Do Well and Do Good!

CSR, Corporate Social Responsibility, has been buzzing lately, as more and more companies consider the activity necessary, both from a reputational perspective and of course in the glossy pages prefacing their financial reports.  In fact, many companies set CSR up as a separate (non-profit) portfolio…where it hangs out in the corner office, bleeding money, like the Owner’s nephew that we just cannot get fired!

Yet, with opportunities opening up in emerging markets, particularly at the Bottom of the Pyramid, it would make sense to take some of that philanthropic spirit to the bottom line and link up the organizations goal of helping society with the overarching theme of creating value, for society and for the company.

Engaging in business in an ethical, not-for-profit manner in emerging markets today could well lead to relationships with loyal consumers steadily working their way up the pyramid tomorrow, enabling a lifecycle approach and securing customers for the long haul.  For instance, take Hindustan Unilever’s practice of delivering products in single use sachets.  While the packaging and low price point may well take margin below what is customary from a 16 ounce shampoo bottle, HUL is enabling access to quality-of-life improving products and engaging with customers who will reach again for HUL when they “move on up”.  General Electric’s Indian arm has supported local partnerships and financed a myriad of health, educational and innovation drives focused on bringing customers into contact with their unique, yet relatively low-cost equipment offerings customized to market needs.  GlaxoSmithKline, rather than giving drugs away, provides regulatory and technical support to local third-party production facilities such that product costs in the poorest markets can be substantially reduced.

The key is to link CSR efforts to the company’s business model and core competencies.  Instead of focusing on making money OR making the world a better place, companies should leverage their assets and talents to achieve both, resulting in synergistic relationships and better positioning to capture new customers and new sources of revenues.