Upload
aaltoglobalimpact
View
248
Download
3
Embed Size (px)
Citation preview
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
BoP 2.0Pushing the Boundaries
Stuart L. HartS.C. Johnson Chair in Sustainable Global Enterprise,
Cornell UniversityAdjunct Professor, University of Vermont
President, Enterprise for a Sustainable WorldFounder, Emergent Institute, Bangalore India
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 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. Hart 2011Copyright Stuart L. Hart 2013
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
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
I = P x A x THuman
ImpactPopulation Affluence
(Consumption)Technology
1.5 5 17.5
Do the Math
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Moving Technology to the Denominator
I = P x AT
T= 10x? 20x? 40x?Biggest Business Opportunity in the History of the World
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Two Levels of Sustainability
Focus on Existing:
products
processes
suppliers
customers
shareholders
Characteristics:
Incremental
Continuous Improvement
Rationalizes Industry
Strategies for
Greening
Focus on New:
technologies
markets
partners
needs
stakeholders
Characteristics:
Discontinuous
Creative Destruction
Restructures Industry
Strategies for
Beyond Greening
Stuart L. Hart (1997) Beyond Greening: Strategies for a Sustainable World
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013 Prahalad and Hart, Strategy + Business, January 2002
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Growing Momentumin the BoP
1998 2002 2004 20092000
Prahalad &
Hart Draft
BoP
LL
“Fortune at
BoP”
WRI
ConferenceMI & Cornell
Conference II
2013
Hybrid Value
Chains
Growing
Inclusive
Markets
Opportunities for
the Majority
Sustainable
Livelihoods
Pro-Poor
Business
Business Against
PovertySocial
Business
Social
Entrepreneurship
Base II
Conference
2013
Regional
MeetingBoP Global
Network Summit
2012
Social
Enterprise Inclusive
Business
Green
Leap
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
• 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”
First GenerationBoP Strategies
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
What Have We Learned?
The Tyranny of the
“BoP Product” Mindset
The Tyranny of the
“Unmet Needs” Mindset
The Tyranny of the “Green
is Expensive” Mindset
“Write the Unfinished
Symphony”Co-create a fortune WITH the BoP
“Think Like a
Mountain”Build a wide value proposition
“Take the
Green Leap”Sustainability from the bottom up
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Need = DemandAffordability = Purchase
ToP– “Create needs in existing markets”
BoP– “Create markets from existing needs”
The Tyranny of“Unmet Needs”
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Why Have TheseTaken Off?
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
The Unfinished Symphony
Symphony No. 8 in B Minor, 1822
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
The ChotuKool
Godrej and Boyce
“The Category Buster”
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
The Base of the Pyramid Protocol:Toward Next Generation BoP Strategy
2nd Edition2008
Erik Simanis
Stuart Hart
Duncan DukeCornell University
Justin DeKoszmovszkyS. C. Johnson & Son, Inc.
Patrick DonohueEnterprise for a Sustainable World
Gordon EnkPartners for Strategic Change
Michael GordonUniversity of Michigan
Tatiana ThiemeCambridge University
www.bop-protocol.org
Co-Creation By Design
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 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. Hart 2011Copyright Stuart L. Hart 2013
Thinking Like a Mountain
The Rifle Shot“Targeting low cost
products to BoP
customers” Creating Wide and Compelling
Value Propositions
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Creating Mutual Value
Income
Capability
Purchasing Power
Food
Water
Nature’s Services
Ties to the Land
Roots
Social Ties
Community
Meaning
Sustainable
Development
Social/Cultural
Economic
Environmental
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Through the Funnel
Population
Poverty
Inequity
Pollution
Depletion
Degradation
“Clean Tech”
“Base of the
Pyramid”
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Clean Technology Base of the Pyramid
•Technology Focused
•Environment as driver
•Base of the Pyramid?
•Business Model Focused
•Poverty as driver
•Environment?
Two Different Worlds
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Taking the Green Leap
Clean
TechnologyBase of the
Pyramid
The
Green
Leap
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Driving Innovation from theBase of the Pyramid
=+
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Vacuum TubeSolar Thermal
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Next GenerationBoP Strategy
BoP 1.0• BoP as producer/consumer
• Deep listening
• Reduce price points
• Extend distribution
• Derivative product technology
• Arm’s length relationship via NGOs
BoP 2.0• BoP as business partner
• Deep dialogue
• Expand imagination
• Marry capabilities
•New, sustainable technology
• Direct, personal relationships
“Structural Innovation” “Embedded Innovation”
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
www.emergentinstitute.net
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Next GenerationEntrepreneurship
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
CorporateIntrapreneurship
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
The OrganizationalChallenge
Strategy•BoP Leadership Team
•Business model R&D
Structure•Separate entity
•Report to senior executive
Systems•Longer time frame
•Learning metrics
Processes•Leverage existing capabilities
•Team with external partners
People•Attract internal entrepreneurs
•Protect from career risk
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
“The next 20 years will not look anything like the last 20…”
Chris Martenson (2010)
The Crash Course
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
The BoP Global Network
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 2013
Size Matters
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?
Copyright Stuart L. Hart 2011Copyright Stuart L. Hart 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. Hart 2011Copyright Stuart L. Hart 2013
Stuart L. [email protected]
www.stuartlhart.com www.e4sw.org
11/15/2013 33