5 differences between Inclusive Business and ‘business as usual’

By on June 12, 2017

What makes inclusive business different from ‘business as usual’? We asked Carolina Rius, manager of IQ IMPACT LAB, whose team recently completed the IBA Introduction to Inclusive Business course.

1- Purpose: IB aims to address a social or environmental challenge. Traditionally, private sector had merely an economic purpose. Goal setting and impact measurement systems in IB integrate economic, social and environmental results.

2- Market: Inclusion of low income groups (a.k.a Base of Pyramid) along the value chain is key for an inclusive business. Inclusion can be achieved by integrating low-income people as suppliers, distributors or customers. Traditional enterprises leave behind low-income communities by not attending to their needs or not considering the long term environmental impact of the products sold.

3- Beneficiaries: In traditional businesses, directors, managers and executive boards have a clear mandate to generate revenues for the shareholders of their company. Inclusive business models are designed to generate profit for multiple stakeholders along the value chain. Governance is key to ensure equality, fairness and transparency.

4- Collaboration: Inclusive business creates enabling ecosystems around their business model to make it economically viable and therefore sustainable over time. Inclusive business usually offers access to credit, knowledge and technology thanks to the ties with other actors. Traditional businesses normally compete for resources instead of collaborating to generate new ones.

5- Innovation: Inclusive business faces the continuous need to innovate not only by creating or adapting their products to the base of the pyramid but also to build the infrastructure around their social business models. Traditional businesses usually innovate by adding features and complexity to their portfolio for the same target customers: the global middle and upper economic segments.

About the author: iQ impact lab is the social innovation unit of INQUVE. We offer strategic advice, business development and evaluation services to #purpose driven projects.

Source photo: HUSK Ventures