This article first appeared on Socialinnovationeurope.eu under the title “Inclusive Business: Innovation for all” and was cross-posted & edited with permission.
Over 4 billion people worldwide lack access to products and services necessary to meet their basic needs –food, housing, safety, health, comfort, culture… They constitute the population commonly referred to as “the poor”. In the E.U. alone, this represents over 80 million people. You may see this as a shame, a problem to solve, a cause to commit to, a society challenge… Some see this as a market failure and the sign that there are many efforts to make (and opportunities to seize) to match the needs.
At the crossroads of social and economic issues
This last take on poverty is the subject of the fields called the “Base of the Pyramid (BoP)” and “Inclusive Business”. The name comes from the fact that these aggregated populations make the bulk of the world demographics, while the richer populations only make the tip of the economic pyramid. Simply put, Inclusive Business consists in considering poor and marginalised persons as full economic agents, as consumers, producers, distributors and entrepreneurs, and designing business models and value chains in a manner that creates shared value and allows for development.
This view is growing steadily among the corporate world and development professionals alike. Faced with this sheer number—over 4 billion people!—some see large, untapped markets, unprecedented opportunities and an open field for innovation, and are developing strategies to reach them. Others see a potential for market-based solutions to tackle poverty on a scale and with an efficiency never achieved before.
Taking into account the socio-economic complexity of poverty
Easier said than done. In reality, poverty has so many factors and facets, and developing economies (and ours) can be crippled with so many market flaws, that BoP and Inclusive Business initiatives cannot rest merely on a low-cost strategy, just as they cannot be led by one company alone. Whether they are implemented in developing or developed countries, these initiatives need to be co-created with the communities at the base of the pyramid. This is the only way to build a real understanding of the daily lives and needs of the poor as customers and business partners, and to achieve social and economic goals.
They also need to rest on strategic partnerships between companies and other actors in the field, especially from the civic and public sectors which are already running programmes dedicated to poverty issues and possess invaluable insight.
Changing the way we see & do business
These initiatives also require new frameworks and lenses for companies to see their own activities and their business ecosystem through. For instance, the key success factors of BoP strategies—affordability, availability, awareness and acceptability (the “4 As”)—cannot be reached without innovation in the value chain, for which innovative representations are needed. And for Inclusive Business to achieve real change, it needs to rest on disruptive strategies that involve, there again, a fair amount of modelling of the company, its assets, processes, cost structure and revenue stream, value proposition… and even its relationship to its business ecosystem, including partnerships and consumer engagement.
One key issue regarding Inclusive Business is collaboration between companies, along with the public and civic sectors, academics, institutions… in order to build those frameworks for action. This entails to conceive other ways of doing business, and even new ways of seeing competition and the role of businesses, large and small, in their ecosystems. This is why third parties are required to set up working groups, ensure knowledge exchange, conduct research and refine business models that work for development.
If you are interested in business at the base of the economic pyramid, and more generally the role of businesses for poverty eradication, here are some sources to get started:
The platforms NextBillion, Business Fights Poverty and The Practitioner Hub relay news, opinions & publications on the matter, and allow you to connect and discuss with professionals.
The BoP Learning Labs work with businesses and other organisations to expand knowledge on the subject and refine business models & partnerships for development.
Growing Inclusive Markets, an initiative of the United Nations Development Program, provides a large database of initiatives illustrating the role of businesses in achieving the Millennium Development Goals.
And finally, the (free!) educative platform edX will feature, starting in February, a course entitled The Challenges of Global Poverty, given by MIT professors Esther Duflo and Abhijit Banerjee.
Haude Le Guen