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July 11, 2007
Two Suitcases
I attended a dinner in New York City last night, sponsored by the International Business Leaders Forum (IBLF), a London-based non-governmental organization (disclosure: I am the new chairman of the IBLF in North America) dedicated to the proposition that business is “at the heart of sustainable development.” There were some important observations during the dinner, which may be of use to all of us giving advice on these kinds of issues.
The most remarkable story was told by Mr. K.V. Kamath, the CEO of ICICI Bank, a large Indian financial institution. He said that his bank is pursuing business in rural India by sending out financial executives with two suitcases a marriage of old and new India. The first contains a folding table and two folding chairs. The second has a wireless-enabled PC, a camera and a biometric device that records fingerprint impressions. In this way, the bank is able to offer microfinance to farmers, a direct deposit mechanism for factory workers and credit facilities for small purchases such as food. “We are actually leap-frogging technology—we are using a higher tech approach in the rural areas because it makes sense to do business that way. We cannot afford branch banks there; we create a virtual branch, adjacent to a cell tower.”
Alan Hassenfeld, chairman of Hasbro, made a fundamental point about working effectively along the global supply chain. “We cannot drive the local manufacturers in China crazy with all kinds of different specifications. In one factory, I noticed that there were different dirt marks for the lighting appliances, at 8, 8 ½ feet and 9 feet. That was because individual company top brass would come on a semi-annual visit and the manufacturer would change the height per the contract with each of them.” The toy industry has persuaded manufacturers, brand holders, and global retailers to sign a code of conduct on labor standards, a collective action that has been advised and approved by major NGOs.
Jane Nelson of the IBLF and the JFK School of Government at Harvard, noted the importance of individual leadership at companies. “The Prince of Wales, founding sponsor of the IBLF, recognized early on the need for champions at the top of companies. She added that the IBLF works CSR into government economic development strategies, such as the Vietnam Business Links initiative on Footwear.
The role of business in solving these greater societal issues depends on the acceptance of the premise that private enterprise needs to make money on these ventures, said Sunil Mittal, CEO of Bharti Enterprises, the large Indian cellular telephone player. “There is profitable business to be done in rural India,” he said. “Thirty five percent of the produce grown locally goes to waste. We need to build new roads, have new trucks, and make farmers aware of prices at local markets. All of this can be done by entrepreneurs.” Mr. Mittal went on to say that in his country, “the aspiration levels are up. We have a small window in time in which to give children the capacity to participate in the economy through education. Fully half of those living in poverty in India are children. We need to give them skills.”
Robert Davies, founder of IBLF and global CEO, is an inspirational man who believes that real change will be initiated by the private sector. His parting words to the group last night suggested that business has a real profit opportunity in the less developed part of the world and responsibility for solving key issues from climate change to HIV AIDS. But he noted that business must conduct its affairs transparently, with cooperation from civil society and to work along side government. There is an all-important job here for public relations, to make the case for private sector leadership, then keeping all stakeholders informed throughout the process.
Posted by Edelman at July 11, 2007 3:33 PM
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Comments
I fully agree with your insightful perspective, actually there is a similar thread at Frontier Blog
( http://www.hwswworld.com/wp )
Posted by: Edward at July 16, 2007 12:44 AM
While there is lots to be done, rural India is going through the same transformation that urban India is. I have seen bits of that change and it is fascinating to see farmers leverage technology to monitor weather and seed accordingly, send soil for tests, get payments through electronic transfers and use smart cards to withdraw many. Just a few surface shits, so much more beneath.
Cheers
R
Posted by: Rajesh at August 12, 2007 2:15 AM