In the second edition of “Capitalism at the Crossroads” Stuart Hart makes a very strong case for MNCs to start thinking about the bottom of the pyramid (BoP) and environmentalism as opportunities. The book, which is subtitled “Aligning business, earth and humanity”, manages to cover the most significant global issues of our time – global warming, global poverty and terrorism – in a way that is comprehensive and insightful. Hart argues, in a very compelling manner, that to be successful tomorrow, the businesses of today need to embrace green practices and target the world’s poor. As if that weren’t enough, Hart goes on to provide unique guidelines for how businesses can go about transforming themselves. The title reflects Stuart’s argument that businesses have a choice to make; they can invest to become the leaders of tomorrow, or they can continue to operate under the status quo and miss the next big wave of growth.
In my opinion, “Capitalism at the Crossroads” stands out because it specifically makes the case that current market leading MNCs (rather than just small corps) actually stand to benefit from both embracing the green movement and finding ways to serve the BoP. In fact, the book goes further and says that large corporations who do not follow this trend will lose in the long run. Hart firmly believes that environmental sustainability and profits are not trade offs, but rather that sustainability will beget profits. There have been a number of books that point to reasons social entrepreneurs and disruptive thinkers should serve the BoP, but this is the first that I’ve seen that clearly articulates why it is in the best interest of large corporations.
To demonstrate his point, Hart has created a framework called the “Sustainable Value Portfolio”, which does an excellent job of showing how pursuing sustainable product development can lead to greater profits. Essentially, Hart argues that whether or not you believe in global warming, creating sustainable products is necessary for success due to the fact that developing countries are continuing to increase consumption levels. As this occurs, resources will only grow scarcer and companies that have developed sustainable solutions will be the only ones positioned to grow in this new global marketplace.
Finally, Hart provides guidance that companies who choose to pursue his strategy must build the inherent capability to serve the BoP. In other words, managers must go into the BoP to experience it first hand; they should live in slums and experience the way of life of the poor before they can really understand how to create lasting solutions.
Ironically, my primary criticism of Hart’s novel is also one of its strengths. By tailoring the book toward large MNCs , Hart does not explictly encourage small entrepreneurs and disruptors to innovate and create brand new solutions.
All told, I would give this book an A+, Stuart Hart kept me captivated and left me in deep thought each time after I put the book down.