Derek Newberry

BoP = 1; SME = Global

age of innov“N=1, R=G” is purportedly the equation that summarizes C.K. Prahalad’s new contribution to business management literature. I haven’t had a chance to read the book yet, but there are good synopses online already, such as this one – all of which report that the new book by C.K. and co-author M.S. Krishnan, The New Age of Innovation, urges companies to become at once more global and more personalized.

The authors essentially argue that the world businesses will have to adapt to is one in which they increasingly co-create value with customers, connecting products and services with their needs on an individual basis (N=1). At the same time, they will have to dramatically strengthen and streamline their global supplier networks to meet these personalized demands (Resources=Global).The examples I’ve seen floating around so far seem to relate mostly to MNCs, but I can’t help but imagine how many of these ideas C.K. may have extrapolated from his BoP work and of course what these trends mean for smaller BoP businesses. C.K. writes in a recent post on his book that:

“The sources of value are rapidly shifting from products to personalized experiences; from dependence on a firm to a network of suppliers; and from firms deciding unilaterally what consumers can have and should expect to cocreating value with the active involvement of consumers”

This deep listening approach expressed in the notion of cocreating value is the same sort of advice BoP champions have been giving to companies for years. This strategy is very reminiscent of those employed by the sample companies in Hart and Simanis’ second edition of the BoP Protocol.

In their estimation, companies have to begin not just thinking about the BoP as a unique market, but about individual BoP communities and consumers as having unique preferences and needs. Hence the intensive focus groups they run in rural India, for example. In other words, BoP=1.

But how does the second part of the N=1, R=G equation potentially apply to the BoP? Many of the SMEs that have been catering to these markets for a long time have the N=1 model down – companies like the CareShop franchises serve the BoP as unique customers, neighbors and maybe even friends.

It’s the scaling that becomes an issue for them – having the technology, the means and the technical skill to grow their supply chain globally while maintaining a personalized approach. This is the goal of organizations like New Ventures, Acumen Fund, and our colleagues in the enterprise development space; to make sure that not just the MNCs that C.K. describes but that profitable SMEs all over emerging economies have the ability to overcome obstacles to growth – our goal is to complete the equation SME=G.