The Rising Billion

How multinational businesses
can keep up with the new global
consumer
The Rising
Billion

Big Entrepreneurship
The way businesses need to organize and behave has
fundamentally shifted. Across industries, companies,
and organizational functions, we have heard many of the
world’s most innovative companies echo the same challenge:
businesses must urgently embrace a more nimble and
entrepreneurial approach in order to stay competitive.
We call this challenge of how big companies can leverage
scale while staying innovative “big entrepreneurship.”
This report aims to deconstruct some of the complex
challenges around big entrepreneurship and provide
actionable insights for business leaders.
Fahrenheit 212
Fahrenheit 212 is a global innovation strategy and design
firm. We define innovation strategies and develop new
products, services, and experiences that create sustainable,
profitable growth for our clients. We challenge the belief
that innovation is inherently unreliable and have spent the
last decade designing the method, building the model, and
assembling the minds to make innovation a predictable
driver of growth for our clients’ businesses.
www.fahrenheit-212.com | marketing@fahrenheit-212.com
@fahrenheit212 | #bigentrepreneurship
5Big Entrepreneurship

3x
Emergingmarketeconomiesareexpectedto
grow threetimesfasterthandevelopedones
overthenextfewyears.Theseconsumersfrom
Asia,Africa,andSouthAmericaarearrivingin
theglobalmarketplace,enabledbytechnology
andinspiredbyexposuretothebrandsweall
knowsowell.Theyaredrivenbyadesiretolive
thelifestylethey’veseenstreamingthrough
theirTVsetsandsmartphones.
2Big Entrepreneurship The Rising Billion

The emerging middle class is ambitious and
aspirational, and they are compelling businesses that
have traditionally underserved developing markets
to action.
This market has seen a major shift, from aid-givers
pouring money and resources into charity work
to platforms that bring together local expertise,
organizations, and money to deliver home-grown
solutions that are scalable and deliver long-term impact.
Unlike the non-profit model, these enterprises have the
commercial acumen, financial resources, and brand
reach to build and sustain their innovation platforms.
Multinationals are quickly becoming significant players in
the world of social innovation as they come to terms with
the massive opportunity that lies in solving challenges in
developing markets. But, introducing innovations that truly
help those in need while ensuring they’re self-sustaining
requires an approach that looks at the Rising Billion
as customers and their own role as more than Corporate
Social Responsibility or charity. They need to solve for
both commercial and consumer needs, which is the
bedrock of the two-sided approach to innovation.
Disruptive innovation typically happens at the intersection
of constraints and a compelling need. Because
of this, markets at the end of the socio-economic
spectrum are prime for disruption and growth.
As this consumer group strengthens its spending power,
it is also developing products and services that have the
ability to not only disrupt—but replace—how business
happens elsewhere. Leading this imperative are four
major opportunities for business.

02
01Future customers are at stake. The emerging middle class in BRIC
countries is expected to add US $3.3 trillion to their consumer spending
by 2020, and improving infrastructure and technology have lowered
the barriers for these consumers to get access to basic necessities
for survival. Facebook’s investment in world connectivity under the
initiative Internet.org is equal parts virtuous and sensible. Two-thirds
of the world is not connected to the internet, which means that they
don’t have the same access to learn, enjoy, and socialize that the rest
of the developed world has. It also means that until this is solved,
two-thirds of the world will not have access to use Facebook.
Reverse innovation can build advantage in mature markets.
The challenges and constraints of developing markets can provide
solutions and insights that can improve and innovate products
with global appeal. For instance, GE Healthcare built a portable,
ultra-low cost, battery operated, easy-to-use, electrocardiograph
machine built for doctors in India and China that is now disrupting
the global market. Sold in over 90 countries, the machine is 80%
cheaper than similar products in developed markets like the U.S.
“People actually
confuse Facebook
and the internet in
some places.”
Sheryl Sandberg
Chief Operating Officer, Facebook

04
03
Social responsibility impacts global reputation. In addition to building
credibility for companies around their global mission and role in society,
social responsibility is important for attracting the next generation
of innovators into a company’s workforce. Particularly with younger
generations, 62% of Millennials want to work for a company that makes
a positive impact on the world. Half of Millennials would prefer working at
a company that has a mission that they believe in over a higher salary.
Big problems have big markets. There are untapped and unsolved
markets for global challenges. Annually, US $54 billion is spent to provide
basic education in 46 low income countries globally. Even with the
success of M-Pesa, over 2.5 billion potential customers worldwide don’t
use or have easy access to financial services or banks. Launched by
Vodafone, M-Pesa is the most successful mobile phone based financial
service in the developing world, and as of 2012, 17 million M-Pesa
accounts had been registered in Kenya alone. In addition to giving millions
of people access to financial services, it has also contributed to the
reduction of crime in a society that has otherwise been cash-based.

As many multinationals have learned the hard way by not
following a two-sided innovation approach, it does not simply
work to take a successful innovation from a developed
market and drop it into an emerging one. From education
and healthcare to hygiene and clean water, developing
economies represent multi-billion dollar markets and
areas for huge impact. These emerging consumers are as
diverse as they are large. Yet while they vary geographically,
culturally, in religion, and in language, there are some shared
fundamental environmental and emotional needs.
Driving
Forces

This is an
aspirational group
Driving Forces
They do not want cheap things; they desire the affordable
version of the essentials they have seen other consumers
access. When Unilever entered developing markets, they
met this need by recognizing that the typical consumer could
not afford to buy the full-size version of a product, but they
were willing to buy single-use sachets of popular products at
much cheaper prices. This approach later proved successful
for declining markets as well, such as Greece and Spain.

Family
matters
Driving Forces
Around the world, multi-generational households
are still the norm. Every purchase made attributes
to household wealth accumulation, so those decisions
are made collectively.

Every item is used
until it breaks
Driving Forces
To avoid wastage and often because of the size of
the investment, people will use products over and
over until it can no longer function. Ink cartridges
will be locally refilled and disposables such as plastic
bottles and diapers are constantly reused.

Women’s roles
are evolving
Driving Forces
While the role of women in these markets has evolved, it
remains complicated; often despite being primary breadwinners
they aren’t heads of the household. While education and
economic growth are all contributors to change, new models like
Coca-Cola’s Splash Bar are empowering women to sell products
that were previously out of reach. By providing a kiosk where
women can sell various serving sizes of Coca-Cola, Splash
Bar enables women to sell products where many locals may
not have been able to afford an entire bottle.
* In full disclosure, Coca-Cola is a client of Fahrenheit 212

“BlogHer
The [Splash Bar] kiosk becomes a kind of community center
where locals gather, and the woman is not far from her home.
It’s this baby-step approach that stays with me most:
And in a country with long-held gender roles and expectations,
this is perhaps a smart strategy: Move forward by evolution,
not revolution.
All of these programs are nudging progress
ahead at a pace the communities can accept.

Note: US data from Pew Research Center Surveys
Source: Spring 2014 Global Attitudes survey. Q66 PEW RESEARCH CENTER
Cell phone penetration in Africa (%)
100%
50%
0%
Cell phone
penetration
2002 2007 2014
Year
United States 89
South Africa 89
Ghana 83
Kenya 82
Tanzania 73
Uganda 65
64
33
10
10
9
8
The speed of change
is more rapid
Driving Forces
The speed of technological change is enabling consumers
to leapfrog from technologies and systems that have
been the standard of operation for the developed world.
Because there are few existing infrastructure constraints,
the speed of adoption and change in emerging markets
can be much more rapid than in developed ones. For
instance, in Africa, landlines never hit critical mass,
enabling consumers to move straight to mobile phones.

It’s not just low income,
it’s also volatile income
Driving Forces
Because this consumer is unlikely to be earning a steady
paycheck, business models cannot just account for affordability;
they have to expect inconsistency in payment and purchase.
With increased wealth volatility in developed markets, this
may be a new normal for businesses to have to address
globally. Building materials company, Cemex, addressed this
by providing products on credit to help consumers finish
building their houses and avoid the waste of raw material.

Customer journey planning
must be end-to-end
Driving Forces
Businesses will have to think beyond the sale and find ways to
integrate with the behaviors and lifestyle of consumers. From
training and education to reuse and next purchase, brands will
need to help consumers understand the benefits and how to get
the most out of the product or service. In India, e-commerce
has taken off because of cash-on-delivery models, which
enable avoiding the need for consumers to pay in advance
via credit card, which has low penetration and little trust.

It’s clear that the challenges emerging markets face are
not just for non-profits and aid agencies to solve. In fact,
businesses are very well positioned to address these
challenges in a manner that will have bigger and more
sustainable consumer impact while also improving their
bottom line. However, to ensure they do both, companies
must take a two-sided innovation approach. Drawing from an
understanding for consumer and commercial requirements,
businesses entering this market must do the following.
Taking
Action

Tap into aspiration01 Make products more affordable while still
providing full value. As the 3rd largest
smartphone distributor, Xiaomi has
quickly captured the Asian market with
smartphones that compete with the iPhone,
but at around one third of the price of one.
Be prepared for customers
to hack your products
03
02
04
Build for a lifetime
Engage the entire family
Don’t assume one
size-fits all
05

Engage the entire family02
01 Big buying decisions affect everyone, so take into account how the
product or service will impact the family, not just the individual.
In Argentina, 77% of people over the age of 65 live with
family. In India, while this number is declining in Urban areas,
60% of households are multigenerational in rural areas.
Tap into aspiration
03
04
Don’t assume one
size-fits all
05

03
02
Tap into aspiration01 Commit to developing products and services that are meant to last and
withstand multiple uses, because it will be used and reused anyway.
BOP consumers in Latin America are careful in their use of diapers.
They use one or two changes per day compared to the five or six
changes per day common among the top of the pyramid consumers.
Because they can afford only one or two changes, they expect
a higher level of absorbency in the diapers and an improved
construction of the diaper that will accommodate additional load.”
Excerpt from Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits
by C.K. Prahalad
04
Don’t assume one
size-fits all
05
“

03
02
04
Tap into aspiration01 Expect that consumers will customize products to fit their
unique needs. Instead of locking things down, find ways to create
mechanisms for enabling customization or supporting it.
In India, car batteries are often converted into backup power
sources, giving rise to companies such as Su-Kam, which develop
power backup solutions and are now moving into solar.
Don’t assume one
size-fits all
05

Don’t assume one
size-fits all
03
02
04
05
01 Take the time to understand and localize to each culture and their
unique needs. McDonald’s customizes menus to meet local preferences,
serving a lamb burger in India, and using rice instead of bread buns
in Asia. Because of how well McDonald’s localizes, The Economist
has created the Big Mac Index to gauge currency exchange rates.
Tap into aspiration

01 02
05
03
Are we designing our products
and services with a full
understanding of how they will
be used in context?
Do we truly understand the
needs and desires of the
market we are entering?
Are we tapping into the
aspirational nature of this
demographic?
Have we localized to the unique
needs of each culture and
market?
04
Do we understand the broader
ecosystem we exist in and how
we fit in it?
Key considerations
for big companies

The Paradox of Scale
Incubating Innovation
Winning the Next Generation
of Innovators
The Rising Billion
The Chief Innovation Officer,
Redefined
Big Entrepreneurship
01
02
03
04
05
Sid is an Engagement Manager with Fahrenheit 212’s
Commercial Strategy team. Originally from India,
Sid brings with him a passion for building businesses
and developing breakthrough innovations that solve
big problems. He has worked with both Fortune 500
companies and entrepreneurs to develop and launch
innovation programs.
Sid’s career started at Citi in London on their Mergers
Acquisitions team. He also launched his own brand
of healthy yogurt smoothies in the UK, modeled
after popular Indian lassi drinks, which were sold
in Whole Foods Market as well as Waitrose and
Ocado. Prior to joining Fahrenheit 212, Sid was India
Program Director at STIR Education, an incubator of
grassroots micro-innovators in education.
As a Senior Strategist on Fahrenheit 212’s
New Business team, Eric works to pair Fahrenheit’s
innovation capabilities with companies seeking
sustainable, profitable growth. Eric was a founding
member of Ruder Finn’s RF Radius, the agency’s
integrated communications and marketing arm,
which drove a four-fold increase in practice revenue
and headcount in just twelve months. Eric has led
engagements with Fortune 500 companies across
financial services, food beverage, healthcare, and
technology, to craft and execute global campaigns
that delivered tangible results.
About the authors
Siddharth Singh
Engagement Manager
ssingh@fahrenheit-212.com
Eric Turkington
Senior New Business Strategist
eturkington@fahrenheit-212.com

Fahrenheit 212 defines innovation strategies and develops
new products, services, and experiences that create sustainable,
profitable growth for our clients.
We challenge the belief that innovation is inherently unreliable
and have spent the last decade designing the method, building
the model, and assembling the minds to make innovation a
predictable driver of growth for our clients’ businesses.
www.fahrenheit-212.com
marketing@fahrenheit-212.com
@fahrenheit212
#bigentrepreneurship
New York
665 Broadway, New York, NY 10012
+1 (646) 654 1212
London
31 Great Sutton St, London EC1V 0NA
+44 0 20 3567 0820
Copyright © 2015 Fahrenheit 212.

Flickr, “India - Janmashtami celebrations in Mumbai” https://www.flickr.com/photos/sandeepachetan/14972177962/
ICEF Monitor, “The growing role of emerging markets in shaping global demand” (2015) http://monitor.icef.
com/2014/03/the-role-of-emerging-markets-in-shaping-global-demand/
Brookings, “Seven Facts about Global Education Financing” (2015) http://www.brookings.edu/blogs/education-plus-
development/posts/2014/02/20-global-education-financing-steer
Flickr, “India - Daughter is a big help at Parkachik, Kargil” https://www.flickr.com/photos/
sandeepachetan/9692219718/
Flickr, “5D3_5024” https://www.flickr.com/photos/kagen33/10719603576/in/photostream/
Flickr, “India - Colours of India - Popularity of single-serving packaging” https://www.flickr.com/photos/
mckaysavage/2508068648/in/photostream/
Flickr, “Family from Anmu village en route Phuktal monastery, Zanskar, India” https://www.flickr.com/photos/
sandeepachetan/15146861455/in/album-72157633380473233/
Facebook, “A Liter of Light” https://www.facebook.com/aliteroflight/photos/pb.181127878593329.-
2207520000.1447820832./962034357169340/?type=3theater
Pew Research Center, “Cell Phones in Africa: Communication Lifeline” (2015) http://www.pewglobal.org/2015/04/15/
cell-phones-in-africa-communication-lifeline/
Flickr, “SRG” https://www.flickr.com/photos/ravindrasingh/8447398647/
Flickr, “Spatial Maximisation III” https://www.flickr.com/photos/meanestindian/4230164734/in/
album-72157625534710020/
Flickr, “Fish market in Mumbai, India” https://www.flickr.com/photos/sandeepachetan/16314544264/
The Wall Street Journal Digits, “Facebook Touts Its ‘Economic Impact’ but Economists Question Numbers” (2015)
http://blogs.wsj.com/digits/2015/01/20/facebook-touts-its-economic-impact-but-economists-question-numbers/
Xiaomi, Mi Note, http://xiaomi-mi.com/company/about/
ILC Global Alliance Report, “Global Perspectives on Multigenerational Households and Intergenerational Relations”
(2012) http://www.cello-ilc.cz/wp-content/uploads/2012/07/Global_Alliance_Intergenerational_Relations_
March_2012.pdf
FT Press, “Engaging the Bottom of the Pyramid” (2009) http://www.ftpress.com/articles/article.aspx?p=1396559
The Economist, “The Big Mac index” (2015) http://www.economist.com/content/big-mac-index
References

The Rising Billion

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