How Mark Zuckerberg Can Resolve The Inclusive Innovator's Dilemma

This article first appeared as on op-ed in my column in Forbes.

Sometimes, Doing Well While Doing Good Can Be Bad For You

Facebook CEO, Mark Zuckerberg is on a global mission to get people on the Internet, even if it is a pared-down version. He also is, seemingly, undeterred by failure.

"Today we're partnering with Airtel Africa to launch Free Basics in Nigeria," he said in a March 10, 2016 post on Facebook. This is just a few weeks since Facebook announced the launch of the same service in Bangladesh (April 11) and El Salvador (April 29).

By launching in quick succession across three different continents, Zuckerberg persists in his drive to connect the 4.4 billion who have never been online, despite hitting a wall recently in India. The irony is that India was also a perfect test case for the holy grail of combining doing well with doing good: it is Facebook's second largest market, and, with growth, poised to be the largest. Yet, the country cannot realize its full potential because 80 percent of its citizens have never been online. Facebook's Free Basics initiative was innovative and appeared reasonable: in partnership with a local telecom provider, Facebook offered free access to a limited package of websites, with a process for site developers to apply to be included in the package. The key, of course, is that the package was limited - and included a "lite" version of Facebook and would have been an on-ramp for those who have never been on the site or on any other.

As I've written previously, there are good reasons to like Free Basics: it is better for a society to provide even limited access to more people, than a status quo where the vast majority have no Internet access at all. Nevertheless, in the case of India, there was a vocal opposition and people active online hated the idea. The Facebook solution, they argued, was inequitable for consumers - Free Basics users would be denied access to the full Internet - as well as for entrepreneurs, app developers and organizations, whose websites were excluded from Free Basics. Faced with overwhelmingly negative public reaction and citing violation of net neutrality, i.e. all Internet traffic is treated the same, India's telecom regulator banned the service.

Zuckerberg is bruised but not out of the game. By taking on new countries as complex as Bangladesh, El Salvador and Nigeria, he seems to have dusted himself off and is back on his mission.

Inclusive Innovators Make a Business Case for Social Responsibility

More generally, innovation in doing well while doing good is a growing trend among businesses seeking new markets in the developing world. Our research and conference initiative on this issue, conducted in collaboration with the Citi Foundation, confirms a growing preference for pursuing such dual objectives over pure philanthropy. For example, when we spoke with Sunny Verghese, founder and CEO of Olam, the agri-business company, he mentioned how pure corporate charity was not popular with shareholders. "But when you tell your shareholders that you are engaging in a variety of developmental initiatives which have some reciprocal value for the company, there are no questions asked," he says.

Governments and international agencies have also come around to acknowledge the critical role that businesses can play. The developmental initiatives that Verghese speaks of are consistent with what the UNDP defines as "inclusive business", recently extended as a call-to-action by the leadership of the G20. Such innovative models are displacing philanthropy in many businesses for several reasons. Such initiatives are more sustainable over the longer-term; they are less reliant on individual "socially conscious" champions; and they are powerful recruiting and retention tools, particularly for the millennial generation, according to a number of studies. Most significantly, such initiatives may prove essential for long-term growth, as markets grow.

Despite all these advantages, straddling the two objectives can be hazardous. Mark Zuckerberg's India debacle has proven to be the most dramatic recent case of the inclusive innovator's dilemma: the "doing good" part of the offer could be rejected if society finds the "doing well" part overly self-serving.

Consider Three Rules For Dealing With The Dilemma

Given that Zuckerberg seems undeterred and determined to continue his initiative, I have three suggestions for avoiding the inclusive innovator's dilemma:

1. Don't over-sell "doing good": There were several signals that Facebook had over-reached in India. Zuckerberg's visit to an Indian village was extensively covered by a Time magazine cover story that read: "Half the World is Not Enough: Mark Zuckerberg's Plan to Get Every Human Online." To compound the problem, the initiative was initially called, before being re-branded as Free Basics. Once an expectation is set to "free Internet for everyone", there is bound to be disappointment and disillusionment with anything substantially less. It is better to set expectations about the benefits to society consistent with what your business model can deliver.

2. Make sure that "doing well" follows "doing good"; not the other way around: As designed, the limited menu of Free Basics, included the Facebook site and Facebook would control which sites and apps appeared on the menu. This immediately encourages a critique; consider, for example: "Here's a large American company coming into India and appearing to try to have its way to gain eyeballs for what is ultimately a company that sells eyeballs to advertisers." So said Kentaro Toyama, a Michigan professor. It is wiser to plan for a "goodwill period" with no measurable benefit to the company to first build trust before pushing for commercial opportunities.

3. Besides passing the commercial test, ensure that "doing good" passes the tests of politics and history: Every company has to set boundaries on which aspects of society's development challenges ought to be part of its "social responsibility" agenda. Otherwise, the costs of tackling the challenges would violate the "doing well" mandate.

It is critical, however, to design offers that respect prevailing political sentiments and norms. When Facebook launched in India in February 2015, concerns for preserving net neutrality had already started gathering momentum: a local wireless operator, Airtel, was under fire from December 2014 on for announcing that VoIP calls would cost users extra fees. By April 2015, the issue had become explosive and it was becoming clear that going against net neutrality would be politically infeasible for the regulator. In the meantime, the parallels with British colonialism had already started surfacing; you cannot ignore an important part of collective national memory.

As designed, Free Basics was going against both the political sentiment and historical sensitivities. "Doing good" initiatives cannot fail these tests because they disproportionately involve the disadvantaged segments of society. This realization can be a novel one for entrepreneurs whose focus, naturally, is on the business elements.

Turn Those "Yikes" Into "Likes"

When an innovative company takes an active role in creating benefits for society, it not only has the opportunity to create value for itself, it might find solutions to problems that have stymied governments, NGOs and active citizens. This is even more reason for inclusive innovators to find a resolution to their dilemma.

Zuckerberg, for his part, can learn from all the "yikes" in India and turn them into "likes" in Bangladesh, El Salvador, Nigeria and elsewhere. Other inclusive innovators should pay close attention to Mark Zuckerberg's education in the global context and learn from his experience.

Bhaskar Chakravorti is the Senior Associate Dean of International Business & Finance at The Fletcher School at Tufts University. He is also the founding Executive Director of Fletcher's Institute for Business in the Global Context and author of the book, "The Slow Pace of Fast Change."