'Doing good and doing well go together'

Q&A:CK Prahalad

Sreelatha Menon ~ Business Standard New Delhi May 20, 2008, 5:11 IST

CK Prahalad, professor of corporate strategy at the University of Michigan and author of books on innovative business models that can help end world poverty, talks about corporate social responsibility in an interview with Sreelatha Menon

More companies are trying to do CSR by changing their business strategy. But wouldn't businesses always be driven by the desire to profit? And wouldn't this often lead to communities getting shortchanged?

To look at CSR as different from business gives it the flavour of philanthropy and I think CSR is a good way to get started in being socially responsible . But being socially responsible and being profit-oriented are not in conflict.

Why?

If you don't make a surplus, how will you have the money to do anything for others? So it is important to be profitable and successful to be able to do good. My hope has been to do business in an inclusive way. The idea is to bring the same rigour that markets demand into inclusive growth. CSR is, but, a transitional step.

What about experiments like e-choupals? Do you think these are perfect and are helping farmers? We find farmers who are often angry with some of these interventions.

The idea is to look at the rural community as micro consumers and micro producers. e-choupal started by targeting producers. Now it is tapping consumers through e-Sagar. They can now be looked at as micro investors and micro innovators. If you have two million farmers each saving 100 dollars a year...these are possibilities. Amul can be a savings network.. It has already become one.

EID Parry has a cashless community in Nellikuppam. People borrow money from the company and the instalments are deducted from earnings.What I am saying is that it is good business to protect the community's interests.

That is true. But is it always good for the community? Is it not purely self-interest that drives the CSR of many companies, seeking minerals in various forest and tribal areas? There is no argument that there is a need to compensate fairly whenever land is taken. There have been many steel plants in the past and many companies have done this before. You should know Tatas built an entire city.

But what good has it done to people who were displaced?

There are several sides to a story. And which is better? To build a steel mill in India or South Africa?

But what about displacement?

Someone always pays the cost.

Can't there be a compromise?

Democracy is about compromise. It requires that all sides are heard. I believe CSR is a good transitional step.

There is pressure on companies to be environmentally sustainable?

It is in the benefit of companies to be environmentally sustainable. They will be forced to do it.

Why?

Because common sense tells you that the cost of production goes down if you do all this. Saving energy, water and preventing pollution is good business. In fact if you think deeply, doing good and doing well go together.

Source: Business Standard