The idea that global companies can take a leading role in social progress is not wrong; the question is how they can do so in a way that realistically achieves social impact and delivers value to their shareholders. High-level global partnerships serve a useful purpose by garnering resources, generating knowledge and focusing attention on the urgency and importance of the issue at stake. Unfortunately, the one thing these partnerships rarely do is actually solve these problems.
As we have learned from studying more than a dozen examples, the collaboration must happen at a local level, where all relevant actors in business, government and civil society must be brought together to create systemic change.
A case in point is the way Novo Nordisk, a leading provider of insulin, is fighting diabetes. It recognized that achieving a positive global social impact meant concentrating its efforts in the specific regions where the company’s ability to provide insulin is constrained by a dysfunctional health care system.
When the company entered the Indonesian market in 2003, for example, its sales were stymied by the lack of health care infrastructure, inadequate training of care providers and limited patient awareness of the disease. Improved diagnosis and patient adherence could have increased the insulin market fourfold by 2020, saving 4.6 million life-years, reducing government health care costs by $5.8 billion and increasing the country’s gross domestic product by $2.14 trillion. Yet little progress was being made by the government, social sector organizations or global coalitions.
Novo Nordisk estimated that the company could capture up to half that market increase and determined that the potential sales justified an eight-figure investment to launch a regional public-private partnership. Working with the country’s Ministry of Health, the Indonesian Society of Endocrinology and the Indonesian Diabetes Association, the company’s local leadership and funding catalyzed a new level of cross-sector engagement and alignment. Diagnostic rates have already improved by 10%, generating increased sales for the company as well as improved health for tens of thousands of Indonesians.
Our research has consistently shown that companies that adopt an approach similar to Novo Nordisk’s can successfully lead social progress in ways that deliver improved economic performance for shareholders. That entails working at a local level with the specific partners who can orchestrate change.
Mark R. Kramer is a co-founder and a managing director of FSG, a global social-impact consulting firm. Marc W. Pfitzer is a managing director at FSG, and Helge Mahne is a director.
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