Aalto Global Impact organized together with the New Global an event called Co-creating Business Ecosystems in Emerging Markets on 17th of June. The event was hosted by Fortum.

1. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
“Un#l
now,
globaliza#on
has
been
driven
by
the
west
and
imposed
on
the
rest”
The World Turned Upside Down
The Economist, 2010

2. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
What
Has
Changed?
Wealthy>$20,000 800
Emerging
Middle Class
(MoP)
$2.000-20,000 1,700
Base of the
Pyramid (BoP)
(Prahalad & Hart, 2002; Hart & Christensen, 2002;
London & Hart, 2004; Prahalad & Hammond, 2002)
<$2,000 4,500
Saturation of
current markets
Cost barriers;
Environmental
tipping points
New technologies,
products & business
models

3. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014Prahalad and Hart, Strategy + Business, January 2002

4. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Growing
Momentum
in
the
BoP
1998 2002 2004 20092000
Prahalad &
Hart Draft
BoP
LL
“Fortune at
BoP”
WRI
Conference
MI & Cornell
Conference
2013
Hybrid Value
Chains
Growing
Inclusive
Markets
Opportunities for
the Majority
Sustainable
Livelihoods
Pro-Poor
Business
Business Against
Poverty
Social
Business
Social
Entrepreneurship
Base II
Conference
2013
BoP Regional
Meeting
BoP Global
Network Summit
2012
Social
Enterprise Inclusive
Business
Green
Leap

5. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
The
BoP
Global
Network
www.bopglobalnetwork.org

6. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
• Nutrition
• Water
• Sanitation
Observation:
Billions of people with
unmet needs…
BOP =
Untapped
Market
• Energy
• Communications
• Health
Ini>al
Assump>on
<$3,000/yr BoP
(D, E, F +)
~4.5 billion
> $15,000/yr ToP
(A, B)
~800 million
$3,000 - 15,000/yr
MoP
(C, D)
~1.5 billion
Source: Erik Simanis

7. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
• Most
corporate
ini#a#ves
in
the
BoP
have
been
focused
exclusively
on
“business
model
innova#on”:
– Lowering
a
product’s
unit
cost
(e.g.
sachets)
– Reducing
costs
by
outsourcing
produc-on
to
developing
country
partners
– Extending
product
distribu-on
into
slums
and
rural
areas
– Partnerships
with
NGOs
for
“on-­‐the-­‐ground”
capability
Result: Child With a Hammer
“Selling to the Poor”
First
Genera>on
BoP
Strategies

8. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Need
=
Demand
Affordability
=
Purchase
ToP–
“Create
needs
in
exis#ng
markets”
BoP–
“Create
markets
from
exis#ng
needs”
The
Tyranny
of
“Unmet
Needs”

9. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Why
Have
These
Taken
Off?

10. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
The
Unfinished
Symphony
Symphony No. 8 in B Minor, 1822

11. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Cemex:
DIY
Homebuilders

12. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
The
ChotuKool
Godrej and Boyce
“The Category Buster”

13. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Thinking
Like
a
Mountain
The Rifle Shot
“Targeting low cost
products to BoP
customers” Creating Wide and Compelling
Value Propositions

14. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
The
Base
of
the
Pyramid
Protocol:
Toward
Next
Genera>on
BoP
Strategy
2nd
Edi>on
2008
Erik Simanis
Stuart Hart
Duncan Duke
Cornell University
Justin DeKoszmovszky
S. C. Johnson & Son, Inc.
Patrick Donohue
Enterprise for a Sustainable World
Gordon Enk
Partners for Strategic Change
Michael Gordon
University of Michigan
Tatiana Thieme
Cambridge University
www.bop-protocol.org
Co-­‐Crea>on
By
Design

15. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Solae:
Soy
Ecosystem
in
India
• Rooftop Gardens as green gathering space within the community
• Creation of a healthy atmosphere in which to do cooking demos, sell packaged items,
and discuss healthy living
• Serve as a home base for the growers group
• Located at schools, furthering embeddedness within children's live

16. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014

17. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Next
Genera>on
BoP
Strategy
BoP
1.0
• BoP
as
producer/consumer
• Deep
listening
• Reduce
price
points
• Extend
distribu#on
• Deriva#ve
product
technology
• Arm’s
length
rela#onship
via
NGOs
BoP
2.0
•
BoP
as
business
partner
•
Deep
dialogue
•
Expand
imagina#on
•
Marry
capabili#es
• New,
sustainable
technology
•
Direct,
personal
rela#onships
“Structural Innovation” “Embedded Innovation”

18. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
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.”

19. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Ques>ons
How big is the BoP?
Are there different segments?
Do you have to include the poorest?
How big are the returns?
Are market returns realistic?
Do you have to reward investors?
How big is a BoP venture?
Are there different growth objectives?
Do you have to scale up to count?

20. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
More
Ques>ons
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?

21. Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2014
Stuart
L.
Hart
Stuart.Hart@uvm.edu
www.stuartlhart.com
www.e4sw.org
6/25/14
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