Monday
August 13
2012

Piera Waibel

NexThought Monday: Are Managers Ready to Lose Control?: The bottom-up development perspective in base-of-the-pyramid ventures

Doing business with the 4-plus billion poor in the world requires a strategy that considers slum inhabitants in Colombia and small-scale farmers in Costa Rica as a source of innovation, and integrates them into different business processes: from idea generation and product and service development, to production and the distribution and marketing of products and services. They are then included in the business of companies, so that “business with four billion”, as Stuart L. Hart and Ted London refer to it, can take place.

But what if inclusive business means more than that?

Does inclusive business mean that the poor are only included in “our” businesses? Or should it also mean that they have their own flourishing enterprises and we become integrated in their activities? What if the poor want to play a bigger role than being just instruments included in a process that was defined by outsiders? What if they want to define their own development and proceed with it?

Aren’t we all dreaming of a world where the poor can lift themselves out of poverty? A world where everybody can be economically active and earn enough for a dignified livelihood?

At least we all say that we are. Development actors have believed for over 30 years (some for even longer) in a situation in which poor people are no longer viewed as the target of poverty reduction efforts, but as partners in, and an asset to, the development process.

Bottom-up development approaches such as Participation, Community-Driven Development, Empowerment, Asset-Based Community Development, or Local Knowledge emphasise the role of the poor and see them as central to the design and implementation of the development process.

Companies can learn from the experiences the development community made, and apply certain strategies accordingly in their BoP ventures, which my new book Putting the Poor First – based on my PhD research – analyses and demonstrates.

The elements of a bottom-up development perspective applied in BoP ventures can be grouped into three clear categories:

  • Drivers in choosing a bottom-up development perspective in BoP ventures (e.g. so that products and services are more readily accepted)

  • Circumstances that help or hinder the application of a bottom-up development perspective in BoP ventures (e.g. the acceptance of the company in the communities or previous experiences with poverty alleviation projects), and

  • Success factors when choosing a bottom-up development perspective in BoP ventures (e.g. the importance of power structures, pluralism and self-esteem)

For these innovation processes to be successful, companies need to put the poor first, step back, and hand over at least a part of their responsibility to local partners, and, finally, the target group themselves.

A certain level of control may still be necessary at the beginning. But arm’s-length project management with intermediaries and engaging the poor comprehensively is a valid alternative, as case studies show. The more the poor are able to control their own destinies, the more efficient and effective a BoP venture becomes.

However, some questions remain: Do companies need to internalize knowledge provided by bottom-up development literature, or can they just engage local partners (such as NGOs) who already possess it? When engaged local partners consistently apply a bottom-up development approach and shift far greater responsibility to the poor, what sort of development will we face?

Will it be TVs and mobile phones? Or improved sanitation and environmentally friendly consumer products?

Piera Waibel is global manager for agriculture at the Fair Labor Association and associated expert of Endeva – Enterprise Solutions for Development. She wrote her PhD thesis at the University of Zurich and CATIE, in Costa Rica, about the application of development approaches in Base of the Pyramid Ventures. Greenleaf Publishing will publish her book, Putting the Poor First: How Base-of-the-Pyramid Ventures Can Learn from Development Approaches, soon. More information is available here.

Categories
Entrepreneurship
Tags
Base of the Pyramid, books, business development