This chapter is from the book
This chapter is from the book
This chapter is from the book
Overview of the Book
This chapter has provided a guided tour of the argument contained in this book. The book itself is divided into three parts. Part One, "Mapping the Terrain," provides the background and context for the chapters that follow; it describes the global situation and establishes the business case for pursuing strategies that aim to solve social and environmental problems. It also outlines the challenges and opportunities that remain to be addressed, particularly those that involve the development of new, more sustainable technologies and the needs of the four billion people who have been largely bypassed thus far by globalization. Part Two, "Beyond Greening," then develops the logic and content of these "beyond greening" strategies in more depth. Finally, in Part Three, "Becoming Indigenous," I suggest how corporations might begin to move beyond even these strategies for sustainability by learning to become more embedded in the local context. Learning to become indigenous, I argue, is the next strategic challenge on the road to building a sustainable global enterprise.
Chapter 2, "Worlds in Collision," places the global challenges associated with sustainability in the larger context. It seeks to cut through the complexity by providing a readily digestible framework for thinking about the current global situation, characterizing it as the collision of three economies or worlds—the money economy, the traditional economy, and nature's economy. Ultimately, the challenge is to develop a sustainable global economy: an economy that the planet is capable of supporting indefinitely, while simultaneously providing for the entire human community in a way that respects cultural, religious, and ethnic diversity. This chapter seeks to put this challenge into perspective and offers some thoughts about appropriate roles for companies.
Chapter 3, "The Sustainable Value Portfolio," closes out the first section of the book by developing a detailed framework for connecting the agendas of sustainability and value creation. Just as companies must succeed on many fronts in order to create shareholder value, so, too, must they master economic, social, and environmental challenges to achieve sustainability. These challenges affect virtually every aspect of a firm's strategy. There need not be a trade-off between stakeholder satisfaction and value creation. The chapter makes clear that although the biggest opportunity for the future lies in moving beyond greening, most companies still focus virtually all their attention on greening or (worse) mere compliance.
Part Two of this book develops the strategies that move beyond greening in greater depth. Chapter 4, "Clean Technology and Creative Destruction," articulates the strategic logic for pursuing leapfrog strategies to clean technology in ways that open exciting new growth markets but also often make the firms' existing technologies and products obsolete. The chapter also shows how the lens of whole-systems thinking can help to prioritize investment in the new technologies and capabilities that will be important to the future competitiveness of the enterprise.
Chapter 5, "Innovation from the Bottom-Up," demonstrates why the four billion people at the base of the world economic pyramid represent the most attractive early market for many of the most exciting new clean technologies. Because most such technologies are disruptive and will, therefore, be resisted by established markets, the vast underserved populations in shantytowns and rural villages offer the most promising places to incubate and grow the technologies of tomorrow. In the process, they also provide platforms for new growth industries that hold the potential to revolutionize markets at the top of the pyramid—and move us much more rapidly toward a sustainable world.
Chapter 6, "Raising the Base of the Pyramid," articulates some basic principles for successfully tapping into these emerging markets and shows how effective strategies will generate not only corporate growth and profits, but also local jobs, livelihoods, and solutions to social and environmental problems. By removing the constraints imposed on the poor, increasing their earning power, and creating new potential in poor communities, companies can identify and pursue previously invisible opportunities. To be successful in these new markets, therefore, companies must seek to actually raise the BoP through their commercial models, making the measurement and tracking of "triple bottom line" impacts increasingly important.
Finally, Part Three of this book critically evaluates early "beyond greening" experiences and offers some prescriptions for how to move toward a more indigenous and embedded form of commerce. Chapter 7, "Broadening the Corporate Bandwidth," first describes how the existing conceptions of "development" and "modernization" reflect a Western cultural bias and a preoccupation with simply raising income and GDP per capita. Together, these shortcomings significantly hinder efforts to imagine and build communities and markets at the base of the pyramid. To successfully serve the needs of the entire human community, therefore, corporations must broaden their bandwidth and expand their conception of the global economy to include the myriad other forms of economic activity beyond the formal economy. Radical transactiveness is the tool proposed to enable companies to hear the true voices of those who have been marginalized or ignored by globalization.
Chapter 8, "Developing Native Capability," then shows how to avoid the trap of simply "selling to the poor." Development at the base of the economic pyramid does not follow traditional patterns found in the developed world. Indeed, the chapter shows that success in this space means engaging in deep dialogue, coinventing solutions, starting small, building trust, and developing an ecosystem of local partners on the ground. To be successful, therefore, companies must consciously develop "next generation" skills needed to create mutual value in the BoP. Native capability thus enables global firms to move beyond the existing multinational model, with its emphasis on global supply chains, world scale, and centrally developed—and often alien—solutions.
Chapter 9, "Re-Embedding Innovation Strategy," builds on the previous chapter by first demonstrating why, at this point in history, it is so important that capitalism become reintegrated into society. Many BoP strategies that appear on the surface to be embedded can actually remain disconnected unless explicit attention is paid to the process by which they are created in the first place. The chapter thus focuses on a specific business process methodology for becoming embedded—the Base of the Pyramid Protocol. Through an analysis of selected applications of this approach over the past five years, the chapter lays out the key challenges to and important lessons for cocreating sustainable, locally embedded enterprises that also have the potential to scale.
The final chapter suggests how to go about actually "Building the Sustainable Global Enterprise." Most of the book focuses on what companies might do to pursue the sustainability path—the strategies, practices, and capabilities that are required. What is less clear is how to pursue this path, particularly within the context of large, incumbent, multinational corporations. This chapter therefore closes with some thoughts on what it will take for leaders and change agents to make this happen in the real world of budgets, bosses, quarterly earnings reports, discounted cash flow analysis, and the discipline of the investor community. Specifically, this chapter lays out a framework for building the organizational infrastructure for sustainability.