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

In my previous post about Anand Jaiswal’s article, Erik Simanis left a comment adding one more critique to the approach to BoP markets from a producer/consumer framework. In this critique he refers to ?Beyond Basic Needs Business Strategies?, an article?he recently co-authored with Stuart Hart and Duncan Duke.

The article offers a very good overview of the current approach that is being developed in their Base of the Pyramid Program and that, by extension, lays the groundwork for their BoP Protocol Initiative. It is written in a clear and concise language?and I would?strongly suggest anyone interested in their work to take a look at it. (And for those who want to get a better feeling of what he means, do check out Robert Katz’s interview from last April).In his article, Simanis et al. criticize the oversimplification of the BoP term, which has ended up reducing poverty alleviation and development to the managerial terms of customer needs and product development. The talk about a ?BoP market? has falsely created an image of a homogeneous market, where there is no homogeneity and where, often, there is no market either. The authors point out that it is not the same to need clean water than to have a profitable market for it. In fact, market creation was the subject of a recent sobering post, in which Kickstart founder, Martin Fisher, is quoted stating that not even having the best technology is enough for success.

In the article, Simanis, Hart and Duke?divide the schools of development thought in three: Basic Needs, Empowerment and Participation, and New Commons. The Basic Needs approach defines poverty and underdevelopment as a form of material deprivation and is the standard approach in the BoP sphere. However, this movement has been criticized as stripping the poor of emotional, aesthetic and cultural dimension.

The Empowerment and Participation approach tries to correct these issues by approaching poverty as a relationship characterized by powerlessness. Poverty alleviation thus requires confronting issues such as patriarchy, religious fundamentalism, racism, culture or illiteracy. Still, it has also been criticized as imposing its own, culturally conditioned assumptions to the poor.

Finally, the New Commons approach takes into account these points and tries to tackle development and alleviation as an ongoing, creative dialogue among individuals and organizations across the continuum of power and status, across differences born of income, gender or education. Thus it emphasizes the process, rather than output and seeks a process of mutual learning through dialogue and co-creation.

These three schools co-exist today and are represented in different projects. Jeffrey Sachs is probably the best example of the Basic Needs approach, while Amartya Sen is closer to Empowerment and Participation, and Muhammad Yunus to the New Commons.

Simanis et al. claim that the reason why many BoP ventures have failed so far lies in their narrow view of development, since it is grounded in the Basic Needs framework. In this light, the First Version of the BoP Protocol represents the initial approach to the New Commons school of thought from the BoP arena. The protocol was written after a 4-day workshop and a testing period in Kenya and India. Based on later learnings and experiences, the model was revised and released as the Second Version of the BoP Protocol (or BoP 2.0). The authors then sign off by including an abridged version of the Second Edition for those who want a quick glance at what this protocol is about.

The approach suggested in Simanis? paper and followed in their last BoP Protocol is relatively new and I suspect that many of our readers, like myself, in spite of having been exposed to bits and pieces of the ideas explained in it, have not had the chance to get a full picture of what the fuss is all about–until now. So I would encourage our readers, after having read the article, to post their thoughts and comments here. I do not know whether this is the future of BoP businesses, but this approach is certainly rocking the boat (it has certainly made me feel I should at least rephrase a couple of chunks of my ?Defining a Base of the Pyramid Business? article).