Can businesses promote sustainable development while turning a profit?
India’s prime minister Narendra Modi with Facebook CEO Mark Zuckerberg Photograph: Bloomberg via Getty Images
By Bhaskar Chakravorti
Facebook’s recent attempts to provide affordable internet in India show that “doing well while doing good” can be tricky for businesses
Facebook’s founder and CEO, Mark Zuckerberg, is on a quest to connect 4.4 billion people worldwide who have never been online to a pared-down version of the internet called Free Basics.
The Free Basics initiative was innovative and appeared reasonable: in partnership with a local telecom provider, Facebook offered free access to a limited package of websites, with a process for site developers to apply to be included. It included a “lite” version of Facebook, and would have been a launchpad for those who have never had internet access.
Despite its merits, Free Basics has faced a number of serious obstacles. The most ferocious and vocal opposition came from India. Internet users hated the idea. The Facebook solution, they argued, was inequitable for consumers, as Free Basics users would be denied access to the full internet. Nor did it work for entrepreneurs, app developers and organisations whose websites would be excluded. Faced with an overwhelmingly negative public reaction and accusations of violation of net neutrality, India’s telecom regulator banned the service.
Despite hitting a wall in India, Zuckerberg has continued undeterred. The service was launched in Bangladesh, El Salvador and Nigeria in April as part of a partnership with Airtel Africa. By launching in quick succession across three continents, Zuckerberg has shown his commitment to connecting the unconnected.
As a prime example of the “doing well while doing good” principle, deployment in India would have been a perfect test case. It is Facebook’s largest market, yet 74% of its citizens have never been online.
There have been other issues. Free Basics was blocked in Egypt because Facebook would not change the security settings to allow for government surveillance. Zuckerberg also had a plan to connect Africa to the internet through satellites and solar powered planes. Then, on 1 September, the SpaceX Falcon 9 rocket carrying a Facebook payload went up in a fireball on a Cape Canaveral launch pad, obliterating the satellite connectivity initiative for the near-term.
As I’ve written previously, there are reasons to like Free Basics: it is better to provide limited access to more people, provided it includes useful and productive sites, than a status quo where the vast majority have no internet access at all. Free Basics is limited, but given the reaction to it in some quarters, you would think it is the private sector equivalent of North Korea’s heavily censored version of the internet.
Zuckerberg is bruised but not out of the game. By taking on new countries, he seems to have dusted himself off and is back on his mission.
The business case for social responsibility
Innovation in doing well while doing good is a growing trend among businesses seeking new markets in the developing world. Our Inclusion Inc. research initiative on companies investing in sustainable development confirms a clear migration towards pursuing such dual objectives over pure philanthropy or charitable spending on corporate social responsibility (CSR).
This form of self-interested altruism is an approach that the United Nations Development Programme (UNDP) defines as “inclusive business”. Inclusive business models are displacing philanthropy and CSR for several reasons. Such initiatives are more sustainable in the long-term; they are less reliant on individual champions; they can win support from shareholders, the wider management team and the board; and they are powerful recruiting and retention tools, particularly for millennials. When applied systematically across companies, this is the approach that will be key to businesses investing in advancing the sustainable development goals. Most significantly, such initiatives may prove essential for the long-term growth of global business opportunities
Despite the appeal, straddling two objectives can be hazardous. Mark Zuckerberg’s experience in India has proven to be the most dramatic recent case of the inclusive innovator’s dilemma: the “doing good” part of the offer could be rejected if society finds the “doing well” part overly self-serving.
It is critical to design offers that respect prevailing political sentiments and norms. When Facebook launched Internet.org in India in February 2015, concerns about net neutrality had already been raised in the country. A local wireless operator, Airtel, came under fire in December 2014 for announcing that VoIP calls would cost users extra. By April 2015, the parallels with British colonialism had already started surfacing.
“Doing good” initiatives cannot go against political sentiments or historical sensitivities because they disproportionately involve the disadvantaged segments of society. For technology companies, whose employees spend more of their time focusing on the technical and business side, consideration of the complicated socio-political context of the real world can be hard
Three rules for dealing with the dilemma
As part of our research at Inclusion Inc., we observed the challenges Free Basics was facing and came up with three conclusions for businesses looking to avoid the doing well/doing good dilemma:
Don’t over-sell “doing good”: There were several signals that Facebook had over-reached in India. Zuckerberg’s visit to an Indian village was extensively covered by a Time magazine cover story with the headline: Half the World is Not Enough: Mark Zuckerberg’s Plan to Get Every Human Online. The initiative was initially called Internet.org, before being rebranded as Free Basics. Once “free internet for everyone” becomes the public expectation, there is bound to be disappointment and disillusionment with anything substantially less. It is better to set expectations consistent with what your business model can deliver.
Make sure that doing good comes before doing well: The limited menu of Free Basics included the Facebook site, with Facebook controlling which sites and apps appeared on the menu. This drew criticism, with claims that Facebook was just trying to sell more advertising. It is wiser to plan for a “goodwill period” with no measurable benefit to the company to first build trust before pushing for commercial opportunities.
Ensure that doing good passes the tests of local politics and history: Every company should set boundaries on which aspects of society’s development challenges ought to be part of its sustainability and inclusion agenda. Otherwise, the costs of tackling the challenges violate the “doing well” mandate.
When an innovative company takes an active role in promoting sustainable development, it not only has the opportunity to create value for itself, it might find solutions to problems that have stymied governments, NGOs and active citizens. All the more reason, then, for inclusive innovators to find a resolution to their dilemma.
Zuckerberg, for his part, can learn from the problems in India and turn them apply the solutions in Bangladesh, El Salvador, Nigeria and elsewhere. During the course of our research, we heard from several organisations who critiqued many companies for doing good solely for the sake of their bottom line. Ironically, critics feel more comfortable with companies doing good with no self-interest whatsoever – which our research indicated would result in a short-lived investment in sustainable development.
Those interested in advancing the sustainable development goals need to be educated on what makes a publicly-held company tick and the incentives and constraints that determine when and why managers invest in societal issues. Inclusive innovators would do well to learn from Mark Zuckerberg’s experience.
Bhaskar Chakravorti is senior associate dean of international business and finance at The Fletcher School, Tufts University. He is also the founding executive director of Fletcher’sInstitute for Business in the Global Context and author of The Slow Pace of Fast Change. The research reported here was supported by Citi Foundation.
Content on this page is provided by Business Call to Action, and originally appeared on the The Guardian Business and the Sustainable Development Goals Hub