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This blog gathers the latest technical and energy advancements and discoveries important to emerging markets and poverty alleviation.

Tuesday, November 08, 2011

"Hot" and "Bright" Business Models: Bringing Energy to the BoP

By Martin Herrndorf

'We have technology - we just need a business model' is the rallying cry for a whole lot of promising BoP projects. Many of these look good, but still face major difficulties in getting their products in the hands of people, and getting the people (or someone else) to pay for it. The "Energize the BoP!" business model generator provides support in overcoming these challenges.

What's in a business model?

Academics disagree (that's their job), but one can consider a business model as "wrapped around" a technology - covering the customer interface as well as how the business develops its products, distributes them, hires and leads its employees, etc.

Especially in BoP contexts, with their scarcity of resources and difficult conditions, having the right, fitting business model is crucial. The different elements of a business model are typically dependent on each other. Using a special BoP distribution channel, for example an agricultural cooperative, without a properly adapted product can lead to low customer satisfaction and high maintenance costs (as cooperative staff cannot provide the same level of support as sales staff in more up-scale markets). Additionally, local conditions may vary - a business model that works in one state in India might fail in the neighbouring one.

dAs a consequence, many BoP pioneers and heroes have very specific business models - and have developed them through a trial-and-error-system. Aravind's low-cost, high-volume business model was developed by its visionary founder, and is maintained by the family. Selco's distribution model has been fine tuned over the years (if not decades), with certain setbacks (like disappointing experiences in franchising).

Any faster way?

To some degree though, companies can learn from the business models of successful leaders. And at the BoP, most companies (at least those with a strong mission to alleviate poverty) are more then happy to have their peers learning from them.

Take the example of energy - a pressing sector for progress at the BoP and, luckily, one with a range of (more or less) successful companies and entrepreneurs operating in it. They are the basis of the "Energize the Bop!" business model generator, a publication by Berlin-based consultancy endeva (see NextBillion's interview with one of its founders).

 

Their guidebook summarizes business model elements in eight areas - like payments, or human resources - for building a "sustainable" business model (see the figure below).

Beyond the publication, the Energize the BoP-Practitioners' workshops are designed to help technology providers, energy providers, and consultants develop energy business models for low-income markets. Participants work on their own business models and share best practices; participants will also explore questions like, "how to get access to the carbon market," or "how to deal with the political environment" (and network!).

The next workshop will be held on Dec. 1-2 in Berlin (you can also download the detailed agenda of the workshop as pdf).

Good luck in developing those 'hot' and 'bright' business models required to bring energy to the poor!

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