Tuesday
January 11
2011

Pablo Sanchez

Notes from the Recent Meeting of Base of the Pyramid Experts in Barcelona (Part 2)

Editor’s note: The original version of this article appeared on NextBillion en Español.

As we posted here, last November saw the meeting of a group of professionals who work in the field of inclusive businesses at the Base of the Pyramid (BoP), in an event titled Business Strategies at the Base of the Pyramid that Create Value in the Triple Bottom Line.

This goal of this meeting was to exchange thoughts and advance a common agenda to promote and show the advantages of developing sustainable business solutions for the poor, having a positive impact in poverty reduction, and taking the environment into account by providing green products and services. The following is a detailed list of conclusions that surfaced at the meeting.

  • Educating the target population is crucial for the success of a new product; if this population doesn’t understand the potential benefits of the product, it is unlikely to succeed.
  • Currently, inclusive business models that promote environmentally-friendly products and services provide these to high-income segments where there is greater demand. However, it is essential to promote sustainable production and consumption among low-income communities. The low-income populations have a great opportunity to create sustainable environments from the beginning if they have access to new products and services.
  • Sometimes, the target population can have a biased perception of value: What one needs is not necessarily the same as what one wants. A presentation discussed the dilemma of including the target population in the planning of a business solution; one proposed solution is learning how the main population thinks, and afterwards adapting the explanations of the product to their perspective. It can also be beneficial to use marketing techniques to make certain products more appealing to low income consumers.
  • A failure of a product doesn’t necessarily mean that the product is not appropriate for the target population; it can have external factors that affect its success, like the method of payment for instance. Interaction with customers is a critical factor that influences the success of products in low income settings.
  • For an innovation to be successful, it should: have a visible and positive impact (preferably in the short-term), be compatible with the social and cultural values of the target population, be of an experimental nature as a test, and be relatively easy to understand and use.
  • Communication with the local government can also be crucial, or at least advantageous, for achieving success.
  • It isn’t always necessary to begin promoting a new innovation in the lowest level of the base of the pyramid; it can be easier to start with larger and more developed areas.
  • Some industries that have traditionally been recognized as polluters are making great effort to be more environmentally sustainable. For example, in the cement industry, more efficient construction in low-income communities has led to houses that are more energy efficient.
  • Environmentally responsible companies in poor communities have required innovative approaches, giving companies better comparative advantages.
  • Ideally, the value proposition should be improved by integrating the product/service into a complete solution that breaks the vicious circle of poverty and unblocks demand.
  • In most cases, innovation has been fostered by a close relationship with the poor communities, so the company can accurately perceive their desires and necessities.
  • Segmentation and standardization are two opposing topics that are integrated into the same business model. Standardization, in some cases, is necessary for managing risk and having scale quickly, for risk management and faster scale, while some activities require segmentation. However, not all communities at the base of the pyramid need the same products or can be approached in the same manner. In these cases, technology plays a unique role in more efficient business models.

We hope to continue sharing the results of the exchanges of experiences and learning that are achieved in these types of meetings.

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