This report looks at the constraints within MNCs that are preventing the uptake and internalisation of inclusive business models. It considers the internal barriers to scale and the specific management practices that MNCs adopt or develop for their inclusive business. It presents what it means to develop and tailor management practices to inclusive business, why it is important for the success of the inclusive business and how companies can improve and become leaders.
Developed by - Business Call to Action and UNDP
Synopsis: To achieve inclusive business growth and scale, companies not only need to have the right products, services and business model, but also the appropriate management practices. Base of the pyramid (BoP) markets require the adaptation of traditional management practices or the development of new ones. MNCs engaging in the BoP market are often faced with unfamiliar contexts, new kinds of customers and suppliers, thin and volatile operating margins, and long timeframes to scale and produce financial returns.
BCtA’s work draws on a decade of experience engaging with companies implementing IB across sizes, sectors and regions. It includes insights from the latest State of IB Survey and interviews with executives from over 20 corporations across regions from June 2018 to January 2019. This work identified a number of organisational barriers as MNCs seek to adopt and scale inclusive businesses. These include a lack of capital, an aversion to risks, a lack of inclusive business awareness, inadequate leadership, and unfavourable attitudes among staff and management with respect to changes in working habits.
However, the report shows how innovative management practices tailored to the BoP market can provide competitive advantage, ensure a better understanding and responsiveness to stakeholders, and balance short-term stability with long-term viability. The report identifies principles that are quite different from business-as-usual. These include: in-depth stakeholder engagement; value-based talent management practices that build skilled loyal staff; staff wellbeing management; coherent performance incentives for management tied to inclusive business success; target-setting consistent with long-term value creation objectives; impact management; and a sharp understanding of environmental, social and governance risks and opportunities within the inclusive business. These practices allow companies to gain critical insights to improve their models and better communicate impact and business value thus gaining greater internal support for the sustainability and replication of inclusive business initiatives.
Actions for MNCs – Companies who are looking to engage in inclusive business activity or scale their inclusive business are encouraged to use the Benchmarking Tool to understand where they are at in their inclusive business management practices compared to peers and select areas where they wish to develop an improvement plan.
Tools and guidance - The report provides a Benchmarking Tool that will be available online, free of charge