Session 2.6 Towards A Base Of The Pyramid Protocol - Stuart
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Toward a Base of the Pyramid Protocol™
Stuart Hart Erik Simanis Cornell University
The Paradox of Globalization Development & Progress Economic Growth Production Expansion
Cultural Imperialism Economic Inequality Ecological Degradation
The MNC: Traditional Customer Base
“Tip” of the Income Pyramid
“Base” of the Resource Pyramid
> $10,000/yr
Cost structures, business models, & research methods based on a “Western infrastructure”
The “ToP” Customer
85% of Global Resources
The BoP: Serving a Different Customer
Less than $1,500 per year “Base” of the Income Pyramid
The “BoP” Customer
“Tip” of the Resource Pyramid
15% of resources
Will require cost structures, business models, & research methods based on a different infrastructure.
The BoP presents… NOT a marketing problem The “Sachet Mindset” • Food & Nutrition and FMCPs
NOT a technology problem The “Killer Ap Mindset” • Water Purification, Distributed Energy and ICTs
but a Business Model challenge
You can’t solve a problem using the same mindset that created it. How do you “imagine,” pilot, and scale business models for a BoP infrastructure if your past & current business is ToP?
Co-Creating the Business Engaging the BoP differently… Customers
Partners
Clients
Colleagues
To serve the BoP, MNCs will need to develop a new capability…
Native Capability The ability to… • Engage with marginalized groups and communities in mutual business partnership • Build long-term relationships of trust and understanding with BoP communities • Creatively marry MNC capabilities and technologies with those of BoP communities through a process of co-creation • Evolve the business model from the ground up
BoP Protocol™: A Collaborative Venture Sponsored By: Cornell University University of Michigan William Davidson Institute The World Resources Institute The Johnson Foundation
Generous Support From: DuPont Hewlett Packard SC Johnson Tetra Pak www.johnson.cornell.edu/sge www.bop-protocol.org
BOP Protocol Project Staff • Core Staff – Stuart Hart, Cornell University – Erik Simanis, Cornell University – Gordon Enk, Partners in Strategic Change – Mike Gordon, University of Michigan – Mark Milstein, WRI/Cornell University – Ted London, William Davidson Institute – Duncan Duke, Cornell University
BoP Protocol™: Project Overview 2006 and Beyond
2003-2004 October 2004
Research On Development Methodologies & BoP Strategies
• Participatory Rural Appraisal (PRA) • Rapid Assessment Process (RAP) • Quick Ethnography • Empathy-based Design
Workshop I Designing The Protocol
Executive Protocol Education Refinement
October 2005
Workshop II Refining The Protocol
Full Scale Implementation with Candidate Companies Dupont/Solae: India
Protocol Version 1.0
Pilot Test: SC Johnson Kenya
Protocol Version 2.0 & Field Guide
The BoP Protocol™: Big Picture Co-Developed Business Model
Co-Generated Business Concept
“Opening Up” Launch a non-business specific immersion guided by two-way dialogue and humility
“Building the Ecosystem” Bring together a diverse network of partners that incubate the business ideas and bridge capability gaps
“Enterprise Creation” Fine-tune and grow the business by conducting small-scale experiments and scale-outing to new communities
Locally-Embedded Global Business Network
BoP Protocol: MNC Initiatives 1) Pilot Test: SC Johnson Kenya Initiative Phase I: “Opening Up” March – August 2005 Phase II: “Building the Ecosystem” September 2005 – June 2006 Phase III: “Enterprise Creation” July 2006 – ???
2) Full Scale: Dupont/Solae India Initiative Phase I: “Opening Up” January – August 2005
Pre-Field: Site Selection
NYOTA, Nakuru District
Kenya
KIBERA, Nairobi
Warangal District, AP
India
Indiramma Nagar, Hyderabad
Pre-Field: Local Partner Selection Discovery-Based Networking
Identifying deeply embedded and attuned community partners
BoP Protocol: Phase I Processes Business Concept Co-Generation
Phase I: Opening Up
Non-Business Specific Immersion Formation Collective of Project Entrepreneurship Community Development Business Co-Creation
Enterprise Creation
Business Scale-Out & Embedding
Small-Scale Pilot Testing
New Capability Development
Building Shared Commitment
Building the Business Ecosystem Model Development
Opening Up Non Business Specific Immersion
Building trust by practicing humility and seeing positive capacity
Forming a committed & representative group Formation of Project Community
Opening Up Workshop Topics • Building successful partnership • Creating unique customer value • Rethinking resources & capabilities • Articulating a business concept • Imagining new businesses
Learning how to build a business together Collective Entrepreneurship Development
Business Concept Co-Generation
Generating ‘embedded ideas” that build off of local resources & meet local needs/wants
SCJ Business Co-Generation: Kibera
“Community Cleaning Service” Diversify & professionalize Taka ni Pato youth groups’ trash collection & recycling business through a direct-tohome cleaning service that bundles SCJ products
Re-Imagining SCJ’s Business Model • Redefine SCJ’s products away from narrow brands to broad suits of service (“Environmental Health and Cleanliness” vs Raid) • Engage “under-employed” youth in a micro-enterprise model (versus central distribution) • Leverage youth group’s trash collection networks as a directto-home distribution channel (instead of bike distribution to dukas) • Servicize SCJ-K’s product line (instead of smaller packages) • Leverage youth group’s social outreach skills (e.g., theatre) to communicate the service’s social benefits (versus radio or TV advertising)
BoP Protocol: Phase II Processes Business Concept Co-Generation
Opening Up
Non-Business Specific Immersion
Collective Entrepreneurship Development
Enterprise Creation
Business Scale-Out & Embedding
Small-Scale Pilot Testing
Formation of Project Community
Phase II: Building the Ecosystem
Business Co-Creation
New Capabilities Development
Building Shared Commitment
Business Model Development
Building the Ecosystem Formation of Project Community
Building Shared Commitment
Extending networks & deepening relationships within community
Building the Ecosystem New Capabilities Development
Business Model Development
Evolving the value proposition from the ground up
BoP Protocol: Phase III Processes Opening Up Business Concept Co-Generation
Phase III: Enterprise Creation
Non-Business Specific Immersion Formation Collective of Project Entrepreneurship Community Development
Business Scale-Out & Embedding
Business Co-Creation
Small-Scale Pilot Testing
New Capabilities Development
Building Shared Commitment
Building the Ecosystem Business Model Development
Enterprise Creation
Small-Scale Pilot Testing
Fail Small, Learn Big
Enterprise Creation
New Capabilities Development Collective Entrepreneurship Development
Building a platform for growth & expansion
Enterprise Creation Develop capability
Re-embed
Conclusion • Very difficult to “outsource” the BoP Protocol process – Development of radical new business models and the generation of “competitive imagination” requires corporate employees and representatives to be on the core immersion team – BoP Protocol represents a new corporate capability
Question • How would you put together a “BoP Protocol Immersion Team” in your organization? – What specific backgrounds and personal characteristics should individuals have? – What skills and capabilities would be most important? – How would you go about preparing the team for the challenge?
For BoP Protocol Updates and Announcements…
www.bop-protocol.org
Who Will Thrive in the BoP Setting? • Personal passion and commitment to addressing issues of poverty and sustainable development through business • Past experience living in or working with poor communities • Past experience leading or participating in an entrepreneurial venture • Experience or knowledge in finance, accounting, operations, and marketing • Ability to work under conditions of high uncertainty and ambiguity • Ability to engage and learn as equals with people from varying educational and experiential backgrounds
Stuart Hart Erik Simanis Cornell University
The Paradox of Globalization Development & Progress Economic Growth Production Expansion
Cultural Imperialism Economic Inequality Ecological Degradation
The MNC: Traditional Customer Base
“Tip” of the Income Pyramid
“Base” of the Resource Pyramid
> $10,000/yr
Cost structures, business models, & research methods based on a “Western infrastructure”
The “ToP” Customer
85% of Global Resources
The BoP: Serving a Different Customer
Less than $1,500 per year “Base” of the Income Pyramid
The “BoP” Customer
“Tip” of the Resource Pyramid
15% of resources
Will require cost structures, business models, & research methods based on a different infrastructure.
The BoP presents… NOT a marketing problem The “Sachet Mindset” • Food & Nutrition and FMCPs
NOT a technology problem The “Killer Ap Mindset” • Water Purification, Distributed Energy and ICTs
but a Business Model challenge
You can’t solve a problem using the same mindset that created it. How do you “imagine,” pilot, and scale business models for a BoP infrastructure if your past & current business is ToP?
Co-Creating the Business Engaging the BoP differently… Customers
Partners
Clients
Colleagues
To serve the BoP, MNCs will need to develop a new capability…
Native Capability The ability to… • Engage with marginalized groups and communities in mutual business partnership • Build long-term relationships of trust and understanding with BoP communities • Creatively marry MNC capabilities and technologies with those of BoP communities through a process of co-creation • Evolve the business model from the ground up
BoP Protocol™: A Collaborative Venture Sponsored By: Cornell University University of Michigan William Davidson Institute The World Resources Institute The Johnson Foundation
Generous Support From: DuPont Hewlett Packard SC Johnson Tetra Pak www.johnson.cornell.edu/sge www.bop-protocol.org
BOP Protocol Project Staff • Core Staff – Stuart Hart, Cornell University – Erik Simanis, Cornell University – Gordon Enk, Partners in Strategic Change – Mike Gordon, University of Michigan – Mark Milstein, WRI/Cornell University – Ted London, William Davidson Institute – Duncan Duke, Cornell University
BoP Protocol™: Project Overview 2006 and Beyond
2003-2004 October 2004
Research On Development Methodologies & BoP Strategies
• Participatory Rural Appraisal (PRA) • Rapid Assessment Process (RAP) • Quick Ethnography • Empathy-based Design
Workshop I Designing The Protocol
Executive Protocol Education Refinement
October 2005
Workshop II Refining The Protocol
Full Scale Implementation with Candidate Companies Dupont/Solae: India
Protocol Version 1.0
Pilot Test: SC Johnson Kenya
Protocol Version 2.0 & Field Guide
The BoP Protocol™: Big Picture Co-Developed Business Model
Co-Generated Business Concept
“Opening Up” Launch a non-business specific immersion guided by two-way dialogue and humility
“Building the Ecosystem” Bring together a diverse network of partners that incubate the business ideas and bridge capability gaps
“Enterprise Creation” Fine-tune and grow the business by conducting small-scale experiments and scale-outing to new communities
Locally-Embedded Global Business Network
BoP Protocol: MNC Initiatives 1) Pilot Test: SC Johnson Kenya Initiative Phase I: “Opening Up” March – August 2005 Phase II: “Building the Ecosystem” September 2005 – June 2006 Phase III: “Enterprise Creation” July 2006 – ???
2) Full Scale: Dupont/Solae India Initiative Phase I: “Opening Up” January – August 2005
Pre-Field: Site Selection
NYOTA, Nakuru District
Kenya
KIBERA, Nairobi
Warangal District, AP
India
Indiramma Nagar, Hyderabad
Pre-Field: Local Partner Selection Discovery-Based Networking
Identifying deeply embedded and attuned community partners
BoP Protocol: Phase I Processes Business Concept Co-Generation
Phase I: Opening Up
Non-Business Specific Immersion Formation Collective of Project Entrepreneurship Community Development Business Co-Creation
Enterprise Creation
Business Scale-Out & Embedding
Small-Scale Pilot Testing
New Capability Development
Building Shared Commitment
Building the Business Ecosystem Model Development
Opening Up Non Business Specific Immersion
Building trust by practicing humility and seeing positive capacity
Forming a committed & representative group Formation of Project Community
Opening Up Workshop Topics • Building successful partnership • Creating unique customer value • Rethinking resources & capabilities • Articulating a business concept • Imagining new businesses
Learning how to build a business together Collective Entrepreneurship Development
Business Concept Co-Generation
Generating ‘embedded ideas” that build off of local resources & meet local needs/wants
SCJ Business Co-Generation: Kibera
“Community Cleaning Service” Diversify & professionalize Taka ni Pato youth groups’ trash collection & recycling business through a direct-tohome cleaning service that bundles SCJ products
Re-Imagining SCJ’s Business Model • Redefine SCJ’s products away from narrow brands to broad suits of service (“Environmental Health and Cleanliness” vs Raid) • Engage “under-employed” youth in a micro-enterprise model (versus central distribution) • Leverage youth group’s trash collection networks as a directto-home distribution channel (instead of bike distribution to dukas) • Servicize SCJ-K’s product line (instead of smaller packages) • Leverage youth group’s social outreach skills (e.g., theatre) to communicate the service’s social benefits (versus radio or TV advertising)
BoP Protocol: Phase II Processes Business Concept Co-Generation
Opening Up
Non-Business Specific Immersion
Collective Entrepreneurship Development
Enterprise Creation
Business Scale-Out & Embedding
Small-Scale Pilot Testing
Formation of Project Community
Phase II: Building the Ecosystem
Business Co-Creation
New Capabilities Development
Building Shared Commitment
Business Model Development
Building the Ecosystem Formation of Project Community
Building Shared Commitment
Extending networks & deepening relationships within community
Building the Ecosystem New Capabilities Development
Business Model Development
Evolving the value proposition from the ground up
BoP Protocol: Phase III Processes Opening Up Business Concept Co-Generation
Phase III: Enterprise Creation
Non-Business Specific Immersion Formation Collective of Project Entrepreneurship Community Development
Business Scale-Out & Embedding
Business Co-Creation
Small-Scale Pilot Testing
New Capabilities Development
Building Shared Commitment
Building the Ecosystem Business Model Development
Enterprise Creation
Small-Scale Pilot Testing
Fail Small, Learn Big
Enterprise Creation
New Capabilities Development Collective Entrepreneurship Development
Building a platform for growth & expansion
Enterprise Creation Develop capability
Re-embed
Conclusion • Very difficult to “outsource” the BoP Protocol process – Development of radical new business models and the generation of “competitive imagination” requires corporate employees and representatives to be on the core immersion team – BoP Protocol represents a new corporate capability
Question • How would you put together a “BoP Protocol Immersion Team” in your organization? – What specific backgrounds and personal characteristics should individuals have? – What skills and capabilities would be most important? – How would you go about preparing the team for the challenge?
For BoP Protocol Updates and Announcements…
www.bop-protocol.org
Who Will Thrive in the BoP Setting? • Personal passion and commitment to addressing issues of poverty and sustainable development through business • Past experience living in or working with poor communities • Past experience leading or participating in an entrepreneurial venture • Experience or knowledge in finance, accounting, operations, and marketing • Ability to work under conditions of high uncertainty and ambiguity • Ability to engage and learn as equals with people from varying educational and experiential backgrounds
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