Wednesday, April 10, 2013

Emerging Markets and Inclusive Growth

"Change is the window through which the future enters your life." It's all around you, in many types and shapes. You can bring it about yourself or it can come in ways that give you little choice about its what, when, and how. Fighting against change slow it down or divert it, but it won't stop it however. If you wish to succeed in this rapidly changing new world "you must learn to look on change as a friend – one who presents you with an opportunity for growth and improvement." The rate of change in today’s world is constantly increasing. The magnitude of today's environmental, competitive, and global market change is unprecedented. It's a very interesting and exciting world, but it's also volatile and chaotic. This paper is focussing on emerging market & inclusive growth as how company needs to manage change.
Reaching out to the lower strata in emerging markets has long been an admirable social goal and important aspect and, it also represents the biggest business opportunity and helps in growing the smaller market. The rapid change is happening where its imperative for organization finding ways to capture “inclusive growth” by reaching the lowest-income segments as both employees and consumers for their growth. It has been observed and found that the single most important thing to do (around inclusiveness) is to manage change. Organization are focusing the emerging market even if some feels that organization doesn’t have the time and resources to do a large inclusiveness plan, then have to start with something smaller and once you have that first step you see the results from it, will be encouraged to take a step ahead. In both the scenario whether large or small inclusiveness plan leaders role is very vital. His creativity and innovation ability can help an organization to achieve the social growth. Having a small gesture of showing respect for people; promotes fairness and equity; engages the talents, experiences, and capabilities of others; fosters a sense of belonging; works to understand the perspectives of others; and creates opportunities for access can reflect and show great success. An inclusive plan helps organization accomplish their missions with greater power and greater success and managing change. Inclusiveness describes how people from all backgrounds are involved in the organization, how their perspectives are valued, and how their needs are understood.
With inclusiveness approach we can invite talent from all backgrounds as well as provide equal opportunity for each person to succeed in a way that works for them. With diverse composition leads to learning-centered organizations that value contributions of all people, in all aspects of the organization and all can be achieved by the approach of leader. It is a challenge in current scenario but if strategized can lead to sustaining and support inclusiveness. The main purpose of this paper is to know how creativity and innovation can be used to impact on inclusive growth. The study is focused on what are the current trends in subject and how can further enhance in following area:
·         Communicate more effectively with diverse constituent groups and the public
·         Take advantage of improved problem-solving
·         To  increased creativity and innovation
·         Ability to learn from people at all levels. 
“Inclusive Growth means rapid and sustained poverty reduction and allows people to contribute to and benefit from economic growth”. “To provide the mass of our people to access basic facilities such as health, education, clean drinking water etc. and the governments at different levels have to ensure the provision of these services". 
Share in Output and Employment of different sectors
      Agriculture: 19% in GDP, 53.16% in Employ.
      Industry: 26.3% in GDP, 21.47% in Employ.
      Services: 54.7% in GDP, 25.37% in Employ.
      Employment growth increased in recent years but quality is low.
      Unemployment rate in India was last reported at 9.4% in 2009/10 fiscal year.
      There are 458 million workers in India in 2008-09
      Out of this 423 million workers are informal/unorganized workers (92%).
      Growth in employment more in unorganized sector.
      Workers in this sector do not have social security.
Performance of human development has 6 basic issues
1.      Low level of human development: India’s rank in HDI (human development index has improved from 132 in 1997 to 126 in 2004. Adult literacy rate is 61%.
2.      Slow progress in human development
3.      Significant regional and social disparities
4.      Low levels of social sector expenditures
5.      Low quantity and quality of education and health 
Inclusive growth is a broader concept covers economic, social and cultural aspects of development. Can inclusive growth have synonymous with equitable development? If we analyze there can be complimentarily between growth and equity, as economic growth can create opportunities for wider participation of people and equity is important in itself as well as for as economic growth by harnessing human resource in broader scale by leader.
Inclusive approach is not a new concept for the world. There has been a perception that globalization and liberalization policies which have given more weightage to market have excluded many section of the population. But inclusive approach is much wider concept and goes beyond great subjects. Inclusive growth objectives is related to examine performance, challenges and policies in four inter related elements : agriculture, poverty reduction, decline in regional disparity and human development.
 Inclusive Marketing is an approach that looks at the poor not only as consumers but also as producers/suppliers. This approach offers promise to add economic value to goods and services contributed by the poor. It can therefore impact poverty positively by improving the quality of life of the poor."Pradeep Kashyap, Founder & CEO, MART 
Inclusive growth has long been proclaimed as the key to reaching the lower strata and geographically remote area. But is it used as a major opportunity for businesses by the leaders in emerging markets. Such growth embraces the customers, employees, distributors and intermediaries. To do business in this market, organization are showing great interest and credit to be given to leaders of the companies who are entering in the market, making products and services available not just at low cost but require innovative manufacturing, marketing and delivery solutions. In past it was discouraging and had great challenges. India’s business frontier lies in the thousands of small towns and tiny villages as well as in the many poor sections of cities. Indian manufacturers and organization have the means as well as the motive to reach the hundreds of millions of India’s poor - and has been using innovative business models to drive inclusive growth.  
To better understand how India’s manufacturing sector and various companies is approaching growth through inclusive innovation. A research was carried out by Accenture – a survey with 55 senior executives at a cross-section of companies and analyzed: Manufacturing companies in India have a big advantage over many of their counterparts in other countries. India’s population in the income group of $4 to $20 a day, its emerging middle class, is expected to explode, increasing from 16.5 percent of the population to 49 percent by 2030. The 725 million people who will make $4 to $20 per day in 2030 will coexist with 710 million people earning less than $4 a day. Large consumer demand spread across a range of low- and middle-income segments will provide Indian businesses with opportunities to experiment with different scaling strategies. Even during the economic downturn, India added 10 million mobile connections each month, thanks largely to a surge in new cell-phone accounts among the poor. India’s also benefits from a large pool of entrepreneurial talent. Businesses now also have the Indian government as their ally on this journey. 
Indeed Leadership at the different levels of managing a business brings dimensions to the organization go beyond mere knowledge or basic and also uses essential management skills. Leadership, according to the traditional definition by such classical authors as C. Barnard and A. Selznick, brings something significant to a business: it helps to define the company’s direction over the long-term, and gives sense and coherence to the combination of strategy, policies and action plans, both inside and outside the organization.  
The leaders identify location to work in low-income markets and with the right mix of approaches help to motivate people and in the process create a great culture.  
1)      The Kolkata-based Indian conglomerate ITC has figured out beginning in 2000, the company set up Internet kiosks, or “e-Choupals” (choupal is the Hindi word for “village gathering place”), that give farmers access to information in the local language on the weather and current crop prices, offer guidance on agricultural practices and risk management, and make it easier both to buy farm supplies and sell produce. Some 6,500 of these kiosks can be accessed by more than 4 million Indian farmers who grow coffee beans, rice, soybeans and wheat. ITC has now also deployed advanced analytics and mobile technologies to track data from individual farms so the farmers can improve their pricing, target the right customer segments and improve their logistics, including crop transport and storage.  
2)      ITC-Aashirvaad is India’s premier brand of packaged flour. ITC has attained the lead by building on key attributes of its network of village-based Internet kiosks to create best-in-class products for middle- and high-income households. With the help of its network, largely made up of farmers in 40,000 villages in 10 states, ITC is well positioned to consistently and cost-effectively procure different varieties of high-quality wheat. ITC also returns a portion of the profits from every pack of Aashirvaad product to water conservation efforts. This initiative has already employed 26,000 people, made possible irrigation on 31,000 acres, and implemented soil moisture conservation measures on more than 37,000 acres.  
3)      Indoor Air Pollution takes a heavy toll each year in India, with over 4,00,000 women and children dying prematurely from respiratory illnesses. Shell Foundation reached out to districts of Mysore, Koppal, Udupi and Raichur in the state of Karnataka, India, through Khidki Amma and talked about simple ways to minimize smoke in the kitchen. The "My Kitchen, My Pride" campaign by Shell Foundation in 2008-09 focussed on raising awareness of Indoor Air Pollution in villages. Typically, villagers use poorly designed, wood fired stoves resulting in toxic pollution in their homes. The campaign included lessons at schools, street plays and van campaigns, village gatherings (baithaks) and games. 
4)      "Lijjat Papad-Women and Entrepreneurship" describes the successful entrepreneurial venture set up by seven semi-literate women from a small community in rural India.  The case gives an account of the setting up and functioning of the Sri Mahila Griha Udyog Lijjat Papad (SMGULP). SMGULP was a cooperative system in which women over the age of 18 could become members. Starting humbly, with an initial capital of Rs 80, borrowed from a local money lender and social worker, SMGULP grew phenomenally. In 2002, it had a turnover of Rs 3 billion and exports worth Rs.100 million. It employed 42,000 people in 62 divisions .... 
5)      Godrej & Boyce that was responsible for developing the Chotukool - an innovative cooler designed for the poor - spent a long time in the field to learn about the habits and lives of consumers in low-income groups across rural India. By systematically applying tools such as observation and interview methods, language and image-processing skills, and reflective thinking, the Godrej & Boyce team was able to unearth insights that ordinary surveys would not have divulged. 
6)      Eureka Forbes launched AquaSure, a water-storage purifier, through its traditional distributor-dealer channel in rural markets, sales did not pick up. It then teamed with Basix, a microfinance company, to sell the product. Sales jumped by 20 percent. Eureka Forbes built on Basix’s network of loan officers, who serve as the link between the company and rural populations, providing customer intelligence while also marketing the purifiers to the self-help groups that it meets regularly. 
7)      Marico continues to occupy the number one position in the hair-oil segment across rural and urban low- and middle-income groups. The “low-cost/fail-fast” prototyping model has been key to Marico’s success. This model has helped Marico repeatedly fine-tune product characteristics and packaging of coconut oil to suit the budgets and usage requirements of low income.
Inclusive innovation is sure to become increasingly important as all emerging markets - not just India - begin to find ways to bring poor and rural people into their economies. In the decades to come, those groups will become critical to business growth in much of the world. Inclusive innovations will spin off new technologies, give rise to disruptive business opportunities, and create new avenues for employment and consumption.
The Evian Group defines inclusive growth as a process which entails sustainable and responsible creation -- as well as just distribution of – both wealth and welfare. The notion entails three main pillars that should be mutually reinforcing:
1. Sustainable & responsible business where opportunities for those excluded from current growth models are created and where self empowerment is generated.
2. Social progress and human well-being have to be a pivotal element of the model and should be demonstrated by the right metrics.
3. Good Governance involves the provision and distribution of adequate public goods. It should sustain and frame robustly the two axes above and provide the necessary secure environment to protect livelihoods. 
C.K Prahalad coined a number of terms in his landmark publication The Fortune at the Bottom of the Pyramid. He referred to what he termed the “aspiring classes” and to the fact that the approach to the market that he advocated would result in what he called “a more inclusive lens of capitalism”. Indeed a more inclusive lens of capitalism is the basic survival kit of the 21st century global economy and global society.
After profitability, the problem identified is the absence of the right culture for putting inclusive business models into practice and also believe that the talent in their organization is either partly or completely nonaligned with the launch of inclusive models.
·         First challenge is  human resources policies are not geared to hire and retain employees who are willing to experiment.
·         Second, companies lack mentors, specifically in the area of innovation.
It has been observed with the right mix of rewards & recognition and incentives, employees will dedicate them to inclusive growth. New Delhi-based Mankind Pharma, for example, has built a distribution network of committed representatives. The company’s fundamental belief is that medicine should be affordable and accessible to India’s poor and remote populations.
To reach customers in low-income regions such as Uttar Pradesh effectively, Mankind recruits its field staff from low-income semi-urban and rural populations. According to the company’s CEO, these recruits are entrepreneurial, persevering and innovative. Rather than hire these reps as contractors, Mankind keeps them on its payroll to make them feel a part of the business family. In spite of being very small compared with its global counterparts, Mankind pays its medical representatives some of the best salaries in the industry. It also makes it a point to recognize and reward performance. During the most recent fiscal year, 4,000 of its 6,500 reps were awarded medals for their performance.
Because of this strategy, Mankind’s distribution network has become its major strength. The company reaches practically every village in India with more than 1,000 residents, and is now one of the country’s fastest-growing pharmaceutical companies, with compound annual growth of 35 percent over the past four years. Its drugs are among the most widely prescribed in India.
the research, identified 4E concept, if effectively use can help in inclusive growth resulting to great reach and profitability.
Developing strong empathy is the biggest challenge, especially when one is doing business with the lower segment. Difficult task is poor customers or  those living in remote locations are reluctant to express their real views on products because of fear of comparison with peers. Leaders therefore need to devise new ways to build a sharper understanding of customer needs. The organization should ensure there team to spend long time in field just to learn basic habits of poor and make them aware.
Leaders should identify the true entrepreneurs who are focusing in inclusive business and with collaboration (after robust evaluation of entrepreneurs) can make inclusive initiatives more viable. The focus should not only be in growing market but also educating poor in health and safety. 
Leaders should scale up rapidly once launched in emerging markets. A prior planning, pilot run and final launch after incorporating respective changes (if required).  The focus should be in maximum output with minimum inputs i.e The idea is to think big, start small and scale up fast, but with minimum investment. 
4.      EXNOVATION :
Exnovation does not actually mean propagating a philosophy of not innovating within the organization but in  reality means that once a process has been tested, modulated and finally super-efficiently mastered and bested within the innovative circles of any organization, there should be a critical system that ensures that when this process is replicated across the various offices of the organization, the process is not changed but is implemented in exactly the same manner in which it was made super-efficient; in other words. The logic is that not every individual is competent at innovating – yet, everybody wishes to innovate, which is what can create a doomsday scenario within any organization.
From senior leaders to new hires, people in the organization must learn to think and breathe inclusion if they are to make it work and should make it part of their culture.
In 2009 the world can be described as composed of two globes. Two globes between which there is no intercourse and no sympathy; that are as ignorant of each other's habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets.
The rich and the poor…..We need focus on same and to manage as the role of an organization is becoming very vital.
This is clearly unsustainable morally, economically, socially and politically. The great and urgent challenge of the 21st century – especially now as we enter its second decade – is to generate inclusive and sustainable growth and manage better.
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