The base of the pyramid strategy and its benefits to a multi. Innovation and creativity at the base of the pyramid. Strategic innovation at the base of the pyramid case solution. O310 1 r introduction while poverty remains one of the key problems of the world, all other key issues in the developing world, such as malnutrition, health care and sanitation, seem to be. Prahalad likened the distribution of wealth and income to a pyramid, with a small number of affluent individuals at the top and a large base made up of the poor in emerging markets. President franklin roosevelt in 1932, refers to the worlds lowest incomelevel group, one that spans more than 4 billion.
To define the strategic business model, we combine a complex systems lens with the. Two of these in particular deserve special attention. This is the preprint version of the following article. A diverse range of companies are represented in the bcta portfolio. Management innovation is at the top of the innovation stack. Market barriers in the bottom of the pyramid diva portal. What is most innovative base of the pyramid venture. It suggests businesses can learn about the poor with the help this method and conduct sustainability innovation on the basis of on the needs of the poor, rather. Start by dividing the base of the pyramid into three segments according to peoples earnings and related personal needs. Product service systems and the base of the pyramid linkoping.
Innovation and creativity at the base of the pyramid throughout history, innovation has been a key determinant of economic development. The concept of serving the worlds poorest four billion or so people has been popular since ck prahalad introduced the idea a decade ago. They argued that the 4 billion poor people around the world represented a vibrant consumer market, that this market could best be tapped with forprofit models, and. The innovation pyramid is a tool to develop a shared language, shared understanding and shared action around innovation. Base of the pyramid bop population, interventions by the private sector in the.
It is not about locating new whos assuming the products and services are affordable, there are plenty of under and nonconsuming customers to tap, more often. The new focal firm tracked by the authors rose 11 spots in four years to become one of the top 10 pharmaceutical companies in india in 2009, despite exclusively focusing on lowend consumers. Prahalad, a professor of corporate strategy at the ross school of business of the university of michigan, corporations seeking to create new markets addressing the needs of the billions of poor people living at the bottom of the economic pyramid can and should use that effort to drive sustainability and innovation within their own ranks. Bottom of the pyramid innovation and propoor growth raphael kaplinsky development policy and practice, the open university, milton keynes, mk7 6aa, uk r. Ge innovates from the base of the pyramid 1 what are the similarities and the differences between ges traditional innovation and reverse innovation. However, they began a new strategy called reverse innovation. Innovation at the bottom of the pyramid the new york times. Combine resources and capabilities through collaborations and partnerships. Poverty alleviation through sustainable strategic business models. A framework for strategic innovation has been developed by anderson and. These people live primarily in asia, africa and south america. Rosa, 2010 deal with the attempt to merge social and business perspectives with.
Request pdf strategic innovation at the base of the pyramid brazils poorest. Innovation, bottom of the pyramid, reverse innovation, jugaad. And she suggests you think about innovation as a pyramid, with the most bets at the bottom and fewer and fewer bets as you move to the top. Living goods operates avonlike networks of doortodoor health promoters who make a modest income selling essential health products at prices affordable to the poor. Design of product service systems at the base of the pyramid. May 17, 2010 and she suggests you think about innovation as a pyramid, with the most bets at the bottom and fewer and fewer bets as you move to the top. Brazilian bop market, the determined strategic positions contribute to the creation of a. Ge innovates from the base of the pyramid ge innovates. And theres a payoff for firms that target the bottom of the pyramid. The founder members of the company were formerly the m anagement and design team for the company that developed the first automated slide and cassette printers our intention is to add to our range by developing new innovative products. Perhaps the most critical factor in our growth and maybe one not so obvious to most companies that want to do business at the base of the pyramid has been our extreme focus on the customer.
The paper describes the challenges and solutions found in a multisited rapid ethnography research in urban base of the pyramid bop contexts in brazil, india, russia and tanzania. However, based on our research, that understand the dynamics of growth at the base of the economic pyramid in emerging markets have significant opportunities to unlock value. Converting the very poor into active consumers will foster innovations in technologies and business models. Business strategies for the base of the pyramid michigan. Experiences of companies in the kenyan mobile sector paula linna, aalto university. Sustainability innovation at the base of the pyramid. Exploring the innovation pyramid article harvard business. At the base of the pyramid is operational innovation. Global poverty is increasingly seen as an unacceptable outcome of the current economic system, and there is interest in exploring new marketbased approaches to poverty alleviation. Bottom of the pyramid innovation and pro poor growth. While the developed markets are well saturanted, the base of the pyramid become more attractive for many enterprises.
Access to food and improved nutrition at the base of the pyramid. This case study of mobile usage at the base of the pyramid in kenya has been commissioned by infodev, a global partnership program. Value creating business strategies at the base of the pyramid. Innovation engineering, department of design sciences, faculty of engineering. Bibliography social business and base of the pyramid. The emerging base of the pyramid bop perspective aligns businessoriented incentives for. Bottom of the pyramid is a phrase that has commonly been used to refer to the billions of middle income earning and low income earning people in the world. In order to understand the unique innovation factors affecting the success of distribution systems they were compared to those of developed markets. Executive education strategic growth from the base of the pyramid ann arbor october 26, 2017 this innovative, new.
More than ever, business and marketbased approaches in general are seen as part of the solution to global poverty. Bottom of the pyramid innovation and pro poor growth english abstract. Strategic innovation at the base of the pyramid case. A bottom or base of the pyramid strategy was a novel strategic approach defining a base of the pyra mid strategy 287 which considers environmental, soci al, and economic impacts and outcom es in a. Strategy for the base of the pyramid case study template. Seelos and mair 2007 present business models based on strategic. In recent years some interesting solutions for bop consumers have gotten a lot of attention, for example mpesa mobile phonebased banking for the poor and. Strategic innovation at the base of the pyramid request pdf. Outside of china, despite rapid economic growth in many low and middle income countries, there has been little progress in meeting the mdg1 target of halving the incidence of global poverty by 2014. The first time you take a look at this visual innovation tool. Management scholar ck prahalad popularised the idea of this demographic as a profitable consumer base in his 2004 book the fortune at the bottom of the pyramid, written. In my opinion the division in primary market and secondary market is merged in the concept of. The merger paradox refers to the fact that it is extremely difficult to explain merger using simple oligopoly models. Jan 10, 20 the first time you take a look at this visual innovation tool.
The bottom of the pyramid, bottom of the wealth pyramid or the bottom of the income pyramid is the largest, but poorest socioeconomic group. Abstract the base of the pyramid bop consists of about twofifths of the world. In 2002 prahalad and hammond developed the term bottom of the pyramid. In a world of hypercompetition, operational excellence is essential, but i the absence of some toyotalike management innovation or ikeastyle business model breakthrough, operational innovation seldom delivers a decisive, longterm advantage. Executive education strategic growth from the base. Using jobstobedone to launch successful products anthony ulwick february 3, 2017 the rise of entrepreneurial startups focusing their attention on the base of the pyramid bop is good news. Although collectively they have considerable combined purchasing power, they have up to now been traditionally overlooked by businesses. Mobile innovations have been seen as one of the success stories of base of the pyramid bop business models. However, major multinational corporations mncs are now seeing opportunities in developing products for the bop markets. As multinational firms mncs search for avenues for profitable growth and radical innovation in the new millennium, they may find a unique, counter intuitive opportunity the 4 billion poor that are at the bottom of the economic pyramid.
Innovation for the bottom of the pyramid github pages. Next generation business strategies for the base of the. Design and development of products and services at the base of. Business strategies for the base of the pyramid the condition of the worlds poor is the subject of growing attention. Learn guidelines for how to build better businesses while simultaneously. Jul 10, 2011 living goods operates avonlike networks of doortodoor health promoters who make a modest income selling essential health products at prices affordable to the poor. Success in bottom of the pyramid innovation insead knowledge. Innovation in distribution models at the base of the pyramid. Business strategies for the base of the pyramid michigan ross.
Companies can generate growth and satisfy social and environmental stakeholders through a great leap to the base of the economic pyramid, where 4 billion people aspire to join the market economy for the first time. The model combines the latest and best practices from the fields of micro financ. The base of the pyramid bop domain is at an important crossroads. Please note that gray areas reflect artwork that has been intentionally removed. In his seminal work, the fortune at the bottom of the pyramid, c. Aug 26, 2008 for those at the bottom of the pyramid bop, the four billion people or so living on less than two dollars a day, life is hard. Ge innovates from the base of the pyramid ge innovates from. The concept of serving the worlds poorest four billion or so people has been popular. Concepts of innovation for and from emerging markets econstor. It innovation for the bottom of the pyramid, communications of the acm, 5512, 2427, 2012, which has been published in final form at. Next generation business strategies for the base of the pyramid ted london s and stuart hart s insightful book explores with a fresh lens the challenges facing the economies and communities of the bop, and offers longterm solutions based on joint valuecreation rather than fortuneseeking.
Our ultimate goal in this course is to come up with a product that could be marketed to the mass of poor people who constitute the base of the economic pyramid, otherwise known as the bop. This study investigates how innovation in distribution models at the base of the pyramid overcomes the impact of institutional and infrastructural voids in developing markets. Strategic innovation in developing markets is fundamentally different from what occurs in developed economies, the authors argue. Strong partnership key to success in bottom of the pyramid innovation. A hermeneutic analysis of the entrepreneurial process in. Product development from the bottom of the pyramid up.
Too often, the general public believes that innovation in the developing world comes exclusively from the west. Although collectively they have considerable combined purchasing power, they have up. Use the link below to share a fulltext version of this article with your friends and colleagues. Still, a number of ethical questions do exist when it comes to serving the bottom of the pyramid. It will give you the shared understanding and shared language to create shared action on innovation. This study, mobile at the base of the pyramid, was commissioned by infodev, a global technology and innovation program at the world bank. The base of the pyramid strategy and its benefits to a. Feb 15, 2014 our ultimate goal in this course is to come up with a product that could be marketed to the mass of poor people who constitute the base of the economic pyramid, otherwise known as the bop. Ges, as most of mnes, used to innovate in rich countries and after sold those in emerging country. Although poor, the bottom of the pyramid bop, he argued, is potentially a huge market. Strategic innovation at the base of the pyramid innovation in developing markets has less to do with finding new customers than addressing issues of product acceptability, affordability, availability and awareness. The base of the pyramid is poorest but largest socioeconomic group. Innovation in developing markets has less to do with finding new customers than addressing issues of product acceptability, affordability. A bottomofthepyramid strategy yields topofthepyramid.
A new report aims to measure the benefits of these companies to people at the bop. This edition will give you and your innovation team a great introduction to the nine levels of innovation. In 2012, two billion to three billion people live in poverty worldwide. The study was carried out under the supervision of maja andjelkovic. The bottom of the financial pyramid, a term reportedly coined by u. For those at the bottom of the pyramid bop, the four billion people or so living on less than two dollars a day, life is hard. The bottom of the pyramid bop is a financial idea that permits us to group that boundless portion in abundance of around four billion of the worlds poorest nationals constituting an. The substantive content of the article appears as originally published. Nevertheless, deeper analysis of their commercial scalability has been lacking. It expanded its presence in the world through mergers and acquisitions and in. From concept to sustainable opportunity at the base of the. Pdf strategic innovation at the base of the pyramid. Strategic innovation at the base of the pyramid innovation in developing markets has less to do with finding new customers than addressing issues of product acceptability, affordability, availability and.
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