બિઝનેસ મોડલ ગરીબોને ફાયદો થાય એવું બનાવો – Create a business model that benefits the poor – www.divyabhaskar.co.in

બિઝનેસ મોડલ ગરીબોને ફાયદો થાય એવું બનાવો – Create a business model that benefits the poor – www.divyabhaskar.co.in.

Not long ago Dr.C K Prahlad used to passionately advocate the concept of ‘Bottom of the Pyramid’ and had explicitly established that given the right business model, this consumer segment had far more  untapped potential – both, in terms of profitability and  the market size.

He also used to establish that so-called ‘poor’ nations in fact did not suffer because of paucity of resources. They suffered because they are not utilizing their resources efficiently and effectively. This calls for invoking the instincts of innovation, inherently available in every human being but generally remaining very dormant.

Not many years ago, when there was hardly any presence of private enterprise – generally presumed to be efficient and innovative – many of the products and services of the public sector in the fields of education, health care, TV, Radio etc. were exemplary.

However, surprisingly the advent of private  sector in these fields in last 20 years seem to have deteriorated the performance and standards of performance. This is considered to be the most adverse comment on the free-market orientation of deployment of resources. The free-market mindset seems to be highly pliable to path of least resistance. The practitioners of free-market orientation need to read Robert Frost’s poem – The Uncharted Road.

in fact, reaching out the bottom of pyramid , the so-called “Aam Aadmi”, is the Challenge of 21st Century, as evidenced by Occupy Wall Street movement and the likes.

What incentives the young professionals of 21st Century need to take up this challenge?

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Author: ASHOK M VAISHNAV

In July 2011, I opted to retire from my active career as a practicing management professional. In the 38 years that I pursued this career, I had opportunity to work in diverse capacities, in small-to-medium-to-large engineering companies. Whether I was setting up Greenfield projects or Brownfield projects, nurturing the new start-ups or accelerating the stabilized unit to a next phase growth, I had many more occasions to take the paths uncharted. The life then was so challenging! One of the biggest casualty in that phase was my disregards towards my hobbies - Be with The Family, Enjoy Music form Films of 1940s to mid-1970s period, write on whatever I liked to read, pursue amateur photography and indulge in solving the chess problems. So I commenced my Second Innings to focus on this area of my life as the primary occupation. At the end of four years, I am now quite a regular blogger. I have been able to build a few very strong pen-relationships. I maintain contact with 38-years of my First Innings as freelance trainer and process facilitator. And yet, The woods are lovely, dark and deep. But I have promises to keep, And miles to go before I sleep, And miles to go before I sleep.

17 thoughts on “બિઝનેસ મોડલ ગરીબોને ફાયદો થાય એવું બનાવો – Create a business model that benefits the poor – www.divyabhaskar.co.in”

  1. In fact, consumerism does not take into account the humans. It survives on consumers and if a fellow is not a consumer he is not a human being. With this kind of general attitude, business itself cannot solve the problems of human misery. reaching the Aaam Admi is not its aim. It aims at expanding its consumer base.
    The DB article refers to the assessment made by World bank and Pricewaterhouse Coopers. They are on the forefront of privatisation of water, medical services etc. Pick up any developing nation and you will find such problems aplenty. Then, these organisations enter and make a survey and suggest a PPP model (Public private partnership model). Strangely, they did not report that every Indian spends Rs. 78 to Rs. 82 per year on health without the government support. 78% of Indians earn Rs. 20 or less. They see this 30 % as possible consumers and insist on reduced government involvement. They do show how government health service has failed to serve all but instead of asking the Indian government to raise to raise funds up to 3% of GDP for health they want to expand the role of for-profit medical facilities.

    1. I do agree with both the points -that consumerism is [ unfortunately, but should not be necessarily] more about material gains than about the impact on human beings as well as the fact that proponents of free-market-ism would always try to create an environment for consumerism.
      Since the entire education system and the social values seems to have evolved to become elitist, Dr. Prahlad had to [probably] bring up Bottom of Pyramid as a new Management Principle. And here too, he still advocated the principle as a benefit to the industrial world!Perhaps, had he talked this as an altruist initiative, it would have met the fate of other CSR initiatives.

  2. A very timely and excellent post! There are a few academics in the developed world who are also pointing out to a crisis in capitalism and to an expanded role of the government in an economy. In India, there has been a welcome mini-trend of “social entrepreneurship” – setting up not-for-profit organizations with an objective of socio-economic upliftment. There is vast scope for doing this, obviously, and it does require great management skill. Whether the same objectives can be achieved purely by profit-oriented corporations is debatable, but given a choice, I would probably answer no. For instance, “essential” drugs have a price control in India. In the absence of this, would drug companies want to keep prices low in order to reach the bottom of the pyramid? Very doubtful. But innovation is the key. Just because I can’t think of good ways to do for-profit business and also bring about some positive socioeconomic impact doesn’t mean others can’t do so. Indeed, India needs original management and business thinking.

    1. well said, Tadatmya,
      Here is how the for-profit commercial companies treat human being. This is a report from today’s The HIndu. This exposes the humbag of corporate social responsibility:

      I was literally thrown down the steps of aircraft, says disabled woman

      AARTI DHAR
      SHARE · PRINT · T+
      Close on the heels of the incident involving Jeeja Ghosh, a differently-abled woman who was off-loaded from a SpiceJet flight, Anjlee Agarwal suffering from muscular dystrophy has complained of harassment at the hands of Jet Airways personnel.

      Ms. Agarwal is an executive director and access consultant with Samarthyam, National Centre for Accessible Environments.

      Acting on her complaint, Chief Commissioner for Persons with Disabilities has served a show cause notice on Jet Airways and the Director General of Civil Aviation, asking them why such an incident had occurred and what measures were being proposed to prevent its recurrence. They have to respond within 30 days.

      Ms. Agarwal was travelling between Delhi and Raipur by Jet Connect flight (9W 2211) on Monday along with a colleague and personal care attendant. At the Delhi airport, she was asked by the boarding pass issuer whether she was “fit to fly.”

      “When I asked him what he meant, he stared at me and asked me to sign an indemnity bond. When I refused, he said it was the airline’s rule and she could not fly otherwise. I had to sign, as I could not afford to miss the flight,” Ms. Agarwal told TheHindu .

      But worse was to come at the Raipur airport. In spite of the airline crew’s assurance that an aisle chair would be brought on board, flight supervisor Niranjan Sen insisted that she be lifted bodily by four male loaders, declaring that Raipur did not have aisle chairs.

      “I was “ordered” to be bodily lifted till the gate of the aircraft and then transferred to the big wheelchair and then carried down the steps. When I resisted, he [Niranjan Sen] threatened that they will not de-board me and instead will send me back as the flight was returning to Delhi. In the midst of all this commotion, flight attendants asked passengers to board the flight before I de-boarded,” Ms. Agarwal said.

      A junior supervisor also accused her of not having put in a request for a wheelchair while booking the tickets. “When I said that I did make a request at the Delhi airport and also while booking tickets, he said ‘wheelchair users cannot book tickets through web booking.’ This came as a bigger shock because I had booked tickets online with the wheelchair request,” Ms. Agarwal said.

      “The fight continued for 35 minutes and when they realised that I would not give up, a “Jet Airways” aisle chair appeared. I was transferred into the aisle chair and literally thrown down the steps as if they were all trying to get rid of me.”
      (http://www.thehindu.com/todays-paper/tp-national/article2926179.ece)

  3. Young entrepreneurs first and foremost must be grounded in serving with passion. They must be grounded in some sort of spiritual, soulful orientation as to why they do what they do. They must be coached into engaging only in business practices for which they have a true passion and not because of the money to be made. Of course, young entrepreneurs must ban together, as in OWS, to form their own small banking systems, pooling their resources. They must become a true force to be reckoned with and not ignored. The middle 50% must reach down to the lower 25% and gradually drain off resources from the top 25%. The middle 50% must realize that they need to lift up the bottom 25% in order to create an overwhelming change for better use of resources for all.

    1. Dear Granbee,
      It is not possible to expect anybody who is working to boost market forces to think otherwise. The young entrepreneurs are not to blame. it is the policy of the government and it is the thinking of the society in general that needs to take the stock of the situation. And this does not apply only to India. The world, in general, needs a different development model.

      1. Dear Granbee and Dipakbhai,

        As long as there will be a NEED, there is definitely going to be a SUPPLY. The economic activity of SUPPLYing the goods or services to meet that DEMAND can never be expected to be normative.
        But, yes, the individual values and morals of the participants can certainly have a very defining role in the quality of interplay of SUPPLY and DEMAND.
        It is also true that high moral or ethical standards and pursuit of an economic activity are not necessarily mutually exclusive.
        This is more of a personal choice and practice.
        And as one of the votary of [ideal and fair[!}] free-market orientation, I would rather wish that a collective force of individuals enable such coexistence, inclusive of the spheres of politics, governments, too.

        1. Ashokbhai,
          Among mammals human beings are very weak. Though they have evoved their brains, they remain vulnerable in the face of a number of physical threats. We, therefore, developed some norms, such as co-operation, morality etc. Living in a group is necessary for our survival and our morality, ethics, co-operation, caring for others are all tools helping us not only survive but grow and prosper.
          Anything that is against this basic principle of life is flawed.
          In the present day scenario, we must evolve and emphasize this basic ethos. Violators need to be checked and that is where the State has to play a role. If trade or business cannot flourish without the basic ethos it is self-destructive. So, that tendency has to be curbed. Those who suffer are in majority and their care must be taken. Or else, we can expect them to change rules violently. Only to avoid this situation, we need decent limit on the so-called creativity and innovative urge of a single individual whose pronounced aim is to acquire wealth at the cost of basic human ethos necessary for survival.

  4. I do grudgingly agree for the need for regulation.
    However, the performance of statutory regulation, over the whole world, still is found so wanting, that one vacillates towards self -regulation, which is found to be even more wanting. That’s the catch-22!
    However, we have to make do with what best we can from the ‘weak mammals’….

    1. I agree, powers-that-be have failed to deliver. Inflexible regulations have obstructed the growth. On the other hand they are hand-in-glove with those who would think nothing of helping the poor. Really speaking, the governments have worked for this class. So far, regulations are concerned, they are observed more in their violations. How can we say that those who could appoint a telecom minister of their choice have genuine reason to grumble about regulations?

      We need a different kind of economic system. I do agree that there are some sectors that are best left to private sector, such as, telecommunication. The revolution we see now engulfing the world and India could not have been achieved by bureaucrats who know nothing about business and for whom government job is an opportunity for making profit without investment. But, we cannot leave education, health, social security and water into the hands of for-profit corporate sector.

      True, communism has failed but its concern for the deprived cannot be ignored. It was Leninism or Stalinism that centralised everything, monopolised and lost. Not Marxism. In that sense even Gandhiji has failed. does it reduce Gandhiji to the footnote of the history? No.On the contrary Gandhi and Marx are more relevant today than they were in their own times.

      1. All economic systems devised so far have failed in one context or another. Some, such as communism, have collapsed and we may never see their rise again. Others, such as capitalism, will survive in some modified form after every crisis. I don’t believe we can ever achieve a perfect economic system.

        One issue is, of course, what you mean by a “perfect” economic system. It cannot be based on every person being happy, for example, since happiness is determined not just by economic well-being but by several other factors such as physical & mental health, social standing, family relations and so on.

        In my view, the only economic system that can be called flawless is one where every individual has the incentive to do the right thing in every area of endeavour. The “right” thing means the morally correct or appropriate thing to do in that society. In such an ideal scenario, the government would really be a standards body, setting the minimum quality standards in each field. Of course, even this is easier said than done.

        There are a number of (insurmountable) difficulties in achieving such a scenario:
        1. The government would need to be composed entirely of knowledgeable and visionary people in every field of endeavour for them to be able to set minimum standards of quality in each field. The question then would be who can be deemed an expert and who chooses the government.
        2. It should be economically rewarding for private individuals and organizations to undertake every economic endeavour. Economic activities that are rewarding to the provider of a service / product should also be valuable to its consumers. In part, this can be achieved through open competition that would lead to cost-effective and better quality products / services. Economic activities which are fundamentally not rewarding to the provider would then need to be provided by the government.
        3. Rapid technological and social changes would need to be factored into revised quality standards. The government needs to be equipped to be able to do this quickly.
        4. Human weaknesses, primarily greed, would pre-empt any such ideal scenario. For instance, competition would never be open. Providers would collude with each other or with the government for their self-interest to the detriment of the consumer. There would also be a lack of consensus on who should constitute the government, and even within the government, on what the minimum standards should be.

        1. Dear Tadatmya,
          You have covered almost everything in a balanced way and left nothing to add. Only thin that is left is to say it differently!
          If society were a company, the overnment would be termed Board of Governors. What is in the interst of the company? Is board takin care of the lowliest of their shareholder? Is dividend is distributed to all? people are, after all consumers and labour provider. You need a service of one’s physical labour for production. Is he not a service provider? The thin is providin this service is linked to his survival. The government must therefore adopt policies that enhance his chances to survive. He must enjoy improved quality of life.
          Not everything can be handled by government and not everythin really enhance quality of life. (this is true at lower level). Better cars or Improvement in mobile technoloy or TV technoloy cannot stop farmers’ suicides..\So overnment must plan in a way that provides basic livin conditions, health and education as well as social security. How can you bein sellin water in the name of providing better water service for a chare? Government may recover cost for providing safe drinking water but the drinkin water itself remains people’s fundamental right!
          I have tried to say differently.

  5. Dear Dipakbhai and Tadatmya,
    Both of you have carried the discussion on a very lively higher platform. Thanks.
    Incidentally, I happened to read two excellent treatises on each of the points – morality and ‘Is what is good for shareholders [any one stakeholder, in isolation] is also good for the organization?’.
    In ‘5 minds for the Future’, Howard Gardener has considered the moral mind as the most critical minds for the future. Moral mind, in his words, is the ability to review role and responsibility in the workplace and as the citizen and to always act in ideal interpretation , never sacrificing long terms well-being over any short-term gain. He rates moral mind above all other minds – Discipline, Synthesis,Creative and Respect- in this book a she advocates that only high moral values will ensure that other minds do not be dysfunctional, either individually or collectively.
    Whilst on the purpose of the organization Peter Drucker has strongly advocated optimization of the benefits of all stakeholders for the sustenance of an organization.The following is excerpted from his book – Management Challenges for 21st Century”
    “The companies that did it right were to be found in Germany and Japan, Drucker believed. “They do not attempt to maximize shareholder value or the short-term interest of any one of the enterprise’s ‘stakeholders,’” Drucker wrote in Managing for the Future. “Rather, they maximize the wealth-producing capacity of the enterprise.” [Italics Drucker’s]

    Drucker continued: “It is this objective that integrates short-term and long-term results and that ties the operational dimensions of business performance—market standing, innovation, productivity and people and their development—with financial needs and financial results. It is also this objective on which all constituencies depend for the satisfaction of their expectations and objectives, whether shareholders, customers or employees.””

    1. (I am sorry, my keyboard gives me trouble today, especially ‘g;, ‘d’ and some other keys… so please ignore such mistakes. I think I will need to get it cleaned up every key from underneath. Anyway…I will try my best).
      Very interesting, this concept of moral mind. Generally,we find tendency among the owners to view their companies independant of all other factors. All other things are to be treated as input; i.e. labour, like any other raw material. Improved input will improve the output. Here again when you bring your production to market the sale has to be treated as an incentive to produce more and not as a way of maximising your profit. It is a sound business tactics. Keep your consumer base afloat by various ways. This certainly include the sacrifice of short term goals.
      By the way, without divertin your focus, just try, on the sidelines, to locate Gujaratis into this scheme of things i.e. are we short term people or long term people?

    2. Agree with Mu. Dipakbhai, very interesting views on the moral mind. Actually, the moral mind should enjoy priority over other minds in all ages and in all activities, not just business.

      Drucker is well-known for have expanded business thinking to pay attention to every stakeholder of a business and not just shareholders. The problem arises when one includes the general society as a stakeholder of every business. Societal benefits / costs are generally ignored as satisfying societal needs does not make business sense (is not economically rewarding). This is a problem in the industrial and post-industrail societies that has no easy solution.

    3. In continuation to this discussion, an intersting observation made by Huguette Labelle, Chair, Board of Directors of Transparency International in her talk with Shri Shekhar Gupta, Editor-in-Chief, IE in a Walk This Talk on NDTV 24×7 [http://www.indianexpress.com/news/india-needs-regulation-but-a-mountain-of-regulation-is-not-necessarily-better-because-it-becomes-almost-impossible-to-enforce/923030/] has this to say:
      “I think that in the last couple of years India has done a number of things. Although it needs regulation and enforcement of regulation to protect people and to have a level playing field for industry, a mountain of regulation is not necessarily better, because then it becomes almost impossible to enforce. I think a lot of work has been done in this regard under the current administration. There is a lot of room now to do really significant governance reviews, improvement and make sure that the citizens are free of having to pay bribes in order to gain access to essential services. “

  6. I am not able to resist the temptation of of adding one more comment to this oft-commented post.
    Kaplan’s Smith: “We will either innovate — or we all die.” is recorded to state at the end of an interesting article: ‘Does For-profit Education Make the Grade?’ published here [http://knowledge.wharton.upenn.edu/article.cfm?articleid=2949].
    The for-profit sector, in this article, maintains its upbeat enthusiasm about their capabilities to deliver what the stakeholders need.
    We can only say, ‘Amen’.

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