Is The Market Mechanism Finally Kicking In For Social Change?

shopping cart.bmp Jeb Brugmann and C.K. Prahalad have some suggestions as to why the “double bottom line” is gaining traction (see my recent posting) in their February, 2007, Harvard Business Review article, “Cocreating Business’s New Social Compact.” In the article, they argue:

“Since the protest against globalization at Seattle and Davos in the late 1990s, people have assumed that the gulf between the private sector and the civil society, as the media call NGOs, has been growing…

However, a countertrend has emerged. Over the last five years, some corporations have started to pay attention to customers at the bottom of the economic pyramid. As the pioneers move into inner cities and villages, their middle managers are spending more time than you might imagine on acquiring local knowledge, value engineering, developing low-cost business models, and community-based marketing.

Meanwhile, several NGOs have set up businesses to provide jobs and incomes in order to free people from the tyranny of poverty. Product development, logistics, project management, and scaling techniques are some of the mechanisms they’re using to kick-start socioeconomic development in long-neglected communities.

Realizing that they each possess competencies, infrastructure, and knowledge that the other needs to be able to operate in low-income markets, companies and NGOs are trying to learn from and work with each other.”

Brugmann and Prahalad’s thesis contradicts what I suggested in my last posting on the subject, which is that the onus is on the NGOs to create ideas and “find” interested companies to make social change. I would be more than happy to be wrong if they are right in their assessment that, “ their interests and capabilities converge, these corporations and NGOs are together creating innovative business models that are helping to grow new markets at the bottom of the pyramid and niche segments in mature markets.” Surely, their analysis constructs a credible chronology of how some NGOs and companies have gotten here.

The whole lot of us who have been cheering for social capital marketplaces to emerge and fuel social change will do well to look hard at what we can do to catalyze this trend if Brugmann and Prahalad are indeed right.

Carla E. Dearing

Posted at 7:51 AM, Feb 28, 2007 in Cross-Sectoral Strategies | Economic Development | Global Philanthropy | Philanthropic Strategy | Scaling Philanthropy | Permalink | Comment