Mars presents alternative business model for achieving financial, social and human capital
Varun Saxena, Smith MBA Candidate 2019, writes about the Corporate Sustainability and Innovation event on Sept. 5, 2017, with Jay Jakub, senior director for external research at Mars, Incorporated. The event was hosted by the Center for Social Value Creation at the University of Maryland’s Robert H. Smith School of Business.
The maker of M&Ms, Mars, Incorprated, is leading the way on innovative corporate sustainably and social value creation. The company exceeded its sales targets of Wrigley chewing gum in the impoverished slums of Nairobi, Kenya, by deploying a non-traditional distribution network, company official Jay Jakub explained during a presentation hosted by the Center for Social Value Creation.
Mars hired local entrepreneurs and provided them with bicycles obtained through micro-finance. Among other departures from orthodoxy, the business model disposed of sales targets, and allowed the entrepreneurs to distribute products from other companies.
“Financial metrics alone to assess value in a knowledge economy are not sufficient,” said Jakub, Mars senior director for external research. Success is also measured using metrics that capture growth in human and social capital.
The “economics of mutuality” show that both forms of capital are correlated with profits and financial capital, Jakub explained, arguing that the benefits to business include greater talent retention and attraction.
“This all has a benefit for business,” he said.
Jakub is aiming to export the sustainable model to other companies, but noted that adoption will be more challenging for publicly traded companies.
“We could not have started this work, or pursued it, in a publicly held company,” he said.
He believes that ongoing projects at Mars, including a similar initiative in Manilla, Philippines, will provide a suite of data and case studies that will demonstrate the benefits of “the economics of mutuality” to other companies.
The idea originated from Catalyst, the internal thinktank at Mars, based in Mclean, Va.
Jakub said that the projects do not constitute corporate social responsibility, since they also generate profit for the parent company, but said they do also improve the company’s image.
“It’s going to take convincing because people are skeptical of things that are new and challenge orthodox business practices,” he said. “You have to teach this at the MBA level because that’s where you get indoctrinated.”
Visit the Center for Social Value Creation website for more information about corporate sustainability and innovation programs at Smith: www.rhsmith.umd.edu/svc.