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Friday, June 07, 2013

The Three ‘Tyrannies’ Shaping BoP Business Today: Hart details the evolution of the sector at the II Base Forum

By Ana Corena

Credit: Camera Lucida

In the years since Stuart Hart first co-authored the seminal article, Fortune at the Bottom of the Pyramid with the late CK Prahalad, the Cornell University professor says there have been many failures and a few successes, as businesses attempt to serve the poor.

As a keynote speaker at the IDB’s BASE II Forum International Thursday in Medellin, Colombia, Hart recognized the important moment that BoP strategies and practices are having worldwide.  A new generation of businesses – from startups to multinationals and everything in between – are applying or attempting to apply BoP principles. That momentum has not only spurred an array of new buzzwords, but has lead to a significant evolution around the core BoP concepts.

On day one of the several, dozens BoP strategies and success stories were to a diverse audience of 1,800 attendees. Hart recognized key learning points with the BoP concept and its approaches. He highlighted three mindsets that are held in the BoP world, which Hart has gathered in three different  “tyrannies”

  • The tyranny of the “unmet needs” mindset.

  • The tyranny of the “BoP product” mindset.

  • The tyranny of the “green is expensive” mindset.

The first tyranny, “unmet needs”, requires the understanding that BoP businesses are not “creating needs in existing markets” Hart said. Instead, BoP businesses are creating markets, often, where none exist.  This suggests an approach in which the needs at the BoP should not be translated directly into demand, and in which the affordability of products does not necessarily mean a secure purchase.

This calls for the evolution toward “finding the fortune AT the Base of the Pyramid” to a “creating a fortune WITH the BoP”. In other words, there is the need for co-creation and to see the BoP as ally and partner, not merely as customer.  This thinking is laid out in detail in the book, Next Generation Strategies for the Base of the Pyramid, which Hart co-edited with Ted London.

The second tyranny, the “BoP product” mindset, explains that through a “rifle strategy” the BoP has been used to target low-cost products. But what’s truly required is more holistic thinking, where ecosystems are created to generate bigger value for the all the stakeholders.

The third tyranny, the “green is expensive” mindset, calls for incorporating sustainability in the BoP businesses. Just because they are environmentally conscious doesn’t necessarily mean that products and services will be more expensive.

According to Hart, herein lies “the opportunity of the decade” for a “green leap”, that is, the convergence of two words: clean technologies, (environmentally driven) and the BoP (poverty driven). When these two merge in a business strategy, an immense opportunity opens to address the world’s biggest issues, he said.

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