Business faculty member examines private enterprises’ role in fighting poverty
Business faculty member Ted London spoke about the need for private enterprise to develop solutions on a large scale to tackle global poverty on Tuesday at the Ross School of Business. The talk, which was sponsored by the Center for Positive Organizations, drew approximately 150 students, faculty and locals to the Business School Colloquium.
London is also the vice president of the Scaling Impact Initiative at the University of Michigan’s William Davidson Institute — an independent, nonprofit organization focused on providing private-sector solutions in emerging markets — and has worked on a variety of projects throughout the developing world.
Having dedicated his life to researching the pervasiveness of poverty throughout the planet and devising solutions for businesses to tackle these issues, London said he believes the world cannot simply donate its way out of poverty.
London believes that global poverty is the biggest problem facing the world. He illustrated this assertion by enlisting the global socioeconomic pyramid, a visual representation that divides the world’s wealth into three tiers: the “wealthy” at the top, the “emerging middle class” in the middle and the “base of the pyramid” at the bottom. Those at the base of the pyramid make less than $3,000 per year while the global “1 percent” are earners who make more than $34,000 per year.
“If we don’t solve the poverty problem, the inequity, honestly, this is going to be a very ugly world,” London said. “We cannot have billions of people on the outside looking in.”
London envisions a central role for private enterprise in developing products and businesses, but also believes it is important for businesses to develop solutions that can be crafted on a scale large enough to make a significant dent in eradicating global poverty.
“If you are thinking about billions of people, scale becomes so crucial,” London said. “I think we can solve vexing social problems, including impoverishment faced by the world’s poorest citizens, but we have to deliver results that are sustainable at scale.”
Business graduate student Anuj Narayanan said he believes London’s thoughts on how businesses can create value for the global poor imbued in him a sense of how a wide range of industry has the potential to help lift people out of poverty.
“Companies can create value for the bottom of the pyramid, and also for themselves,” Narayanan said. “If they can do that at scale, they can actually bring the majority of people in the bottom out of poverty.”
According to London, businesses and corporations that aim to tackle global poverty by developing solutions at the necessary scale must adhere to four principles: design for success, plan for scale, manage value creation and develop partnerships.
Yet, to London, Western companies and organizations aiming to develop solutions for poor populations in Africa and Asia must enlist locals to tap into their knowledge of local customs, politics and business.
Business graduate student Pranay Lagadapati, who is planning to work at an energy company in India after graduation this spring, said he believes Western organizations and companies too often fail to enlist locals in projects, but locals lack knowledge of how to develop businesses and products that could help alleviate poverty.
“Being Indian, I know that (my company) is in the energy space, and when we go into a location, the first reaction a lot of people have is, ‘What are you doing here?’ and ‘What is your motivation?’ ” Lagadapati said. “There is a lot of mistrust, and rightfully so — they have every right, because of the history of colonization and the rich looting the poor, so a lot of times it is hard to do business, even when you are local.”
Yet, to Lagadapati, having studied under London and incorporated some of London's ideas into his own beliefs, he believes he now has an expanded toolset of ideas from which to draw when working on issues pertaining to poverty.
“What I have learned is the whole idea of trusting the (bottom of the pyramid) more, as before coming to Ross, I viewed them as people who were trying to stop me,” Lagadapati said. “In retrospect, it was so dumb for me to think that way, as we didn’t want the people we were helping to be part of the process.”