Contents
The Big Picture by C.K. Prahalad
Introduction: Creating a Fortune with the Base of the Pyramid
Ted London, William Davidson Institute & Ross School of Business, University of Michigan; and Stuart L. Hart, Johnson School of Management, Cornell University
The introduction, by co-editors Ted London and Stuart Hart, conveys the core message of the book: that the next generation of BoP business strategies won’t be about “finding a fortune at the base of the pyramid,” but rather, about “creating a fortune with the base of the pyramid.” The shift from “fortune-finding” to “fortune-creating” has implications for how BoP ventures are organized, and how their strategies are conceived and implemented. Co-editors London and Hart introduce the three core sections of the book—Roadmaps for Success, Strategic Opportunities, and Effective Implementation—and explain how the contents of each can help venture leaders approach the challenges and opportunities of BoP markets.
Part One: Roadmaps for Success
Chapter 1. Building Better Ventures with the Base of the Pyramid: A Roadmap
Ted London, William Davidson Institute & Ross School of Business, University of Michigan
Ted London’s chapter addresses how venture leaders can maximize the chances that their business development efforts in BoP markets will succeed. Which business practices should guide your efforts—and which ones should you be sure to avoid—as your venture moves through the stages of designing, piloting, and scaling? How do you craft initial business models, effectively test these approaches, and create sustainable competitive advantage? Using the perspective of “creating a fortune with the base of the pyramid,” London provides a set of guiding principles (a “roadmap”) that answer these and other critical questions relevant to both existing and startup BoP ventures.
Chapter 2. Innovation for the BoP: The Patient-Capital Perspective
Robert Kennedy, University of Michigan and WDI, and Jacqueline Novogratz, founder and CEO, Acumen Fund
Co-authors Robert Kennedy and Jacqueline Novogratz explain how social entrepreneurs and “philanthrocapitalists” are changing the BoP landscape by connecting innovative business approaches to “patient capital”—i.e., money that is expected to generate returns over a longer period than is typical of (say) venture capital. They identify four types of innovation that are proving critically important to success in operating in BoP markets, and show how a range of enterprises are applying these approaches in the field.
Part Two: Strategic Opportunities
Chapter 3. Taking the Green Leap to the Base of the Pyramid
Stuart Hart, Johnson School of Management, Cornell University
Can the BoP teach the “ToP” (the “top of the pyramid”) anything? Author Stuart Hart says “yes.” In the old BoP model, Western entrepreneurs sought to sell goods and services to the BoP with little regard to environmental consequences. Today, Hart argues, the next generation of entrepreneurs are trying to develop distributed, small-scale, “small-footprint” products and services that are more appropriate to the BoP context—and may well point the way toward better models for the ToP, as well.
Chapter 4. Needs, Needs Everywhere, But Not a BoP Market to Tap
Erik Simanis, Center for Sustainable Global Enterprise, Johnson School of Management, Cornell University
Market creation, argues author Erik Simanis, is fundamentally different from market entry. And although the BoP is a “basket of compelling needs,” it is not yet a “market” in the traditional sense of that term. As a result, entrepreneurs in the BoP context have to think in terms of market creation—and understand how to achieve that end in a uniquely challenging context. The wise venturer in the BoP space, Simanis writes, learns how to frame the value proposition and manage the innovation process (through seeding, base-building, and growth and consolidation) in ways that align business strategy with BoP opportunity. Through a sustained case study involving a soy-protein product, Simanis illustrates how to stay on track while building markets with the BoP.
Part Three: Effective Implementation
Chapter 5. A Microlevel Approach to Understanding BoP Marketplaces
Madhu Viswanathan, University of Illinois, Urbana-Champaign
“The devil is in the details,” as the old saying goes. In this chapter, Madhu Viswanathan makes the case that BoP markets have to be understood at the ground level—from the bottom up—if a venture is to succeed in those marketplaces. What are the marketplace-relevant characteristics of poverty? In the one-to-one interactional marketplaces of the BoP, the boundaries between “human” and “economic” issues tend to get blurred, long-term relationships tend to trump short-term ones, “rich networks” make up for resource constraints, and consumption and entrepreneurship can be two sides of the same coin. BoP entrepreneurs, therefore, have to concretize, localize, and “socialize” their products and services.
Chapter 6. Reframing Design for the Base of the Pyramid
Patrick Whitney, Institute of Design, Illinois Institute of Technology
By enabling breakthrough products, issues of design have come to the fore in the industrialized world, which is leaving behind economies of scale for economies of choice. Contrasting the Apple iPhone with the Chotukool refrigerator, author Patrick Whitney explores the provocative question of whether strategic design techniques that have proven themselves at the top of the economic pyramid might also prove useful—in identical or modified forms—when applied to base of the pyramid markets. His answer is “yes”—albeit with some important caveats.
Chapter 7. BoP Venture Formation for Scale
Allen Hammond, Ashoka
Social enterprises do good works. But unless they achieve a significant scale, they aren’t in a position to serve millions of BoP customers or to help reshape economies. Author Allen Hammond argues for a combination of both bottom-up and top-down enterprise formation to better reach and serve BoP markets, and explains how that productive mix can be accomplished. Additionally, he suggests, BoP entrepreneurs can also build business ecosystems (rather than stand-alone ventures) to support scale. Hammond explains how “hybrid” organizations can serve that purpose—and provides insights from a real-world example.
Conclusion: A Continuing Journey
Ted London, William Davidson Institute and Ross School of Business, University of Michigan; and Stuart L. Hart, Johnson School of Management, Cornell University
Co-editors Ted London and Stuart Hart look at “the journey ahead”—both in terms of the future of BoP-oriented ventures, and in terms of the research that needs to be done to help advance our understanding of the field—which ultimately will help those BoP-oriented ventures succeed. They present—and begin the debate about—five core assumptions that underpin the BoP domain, which collectively help set the BoP agenda of tomorrow.
Appendix: Attendees from 2009 Conference: Creating a Shared Roadmap