NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Businesses have made significant strides in the last 40 years, identifying innovations that make serving the world’s poorest profitable. Single-use packets developed by giants like Proctor and Gamble made fast-moving consumer goods affordable. Mobile technology leapfrogged conventional telecom in Africa, improving connectivity and reach. Capital inflows from micro-financing opened small business opportunities for billions. These innovations, and many others, have enabled multinational corporations to enter emerging economies and create profitable products and services at scale.

Although these innovations have unleashed markets, traditional for-profits have made two serious errors in serving the base of the pyramid (BOP).

Throughout the world, businesses engage their consumers in the process of developing new products and services, a mechanism known as co-creation. Co-creation can run a full spectrum of involvement: from asking someone who has purchased a product to take a survey to integrating real consumers in feature design, product testing, and launch.

Feedback systems for businesses working with the BOP, however, are rarely as sophisticated. The reason isn’t hard to understand. Most companies serving the BOP operate on very thin margins and rely on products that serve high volumes in order to break even. Co-creation can be an expensive process and usually only includes a select group of “super users” who may or may not represent a broad base of consumers.