Elements of a BoP strategy
Evaluating BoP initiatives is never an easy task – and, of course, there is always a risk that a project will succeed or fail based on uncontrollable factors. A few years ago as I read C.K Prahalad’s now famous book “The Fortune at the Bottom of the Pyramid” (BoP) the concept of a BoP strategy were pretty obvious although fairly new to many seasoned executives. However, after many projects and countless frequent flier miles later the drivers of successful BoP initiatives described have helped me evaluate many types of BoP models and concepts. Attached to this post is an excel document with BoP initiatives explained by the drivers of BoP strategy listed below. The excel sheet at the bottom of this post was completed in 2008.
There are four main elements of a BoP strategy, which can be broken down into concepts that drive each strategic focus:
1. Price Innovation
- Affordable price
- Packaging strategy (cost/environmental waste reduction)
- New approach (group-based, pooling etc.)
- Creative financing (micro-lending, installment etc.)
2. Product Innovation
- Functionality
- Design (specific to hostile infrastructures)
- Scale of Operations (Scalability)
- New Products / Service
- Modification or Adaptation
3. Localize Value Creation
- Process innovation
- Distribution channels
- Strengthen/ develop local systems
- Dis-aggregate Access & Ownership (ex. Pay-per-use)
4. Sustainable Development
- Defined job descriptions and trainings *
- Education
- Easy-to-use interface
- Partnering
- Advancement opportunity / Incentives *
* Based on my work in developing countries, I have added drivers of a successful BoP strategy
Molding the concepts of Social Business (read: Muhammad Yunus’ book “Building Social Business” with concepts that work at the BoP is something that intrigues me. Creating a type of evaluation framework for investing Social Business aimed at the BoP that goes beyond financial dollars or typical Social Return on Investment approaches.
What if one measured the success of not only Social Business but For-profit business by using the principles of success at the BoP? Would businesses become more efficient? Reduce waste? Create sustainable local value over the long-term?
