From exploitation to transformation - Focus on social impact requires new business models and transformative leaders Hult Blog

By Joanne Lawrence, Global Professor of Corporate Responsibility and Social Innovation, Hult International Business School News headlines in recent years have included stories of businesses behaving badly at an alarming rate. Once highly respected institutions have been caught in scandals that have cost them billions of dollars in fines, lost reputation, and lost trust. Aside from the institutions’ own financial losses, however, the greater concern has been the cost to society. The financial crisis of 2008 has had reverberations around the world, reverberations which continue today, more than five years later. These crises have underscored the world’s interconnectivity and interdependence. The fact that business is all-pervasive (is there any part of your life that business doesn’t touch in some way every day?) has once again generated discussions around its role in society. Is business’s only social responsibility, as famed economist Milton Friedman said more than four decades ago, â€Å"to increase profits†? In the end, the more astute leaders know that how much profit their companies make depends upon how well they serve society, i.e. their customers, employees, and local communities. Once companies fail to meet those needs, and lose trust, they are out of business. You need only to look at the last decade to see how many firms have disappeared because they lost the confidence of their constituents. How business can meet society’s challenges In the past, business has tackled such fundamental societal issues as food spoilage, disease, transportation, and communications with inventions that have improved living standards for millions of people. Along the way, they have also met society’s demands for the raising of safety standards, the protection of human rights, and reductions in air and water pollution. After the excesses of recent years, it seems we are once again returning to that narrative: a narrative in which business can play a critical role in changing people’s lives forever, particularly those who have been marginalized and excluded by poverty. The world’s population is set to grow to nine billion people by 2050—more than half of whom will live in cities. This population growth coupled with the increasing effects of climate change and the growing income disparity between rich and poor means that society’s needs are basic: how will we provide enough food, fresh water, clean energy, healthcare, and jobs for all these people? Where decades of aid has so far failed to eliminate poverty and left most of the world’s billions of people out of the economy, business, working in collaboration with governments and NGOs, has the potential to create a more inclusive economy and reduce poverty through a market-based approach to development even as it fulfills its own economic, profit-generating role. Along with societal challenges, globalization also offers huge market opportunities. Recent research shows that emerging markets could account for USD30 trillion by 2025[1] —realizing their potential is going to require a different way of working and a new way of thinking. The world’s truly visionary business leaders see their aspirations converging with those of governments, NGOs, and society at large. Realizing the promise through new models To achieve the social, environmental, and financial potential of these markets, C.K. Prahalad in his book Bottom of the Pyramid wrote: â€Å"We need new ways of creating economic value† and advocated designing â€Å"wealth-generating eco-systems.†[2] Porter and Kramer on the other hand have called for â€Å"Creating Shared Value.†[3] Each approach seeks ways to benefit each component of the value chain, i.e. the means are as critical as the results. Three new models have emerged: the social entrepreneur, public-private partnerships, and the multinational ‘intrapreneur.’ Social entrepreneurs are driven by passion and a desire to make real change. For example, the two founders of Waste Concern in Bangladesh wanted to get rid of the 4,000 tons of trash that was dumped daily in Dhaka. With the tagline â€Å"Waste is a Resource,† they collect the waste, change the 85% that is organic into fertilizer, hire local women to put it into sacks, then sell it through a joint venture to farmers—a true eco-system that is self-sustaining and a model that has been adopted in other countries. Public-private partnerships (PPPs) are growing exponentially, using their complementarities and networks to solve problems. For example, governments in Africa are working with private companies to help provide safe drinking water and energy for their citizens. Companies like IKEA have partnered with UNICEF to enable children to go to school in India while helping to improve family incomes. Some companies are working across industries to create partnerships around a common goal, such as recycling waste in Chile. Multinational corporations (MNCs) are using their enormous resources, skills, and ability to develop new ideas that can be scaled. They often start by creating ‘intrapreneurial’ groups— places within the company where managers are tasked with developing and designing the innovative products that will meet the unique needs of emerging markets. Companies such as Unilever, with its Sustainable Living Plan, Nestlà ©Ã¢â‚¬â„¢s Creating Shared Value framework, or GE’s healthymagination and ecomagination initiatives, are building entire business strategies around social and environmental issues, seeing them as opportunities to be realized rather than risks to be managed. They are embedding this perspective into their company cultures, introducing comprehensive management and incentive systems around core sustainability-focused values that drive employee behavior. They go even further, working with institutions like the UN Global Compact to encourage other MNCs to do the same. As companies take this approach, they are generating very tangible results for themselves: growth in revenues from entering new markets and creating new customers, such as Unilever, which reported 55% of revenues from emerging markets in 2012, and introducing promising new products that have potential across the developing world, such as GE’s portable USD500 electrocardiogram (EKG) developed for India. Companies are increasing returns from the operational efficiencies realized from saving energy and reducing emissions, as well as securing quality supply chains, for example, by helping rural farmers as Nestlà © has done, or seeing an increase in productivity from motivated employees. In our Internet-driven world, companies are also preserving valuable brand names and reputations, reputations that attract loyal consumers, talented employees, discerning investors, trustworthy suppliers, and welcoming communities—all the ingredients for ongoing success. The world needs transformative leaders This updated narrative, business as transformative rather than exploitative, is going to require visionary, courageous leaders, with special competencies: what I call the â€Å"5 Cs to creating enduring change†: Cross Cultural Aptitude: Understanding cultures and how it affects product design, development, and delivery will be important, but in this Internet age, even more important may be the ability to distinguish and balance what is tradition with what might be considered a violation of universal rights. Collaboration: To make PPPs work, former adversaries will need to learn how to partner, working with mutual respect for each other’s strengths and complementarities in pursuit of a shared goal. Communication: The ability to listen and engage as well as inform and persuade will be fundamental to building trust and maintaining relationships with critical stakeholders. Creativity: Solving these complex problems will require new ways of approaching solutions, considering ideas and practices from across different sectors, and integrating different perspectives. It takes vision and imagination to drive innovation and create true breakthroughs. Critical and Holistic Thinking: It will be important to challenge assumptions by analyzing the disparate pieces to be sure the questions being raised are the right ones. Just as critical will be the ability to see the subsequent answers as part of a much larger puzzle, assessing their potential impact on all the other pieces before acting. The world’s growing interdependence means that society’s problems are all our problems. We are using phones made in China, wearing clothes sewn in Bangladesh, and drinking coffee grown in El Salvador. Increasingly, we are working for companies – large or small – who depend on a global marketplace for their growth. Business, in its role as serving society, has the power and the potential to create both economic value and lasting, positive social change. It will take leaders with a different vision: courageous leaders who see the world as a whole, rather than parts, driven by what is possible, working together to create a new, more inclusive economy where everyone benefits and can realize their potential. What’s your vision? How can you become a transformative leader? Related: Global Webinar: ‘What top global business leaders are focusing on’, Joanne Lawrence, Global Professor of Corporate Responsibility/Social Innovation, Hult International Business School Listen to CEO of Unilever, Paul Polmans, visionary speech on ‘Driving sustainable growth’, given at the Hult London campus References Atmonson, Yuval; Peter Child; Richard Dobbs; and Laxman Narasimhan (Aug 2012) Winning the $30 Trillion Decathlon: Going for Gold in Emerging Markets (McKinsey Quarterly). Retrieved from: www.mckinsey.com/ features/30_trillion_decathalon Bartlett, C.A. and P.W. Beamish (2008) â€Å"The future of the transnational: an evolv- ing global role.† in C.A. Bartlett, S.Ghoshal P.W. Beamish (eds) Transnational Management: Texts, cases and reading in cross-border management (5th ed., pp. 727-741 ) (Burr Ridge, IL, McGraw-Hill/Irwin) Porter, Michael and Mark Kramer (Jan-Feb 2011) Creating Shared Value (Harvard Business Review) Prahalad, C.K., (2005) The Fortune at the Bottom of The Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, Pearson Education) JOANNE LAWRENCE Global Professor of Corporate Responsibility/Social Innovation MBA, Stern Graduate School of Business, New York University Joanne Lawrence is Global Professor, Corporate Responsibility/ Social Innovation at Hult International Business School and an academic advisor to the UN Global Compact. Prior to Hult, she was a guest lecturer and adjunct professor at INSEAD. With extensive international corporate and consulting experience, she has worked with multinational companies and global organizations such as BP, IBM, and the World Bank as well as smaller, socially-focused enterprises and start-ups, such as Tom’s of Maine and Economic Development Imports. Joanne has also written and contributed to several publications including co-editing Globally Responsible Leadership: Managing According to the UN Global Compact Principles, which was published in 2012. [1] Atmonson, Yuval; Peter Child; Richard Dobbs; and Laxman Narasimhan (Aug 2012) Winning the $30 Trillion Decathlon: Going for Gold in Emerging Markets (McKinsey Quarterly). Retrieved from: www.mckinsey.com/features/30_trillion_decathalon [2] Prahalad, C.K., (2005) The Fortune at the Bottom of The Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, Pearson Education) [3] Porter, Michael and Mark Kramer (Jan-Feb 2011) Creating Shared Value (Harvard Business Review) Accelerate your financial career and boost your earning potential with a Masters in Finance from Hult. To learn more, take a look at our blog What can you do with a Master degree in Finance? or get into wider business with a Masters in International Business instead. Download a brochure or get in touch today to find out how Hult can help you to explore everything about the business world, the future, and yourself. Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Hult Rotation offers you a chance to study in a truly global way. Our rotation program allows you to study and be immersed in some of the finest cities in the world. 📠¸: @jasminmanzano . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . Each year, Hult seeks to enroll a talented and ambitious incoming class from all over the world. We look for diverse students with a wide range of experiences, perspectives, and interests—students who will thrive in our unique educational atmosphere. Are you ready for a truly global experience? 📠¸: @iambrunadiniz . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . We’re excited to start 2020 on a ranking high! Hult is proud to have been placed #28 in Poets Quants 2020 rankings for Best Undergraduate Business Schools in the US. Taking a huge leap of 32 places from our 2019 position, we’re also very happy to have secured top positions in key categories like: life-changing experience, practicality of the degree, and global immersion. . With five global campuses, a student body of over 130 nationalities, and a learn-by-doing approach—Hult offers a student experience like no other. . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . â€Å"I’m from an engineering background and needed a whole new skill set for the industry I wanted to switch to. I learned a lot about myself and how I deal with being out of my comfort zone. I learned both soft and hard skills, from how to work in very diverse teams to key accounting metrics and strategy. I was surprised by how weak I was at certain tasks in English or how strong I actually was in other areas. Hult gave me opportunities to try new things and meet people from places I never thought I would have friends. . My internship experiences gave me the chance to broaden my view of different cultures and different companies. I had the opportunity to work and live with people whose values differed from people in my home country. I thought that this would be difficult, but it gave me the chance to reflect on my own values and assess if they were a result of my home country environment or if they were intrinsically mine. . Diederick ter Kulve (@diederick.terkulve) Netherlands Masters in International Business . Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021 Say a big hello to our Bachelor of Business Administration program cover star, Elisa Orus Plana âÅ" ¨ . â€Å"I’m excited for the future—especially that I cant predict whats going to happen. Maybe Ill end up in Mexico working for a trading company or maybe in Africa, developing my own business. Everything is possible, and the options are constantly changing. I love the idea that Im never going to be stuck doing the same job until the end of my life if I dont want it to be like this. . Hult really supports me and my ambitions and truly believes that we deserve to be considered as professionals as well as students. Here, I get to express not just my opinions but all elements of myself. From my creative side with the Fashion Society to my finance and business sides in Trading Club and the Management Consulting Club. We get a different type of learning here. Not just essential knowledge and theory, but practical skills and mindset. The school is always evolving. We’re encouraged to innovate and to always look for new ways of doing traditional things. We learn how to be more confident and become aware of how we can impact our environment. The school aims to help you become a better version of yourself and to stand out from the crowd.â€Å" . Elisa Orus Plana French Bachelor of Business Administration Class of 2021"> During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. During the final days of 2019, you probably reflected on what you’ve accomplished this year—and even this decade—and what you’d like to achieve in 2020. Let us know in the comments below. â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"The first time we did group work on the program, I went head-to-head with a colleague. It taught me a lot about how I see people, how people see me, and how conflict can be resolved in a kind and productive way. The best feedback you get, when delivered constructively, is the most critical because it really feeds into how you lead. I’ve completely reversed my leadership style—the result is so much richer and more powerful when you lead from behind and lead with strength. . Studying in tandem with working, whilst challenging, gave me the perfect platform to directly apply learning concepts into my business environment, the competitive landscape, and the real-estate industry as a whole. When I started the program, I was very happy in my corporate role. But my courage and aspirations grew to the point that I took on a whole new direction. Having my career coach, Joanna, as a sounding board allowed me to really be strategic and get to know myself. She coached me thro ugh all the interviews, the research, and the questions. It went in parallel with what I was doing academically and after six months everything just clicked. . I went into the EMBA knowing I had nothing to lose and I’ve come out with everything. Great strength, global friends, amazing learning, mentors from professors, a job I love, and the knowledge that I can set my mind to achieve anything and with the right support and resources I’ll get there.† . Kashani Wijetunga British, New Zealand Sri Lankan Associate Director Senior Strategy Consultant CBRE EMBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . â€Å"It was now or never. I knew that I’d have likely stayed in my neighborhood for years to come if I didn’t take this opportunity. I’d not lived or studied outside of the U.S. before. So I left my job as a global strategist at an advertising agency and moved halfway around the world. I’ve come back a more culturally aware, well-versed person. I’ve realized that everything is a learning experience and an opportunity for growth. Ill definitely carry this mindset with me into the future. Technology and social media allow us to be different people in several places at once. Im excited to see how I can establish myself in whatever city Ill be lucky enough to call home and still maintain deep connections with people all over the world. I’m inspired by my classmates every day. Hearing some of their life stories and how getting this degree fits into their greater mission has been very humbling. My biggest challenge has been finding the ‘right’ path for me. There have been rooms Ive felt like I shouldnt be in, but now Im proud to feel as though I truly belong, wherever I am.† . Dwayne Logan, Jnr. American MBA Class of 2019 . Happy New Year, Hultians! . Happy New Year, Hultians! .