How inclusion is a disruptive strategy

Inclusive business has long been associated with corporate social responsibility (CSR). Visionary firms, however, are now moving beyond CSR and setting up “inclusive business units” to profitably serve underprivileged and marginalised populations in both developing and developed nations.

In the US, many financial technology startups such as PayNearMe are launching frugal solutions that serve the needs of the 70 million Americans who are under-banked.

Similarly, French glass-maker Essilor has launched 2.5 New Vision Generation, a new division that will pioneer profitable business models to improve the vision of the world’s 2.5 billion who suffer from poor eyesight, of whom 550 million live in India alone. To that end, Essilor launched EyeMitra in India, a social business initiative which trains young people in villages to go door to door and do eye exams and prescribe lenses that are manufactured locally at low cost.

Inclusive business enables companies not only to create lucrative new markets but also to attract new customers and employees. Indeed, studies show that 55 per cent of consumers want to buy products from companies that are socially responsible and that 67 per cent of young people want to work for purpose-driven and socially-engaged firms.

Hence, inclusive business is not only a profitable strategy but also a great lever to attract millennials, who will soon make up the bulk of the customer base and talent pool globally. (Millennials account for half of India’s population.)

Take FMCG giant Unilever. It was ranked by LinkedIn as the third most sought-after employer in the world by its members, behind Google and Apple. Under its core business strategy, Sustainable Living Plan, whose goals are social inclusion and environment protection, it aims to double the firm’s revenues while halving its ecological footprint and boosting living standards for customers and ecosystem partners by 2020.

In the Indian corporate context, with a few notable exceptions such as the Tata Group, most companies suffer from a skewed perspective of inclusive business, either confining it to their CSR department, or viewing social inclusion mainly through the lens of the bottom-of-the-pyramid (BoP) markets. Here are two suggestions I would offer Indian CEOs who aspire to adopt inclusive business as a core strategy and a competitive differentiator.

Add to the workplace

Make your workplace more inclusive first. It would be hypocritical for a company to vie to serve under-represented segments as customers while excluding other segments of the population from its workplace. Inclusive business must start within.

To begin with, how about promoting more women to senior leadership roles in Indian firms? According to Grant Thornton International Business Report 2015, women hold only 15 per cent of top management roles in corporate India. Yet, an extensive study by McKinsey shows that businesses that promote greater gender diversity in their leadership report financial returns well above their national industry medians. Another study by non-profit organisation Catalyst reveals that Fortune 500 companies with most women on their boards financially outperformed those with the fewest women directors. While SEBI’s ruling for listed companies in India to have at least one woman on their board is a step in the right direction, bolder steps need to be taken, as in France, where companies are required by law to have 40 per cent of women directors on their boards by 2017.

It also makes business sense for Indian firms to hire people with disabilities, who boast unique qualities and valuable skills that are under-appreciated. In 2012, SAP Labs India hired several people on the autism spectrum as software testers. The success of that pioneering initiative led SAP to commit to having 1 per cent of its global workforce with people with autism by 2020. To meet that goal, SAP teamed up with Specialisterne, which empowers people with autism to turn their disability into an asset by training them for jobs involving repetitive tasks such as software testing and verification, at which they excel.

Influence behaviour

Change KPIs (key performance indicators) to make all executives think/act inclusively. Indian CEOs must tie all senior executives’ compensation to KPIs that measure and reward them based on how well they are embedding social inclusion and eco-sustainability in all activities of the company. In 2008, Ramón Mendiola Sánchez, CEO of Florida Ice & Farm, a food and beverage producer in Costa Rica, did something radical: he shut down the firm’s CSR unit. Instead, he established a balanced scorecard that combines financial, social, and environmental KPIs that track how well his firm is reducing use of water, carbon emissions, and waste.

Sánchez linked these KPIs to his senior executives’ compensation, and his own pay. And it worked: The company grew by 25 per cent between 2006 and 2010 while cutting water use by 70 per cent and eliminating solid waste. It aims to become “carbon-neutral” by 2017. As 2016 dawns, I hope India Inc will show the corporate world that being inclusive, in every sense of the word, is good for society and good for business.

(Navi Radjou is co-author of Jugaad Innovation and Frugal Innovation and curator of WAVE: How Collective Ingenuity Is Changing The World, a global exhibition produced and hosted by BNP Paribas.)

(This article was published on January 14, 2016)

This article appeared in Hindu Business Line on January 14, 2016.