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Guest blogger Bill Kramer is principal of The Global Challenge Network, LLC, an executive education and training company. From 2001 through mid-2007, he worked on pro-poor business strategies with WRI. Previously, Bill founded a non-profit focusing on the relationship of knowledge to economic development and enjoyed a long career in the private sector, founding a dozen companies, most of which were in the book business.

By Bill Kramer

Yesterday, the New York Times' Science section featured an ongoing partnership to develop, manufacture, and sell cleaner-burning cookstoves. Working together, the Shell Foundation and Envirofit – a Colorado-based non-profit that we've profiled before on NextBillion – plan to address air-quality problems in a host of BoP communities worldwide. According to the Times:

Envirofit has plans not only to engineer the stoves, but also to market them. The hundreds of prior stove projects, Dr. Willson said, were not “guided by a real strategic vision of what it means to understand who the customer is, what they need and how to get it produced.” Envirofit has been visiting rural areas to study factors like the ergonomics of cooking habits and preferred color schemes. In India, women tend to squat while cooking, making height an important consideration. Envirofit will offer a variety of sleek ceramic stoves from single to multipot, with and without chimneys, and with colors like apple red, baby blue and gold. The cost is to start at $10 to $20 and run to $150 to $200.

For readers of NextBillion, this project has a number of interesting takeaways. First of all, the partners have consciously created a BoP product through careful analysis of user demands and requirements. Secondly, the stoves have been developed from an NGO perspective, but the business model is fully intended to scale to the level of need, and to operate as a sustainable, profitable enterprise – clear marks of Shell's involvement.

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I recently had the opportunity to read an IESE occasional Paper, "Profitable Business Models and Market Creation in the Context of Deep Poverty: A Strategic View" by Christina Seelos and Johanna Mair of the IESE Business School – University of Navarra.

What makes the paper refreshingly different is that it moves beyond the "why" BoP debates to focusing on "How to do it" from the perspective of corporate and competitive strategy. The paper aims at providing insights into how business models can be structured to generate profits to justify investments, while integrating and serving the needs of the poorest citizens.

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If you've been to Bogotá in the last seven years, you've probably noticed a city that is distinctly different from the metropolises of many other Latin American countries. It's cleaner, more efficient and easier to navigate. Not only that, many of the city's public spaces exist alongside, not in spite of, vehicle transit networks.

This is no accident. Bogotá's hugely successful Bus Rapid Transit (BRT) system, the Transmilenio, has been the centerpiece of the city's urban regeneration. (Sidenote: I spent much of July/August 2006 traveling to Bogotá and other cities in Latin America, conducting independent research on urban transportation reform).

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Both the New York Times and Emeka Okafor's Timbuktu Chronicles point out Google.org's newly-announced philanthropic commitment to small and medium-sized enterprises. From the Google.org web site:

Small and medium sized enterprises (SMEs) are critical for creating more equitable economic growth. SMEs create opportunities for more people to participate in the formal economy and help reduce poverty by creating jobs. In many developing countries large businesses have access to formal, bank-based credit and capital markets while households and micro-entrepreneurs have access to micro-loans. This leaves a massive gap known as the "missing middle."

While SMEs in rich countries represent half of GDP, they are largely absent from the formal economies of developing countries. Today, there are trillions of investment dollars chasing returns – and SMEs are a potentially high impact, high return investment. However, only a trickle of this capital currently reaches SMEs in developing countries. Our goal is to increase this flow.

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The January 10th edition of the Economist takes note, in two separate pieces, of the huge successes of a handful of large MNCs.

It highlights how these firms have successfully shaken up their industries and acquired well-known brands in their efforts to capture large swaths of global market share. Usually this wouldn't mean much for the BoP. In fact, what does the potential acquisition of a luxury brand like Jaguar, or a deal for a steel giant, "cooked up... [by father and son] during their annual skiing holiday in St. Moritz," have to do with the BoP?

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Two new papers exploring the 'base of the pyramid' concept crossed my desk recently. We posted both of them to the Newsroom, but they also merit a slightly longer discussion.

First, Jean-Louis Warnholz of the University of Oxford's Queen Elizabeth House has a new working paper out entitled "Poverty Reduction for Profit? A critical examination of business opportunities at the Bottom of the Pyramid." In his paper, Warnholz studies overarching BoP strategy and applies a new dataset - based on price survey data - to look deeply at the extent of a 'poverty penalty' at the BoP.

Warnholz's paper merits a close read, especially for academic members of the BoP community. I will hold off on giving my impression of his paper - other than to say that it's worthy of a close read - until I have had the chance to speak with the author himself (I have a request out to him - stay tuned to NextBillion.net.)

The second paper I recommend is David Lehr's just-posted "Going Wireless: Dialing for Development." (Full disclosure: I provided David with feedback on the initial drafts of this paper.) In it, Lehr - a 2007 Acumen Fund Fellow - examines the role of mobile devices in expanding economic opportunity at the BoP.

While "Going Wireless" is not the first examination of the role of technology for development, Lehr does an excellent job culling the best lessons and examples from the existing literature while offering his own keen insights and analysis. I highly recommend giving this paper a thorough read, and find it especially useful as an introduction/overview of the mobiles-for-development space.

If NextBillion readers have particular thoughts on these two papers, please post them in the comments section below.

Position: Consulting Assignment

Location: Brazil

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Position: Managing Director, Sustainable Supply Chain Management Center

Location: Eugene, Oregon

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Guest blogger Bill Kramer is principal of The Global Challenge Network, LLC, an executive education and training company. From 2001 through mid-2007, he worked on pro-poor business strategies with WRI. Previously, Bill founded a non-profit focusing on the relationship of knowledge to economic development and enjoyed a long career in the private sector, founding a dozen companies, most of which were in the book business.

By Bill Kramer

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On Wednesday, I attended a presentation by Jessica Cohen on her doctoral research experiment (co-authored with Pascaline Dupas) about distribution schemes for anti-malarial long-lasting bednets. The randomized experiment, conducted in rural, western Kenya, aimed to test the difference between free distribution and cost-sharing schemes in terms of their direct impact on malaria prevention in pregnant women and their infants. A draft of their paper is available through the Brookings Institution.

In the past, I have been an advocate for the continued use of social marketing (cost-sharing) and for profit-based BoP business models to produce and distribute insecticide treated nets (ITNs). Because of this history, I was a little apprehensive about what Cohen's presentation would reveal. After all, the report's summary stated clearly that the experiment produced "no evidence that cost-sharing reduces wastage on those that will not use the product: women who received free ITNs [insecticide-treated nets] are not less likely to use them than those who paid subsidized positive prices."

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