In low-income communities around the world, consumers who are starting to accumulate some disposable income want to improve their lives. They don’t necessarily yearn for luxury products and services; rather, they want simple and affordable offerings—like clean water, overthe-counter medicines or technologies that can help them sell their crops. Yet the societies in which they live often lack the institutions as well as the infrastructure to take part in the markets that make such goods and services available. Companies that develop products and services that address institutional and infrastructural deficits can help low-income communities enter the growing global middle class. The most successful companies can also generate new growth possibilities with such ventures—which we call inclusive business initiatives (IBIs).
New business technologies are helping companies to deepen their reach into low-income markets as well as strengthen their understanding of these consumers’ priorities. Moreover, many governments, non-governmental organizations (NGOs) and low-income communities are willing and eager to participate in and to benefit from IBIs. But for these initiatives to take hold and succeed, they must achieve scale. And that has proved to be a daunting challenge. Why? Large companies have found it difficult to harness key stakeholders’ strengths in ways that influence low-income consumers’ preferences and gain local communities’ trust. Without these capabilities, an inclusive business initiative—no matter how promising—won’t be adopted widely enough to deliver value to its intended beneficiaries or to be profitable for its originator.
All this can change, however. There is growing evidence of companies that have managed to launch successful IBIs. We analyzed IBIs operating in high-growth markets across five emerging economies to glean insights into how large businesses have surmounted the core challenge of scaling their initiatives. Our research reveals that leaders of exceptional inclusive business initiatives—those that enhance low-income consumers’ quality of life as well as companies’ bottom lines—apply a rigorous, three-step process. In this report, we describe how that works within real companies and suggest how it can be applied much more widely around the world.