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

Four Emerging Leaders Building the Future of Pakistan

With 60% of Pakistan’s population living under less than a dollar a day, the external narrative of Pakistan is characterised by what the country lacks; a lack of security, a lack of women’s rights, a lack of access to education, and the list goes on. What this narrative ignores are the individuals who work tirelessly to plug those gaps. From human rights to education to food security, Acumen Pakistan Fellows are affecting change through organizations committed to tackling poverty. Their work is truly inspiring, promising a hopeful future for Pakistan. Here are four fellows that are building this future for Pakistan and come together periodically to share learning experiences and grow as leaders. Through five seminars, the fellows have strengthened skills of adaptability, communication, empathy and problem solving through listening. If you are committed to creating change in your community, apply now to be an Acumen Pakistan Fellow. The deadline is 29 September. [Read More]

Acumen Partners with AlphaSights to Better Access Global Expertise

In our work investing in social enterprises that deliver critical goods to the poor, there is a substantial amount of work to evaluate each investment opportunity. A critical part of the diligence process, particularly when it comes to emerging markets, is speaking with industry experts who can provide reliable information about sector trends, market dynamics and public policy – all of which affect our evaluation of potential investment opportunities. [Read More]

DE-BUNKING THE BURDEN MYTH: IMPACT DATA GOES LEAN

Our manifesto begins, “it starts by standing with the poor.” Yet for good reasons, the sector has found it challenging to measure which customers are actually being served through social impact investments – getting accurate data on incomes is notoriously difficult and the logistical challenge and cost of conducting surveys in person prohibitive. [Read More]

Questions for Aspiring Leaders

Bavidra Mohan, Acumen’s India Fellows Manager, attended this years Aspen IDEAS festival as a Scholar. The Scholarship program was established to invite guests from around the world to bring a diverse set of experiences, voices and perspectives to the rich conversations that take place at the IDEAS festival each year. [Read More]

Give Impact Investing Time and Space to Develop

Impact investing has captured the world’s imagination. Just six years after the Rockefeller Foundation coined the term, the sector is booming. An estimated 250 funds are actively raising capital in a market that the Global Impact Investing Network estimates at $25 billion. Giving Pledge members described impact investing as the “hottest topic” at their May 2012 meeting, and Prime Minister David Cameron extolled the potential of the sector at the most recent G8 summit.  Sir Ronald Cohen and HBS Professor William A. Sahlman describe impact investing as the new venture capital, implying that it will, in the next 5 to 10 years, make its way into mainstream financial portfolios, unlocking billions or trillions of dollars in new capital. [Read More]

10 Books We’re Reading This Summer

What are you reading? It is a common question here at Acumen, an organization full of avid readers constantly trading favorite book titles that discuss leadership, impact, development and branding. Here are 10 stellar books we’re reading this summer. These books and others provide a framework of thinking, a spark of new ideas, a platform for debate. So, what are you reading? [Read More]

How Acumen Brought Back my Fire

Eda is an East Africa Regional Fellow from Nairobi, Kenya and is the Founder and Director of Halisi Trust, an organization that seeks to challenge the vices that plague society and encourage transformational development in Kenya’s youth. When Eda applied for the East Africa Fellows Program, she felt disillusioned and stuck. Below, Eda discusses how Acumen’s Regional Fellowship Program brought back her fire. Now, Eda has engaged nearly 6,000 people through outreach events and the Mkenya Halisi movement continues to grow. Acumen is currently accepting applications for the next class of East Africa Fellows. APPLY TODAY! [Read More]

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]