MBA Elective (new)

MBA PROGRAMME
Singapore: Jan-Feb 2015 (P3)
STRATEGY AND IMPACT
Professor Jasjit Singh
[email protected]
Office 438, Singapore Campus
Assistant: Avegail Villanueva
[email protected]
Open Office 548, Singapore Campus
Learning Objectives
This course concerns how business can be a force for good. Much of our focus will be on
companies proactively managing their social impact as an integral part of their strategy.
We will also discuss how social enterprises and impact investors are increasingly using
business and management tools to address societal problems as well. We will take a view
that these different organizational forms can be complementary means for economic and
human development as long as each organization has a clear strategy for creating unique
societal value over and above existing alternatives.
There remain ideological differences in how much for-profit companies can or even
should prioritize societal goals in their commercial pursuits. However, stakeholder
pressure is making impact an important concern even in such organizations - with
societal value creation becoming an imperative for ensuring sustained competitive
advantage and even long-term survival. Forward-looking companies are therefore
looking beyond the short-term value they capture for themselves and are trying to align
their commercial agenda with explicit social objectives. In the process, societal concerns
get integrated into the overall strategy rather than comprising a marginal agenda just to
be delegated to a standalone “Corporate Social Responsibility” (CSR) department.
A particular focus of the course will be how innovative business models can allow new
ways of reaching underserved populations around the globe (the so-called “base of the
pyramid”). Doing this right requires moving beyond a mind-set of just selling watereddown versions of global products and services. The focus has to be on understanding the
unique needs of these populations, getting the communities involved, designing the right
value propositions, having a solutions mindset, iteratively refining the local models
through experimentation, and patiently creating the needed capabilities and ecosystems.
Who should take this course?
This course targets students looking to employ business tools to make a positive societal
difference. Given the increasing salience of social impact concerns in all domains, the
course should have a broad appeal. It should certainly interest individuals considering a
career in strategy, consulting, entrepreneurship, impact investing, social
entrepreneurship, non-profit organization or corporate social responsibility.
Last updated: 04 December 2014
Grading Scheme
Your overall grade will depend on your contribution to the learning environment and
your responses to the assignments. The breakdown of the grading scheme is as follows:
Individual class contribution
Individual assignments (3)
25%
75%
Individual Class Contribution
Individual contribution to the learning environment consists of your preparedness, class
attendance, participation in class discussions, and professional engagement throughout
the course. The specific expectations from you are:
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Closely reading the assigned case in advance of each session
Being able to answer a “cold call” in class based on your case preparation
Making clear, relevant and insightful comments
Building on and/or constructively challenging prior comments
Relating the case to the other course materials and/or your experience
Listening actively and respectfully to others
No use of electronic devices in class
Individual Assignments (3)
You are required to individually turn in three different written assignments based on the
case preparation questions for these sessions: LOLC Microcredit (sessions 3 & 4), GE
Healthcare (sessions 5 & 6) and Acumen Fund (sessions 7 & 8). Each assignment involves
answering the three questions listed under the respective session description below.
Please email your assignment to the course assistant at least 24 hours in advance of the
respective session. The preferred format is an MS-Word or pdf document, with 1 inch
margins and your name included in the header. Please start each answer on a new page,
and try to restrict its length to one page (exceptionally 2 pages, certainly never more).
Delayed submission will affect your grade, with an increasing penalty with the delay
irrespective of the reason for the same (such as job interviews or travel) - so plan ahead!
Please bring a printed copy of your submission for reference during class, as you might
be called upon to summarize your answer during case discussion.
Beyond the Course
Given that there are limits to how much material can be covered in class, an appendix at
the end of this outline suggests further readings of interest – all of which should be
available either in the library or on the Internet. You are also welcome to get in touch with
the professor to have a dialogue outside class about specific topics of interest to you, and
possibly even explore signing up for a follow-up independent study project (ISP).
Last updated: 04 December 2014
Prof. Jasjit Singh
Associate Professor of Strategy
The Shell Fellow in Business and the Environment
Jasjit Singh has been an INSEAD professor since 2004. His teaching and research interests
include Business Strategy, Emerging Market Strategy, Inclusive Business, Corporate
Social Engagement, Social Innovation, Knowledge Diffusion and Economic Geography.
He also advises companies, social enterprises, non-profits and impact investors on
thinking strategically about social impact and carrying out systematic impact assessment.
Jasjit obtained his Ph.D. in Business Economics (Strategy) and M.A. in Economics at
Harvard. He also holds M.S. in Management & Computer Science from Georgia Tech, and
B.Tech. in Computer Science & Engineering from IIT Delhi. He is the author of numerous
journal articles and case studies, many of which have won prestigious awards. He also
serves as an Associate Editor for Management Science and an Editorial Review Board
member for Strategic Management Journal and Organization Science.
Jasjit regularly teaches in INSEAD’s MBA, PhD, EMBA and executive programmes. He has
also conducted customized workshops for companies, social enterprises, government
bodies and development organizations. Prior to joining academia, Jasjit worked as a
management consultant with Accenture, and also interned with Intel, AT&T and Cadence.
He is an Indian citizen, and lives in Singapore.
Last updated: 04 December 2014
SESSIONS 1 & 2 (DOUBLE SESSION)
THINKING STRATEGICALLY ABOUT IMPACT
PRE-SESSION CASE READING (REQUIRED):
• John Wood. Leaving Microsoft to Change the World (Chapters 5 and 6)
LEARNING OBJECTIVES AND SESSION DESCRIPTION:
At the heart of capitalism is the economic theory of how a well-functioning market system
ensures an efficient allocation of resources: producing goods and services people value
most, and in the process creating jobs and wealth that also improve the lives of people.
Market value creation is indeed credited for driving most of the economic growth in
recent decades, including helping over a billion people come out of extreme poverty.
But capitalism is under scrutiny for not addressing market externalities like
environmental damage and distributive justice issues like income inequality. In the past,
resolving such problems has been in the realm of non-profits, development agencies and
government policy. However, in an emerging view of capitalism, different organizational
forms – including commercial enterprises, social enterprises and others - are seen as
complementary means of making a societal contribution in their own unique ways.
Building upon the above discussion, we will discuss ways of structuring one’s thinking on
the kind of organizational form best suited for achieving the desired social impact goals
and systematic approaches towards formulating appropriate strategy for achieving these.
The main message will be that there is no unambiguous “best path” for making an
impact. What is crucial instead is that you have an understanding of what impact means in
your context, and have clarity on how you and your organization would uniquely
contribute to societal value creation in whatever path you choose.
CASE PREPARATION QUESTIONS:
1. What is John Wood’s rationale for wanting to quit Microsoft and change the course
of his career so radically?
2. Do you agree with John’s rationale for making the radical move? If John were your
friend, would you encourage him in this or try to talk him out of doing so?
3. Have you ever faced a dilemma similar to John’s? How did you resolve it?
RELATED READING:
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“Towards the end of poverty” The Economist. 01 June 2013.
“An Exclusive Interview with Bill Gates” Financial Times. 1 Nov 2013.
Last updated: 04 December 2014
SESSION 3 & 4 (DOUBLE SESSION)
DOING WELL BY DOING GOOD
PRE-SESSION CASE READING (REQUIRED):
• Jasjit Singh & Pushan Dutt. LOLC Micro Credit. INSEAD Case
LEARNING OBJECTIVES AND SESSION DESCRIPTION:
Business tools are playing a critical role in economic development. Commercial
enterprises are not only creating value through traditional market mechanisms but also
becoming proactive in managing impact. At the same time, social enterprises, non-profits
and government entities are increasingly employing business thinking to address
societal issues. Either way, the fundamental strategy question for any form of organization
is how it creates unique value, i.e., makes a societal contribution over and above
alternatives. A robust strategy address long-term value creation: companies that overemphasize short-term value capture often end up hurting their own success and survival
in the long run.
There are ideological differences in how much businesses can or ought to prioritize
societal goals at the cost of commercial objectives. However, we make a case that
creative thinking and innovation can often lead to significant “win-win” opportunities,
where societal goals and commercial objectives can be made to align. In fact, forwardlooking companies are already evaluating their “shared value creation” rather than only
considering the profits they capture for themselves. Societal concerns are therefore
getting more integrated into mainstream strategy rather than comprising an agenda
delegated to a standalone “Corporate Social Responsibility” (CSR) department.
CASE PREPARATION QUESTIONS:
1. For a typical low-income customer, what are the pros and cons of trying to get a
group loan from a microfinance company versus going to a moneylender?
2. In expanding from micro-leasing to group lending, in what ways did LOMC adapt
its business model to ensure continued success even in the new market segment?
3. Despite it being a for-profit entity, what makes LOMC so concerned about societal
impact? What steps is it taking in this regard, and how can it improve further?
RELATED READING:
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Stout, L.A. 2012. “The Problem of Corporate Purpose”. Issues in Governance
Studies.
Pfitzer, M., V. Bockstette and M. Stamp. 2013. “Innovating for Shared Value”.
Harvard Business Review.
Last updated: 04 December 2014
SESSION 5 & 6 (DOUBLE SESSION)
INTEGRATING IMPACT INTO GLOBAL STRATEGY
PRE-SESSION CASE READING (REQUIRED):
• Jasjit Singh. GE Healthcare (A): Innovating for Emerging Markets. INSEAD Case.
• Jasjit Singh. GE Healthcare (B): A CSR Dilemma. INSEAD Case.
LEARNING OBJECTIVES AND SESSION DESCRIPTION:
The past decade has witnessed a qualitative shift in the sophistication of value chain
activities multinational companies are willing to carry out in emerging market locations.
Places like China and India are increasingly used not just for low-value outsourcing or
minor product adaptations but also for developing innovative products and business
models from scratch: both for serving emerging market customers and as a part of the
company’s global innovation network. In the process, emerging market initiatives are
also serving as platforms for supporting the company’s overall social impact agenda.
Decentralization of innovation is becoming a key mechanism for reaching underserved
populations around the globe (the so-called “base of the pyramid”). Doing this right,
however, requires moving beyond just producing watered-down versions of existing
products and services. The focus has to be on understanding the unique needs of these
populations, getting the local communities involved, designing the right value
propositions with a solution mind-set, iteratively refining the business model through
experimentation, and patiently creating the overall ecosystems. In addition to being an
engine for growth in a specific market, products or solutions developed in the process
can also trigger broader innovations - often opening up new markets globally.
CASE PREPARATION QUESTIONS:
1. What is the strategic rationale for large global companies like GE prioritizing lowincome markets? What would be arguments against doing so?
2. In what ways was GE’s MAC 400 offering different from a high-end ECG offering
like MAC 5500? How high do you think is the risk of an Indian hospital that would
otherwise have purchased a high-end GE ECG machine now buying a MAC 400
instead? Why? (Use a 4-point scale: 1=Very unlikely to 4=Very likely)
3. In what ways were MAC i and Mac 800 different from MAC 400? How were these
design choices consistent with the target markets for these products?
RELATED READING:
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Prahalad, C.K. and A.L. Hammond. 2002. “Serving the World’s Poor, Profitably”,
Harvard Business Review.
Karamchandani, A., Kubzansky, M. and N. Lalwani. 2011. “Is the Bottom of the
Pyramid Really for You?” Harvard Business Review.
Last updated: 04 December 2014
SESSION 7 & 8 (DOUBLE SESSION)
IMPACT INVESTING AND IMPACT ASSESSMENT
PRE-SESSION CASE READING (REQUIRED):
• Acumen Fund: Measurement in Impact Investing (A). HBS Case.
LEARNING OBJECTIVES AND SESSION DESCRIPTION:
Any organization concerned with social impact needs to evaluate its performance on two
dimensions: financial and social. While well-established metrics and methodologies exist
for measuring financial performance, impact assessment is a newer, more difficult and
more controversial area. One reason is that social performance has multiple facets, such
as breath vs. depth of impact or short-term impact vs. long-term sustainability. Given lack
of one universally acceptable overall metric for impact, it becomes particularly hard to
compare social performance across sectors (e.g., health vs. education) or to objectively
evaluate trade-offs between financial and social performance.
Although it is impractical to turn impact assessment into a perfect science, there are some
general principles to bear in mind and pitfalls to avoid in defining and evaluating impact.
We will discuss such best practices and techniques being employed by leading players
in this space. In the end, however, the process has to involve some subjective
prioritization made in light of an organization’s mission. It is important to be clear about
this mission, and to transparently communicate it to potential employees and investors to
ensure stakeholder alignment and consistent strategy formulation and implementation.
CASE PREPARATION QUESTIONS:
1. Exhibit 9 provides Acumen’s “Capabilities Assessment Matrix” for investment. For
each of the ventures under consideration – Ecotact and Meridian – provide your
rating for the eleven questions therein on a 1-4 scale. Add up the scores to come
up with your overall rating (out of 44) for each venture. What are the pros and cons
of using these ratings as the basis for making the investment decision?
2. Apply Acumen’s BACO method to evaluate Ecotact. What would be your
investment decision regarding Ecotact if asked to base it on this BACO
computation? What do you see as the pros and cons of this approach?
3. Taking into account everything you consider relevant, would you recommend that
Acumen invest in Ecotact, Meridian, both or neither? If constrained to invest in
exactly one of these ventures, which one would you recommend? Why?
RELATED READING:
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Rangan, V.K., S. Appleby and L. Moon. 2012. “The Promise of Impact Investing”
HBS Note.
Brest, P. and K. Born. 2013. “When Can Impact Investing Create Real Impact?”
Stanford Social Innovation Review.
Last updated: 04 December 2014
APPENDIX: SUGGESTIONS FOR FURTHER READING
Bill & Melinda Gates Foundation. 2010. “A Guide to Actionable Measurement”
Banerjee, A.V. and E. Duflo. 2011. Poor Economics: A Radical Rethinking of the Way to Fight
Global Poverty. PublicAffairs.
Bugg-Levine, A. and J. Emerson. 2011. Impact Investing: Transforming How We Make Money
While Making a Difference. Jossey-Bass.
Collins, D., J. Morduch, S. Rutherford and O. Ruthven. 2009. Portfolios of the Poor: How the
World’s Poor Live on $2 a Day. Princeton University Press.
Crane, A, G. Palazzo, L.J. Spence, D. Matten. 2014. “Contesting the Value of ‘Creating Shared
Value’”. California Management Review.
Dees, J. G., Emerson, J., and Economy, P. 2001. Enterprising Nonprofits: A Toolkit for Social
Entrepreneurs. New York: Wiley.
Easterly, W. 2007. The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So
Much Ill and So Little Good. Penguin Books.
Epstein, M.J. and K. Yuthas. 2014. Measuring and Improving Social Impacts: A Guide for
Nonprofits, Companies, and Impact Investors. Berrett-Koehler Publishers.
European Venture Philanthropy Association. 2013. A Practical Guide to Measuring and
Managing Impact.
Fleming P, Jones, M.T. 2013. The End of Corporate Social Responsibility: Crisis and Critique.
Sage Publication.
Freeman, R. E., Harrison, J. S., Wicks, A. C., Parmar, B. L., de Colle, S. 2010. Stakeholder
Theory: The State of the Art. Cambridge University Press.
Karlan, D. 2011. More than Good Intentions: How a New Economics Is Helping to Solve Global
Poverty. Dutton Adult.
Nussbaum, M.C. 2011. Creating Capabilities: The Human Development Approach. Belknap
Press.
Prahalad, C.K. 2005. The Fortune at the Bottom of the Pyramid. Wharton School Publishing.
Roodman, D. 2012. Due Diligence: An Impertinent Inquiry into Microfinance. Center for Global
Development. Washington, D.C..
Schöning, M. and P. Hartigan. 2013. “Monitoring and Evaluation in the Social Sector”. Skoll
Centre.
Rangan, V. Kasturi, J.A. Quelch, G. Herrero and B. Barton. 2007. Business Solutions for the
Global Poor. John Wiley and Sons.
Rodin, J. and M. Brandenburg. 2014. The Power of Impact Investing: Putting Markets to Work for
Profit and Global Good. Wharton Digital Press.
Rossi, P.H., M.W. Lipsey and H.E. Freeman.2004. Evaluation: A Systematic Approach.
Karnani, A. 2011. Fighting Poverty Together: Rethinking Strategies for Business, Governments,
and Civil Society to Reduce Poverty. Palgrave Macmillan.
Morduch. J. 2013. “How Microfinance Really Works” The Milken Institute Review.
Porter, M. 2008. On Competition. Harvard Business School Publishing.
Porter, M. and M. Kramer. 2006. “Strategy and Society: The link between competitive
advantage and corporate social responsibility” Harvard Business Review.
Porter, M. and M. Kramer. 2011. “Creating Shared Value” Harvard Business Review.
Sen, A. 2000. Development as Freedom. Anchor.
Sen, A. 2009. The Idea of Justice. Cambridge, MA: Belknap Press of Harvard University.
Yunus, M. 2009. Creating a World Without Poverty: Social Business and the Future of Capitalism.
PublicAffairs.
Zingales, L. 2014. A Capitalism for the People. Basic Books.
Last updated: 04 December 2014