Tag Archives: growth

January 27, 2012 · 3:55 pm

Davos 2012: Nailing the other foot to the floor

By Clare Melford, CEO, IBLF

The Arab Spring in January 2011 left participants at last year’s World Economic Forum scrambling for sensible soundbytes. This gave this elite gathering the appearance of being somewhat out of touch with the general public.

This year’s Davos meeting badly needed to demonstrate that those gathered were both informed of, and dealing with, the wider concerns of the world. Unfortunately, given the timing of the meeting (falling in the middle of the Chinese New Year), the conference has been somewhat lacking in Chinese participants.

Hence, it does not have quite the diversity of opinion, experience and culture that might have lent a more connected feel. There is however a reasonable contingent from India who are doing their best to raise spirits and forecasts from the overriding sense of Anglo-Saxon gloom pervading proceedings. The jaunty 8% GDP growth rates and flamboyant tech entrepreneurs are a much- needed shot in the arm to the general malaise that dominates other national tents.

However the Indians are in a minority here. The biggest groups (or the most visible ones) by far at the “World” Economic Forum are North Americans and Europeans. Inevitably, this has led to the main themes of this conference being those that currently obsess the Developed World – namely, the euro, unemployment and debt crises.

The risk with this under-representation of Asia, Latin America and Africa at this year’s WEF is two-fold. Firstly, the best ideas come from the most diverse groups. With a somewhat homogenous group here in Davos, can we be sure that we are really getting the best the world has to offer to tackle our undoubtedly large and shared problems?

Secondly, without the voices of more buoyant, dynamic and growing economies loudly in the room, there is a risk that those present “talk ourselves down” and in fact exacerbate the pessimism that will ultimately become a self-fulfilling prophecy. A negative economic outlook will not encourage customers to spend or businesses to invest – and this in turn will curtail job growth and tax receipts, making the problems for developed countries worse.

In an untempered focus on the problems of the developed world – without the tonic of the opportunities of the less developed – we risk “nailing our other foot to the floor”.

During the forum, a Microsoft spokesperson eloquently explained the risk of limited experiences arising from an increasingly networked world, and in creating a culture of fear in the process. To explain – the opportunities from social media mean we can communicate with anyone we want. However, often those we want to communicate with are those with similar views to our own.

Social networks allow us to create large groups of contacts who share our mindset, giving us the misguided belief that our views are the norm.

This creates situations where our views, informed or ill informed, get reinforced without the moderating influence of divergent ones. Examples of this can be seen in the polarisation of debate in the American political sphere and in the intemperate reactions of many developed economies to migration. It is easy to see how fear can take hold in such large but self-selecting social networks.

In fact the woman from Microsoft observed that the most common emotion she picked up from her analysis of social networks was fear. Her contention was that the ability to connect with everyone has in fact reduced the likelihood that we will connect anyone with differing views from ourselves – and that the impact of that can be an increase in fear.

In many ways, the European project was as much to address this fundamental human trait as anything else. Centuries of war across Europe have been largely brought to an end by a process of ever deepening integration and mutual understanding, of which the eurozone is just the latest (and most ambitious) facet.

 My overriding hope from this year’s World Economic Forum is quite simply this: Those of us that are present should not let the lack of diversity encourage us into talking up a more fearful future than the one that is most certainly possible.

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October 18, 2011 · 5:00 pm

The Big Question: Why should companies care about ‘inclusive growth’?

By Graham Baxter, Global Programmes Director – IBLF

9/11 marked the beginning of a decade in which unbridled economic growth was brought to a shuddering halt by the financial crisis.

It was characterised by large-scale unemployment, marginalised youth and a yawning gap between the rich and poor. That decade culminated in 2011 – the “year of indignation” as aptly coined by Gideon Rachman of the Financial Times – a year in which the frustration of the excluded spilled out onto the streets, from Tottenham to Tunisia.

The International Business Leaders Forum believes the challenge of social exclusion is no longer the prerogative of governments and must be addressed by business -  the creator and purveyor of jobs and the main guarantor of social inclusiveness.

The private sector has a vested interest in avoiding social instability. Even without open conflict, the seething indignation of the excluded – whether the Naxalites in India, the urban migrant in China, the ‘rebels’ in Libya, or the ‘hoodies’ in London – damages and destroys social stability and hence business growth.

So what should companies do?

They need to base their business model on the concept of ‘Inclusive Growth’ whereby they consciously include the world’s ‘have-nots’ as employees, suppliers or customers. This is the best opportunity in years for companies to address social exclusion directly, not as part of a philanthropic commitment, but as a core part of their business.

Over the last decade, many leading multinationals have gone out of their way to focus on the excluded in the community through their social investment and employee engagement initiatives.  While these programmes should not be denigrated – they deliver tangible results and benefits to many individuals and their families – their impact will always be marginal relative to the scale of the challenge.

It is through their core business activity that companies can make the biggest difference and have the most profound impact on society.

There are already examples of this in action taking place in countries such as India, where for instance telecoms and financial services companies provide the rural poor with access to their services. Or take some of the companies participating in the Business Call to Action initiative in which IBLF is a partner. Through IBLF-run workshops in Mumbai, Jakarta, Hanoi and elsewhere, we have discovered and promoted an exciting range of imaginative approaches by MNCs such as Coca Cola’s Micro Distribution Centres in East Africa, Diageo’s sorghum initiative in Cameroon or Anglo American’s Zimele model (now being transferred to South America from South Africa).

These are tried and tested ideas, not development theories – and they work. Inclusive growth is not an act of charity or mere “social responsibility”, but a way of simultaneously accessing and growing some of the world’s biggest untapped markets, while supporting social development.

Business – working in partnership with governments and civil society – can generate innovative, collaborative business models that specifically include the excluded.

If global business leaders and their companies direct just a fraction of their intellectual and financial resources to this challenge, it would be a mighty contribution to help us move on from a decade of indignation to one of inclusion and widespread prosperity.

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August 16, 2011 · 11:26 am

The business sector’s pivotal role in growth

By Mark Foster, Chairman of the IBLF Board of Trustees and former Group CEO, Accenture

The current debt crisis has been portrayed in apocalyptic terms. The downgrading of the US’ triple-A rating, the paralysis of the political systems and the deficit of leadership in both US and Europe are depicted as marking the end of the era of growth. Cut public spending too deep and too fast, and recovery will be undermined; don’t cut it enough, and there’s a risk of default and a further collapse of the economic system.

Furthermore, the common assumption that financial growth leads automatically to a more prosperous and stable world has been seriously undermined.

From Tottenham to Tunisia, widespread unemployment, disenfranchisement of youth, marginalisation of ethnic and religious minorities, unmanageable urban concentration, mistrust of the ruling elites, and the yawning gap between rich and poor are already resulting in civil unrest. With the global population on course to reach 9bln by 2045, the prospect of balanced and consistent growth fades further from our grasp daily.

For business, however, far from a reason to despair, this new world of lower growth, social unrest, and financial instability provides the best opportunity in years to reassess its market strategy.

Companies – and their leaders – that can best restructure their organisations to address the new challenges will be those that are most likely to gain a competitive advantage – in this new environment, they will be the ones able not only to survive, but to thrive.

At the root of a new vision for business is a new concept of growth, redefined in terms of its longer-term economic and social impact to capture a broader set of indicators, such as job creation, skill development, and efficient resource use. At the company level, it’s not only shareholder value, but stakeholder value which will count.

It is going to require a concerted effort on all sides, but, in the absence of political leadership, business has a pivotal role to play in redefining growth.

It will be companies, not governments, which will engineer the quantum leap in how to manage the earth’s finite physical and financial resources. For example companies are already beginning to redesign their products and packaging to improve energy efficiency, reduce resource consumption and waste in their production processes. Getting more for less is going to be critical in the years to come.

It will be companies which will redefine their business model to consciously include the world’s “have-nots”, as employees, suppliers or customers. There are already plenty of examples of this in countries such as India such as telecommunication and financial services companies providing access to their services to the rural poor. Inclusive growth is not an act of charity or “social responsibility”, but a way of simultaneously accessing and growing some of the world’s biggest untapped markets, while supporting social development.

It will be companies which will guide and educate their customers in the benefits of more responsible – healthier, less environmentally damaging, less wasteful – consumption. This must lead each one of us question our consumption habits  – and ultimately, even to reduce our consumption.

It will be companies that will bring under control the cost to society of lax corporate governance, dubious financial schemes and outright corruption. Where a stable regulatory framework is absent or unstable, companies which will voluntarily regulate themselves, and work with governments to create a regulatory environment which incentivises efficiency, integrity, and social equity.

This new emphasis on the quality rather than the quantity of growth will require nothing less than a radical new way of thinking and behaving. In the company of the future, a new generation of leaders, endowed not only with financial skills, but leadership values, will need to be guided by an appreciation of the inexorable convergence of their public and private responsibilities, of the critical importance of multi-stakeholder collaboration, and of the primacy of long-term goals over short-term profit.

Now is the time for today’s business leaders to step up with confidence to engage with the challenges the world faces and lead the way to smarter, more inclusive and more responsible growth.

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