NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, June 28, 2011

BANGALORE: Indian IT companies, which rode the outsourcing wave to become large corporations, may lag a bit while becoming sustainable corporations that create fortune “with” the bottom of the pyramid, says management guru Stuart L Hart .

The American academic who was in town recently, says: “From what I can see, there is a little bit of self-satisfaction and comfort with the current model. Maybe they are getting stuck in the outsourcing model like that is the endgame. But it is not the endgame.

It shows signs of becoming stagnant.” Hart says that he is no expert on the IT sector but he has authored Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World’s Most Difficult Problems and was co-author of Fortune at the Base of the Pyramid with CK Prahalad, giving him ample bandwidth to talk on corporates and business models.

He says once the realisation sets in that the market is stagnating, and the existing business model goes “stale”, these companies will have to think of what comes next. “Sustainable enterprises come next,” he says. In Hart’s words, a sustainable enterprise is one that through its work, and not through its philanthropy, solves social and environmental problems and makes money while doing this.

The idea behind sustainable enterprise, he says, is that it is possible that businesses for the 21st Century figure out how to jointly optimise results for all of the stakeholders around the business. “Increasingly, businesses will be focused on solving social and environmental problems as the actual businesses,” he said.