Bottom of the Pyramid

The idea of the Bottom of the Pyramid movement targets the implementation of functioning business models in such areas, frequently involving modern technological innovations.
Nicolas Chevrollier
Knowledge and Information Manager at BoP Inc>
After a successful career in the technology industry, Chevrollier decided to focus his skills on development aid. From the very start, he was part of the formation of BoP Inc. and since then, has seen the organization grow significantly.

Bottom of the Pyramid

The Bottom of the Pyramid represents the members of the largest, however poorest socioeconomic group. This economic discrepancy demonstrates the unequal distribution of economic goods, trade and growth, allowing for well-established economies in Western societies to prosper, while developing countries - primarily to be found in Asian, African and South American areas - do not benefit from such economic development. In factual terms, this ascribes to approximately 4.5 billion people worldwide who earn 8$ - if even - a day. What social entrepreneurships such as the BoP Innovation Center focus on, is to re-distribute developmental growth and make it accessible to this poor majority of people, allowing them to own and manage their own businesses. The 4.5 billion represent prospective customers, suppliers and retail partners, making up for a great potential for growth and development.

BoP - Who they are and what they do

BoP Innovation Center, founded in 2010 and based in Utrecht, targets the provision of access to networks, new knowledge as well as information about available funding schemes. One of their aims is to allocate private sectors who are willing to engage within the 'Bottom of the Pyramid' market, that is, making use of underutilized productive sectors in underdeveloped and developing countries. Through the cooperation with strategic partners such as private sector organizations, governments, investors NGOs and knowledge institutes such as universities, BoP has formed the BoPInc Alliance. This way, they can stay in close contact with all contributors and clients who help promoting inclusive businesses.

An Interview with the BoP Senior Program Manager, Nicolas Chevrollier:

Upon request, Nicolas Chevrollier, who is currently active as the Knowledge and Innovation Manager for BoP, was open for giving an interview.This enthusiasm is not to be taken for granted, yet relatively easy to explain: He and his team already began to acknowledge the vast potential of underutilized productive sectors in underdeveloped or developing countries back in 2010, when the Bottom of the Pyramid initiative was founded. There, it is his specific aim to initiate, build and nurture partnerships with possible industrial partners, international organizations, public authorities as well as social entrepreneurs, in order to promote market driven pro-poor innovation strategies. By means of establishing partnerships, BoP achieves a broader context of scaling procedures, establishing economic footprints - through relatively large and sophisticated companies - , understanding the dynamics of individual markets - in collaboration with non-for-profit organizations - as well as gathering new knowledge and receiving innovative input - via co-operational Universities.

What is the future predictive course of Micro Franchising?

According to Chevrollier, Micro Franchising is a 3rd generation experiment, that is not yet established but might be well spread and practiced within the course of the next 5 until 10 years. He also states that he considers it a mistake to approach the distribution of economic growth and innovation techniques via Micro Franchising only, although it is a useful tool in order to do so. Other possible models to address this issue is for instance the process of building on markets, in order to improve already existing markets and business schemes. To mention other successfully implemented projects that demonstrate operations executed by BOP, Chevrollier named successful manufacturing business models such as Fan Milk with leading role in West Africa, which was the first company that was invested and financially covered by foreign pioneers.

What are the stands on social entrepreneurship targeting these issues?

When asked about international comparatives, Chevrollier reports several relatively big-scale businesses in the US that do similar work, however, their number is still relatively low. This held-back enthusiasm could be due to mainly financially driven behavior of market actors as well as a pronounced risk-perception of pioneering businesses. The problem with this slow process of establishing a new concept - like for example Micro Franchising - is, that any pioneer in this field must be willing to take risks. Risks are what economy is partially made of, markets cannot exist without it. However, many clients, consumers and customers are likely to rely on what they already know, rather than exploring unknown territory. This way of building business models and investing in economic growth as well as generating more work space suggests safety, however, it does not offer much room for development and dynamic change. In comparison, developed markets, driven by those with most influential power and not necessarily determined by the most innovative ideas, are relatively restricted in their potential growth, as opposed to markets that are not yet economically well established. So why not support developing economic sectors in countries where it is needed most, involving eventual financial success as a result instead of staying on the paths that are constantly walked upon? Entrepreneurship stands for discovering new paths and leaving trails that no one yet discovered, making them accessible to others and possibly finding a new, faster, more efficient, interesting, thought-provoking trace. When seeking for a solution to a problem - of any kind - there is not just one solution-offering source but often, several. Think broad, discover more.

Widely spread misconception: Innovation and quality are very welcome

Regarding the question whether Chevrollier considers it a misconception that BoP markets are not ready to adopt innovation easily, Chevrollier responds with the following: He wants to distinguish between 'brand-consciousness' and 'risk-consciousness'. While 'branding' can facilitate the adoption process of innovative structures in BoP countries, the target groups in such areas are especially conscious of any risk-taking and therefore, take precautious and careful evaluations. That is, according to Chevrollier, to be explained with their little means of financial resources and regarding 'cheapness' as potential risk factor for not sufficient quality. Therefore, customers are indeed interested in spending the little money they have on a product that is both more efficient and long-lasting, while being willing to spend a relatively higher price. Because they do not have sufficient resources to replace items easily and correct purchase-decisions, they do not possess the luxury of making inconsiderate choices. Rather than blindly buying cheap products and being able to afford more in quantity, it appears that, same as in Westernized and privileged economies, customers demand well-tested and approved products with satisfying quality. This way, Chevrollier states, they are more primed for brand loyalty, provided that a certain label has established its qualitative value and gained the customer's trust.

Towards the utilization of underutilized sectors

Although in economically weak areas there is need for facilities such as transport and infrastructure sectors, sustainable energy supply, communication networks, health care systems, financial services and so on, there still exists a rather reserved enthusiasm regarding social entrepreneurship. That is because investors tend to not pursue the most risky paths and stick to what they are used to.

Entering social pioneering pathways contribute to Micro Franchising in its basic concept: Developing a tool that, in this case, especially targets the aim of generating the possibility for people in low/ middle income countries to own and manage their own businesses. The set goal within this very process is to promote economic development and growth in areas with high potential for this purpose. Key principles are replication, sustainability and the social impact of each micro-franchised project.