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This blog explores insights for multinational corporations, NGOs, academics, social entrepreneurs and others working at the Base of the Pyramid.

Tuesday, October 22, 2013

Day 1 at the BoP Summit: Why BoP business practices need to move to 2.0

By NextBillion Editor

NextBillion is providing special coverage of the BoP Summit 2013: Creating an Action Agenda for the Next Decade, hosted by the William Davidson Institute. You can follow all the action at a special blog on NextBillion: nextbillion.net/bopsummit. On Twitter, please follow the hashtag #bopsummit for updates. 

 

At the end of day one of the “BoP Summit 2013: Creating an Action Agenda for the Next Decade,” WDI Senior Research Fellow and conference organizer Ted London had a question for the participants: What will our legacy be?

London said his hope is that the next three days will be the start of a roadmap to chart the future of the base of the pyramid domain. The roadmap could be a seminal contribution to the domain, which everyone in attendance this week could look back at with pride years later to say they were part of it, London said.

"But now it’s time for a refresh," London said. "BoP enterprises can play role in alleviating poverty, and have potential to be profitable and scalable, growth has been phenomenal, conversation has changed: business can be part of the solution.

“This isn’t just an event to show up,” he added. “We’re here for the development of the domain.”

The Oct. 21-23 summit at the University of Michigan's Ross School of Business has brought together 200 attendees will come from the corporate, nonprofit, development, foundation, and entrepreneurial worlds. More than 20 countries are represented – including those in Africa, Europe, Asia, North America, South America, and Australia.

One of the many motivations for creating the summit, London said, was because he got tired hearing too many stories of how great things are without 

"The progress has been amazing, but we need to think of the journey ahead. We’ve learned some great things, had some successes, but there are other things we need to do to make this what we hope it will be," he said.

Stuart L. Hart, founding director of the Emergent Institute and president of Enterprise for a Sustainable World, followed London in kicking off the conference and framing the issues for the days ahead.
 
He said it's time to move away from BoP 1.0, or thinking of the BoP merely in terms of producers/consumers, engaging in deep listening with customers, simply reduce price points, and extend distribution channels. 

Instead, Hart said many are or should be adopting a BoP 2.0 mindset. He defined that as considering the BoP as business partners, engaging in deep dialogue with customers, co-creating sustainable technologies and developing direct, personal relationships

"The BoP needs wide and compelling propositions, not rifle-shot products," he said. "But that requires co-creation, interaction, time."

Hart also addressed vexing questions of profitability and return on investment, noting that "philanthropic capital" will only limit returns on value and ultimately on poverty reduction. 

"There are still a lot of questions around returns," Hart noted. "How big are the returns? Are market returns realistic? Do you have to reward investors? My personal view is that if we don’t create business models/strategies that reward investors, we won’t be able to attract the investment capital that we need to make a bigger impact."

Those engaged in social enterprise or BoP focused solutions to poverty need to take a page from composer Franz Schubert who wrote the unfinished symphony. Key to that for both established businesses and startups to build and/or harness platforms for business development, instead of offering one-off products like water filters or cookstoves. He cited microfinance, mobile money technologies, and water irrigation pumps as examples successes that created networks. 

"One of the best things you can do in BoP business is not write the symphony until the last note, because we’re not smart enough. Most attempts to do that fail," Hart said. "This is the co-creation logic, and it’s absolutely essential."

On the summit’s second day (Tuesday), there are several concurrent sessions planned. In the morning, the sessions include: Multinational Corporations and the BoP: Seeking Scale; Non-Profits and BoP Ventures: Integrating Economic and Social Goals with Viability and Scale; New Venture Development: Incubation to Acceleration; and Understanding the BoP: Building Ventures that Incorporate the Local Context.

WDI Director of Healthcare Research Prashant Yadav will lead a plenary session, “Best practices, major roadblocks, and next steps: HealthCare.”

In the afternoon, four more concurrent sessions will be held. They are: Providing Financial and Other Resources: Re-thinking the Role of Enterprise Support; Ecosystem Creation in Base-of-the-Pyramid Markets; Building Institutions to Facilitate Enterprise Growth; and Achieving Social Performance: Assessing and Enhancing Poverty Alleviation Impacts.

After those sessions, Simon Winter of TechnoServe will lead a plenary session on best practices, major roadblocks, and next steps for the agriculture sector.

To close out the day, attendees will be divided into nine working groups to begin charting a roadmap for the BoP field. Each of the working group leaders made a quick pitch to the attendees to join their group.

 

This post was written by Dan Shine, manager of external communications at the William Davidson Institute, with reporting by James Militzer, editor of NextBillion Financial Innovation. 

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