Jun. 25, 2008
Cornell creates life-changing business opportunities with the world's poorest people
When most people hear about "helping the world's poor," they think of international aid or government assistance programs. But at the Johnson School's Center for Sustainable Global Enterprise (CSGE), poverty alleviation is about business innovation that springs from close partnerships between the world's largest corporations and poor communities. It is the kind of innovation that has managers and executives working face-to-face, hand-in-hand with the slum dwellers and villagers that comprise the so-called "Base of the Pyramid" (BoP) -- the 4 billion people with per capita incomes below $1,500.
This unique approach to business and development has been the focus of a five-year research project by Stuart Hart, the Samuel C. Johnson Professor of Sustainable Global Enterprise at the Johnson School, and Erik Simanis, a senior researcher with CSGE. "Traditional corporate efforts to sell products to low-income communities have treated the BoP as simply another mass consumer market and resulted in business models that create little long-term value for either the corporation or the community," Hart says.
"The more we delved deeper into a wide variety of BoP business cases, the more it became evident that linking corporate strategy and poverty alleviation called for a completely different kind of business innovation process and a whole new set of management skills that are more commonly associated with social work and anthropology," Simanis adds.
Creating a unique business innovation process
In 2003, with support from the Johnson Foundation and DuPont, SC Johnson, Hewlett-Packard and Tetra Pak, Hart and Simanis, with colleagues from the University of Michigan and the World Resources Institute, launched the Base of the Pyramid Protocol Project to create this new innovative process. The initial framework was developed through a four-day workshop that brought together an eclectic mix of social entrepreneurs, leading nongovernmental organizations, academics from international development, social work and economic anthropology, and a dozen managers from the project's four corporate sponsors. CSGE then put theory into practice by partnering with SC Johnson in 2005 to implement the BoP Protocol in a Nairobi slum and Kenyan village. Less than a year later, the Solae Co., a DuPont subsidiary, partnered with CSGE to launch a BoP Protocol initiative in India. Learnings over the past three years have formed the basis for a just-released second edition of the BoP Protocol.
Simanis, who has served as project manager and field leader for both initiatives, describes the BoP Protocol as an "embedded innovation strategy" that brings a corporation together with a BoP community to conceive, launch and evolve a new business that serves that very community. "Co-creating the business with the community results in a kind of interdependence and mutual commitment that leads to a far more expansive and enduring base of value for both the community and the company," says Simanis.
The BoP Protocol takes about two years to complete. Phase I begins with a company immersion in the community using home stays to build rapport and trust and culminates with the co-creation of a business concept together with community partners. Phase II begins formalizing a new business organization and creates an initial product/service offering through action learning. In Phase III, the partners use small-scale tests to evolve the complete business model and to build local management capacity. The final output of the BoP Protocol process is a business embedded in the social fabric of the community, and a corporate platform for replicating the new business in other geographies.
The BoP Protocol in Action
In 2006, for example, the Solae Co. together with CSGE launched a BoP Protocol project in India. Solae partnered with women from a Hyderabad slum and a rural village three hours outside of the city. Over a period of three months, they co-created the idea for a new business that would provide fresh, prepared foods and teach housewives in the community how to prepare tasty, balanced meals from traditional dishes supplemented with Solae's soy products. In the village, the business concept featured organic ingredients from local sources; in the slum, the plan was to grow vegetables on a network of public rooftop gardens, thereby meeting an expressed need for local green spaces. Following extensive action learning that included field visits to food markets and producers across the value chain, as well as hosting community cooking expos, an initial business prototype was put into action in 2007. The initiatives are now in Phase III. Two full-time Solae employees are based in each site and work closely with more than 20 women from each community. "We feel that both businesses will be self-sustaining within one year," reports Simanis.
New BoP Protocol projects this year include a venture by The Water Initiative (founded by Kevin McGovern '70) in Mexico dealing with potable water, and an effort by Ascension Health in the area of health care for poor communities in the United States.
"Our biggest challenge," says Hart, "is simply keeping up with demand. We're trying to address the gap through a BoP Protocol Leadership Training course, but it takes hands-on practice to really become effective." Meanwhile, Simanis, Hart and colleagues continue to update the BoP Protocol and are developing a "field guide" that outlines specific techniques from the various project sites.
For more information, visit http://www.johnson.cornell.edu/sge/.
Becca Bowes is a writer for Entrepreneurship@Cornell. This article was abridged from Cornell's eship magazine.