How Can Companies Do More Good for Society AND Turn a Profit?
An article by Erik Simanis in Palladium’s June 2015 issue of Strategically Speaking
“To fully harness the unique resources and capabilities of a global corporation to make the world a better place, one thing must happen: visions of social transformation have to be translated and embedded into core business operations—that is, into the Profit and Loss (P&L) side of the company responsible for innovating, making, and selling products on a daily basis.”
Click HERE to read how companies can embed impact into their core business operations.
Scale and scaleability: a conversation with Erik Simanis
An interview with Erik Simanis by Tom Harrison of the Practitioner Hub for Inclusive Business
“In my experience, many organizations and managers confuse “scalable” with “replicable.” Anything can be replicated, given enough time and money. In a business context, scalable means one simple thing: a venture has a positive net present value. In other words, the additional free cash flows generated within a defined period of time are high enough to repay the upfront investment costs and working capital that come with every replication of a business unit, and to pay the providers of that growth capital (i.e., shareholders of the company) a required return on their money.”
Click HERE for the full interview.
“Why impact assessments are good for non-profits but bad for business”
By Erik Simanis
In the hands of corporations aiming to profitably serve the poorest consumers impact assessments can impede progress.
(c) Guardian News & Media Ltd
“Businesses Selling to the Poor Should Think Twice Before Working with NGOs”
By Erik Simanis
Without a clear strategic basis for partnering with NGOs, businesses will find the initial warm fuzzies and positive publicity of a partnership will inevitably fade and turn to disappointment.
(c) Guardian News & Media Ltd
“The Smart Way to Make Profits While Serving the Poor.”
By Erik Simanis
HBR Blog Network. June 13, 2012.
Most companies trying to do business with the 4 billion people who make up the world’s poor follow a formula long touted by bottom-of-the-pyramid experts: Offer products at extremely low prices and margins, and hope to generate decent profits by selling enormous quantities of them. This “low price, low margin, high volume” model has held sway for more than a decade, largely on the basis of Hindustan Unilever’s success in selling Wheel brand detergent to low-income consumers in India.
However, the model has a fatal flaw: It inevitably requires an impractical penetration rate of the target market — often 30% or more of all consumers in an area.”
Click HERE to read more.
“Businesses Serving the Poor Need to Get Over Their Unease About Profit.”
By Erik Simanis
HBR Blog Network. June 13, 2012.
A business-led movement that serves the needs of significant numbers of D and E consumers will materialize only when companies crack the profitability code and demonstrate an investment-worthy opportunity to shareholders. Until then, high-level debates and discussion about enhancing the development impacts of D and E businesses are not only premature, they are also a costly distraction from the task at hand.
Getting to profitability will require a laser focus on basic business tenets, which include matching business models to the constraints of the commercial environment. And in D and E markets, the environment demands a very high contribution per transaction.
Click HERE to read the full article.
Erik is an action researcher and authority on innovation and go-to-market strategies for creating and shaping new mass markets in emerging and frontier economies. He brings a unique combination of theoretical rigor with “P&L practicality” to his work, as his frameworks are designed to work in the real world of trade-offs, limited time, and constrained resources.
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