The deaf and hard-of-hearing community have benefited from cell phone use ever since text messaging became viable. However, this segment has traditionally been overserved by cell phone providers who have only sold their plans with voice and text.
Let’s set the stage for a business plan developed within a CSR department that has the potential to earn a sizable revenue stream. Census numbers are uncertain, but there are anywhere from 2.125 million people in the USA who are deaf to upwards of 20.295 million who are deaf/hard-of-hearing (data). Generally, Americans with disabilities earn less than those without disabilities (World Institute on Disability). Deaf Americans are currently overserved by mobile phone providers who only offer data plans that are in addition to voice plans (they don’t personally use voice and only rarely use it when they hand their phone over to a friend). And there are some with disabilities who cannot afford the costly bundled plan and thus are priced out of this useful form of communication.
Enter a mobile phone provider’s CSR department. The cost to the company to provide a data-only plan in addition to the many other plans they offer? MINIMAL. The marketing benefit to their shareholders/stakeholders for offering a product that costs less to the consumer and benefits them tremendously? Lots of upside there. The potential revenue stream? Uncertain, but it’s worth a venture since I imagine that the cost of selling a data-only plan (and charging more for the occasional voice call) is close to nothing. There’s only upside here folks. Who is going to be the first to realize this opportunity??
Verizon’s attempt
AT&T not quite realizing full benefit
T-Mobile’s only for Blackberrys
Other plans
Yes, I said “love” and “corporate” in the same phrase. What could I possibly be talking about this time? It’s the new B Corporation designation. According to their website:
“B Corporations are a new kind of company which uses the power of business to solve social and environmental problems.
B Corporations:
- Meet comprehensive and transparent social and environmental performance standards;
- Legally expand the responsibilities of the corporation to include stakeholder interests;
- Build collective voice through the power of the unifying B Corporation brand.
The next time you see green, responsible, sustainable marketing campaigns, take a closer look. B Corporation is the new corporate standard for social and environmental performance.”
Corporate Social Responsibility, aka CSR, is a private sector movement that is making waves. Some big, established companies use CSR as a marketing tool and some new, innovative companies are being born whose mission statements include a responsibility to more than just shareholders - integrated CSR. We could tackle the merits of either approach and the vast spectrum in-between. For now, I’d like to flesh out a potentially profitable use of CSR within established old economy companies and established multinational corporations.
The idea: use your CSR departmental budget to rapidly test and develop business models that not only create financial returns but also social returns. Blended value businesses. CSR as Social Venture Capital.
Examples of this theory application already exist.
- Microsoft: Rolled up into it’s CSR strategy broadly known as Unlimited Potential, Microsoft is incubating and innovating to create products that serve the BOP. Examples include their Ultra-low-cost PC and Starter Editions of Windows OS. Both products are a stripped-down version of their advanced brothers but offer accessibility, affordability and usability that BOP consumers can consume.
- Unilever: Hindustan Lever Limited (the Indian subsidiary of Unilever) created Project Shakti in 2000, to spur growth and penetration of its products in rural India while changing lives and boosting incomes. This program broke even in 2004 and boasts 100,000 entrepreneurs and US$270million in sales. (1)
There is no doubt in my mind that these multinational companies are testing new products and business models in emerging markets in order to ultimately make a profit. That’s what they are in business to do - return financial value to shareholders. However, packaged under the guise of CSR these companies are afforded a little bit more flexibility to utilize heavyweight teams to rapidly innovate to see which of their new products will serve the needs of BOP consumers. With the added constraints that the product must ultimately also create social value, managers with an eye toward profitability (impatient for profits) will be able to more readily recognize the business models that drive bottom-line results while also creating social value.
The ultimate goal of CSR as Social Venture Capital is to utilize the human capital and IP of large companies to tackle BOP opportunities to create both financial and social value. A new avenue for an incumbent to disrupt itself? Maybe. A quicker and more sustainable way to create social value? Time will tell!
References:
(1) Business Solutions for the Global Poor, Creating Social and Economic Value, V. Kastur Rangan, John a. Quelch, Gustavo Herrero and Brooke Barton: Editors, Harvard Business School. 2007: John Wiley & Sons, Inc. p.144-154.
One of my favorite courses during my MBA was called Building and Sustaining Successful Enterprises(BSSE), based on the theories of Clay Christensen. The theories presented through case examples and discussion provided not just a way to understand innovation but also a road-map by which to make prudent decisions as a manager.
Prior to business school the corporate world was, to me, overwhelming. I may have studied business in my undergrad but I learn best by doing. My post-undergrad experience involved applying business concepts to the nonprofit world. While I interacted quite often with the private sector, the values that drove my productive hours at work limited my understanding of the varied complexities of what made those corporations tick. Business school was the ticket I needed and BSSE - Clay Christensen’s class on Disruptive Innovation- was the course that made my ticket first class.
How does this relate to poverty? Poverty is an overwhelming concept. Just scratch the surface and you will find numbers like:
- The World Bank estimates that 2.8 billion people live on $2 a day.
- The richest 20% of the world’s population consumes 86% of all goods and services; the poorest 20% consumes 1.3%(1).
How would disruptive innovation inform my decisions on creating enterprises that also tackled contributing factors to poverty? Let’s start with an article from the experts that describes the overall application of Christensen’s theory to social change (2). This article describes the five qualities of “catalytic innovators” as such:
- “They create systemic social change through scaling and replication;
- They meet a need that is either over-served (because the existing solution is more complex than many people require) or not served at all;
- They offer products and services that are simpler and less costly than existing alternatives and may be perceived as having a lower level of performance, but users consider them to be good enough;
- They generate resources, such as donations, grants, volunteer manpower, or intellectual capital, in ways that are initially unattractive to incumbent competitors;
- They are often ignored, disparaged, or even encouraged by existing players for whom the business model is unprofitable or otherwise unattractive and who therefore avoid or retreat from the market segment.”
I like the way this theory application is shaping up. I wonder how we take this theory of catalytic innovators and apply it to business models in emerging markets - where the poor will benefit the most and social investors can seek blended value returns beyond their wildest dreams.
References:
(1) Robert A. Isaak, The Globalization Gap : How the Rich Get Richer and the Poor Get Left further Behind. Financial Times Prentice Hall Books. (Upper Saddle River, NJ: Prentice Hall/Financial Times, 2005), 103. Statistic taken from Barbara Crossette, “Kofi Annan’s Amazing Facts:The true Parameters of the Planets,” :The New York Times, September 27,1998.
(2) “Disruptive Innovation for Social Change”, Christensen, Clayton M., Heiner Baumann, Rudy Ruggles, Thomas M. Sadtler. Harvard Business Review, 2006.
I recently read an article in Harvard Business Publishing by Umair Haque entitled “The Generation M Manifesto.” The article was a nice capstone to what I learned over the last two years as a student at the Harvard Business School combined with my five years experience working for nonprofits. As I search for a meaningful career that will blend my personal dedication to social change with my belief that our capitalist markets have the resources to create that change, I am comforted by articles like this that essentially point to others with similar values. Kudos to Umair for expressing this viewpoint. I look forward to meeting the many members of Generation M and working together to make meaningful change.
