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Hart's Book is One of Best Books of 2005
Says strategy + business magazine,
"The private sector has an essential role to play in lifting the developing world out of poverty, but it must be provided with the tools to do so. Two business professors take up the theme of sustainable capitalism in books that are strong complements to The End of Poverty.
Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World's Most Difficult Problems, by Cornell University Johnson School of Management professor Stuart L. Hart (Wharton School Publishing, 2005), and The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, by University of Michigan professor C.K. Prahalad (Wharton School Publishing, 2005), both show how multinational corporations can develop new growth markets while elevating living standards among the poor. The professors first presented their ideas about "the bottom of the pyramid" - a reference to the 4 billion people, living mostly in Africa, Asia, and Latin America, with per capita incomes of less than US$1,400 a year - in strategy+business. (See "The Fortune at the Bottom of the Pyramid," by C.K. Prahalad and Stuart L. Hart, s+b, First Quarter 2002.) They present this concept as an approach to corporate strategy. (See "Sailing Beyond Luck," by Chuck Lucier and Jan Dyer, s+b, Winter 2005.)
Professor Hart is a leading scholar and innovator in strategy and corporate environmentalism. He was the founder of the University of Michigan's first program in corporate environmental management, and later started the Center for Sustainable Enterprise at the Flagler School of Management at the University of North Carolina. In 2003, he assumed his current position at Cornell as the S.C. Johnson Professor of Sustainable Global Enterprise.
Capitalism at the Crossroads is a generally well-written and well-argued collection of ideas developed over several decades of research on the promise of what Professor Hart calls the sustainable global enterprise - "a new private sector-based approach to development that creates profitable businesses that simultaneously raise the quality of life for the world's poor, respect cultural diversity, and conserve the ecological integrity of the planet for future generations."
The book provides many valuable examples of the experiments, innovations, and market success stories of companies that are building businesses to address the specific needs and desires of people living in the poorest nations. His stories and insights are especially strong when he explains what multinational companies do to become effective in these markets. For example, Unilever's Indian subsidiary, Hindustan Lever Limited - which increased its revenues and profits by 20 and 25 percent per year, respectively, between 1995 and 2000 - requires all employees in India to spend six weeks living in rural villages to get information directly from consumers, while the company develops new products for them and works with local producers to source local materials. Unilever also built an R&D center in rural India. These efforts he describes as part of a strategy to become "indigenous."
Even more valuable to the strategy+business reader is the void this book fills in leveraging familiar management concepts, frameworks, and language to connect business strategy to sustainability strategies. Professor Hart devotes an entire chapter to the subject, citing Clayton Christensen's work on disruptive innovation several times, and presenting a useful diagnostic approach for managing today's businesses and creating tomorrow's opportunities. One chapter, "The Great Leap Downward," shows why the poorest nations can be viewed as potentially lucrative markets in which to incubate "clean" technologies. For instance, Professor Hart cites the development of fuel-efficient cars for use in heavily polluted countries such as China and India as a prime opportunity that auto manufacturers have so far missed."
