Rob Katz

Will 2008 Be The Year of ’Next Billion’ or ’Bottom Billion’?

Ban Ki-MoonWhat’s in a name, a brand, a catchphrase? In some sense, everything. But a brand/name/phrase is only as good as the content behind it. So when U.N. Secretary General Ban Ki-Moon recently declared 2008 to be “the year of the ’bottom billion’,” I paid attention – after all, Ban’s declaration has the force of the U.N. behind it.

Upon hearing this statement, my first thought was actually a question: if 2008 is the year of the ’bottom billion’, does that preclude 2008 from being the year of the ’next billion’ as well?I thought a lot about this, and came to believe that ’bottom billion’ and ’next billion’ need not be mutually exclusive. My conclusion is based partly on data: if there are 4 billion in the base of the pyramid, then there’s room for both a bottom AND a next billion. (I cringed when thinking about this – these data are quite daunting when thought about in this way.)

Beyond numbers, however, there is a case to be made that 2008 should be the year of both the bottom and the next billion. In fact, as we argued in The Next 4 Billion: Market Size and Business Strategy at the Base of the Pyramid, these two elements of the BoP couldn’t be more different – and they merit different approaches.

For the next billion, it’s my opinion that 2008 will bring a wealth of new business models, strategies, funds and ideas to bear on taking these folks and lifting them into the middle class. (When I speak of the next billion, I am thinking of those BoP individuals whose incomes are between $2000 and $3000 PPP per year.) Intel, Microsoft, Vodafone, Boston Consulting and countless others have validated this by branding their emerging markets plays as reaching out to this very ’next billion.’

(Of course, there is a risk that private sector players have badly misunderstood the size and scope of the BoP, and when they talk about it, they actually mean the middle class. Check out my post on the mis-use of buzzwords and TutorVista from late last week for a case in point: What’s in a Buzzword: Use and Misuse of Bottom of the Pyramid.)

Meanwhile, the bottom billion will be the purview of development agencies, NGOs and a select few businesses. The private sector ’s growing interest in the next billion will allow the development community to focus its efforts away from such low-hanging fruit and instead on those whose needs cannot be met by the market. As we suggested in The Next 4 Billion:

A successful market-based approach would bring significant new private sector resources into play, allowing development assistance to be more sharply targeted to the segments and sectors for which no viable market solutions can presently be found. Market-based approaches and smart development policies are synergistic strategies. (The Next 4 Billion, page 20.)

In short, 2008 can – and should – be the year of BOTH the next billion and the bottom billion: the next billion as the growing focus of the private sector, and the bottom billion as the increasingly exclusive focus of the development community. Here’s hoping that such an idea might be put into action in the coming 12 months…

(Hat tip: Dan Tunstall)