The Competitiveness of the Inner City

In this post, I'll argue that many of the business strategies for innovation that target the base of the global economic pyramid ought to be applied to American inner-cities.  The bottom of the global economic pyramid shares three similar characteristics to distressed sections of American urban cores.

• Significant unmet basic needs
• Cultural norms that differ from the mainstream culture/economy
• Significant economic and business oppportunities

Few will argue that those at the low end of the developing world's economic spectrum have significant-often dire-unmet basic needs.  The issue is more complicated when one considers the poor in urban America.  How can we say that basic needs are unmet when soup kitchens, homeless shelters, welfare programs, etc. abound?  Walk around.  Somehow, people still don't have shelter, kids go to bed with empty stomachs.  I call those unmet needs. 

Take any ghosts that remain from the political discourse surrounding welfare reform in the 90s and exorcise them, please!  The best way to think how cultural norms differ between social classes is through the lens of behavioral economics.  The level of economic security (or insecurity) that one experiences as "normal" is going to affect the way they make decisions in the short term and the long term.  A quick example: I have cut-rate insurance on my car because my net worth is negative: I'm not worth suing.  Once my social venture makes me a billionaire-philanthropist, I'll need more insurance. Cost benefit analysis that balance short term and long term consequences (and all sorts of other types of consequences) affect all kinds of behavior-even the most mundane.   All I'm trying to say here is that the global poor make economic/consumer decisions according to a different calculus that the global middle.  The same goes for the American urban poor versus the American middle class. 

Discourses about poverty (like the politically charged "culture of poverty" debate) tend to obscure the reality present at the bottom of the global economic pyramid and in American inner cities: business opportunity abounds!  Poor communities, yes, even poor people have significant assets that can contribute to economic and social improvement!  Our readings throughout the semester have driven this point home in regards to global poverty.  The Initiative for the Competitive Inner City seeks to create similar awareness regarding American urban cores. 

In both contexts, the point made by two of this week's readings (GE in India and HBR Re-thinking Business Models) rings true: we cannot simply import mainstream business models and tweak them here and there.  We must re-form the business model from the ground up, building on the strengths found in each poor community and exploiting the opportunities. 

Curious to know: What assets do you all observe in poor communities-global and local?  Any ideas to leverage them?