FINANCING INNOVATIONS FOR THE BOTTOM OF THE PYRAMID MARKET A.S.Rao, Adviser, DSIR, GOI [email_address]

Contents UN millennium goals Characteristics of innovations for millennium goals BOP market Characteristics of innovations for BOP market TePP program of Government of India Financing innovations for BOP- challenges and opportunities

UN millennium goals

Characteristics of innovations for millennium goals

BOP market

Characteristics of innovations for BOP market

TePP program of Government of India

Financing innovations for BOP- challenges and opportunities

UN millennium goals The eight Millennium Development Goals (MDGs) – which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 – form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions. They have galvanized unprecedented efforts to meet the needs of the world’s poorest.

The eight Millennium Development Goals (MDGs) – which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 – form a blueprint agreed to by all the world’s countries and all the world’s leading development institutions.

They have galvanized unprecedented efforts to meet the needs of the world’s poorest.

Characteristics of innovations for millennium goals High diffusion potential. Diffusion is the adoption of new products or services overtime by consumers within social systems as encouraged by marketing activities. Speed of diffusion is critical parameter.

High diffusion potential.

Diffusion is the adoption of new products or services overtime by consumers within social systems as encouraged by marketing activities.

Speed of diffusion is critical parameter.

BOP market Four billion people form the base of the economic pyramid (BOP) -- those with annual incomes below $3,000 (in local purchasing power). The BOP market in Asia (including the Middle East) is by far the largest: 2.86 billion people in 19 surveyed countries, with an aggregate income of $3.47 trillion. The African BOP includes 486 million people in 22 surveyed counties -- 95 percent of the population in those countries.

Four billion people form the base of the economic pyramid (BOP) -- those with annual incomes below $3,000 (in local purchasing power).

The BOP market in Asia (including the Middle East) is by far the largest: 2.86 billion people in 19 surveyed countries, with an aggregate income of $3.47 trillion.

The African BOP includes 486 million people in 22 surveyed counties -- 95 percent of the population in those countries.

Characteristics of innovations for BOP market Prahalad outlined 12 principles of innovation for the BOP markets: Create a new –price performance envelope . Creatively blend existing technologies with the new technologies. Solutions developed must be scalable and transferable across countries. Use minimum resources. Product development based on functionality and not just form. Process innovations to address logistics constraints

Prahalad outlined 12 principles of innovation for the BOP markets:

Create a new –price performance envelope .

Creatively blend existing technologies with the new technologies.

Solutions developed must be scalable and transferable across countries.

Use minimum resources.

Product development based on functionality and not just form.

Process innovations to address logistics constraints

TePP program of Government of India Markets under invest in developing innovations for the BOP markets as the market size and penetration is unattractive. Private investor needs to appropriate knowledge to make it pay, but government is more interested in diffusion of knowledge. TePP program of GOI (Government of India) supports independent innovators at Ideation stage to prove their concepts as the first prototypes.

Markets under invest in developing innovations for the BOP markets as the market size and penetration is unattractive.

Private investor needs to appropriate knowledge to make it pay, but government is more interested in diffusion of knowledge.

TePP program of GOI (Government of India) supports independent innovators at Ideation stage to prove their concepts as the first prototypes.

TePP Innovation Funnel 2351 887 1 st level Screening TePP Screening Committee 196 Creativity Phase Successfully completed Appropriation & Scale-up limitation Commercialisation of Innovation 77 Diffusion by Imitation Innovation Phase Diffusion Phase 6500 Ideas

Creativity Phase

Financing innovations for BOP- challenges and opportunities Opportunity tool to use S&T to meet socio – economic goals of nation. Challenge to access ideas on large scale and screen at least transaction cost. TePP as a orchestrated network

Opportunity

tool to use S&T to meet socio – economic goals of nation.

Challenge

to access ideas on large scale and

screen at least transaction cost.

TePP as a orchestrated network

TePP orchestrated Network Access through 20 outreach centres. Mentoring by `Technology angels’. Separate `innovation incubation’ and `enterprise incubation’ phases. Separate tracks for `open source innovations’, `technology transfer innovations’ and `start-up innovations’

Access through 20 outreach centres.

Mentoring by `Technology angels’.

Separate `innovation incubation’ and `enterprise incubation’ phases.

Separate tracks for `open source innovations’, `technology transfer innovations’ and `start-up innovations’

Summery Innovations for BOP market require a distinct sub-national innovation system with primary emphasis on creatively altering `price-performance’ envelope. The large body of independent innovators can make a significant contribution in developing and marketing these solutions. A network mode of operation can keep the transaction costs lower while providing wide access.

Innovations for BOP market require a distinct sub-national innovation system with primary emphasis on creatively altering `price-performance’ envelope.

The large body of independent innovators can make a significant contribution in developing and marketing these solutions.

A network mode of operation can keep the transaction costs lower while providing wide access.

Thank You