Lighting the path of profitability for base-of-the-pyramid enterprises
Monday, October 21, 2013
It’s every small business’s dream to be profiled not only by mainstream media flagships like the New York Times and The Economist but also trendsetting outlets like “The Colbert Report” and Fast Company. And by this measure of media attention, d.light design, provider of solar light and power products for the developing world, is a resounding success.
But as any enterprise knows, generating buzz about your product is not the same as having customers actually buy it.
d.light represents that most ambitious of social enterprises: One that aims to turn a profit while solving a social problem. Dubbed “hybrid” organizations by Harvard Business School professor Julie Battilana, these businesses differ from other social enterprises, who often rely on grant-based funding, rather than revenue, to sustain operations.
The defining criteria of success, however, is not whether these organizations come up with innovative ideas for reaching the bottom-of-the-pyramid market. It’s whether they can actually turn a profit by selling products to that market.
And despite widespread enthusiasm among policy makers, investors and the entrepreneurs themselves for this hybrid model, the instances of success in the field are few and far between, making the media attention seem out of proportion or at least premature.