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Executive Interviews: Interview with Miguel Angel Gardetti on Bottom of the Pyramid
November 2008
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By Dr. Nagendra V Chowdary
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Which companies MNCs or local
companies are better equipped to
serve the BOP markets and why?
In my opinion MNCs and local
companies can fully supplement each
other. According to the Base of the
Pyramid Protocol (www.bopprtocol.
org), the development of
business strategies focused on the
base of the pyramid is about setting a
profound learning process, whose
consequence is the co generation of
ideas and opportunities,
strengthening local capabilities and
socioeconomic systems to create
stakeholder value. And when it
comes to "learning process," "cogeneration
of ideas and opportunities," and "local
capabilities,"
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local players are also
involved. This is confirmed by the
premise stating that the private sector,
as a proactive partner, can eradicate
poverty, relying on the potential of
local players to cooperate in fostering
and jointly promoting local
development. For this reason, as well
as to acquire a deeper knowledge of
local social and economic capabilities
and systems, our Lab started thinking
in local/regional terms, thus fostering
the creation ofMini Labs: the first one
is located in the Province of Cordoba
and was created to meet the needs of
the central region of the country. -
MNCs have always operated
globally leveraging on their scale
economies. And those scale
economies have largely come from
catering to similar kind of
customers. But BOP customers are
definitely different. What
organizational changes are required
for MNCs to tap the BOP markets
successfully for instance, in
marketing, in innovation, in sales
and distribution, in advertising
campaigns, etc?
Most companies find it difficult to
regard stakeholders as a source of
knowledge. And they find it even
more difficult to understand and
believe that fringe stakeholders (the
poor, the illiterate, the divergent, the
non-legitimate, the isolated, the
disinterested, the weak, etc.) can
become part of the disruptive change
management. The vision of poverty
must be changed: from being a
passive observer to be considered
part of an interactive learning
workshop. Clearly there is a direct
relation to the breakaway of
management archetypes, bringing
about revolutionary routines that will
develop innovation, change, and will
bet on the inclusion of diversity. Companies must be "transactive" and
must be open to a dialogue with
marginality for promoting mutual
confidence bonds. And their work
should be performed at a level of
equality and respect for the diversity
of players. This mutual learning on
resources and limitations of both
players is an evolutionary process
that deepens and consolidates the
formal "organization-base of the
pyramid" alliance. Companies must work on in-house
changes; the gained knowledge
turned the traditional paradigms into
new company beliefs that backed the
project performance. This process
ranges from raising awareness of the
finite nature of resources to social
inclusion as a belief and value
businessmen should include in their
decision-taking process in doing
business. The change in the managers and
director's thinking routine is a
paradigmatic revolution: stop
thinking linearly in order to open up
to new ways to survey contexts, to
collect data and information from
reality so as to shape innovative
alternatives for inclusiveness.
Inclusiveness as a response within
the multiplicity of human diversity where the base of the pyramid brings
its wisdom and culture to build
solidarity (bonds) other than those
already known by all organizations. -
What would be the unintended
consequences for MNCs in serving
the BOP markets? Is there any
empirical evidence that throws light
on either positive or negative impact
on a company's greater good?
Simanis, Stuart Hart and Duncan
Duke in their work The Base of the
Pyramid Protocol Beyond Basic Needs
Business Strategies address these
issues: Consider now that traditional
business development strategies
cluster consumers into distinct
segments along dimensions related to
the value proposition of a product or
service; benchmark against existing
competitors and assess the likelihood
of entrants; analyze the value chain to
understand where a company can
add value by applying its
competencies; and then explore
value-capture strategies such as
intellectual property positions. All
these activities assume the existence
of a "market as a network." Those
tools and approaches have limited
value at the Base of the Pyramid,
where the absence of effective
product markets is the norm, and
informal institutional structures exist.
First generation corporate BOP
strategies have invariably been based
on this mistake. Without an existing
product market against which to
benchmark, neither a company nor
potential BOP consumers have a
reference point from which they can
assess whether a given product or
service is "needed." Simply stated, corporate BOP
business ventures undertaken to
address a "need" are unlikely to
succeed in the absence of a market.
No amount of "deep listening" to
BOP consumers will elicit the right
data. No NGO partnership will
provide access to the BOP's "true needs." No reengineered products
and no disruptive technologies will
unleash the "latent demand." "Basic
Needs" business strategies are the
wrong tool for the job. To propel the
corporation towards the BOP
opportunity in a way that addresses
this unique business challenge, a
fundamentally new approach to
strategy and business development is
called for: strategies that engage BOP
communities in a process of deep
dialogue and mutual learning to cocreate
new businesses and new
markets. When viewed in this light,
the "New Commons" development
model holds valuable insights and
lessons for shaping the next
generation of BOP strategies and
corporate capabilities.
1.
Bottom of the Pyramid Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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