In this edition of Author Talks, McKinsey Global Publishing’s Belinda Yu chats with Viva Bartkus, professor emerita at University of Notre Dame and a former McKinsey partner, about her new book, Business on the Edge: How to Turn a Profit and Improve Lives in the World’s Toughest Places (Basics Books/Hachette Book Group, Summer 2024), coauthored with Emily S. Block. Bartkus debunks the myth that conducting business in areas stuck in cycles of violence and extreme poverty is devoid of opportunity and full of risk. She argues that businesses that expand into these “frontline regions” can help to create stability and increase opportunity. An edited version of the conversation follows, and you can also watch the full video at the end of this article.
Why did you write this book?
Rebuilding societies that are ravaged by war and poverty is the great challenge of the 21st century. Focusing on the inherent dignity of our fellow humans seems to be the place to start.
My coauthor and I decided it was time to take all the lessons that we learned from our successes and failures in this regard and write the book. Our message is that in these tough environments, business can operate and improve people’s lives. We wanted to share the business model and the process that we developed so that more companies could access these opportunities and improve lives.
What’s the business case for expanding into the front lines?
What we say to business leaders about the front lines is, “The juice is worth the squeeze.” The front lines are impoverished and isolated. They are on the edge of development and globalization, sometimes even on the edge of the rule of law. You could legitimately question whether these areas really represent “business opportunities.”
Our message is that the front lines are teeming with economic possibility. By our calculations, there are 1.4 billion people who live on the front lines, and they generate in excess of $20 trillion in economic activity every year. They represent the next great frontier of global business opportunity.
How do you think about these opportunities? Consider the competitive advantages of the front lines, which are really land, underdeveloped natural resources, and hard-working, low-cost labor.
This underdeveloped nature of the front lines means that the first movers into these areas will gain disproportionate advantages. Our message is, by adopting a stripped-down business model, partnering locally, and engaging in a disciplined process, you can cut costs, mitigate risks, and work profitably in these areas. As you do so, you will provide some of the jobs that local communities really need.
Was there anything that surprised you in the writing or research of this book?
What surprised me was how former adversaries could find common ground and tackle problems together while working in many of these tough environments. We were part of an effort that combined the Socialist Republic of Vietnam, Catholic Relief Services, which is the second-largest humanitarian organization in the world, and USAID [United States Agency for International Development], which is our government’s foreign aid agency.
Catholic Relief Services really had the expertise to create programs for those who were disabled: they had medical doctors, psychologists, and social workers. They knew how to do this, and they had done it in many other countries around the world.
USAID came forward and provided some of the funding that was necessary to launch these programs. Together with leaders of the disability community in Vietnam, they created programs that enabled those with disabilities in Vietnam to come out of the shadows and live their lives to the fullest.
They put aside their differences, found common ground, built trust, and built extraordinary programs that serve people with disabilities. The story showed me that it is possible for those who may have been adversaries in the past to work together to really tackle some of the world’s toughest problems.
What surprised me was how former adversaries could find common ground and tackle problems together while working in many of these tough environments.
What are some of the first steps leaders can take to identify economic opportunities and conduct business successfully in frontline environments?
The front lines are tough; this is not business as usual. But there are steps we can take to begin to understand these conditions of high complexity and high uncertainty.
As business leaders think about accessing opportunities in frontline environments, they should map the entire value chain, from beginning raw materials all the way to end customers.
Through interviews and data-gathering, this disciplined process will uncover opportunities and barriers. How do we start overcoming the barriers that we’ve uncovered? That step really rests on partnering broadly with the myriad local actors that are in that geography.
These are not necessarily your traditional business partners: these could be NGOs [nongovernmental organizations], community members, and local government officials. But you need diverse sources of information to determine who to trust, and to make better business decisions.
We’ve talked about imagining and creating common ground with these partners. This requires a classic data-driven, deductive, problem-solving process. So develop the hypothesis, test it out on the ground, gather more data. Then, as you disprove the hypothesis, iterate very, very quickly, and change the solutions, try again, fail forward, fail fast.
Ultimately, the heart of the solution is to focus on the parts of the value chain where you really have a competitive advantage because you have privileged assets, or relationships, or capabilities, and then partner on the rest of the business activities. These are really the first steps for identifying and accessing opportunities on the front lines.
How can companies address security risks in unstable frontline regions?
One of the challenges of frontline environments is the lawlessness, instability, and potential for conflict or violence. That is certainly a very serious concern. Our experience is that if businesses are expanding into this area, then you cannot build a wall high enough to protect your operations.
As our longtime friend Wayne Murdy, the former CEO of Newmont Mining, always told us, “There’s no way to protect a mine. If a mob wants to take the mine, the mob will take it over.” So our recommendation is very different: don’t build the wall.
What you should do instead is embed your business so deeply into the local community that the local community begins perceiving the business and the business’s success as their own. Then they will protect the business from any sort of threats. You do that by hiring and obtaining supplies locally, and by working with respected local leaders. Viewing security as a variable cost rather than a fixed cost really opens up opportunities.
As you build these businesses, you provide opportunities for those who might be more attracted to, perhaps, not-so-good opportunities for society. Consider mining, infrastructure, or agriculture, which require a lot of labor.
Embed your business so deeply into the local community that the local community begins perceiving the business and the business’s success as their own.
Those are the opportunities that really can appeal to military-age males who need alternatives to joining extremists, criminal elements, gangs, or anything else like that. You want to give at-risk youth a chance in life—that means a job. That’s how business can really build stability in these areas.
Business leaders should worry about risk in frontline environments. You could really mitigate your vulnerabilities and risks by trying to control everything. There are certainly companies that have done that.
For example, Dole is the largest landholder in Guatemala; it has plantations. Dole owns the whole supply chain, from the plantations to the shipping, all the way to a consumer’s dinner table. That is expensive. Alternatively, Green Mountain Coffee partners with thousands of small coffee growers around the world. It supports them and their cooperatives, and it partners with other organizations as those coffee growers need new and different services. For example, it partnered with Root Capital to provide microloans so that farmers could invest in fertilizer.
Green Mountain Coffee controls the part of the value chain that it can do uniquely, which is sales and marketing to customers. It has partnered on all other business activities. The return on investment works like this: they don’t make the up-front investment, like Dole does, in plantations or in other expenses.
Certainly, the operational costs are a little bit higher to manage all of these partners. But, overall, this stripped-down business model really drives returns. Along the way, it improves the lives of many of the local people with whom Green Mountain Coffee partners.
How can leaders break down barriers, develop trust with locals, and bridge cultural divides on the front lines?
In our book we talk about dirty boots. If you saw either Emily’s or my boots from all our years in the field, they really are dirty. Nothing substitutes for firsthand experience. Most of the front lines have limited to no data to base strategic decisions on, so you must gather the data yourself.
You need to experience the front lines: listen, learn, use all your senses, and stay long enough for real life to happen. If you’re an outsider, you’re going to be interesting, people will be curious about you. They’ll probably give you their best answers. But stay long enough to experience real life.
You have traveled a great deal to these frontline areas to sit at the feet of those who are working and living there and to listen to their stories. They will be very curious about you, so return the compliment. Now, this is extra work. We are the first ones to admit that this time listening, learning, and immersing yourself in this frontline environment is not business as usual. You need to do that to determine whom to trust in these areas.
What questions do senior business leaders have when you talk to them about going to the front lines?
In talking about the book with senior business leaders, a couple of recurring questions arise. One question is about how you address the question of security. If your competition is middlemen with guns, that can certainly be quite scary.
Those communities that [have the competitive advantages of] labor or natural resources want to work hard, to have a better future, and to partner with you. They want to partner with you because you represent an opportunity that minimizes corruption, maximizes opportunity, and gives their kids a chance for a better life. You start working with them and these local communities will end up protecting you as you embed your operations very deeply into those local areas.
The second question that I have heard recently from senior executives is “where next?” There have been 20 years of globalization in India and China, and many senior leaders are really worried about diminishing returns in many of the places where they’ve invested over the past decades.
Business investment in the front lines represents an upside for society, both in terms of livelihoods but also in terms of prosperity and stability.
We believe the front lines will represent the next round of globalization. We believe that those companies, those first movers who are willing to embrace new approaches that are not business as usual, that partner with untraditional allies, untraditional local actors, and take the opportunity, will gain the advantage. So that’s “where next.”
We sincerely believe that business investment in the front lines represents an upside for society, both in terms of livelihoods but also in terms of prosperity and stability.
The conclusion of your book is titled, ‘Nothing stops a bullet like a job.’ What does that mean?
The entire book is really about the opportunities for business represented by the front lines. The second half of the book is about the process the business must go through to access those opportunities.
But in the conclusion, Emily and I lay out the case for the upside to society when business invests in frontline environments. This is captured by what our friend Father Greg Boyle, the founder of Homeboy Industries, says. His is arguably the largest gang rehabilitation organization in the world.
Father Greg says, “Nothing stops a bullet like a job.” First of all, jobs give at-risk youth a chance, they give them an alternative, they give them a way to be a part of the community and a part of a future, and this gives them an alternative to violence. So, it’s really a race, in many of these frontline environments, to create enough jobs for at-risk youth.
Jobs give at-risk youth a chance, they give them an alternative, they give them a way to be a part of the community and a part of a future, and this gives them an alternative to violence.
Second, business provides the opportunity for those who may have been adversaries or may have been opponents to have a low-risk way of interacting, as buyers and sellers, in a repeated manner. That repetition in a low-risk way enables them to get to know each other, and to build some trust and social capital. These repeated market interactions provide the scaffolding for the relationships that a community needs not only to survive but to thrive. And business provides the foundation for that.
Watch the full interview
