Building Capitalism With the Capacity to Lead
In the 1990s corporate leaders boldly argued that business, not government, was best prepared to lead solutions to the world’s most intractable problems. “Get out of our way,” was the mantra, “and we’ll get the work done.” Years later we understand the extent of business’ ill-preparedness for the very complex challenges of poverty and sustainability. Corporate leaders assumed that existing approaches, geared to highly organized markets, were adequate for highly complex new jobs where markets were often undeveloped. The result was often failed promises (e.g., the privatization of municipal water systems in Argentina or South Africa), large-scale crisis (e.g., the 2008 food price shocks and sub-prime crises), and the globalization of ungovernable informal and criminal economies. We’ve lost time at a critical moment in human history.
Yet business leaders were also correct: a carefully designed product or business model can be an amazingly powerful vehicle underserved populations and for solving large-scale problems. The global penetration of mobile phones as a tool for household economic and political empowermment in low-income countries is a stunning case in point. Jeb Brugmann helps companies apply their capacities together with social and public sector innovators and informal sector entrepreneurs to co-create the product specifications, value chains , and partnerships through which companies can profitably deliver enriched value propositions to market. An enriched value proposition is much more than a ‘win-win’ or a ‘triple bottom line.’ It is a design brief for a new market-based system, which supports new business-consumer relationships that address a bundle of unmet functional, emotional, and developmental needs.
The guiding principle underlying an enriched value proposition is that the company’s investment in a consumer relationship is leveraged with the investments of other organizations to optimize the delivery of value in the consumer’s life. This typically involves the design of a new category of relationship, in which the sales transaction is supported by multiple other points of value exchange, often involving a network of organizations coordinating their efforts to provide a bundle of solutions and experiences. The sale of even a simple product, such as a nutrient-enriched food product, can also support and be supported by delivery of other value components, such as education, social validation, access to medical services, time savings, etc.
The development of such a value proposition begins with a comprehensive understanding of the consumer’s life. Ethnographic and other qualitative research methods are critical for this purpose. They are used through the entire product development and consumer acceptance cycle to establish a refined sense of value attributes associated with the product and related daily activities. To further illustrate, a food product’s nutritional value is not isolated from the home environment, food preparation and the family meal-time experience, from the parenting role, and from other daily routines and challenges. Once all the different value components associated with the product and consumer relationship are understood, an analysis is undertaken to determine the cost implications of delivering each component of value, and which can and cannot be supported on the company’s financial model. This focuses decisions regarding collaboration with other organizations as partners in delivering parts of the enriched value proposition on their budgets to fulfill their missions. Schools, health clinics, development NGOs, churches, micro-finance institutions, cultural organizations and others co-create a consumer cycle with the company to deliver the enriched value proposition in a stable way. The resulting market ‘ecosystem’ can also enhance business value creation in a variety of ways, providing operating and marketing efficiencies, data collection, brand value, and license to operate.
© Jeb Brugmann, 2009. All rights reserved. May be reproduced and circulated with authorship and copyright attribution. Source: www. jebbrugmann.com