Hard vs. Soft: Defining Critical Skills at the BoP
When I’ve asked those who are active at the BoP what skills are needed in the space, the answer I receive is deceptively simple: ?everything.? Perhaps this is because, as long time BoP entrepreneur Patrick Donohue explained, BoP is really about the ?creation of markets.?
After spending many months trying to determine what I ?should? do in the field, I realized that I had asked myself the wrong question. The right question is, ?What do I want I want to do in the field?? Even better, ?What am I good at?? This, as Patrick pointed out, is the difference between causation, or allowing goals to determine means, and effectuation, or enabling the means to define the goals. As a result, what is needed comes down to what you can give and what lens you will use to examine the problem. Nonetheless, we can still agree that there are a number of practical skills that are particularly useful at the BoP.Fortunately for me, I could look to none other than Sara Standish, New Ventures team member and fellow NextBillionaire, for the inside scoop. For those of you may not be familiar, New Ventures is a WRI program that supports sustainable enterprise creation in emerging economies by accelerating the transfer of venture capital to investment opportunities that incorporate social and environmental benefits. Sara’s work with emerging market entrepreneurs has led her to identify three critical needs for BoP producers: management training, access to new markets, and access to investors.
Not surprisingly, it is difficult for BoP entrepreneurs to find the appropriate resources. As a result, there is a need for management training that teaches business plan writing, business strategy development and financial literacy. By definition, an emerging market or sector often lacks role models to which new entrants can turn for best practices. Consequently, entrepreneurs need information about, and access to, less established sectors. BoP businesses also need working capital and the requisite knowledge to attract and manage venture capital funding. Finally, while achieving scale is challenging for both BoP entrepreneurs and MNCs, it is essential for success.
From the little that we’ve discussed so far, it appears that the ?everything? focus (Is that an oxymoron?) gets you pretty far. However, one still has to wonder what additional problems one encounters on the ground. I got my answer while reading the Acumen Fund’s spring update. In the words of Jacqueline Novogratz, Acumen Fund?s President:
?the biggest constraint to growing small and medium-sized enterprises is a lack of talent, especially at the senior and middle management levels. I have spoken with entrepreneurs and local business leaders in the countries in which we work and hear the same phrase repeated: We need skilled managers who have experience in growing companies, managing supply chain, marketing, and managing manufacturing plants.
Points taken. However, while technical skills are critical, I also believe that certain soft skills are equally important. In fact, I had an epiphany about this the other day while walking home from the gym. (Now don?t act like you haven?t had post-workout revelations.)
As I trudged along, lamenting my inability to perform one-legged dead lifts, I thought to myself, ?Although an MBA is an excellent conduit to a future BoP career, I’d have to think twice if someone offered me a well-paying job now.” Why? Because at this point in my financial life, investing the future value of $120,000, the approximate cost of my business school education not including intangibles, seems rather risky. (By the way, it’s $202,800 if you use a 30% discount rate.) Will this investment pay off? For my sake, I sincerely hope the answer is yes.
What I am trying to say is that I finally understand, in an emotional sense, not just in an intellectual one, why the supposed ?shortsightedness? of those with limited resources can be economically rational. After all, if sound corporate capital structure policy includes investing in short-term marketable securities to mitigate interest rate risk, can you really fault a petty trader for his ?here and now? focus? For me, this means that empathy is a critical skill when working at the BoP. With it, one is more likely to be receptive to the needs of the neglected consumers that comprise the BoP.
If nothing I’ve expressed so far has proven my case, perhaps the words of Stuart Hart, one of the world’s top authorities on the implications of sustainable development and environmentalism for business strategy will move you. At a talk that he gave to students and faculty of the Ross School of Business in September of last year, Hart indicated that the following types of people will ?thrive in the BoP space?:
- Those with a personal passion for addressing issues of poverty and sustainable development through business.
- Those with past experience living in or working with poor communities.
- People with past experience leading an entrepreneurial venture.
- Those with experience or knowledge of finance, accounting and operations.
- Those who can work under conditions of high uncertainty.
- People with the ability to learn and engage as equals with people from varying backgrounds.
Sound familiar? I sure hope so. Now get to work!