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Reaching the market at the “bottom of the pyramid” (#bop on twitter) is a common goal these days for everyone from social entrepreneurs, to start-ups, to multinational corporations. A recent Wall Street Journal article highlights how sophisticated the technology and the players have become in the BOP market:
For the farmer who wants to save for the future, one Indian entrepreneur has developed what is, in effect, a $200 portable bank branch. For the village housewife, a wood-burning stove has been reinvented to make more heat and less smoke for $23…For the villager who wants to give his child a cold glass of milk, there is a tiny $70 refrigerator that can run on batteries…
…Everyone from small local players — looking to go national then global with their low-price inventions — to the country’s biggest conglomerate, the Tata Group, are in the race. They are trying to figure out what the poor want and how much they are willing to pay for it. Then the companies are going back to their research teams and crafting new products and unprecedented price points.
To read the papers and talk to the many of the social entrepreneurs working today, it would seem that the answer to poverty alleviation is technology, products, and services for the BOP market. Multinational companies are building affordable home water-filters and low-cost medical supplies, non-profits are building solar powered lamps for slum dwellers. Everyone has micro-credit and saving schemes and payment plans to help those living on less than $2 per day pay for access to clean water, electricity, financial services and information via SMS.
It’s seems like the perfect solution on multiple levels: companies can “do good by doing well,” while non-profits can earn revenue from their clients and stop relying so heavily on donor funds. Except that we haven’t quite gotten to that ideal yet, though we can.
Right now a poor farmer in India can buy a water pump on a payment plan to improve his yields and access crop prices over SMS. His children can study their lessons after dark under the light of a solar-powered lamp. With these tech products enabling him to earn more income off the land and his children to further their education, it would seem that he and his family are making steady progress up the economic ladder.
That progress is fragile though, and thus so too is the family and the market they represent. The farmer might not have a formal title to his land and could lose it should a large buyer like a multinational buy it from the Indian government. His children’s teacher might stop showing up to school, leaving behind a village of children who now no longer have a farm or an education to rely on for employment. Without employment they will likely slip further into poverty and further away from the middle-class aspirations that drive much of the BOP market.
The BOP market is vast but not infinite and there’s room within it for many families to fall quickly from saving for a mini-fridge to saving for a simple meal of chapatti.
Sometimes it’s simply a matter of bad luck but what if, in most cases, we just haven’t pushed the technology or products and services approach far enough? What if there are products and services to be had that could prevent or at least shield families from some of the catastrophic events and chronic challenges that trigger deeper poverty.
Medical emergencies are one such catastrophic event that companies and non-profits are already tackling with affordable insurance plans for the BOP, but there are so many other services that the market can, but does not currently provide for those living on less than $2 per day.
Maybe we need low-cost long-distance learning courses that utilize SMS and other technologies to affordably serve children whose neighborhood schools won’t. If governments are seizing small-holders’ land to hand over to corporations, maybe we need 3rd parties in there with services to help governments and farmers partner to produce sustainable organic foods for premium markets.
Not every idea will be inherently profitable and perhaps that’s the challenge that will inspire a whole new level of innovation. Business entrepreneurs, corporations, and social entrepreneurs must work together, form partnerships and build on one another’s momentum and success in the same way companies build upon synergies in other markets. As traditional non-profit funders, companies, consumers, and social entrepreneurs move further and further away from old models of philanthropy and service delivery, they will need to take the unprofitable products and services the poor truly need and find a way to make them profitable or at least feasible in an increasingly market-oriented environment.
For instance, in some cases it might make sense for large corporations in the market to subsidize the costs of some inherently unprofitable products, or bundle them in with their own services as a strategy for growing and maintaining their own customer base. After all, if a third party service can help keep small family farms in business, the larger the market for a corporation’s mini-refrigerators and other products.
Whatever the future innovations are, it’s important that we keep pushing towards them and remember that products for the poor don’t necessarily alleviate poverty for the poor as long as there are other variables and challenges out there to be addressed and overcome. We have the capacity to use the market to drive the spread of even more useful products and services for the poor but we have to be creative and support the social entrepreneurs who are looking beyond profitability to what the poorest consumers in the world really need.
Image Source: zegood.com