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As readers of this page are now well familiar, companies worldwide are rapidly becoming aware of and pursuing markets at the base of the pyramid (BOP). I'm often dismayed, however, by how many of these efforts are essentially just scaled-down or lower-cost versions of existing products or services. Although these can succeed and positively impact BOP markets, the real potential lies in radically new and innovative solutions designed to meet the specific needs of poor people.

I haven’t found too many groups designing such solutions from the ground up. One notable exception has been the 'Design for the Base of the Pyramid' project at the Illinois Institute of Technology’s Institute of Design. The initiative is developing "human-centered design strategies and concepts for new products, services and businesses capable of generating sustainable economic improvement in the lives of people living at the BOP."

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A number of articles appeared this week that trumpeted both the success and growth of mobile telephony in emerging economies. The first gives an update from the Emerging Market Handset Programme (EMHP), highlighting GSMA's six month extension of its endorsement of Motorola as the program's official vendor. The article credits the program as being the catalyst which encouraged handset vendors to seriously begin to examine base of the pyramid (BOP) markets.

The arrival of these so-called Ultra-Low Cost Handsets (priced at or below $50) has brought price competition to the mobile sector. The second article points out that to compete with the new offerings, official handset retailers, as well as black market, second hand and refurbished retailers were obliged to reduce their prices across all tiers. "The redirection of vendor strategy towards the growing low and ultra-low cost segments is increasing competition in these segments, obliging further handset cost reductions. This impact has made all handsets in the market more affordable and has even encouraged higher-end handset customers to change their phone, making them available in turn to be refurbished."

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Jeff Sachs, Director of the Earth Institute at Columbia University in New York City, spoke Tuesday, March 14 at the Center for Global Development here in Washington. Professor Sachs has long been identified as a strong proponent of a publicly-led drive against global poverty. As Director of the UN Millennium Project, Jeff has been highly influential in defining the Goals and the pathways to achieving them. While I agree wholeheartedly with him on the diagnosis of the disease, I have found it hard to put much stock in his cure: more public money. Not because it wouldn’t help. Of course it would. It is the moral course of action., and the politically wise thing to do. But years of observation have made a cynic: it’s simply not going to happen. And yet, Jeff’s talk at CGD this week lead me to believe that the Millennium Village projects on which Earth Institute has embarked are perhaps less distant in practice from the private sector-led development approach we take here at Nextbillion.

As usual Jeff painted, in just a few bold strokes, a powerful and stirring portrait of poverty on-the-ground in sub-Saharan Africa: unique disease burden, depleted soils, lack of transportation infrastructure, under-financed (and yes, corrupt) governments. But he was not just trying this time to be a prophet, calling us to action on debt relief or increased aid. He talked about the Millennium Villages projects as creating the conditions necessary for markets to flourish, and for SME entrepreneurship, and real economies, to take hold. (The influence of climate change on Africa, and its implications for agriculture, is a discussion for another day.)

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Just a reminder, the deadline to submit your business plan for the BiD Challenge is this Monday, March 20th.

The Bid Challenge is offering €150.000 in start-up finance for plans that
combine income generating business with poverty reduction in a feasible way. Both new ideas and plans to expand an existing business can compete.

Click here for more details.

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In January, I wrote about the proposed creation of the World Development Corporation (WDC), a new institution which would harness the capabilities of MNCs to confront global poverty while at the same time reviving their legitimacy and maintaining shareholder value. The for-profit entity would work closely with NGOs and governments to invest in and scale up viable social enterprises like the ones we highlight here on Nextbillion.

The idea for the WDC comes from George C. Lodge, professor emeritus at Harvard University. Together with co-author Craig Wilson, Lodge has written a new book that examines the concept further. A Corporate Solution to Global Poverty: How Multinationals Can Help the Poor and Invigorate Their Own Legitimacy is due out in May.

In the meantime, Harvard has just published a great interview with Lodge in which he explains why nonprofits aren't the answer to ending poverty and asks that executives look beyond philanthropy to make lasting positive change.

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My post last Thursday criticized Microsoft's potential release of a stripped down version of its forthcoming Windows Vista operating system for emerging markets. I thought this was the wrong approach; rather than strip features out, Microsoft should be figuring out which applications to add in. Apparently the company is!

BusinessWeek reports on some interesting research going on at one of Microsoft's labs in India:

"Microsoft has developed a prototype of a system that would connect illiterate domestic workers in India with families seeking their services. The system uses pictures, video and voice commands to tell women what jobs are available, how much the jobs pay and where they are."

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If you've been watching news of the $100 laptop in the last five months, your head is probably spinning. Not to worry. I've rounded up the various NextBillion activity capsules and blog entries just for your pixel-strained eyes.

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The Acumen Fund Blog today reports a new for-profit water services project launched in one of India's poorest urban neighborhoods. The provider, Heritage, receives strategic management support and assistance raising capital from the Acumen Fund. I am excited to hear companies saying that "[poor] people are ready to pay, provided the service is good." Want to achieve the MDG for water? Engage the private sector. An article in The Hindu goes into some detail about the project:

"The idea is to provide safe drinking water to the urban poor in areas where there is no network of piped supply," HLSP executive trustee Nalini Gangadharan said. The program would be implemented in slums where laying of infrastructure is expensive, technically unfeasible or not on the immediate agenda...

"Apart from providing clean drinking water to the urban poor, it will also generate revenue to the water board, indicating that people are ready to pay provided the service is good."

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Over the weekend, Microsoft posted information about the six editions of Windows Vista it plans to offer -- only to remove the information from its Web site a day later, saying it has yet to make a final decision. Interestingly, one of these editions appears to be a more limited version aimed at developing countries.

This wouldn't be Microsoft's first foray into BOP markets. In 2004, the company released it's Windows XP Starter Edition, a stripped-down version of its OS that was initially installed on PCs shipped to Thailand, Malaysia, and Indonesia, and then later to Brazil, India and Mexico.

Although at first reluctant to distribute a cheaper version of Windows, Microsoft's hand was forced when the government of Thailand's Peoples PC

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Rob Katz, a NextBillion staff writer, recently interviewed Martin Fisher, co-founder of KickStart, and Upendra Bhatt, co-founder of Aavishkaar, in writing an article for GreenBiz.com. KickStart and Aavishkaar are, dare I say, two of the most innovative and robust businesses operating at the BOP.

KickStart is an inventions and business incubation company in Kenya. They develop technologies (e.g., micro-irrigation pump, oilseed press) specifically for the BOP and build the linkages, from product manufacturing to micro-retailers, necessary to bring these technologies to market. Aavishkaar, an Indian company, is one of the world's very few venture capital funds providing loans above microcredit amounts (say, USD 1000) and below traditional venture capital investments (below USD 1 million), in addition to providing business development services for loan recipients.

Find out more about Fisher and Bhatt's perspectives toward doing business and growing businesses at the BOP in Rob's article, "Strategic Thinking: Sustainable Business from the Bottom Up."

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