Earlier this week, I had the privilege of hearing Amit Mehra, Founder and CEO of Reuters Market Light (RML) speak at an event called The Intrapreneur Lab held at the Said Business School in Oxford.
The Reuters Market Light story
RML is a pioneering service that harnesses mobile technology to deliver accurate, real-time information to smallholder farmers in India on the market price of their crops. Having this data at their fingertips allows them to realise more of the value of their harvest because they can always check if they’re being offered a fair price.
RML isn’t (yet) profitable, but it is run absolutely as a business, and Amit makes no bones about his intention to achieve positive cash flow as soon as possible. In the meantime, RML has won a cabinet-ful of social impact awards and garnered significant positive press coverage. So while it may not have made money, it has added huge reputational value to the Reuters brand.
Crucial in the RML success story is a conversation Amit had in 2008 with the then-CEO of Reuters – and his boss at the time – Tom Glocer, when RML was still an embryonic idea. Glocer told him not to worry about achieving positive cash flow within the first 2-3 years (the usual timeframe granted to new products before they are dismissed as unviable). He told Mehra to focus on building a business that would be profitable within 7-10 years.
The emergence of intrapreneurship
Intrapreneurship – the practice of driving social innovation from within big companies – is an idea whose time has come. The Intrapreneur Lab is an exciting partnership between three organisations – Leadership Laboratories, Accenture andBusiness Fights Poverty – that supports people inside big corporations who have ideas for business ventures that could create significant social impact. Already, they are working with Barclays, GSK, Philips and others.
Of course, business solutions to social issues are nothing new. Perhaps the most famous pioneer in this space is the Grameen Bank. Founded in 1976 by Nobel Prize-winner and self-styled ‘banker to the poor’ Muhammad Yunus, it lends tiny sums of money to the very poor – predominantly women – enabling them to feed their families and, in some cases, start their own micro-enterprises. The micro-finance model has been hugely successful at lifting people in developing countries out of extreme poverty.
The Grameen story is no fluke. Given the importance of access to capital in addressing poverty, financial institutions have a vital role to play. Thanks in no small part to the vociferous campaigning of Yunus over the last 20 years, the tide is turning against the conventional wisdom that charitable aid is the key to tackling global poverty. If we do manage to ‘make poverty history’, we won’t have Bob Geldof or Bono to thank. Rather, it will be down to the money-lenders and investors who are willing to think long-term.
That last caveat is an important one. One of the distinctive things about Grameen is that when Yunus started lending his own money to poor women in Bangladesh, he wasn’t looking to get it back with interest next week, next month or even next quarter. He knew that the bank needed to be financially sustainable, but he was pretty relaxed about how long it would take.
Reaching bottom-of-the-pyramid consumers
In the field of consumer goods, the holy grail is the development of products that reduce environmental impact and, at the same time, can be marketed and sold to those at the bottom of the pyramid. The two giants in this area, Unilever and P&G, both offer products that significantly reduce the amount of water needed to wash clothes – Comfort One Rinse and Downy Single Rinse. The race is now on to get products like these to consumers at the very bottom of the income scale.
In many of the poorest communities across Africa and Asia, finding clean water involves walking – often many miles – to the nearest well. In this context, reducing water consumption isn’t just about saving the environment: it’s about saving valuable hours that could otherwise be dedicated to more productive, revenue-generating activities.
Often, to achieve market penetration in the first place, a company will need to donate its products and defer financial returns. Long-term though, the most desirable outcome isn’t charity: it’s the development of a commercially viable market for the goods.
It’s no coincidence that one of the most eye-catching changes implemented by Paul Polman (Unilever CEO, widely considered the poster boy of responsible capitalism) has been to move away from quarterly financial reporting. Shareholders may not have been universally delighted (to say the least), but it’s a significant step towards the kind of patient approach that’s needed if you’re serious about creating social impact through commerce (which Polman clearly is).
The role of senior leadership
The common denominator in all these stories – RML, Grameen, P&G, Unilever – is clear. The potential of the intrapreneurship movement is huge. But companies can only unlock this potential if the senior leadership is willing to do what Tom Glocer did for Amit Mehra at Reuters: offer a space for long-term thinking to people with the vision and courage to get things done.