The rise of a growing middle class across the globe has corporations working to understand and address the needs of potential new customers in emerging markets. But as these expanded markets emerge, corporations are challenged by customers who want a say in everything that’s offered to them, from consumer products to education and health care to financial services. It’s part of a phenomenon that the CEO and president of PATH, Steve Davis, believes is changing the face of innovation.
In “How Companies Can Combine Both Purpose and Profit,” writer Peter Vanham talks to Steve Davis to find out how corporations can reach these new markets. Davis believes multinationals, nonprofits, and governments can work together to tackle the big problems in ways that are mutually beneficial. It’s a social innovation revolution, and it’s happening right now.
Here are some excerpts from Vanham’s World Economic Forum post:
“Geneva, Washington and Seattle can’t decide what those people need,” says Davis. “These countries are setting their own standards, and thus innovation is no longer a one way street. It is multi-nodal.”. . . The result is that companies increasingly set up R&D centers in the emerging world, and offer products specifically made for the emerging world. “These initiatives are quasi philanthropic in the beginning, but eventually help,” says Davis. “They help penetrating market, understanding consumer behaviour and building a brand.”
And what goes around, comes around. It’s not just Western companies who engage in “social innovation” or that enter new emerging markets. Davis’ own PATH organization helped a Chinese company get WHO pre-qualification for an encephalitis vaccine, making it the first Chinese company to ever get such a stamp of approval, and allowing it to serve the many encephalitis patients in India and Southeast Asia. That project was subsidized by philanthropic and international organizations at first, but now is making money for the low-cost Chinese vaccine manufacturer.
But is this trend sustainable? Davis thinks the need behind social innovation won’t go away, but it will involve companies shifting their focus from short-term growth and profit to a long-term portfolio play:
Social innovation is “moving from kumbaya to board room. . . . With the long term trends in climate, health, and economic development, business will have to adapt their activities in this direction. I’m an optimist.”
Read Peter Vanham’s article in its entirety on the World Economic Forum website.
During the week we scour the news for the hottest stories on innovation. Our feature, The Friday Think, highlights one we’ve found particularly fascinating.