Aneel Karnani, a Professor at the University of Michigan and a Managing Director at FSG Social Impact Advisors, is a long-time critic of market-based approaches to poverty alleviation and the "base of the pyramid" concept in general.

His latest article, Romanticizing the Poor, appears in the Winter 2009 issue of the Stanford Social Innovation Review.  A brief excerpt:

Market solutions to poverty are very much in vogue. These solutions, which include services and products targeting consumers at the "bottom of the pyramid," portray poor people as creative entrepreneurs and discerning consumers. Yet this rosy view of poverty-stricken people is not only wrong, but also harmful. It allows corporations, governments, and nonprofits to deny this vulnerable population the protections it needs. Romanticizing the poor also hobbles realistic interventions for alleviating poverty.

This article came across my desk last week, and I've been thinking about it since.  A formal response is in the works - to which I will invite Professor Karnani to respond here on NextBillion - but I wanted to make sure that everyone reading the site knew about the article and had the chance to read it themselves in the meantime.

Comments are open below if you have immediate thoughts; should this spark an interest, here are some of Professor Karnani's other critiques of the BoP concept:

• The Mirage of Marketing to the Bottom of the Pyramid
• Microfinance Misses its Mark
• Doing Well by Doing Good Case Study: Fair and Lovely Whitening Cream
• Help, Don't Romanticize, the Poor
  

Update 12/15/08: Aneel Karnani is not a Managing Director with FSG Social Impact Advisors, as I reported Friday.  The erroneous material was sourced from the Stanford Social Innovation Review web site; even so, I should have cross-checked it.  My apologies.

Paul Polak is wearing a sweater vest.  This will come as no surprise to anyone who’s met him or seen him speak.  The man loves sweaters – cardigans, sweater vests, pullovers.  Hell, in Camden today – with temperatures hovering around 40 degrees in the midday sun – Paul’s sweater makes a lot of sense.  But despite his grandfatherly image, Paul is a truly a young, tireless innovator and entrepreneur at heart.  

Polak is the founder of the non-profit International Development Enterprises (IDE) and the author of Out of Poverty (review here).  He is dedicated to developing practical solutions that attack poverty at its roots. For the past 25 years, Paul has worked with thousands of farmers in countries around the world to help design and produce low–cost, income–generating products that have already moved 17 million people out of poverty.

His goal - like Bunker Roy's - is to create a franchise of barefoot, women microentrepreneurs based on the ruthless pursuit of affordability. Polak suggests that a company could set up a water kiosk where entrepreneurs could sell water at an affordable price, profitably.  (Sounds familiar!)

He starts his presentation with some seemingly random facts – 200 million Americans have hemorrhoids; men talk on cell phones 16 percent more than women do.  His point: we know everything we need to know (and more) about affluent consumers.  But we know next to nothing about the other 90 percent of the world's customers.

Serving these customers means re-thinking business.  But it also means re-thinking development.  To do so, Polak has based his work on what he calls the three great poverty eradication myths:

(This post continues past the break; click "Read More" to continue)

Guest blogger Champa Gujjanudu is an 1st-year MBA student at the Haas School of Business at UC Berkeley with an emphasis in social impact consulting and community development. Prior to Haas, Champa was a Strategy Consultant with BearingPoint in the Bay Area and in New Zealand. She has held consulting positions in various industries such as Financial Services, Healthcare and Technology. She graduated with a degree from the University of Auckland with degrees in Computer Science, Mathematics and Business Information Systems.

By Champa Gujjanudu

Today, I was privileged enough to attend not one but two great panel discussions on a topic close to my heart, Fair Trade. While being familiar with some of the local and regional Fair Trade associations and retailers, I was blown away by the breadth of experiences and the passion that the various panelists brought to the discussions.

The first panel addressed one of the major challenges in the mainstreaming of Fair Trade - how do we influence the large untapped proportion of consumers to affect long lasting change in preferences? The other important question was how do we compete in the market with other non-Fair Trade products?

The next panel was focused on attracting investment in Fair Trade - tracing the supply chain of Fair Trade and discussing some of the key attributes of Fair Trade that deter traditional financiers and limit micro-financiers such as lack of collateral and the scale of Fair Trade.

(This post continues past the break; click "Read More" to continue)

Jocelyn Wyatt leads the Design for Social Impact initiative at IDEO (a global design consultancy). Prior to IDEO, Jocelyn worked as an Acumen Fund fellow in Kenya and served as Interim Country Director for VisionSpring in India. Jocelyn has an MBA from Thunderbird and a BA in Anthropology from Grinnell College. She blogs (periodically) on www.jocelynwyatt.com.

By Jocelyn Wyatt

Fully admitting my bias here, I did think the Design in the Developing World panel was an especially interesting conversation between a top-notch set of designers and practitioners. Caroline Balerin launched the panel with the question "What would it look like to design for the other 90%?" I fully expected the panelists, who have traditionally designed products, to respond with something about appropriately designed technologies. I was pleasantly surprised to hear each of them respond with the need to design not only the products, but the systems around them.

Paul Polak noted that the design of tools is trivial compared to designing how to mass market them. Tim Brown followed up with the need for us to design the distribution channels, supply chains and marketing strategies to ensure they get to market and scale. "Breakthrough innovation in the developing world is happening by designing systems." Kristen Peterson built on this with a story about how Inveneo started by designing hardware, but realizing that wasn’t enough, has moved to building partnerships with local entrepreneurs who can distribute the IT services.  

The second point, which was made by Paul Hudnut, was the importance of empathy and the need to speak to your customers in a way that makes sense to them.

(This post continues past the break; click "Read More" to continue)

"...you can have the very best technology in the world, and if you don't get it out there and market it, if you don't have a distribution network, then it doesn't have any impact."

Martin Fisher, Co-Founder and CEO, KickStart

Creating markets at the base of the pyramid is hard work.  This theme that has resurfaced again and again in my recent work, whether at a gathering of budding BoP-focused entrepreneurs or during a conversation with established social innovators.

What do we mean by 'market creation'?  What role does it play in BoP venture creation?  And why is it so often overlooked by entrepreneurs, investors, policymakers and pundits?  In this post, I'll touch on these issues by citing examples that have surfaced recently in my work, including insights from the Acumen Fund portfolio.

(This post continues past the break; click "Read More" to continue)

Last week, I had the opportunity to sit down with Jordan Kassalow, Graham Macmillan and Miriam Stone – three staff members at VisionSpring – to conduct a long-form interview. Formerly known as Scojo Foundation, VisionSpring is the pioneering base of the pyramid-focused enterprise working to provide access to eyeglasses in low-income communities around the world.

NextBillion.net readers will be familiar with VisionSpring's basic story; after all, our team published a What Works case study on the company back in 2007. We've followed their progress for a long time, up to and including their recent name change and announcement of a 5-year fundraising prospectus.

(Full disclosure: I work at Acumen Fund, which is an investor in VisionSpring.)

Rob Katz, NextBillion.net: How, when and why did you get involved with VisionSpring?

Jordan Kassalow, Chairman and Co-Founder, VisionSpring: It was very practical. I spotted a market failure in my blindness prevention work (I'm an optometrist and public health expert by trade.) For many years, my specialty was river blindness control, and when I worked in low-income communities, I saw more people coming to clinics because they couldn't see up close, while there were relatively few who were coming to us for river blindness. I saw this pattern regardless of whether I was working in Africa, Asia or Latin America. When you're working on blindness, the overall market relative to general eye care is small. The normal need for eyeglasses is strong, but underserved in the developing world. After many months, I finally realized that, if no one else is doing something about it, why can’t I?

(The interview continues past the break; click "Read More" to continue)