Volume 20, Number 2 Article by P D Jose June, 2008
Rethinking the BOP: New Models for the New Millennium — Discussion :
While Base of the Pyramid (BOP) business models, which projected the world’s four billion poor as a viable market, captured the imagination of leading companies, many of the current models are being challenged. They are seen as being unable to meet the real needs of the poor, and privileging large firms, brands and corporations rather than the community. IIMB Management Review invited a panel of practitioner experts from organisations actively involved with the BOP, to speak about how their models were addressing the next-level issues of ecological and social sustainability, of community involvement and co-creation of need-based products and services.
Basing his presentation on the rural BOP in the context of agriculture, Mr S Siva Kumar, Chief Executive, Agribusiness, ITC, said that the ‘market’ is the best solution for raising BOP incomes and that markets created by empowered communities will lead to equity – a view that was echoed by the other panelists. Fragmentation of land holdings, poor physical and institutional infrastructure, dispersion, heterogeneity and lack of access to critical knowledge have led to farmers depending on either the mandi (the village yard) or the intermediary to market their produce, both of which are unsatisfactory. The solution lies in delivering an end to end solution and simultaneously offering freedom of choice, which ITC’s eChoupal model aims at.
Mr Vijay Sharma, Business Head of Hindustan Unilever’s Project Shakti spoke of the Shakti Entrepreneur programme which provides a micro credit facility as well as a micro enterprise opportunity — distribution of the company’s products — under which underprivileged rural women are appointed and trained as entrepreneurs. Shakti Vani creates awareness about health and hygiene while providing a market for the Shakti entrepreneur.
Dr L Ramakrishnan, Regional Environmental Coordinator – Philips Lighting, Asia-Pacific, detailed the efforts of the Sustainable Model in Lighting Everywhere (SMILE) model. With the goal of increasing the productivity of the rural household by providing six to seven hours of extra lighting beyond sunset/before sunrise, the company developed ‘Uday’, a rechargeable mobile lantern, a sturdy, weatherproof product, designed on the basis of rural requirements. Other than economic indicators, the company aims to monitor the social and environmental indicators as well. Affordability of the product, however, is still an issue. Mr Samit Ghosh, the Founder-CEO of Ujjivan, a microfinance institution which was set up as a profit making, non-banking financial institution, on a professional, sustainable and scalable basis, brought out the dilemmas of operating at the BOP.
From the discussion it emerged that if BOP models truly have to address the base of the pyramid, they must provide end to end or integrated solutions. They must identify the real needs and aspirations of the BOP, and co-create models and deliver appropriate products and services along with the community and partner companies. Multi-sector partnerships — within organisations, with the government and with NGOs — are at the core of success at the BOP. For eChoupal it is a combination of all four sectors — public, private, social and academic; for Ujjivan, the Association of Micro Finance Institutions is the way forward for competing organisations to co-operate, share ideas, fight common problems and build their fragile industry. Emerging models were not just about corporate profitability but equity, efficiency, sustainability and social justice. Shakti has chosen areas such as health and education which while being closest to their business are very strong indicators of improving the quality of rural life. Rural education in terms of skill building and tapping the market for agricultural services also have to be built into the emerging models.
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