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This blog explores insights for multinational corporations, NGOs, academics, social entrepreneurs and others working at the Base of the Pyramid.

Sunday, December 11, 2011

Weekly Roundup - 12/11/11 - The 'Tata Way' Explained

By Nazanine Metghalchi

Kishor Chaukar, managing director of Tata Industries

Let's get down to business, or should I say 'sustainable business': "The community is not just another stakeholder, but the very purpose of the existence of social enterprise." Is this a speech extract given by the founder of Ashoka or those behind the B Corporation? No, these are words declared in the 19th century by the founder of the Tata Group, also known as the 'father of the Indian industry'; Mr. Jamsetji Tata himself.

WOW: it's astounding how ideas we perceive as new have been around for centuries, and incorporated into the 'Tata way'.

This is a story where big business meets big heart. The winter's biggest national event for the UK's youth social enterprise sector, the Tata Social Enterprise Conference, organized on behalf of the National Consortium of University Entrepreneurs (NACUE), was a call for ideas and action. Here was the general agreement: we are suffering from a global sustainability crisis but social enterprises are about to change the circumstances notably by reaching a higher number of people. Nothing new so far...

But in between a Social Innovation Hack and a Next Generation Panel, the keynote speech of the event was given by Kishor Chaukar, managing director of Tata Industries. In fact, Chaukar was on a mission: sharing Tata Group's philosophy which is far from making shareholders happy by only accumulating profit, but by having instead a more holistic approach, one of responsibility to society, community and employees. What is exactly hiding behind this recipe for change? At the heart of the 'Tata-ness' is the Group's structure, of which two-thirds is owned by charitable trusts with an equitable share of profits channeled back into the community.

So what are we waiting for to change the mindset? Chaukar suggests companies should not assess returns after 25 seconds like a broker, but wait sometimes six decades. He also advocates that social responsibility should be made the core of a company as Tata Group has been actively doing instead of putting it on the side. These are to him the paramount keys to building a safe and trusted sense of belonging as well as having concrete values and mission that go beyond the compliances.

Through this individual and organizational empowerment, the depth and breath of the Tata Group's involvement is paving the way for new examples of management. ClearlySo and Sandbox, the conference's sponsors, decided to not have recourse to any euphemism by declaring today's used models as unsustainable: government, traditional mainstream profit-oriented businesses or charities. Whether by finding a way to reconcile them or by determining an alternative, both presented either a disruptive framework or an unleashing movement they hope to see pave the way for a changing world.

After risk and return, Rod Schwartz, founder of ClearlySo, calls for a 3rd dimension to investment: the social impact. Put shortly, people should maximize across the three variables and not just the first two by taking lower rates of return for higher social impact and risk impact: the '3D Investment.

Christian Busch, co-founder of Sandbox, aims to build an ecosystem to implement a new organizational vehicle: the impact organization. This latter will place social and financial impact at the same strategic level, governed not by hierarchy or transactions, but rather by lateral accountability and relationships.By committing to stretch beyond business, these creative organizational strategies and structures will rethink and reinvent the sense of purpose benefiting the community, shareholders, customers, as well as eventually pushing the needle forward for those at the bottom of the pyramid (and this beyond India hopefully).

In spite of the economic trend, the Indian way is the soon-to-be-adopted management style. It is finally time to embrace the possibility to do well and do good simultaneously.

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