Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the...
Transcript of Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the...
![Page 1: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/1.jpg)
Back to Business Fundamentals:Making Bottom of the Pyramid Relevant to Core Business
Erik Simanis MBA, PhDCornell UniversityDecember 5, 2011
![Page 2: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/2.jpg)
< $3,000/yr ~4.5billion
> $15,000/yr ~800million
Global PopulationPer Capita Income (PPP)
$3,000 - 15,000/yr ~1.5billion
Class A
Classes B&C
Classes D&E(The BOP)
![Page 3: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/3.jpg)
“For companies with the resources and persistence to compete at the bottom of
the world economic pyramid, the prospective rewards include growth,
profits, and incalculable contributions to humankind.”
C.K. Prahalad & S.L. Hart,“The Fortune at the Bottom of the Pyramid,” 2001
![Page 4: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/4.jpg)
The Shifting BOP Landscape
Corporate CSR ProjectsCorporate Business Efforts
Non-Profits & Social Entrepreneurs
2000-2005 2005-Today
Gov’t Multilaterals
![Page 5: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/5.jpg)
Bottom of the
Pyramid
CoreBusiness
(P&L)
BOP has turned into a market-based development strategy rather than a rigorous
business growth strategy
![Page 6: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/6.jpg)
The Business Disconnect• DEVELOPMENT SPEAK:
BOP concept talked about using development language and development goals, not business language and business goals Projects lack internal business credibility and migrate
into CSR
• MISSING MIDDLE: Business case framed using grand claims and emotionally-tinged language Managers can’t sell project internally; if they get buy-in,
ventures can’t find home within core business
• CONSUMER ENGAGEMENT MYOPIA:Overwhelming focus on engaging with the consumer, but little attention to business economic drivers Feel-good product ideas and concepts that don’t have
“business legs”
Corporate
Project Management
Field
![Page 7: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/7.jpg)
Grand, Broad Visionof Business & Social Impact
Projects without concrete, internally-
relevant business deliverables
“Holistic” Concepts Resting on Weak
Economic Foundation
Venture Failure & Loss of Interest in BOP as Core
Business Opportunity
Struggling business lacking clear decision-making
frameworks for maximizing resources and managing
tradeoffs.
The
BOP
Projec
tSpiral
![Page 8: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/8.jpg)
Back to Business Fundamentals“To get companies focused on [BOP] as part of
core business, it has to look like, sound like, and smell like core business: in other words, it has
to be about generating revenue, growing profits, and selling
the company’s products to the poor—not broad-based poverty alleviation.”
Simanis, E. N. & Milstein, M.B., 2011 (Forthcoming)
Poverty Alleviation
Positive externality (by-product) of activities that drive business success in
most efficient & rapid way possible.=
![Page 9: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/9.jpg)
Making BOP About Core Business: Key Reversals
I. Framing
II. Internal Positioning
III. Project Management
IV. Measurement
![Page 10: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/10.jpg)
Case: SC Johnson, Ghana
Home Cleaning Insect Control Air Care
Social Objective: Reduce malaria
contraction among at-risk, rural populations
![Page 11: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/11.jpg)
I. Framing
“Bottom of the Pyramid”
“D&E Consumers &Markets”
FROM TO
Project Framing: “Reach the D&E Consumer” Faster alignment across management levels, particularly
during recent management transitions Quicker response to requests from other departments
& geographies (e.g., R&D, Manufacturing)
![Page 12: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/12.jpg)
II. Internal Positioning
Lofty Boardroom Rhetoric
Grounded Business Opportunities
FROM TO
Business Goal: “To drive broad adoption of SCJ’s product categories by D&E consumers in Agona and Gomoa Districts of Ghana” Strong country-level support: complementary to local
deep distribution strategies targeting C consumers Expectations aligned with initial revenue/profit potential
![Page 13: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/13.jpg)
III. Project Management
Focus on Consumer Engagement
Focus on Economic Drivers
FROM TO
Business Concept/Product Offering Shaped by Continual Modeling of Key Business Drivers Offering and business model rooted in clear financial
assumptions Internal clarity on key performance determinants (i.e.,
dashboard of business drivers)
![Page 14: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/14.jpg)
IV. Measurement
External Impact Assessments
Internal Business Performance
FROM TO
Measure of Malaria Impact: Units of Insect Control Products Sold A business outcome that proxies for the targeted social
outcomeMetric that the company would track as part of regular
operations
![Page 15: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/15.jpg)
Corporations & Poverty Alleviation
1. Corporations—unlike non-profits—were not built for poverty alleviation. Different resources, responsibilities, limitations
2. Corporations can bring substantial value into lives of D&E consumers by doing what they were built for. Sell quality products & services at a sustainable
profit
![Page 16: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/16.jpg)
To maximize your company’s positive impact
on D&E consumers, excel at the business
fundamentals.
![Page 17: Back to Business Fundamentals - Fujitsu...Back to Business Fundamentals: Making Bottom of the Pyramid Relevant to Core Business Erik Simanis MBA, PhD Cornell University December 5,](https://reader035.fdocuments.in/reader035/viewer/2022070821/5f1e7d6bc0dc5344f36a73ab/html5/thumbnails/17.jpg)
Thank You!Erik Simanis MBA, PhDCornell UniversityDecember 5, 2011