This is a great 16 min video by the renowned HBS professor, Michael Porter, on how commercial businesses can be good at addressing social needs and problems. Do you agree or disagree, and why?
http://www.ted.com/talks/michael_porter_why_business_can_be_good_at_solving_social_problems#t-268305
This was a great video and he makes a lot of good points, specifically addressing the problem that non-profits do not have the resources to tackle the issues they set out to ameliorate. I agree that businesses can address many social problems, such as pollution. However, the foundation that businesses are built are not to address social problems, it is to make money.
ReplyDeleteI think this ties in very well with Dr. Yunus's work in micro-finance and the Grameen bank.
ReplyDeleteI was quite surprised when I saw that Porter was giving this speech because he is in my opinion most famously known for his 5 forces framework, in which he describes what shapes corporate strategy and profit-making techniques. The article is here: http://prolog.univie.ac.at/teaching/LVAs/KFK-LM/WS07/Porter.pdf, and I strongly recommend people take a look at it. A lot of it is intuitive and has been discussed in our econ classes, but it's useful to have it formally presented like this.
i agree, i was positively surprised. i remember reading his work on the 5 forces in my joint senior seminar class wherein we never talked about social entrepreneurship. this is thinking big and out of the box.
DeleteI'm in agreement with Mark here, I think that, while Porter makes many good points, businesses are fundamentally profit driven. Porter is definitely right in his assessment of NGOs: they often don't have the resources to fully enact the changes they seek to enact.
ReplyDeleteBut business, usually, don't make resources--they utilize them (labor, land, energies, etcetera). He also sort of glosses over the fact that most businesses today focus on marketing and product differentiation. Many many businesses do not solve problems of any real type--they create need. Think of the example of Apple, one of the largest cos. in the world. When was the last time Apple created a product that solved a problem--not just created a need. Apple is a shining example of branding and brilliant corporate strategy--not problem solving social problems.
I think his work could go in a very positive direction though--and he alluded to this. That is trying to find ways to make social entrepreneurship coincide with profitability; a lot like the work of today's B-Corporations: http://en.wikipedia.org/wiki/Benefit_corporation
Porter has great examples of how social issues and economic efficiency can go hand on hand (ex. pollution, drip irrigation). His argument focuses almost exclusively on the supply side -- socially efficient solutions are often economically efficient. But what happens when the economically efficient solution does not align with the socially efficient solution? Surely these two will not always go hand in hand.
ReplyDeleteThis is where the consumers come in. Business is built to respond to market dynamics. When consumers shift their demand, businesses shift their practice to meet those needs. When consumers support companies that act in socially beneficial ways, companies will start to socially responsible. Consumers cannot sit back and wait to businesses to discover economically efficient practices that happen to be socially efficient, consumers must force businesses to find and/or develop them.
At the end of the day, consumers hold all of the power, they/we just need to learn how to use it. Change happens a lot faster when it is demanded.
Of course, educating consumers to the point where they change their preferences is very difficult, so maybe business does have to lead the way. It is probably some combination of both, but which is more likely? Do you have more hope in the consumers or in the businesses?
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