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Tuesday, March 4, 2008

Technology: A Key to BoP Success?

By Nitin Rao

What do Aravind Eye Care, d.light design, Ekgaon Technologies, ITC's e-Choupal, and the much awaited Tata Nano have in common?

New market segments?
Radically new paradigms?
Technology?

As the BoP discussion moves from whether-to-invest to where-to-invest, there is an increasing need to measure the impact of new ventures. I see a strong correlation between Successful Models and Technology.

  • One reason for this could be that by definition, addressing the needs of the base of the pyramid requires fundamental rethinking. Downsizing current models cannot yield this change, but technological innovation provides a solution.
  • Leading technology universities such as Stanford and MIT have seen an increased demand for courses that tie technology with social entrepreneurship. For instance, Prof. James Patell's course, Design for Extreme Affordability, has been a launching pad for innovative startups such as d.light & Cosmos Ignite. MIT's Legatum Center for Development & Entrepreneurship promises to be a hub for social entrepreneurs driving bottom-up innovation.
  • In social business plan competitions, innovators often turn to Social RoI to strengthen their proposals. Technology-backed plans here bridge the gap in numbers, make for a more compelling economic proposition and face shorter gestation periods.
As Neerja Raman, Senior Research Fellow at Stanford University writes:
I think the world ought to sit up and take notice. These are early indicators of a change in the making. An important change; a great change: where lower cost comes from reducing non-essential features in product design not from using older, cheaper technology developed for a market with completely different economic drivers. For years technology has been associated with ?expensive?, ?complicated? and most importantly ?irrelevant? for the poor or people living on less than $2/day. This is a red herring. Give them food, give them medicines and ah yes give them education; but technology? Yes technology - the best and latest technology; the kind developed for the market that represents the next billion.

Continuing with the Indian context, I used Acumen Fund's India Portfolio (as listed on their website) as a sample set to study the use and impact of technology. I was not at all surprised to find that at least 6 of their 9 investments were the direct result of technological innovation. These are:

These examples point to a strong correlation between technology and success in BoP markets.

This trend should increase over the years as a new breed of socially conscious talent designs improved and cost-effective technologies specifically aimed at the needs of the poorest citizens.

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