Our World

Click to read Jacqueline Novogratz and Robert Kennedy's Chapter in Next Generation Business Strategies for the Base of the Pyramid

The Next Generation of BoP Strategy

Click to read Jacqueline Novogratz and Robert Kennedy's Chapter in Next Generation Business Strategies for the Base of the Pyramid

In 1998, C.K. Prahalad and Stuart Hart, then professors at the University of Michigan, circulated a white paper amongst their colleagues at the business school.  In it, they argued that poor customers – the bottom of the pyramid – were being ignored, at the peril of large companies.  Rather, they suggested, there is a fortune to be made at the bottom of the pyramid.

Believe it or not, it took four (FOUR!) years for this white paper to get anywhere, ultimately landing as an article in the strategy+business journal.  From there, however, the idea took off.  In just two years’ time, Prahalad turned many of the ideas into a book, now an international bestseller, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.  Hart, meanwhile, undertook to add a third bottom line to the argument, positing that organizational success must not only be measured in economic and social impact, but environmental impact as well.  His book, Capitalism at the Crossroads, came out in 2005. The two texts are of the core BoP canon to this day.

Much has changed since 1998, or even 2002 for that matter.  Business strategy to serve the poor is no longer a radical concept; companies large and small look at low-income customers and producers as part of their market expansion and development strategies.  Many of the concepts first put forth by Prahalad and Hart have changed, of course.  It is not enough to create low-margin, high volume businesses and push into large, untapped markets, as they suggested.  Where the rubber meets the road, it’s much more difficult than many would have imagined.  There haven’t been widespread windfall profits from BoP businesses either, but there are successes and cautionary tales that are helping us point the way.

Until recently, there hasn’t been a single volume updating modern lessons in BoP thinking, akin to The Fortune at the Bottom of the Pyramid or Capitalism at the Crossroads.  That’s what the new book, Next Generation Strategies at the BoP, is all about.  In it, editors Hart and Ted London have collected essays from leading academicians and practitioners asking, “What are today’s – and tomorrow’s – approaches to BoP markets?”

At Acumen Fund, we were honored that Jacqueline Novogratz was asked to co-author a chapter, along with our friend and ally Robert Kennedy from Michigan’s William Davidson Institute.  In their chapter, Jacqueline and Bob suggest that BoP ventures need a combination of the following innovations:

1) Introducing radical cost reductions in some value activity

2) Building a BoP-centric management team – which consists of constantly rebalancing the social impulse (i.e. the will to serve the poor) with the more traditional business skills needed to build a successful business.

3) Implementing human-centric design thinking to products and services.

4) Establishing trust with the BoP in order to create and grow markets.

We encourage our blog readers to browse the chapter – which can be downloaded free from our Knowledge Center – and tell us what you think.  What innovations have we omitted?  What other examples support – or question – the conclusions Jacqueline and Bob reach?

What’s even better, the rest of the book is rich with examples, new strategies, approaches to building – and funding – businesses and revenue-generating NGOs.  I have a copy at home, and would encourage folks to pick it up, as part of our ongoing education in the best ways to build businesses that serve the poor.

Rob Katz is a Portfolio Manager in Acumen Fund’s India office.

Comments

Imagining the world as it could be

Christine Gitau is an East Africa Fellow and an enterprise coach at Craft Afrika, which provides business support services to craft entrepreneurs, enabling them build viable and thriving businesses in Kenya. At Acumen we often use the term “Moral Imagination” when talking about leadership. Christine wrote a reflection on how this concept has shifted her thinking. We could not be more proud of what she is building! [Read More]

How two Acumen Fellows are disrupting the education model in India

Whether its running youth soccer programs, providing vocational training services, or transforming the education system in India, Acumen India Fellows are driving real change in their communities.  Abbas Dadla and Abhilasha Sinha are India Fellows who are addressing the teacher shortage in India through the use of technology and peer collaboration. Find out what they are building below.  If you have grit, resilience and a commitment to creating change in your community in India, East Africa or Pakistan, we encourage you to apply for the Regional Fellowship Program! [Read More]

Meet Manjushree Patil, Founder of Aatman Academy

This month saw violent tragedies in Pakistan and Kenya, regions where Acumen works and which five classes of Acumen regional fellows call home. Among them there are dedicated teachers like Acumen India Fellow Manjushree Patil, crusaders against sex trafficking, builders of government, creators of liberating mobile medical technologies, and curators of slum sports programs. The need for strengthening the connections between those who are working for positive change against seemingly impossible odds has never been greater. We at Acumen have never been prouder to be the thread tying together these courageous individuals. Read more about Manjushree and how she is changing her community in India below! [Read More]

No, not silence again!

The Acumen Fellowship’s Cambridge Leadership Associates (CLA) training is notorious for digging deep, breaking Fellows down to reveal their deepest fears, identifying the sources of resilience that will fuel them with the tenacity to continue along the path to social change. Kahabi G. Isangula is an East Africa Regional Fellow living in Tanzania and recently participated in our CLA training. Get an idea of what it is like, below!  [Read More]

Announcing the Class of 2015 Acumen Global Fellows

Acumen Global Fellows are architects for the impact sector. They are innovators, game changers, visionaries, with various professional experiences looking to make substantial change in the world. They have thrived in companies such as Google; they have started their own companies in Sri Lanka, Canada and Malaysia.  They are choosing the challenge of working alongside our portfolio companies and immersing themselves in a rigorous leadership training. [Read More]

Welcoming Ajit Mahadevan as Acumen India Country Director

We are pleased to announce that Ajit Mahadevan will be joining Acumen as India Country Director. Ajit joins Acumen from Ernst & Young, where he has served as Advisory Partner & Leader (Life Sciences) for the past six years.  At EY, he was a strategic advisor to the leadership of some of the leading Indian and global life science and healthcare players with the focus being business transformation and growth.  Prior to his time at E&Y, Ajit was President of Piramal Healthcare, one of the leading pharmaceuticals companies in India, where he built the international business from inception in 2002 to $300M by the end of 2008. Ajit held multiple leadership roles across strategy, M&A and business leadership. During his tenure at Accenture’s Strategic Services practice in UK and India, he led the development of one of the firm’s largest and most successful internal projects – the Offshore Development Centre in 2001, which has now grown to about 100,000 people across multiple cities in India. Ajit has worked in an advisory capacity to Acumen in the past, most recently participating in Regional Fellows selection panels in Mumbai. [Read More]

Why We All Need A ‘Rikki’

Caren Wakoli is an emerging leader in East Africa who has launched a foundation to support the next generation of female leaders for Africa. Caren applied twice for the fellowship and was not accepted, but she did not give up. Her resilience and grit allowed her to persevere, and this year we are proud to have her as an East Africa Fellow. Below she shares her story on why everyone needs a ‘Rikki,’ and failure is never final.  [Read More]

Acumen Joins Beyond the Grid as Founding Partner

Acumen is proud to be a founding partner of Beyond the Grid, an innovative framework under President Obama’s Power Africa initiative to increase energy access for underserved populations across sub-Saharan Africa. Beyond the Grid will leverage partnerships with investors and practitioners committing to invest over $1 billion into off-grid and small scale solutions for this underserved market. [Read More]

Life after Lean

In May 2013, Sabrina Natasha Premji & Afzal Habib participated in +Acumen’s inaugural Lean for Social Change course based on Lean Start-Up principles. Enrollment for the next session of the Lean for Social Change course is open now. If you are working on a social issue in your community, are interested in pursuing your own social venture, or are just interested in creating an impact in this world…Register today! Sabrina & Afzal joined the course with a simple idea and the passion to transform the childcare crisis in East Africa’s informal settlements. Seven weeks later, they had developed a customer-tested business model ready to pilot in Kenya’s densest slums. Read their story below. [Read More]