To Tap the Fortune of BoP: Decreasing Cost and What Else? & Some Thoughts on Social Innovation as a Career

To Tap the Fortune of BoP: Decreasing Cost and What Else? & Some Thoughts on Social Innovation as a Career

After reading all the materials in these two recent weeks, I got a strong sense that when social entrepreneurs and some multinational corporations head to serve the needs of people at the BoP, decreasing cost of the products and services is a determining factor, sometimes it is between “life” and “death”.

One Laptop Per Child (OLPC) project failed because of cost overrun in the mass production phase. Tata’s cheapest can are stilled being picked that they are still beyond the financial outreach of millions of people.

In other words, Does the single act of decreasing cost make an enterprise “social innovative “or can the act of bringing down the cost by a MNC (like Tata) be considered as serving the need? What else should be taken into consideration besides decreasing the cost?

Given my business background, I try to analyze this question using the marketing theories- 4P

1.       Product: consumers’ need.

What they want? What their needs? Are the needs you perceive the real needs?? (refer to the former post called “Get Out Of Your Own Skin”) As for now, social innovation companies focus on the basic human needs, but I can imagine that in the future more needs will be satisfied. (Maslow's hierarchy of needs applies)

2.       Price : 

      This is where the cost comes in. no doubt, a good product with high price would not make any sense to BoP people. Companies can decrease product price by:

•        New Technology: obviously, this is the major things to do.
•      Strategic Cash flow Alteration: Micropacks, sachets and even Microfinance are all approaches      to cater to the people ’s cash flow realities.
•      Sharing!: tele lady in India… sometimes you do not need to own one, but share one with your group.

3.       Placement: the distribution methods.

I find this one interesting too. Shaky distribution networks can plague some great products. Actually Innovative distribution network can bring more benefit to the community, for instance, Jobs!

e.g.: Danone Yogurts are sold by “local women who would peddle it door to door on commission”  

4.       Promotion

Not quite sure about this point. But I am figuring that although there are needs and products, sometimes enterprises need to “Educate the market and the consumers” to let them believe that this product can satisfy their needs!

However, there might be some Ethical Problems, because in order to sell the products, company tend to overestimate and exaggerate the effects of a certain product. (e.g. I doubt that if the Danone yogurts is that effective in providing vitamin and protein…)

Some Thoughts on Social Innovation as a Career

I am excited about the fact that an increasing number of young talents start to engage in social innovation. How good is that! They can make more income, have a great sense of self-accomplishment (not only because they can generate thousands of millions of profit for the company, but more importantly they are helping bring a better world, making an impact! Something, I assume, more meaningful).

I am not sure the cases in other countries, but in China the “most popular” thing to learn is Finance, simply because it something that you can have lucrative financial gains and perceived “high social status”. Go and ask the best and brightest students in China, seven of ten will tell you that they want to go the Investment Banks…. I do not want to make any judgment on this. But it appears to me as a “loss” to a certain degree. Some of the brightest minds head to develop derivatives, swaps and so many other super complex financial products (weapons of mass destructions!!), that literally collapse the economy at a certain time.

What if they come to do some things in social innovations? They can have jobs, earn money, have very decent life, be an entrepreneur and make social impact! I am aware this sounds too idealistic or even immature… but I am picturing it really seriously…