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When talking with people inside the "base of the pyramid" (BoP) community, I often hear strong opinions about how BoP ventures should be set up. Some people strongly support registering these ventures as for-profit entities, while others maintain that BoP activities can start out as non-profits and transition into formal businesses later.
There is no one answer, and this is not a straightforward discussion. The legal and financial implications of a for-profit vs. non-profit organization are myriad, and I don't claim to understand them all by any means.
Back in December, we wrote about the new Piramal Prize for healthcare innovations. Now, the deadline is just twelve days away...but there is still time to submit a winning entry. See below for the details.
...to encourage and support bold entrepreneurial ideas which have a profound impact on access to higher standards of health for India’s rural and marginalized urban communities. The award recognizes high-impact, scalable business models that propose innovative solutions which directly or indirectly address India’s healthcare crisis. Entries may include, but are not limited to, innovations in service delivery, technology applications, health-related products, or mechanisms to address public health necessities such as potable water.
Initial entries for the prize are due no later than April 1, 2008; the winner will be announced at the end of May.
Moses' last week post raised the very interesting discussion about the concept of scale in BoP business models. I enjoyed the read and, while I agree with his thoughts about --and answer to-- the what is scale question, the article made me move on to one of my current research subjects, which is how to achieve and maintain scale.
Well, just this morning I came across a fine essay on this matter. Professor Christian Seelos from IESE was awarded the Golden Prize in the Essay Competition sponsored by IFC and Financial Times, with his essay Corporate Strategy and Market Creation in the Context of Deep Poverty. The paper is refreshing for the BoP dialogue, as it introduces an interesting framework for analyzing strategic alliances as an effective means for giving scale to BoP initiatives.
Through the presentation of two cases of alliances between companies and existing BoP initiatives, Professor Seelos shows companies may leverage their already existing capabilities and expertise to work with and provide scale to existing organizations at the BoP level, thus creating new markets or expanding those already in place. This approach is complementary to the traditional --and often challenging-- recommendation for companies to enter low-income markets by redesigning their value chains and business models to address the needs of a new base of customers.
The following two excerpts may provide a feeling of what the new research is all about.
"How are we going to scale this enterprise?" "What is our scaling strategy?" "What are the building blocks needed to take our concept to scale?"
If you have ever sat in on a board meeting of an organization, either for a for-profit or non-profit, I am sure you would have heard the above questions or some derivative of them.
Who better than two remarkable female leaders to quote introducing Goldman Sachs' recently launched 10,000 Women program?
"Creating more female entrepreneurs in developing and emerging economies satisfies all the requirements of smart development: the benefits will multiply far beyond the investment; it is sustainable over the long run; it is adaptable to local needs; it is focused; it is measurable and it helps beneficiaries, communities and states alike." Linda Rottenberg, Co-founder & CEO, Endeavor
Soon after we explored the role of Technology in BoP success, Derek pointed me to an interesting article in The Economist: Technology in emerging economies. The article makes a distinction between technology adoption and technology diffusion -- and argues that emerging economies are better at adopting new technologies than at putting them into widespread use.
The Tata Nano at USD 2500 is a favorite example to show that competence in design and technology exist, and that challenges could well lie in reaching out to a large audience.
Even as technology is spreading to emerging markets faster than ever, I found one very interesting data point.
I ran across this Fair and Lovely ad on YouTube recently. For those who don't know, this product is a skin-lightening cream that was at the center of a debate last year over the value and impact of a BoP approach to poverty alleviation.
The ad is in Hindi, but the message is clear: lightening your skin with this HLL product will open doors for you, leading to a happier more successful future. I support BoP initiatives in general but don't believe that every successful attempt to market to the poor should be lauded.
This ad crosses a line for me and last year I found myself personally agreeing with the BoP critics' point on this specific product. As a consumer who has wasted a few dollars of his own on useless items, I can say that we often get goaded by ad campaigns with empty promises into irrationally buying products that do not serve our best interests.
But it got me thinking about how we draw the line between BoP initiatives that deserve our support, and general market activity involving the BoP that it may not be our place to condemn, but that we should neither hold up as a model example.
Two items come immediately to mind as part of a BoP litmus test:
Dignity: Does this activity tap into BoP markets in a dignified manner? The BoP hypothesis, after all, is all about treating the BoP with dignity by including them in the global marketplace, so does the business model treat the BoP with dignity or exploit insecurities and race/class divisions?
Sustainability: Does this activity align with a vision for a future economic system that is environmentally sound? Or is it at least not clearly a major detriment to the Earth's resources?
The quote is from an interesting NYT Magazine article I just read and got me thinking about successful models to scale the impact of socially minded initiatives. Freakonomics authors Levitt and Dubner discuss innovative models implemented by Smile Train and the Prevent Cancer Foundation to scale impact on the ground level and provide incentives to attract potential donors.
The Smile Train model was specially thought provoking, as it lies on the power of fostering local talent and capacity to deliver benefits where they are most needed, as has been discussed by Abigail, Grace and Moses in recent NextBillion posts.
Ride Metrocable, an impressive system of cable cars that connects to the Metro and carries Medellin's poorest citizens over the steep hills that host the city's slums (traveling together with an increasing number of curious tourists). Step down in the uppermost station, and you'll have a beautiful view of two remarkable buildings that summarize Medellin's transformation at the BoP level: the beautiful Santo Domingo Public Library, part of a network of five such centers in the city's most depressed areas, and the neighborhood's Cedezo (Local Center for Enterprise Development), an equally impressive building that hosts Medellin's Cultura E (Entrepreneurial Culture), a program led by the city government through a partnership with local Microfinance Institutions. The two buildings summarize the character of the social programs led by former mayor Sergio Fajardo and his successor Alonso Salazar.
Today, I want to describe the remarkable Cultura E program and set it as an example of how local Governments can successfully engage with the private sector to enact initiatives aimed at the core of what we stand for at NextBillion: the power of enterprise to alleviate poverty and the need for policies that foster the creation of economic opportunity for the BoP.
In essence, a Cedezo is the place where business ideas turn into successful micro enterprises and SMEs. Cedezos are located alongside the Public Libraries in the poorest neighborhoods, hosting a microfinance initiative called Red de Microcredito (The Microcredit Network), comprised of the government-funded Banco de las Oportunidades, as well as 14 private microfinance institutions. The Network allows each entrepreneur to be directed to the institution(s) that can best serve them, according to his or her particular needs, credit history and previous experience. While the Government-funded Banco de las Oportunidades usually serves the city's poorest citizens, those better off are served by one of the private programs.
By all measures, this has been a pretty long post to finalize.
In January, Ana’s post about the mobile phone banking conference at Chemonics aroused a series of insightful comments. Al Hammond then weighed in with a post of his own (he also recently wrote about Biometric Security for Mobile Banking). In this context, I felt I could join in the debate with a post about business strategies in the mobile phone banking sector (or m-banking, as it is commonly known). Specifically, I set out to analyze what affects mobile phone banking business models, their most common critiques and their challenges for the future.
When talking with people inside the "base of the pyramid" (BoP) community, I often hear strong opinions about how BoP ventures should be set up. Some people strongly support registering these ventures as for-profit entities, while others maintain that BoP activities can start out as non-profits and transition into formal businesses later.
Anand Shah, CEO of the 
Moses' last week post raised the very interesting discussion about the concept of scale in BoP business models. I enjoyed the read and, while I agree with his thoughts about --and answer to-- the what is scale question, the article made me move on to one of my current research subjects, which is how to achieve and maintain scale. 
"How are we going to scale this enterprise?" "What is our scaling strategy?" "What are the building blocks needed to take our concept to scale?"
Who better than two remarkable female leaders to quote introducing Goldman Sachs' recently launched 
Soon after we explored the role of Technology in BoP success, Derek pointed me to an interesting article in The Economist: 
The quote is from an interesting 
Ride Metrocable, an impressive system of cable cars that connects to the Metro and carries 
Today, I want to describe the remarkable Cultura E program and set it as an example of how local Governments can successfully engage with the private sector to enact initiatives aimed at the core of what we stand for at NextBillion: the power of enterprise to alleviate poverty and the need for policies that foster the creation of economic opportunity for the BoP. 
By all measures, this has been a pretty long post to finalize.
