You are on page 1of 22

Co-creating Businesss

New Social Compact


Submitted by:
Group 7
Abhinav VK
Anubhav Gupta
Kshitij Ahuja
Mayank Bathla
Mohit Ambwani
Saurabh Arora
12P121
12P130
12P143
12P149
12P152
12P166

by J eb Brugmann and C.K. Prahalad
1
Motive
> What?:
Convergence of Corporations & NGOs
> Why?:
Create innovative business models
> To?:
Grow new markets at bottom of pyramid & niche segment in mature
market
Business
NGOs
Civil
Society
Changing Relations:
Businesses, The Civil Society & NGOs

New Opportunities:
Bottom of the Pyramid

NGOs:
Taking the new role of Entrepreneurial
Ventures

2
A ROCKY START

Two decades of liberalization by governments
At the behest of IMF and World Bank
Business and civil society fought bitterly
Point of Contention: nature & rate of economic reform
Government reduced its intervention

3
UNANTICIPATED CONSEQUENCES:
CONVERGENCE OF PATHS
NGO emerge as corporate sectors De facto regulators
With the ability to coordinate smart mobs
A potent example: Attack on Coca Cola by local NGO over use of
water in village in Kerala
Account spread over Internet like wildfire
Millions of dollars in lost sales & damage to reputation
Make the corporate conform to their norms
4
HEAVY INVESTMENT BY COMPANIES TO
COUNTER NGOS
Initially companies did it defensively; followed by proactive strategies
Social Market Slogans
Setting up non profit entities
CSR initiatives
Cause based marketing programs
Chevron on Global Energy Issues & Unilever on women issues
Microsoft Director worked with NGOs
5
EMERGENCE OF MARKETS AS AN ARENA FOR
INTERACTION OF COMPANIES & NGOS
Utility of NGOs
Possess
Local knowledge
Local infrastructure
Understanding of
Local cultures
Consumption behavior
Utility of Corporations
Provide
Business models
Acumen
Funding

JV between Telenor & Grameen Bank: Sell cellular phones
Decline in Government aid & Private Sector charity: NGOs eyeing
entrepreneurial opportunities
WIN:WIN for both: Companies can market well & NGOs
calibrated business models for good.

6
STAGES SUMMARIZED
Stage one
Companies
and NGO
realize they
have to
coexist.
Look for
ways to
influence
each other.
Stage two
Some
companies
get into
bottom of the
pyramid
segments and
niche
markets.
They learn
from and
work with
each other.
Stage three
They enter
into co
creation
business
relationships
Companies
become a key
part of the
NGOs
capacity to
deliver value.
7
THE PATH TO CONVERGENCE
The Be-
responsible
Stage
The Get-into-
business
Stage
The Co-create
- Businesses
Stage
8
THE BE-RESPONSIBLE STAGE
Realization of possibility of mutual existence
Work to meet limited objectives
Collaborate with the enemy
Creation of three convergences
9
CONVERGENCE OF STANDARDS OF PRACTICE &
EMERGENCE OF JOINT REGULATORY
FRAMEWORK
Benefit to Corporations
Access to NGOs knowledge
of local market & social
network
Benefit to NGOs
Developed more expertise in
marketing & specialized
business practices
10
CONVERGENCE OF BRANDS, MARKETING & COMMUNICATIONS
AND
EMERGENCE OF FIRST JOINT PLATFORM FOR MARKETING & CUSTOMER
MANAGEMENT
Case in Point: Cause-related marketing






Learning from each other:
Co.: Viral Marketing
NGO: Commissioning of Advertising Agencies to design campaigns
Company
NGOs
loyalists
NGO
Companys
customer &
employees
11
CONVERGENCE OF PROFESSIONAL CADRES AND CAREER
PATHS & EMERGENCE OF MGT PROFESSIONALS DEDICATED
TO WORKING WITH COS ON SOCIAL CAUSES AND NGOS ON
BUSINESS ENDEAVORS
Cos
Gather intelligence on NGOs
Tools to pursue opportunities
in untapped markets
CSR
NGOs
Persuade Cos to change ways
Develop competencies to do business
Many managers building careers by moving back and forth between the two sectors
12
THE GET-INTO BUSINESS STAGE
Failure on part of Cos to cater to the 4 Billion consumer market
in developing countries

Few Cos Success in Bottom of Pyramid mkt.

Few NGOs success in untapped market segment
13
CASE IN POINT: PICK N PLAY
Pick n Play: South Africas largest retailer
CSR Initiative: Support black farmer & cooperatives
Co operatives: Provided mgt & mkt. skills
Farmers: directly source produce to urban areas


Health Store Foundation
Aim: Provide people with safe medicine in Kenya
Created 68 Child & Family wellness shops
Provide
turnkey mgt systems & support
Training to owners
Select optimum store location

14
ISSUES WITH THE GET-INTO BUSINESS
STAGE
One retail outlet per 5800 people vs one per 3.4million people
Companies that succeed leveraged relationship with NGOs
ABN AMRO Accion initiative for microfinance in Latin America
Shell Foundation venture capital funds to local entrepreneurs
Pick n Pay support to weak farmers
Difficulty in managing new roles
Business investment strategy to achieve both social and investment goals??
Can local NGOs earn profits through consultancies??
Are you a competitor or a collaborator?
Microfinance Vs Banks
Cooperatives Vs retail outlets
15
NEW RULES OF COMPANY-NGO ENGAGEMENT
Jointly define the norms that will govern their future
relations and behavior.
Private and civil society sectors will cocreate markets.
Task oriented relationships, rather than ideology driven
dialogues.
Align global positions and standards.
Neither companies nor NGOs can see one another as
adversaries.
Creating legitimacy in the society by creating bold value
propositions.
Advocate common policy positions and jointly develop co
regulatory schemes.


16
THE CO-CREATE BUSINESSES
STAGE

Development of integrated business model

Both become key parts of each others capacity to
deliver value

17
OPPORTUNITIES OF SUCH VENTURE
Ability to target Low income consumer/ niche market
Create hybrid business model to cater to bottom of
economic ladder
Revive corporations social legitimacy while expanding
NGOs impact
18
CASE IN POINT: BRITISH PETROLEUM

Aim: Develop Fuel Efficient Stove for poor consumers in rural India
Requirement: Option to switch between fuels based on
Current income
Availability of fuels
Cooking styles
BP in collaboration with IISC Bangalore developed a portable stove that could
use LPG or biomass as fuel
Distribution through three NGOs
Established channel in 5 states
Work together on
Product features
Promotion campaign
Financing options
Distribution
Safety considerations

19
ADVANTAGES OF THE CO-CREATE BUSINESS
MODEL TO SHAREHOLDERS

Availability of pre existing distribution channel to BP
Building reputation for the NGO
Shared credit for developing the product
Collaboration with a global firm
Financial advantages
Unique venture in efficient value chain
Global corporation
Informal local organization
Research Institute

20
CONCLUSION:
A MUTUALLY BENEFICIAL ALLIANCE
The two parties are dependant on each other
Both realize the mutual benefits which they derive
from each other
Application of asset and competencies by both partners
Value creation greater than sum of individual efforts

21
22

You might also like