Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality

A road map for creating shared value

by

and

Eduardo Tugendhat

by

and

Eduardo Tugendhat

From the Magazine (January–February 2018) · Long read

Ellen Porteous

Summary.

More than a billion people in the developing world remain in extreme poverty and outside the formal economy. Traditional CSR programs have done little to alleviate the situation and rarely produce transformative change.

Instead of trying to fix local problems, the authors argue, corporations need to reimagine the regional ecosystems in which they participate. They should search for systemic, multisector opportunities; mobilize complementary partners; and obtain seed and scale-up financing from organizations with a mission to alleviate poverty. They should also align the various stakeholders around the new strategy, using proven tools such as a co-created strategy map.

These principles are informed by the authors’ experience with several successful inclusive-growth projects. An initiative in Uganda is bringing small maize farmers into the mainstream regional economy, while a training program in El Salvador is giving unemployed youths the skills to work in the country’s growing service sector.

In Brief

The Problem

Although growth has raised the standard of living in the developing world, more than a billion people remain in extreme poverty and outside the formal economy. Traditional corporate social responsibility programs have done little to alleviate the situation and rarely produce transformational change.

Why It Happens

Companies’ projects are not ambitious enough. Instead of trying to fix local problems, corporations and other actors need to reimagine the regional ecosystems in which they participate.

How to Fix It

Ecosystem reinvention requires searching for systemic, multisector opportunities and mobilizing complementary partners. Corporate financing can be supplemented with start-up capital from private and public organizations with a mission to alleviate poverty.

Global corporations and market-driven capitalism have generated tremendous growth since World War II, considerably reducing overall rates of poverty. That growth, however, has not benefited everyone. In developed economies, a small fraction of the population has captured the most recent gains, while many people in working-class rural and especially urban communities have experienced socioeconomic decline.

A version of this article appeared in the January–February 2018 issue (pp.126–133) of Harvard Business Review.

Robert S. Kaplan is a senior fellow and the Marvin Bower Professor of Leadership Development emeritus at Harvard Business School. He coauthored the McKinsey Award–winning HBR article “Accounting for Climate Change” (November–December 2021).
GS

George Serafeim is the Charles M. Williams Professor of Business Administration at Harvard Business School, where he leads the Climate and Sustainability Impact AI Lab. Follow him on Twitter @georgeserafeim
ET

Eduardo Tugendhat is the director of thought leadership at Palladium, the global consulting firm whose work is discussed in this article.

Inclusive Growth: Profitable Strategies for Tackling Poverty and Inequality

In Brief

The Problem

Why It Happens

How to Fix It

Partner Center

Explore HBR

HBR Store

About HBR

Manage My Account

Follow HBR