Soapbox

July 30, 2012 12:05 am

Social innovation must be in core curriculum

Business schools are too focused on the race to unveil the latest social innovation, rather than on the concept of how scale can lower price

In recent years, business schools have been both advocates and developers of social innovations, often enlisting support from schools of design or engineering in exploring promising new products that are intended to address both economic and social demands. Barely a month goes by without some “pro-poor” or “base of the pyramid” or “inclusive” innovation hitting the news. A multitude of different solar-powered indoor lights and charcoal-saving cooking stoves have been invented in recent years.

But few of these innovations have been scaled up to benefit large numbers of people. Part of the problem may be that those engaged in social innovation activities at business schools operate apart from the mainstream curriculum. Indeed, perhaps more social innovations would attain scale if social enterprise activities were better integrated into the core curricula and business school graduates leveraged the traditional and emerging perspectives in their mainstream professions and entrepreneurial social ventures.

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The concepts of how scale can lower price and dramatically grow market share are at the foundation of traditional business disciplines, concepts that are somehow being missed in this race to see who can unveil the latest and greatest social innovation. Is it time for “doing good” silos to become part of mainstay “doing well” teaching?

Why haven’t these social innovations had the mass impact many would hope? Prices are often too high (or subsidised by aid donors, whose reach is limited and who offer little assurance of continuity or sustainability). In addition, long-standing incentives (and disincentives) may not be fully accounted for. As long as chopping down trees for charcoal is seen by local populations as a “free good” for example, incentives to switch to alternative cooking stoves are exceedingly weak.

Why is this basic challenge not being addressed in business schools, alongside the current focus on new, cutting edge devices?

Some major innovations have actually improved the lives of millions of people. What they have in common is that large commercial companies or NGOs ultimately found it in their interest to develop and market them. Microfinance is a case in point. It has been weaned away from continual dependence on aid. In some instances, these NGOs transformed themselves into banks. As traditional banks began to recognise the potential of microfinance – and the competition for saving and lending dollars from “base of the pyramid” clients – they found it profitable to open microfinance windows. In the same way, the use of mobile phones for financial and other transactions spread like wildfire when government regulators in Kenya, Nigeria and many other countries allowed phone companies to provide financial services and/or banks to operate mobile networks. Faculty and students of marketing, supply chain, IT and strategy could all bring something to the table in understanding how such products could be brought to scale.

The same could apply to global health. The spread of anti-mosquito bed nets might be far broader if commercial companies operating in a competitive framework built on the achievements of NGOs, first by collaborating with those NGOs and then offering a fully commercially viable alternative. Indian companies have been particularly good at finding opportunities at the “base of the pyramid”; partly because the cost base and reach of those companies was already impressive.

One need look no further than Clayton Christianson’s game-changing concept of disruptive innovation as described in his book The Innovator’s Dilemma, a concept widely taught and studied in business schools, to appreciate the power of simplicity and scale in capturing new markets or overturning existing ones.

Governments and NGOs can play critical roles as catalysts, sponsors and partners, but ultimately private markets must see the benefits of these products if they are to become truly mass-market. Perhaps Philips or GE will someday follow suit with inexpensive mass-produced solar light? Now that would be a great subject for a business school case competition – lighting the world at low cost with green design and mass marketing.

Business education is making a real contribution to social innovation. Perhaps that contribution could have even more impact in improving the welfare of millions around the developing world if, instead of being “islands”, social innovation activities were integrated into core curricula and these opportunities became mainstream in the classroom and the workplace.

Guy Pfeffermann is chief executive of the Global Business School Network and was previously chief economist for the International Finance Corporation. Jonathan Doh is the Herbert Rammrath chair in international business and director, Center for Global Leadership at the Villanova School of Business.

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