Friday Roundup ? 5/27/11: Segmenting the Layers of the BOP, Watch Out SOCAP/E’s Live Stream
BoP critics, perhaps justifiably, argue that the definition of the Base of the Pyramid, especially in terms of income and/or buying power, is far too mailable. Is it $3-$5 a day, $1-$3 a day, or $1 or less a day? The answer to all of the above is, yes, according to the authors of “Segmenting the Base of the Pyramid” (subscription required for full article) appearing in the June issue of the Harvard Business Review.
Writers V. Kasturi Rangan, Michael Chu, and Djordjija Petkoski, explain that at each level – low income ($3-$5), subsistence ($1-3) and extreme poverty (less than $1) – there are appropriate ways to segment products and services for successful value creation. For low-income people, companies should hone in on providing affordable products directly to consumers; for those at the subsistence level, the focus should be reaching out through individuals or small businesses; for those in extreme poverty, developing partnerships with both governments and NGOs should be the approach, they argue.
(Incidentally, the issue of the market size and earning power came up in a recent interview I had with Aneel Karnani, associate professor of strategy at the University of Michigan’s Ross School of Business, and as readers of our site will be familiar, a BoP and microcredit critic. Karnani has written a new book, Fighting Poverty Together, that stresses the need for distinct but interfacing roles of business, NGOs and government in effectively addressing poverty. We’ll be posting the interview soon).
The HBR piece also keenly points out that the responsibility of companies doing business with the BoP does not end once the product is introduced, or the profit is booked. “… as companies make money, the communities in which they operate must benefit by, for example, acquiring basic services or growing more affluent. This leads to more income and consumption – and triggers more demand within the communities, which in turn allows the companies’ businesses to keep growing.”
This builds off the arguments of many in what I’ll crudely call BoP 2.0 thinking extends. That is to say, building a fortune “with the BoP” as advocated in a recent book, Next Generation Business Strategies for the Base of the Pyramid.
Watch SOCAP/Europe Live
SOCAP/Europe has completely sold out of its 600 available seats, but you can still attend virtually. Tune in to the S/E’s live video stream from Amsterdam on Monday and Tuesday. We’ll host the stream on a special page here. The broadcast is expected to begin at 6:30 p.m. Amsterdam time (CEST), which is 12:30pm EST (here’s a Time Zone Converter to help you figure out what time it will where you are). At NextBillion, we’re also planning to have plenty of coverage and discussion on the conference in the coming days.
Fast Company’s list of The Most Creative People in Business 2011 recognizes two entrepreneurs using digital technology to advance democratic and economic agendas: David Kobia, founder of Ushahidi, and Leila Chirayath Janah, founder of Samasource. Ushahidi, which means “testimony” in Swahili is a mapping platform nonprofit company born out of 2008’s post-election violence in Kenya. Beyond the real-time crisis information site that shot it to prominence, Ushahidi has gone on to offer two other products: SwiftRiver – a business/organizational focused analysis and brand monitoring tool; and Crowdmap – which keeps tabs on elections, among other quickly developing events via multiple social media networks. Samasource, also based in Kenya, is a socially responsible outsourcing nonprofit that connects workers with digital projects. Its aim is to develop labor and environmental standards for the service industries, akin to a fair trade system. Check out Francisco Noguera’s 2008 interview with Janah here.
(Hat tip: Kishor Nagula for the Fast Company link).
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SOCAP/Europe Preview: Beyond the Revolution in MENA by Diana Hollmann
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