Book Review: Improving Profit by Understanding Poverty

Thursday, February 14, 2008

When I first saw the book on the Internet, I thought the title was rather provoking yet puzzling for people like me who work in the development field. It seemed as though the poor were a commodity for making money. So I decided to buy it and my view did a complete turn-around. This book gives a different perspective to improving profit and reducing risks by understanding poverty. It is also useful for people who want to use business as a tool to help the poor.

With talk about CSR growing in Indonesia, it’s easy to throw opinions that all motivation in addressing poverty is purely for business interests. While it is not entirely wrong, the writers suggest that there some areas where business interests and moral obligation converge.

There is a book by CK Prahalad titled The Fortune at the Bottom of the Pyramid, but the Wilsons’ book is different. It doesn’t talk about marketing approach to make cheaper products for the poor community. Instead, it addresses ways of helping the poor in getting jobs, earning sustainable incomes while linking them to the mainstream of business. This book can help managers make better day-to-day decisions, and not all about money. Companies can play huge roles as catalyst, advocate, problem solver and convener using their tangible assets.

In the context of helping the poor, a company can often call on development resources (aid agencies) to undertake actions that have least obvious business cases or that require unfamiliar skills. By doing so, the company can focus on areas closest to its core competencies.

This book tells a lot about direct impacts of local economic development for poverty reduction and what companies can contribute to a vibrant enterprise sector. There is a real case of a multinational company that was revived from its downturn after undertaking a closer approach to its stakeholders and local community, through outsourcing and indigenous labor. Business linkages between foreign affiliates and local suppliers offer mutual benefits.

Interestingly, the authors dislike the term “CSR”. Their interest is in running the core business more profitably and in doing so playing a role in poverty reduction. The authors clearly suggest that CSR is about finding new ways of dealing with the poor in order to create new sources of competitive advantage.

The angle from which the authors see CSR is business (core business and profits) as the real sources of value to society. It sets down CSR as a public relations tool. CSR fails when the public gets a whiff of hypocrisy.

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Source: Jakarta Post (link opens in a new window)