- Pretoria, South Africa: Themba, CEO Who Can't Collect
- Kibera, Nairobi, Kenya: Mariam, Microentrepreneur Who Must Choose between Feeding Her Children and Feeding Her Business
- Santiago, Chile: Jaime, International Executive Who Has to Please Everyone
- Kingston, Jamaica: Lisa, Business Leader Whose Industry Is Struggling
- Abuja, Nigeria: Ijeoma, Government Leader Who Can't Help Feeling Like a Beggar
- Washington, DC: Rob, Development Partner Can't Work Self Out of Job
- The Core Problem: Caught in The Survival Trap
- Getting at the Essence of The Survival Trap from a Stakeholder's Perspective
- BoP Markets as the Biggest Untapped Business Opportunity
- The Case of Africa: Islands of Opportunity in a Sea of Challenges
- The Solution
- Why Business Must Lead BoP Nations out of The Survival Trap
- Building Partnerships That Transcend The Survival Trap
- Practical Solutions for Escaping The Survival Trap
- The Approach
This chapter is from the book
This chapter is from the book
This chapter is from the book
The Core Problem: Caught in The Survival Trap
Stories of individuals like Themba, Mariam, Jaime, Lisa, Ijeoma, and Rob play out daily in any of a hundred developing nations, from islands in the Caribbean to the landlocked heart of Africa. Entrepreneurs, managers, and leaders in BoP markets alike experience deep frustration.
It would be easy to look at these scenarios and put them into categories of common business or development issues, and prescribe "tried and true" approaches: cash flow management for Themba, access to a microfinance program for Mariam, a corporate social responsibility (CSR) strategy for Jaime, marketing efforts for Lisa, a resource mobilization drive for Ijeoma, and a new development strategy for Rob. This is exactly what development experts have done for decades.
There is real value in these initiatives. Cash flow management is critical for any business; microfinance creates opportunities to improve livelihoods at the bottom of the pyramid; and strategies matter both in business and development. But none of these initiatives are sufficient to succeed in the complex operating reality of developing nations. When we see scenarios such as the ones described above, we spring into action. These are important issues to tackle. However, all too often, the actions only offer temporary relief.
Three key gaps illustrate the unique nature of doing business in emerging markets. The first is the tension between meeting the vast unmet demands for basic services, while confronting the reality that existing businesses struggle for access to fundamentals such as educated staff and suitable infrastructure.
The second gap is the existence of The Survival Trap. The Survival Trap is a cycle that entraps those at the BoP. Its effects can be felt at all different levels throughout the nation, including the reality that the poorest nations face complete bankruptcy in their inability to meet their operating and investments needs.
Finally, conditions are such that a high proportion of potentially productive pockets of society, especially women and youth, are underutilized at significant costs to society. Acknowledging these realities is fundamental to defining a new approach to doing business and creating prosperity in BoP markets.
The question becomes, why do we keep using the "tried and true" approaches? Have we become so accustomed to them that we automatically reach to these solutions, knowing they will at least produce some results, rather than breaking with convention and stepping out into the unknown?
As Albert Einstein allegedly remarked once, "the definition of insanity is to do the same thing over and over again and expect a different result." While "tried and true" approaches are important and can yield results in some instances, there is an even bigger problem than knowing what approach to apply. The bigger problem is this: People become stuck in a Survival Trap.
The Survival Trap is a vicious cycle that keeps individuals, businesspeople, and leaders in the developing world pursuing the same strategies in the face of chronic problems. This habitual process robs them of the power to solve their problems and catalyze significant change.
In his Action Science theory, Chris Argyris gives us a key to understanding The Survival Trap.1 The breakthrough in Argyris' model is the recognition that operating reality (or context) and mindset matter dramatically in achieving results.
As illustrated in Figure 1.1, stakeholders stuck in The Survival Trap become overwhelmed by their operating reality and its difficulties. As a result, they develop reactive mindsets that fail to imagine solutions beyond their immediate challenges. These mindsets inform reactive actions which provide short-term relief but fail to address the real problems. When things fail to change, they repeat the same actions only with redoubled efforts.
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Figure 1.1 Stuck in The Survival Trap
Leaders, whether business, national, or development, are increasingly recognizing the success of individual firms as key to economic growth. However, when faced with a challenge, leaders often apply outdated thinking, or "winning formulas" that worked in the past. As a result, each time people fail to obtain a desired outcome, they implement the same strategy: "doing the same thing, only harder."
Firms fail to thrive, governments continue to rely on aid, and poverty is perpetuated. Results don't change given that the actions are fundamentally the same, and informed by previous mindsets, mental models, or beliefs. These mindsets are further shaped by the operating reality, or business environment, in which these stakeholders operate.
This situation erodes trust while increasing dependence. Trust erodes because stakeholders compete against each other to access limited and unreliable sources of aid. As a result, dependence increases, as individuals rely on somebody else to solve their problems. With effort, an expectation is created, and with each repeated failure, disappointment grows. Continuous disappointment eventually leads to distrust, resentment, and allocation of blame.
As this approach fails to generate results, ownership slips away, and the locus of responsibility shifts, breeding a culture of dependency and mistrust. This eventually evolves into endemic problems with direct implications for business. Eventually, all stakeholders operating in developing countries come to the conclusion that the "context" is to blame. Massive efforts such as the World Bank's Doing Business Survey and the World Economic Forum's Global Competitiveness Index are undertaken to evaluate change in the operating reality or context of countries.
Yet focusing exclusively on myriad challenges present in the operating reality often clouds the judgment of stakeholders. Instead of looking for sustainable solutions, massive, urgent action is taken that ultimately fails to deliver real solutions. Again, this approach means that a lot of work is wasted on efforts that only solve part of the problem and leaves out some of the essence.