Wednesday, November 7, 2012

Mark Kramer On How To Fix Capitalism

By Manuwant Choudhary

I am not interested in Obama's second term or his pep talks but accidentally I happened to `gate crash' at a talk held at the Marriott in Gurgaon `How To Fix Capitalism'.

I must perhaps be the only farmer attending but it was refreshing to hear an American Mark Kramer talk about how the corporates must reach out to the farmers and must explore what he calls `Shared Value'.

"Corporates generally ignore social issues and even when they don't they address the concerns through philanthropy or through Corporate Social Responsibility but all this is just is about dividing up the pie, its not about increasing productivity but just about shifting away of profits."

Mr. Kramer says, "We need to change the rules of the business and treat social problems like business problems."

"Solving social problems through charity and not through business is stupid."

Mr. Kramer is currently on a global lecture on his ideas convincing corporates to think differently and even solve the worlds problems and not compromise on their own  profits.

He said that now there are companies who analyse not just the profits of a project but also its social impact.

He gave the example on Novartis in India who manufacture drugs but realised they had no access to their buyers so what they did is train hundreds of health workers (not salesmen) to make people aware of their health needs and how to get tests done and this has resulted in them reaching out to millions in a short time and thereby increasing their profits as well.

"Similarly, ICICI bank gives farmers crop insurance and pays insurance on the basis of satellite imagery of the crop region and this has brought profits to ICICI as well, while farmers also gain."

"Then Nestle many years ago set up a network of milk farmers in one district Moga at a time when there were no roads and now they have enough milk supply for their factory."

"Mahindra & Mahindra builds infrastructure in poor farmer homes and takes bank the loan interest at harvest time and not EMI..."

Then he spoke of Cocoa growers whose yeild is just 20 per cent of the potential and chocolate companies are now helping farmers to increase their what was essentially a farmers problem in now being addressed by corporates thereby improving the incomes of farmers and also their own profits.

Mr. Kramer is the founder of Foundations Strategy Group (FSG) and believes governments and civil societies  are not the best vehicles to solve social problems.

"Development without business is stupid...I am glad that we are getting beyond that..."

With a global meltdown and with governments having little money to splurge its Mr. Kramers ideas that can take the world ahead.

In the Q & A session one person questioned Mr. Kramers ideas being relevant in India where most groups are suspicious of corporates and so there are no `shared values'

Mr. Kramer said its fine if people don't share the same values, what he is talking about is `shared value' (Value as in gains)

But one listener was just not convinced and he said charity in India means  the left hand should not know what the right hand does.

Mr. Kramer only smiled.

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