(Readers may want to read yesterday’s part one post, which provides a brief description of the concept of the base of the pyramid, and introduces today’s post.)
While articles extolling the virtues of expanding markets to include, and creating brand-new ventures solely for the base of the pyramid proliferated in the early part of this decade, success utilizing this concept was fleeting, and challenging to sustain. In a recent article, Eric Simanis and Stuart Hall from Cornell, argue that the fundamental problem with base of the pyramid 1.0 strategies is that outside companies sought to “target” developing communities with affordable products, rather than questioning whether or not these were products that were appropriate or would be demanded by the community in question.
As can be imagined, base of the pyramid strategies were characterized as cynical attempts to sell to the poor, attempting to create brand new consumer markets rather than as it was originally envisioned, as a new, alternative to the Washington Consensus’s “trickle-down” development model.
So what does base of the pyramid 2.0 offer us? 2.0 envisions companies using base of the pyramid working in partnership with base of the pyramid communities rather than viewing them as consumers (i.e. working in partnership to understand their needs and demands rather than designing what they think would be useful); working with the communities rather than for the communities, and finally, thinking of the base of the pyramid as a business co-venture rather than simply “selling to the poor”.
In sum, building a BoP business that creates enduring community value, while establishing a foundation for long-term corporate growth and innovation, requires an entirely new strategic process and corporate capability.
The Base of the Pyramid Protocol: Toward Next Generation BoP Strategy by Erik Simanis and Stuart Hart, Cornell University
The new version of the protocol envisions mutual value, and co-creation. In other words, that every stage of the process creates value for both the business and the consume, that the company and community work in partnership, enabling culturally appropriate, and ideally, environmentally sustainable initiatives that are created by the two groups in partnership.
To step further, proponents of this base of the pyramid 2.0 protocol envision:
we believe it is possible to shatter the presumed trade-off between being locally embedded and large in size, and between meeting the needs of the Base of the Pyramid and overwhelming
the planet’s ecological systems. Indeed, we believe the interconnected challenges of
addressing poverty and human development and restoring global ecological systems
present multinational corporations (MNCs) with a unique opportunity — a “license to
imagine,” to re-conceptualize the corporation in a manner that can sustainably serve the diverse needs and values of people across the globe.
The Base of the Pyramid Protocol: Toward Next Generation BoP Strategy by Erik Simanis and Stuart Hart, Cornell University, page 5.
In future posts, I will expand on this protocol, and review their methodology and implementation strategy.
Photo Credit: GO Media Archives