Making sustainability profitable may be simply a matter of perspective.
In 2007, the release of the first iPhone made headlines around the world. In that same year, another new mobile technology was also rolled out to considerably less fanfare. Like the iPhone, it revolutionized the concept of a phone, tapping into latent demand and disrupting both its sector and previously unrelated industries. This pioneer achieved unprecedented market dominance and popularized a service appropriate for billions of mobile phone users.
The disruptor flipped Apple’s strategy on its head: Rather than pursuing the high-end, their market lived on less than $2 per day. The service was developed and launched far from the denizens of Silicon Valley by Safaricom in Kenya. Called M-Pesa — “M” for mobile and “Pesa,” the Swahili word for money — they created one of the earliest mobile money platforms, seven years before Apple Pay.
M-Pesa found an opportunity for abundance by solving chronic financial services problems for nearly three-quarters of the Kenyan population that didn’t or couldn’t use banks to house their money. The pent-up demand was enormous, the growth explosive. M-Pesa now has 20 million customers and over 70% market share. Transactions passing through the service represent more than 40% of Kenya’s GDP. By meeting the needs of people at the base of the pyramid, M-Pesa built a profitable, double-digit growth business while addressing chronic economic and social problems for their community.
M-Pesa’s model has gone global. A 2014 industry report identified 255 mobile money services available in 89 countries. Despite capturing only 8% of mobile accounts, monthly global transactions in December 2014 were $16.3 billion. The growth opportunity is staggering.
Merging Sustainability and Strategy with the Abundance Cycle
M-Pesa found abundance with simple mobile financial services that reduce transaction costs, bolster financial security, improve food access, and spark grassroots economic expansion. M-Pesa is a remarkable story, and one that is mirrored by abundance trailblazers across industries. These enterprises build virtuous cycles where solving ecological problems and building resilient communities opens new markets and strengthens competitive advantage. While sustainability may seem amorphous, adopting an abundant perspective (Figure 1) provides concrete economic, social, and environmental objectives provoking new questions and unleashing new possibilities.
While leaders understand the importance of sustainability, they often have difficulty translating it into action. The MIT Sloan Management Review and Boston Consulting Group study, "Sustainability's Next Frontier", found that while nearly two-thirds of business respondents felt sustainability issues were important, only 10% of companies fully tackled them. A key differentiator in their success was linking sustainability and business strategy.
The Abundance Cycle (Figure 2) and the five-step process below bridge this gap by combining an abundant perspective with core business activities, making sustainability strategic.
Step 1: Reconnect with Purpose
Purpose is powerful.
Enterprises are founded to solve problems or provide new solutions. Reconnecting with and articulating this purpose lays a solid foundation for abundance. Purpose fuels company founders through start-up chaos, motivates employees and customers, and drives superior stock performance. M-Pesa’s purpose is enhancing the lives of the unbanked by giving them access to financial services. As their offerings and market share have grown, M-Pesa’s purpose remains inspirational.
Step 2: Build on Competitive Strengths
Building on competitive strengths maximizes strategic alignment and positive social and environmental impacts. M-Pesa leveraged their broad distribution network to disrupt the branch-banking model. Figure 3 shows the core activities of every enterprise and highlights M-Pesa’s distribution competitive advantage.
Step 3: Apply Proven Tactics
Across all industries, giants and start-ups alike are achieving abundance with a suite of proven tactics. By applying tactics to competitive strengths, they reimagine their enterprises and find new opportunities. Figure 4 highlights companies across the financial services industry using abundance tactics. M-Pesa’s tactics of unbundling financial services for people at the base of the pyramid leveraged their mobile distribution strength.
Step 4: Communicate in Stakeholder Language and Implement
Speaking the stakeholder’s language is key to success. Passionate advocates discussing emission reductions or social justice alienate internal stakeholders interested in business impacts or customers looking for products that work. With language aligned, begin by implementing achievable projects that maximize impact. M-Pesa began as a simple way to move small amounts of money. Its website is not a social treatise; rather, customer communications focus on the easy, safe, and convenient service provided by a world leader in mobile money.
Step 5: Measure, Report, and Repeat
When implementing, track key performance indicators that span business, social, and environmental results. Researchers have thoroughly documented M-Pesa’s societal benefits, and its website provides relevant business metrics. But in order to grow their business, M-Pesa, like all enterprises, faces an imperative of continuous value creation in order to avoid obsolescence.
The abundance process is one of continuous improvement, fueled by the evolution of civic, economic, and ecological issues. In Kenya, M-Pesa continues creating new value by building a suite of financial services. Revenues are growing at 20% and annualizing at $380 million. Globally, M-Pesa has expanded to 11 countries in Africa, Asia, and Europe.
Beyond financial services, abundance is redefining industries from automobiles to retail. As with M-Pesa, enterprises either discover latent value and prosper or are swept aside by those who do.