NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

I’m in Ann Arbor, Michigan for the “Business With Four Billion” conference – the first major “base of the pyramid” meeting since WRI convened the “Eradicating Poverty Through Profit” conference in December, 2004.? On a macro level, my impressions from day one are three-fold:

1. The energy here is amazing.? I saw a slide put up by Ted London (Director of the William Davidson Institute’s BoP Initiative and one of the conference organizers) with the attendance – it’s about 1/3 academic, 1/3 NGO or government, and 1/3 business.? This kind of split would have been unthinkable 3-4 years ago.? The sheer momentum that the BoP concept has gathered in the private sector is palpable.2. The level of thinking is advanced.? That is, it has advanced, especially over the last couple of years.? No longer is it necessary for plenary speakers to walk the audience through the BoP concept.? We get it, and they get right down to it.? I’ll have more details on today’s plenaries (C.K. Prahalad, Stuart Hart, Ted London, and Al Hammond) below.

3. We still have a long way to go.? If attendees left with anything today from Prahalad and Hart’s presentations, it is that the challenge of inclusive, pro-poor, pro-environment growth is a huge one.? We need the private sector to step up – but we also need governments, NGOs, and even private citizens (Kiva, anyone?) to answer the bell.? The BoP proposition is about advancing this generation’s greatest challenge: how to bring 4 billion people into the middle class without overwhelming Earth’s natural systems.? Not an easy question.

OK – a quick plenary recap (I will have a full recap after I return to DC and can digest everything).

C.K. Prahalad was the first to speak.? His talk centered on the establishment of a new development paradigm, one that will turn the way we’ve traditionally viewed development on its head.? In typical C.K. style, the guru went through perhaps 40 slides, each one offering a new strategy or perspective that left the audience nodding its collective head in agreement.?

Of particular interest was Prahalad’s exhortation to stop denying globalization, but instead to start defying it – a process he compared to flying (don’t deny gravity – defy it with the airplane).? I like this construction, because it gets us all thinking like innovators and entrepreneurs, working to create the next great model that will solve a seemingly intractable problem.? And it relegates the anti-globalization movement to the sidelines, where it probably belongs.

I can’t do his entire presentation justice, but he did do a good job addressing some criticisms of the BoP theory, including how a BoP model can be environmentally friendly, inclusive, and about more than just “selling to the poor.”? Check out the webcast for details, and keep an eye on the conference web site for the slides – they’re supposed to be posted soon.

After a short break, Stuart Hart and Ted London took the floor.? Hart’s talk, like Prahalad’s, began with a short history lesson about where BoP came from and where it is today.? After some reflection, he asserted that “the BoP has reached a tipping point” in terms of literature, experience, programs, the BoP Protocol, conferences, and backlash.

This last point was of interest to me.? Hart explicitly brought up Aneel Karnani’s papers as evidence that BoP has arrived — I suppose an idea has only really made it when people want to break it down and expose its flaws.? Kudos to Stu for facing this straight on.? In light of criticism, he also had a very interesting comment:

There are now, and will be, BoP ventures that deserve to be weeded out.? And I have faith in the competitive process to do that.

A bold statement.? Is it true?? I’d like to hear the BoP critics response — comments below.

Hart continued by posting 4 questions for the BoP community:

1. Can the planet handle it?
2. What’s in it for the poor?
3. Can BoP be an antidote to terrorism?
4. Are corporations up to the challenge?

The rest of his presentation was dedicated to answering those 4 (tough) questions.? Full recap to come, but a few quotes first:

BoP is the innovation opportunity of the century – from point of use to small-scale to distributed networks – there’s a huge opportunity to unseat incumbents.

Most sustainable technologies are disruptive; not all disruptive technologies are sustainable.

Next was Ted London, who focused on a BoP approach to poverty alleviation.? I liked Ted’s presentation, which is what you’d expect from a management consultant turned academic – clear, to the point, with emphasis on key leverage points.? His main point was the BoP is a new form of research and development, and that with patient capital and experimentation, there’s a real potential to alleviate poverty.?

I don’t want to gloss over his BoP impact assessment framework or his white paper on poverty alleviation – both are excellent pieces of work (in fact, WRI has incorporated the assessment framework into a forthcoming study of our own — thanks Ted!)? Rather, stay tuned to NextBillion, where we will feature both pieces of work in the coming weeks/months.

Finally, Al Hammond gave the dinner talk.? Al focused primarily on the data inside The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid.? It’s a presentation I’ve seen many times, but it doesn’t get old.? The data alone are worth looking at time after time – it is clear that the BoP is a huge, untapped opportunity.? Not only that, but Al addressed some critics who claim that $3000 PPP is too high a threshold to define BoP.? See the slide deck for the full explanation, and a forthcoming white paper on the same.

After going through some data, Al moved on to discuss some transformative sector strategies that WRI is working on with our partners – specifically in healthcare and IT.? In each, we seek to identify, de-construct, localize, and replicate a scaleable business model that delivers key services using a pro-poor, environmentally friendly approach.? Not easy, but it can be very rewarding.? More to come – trust me.

Tomorrow’s agenda includes a plenary speakers Mark Milstein, Ted London, Bob Kennedy, Luis Alberto Moreno, Tim Mahoney, Helene Gayle, and Carter Roberts.? Oh yeah, and some guy named Robert Katz is moderating a panel session on “Discovering BoP Business Models.”? Swing by if you’re interested 🙂