Creating Social Impact at the BoP

Last week, our in-class discussion revolved around the salience of diffusion in order to have a successful innovation that creates a meaningful impact.  This week, the readings transition into the development of a venture and how critical the process of creating an innovation is in order to ensure its success.  It’s easy to draw parallels across the readings from last week and this week, especially in that proper development is essential in order to achieve product diffusion.  When people typically think of an innovative product or service, they generally just think of the end-product.  However, the end-product won’t be successful unless you focus on the process by which the innovation gets developed and the process by which the product comes to market. 

The article “Profits at the Bottom of the Pyramid” made a compelling point about the development and design of a product that I think is often overlooked.  It emphasizes that in order to be successful in low-income markets (where a lot of social ventures are made for), it’s essential to understand the obstacles facing you in those markets: consumer behavior and the way products are designed.  If we recall the innovation adoption curve, only about 13.5% of people are early adopters or buyers of a new innovative product.  How much do you think it is in low-income communities?  My guess is that it’s much smaller than that, hence the importance of consumer behavior.  If you introduce an entirely new product to a low-income market, it’s going to be extremely difficult to get anyone to buy it simply because it’s an entirely new concept to them and these people have limited means and limited experience with new products.  However, when these two obstacles are accounted for, selling profitably to the bottom of the pyramid (BoP) becomes possible.  It’s important here to note that the authors believe profitability is vital because it allows for the business to create more of an impact, scale their product, and it also helps keep a product financially sustainable. 

This approach seems genius when first reading about it, especially if companies can make it happen.  It allows for social impact and helps ensure financial sustainability over the long run.  However, I think there are a few points that need to brought up.  Creating a lasting social impact on a BoP market is much more than just simply selling your product in that area in order to improve the lives of those individuals.  To create a lasting impact, these individuals need to be alleviated from poverty.  Instead of simply focusing on providing these people with a product, I think more emphasis needs to be placed on creating a venture that will give back to these communities by providing them with jobs or giving them the tools to be social innovators themselves.  I think it’s also crucial to emphasize that the private sector can’t do this by itself, just like the governments can’t do this by themselves, just like non-profits can’t do this by themselves.  We need all three of these sectors working together to ensure the best outcome.