The secret to success for inclusive business? Asking the right questions
A store selling clean cook stoves in rural India. Photograph: Ted London
By Ted London
A toolkit that is specifically developed with the BoP context in mind will help enterprise leaders avoid some classic mistakes that many BoP ventures seem to make over and over, while providing a roadmap for their journey to scale
If you’ve worked in any industry or sector long enough, you start to see some patterns.
I have been working in the base of the pyramid (BoP) domain since 1989. During that time, I’ve been fortunate to engage with many entrepreneurs and business leaders seeking to develop and launch enterprises in BoP markets. When I first meet these entrepreneurs, they are excited and passionate about their potential impact. They have a product or service and a proposed business model. Often they have won some sort of business competition or have some internal corporate seed funding. They are on their way, with the next big milestone being additional capital.
These are smart, committed people. Some have come to this point in their lives with substantial business experience in developed world markets. Others are fresh out of school. As we run into each other over time, I see the same thing happening again and again. They begin to recognise how much they didn’t know about BoP markets, and all of this leads to a déjà vu scene that has happened all too often.
“We thought we knew what we were doing, but we have made all the mistakes in the book,” lamented a colleague, who is an experienced entrepreneur in the technology industry. He believed his experience as a successful top-of-the-pyramid entrepreneur would translate well into a BoP context. It didn’t work out that way for him – or for many others.
BoP entrepreneurs and enterprise leaders aren’t destined to repeat his experience. But first we need to change our thinking and adopt new tools to keep us from falling back into old patterns.
For too long, the implicit assumption has been that each enterprise has to respond in a unique way to the specific context it faces. This thinking has downplayed the value of understanding lessons learned and the opportunity to use experience – both successful and less so – to understand best practices.
To be sure, each BoP enterprise faces a distinct context. But so does each enterprise in the developed world. Yet that hasn’t constrained the development of strategies, tools, frameworks and processes that business leaders can use to navigate the complexities of the environment in which they operate. To name a few, there are Porter’s five forces, the four Ps of marketing, and the SWOT analysis. What each of these has in common is a standardised framework that can be customised to reflect local realities.
These frameworks, however, were designed for developed world markets. BoP enterprises operate in an impoverished environment and seek to serve impoverished people. While BoP enterprise development is not about reinventing the principles of business, it is about recognising that these principles need to be applied in different ways.
What we need is a toolkit that is specifically developed with the BoP context in mind. At the very least, such a guide will help BoP enterprise leaders avoid some classic mistakes that many BoP ventures seem to make over and over, while providing a roadmap for their journey to scale.
As a community we have begun to develop a set of tools, frameworks and strategies derived from examining and understanding success and disappointment in the field. What I am proposing with the Partnership Ecosystem Framework (PEF) is a tool that helps prepare the enterprise for building the cross-organisational collaborations needed for sustainability at scale.
Often, enterprise leaders have been guided by an interesting but incomplete question: “Who should we partner with?” While helpful, this question also sends BoP entrepreneurs and business leaders down a false path. Indeed, the trap for too many BoP business leaders is to focus on finding one partner – often someone who can provide financing – or finding partners in a sequential manner – one after the other.
A better question is: “How can we build a robust and evolving partnership ecosystem?”
In impoverished markets, key building blocks may not exist, or may operate in very different ways. To overcome these gaps in a cost-effective manner, enterprise leaders must consider a range of potential partners that can provide support across a wide range of functions - for example, helping to facilitate operational activities, providing access to financial and other resources, influencing supply and demand, or otherwise enhancing the context in which the enterprise operates.
Getting the question right is a good first step, but doesn’t fully solve the problem. The enterprise’s leadership team must still develop a partnership strategy that maximises access to the resources available from potential partners. These partners use a variety of approaches, including business accelerators, impact investment funds, last-mile distribution and strengthening market systems, to support BoP enterprise development.
Partnership Ecosystem Framework. Photograph: Ted London
This is where the PEF comes into play. It is a standardised framework that allows enterprise leaders to strategically consider who should be in their partner ecosystem. By customising to their specific situation and context, enterprise leaders can understand their capability set, their current partner portfolio, and then assess where the key partners’ needs remain.
The PEF organises support from partners based on the focus and type of that support.
It is a standardised framework that BoP enterprise leaders can customise to their own situation. Our work in the field has shown the value of such an organised approach. These leaders can better:
assess where partnership support is most crucial;
plot their existing set of partners and the support they are currently providing;
identify key gaps that remain.
This leads to actionable strategies that enable a BoP enterprise to build and maintain an integrated and evolving ecosystem of partners that responds to key challenges in the enterprise’s journey to sustainability and scalability.
This is a key part of the future of BoP enterprise development – standardised strategies, frameworks and processes that can be customised to the local context. This toolkit of frameworks can offer a blueprint for increasing the likelihood of an enterprise’s success.
Ted London is vice president and senior research fellow for Scaling Impact Initiative at the William Davidson Institute. He is also a faculty member at the Ross School of Business at the University of Michigan. His most recent book is The Base of the Pyramid Promise: Building Businesses With Impact and Scale.
To access the webinar slides, recording and other resources, please visit this page.
The original analysis of Ted London’s Partnering EcoSystem Framework used for this article was published on NextBillion.
Content on this page is provided by Business Call to Action, and originally appeared on the The Guardian Business and the Sustainable Development Goals Hub