Indian Tales of Inclusive Business Models

3:00PM,Wednesday,January5,2011
by Navi Radjou, Jaideep Prabhu, Prasad Kaipa, Simone Ahuja
blogs.hbr.org

We just spent the last few weeks criss-crossing India to discover how private sector companies are striving to
support India's quest for "inclusive growth."

Inclusive growth has become the economic development mantra for both Indian politicians and CEOs in recent
months. Prime Minister Manmohan Singh is championing this concept to ensure that even as the red-hot Indian
economy keeps growing at 9%, this growth is equitable so that the 300 million Indians living with less than $1 a
day are not left out of the economic boom. He has challenged Indian companies to come up with inclusive
business models that deliver more value at less cost for more citizens — be it in agriculture, healthcare,
education, energy, or financial services.

Indian companies have traditionally contributed to inclusive growth primarily through philanthropic activities or
CSR (corporate social responsibility) projects. While these non-profit projects have a modest societal impact,
they were devoid of for-profit business models — and financial motivation — needed to scale them up.

Today, however, that old model is being retired. Many Indian firms as well Indian subsidiaries of MNCs are now
adopting new business models that can deliver affordable housing, healthcare, education, and financial services
to those living in the middle and bottom of the pyramid.
We visited major Indian metros to interact with companies that are pioneering these inclusive business models.

At the 2010 India Economic Summit organized by the World Economic Forum in New Delhi we facilitated a
workshop entitled "Innovating More with Less for More" where C-level execs shared best practices which their
companies have adopted to enable inclusive growth in India. Ellen Kullman, CEO of DuPont, talked about the
innovative public-private partnerships DuPont's India unit has forged with various state governments to increase
the productivity and profitability of farmers and improve food availability by making resilient seeds available at
affordable prices.

Kullman explained that DuPont's inclusive business models are not blue-sky stuff conjured up in her firm's R&D
labs or in the boardroom, but rather based on understanding the actual needs of bottom-of-pyramid users.
Recently, for instance, DuPont India's entire Indian leadership completed an immersion program in hinterland
India with guidance from MART, a rural marketing consultancy. In the process, these senior execs developed
their insights into the needs and wants of rural consumers through interaction, discussion and research. The
output was several big commercially viable product ideas backed by inclusive business models — which DuPont
India will be developing soon with the active involvement of rural communities.

We then headed to Mumbai, India's financial capital, where we participated in a panel discussion hosted by Asia
Society entitled "INDOvations: Driving Global Innovations from Emerging Markets."Indovation designates the
unique process by which innovations are developed in India to serve a large number of people affordably and
sustainably in response to conditions of scarcity and diversity.
 Our fellow panelist, Geetu Verma, Exec Director of Innovation at PepsiCo India explained how her company has
devised inclusive business models to help scale up such Indovations. For instance, PepsiCo India and the
Punjab Agricultural University have co-developed a tractor-driven machine to systematically implement direct
seeding of rice (DSR), an eco-friendly technique that can reduce water use in rice paddies by 30% and cut
carbon emissions by 70%. DSR is a boon for Indian farmers who are reeling under the effects of water scarcity.
DSR's initial success has led PepsiCo to team up with the Indian Agricultural Research Institute to deploy DSR
nationwide. Verma pointed out that PepsiCo's partnerships with research institutions, state governments, NGOs,
and local communities help make the company's inclusive business models both scalable and sustainable.

Of course, social entrepreneurs have pioneered many of the inclusive business models that large multinationals
are now tapping into — and in Hyderabad, we presented at a boot camp (iDiya) for some of those entrepreneurs
at the Indian School of Business. Three innovative projects —MASARD (sanitary napkins production by/for poor
women), Akshaya Kalpa (integrated organic dairy venture), and Aakar Asha (center for enabling physically
disabled) — got the top three awards for their inclusive business models.These and the seven other projects in
the top ten will be getting mentoring and help connecting with funders to take their plans forward.

We also saw evidence that inclusive business models are making inroads in one of India's biggest and best-
known industries, IT services. In Chennai, the capital of the Tamil Nadu state and a city that is emerging as a big
IT hub, we participated in a seminar co-hosted by Cambridge University and the Confederation of Indian Industry
(CII) on how to scale up the Indian innovation ecosystem so that entrepreneurs, VC firms, universities, and
corporations can systematically co-create inclusive business models. One promising example was pointed out to
us by Sandhya Shekar, CEO, IIT Madras Research Park, who discussed how they have successfully incubated
profitable social enterprises such as DesiCrew, which employs many rural women as Business Process
Outsourcing (BPO) workers.

At the end of this long trip across India, we were inspired by the inclusive business models pioneered by private
sector companies — small and large, domestic and multinational — to deliver more value at less cost for more
people. We will be writing more about these pioneers in our blog posts throughout 2011.

A core theme of the World Economic Forum's 2011 Annual Meeting is "inclusive growth." We hope the CEOs
gathering in the chilly Davos in late January may find the tales of inclusive business models pioneered in India
not only heart-warming but also applicable in their own markets.

To read this article: blogs.hbr.org

About Authors:

Dr. Jaideep Prabhu is

the Jawaharlal Nehru Professor of
Indian Business and Enterprise.
Navi Radjou is Dr. Prasad Kaipa
Executive Director of the is a CEO Coach in Silicon
Centre for India & Global Valley and a senior research
Business (CIGB) at Judge fellow at the Centre for
Business School at the Leadership, Innovation, and
University of Cambridge. Change at the Indian School of
Dr. Simone Ahuja is Business.
the CEO and founder of Blood
Orange Media.