Many new age businesses are moving towards being more socially conscious. This means impact of business on society is now being considered seriously. Sustainable socio-economic impact business models that challenge the supremacy of profit in business decisions are being created.
“What is needed now is a new era of economic growth – growth that is forceful and at the same time socially and environmentally sustainable.” This call in the foreword of the 1987 Brundtland Report, “Our Common Future,” still rings true twenty years later.
Even big businesses are changing the way they do business to be sustainable and to be in harmony with larger society. This quest for sustainability is already starting to transform the competitive landscape, forcing companies to change the way they think about products, technologies, processes, and business models.
Understanding B-Corp movement in this context is significant. It has brought into spotlight sustainable innovation, transparent processes, respect for all stakeholders in the business ecosystem and equal importance to profit and purpose.
Here’s a quote from Suvankar Mishra of e-Kutir (India’s first B-corp):
“eKutir aims to improve economic opportunities, bring about social economic empowerment, and provide market access to small farmers through previously unavailable infrastructure, network of micro entrepreneurs and service nonprofits. We focus on alleviating poverty through supply chain, sourcing from and partnering with fair wage certified suppliers by guaranteeing them future purchases and contracts”.
Growth in B-Corps (there are probably more than 2000 Bcorps in the world) has largely been attributed to increasing demand for purpose-led brands from consumers, as well as employees seeking out companies who are driven by a purpose, are ethical and think beyond profit.
According to B Corp’s analysis, over 66 percent of consumers have reported that they are willing to spend more for goods and services that have a positive impact. – SustainableBrands.com
Clearly, business as we know it is witnessing a paradigm shift. Changing role of the business in the society can be further accelerated and sustained only if business management education adapts to this emerging phenomenon. We need future business managers and leaders to understand this shift and be prepared to operate in this evolving environment.
Management Education Needs To Undergo A Change In Mindset
In the mid 20th century, B-schools emerged as the birthing grounds for well-trained, highly analytical and growth driven managers who went on to become business leaders we see today. It was the need of the hour then. But today many of these leaders and their management practices seem to be out of context and incompatible with emerging expectations of sustainable development.
“For too long, we had seen capitalism go unquestioned and witnessed unbridled markets overlook or exploit low-income communities, too often creating a cycle of poverty and inequality” – Says Jacqueline Novogratz, founder and CEO of Acumen
“There is an increased realisation and emphasis on inculcating an appreciation and building an attitude towards linking business goals with social objectives,” said IIM-K director Kulbhushan Balooni.
Businesses moving towards sustainability need an army of trained managers and leaders who know what it means to run a sustainable business. The problems of today- climate change, rising social & economic inequality, abject poverty etc. demand leaders who can address these issues by creating solutions around them and scaling them into sustainable businesses.
Take for instance a fair trade brand selling apparel produced by local women artisans. How this brand handles price competition in market place sets it apart from a commercial brand. The leader of this fair trade brand invests his profits in initiatives towards socioeconomic upliftment of artisans so that they can rise above their status quo. He pays them respectable wages and arranges for their social security. Clearly, his operating expenses increase as a percentage of his revenues which may hit his profit margins. This needs him to create a highly differentiated brand messaging, streamline operating costs that don’t add value to sustainability of the brand and reduce wastage.
On the other hand, for the leader of a commercial brand the artisans are a part of his supply chain. Any demand for increase in wages by his artisans and workers will compel this leader to explore other sources of cheaper labour. Moreover, this leader may not appeal to his customers on social impact of his brand.
Budding management students need to learn the complexities of running sustainable businesses. This necessitates a significant change in the way business management is taught in B-schools. Our universities still teach academic theories of the industrial age instead of teaching how to make solutions that solve real-world problems of today.
Management Education Focused On Triple Bottom Line
The UN’s Sustainable Development Goals (SDGs) is a global framework for holistic and equitable development of human society. It needs collaboration between nations, govts, civil society groups and businesses to achieve all of its 17 goals. Only if upcoming entrepreneurs, managers and leaders understand the importance of SDGs and incorporate their goals into their organisations’ vision, will the true spirit of SDGs realized.
For this to happen B-school students need to be taught and sensitized to triple bottom line of people, planet and profits. They need to be encouraged to work with socially responsible businesses which report their impact on communities and environment besides conventional metrics related to profit.
Ronnie Screwvala, entrepreneur and philanthropist says, “I find the younger generation of today automatically leaning towards creating an impact in what they pursue.
It’s also important to not segregate social and impact businesses from normal businesses as I am a firm believer that in India, all impact has to be at ‘scale’ and for us to be able to deliver at scale — it needs to not be looked like a subsidised approach — but should be for profit but with impact.”
Premiere b-schools around the world are already taking steps towards inculcating the impact-driven business management knowledge in students. An article on economic times explains how IIM-C is making social entrepreneurship a part of their curriculum.
“We are committed to supporting ‘for-profit’ social enterprises which can solve some challenging social problems. Our students provide voluntary services to NGOs and woman entrepreneurs under an initiative called INCA (Initiative for Community Action),” said Ashok Banerjee, director of IIM Calcutta Innovation Park.
IIM- C in collaboration with TSEC ( Tata Social Enterprise Challenge ) has launched an initiative called ‘Thinking Social’ to promote awareness about social entrepreneurship among its students.
Hult Prize India through their annual competition motivates B-school students to come up with social impact driven ideas that are feasible, disruptive and scalable.
Similarly, IIM-B’s NSRCEL, an early stage startup incubator, promotes sustainable business ideas and helps shape these ideas into robust business models. Aakarsh Naidu, Ecosystem Representative at NSRCEL, explains how they weigh impact and business models.
Experts believe that Indian business school graduates tend to make professional decisions based on profitability rather than social responsibility.- from an article written by Jonathan Pfeffer
If businesses big and small practice socially responsible behaviour then human society will witness a sea of change in quality of life and hope for a better future.However this can only happen if they are run by managers and leaders who know what it means to run a sustainable business.