenueaccruedbythecompanygoesbacktothefarmer

• MotherDairyensuresthatmilkproducersandfarmerscontinuallyreceivemarketpriceforofferingmilk,milkproducts,andotherfoodproducts

• Addressingthesocialchallengesintheareaofagriculturetheyhavepositivelyimpacted250,000individualsacrossthecountryandhavespentmorethan1600crores ontheseactivities(asofFY2013)

Redefiningproductivityinthevaluechain

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Mirakle Couriers(2009)• 6%Indians(10million)aredeaf;66%(6million)unemployed• Missiondrivenfor-profitbusinessthatemployslow-incomedeafyouthinthelogisticsspace(courierdelivery)

Uniquefeatures• Trainingandengagingdeafyouthforback-office anddeliveryoperationstherebyenablingfinancial independenceandempowermentforthedeafcommunity.

• Communication isdoneusingISL(IndianSignLanguage)alongwithSMSandemails.• Deliveryandcollectiondoneviapublictransport leadingtolowcarbon footprint• Settingabetterrolemodelandinspiration forcorporatesandsociety

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• Companies can use clusters for supporting their long-term growth through the development of theirsuppliers and other stakeholders being impacted by their business operations

Example – Godrej Industries

• Godrej Good and Green initiative, which moves beyond business and plans to have trained and provided useful skills tothousands of rural and semi-urban youth.

• In FY 2013, Godrej under its various verticals have trained nearly 16800 people with a particular job skill will impede businessgrowth

• The group has set a goal to train 1 million youth by 2020• The skill development initiative ensures overall development of society by ensuring a source of income for the youth and

commercial success for the business

Enabling localclusterdevelopment

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Jaipur Rugs(1978)• Offeringhand-knottedrugsglobally,whicharebeingmanufacturedbytapping intothecreativecapabilitiesofanetworkofartisansacrossthevillages

• 20+branches,40000+artisans(6states,600villages), anddistributionacross40countries

Uniquefeatures• Unskilledruralpooraremaderugartisansbycommunitymobilizationandskilltraining• Fairwages,noexploitation,trainingandsustainablelivelihoodatdoorstep• Accesstoglobalmarkets,doorstepdeliveryofrawmaterialandcollectionofrugs• Financial independence&empowermenttoruralwomen&flexibilitytoworkfromhome• In-personconnectartisanswithcustomers

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Adani AgriFresh(2006)• Settingupanintegratedapplesupplychainempoweringtheapplefarmerswhiledeliveringhighqualityapplestoconsumers

• 3ControlledAtmospherefacilities(23000MT), networkof15000+farmers,700+villages

Uniquefeatures• Empowerment,Fairwages,noexploitation,trainingandsustainablelivelihoodatdoorstep• Promotinggoodhealthandwell-beingoffarmersthrough ruralhealthcareunits• Fully-automatedtechnologydrivenprocessesforhighqualityapplesgrading&selection• Makingavailablescientificorchidmanagementtechniquesandagri-inputsneartofarms

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UnderTheMangoTree(2009)• Promotesbeekeepingtoincreaseagriculturalproductivity, enhanceincomesandimproveslivelihoodsofmarginal farmersinIndiawhileofferingall-naturalhoneytoconsumers

• 6states,3000farmers,agricultural productivity increaseoflocalplantsduetopollination

Uniquefeatures• Utilizesthepowerofmarketforcestoprovidepoorfarmerswithalucrativeincomestreambytraining themonbee-keepingandestablishingmarketaccessforthehoneyproduced.

• Focusontheindigenousbee,theApis cerana indica,anexcellentpollinator.• Providetraining, sustainablelivelihood andimprovedagriculturalproductivity (duetocross-pollination) forthefarmersandmarginalizedcommunities

• Partnershipswithruralorganizations, technicalexperts,corporateentities

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Socialinnovationisessentialtobreaktrade-offsbetweenmeetingsocialneedsandmaintaining

profits

Sharedvalueisessentialtoinvestsufficientlytoovercomemanysocialproblems

Innovationisessentialtocreatingsharedvalue

Social Innovation

at Scale

Shared Value

Innovationisessentialtocreatingsharedvalue

SocialNeed

BusinessOpportunities

CorporateAssetsandExpertise

SharedValueOpportunity

Sharedvalueisfoundatthenexusofbusinessopportunity,corporateassetsandsocialneed

ThankYou

U24/8,DLFPhaseIII,Gurgaon– 122022,Haryana,India