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Lessons from India: Social Profitability

davidlivermore | September 17th, 2010 1 Comment

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I often meet people keen to go to India to teach them about business, leadership, and faith. But India has as many lessons to give as receive. Take for example, the long time commitment from Indian businesses to serve others while also being financially profitable. While corporate social responsibility, creative capitalism, and the triple bottom line are relatively new, trendy ideas in the West, many Indian businesses have long measured their success by how they care for their most important asset—people. In fact, a recent study among the 100 leading businesses in India found that social mission trumped shared holder value for every executive surveyed.

For example, ITC, a leading multi-business conglomerate involved in the study said, “Envisioning a larger societal purpose has always been a hallmark of ITC. The company sees no conflict between the twin goals of share holder value enhancement and societal value creation.”

This sounds nice on paper but what’s it look like in reality? Two-thirds of the profits of the mammoth Tata Group companies go back into society through charitable foundations. The Godrej Group builds schools, medical clinics, and housing for employees.

There are important debates about whether it’s really the company’s right to use profits this way or whether shareholders should simply be paid their dividends and allowed to personally decide how to use their profits to make the world a better place (an argument largely rooted in an individualist versus a collectivist perspective). And some argue that Bill Gates did more to help the world as profit-producing CEO of Microsoft (by giving millions of people access to technology) than he ever will as a philanthropist.

Others are better qualified to debate these issues. I’m simply calling us to pay attention to the inspiring, exemplary work of many Indian businesses that sheds new light on what it looks like to invest in human capital—both employees and society as whole.

The researchers behind this recent study are careful to point out that not all Indian businesses are characterized by what they found. And just as we can’t simply take 10 principles of effective organizations from the U.S. and transfer them elsewhere, so also we ought to beware of simply thinking we can replicate the Indian model in other cultural contexts. So much of their commitment to social mission flows from the ebb and flow of Indian culture and society.

But let’s not miss out on the lessons to be learned from India. It’s fun to describe the way Google’s work environment, complete with free massages and food contributes to their success. But let’s also talk about how Indian companies have remained viable while also building complete communities for their employees and families. Meanwhile, India’s economy barely felt the recent “Great Recession” and Indian companies have a track record of making the U.S. publicly trade companies they acquire more profitable (financially and socially!).

If you have a chance to go share some of your expertise in India, go for it. But don’t miss out on the nuggets of wisdom and success you can bring back home.

[The study referenced is from P. Cappelli, H. Singh, J. Singh, & M. Useem, The India Way, Academy of Management Perspectives, 24, 2, May 2010, page 6-24].

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