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

Reflections on the India Fellows Seminar

Each year, the India Fellows Program brings together up to 20 emerging leaders from different regions, sectors, and socio-economic backgrounds in India. During the fellowship year, Fellows remain in their jobs and meet every 6-8 weeks throughout the year for 4 seminars and 2 collaborative projects, each about a week long. As the India Fellows Associate, Jacqui is responsible for supporting all aspects of the program recruitment, logistics, marketing and strategic planning. Below, Jacqui reflects on the first seminar, Foundations of Leadership. You can read more about the fellowship program here[Read More]

Adaptive Leadership in Action: Addressing Cultural Norms & Giving Women a Voice

In the fall of 2013, +Acumen launched the course Adaptive Leadership: Mobilizing for Change in partnership with the Cambridge Leadership Associates. This course is for anyone who wants to become more effective at leading their organization through change. Below, one of the course participants shared her story about how this course impacted her work and ability to affect change. [Read More]

Making Sense of Social Impact in Action: The Value of Educating Our Youth

At Acumen, one of the most common questions we get is how we measure social impact. Our newest +Acumen course – Making Sense of Social Impact: Acumen’s Building Blocks for Impact Analysis. – will provide an entry point for how to think about impact and we’ll share frameworks that help us define what to measure and why. Makoto Matsuura, founder of cobon a not-for-profit focused on youth education in Jakarta, Indonesia and Osaka, Japan, took a pilot version of this course and shared his reflections with us. [Read More]

Good news for philanthropists in the U.K. and Europe

We are excited to announce that Acumen now holds a CAF Charitable Trust in the United Kingdom. CAF, the Charities Aid Foundation, is a registered U.K. charity. By donating to Acumen through CAF, you can use Gift Aid if the amount of Income Tax and/or Capital Gains Tax you’ve paid for the tax year in which you make your donation is at least equal to the amount of basic rate tax  [the charity or Community Amateur Sports Clubs (CASCs) and any other charities or CASCs] you donate to will reclaim on your gift. CAF will reclaim 25% Gift Aid from HM Revenue & Customs and pass this through to Acumen.  The donor can claim higher rate tax relief (for more information, please refer to CAF’s online resource, What Is Gift Aid?). [Read More]

d.light Leaders Named 2014 Social Entrepreneurs of the Year

We are thrilled for our portfolio company d.light and Donn Tice, Chairman and CEO, along with cofounders Ned Tozun, President, and Sam Goldman, Chief Customer Officer, for being named Social Entrepreneurs of the year 2014 by the Schwab Foundation for Social Entrepreneurship. d.light is a for-profit social enterprise that manufactures and distributes solar lighting and power products with primary markets in the developing world, today announced that d.light, along with 37 other individuals and organizations in the 2014 class, will be fully integrated into the events and initiatives of the World Economic Forum. [Read More]