Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality

Robert S. Kaplan; George  Serafeim; Eduardo  Tugendhat

Article | Harvard Business Review | January–February 2018

Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality

by Robert S. Kaplan, George Serafeim and Eduardo Tugendhat

Abstract

More than a billion people in the developing world remain in extreme poverty and outside the formal economy. Traditional CSR programs have done little to alleviate the situation and rarely produce transformative change.
Instead of trying to fix local problems, the authors argue, corporations need to reimagine the regional ecosystems in which they participate. They should search for systemic, multisector opportunities; mobilize complementary partners; and obtain seed and scale-up financing from organizations with a mission to alleviate poverty. They should also align the various stakeholders around the new strategy, using proven tools such as a co-created strategy map.
These principles are informed by the authors’ experience with several successful inclusive-growth projects. An initiative in Uganda is bringing small maize farmers into the mainstream regional economy, while a training program in El Salvador is giving unemployed youths the skills to work in the country’s growing service sector.

Keywords: inclusive growth; sustainability; social impact; Business Strategy; shared value; impact investing; inequality; Poverty; corporate governance; balanced scorecard; strategy execution; Economic Growth; Developing Countries and Economies; Poverty; Equality and Inequality; Corporate Social Responsibility and Impact; Strategy; Investment;

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Citation:

Kaplan, Robert S., George Serafeim, and Eduardo Tugendhat. "Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality." Harvard Business Review 96, no. 1 (January–February 2018): 127–133.

This note was written to provide students with fundamental concepts and methods for the analysis of cost variances. It focuses on the decomposition of cost variances into price, quantity, and mix variance components, an approach that allows students to identify the root causes of differences between expected and actual costs.

Case | HBS Case Collection | November 2017 (Revised July 2018)

Summa Equity: Building Purpose-Driven Organizations

George Serafeim and David Freiberg

In 2015, Reynir Indahl left top Nordic private equity firm Altor Equity Partners to found Summa Equity (Summa). After long contemplation following the financial crisis, Indahl was convinced the financial system was producing negative externalities and that the current private equity model adopted by most firms would no longer be successful. Summa was developed under a new private equity model that sought to “future-proof” businesses by focusing on long-term value creation and growth, in addition to traditional private equity practices of implementing best practices and productivity improvements. To find businesses best suited for long-term growth with disruptive potential, Summa invested in four thematic areas that were mapped to megatrends outlined in the United Nations Sustainable Development Goals—trends Summa believed presented long-term growth opportunities for businesses that presented commercial solutions for these challenges. After a period of successful recruiting, fund raising, and deal completion, Summa needed to develop a set of practices and expectations across portfolio companies and partners. The case concludes with Indahl contemplating exiting Summa’s first company. What should Summa look for in a buyer? Is sale price all that matters, or should a potential buyer share Summa’s focus on building purpose-driven organizations with a positive impact on the world? How can Summa maximize its impact, both through investment and voice?

Keywords: corporate purpose; ESG; ＂ESG (environmental, social, governance) performance; social impact; social enterprise; private equity; investment management; finance; capital markets; management practices; leadership; innovation; entrepreneurship; voice; Environmental Impact; value creation; Private Equity; Social Enterprise; Finance; Capital Markets; Management Practices and Processes; Innovation Leadership; Leadership; Innovation and Management; Entrepreneurship; Mission and Purpose; Value Creation; Financial Services Industry;

Citation:

Serafeim, George, and David Freiberg. "Summa Equity: Building Purpose-Driven Organizations." Harvard Business School Case 118-028, November 2017. (Revised July 2018.) View Details

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During the past 50 years, several consulting companies introduced important new ideas that extended management theory and improved management practice. This paper draws upon public sources and the authors’ personal experiences to describe how three management consulting companies created and sustained several big management ideas. The consulting organizations identified companies that had introduced an innovation to address a practice gap or anomaly. It then described the innovation in articles, cases, and public conferences and proceeded to help a new set of companies implement the management innovation, which led to enhancements in the original innovation that made it more understandable, generalizable, and robust. The consulting leaders sustained their thought-leadership positions by creating an ecosystem with senior executives at pioneer corporations and academic/thought leaders. The paper also describes how other consulting companies did not sustain an initial thought-leadership position because of a failure to recognize the synergistic interplay between knowledge application and knowledge creation.

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Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality

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