There are many reasons why large corporations are challenged to capitalize on shared value opportunities. One that is frequently cited is the inability to look beyond current product lines to rethink solutions to social problems. Some corporations are however, finding ways to overcome this challenge. This is the story of one such corporation and how it overcame the challenge by striking a non-traditional alliance – one with a startup social enterprise.
In 2009, GE launched Healthymagination, a bold commitment to invest US $6 billion by 2015 to develop 100 new, more affordable, and simpler products that address severe health issues. In India, one of the severe health issues the company targeted addressing was infant mortality. A key Millennium Development Goal (MDG) for India, infant mortality had come to symbolize the country’s struggle to balance rapid economic progress with human development challenges. One of the causes of infant mortality is premature births and low birth weight. Babies born pre-term or at the low end of the weight scale do not have as much fat in their little bodies and struggle to stay warm. As a result, one in five of these babies don’t make it through the first month of their lives. In developed countries, such babies would be placed in incubators like the ones GE has traditional made. At a cost of US$20,000 and requiring steady electricity supply, this was too expensive and impractical a solution for India. 60% of India’s population lives in rural areas with unpredictable electricity supply and where vast majority of births are delivered by midwives at home. GE’s R&D engineers spent months reinventing their incubator and managed to bring the price down to an impressive US$2,000 – 10% of the original. However, this was still too expensive. It was then that GE chanced upon Embrace, a social enterprise born out of a Stanford Design class that had radically rethought the solution to the problem.
Bearing no resemblance to a traditional incubator, Embrace’s solution was instead fashioned as a sleeping bag with a pouch for a heating pad. The pad which could be warmed by an electric or water warmer in 20 minutes could keep the baby warm for 4-6 hours. Most of all the solution was priced at just $200 – or 1% of GE’s original incubator. Portable, affordable and practical, it was the perfect solution for the problem. GE recognized the power of Embrace’s solution and decided to partner with the social enterprise to distribute the product.
A screenshot from Embrace's website.
GE and Embrace bring very different and unique strengths to the alliance. Like most social enterprises, Embrace, unencumbered by a legacy product line was able to develop a disruptive solution to the problem. Further, it had the ability to quickly adapt and improve its design based on market inputs. GE on the other hand, brought very different strengths to the partnership. Its experience with healthcare regulatory requirements enabled it to turn a neat solution into something that was market-ready. This coupled with its awesome depth and breadth of market access as well as marketing prowess ensured the solution would reach the greatest number of population in need – far more than Embrace alone would have ever been able to reach.
In short, together, GE and Embrace will be able to capitalize on the opportunity in ways neither would have been able to alone. It is the ultimate “win-win” alliance – a match made in heaven. Both parties are quick to point out however, that it takes hard work to make such alliances successful. The speed of progress can seem painfully slow to social enterprises used to moving quickly. On the other hand, social enterprises can seem lacking in structure and organization to the large corporation. However, with enough trust, it is possible to make such alliances work as GE and Embrace have shown.
What is your experience with such alliances? We invite you to share what you see as the benefits and challenges of such alliances.