stuart l. hart - enterprise for a sustainable world

Copyright Stuart L. Hart 2011 Copyright Stuart L. Hart 2014

“Un#l now, globaliza#on has been driven by the west and imposed on

the rest”

The World Turned Upside Down The Economist, 2010


What Has Changed?

Wealthy >$20,000 800

Emerging Middle Class

(MoP) $2.000-20,000 1,700

Base of the Pyramid (BoP)

(Prahalad & Hart, 2002; Hart & Christensen, 2002; London & Hart, 2004; Prahalad & Hammond, 2002)

<$2,000 4,500

Saturation of current markets

Cost barriers; Environmental tipping points

New technologies, products & business models

Copyright Stuart L. Hart 2011 Copyright Stuart L. Hart 2014 Prahalad and Hart, Strategy + Business, January 2002


Growing Momentum in the BoP

1998 2002 2004 2009 2000 Prahalad & Hart Draft

BoP LL

“Fortune at BoP”

WRI Conference

MI & Cornell Conference

2013

Hybrid Value Chains

Growing Inclusive Markets

Opportunities for the Majority

Sustainable Livelihoods

Pro-Poor Business

Business Against Poverty

Social Business

Social Entrepreneurship

Base II Conference

2013 BoP Regional

Meeting BoP Global

Network Summit

2012

Social Enterprise Inclusive

Business

Green Leap


The BoP Global Network

www.bopglobalnetwork.org


•  Nutrition •  Water

•  Sanitation

Observation: Billions of people with

unmet needs…

BOP = Untapped

Market

•  Energy •  Communications

•  Health

Ini>al Assump>on

<$3,000/yr BoP (D, E, F +)

~4.5 billion

> $15,000/yr ToP (A, B)

~800 million

$3,000 - 15,000/yr MoP (C, D)

~1.5 billion

Source: Erik Simanis


•  Most corporate ini#a#ves in the BoP have been focused exclusively on “business model innova#on”:

– Lowering a product’s unit cost (e.g. sachets) – Reducing costs by outsourcing produc-on to developing country partners

– Extending product distribu-on into slums and rural areas – Partnerships with NGOs for “on-‐the-‐ground” capability

Result: Child With a Hammer “Selling to the Poor”

First Genera>on BoP Strategies


Need = Demand Affordability = Purchase

ToP– “Create needs in exis#ng markets”

BoP– “Create markets from exis#ng needs”

The Tyranny of “Unmet Needs”


Why Have These Taken Off?


The Unfinished Symphony

Symphony No. 8 in B Minor, 1822


Cemex: DIY Homebuilders


The ChotuKool

Godrej and Boyce “The Category Buster”


Thinking Like a Mountain

The Rifle Shot “Targeting low cost

products to BoP customers” Creating Wide and Compelling

Value Propositions


The Base of the Pyramid Protocol: Toward Next Genera>on BoP Strategy

2nd Edi>on 2008

Erik Simanis Stuart Hart

Duncan Duke Cornell University

Justin DeKoszmovszky S. C. Johnson & Son, Inc.

Patrick Donohue Enterprise for a Sustainable World

Gordon Enk Partners for Strategic Change

Michael Gordon University of Michigan

Tatiana Thieme Cambridge University

www.bop-protocol.org

Co-‐Crea>on By Design


Solae: Soy Ecosystem in India

•  Rooftop Gardens as green gathering space within the community •  Creation of a healthy atmosphere in which to do cooking demos, sell packaged items,

and discuss healthy living •  Serve as a home base for the growers group •  Located at schools, furthering embeddedness within children's live


Next Genera>on BoP Strategy

BoP 1.0 • BoP as producer/consumer

• Deep listening • Reduce price points • Extend distribu#on • Deriva#ve product technology • Arm’s length rela#onship via NGOs

BoP 2.0 •  BoP as business partner •  Deep dialogue •  Expand imagina#on

•  Marry capabili#es

• New, sustainable technology •  Direct, personal rela#onships

“Structural Innovation” “Embedded Innovation”


During the last decade, first generation “Base of the Pyramid” (BoP) ventures focused primarily on “finding a fortune at the BoP” by selling products to the world’s four billion poorest people. Many of these initiatives did not scale, and some failed outright. But through that experience, crucial lessons have been learned. Innovators are now succeeding thanks to a more sophisticated and nuanced approach based on “creating a fortune with the BoP.”


Ques>ons

How big is the BoP? Are there different segments?

Do you have to include the poorest?

How big are the returns? Are market returns realistic?

Do you have to reward investors?

How big is a BoP venture? Are there different growth objectives?

Do you have to scale up to count?


More Ques>ons Intra vs. Entre

Are BoP entrepreneurs preferred? Can corporations create the white space?

Urban vs. Rural How do villages and slums differ?

Do you have to include both?

Social vs. Environmental Is poverty reduction enough?

What about environment when it comes to impact?


Stuart L. Hart [email protected] www.stuartlhart.com

www.e4sw.org

6/25/14 21

stuart l. hart - enterprise for a sustainable world

Technology

copyright stuart

hart christensen

london hart

pyramid bop prahalad

bop entrepreneurs

pyramid bop ventures

home base

generation base