(Lecture at Erb Institute for Global Sustainable Enterprise)
Prof. Stu Hart is a world authority on developing social business models for the developing and poor economies.
He is known most for his work on the base of pyramid (BOP). Along with C.K. Prahalad, he summarized his ideas in the path breaking article in 2002 “The Fortune at the Bottom of the Pyramid”.
What essentially is BOP: It is the 4 billion people living at the bottom of the capitalistic pyramid on less than $2 a day. That’s where the maximum population growth is going to take place in the coming years. So, how does the business leverage this humungous market segment that is moving to the Middle of the pyramid.
The BOP is the ideal incubating ground of tier 1 disruptive technologies and the next generation clean tech. Technological innovation will take place at BOP and will trickle up instead of the other way round – as has been traditionally.
So, the quesiton to ask is ‘Is it possible for businesses to build BOP businesses that’re mutually beneficial to both companies and local communities?’
It is poosible, provided the mindset changes – not repackaging the same products in smaller packs and sachets and selling ‘less for less’ but selling ‘less for more’ – it’s not about selling to the poor – but about co-creating the business together. And this leads to the concept of ‘Embedded Innovation’
- More of a community-centric proposition
- Rather than thinking B2C (consumer), it is B2C (community)
- Having a more systemic understanding of the community
- Marrying technology with BOP
- To evolve the business model from ground-up and to scale it out – spreading organically
A classic example is that of Grameen Bank in Bangladesh about micro-finance – the model that is being replicated through out the world. Another example is that of SC Johnson and DuPont creating business models in rural Africa and India.
It is about developing native capability embedded in the local place and not some alien force coming from the outside that designed the product sitting in R&D centers in New York or London. Embedded innovation means to create a business opportunity that did not exist before – locally. Not selling products that poor don’t need.
BOP doesn’t present a marketing or technological problem ( a silver bullet water purification system or a killer app). It is a Business Process Challenge.
-:Next Generation Business Strategies for the Base of the Pyramid:- Ted London and Stu L.Hart
For more @ http://www.stuartlhart.com
Above pictures from : The Base of the Pyramid Protocol: Toward Next Generation BoP Strategy Erik Simanis and Stuart L. Hart, et al (2008)