STRATEGY AND IMPACT. MBA Programme Period 3/Period 5 (France) May-June Course Purpose. Learning Goals. Who Should Take This Course?

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1 STRATEGY AND IMPACT MBA Programme Period 3/Period 5 (France) May-June 2018 Professor Jasjit Singh jasjit.singh@insead.edu Website: Assistant: Michele Plu michele.plu@insead.edu Please note: The mini-electives Strategy and Impact and Impact Investing are designed to be complementary, but either can also be taken without the other. Attendance in the first session is mandatory, and auditing is not allowed. The first assignment is due by 9PM of the evening before the first session. Course Purpose This course will examine how to best employ business and management tools as a force for good. We will study how to integrate a broader social and/or environmental agenda into an organization s strategy, and analyse practical approaches for building financially viable, effective and scalable market-based solutions to meet critical societal needs. Irrespective of whether you work within a traditional business setting or in an impactdriven organization, the course will show how being creative yet rigorous can help you maximize your contribution to society within your unique context and career path. Learning Goals Aligning societal and financial considerations in strategy for any organization Analysing what impact really means and how it can be best realized Formulate sustainability strategy within traditional companies Design impactful models for inclusive business and Base of Pyramid (BOP) Who Should Take This Course? Societal issues are becoming increasingly salient in every job. Therefore, while this course should be of obvious interest to people pursuing social impact opportunities (e.g., impactdriven businesses, impact investing, social enterprises, non-profits or development agencies), it should also appeal to those in mainstream business careers. This elective can be taken either independently or as a complement to Impact Investing (in any order). Last updated: April 15,

2 Course Overview Market-driven economic growth has raised living standards worldwide, including lifting over one billion people out of extreme poverty in recent decades. But society faces critical challenges like climate change and rising inequality. Resolving these is a job not just for non-profits, development agencies or governments: business can also play a role, and often most effectively by going beyond just corporate philanthropy and standalone CSR programs to embedding considerations of societal impact into their strategy. We will adopt a critical lens on what impact (whether social or environmental) really means, and examine why just having good intentions is often not enough for the desired impact to be realized. We will study a range of impactful business models that can help address various societal problems and needs, while acknowledging the necessity of complementing market-based approaches with other interventions in many contexts. Evaluation Your overall grade will depend on your answers to three individual assignments (questions listed online as well as in the session details below): Individual Assignments (3) 100% Each individual assignment, due 9pm of the evening before the corresponding session, asks a question regarding the session s case. Your response will be evaluated based not on a right answer but on the quality of your argument. Please consider the situation as described, and do not use outside information (e.g., Internet sources). While no word limit is imposed, words (bullet format okay) should suffice for a wellwritten response to each of the individual assignments. You may discuss the assignments with others, but should write your actual answers independently. Please turn in your responses via the course website. In exceptional circumstances where online submission has issues, please submit it via to the instructor and the course assistant by the deadline. Late submissions carry an increasing penalty with the delay, but turning in late is still better than not submitting at all. Last updated: April 15,

3 Classroom Expectations No separate points are set aside for class participation. But a negative participation penalty or a positive participation adjustment might be awarded if warranted. The specific expectations from you are: Attending class regularly (except with advance approval to miss a class) No electronic devices (except with permission in airplane mode for note-taking) Coming to class well-prepared to discuss the cases Making clear, relevant, insightful and constructive comments Listening actively and respectfully to others Beyond the Course The session-by-session outline below suggests optional readings to consider either during or after the course. You are also encouraged to sign up for the mini-elective Impact Investing for a perspective on social impact that complements this course. In addition, please feel free to contact the instructor for any further guidance on the topic. Last updated: April 15,

4 Prof. Jasjit Singh Associate Professor of Strategy Academic Director, INSEAD Social Impact Initiative Jasjit Singh has been an INSEAD professor since His interests include Strategy, Inclusive Business, Sustainable Development, Innovation, Impact Investing and Impact Evaluation. He is particularly passionate about how market forces and business tools can be used as a force for good, and regularly teaches in INSEAD s MBA, EMBA and executive programmes on this topic. He also gives speeches, conducts workshops and advises enterprises, non-profits and investors on how to systematically think about their impact. 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 has written numerous academic articles and case studies, many of which are highly cited and have won prestigious awards. He is also personally involved in editorial and reviewing roles for leading academic journals. Prior to joining academia, Jasjit worked as a management consultant with Accenture and an engineer at Intel, AT&T and Cadence. He is an Indian citizen, and lives in Singapore. Last updated: April 15,

5 Session 1 & 2 (Double Session) Strategies For Impact PRE-SESSION READING (REQUIRED): John Wood and Room to Read. INSEAD Case. Gib Bulloch and Accenture. INSEAD Case. ASSIGNMENT #1 (DUE 9PM OF THE EVENING BEFORE THIS SESSION): If John were your friend, would you have supported him in his decision to quit Microsoft or tried to talk him out of it? Explain your reasoning as well as the specific advice you would have offered. LEARNING OBJECTIVES AND SESSION DESCRIPTION: Capitalism relies on a well-functioning market to allocate societal resources efficiently: producing goods and services society values, and in the process also creating jobs and wealth for people. Historically, the market s invisible hand has indeed worked better than planned economies supposedly set up to maximize social welfare. However, market outcomes do not always align with societal objectives, such as on issues like environmental degradation or inequality. Who should be addressing these challenges? We will argue that companies, social enterprises, non-profits, donors, international agencies and governments are best seen as complementary means of pursuing societal well-being, contributing through a mindset of collaboration among different actors. It would be a fallacy to think of any one organizational form as unambiguously superior for society. Instead, we as individuals need to identify causes we personally care about, and work to contribute to these in a manner consistent with our career and life goals as well as the unique advantages and constraints of the context in which we pursue these goals. PREPARATION QUESTIONS (NOT NEEDED FOR SUBMISSION): 1. If you were heading Microsoft s business in China and were keen on retaining John as a valuable employee, how could you have tried to convince him to stay? 2. If advising Gib Bulloch as a friend, would you encourage him to pursue his proposed initiative within Accenture? Why? If yes, how should he overcome the practical hurdles? If not, what else could he do to realize his passion for impact? [OPTIONAL] RELATED READING: Yunus, M A New Kind of Business Chapter 1 in Creating a World Without Poverty. Last updated: April 15,

6 Session 3 & 4 (Double Session) Impact-Driven Business PRE-SESSION READING (REQUIRED): Patagonia. HBS Case. ASSIGNMENT #2 (DUE 9PM OF THE EVENING BEFORE THIS SESSION): If Patagonia gets acquired by a large public company, could they improve Patagonia s commercial performance by scaling back some of its environment-related standards and activities? Explain. LEARNING OBJECTIVES AND SESSION DESCRIPTION: In this session, we will examine how a business aspiring to make a positive difference can embed its social or environmental goals into its mission and business strategy. A key message will be that achieving a positive impact is easiest if the impact goals can be aligned with the fundamental challenge of business: building a competitive advantage to create unique value, while also ensuring that the business captures a large enough part of this value to support its own long-term survival and growth. We will discuss the challenges and trade-offs that impact-driven businesses face as they try to integrate societal considerations into their strategy and business model in pursuit of the dual goals of impact and profit. We will also examine how managers can resolve these tensions associated with pursuing multiple goals at least to some extent. Finally, while acknowledging that business alone cannot save the world, we will discuss how recent developments around impact-related governance, ecosystems and regulation are making it easier for entrepreneurs to employ business as a force for good. ADDITIONAL PREPARATION QUESTIONS (NOT NEEDED FOR SUBMISSION): 1. What is the Product Lifecycle Initiative proposal? Which aspects of the proposal do you consider most controversial or risky? 2. Should Patagonia go ahead with the Product Lifecycle Initiative proposal? Why or why not? [OPTIONAL] RELATED READING: Stout, L.A The Problem of Corporate Purpose. Issues in Governance Studies. Kassoy. A., B. Houlahan and J.C. Gilbert Impact Governance and Management: Fulfilling the Promise of Capitalism to Achieve a Shared and Durable Prosperity. Center for Effective Public Management at Brookings. Last updated: April 15,

7 Session 5 & 6 (Double Session) Sustainability Strategy in Large Companies PRE-SESSION READING (REQUIRED): Unilever in Vietnam: The Perfect Village Initiative. INSEAD Case. LEARNING OBJECTIVES AND SESSION DESCRIPTION: Pressure from diverse stakeholders - investors, customers, employees, communities and governments - is making sustainability a salient concern for all companies. Managing this well is becoming critical for commercial success and profitable growth, and business leaders are therefore trying to align their commercial objectives with societal goals. In fact, forward-looking companies are proactively integrating issues such as environmental impact and social justice into business strategy rather than leaving these as concerns just for standalone Corporate Social Responsibility (CSR) departments. There remain different points of view on how much companies can or even ought to prioritize societal goals in running their business. Managers leading impact-driven initiatives often circumvent this debate by reframing societal goals as an opportunity for creating shared value for the company and its stakeholders. They make a case that many of the trade-offs actually disappear with a long-term perspective, and that sensitivity towards societal concerns can in fact lead to profitable growth through intangible benefits like innovation and improved employee engagement. ADDITIONAL PREPARATION QUESTIONS (NOT NEEDED FOR SUBMISSION): 1. What were the key elements of Unilever Sustainable Living Plan (USLP)? Why did it make sense for Unilever to be doing this? 2. What are the key elements of the Perfect Village model? How is it different from typical Corporate Social Responsibility (CSR) projects? [OPTIONAL] RELATED READING: Porter, M. and M. Kramer Creating Shared Value Harvard Business Review. Last updated: April 15,

8 Session 7 (Single Session) Building Impactful Business Models PRE-SESSION READING (REQUIRED): Patrimonio Hoy: A Financially Viable Business Model for Inclusive Housing? INSEAD Case Study (Pre-Release Version). ASSIGNMENT #3 (DUE 9PM OF THE EVENING BEFORE THIS SESSION): Based on Patrimonio Hoy s performance so far (as per the case), how convincing is the business case for allowing it to scale up rapidly in line with its management s proposal? Why? (4=Very convincing; 3=Somewhat Convincing; 2=Somewhat Weak; 1=Very Weak) LEARNING OBJECTIVES AND SESSION DESCRIPTION: Many impact-driven initiatives fail to scale up or even survive. The reason often is that people running them, despite their good intentions, fail to rigorously consider all the factors driving their financial viability and/or actual impact. We will discuss how more systematically following basic strategy principles can help build a sustainable and scalable model for creating value not just for yourself but also for the society at large. Succeeding as an impactful business, such as one benefiting underserved populations (including the base of the pyramid or BOP), often requires moving beyond a mindset of incremental change. We will discuss how thinking creatively about not just your products and services but your entire business and impact model facilitates innovative market-based solutions for unmet social needs. Doing so involves complementing design of appropriate value propositions with a robust overall system that delivers the desired value efficiently and effectively. ADDITIONAL PREPARATION QUESTIONS (NOT NEEDED FOR SUBMISSION): 1. What factors prevented low-income Mexican families from being able to build a decent house? How does the Patrimonio Hoy business model address each of these hurdles? 2. What are potential points of tension between commercial performance and social impact for Patrimonio Hoy? How in your view should these be resolved? [OPTIONAL] RELATED READING: Rangan, V.K., M. Chu and D. Petkoski Segmenting the Base of the Pyramid Harvard Business Review. Gugelev, A. and A. Stern What s your End Game? Stanford Social Innovation Review. Last updated: April 15,