Rob Katz

Guest Post: Erik Simanis Explains the BoP Protocol

Erik SimanisGuest blogger Erik Simanis is Co-Director of the BoP Protocol project. Erik co-founded the Base of the Pyramid Learning Laboratory in 2000 with Professor Stuart Hart. He holds a BA in Spanish from Wake Forest University and an MBA from the Kenan-Flagler School of Business (University of North Carolina at Chapel Hill); he will soon complete his Ph.D. in strategy at Cornell’s Johnson School of Management.

Editor’s note: Simanis’ thoughts were initially posted as a comment to Derek’s recent post, BoP = 1, SME = Global.? They have been adapted, with Erik’s permission, as a full-length post.? encourages debate on different business approaches within the BoP movement.By Erik Simanis

Thanks for this post, Derek, and for the reference to our work on a corporate innovation process for the BoP (aka, the BoP Protocol.) I did want to make a small correction/addition to your description of that process. Importantly, the BoP Protcol is NOT about how to do “deep listening,” nor simply how to understand the BoP customer’s “true needs.” We contend that such an approach, which reflects a very traditional corporation innovation process, is (counter-intuitively) the reason why so many of the initial corporate BoP ventures have produced lack-luster results, both for companies and communities. It also leads to weak competitive positions for the company and exposes them to low-cost knockoffs.

The problem, therefore, isn’t a lack of “good customer data” or new methods (like co-creation or quick ethnography) to get that data; the problem is the very belief that new businesses (particularly in the BoP) are built on “customer data!” When you do business development with that as the organizing framework, it inevitably leads to a transactional relationship with BoP communities and fosters the view that the company’s primary interest is simply to “sell stuff to the poor.”

The BoP Protocol, instead, is about how companies can engage in “deep dialogue” with BoP communities and, through that process, to creatively marry each others? resources, capabilities, and imaginations in forging a new business. The process, which establishes close, personal relationships (not with the intent of getting deeper insights into someone’s needs), fosters a deep interdependence and a sense of mutual commitment between the company and the community. ?

That “solidarity,” if you will, shifts the basis of value on which the business is built and establishes a durable base of competitive advantage. To be clear, we do not run intensive “focus groups” as part of the BoP Protocol process – again, we see the transactional, “focus group” mentality as part of the problem! We do hold intensive workshops and community engagements, but the purpose of those is to build the capacity for the community and the company to work effectively as long-term business partners and to harness the creative potential that the partnership holds (the workshops fall under the “collective entrepreneurship development” part of the Protocol process). That’s why “action learning” plays such an important part in the BoP Protocol process.

We use the term “co-venturing” to help differentiate the BoP Protocol process (and its strategic intent) from the concept of co-creation (which has become a bit of a buzz-word of late and is very similar to the concepts of end-user innovation and public-private partnerships – all good and valuable, just not particularly effective, we believe, in delivering the kind of company and community value on which the BoP concept was premised). The front-end of the 2nd Edition of the BoP Protocol (PDF) lays out some of this logic.

We have another paper that is in the publishing process (Beyond Selling to the Poor: Building Business Intimacy through Embedded Innovation) that explores in depth this larger question (of “re-embedding” innovation strategy). Again, thanks so much for the mention – I hope this helps situate the BoP Protocol and clears up any misconceptions of it being an approach to marketing research at the BoP (or the same thing as co-creation).