Global BOP LL summit in Brazil.
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Global BOP LL summit in Brazil.

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Global BOP LL summit in Brazil. Global BOP LL summit in Brazil. Presentation Transcript

  • BoP 2.0 Pushing the Boundaries Stuart L. Hart S.C. Johnson Chair in Sustainable Global Enterprise, Cornell University Adjunct Professor, University of Vermont President, Enterprise for a Sustainable World Founder, Emergent Institute, Bangalore India Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • “Until now, globalization has been driven by the west and imposed on the rest” The World Turned Upside Down The Economist, 2010 Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • What Has Changed? Saturation of current markets >$20,000 $2.000-20,000 <$2,000 Wealthy Emerging Middle Class (MoP) 800 Cost barriers; Environmental tipping points 1,700 Base of the Pyramid (BoP) New technologies, products & business models 4,500 (Prahalad & Hart, 2002; Hart & Christensen, 2002; London & Hart, 2004; Prahalad & Hammond, 2002) Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Do the Math I=PxAxT Human Impact Population 7.5 1.5 Affluence Technology (Consumption) 5 1 Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Moving Technology to the Denominator I=PxA T T= 10x? 20x? 40x? Biggest Business Opportunity in the History of the World Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Two Levels of Sustainability Strategies for Greening Strategies for Beyond Greening Focus on Existing: Focus on New: products processes suppliers customers shareholders technologies markets partners needs stakeholders Characteristics: Characteristics: Incremental Continuous Improvement Rationalizes Industry Discontinuous Creative Destruction Restructures Industry Stuart L. Hart (1997) Beyond Greening: Strategies for a Sustainable World Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Prahalad and Hart, Strategy + Business, January 2002 Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Growing Momentum in the BoP Pro-Poor Business Opportunities for the Majority Social Enterprise Social Entrepreneurship 1998 Prahalad & Hart Draft Hybrid Value Chains Social Business Business Against Poverty Inclusive Business Growing Inclusive Markets Sustainable Livelihoods Green Leap 2000 2002 2004 2009 2012 2013 2013 BoP LL “Fortune at BoP” WRI Conference MI & Cornell Conference II Regional Meeting Base II Conference BoP Global Network Summit Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • First Generation BoP Strategies • Most corporate initiatives in the BoP have been focused exclusively on “business model innovation”: – Lowering a product’s unit cost (e.g. sachets) – Reducing costs by outsourcing production to developing country partners – Extending product distribution into slums and rural areas – Partnerships with NGOs for “on-the-ground” capability Result: Child With a Hammer “Selling to the Poor” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • What Have We Learned? The Tyranny of the The Tyranny of the The Tyranny of the “Green “Unmet Needs” Mindset “BoP Product” Mindset is Expensive” Mindset “Write the Unfinished Symphony” “Think Like a Mountain” “Take the Green Leap” Co-create a fortune WITH the BoP Build a wide value proposition Sustainability from the bottom up Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • The Tyranny of “Unmet Needs” Need = Demand Affordability = Purchase ToP– “Create needs in existing markets” BoP– “Create markets from existing needs” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Why Have These Taken Off? Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • The Unfinished Symphony Symphony No. 8 in B Minor, 1822 Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • The ChotuKool Godrej and Boyce “The Category Buster” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Co-Creation By Design Erik Simanis Stuart Hart Duncan Duke The Base of the Pyramid Protocol: Toward Next Generation BoP Strategy Cornell University Justin DeKoszmovszky S. C. Johnson & Son, Inc. Patrick Donohue Enterprise for a Sustainable World Gordon Enk Partners for Strategic Change 2nd Edition 2008 Michael Gordon University of Michigan Tatiana Thieme Cambridge University www.bop-protocol.org Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • During the last decade, first generation “Base of the Pyramid” (BoP) ventures focused primarily on “finding a fortune at the BoP” by selling products to the world’s four billion poorest people. Many of these initiatives did not scale, and some failed outright. But through that experience, crucial lessons have been learned. Innovators are now succeeding thanks to a more sophisticated and nuanced approach based on “creating a fortune with the BoP.” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Thinking Like a Mountain The Rifle Shot “Targeting low cost products to BoP customers” Creating Wide and Compelling Value Propositions Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Creating Mutual Value Economic Income Capability Purchasing Power Sustainable Development Food Water Nature’s Services Ties to the Land Environmental Roots Social Ties Community Meaning Social/Cultural Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Through the Funnel “Clean Tech” Pollution Depletion Degradation Inequity Poverty Population “Base of the Pyramid” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Two Different Worlds Clean Technology Base of the Pyramid •Technology Focused •Environment as driver •Base of the Pyramid? •Business Model Focused •Poverty as driver •Environment? Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Taking the Green Leap Clean Technology The Green Leap Base of the Pyramid Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Driving Innovation from the Base of the Pyramid + = Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Vacuum Tube Solar Thermal Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Next Generation BoP Strategy BoP 1.0 BoP 2.0 • BoP as producer/consumer • BoP as business partner • Deep listening • Deep dialogue • Reduce price points • Expand imagination • Extend distribution • Marry capabilities • Derivative product technology • Arm’s length relationship via NGOs •New, sustainable technology • Direct, personal relationships “Structural Innovation” “Embedded Innovation” Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • www.emergentinstitute.net Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Next Generation Entrepreneurship Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Corporate Intrapreneurship Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • The Organizational Challenge Strategy •BoP Leadership Team •Business model R&D Structure Systems •Separate entity •Report to senior executive •Longer time frame •Learning metrics Processes People •Leverage existing capabilities •Team with external partners •Attract internal entrepreneurs •Protect from career risk Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • “The next 20 years will not look anything like the last 20…” Chris Martenson (2010) The Crash Course Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • The BoP Global Network Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Size Matters How big are the returns? Are market returns realistic? Do you have to reward investors? How big is the BoP? Are there different segments? Do you have to include the poorest? How big is a BoP venture? Are there different growth objectives? Do you have to scale up to count? Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Contested Terrain Intra vs. Entre Are BoP entrepreneurs preferred? Can corporations create the white space? Urban vs. Rural How do villages and slums differ? Do you have to include both? Social vs. Environmental Is poverty reduction enough? What about environment when it comes to impact? Copyright Stuart L. HartHart 2011 Copyright Stuart L. 2013
  • Stuart L. Hart slh55@cornell.edu www.stuartlhart.com www.e4sw.org 11/15/2013 Copyright Stuart L. Hart 2013 33 Copyright Stuart L. Hart 2011