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NextBillion News Vol. 23 March 31, 2008
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1. Taking a BoP Venture to Scale, Part 1
By Moses Lee
“How are we going to scale this enterprise?” “What is our scaling strategy?” “What are the building blocks needed to take our concept to scale?”
If you have ever sat in on a board meeting of an organization, either for a for-profit or non-profit, I am sure you would have heard the above questions or some derivative of them.
Scale is a word that is often thrown around, but what is scale? In the business world, scaling an enterprise basically means optimizing resources to sells more goods or services in order to grow top-line revenues and finding ways to improve cost effectiveness to drive profitability. Simple, right? Or not. Not all businesses are created equal. Some business models are inherently more scalable than others. For example, an online retailer is much easier to scale than a brick-and-mortar store.
Defining scale in the for-profit world is relatively straightforward. And its importance is also clear: shareholder maximization. But what about in the BoP world, where measurement is not necessarily in dollars and cents and the goal is not wealth maximization? Can we simply take scaling strategies from the for-profit world and apply them to BoP ventures? I think most of us would say no. Therefore, it is important for us to look at scaling a BoP venture through a different lens.
In this post and the next, I’d like to open up the discussion on scaling a BoP enterprise. In this entry, I am going to attempt to bring some definition to the idea of scaling a BoP venture. In my next post, I will try to tackle the importance of scaling BoP ventures from a macro level.
On Definition
I think most of us will agree that the reason a BoP venture exists is to positively impact and transform the lives of poor people through business. This means that at the end of the day, the success of a BoP venture is measured by improved lives. This doesn’t mean, however, that a BoP venture doesn’t look at profits or revenues. A BoP venture uses the unique approach of business to tackle the issues of poverty.
Now on scale: when the leaders of BoP ventures say that they want to scale their organizations, what they are saying is that they want to positively impact and transform more lives of the poor! So the first step in thinking about scale is to iron out just what those positive impacts are that a BoP venture seeks.
Take for example the case of malaria bednets (which has been gaining a lot of publicity as of late). Should a manufacturer of bednets in Africa simply seek to sell more bednets? Or should the a bendet manufacturer see malaria prevention as its raison d’être? The answer to these questions are extremely critical. And potentially different BoP ventures and scaling strategies emerges on how we answer these questions.
Which brings up the entire issue of identifying and measuring impact. Jon Gertner writes in a recent New York Times magazine article on philanthropy and impact, “By tracking participants over many years in various programs – in early childhood education, for instance – foundations would come to understand whether a program was worth expanding on a larger scale.”
Many BoP ventures start out with a hypothesis on how they can positively affect an aspect of poverty. But as Gertner mentions, scaling a program or venture only makes sense if it is actually making a difference. I mean, what good is it if a bednet manufacturer keeps selling bednets if it does nothing to prevent malaria? Now, I don’t want go into an entire discussion in assessing and measuring impact, because that would be outside the scope of this entry. (Right now at the William Davidson Institute we are working on developing a more robust approach towards impact assessment. Stay tuned for more on our work.)
But what makes a BoP approach different from other social programs is the use of market-based solutions. As much as we in the BoP world are concerned about impact, we are also looking for repeatable business transactions. And by this I mean everything we learn in business school: product differentiation, porter’s five forces, effective pricing models, cost efficiencies, gross margins, etc. I am confident that all of us who are reading this blog are capitalists – we just want to use capitalism to change our world.
So my working definition of scaling a BoP venture is as follows: increasing business transactions that positively affect the lives of the poor. Simple and sweet. But loaded with complexities and challenges.
What do you think? Do you agree or disagree?
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2. Featured Blog Posts: Technology: A Key to BoP Success?
By Nitin Rao
What do Aravind Eye Care, d.light design, Ekgaon Technologies, ITC’s e-Choupal, and the much awaited Tata Nano have in common?
New market segments?
Radically new paradigms?
Technology?
As the BoP discussion moves from whether-to-invest to where-to-invest, there is an increasing need to measure the impact of new ventures. I see a strong correlation between Successful Models and Technology.
Read More
New Study Details Problem and Prospects for Mobile Banking
By Manuel Bueno
By all measures, this has been a pretty long post to finalize.
In January, Ana’s post about the mobile phone banking conference at Chemonics aroused a series of insightful comments. Al Hammond then weighed in with a post of his own (he also recently wrote about Biometric Security for Mobile Banking). In this context, I felt I could join in the debate with a post about business strategies in the mobile phone banking sector (or m-banking, as it is commonly known). Specifically, I set out to analyze what affects mobile phone banking business models, their most common critiques and their challenges for the future.
2008 Skoll World Forum Preview
By Rob Katz
I like late March. Here in New York – and in Washington, where I used to live – late March is when spring starts to take hold, bringing longer, warmer days. It’s also when the annual Skoll World Forum takes place, bringing a breath of fresh air to cloudy, rainy England (apologies for the weather metaphor). For a review of Forums past, check out Jacqueline’s blog post from 2006 and Kevin Jones’ guest post on NextBillion from 2007.
I sincerely hope for good weather in Oxford this week, since a number of my Acumen Fund colleagues (and numerous allies from throughout the ‘base of the pyramid’ community) will be attending the Forum. Then again, rain might be for the best – that way, no one is tempted to spend time outside, away from the excellent sessions. I am particularly impressed with this year’s lineup, and its theme: social entrepreneurship: culture, context and social change.
If I had to choose, here are some of the sessions I would mark on my planner as “must-see”. Unfortunately, some of them are being held simultaneously…so be sure to check out posted synopses online (see below for more info on blogging at the Skoll World Forum.)
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3. Several Initiatives Address the Issue of Fostering Talent at the BoP
Three recent posts by Grace Augustine, Abigail Keene-Babcock and Francisco Noguera discuss different initiatives aimed at developing talent at the BoP.
StartingBloc Institute for Social Innovation: NYC 2008
By Grace Augustine
We are all looking for opportunities to develop our ability to address poverty and underserved markets with business solutions. One forum that brings together students and young professionals to connect around these ideas is StartingBloc.
I was encouraged to apply to StartingBloc throughWRI staff who have attended in the past and who recommended the program. I was then fortunate enough to be admitted as a New York City 2008 StartingBloc fellow, and I would like to share some of my experiences thus far.
Agora Partnerships: Building Talent with Bamboo
By Abigail Keene-Babcock
Over the last few months, there’s been plenty of discussion about the growing importance of building talent in the area of BoP business/social enterprise. Moses Lee has mentioned talent oftenone recent post, he described how a BoP business scheme failed when a group of experienced managers believed they could run the venture from afar and had no interest in taking talent into the field to do the “heavy lifting”. Related to this is a recent post on the Acumen Fund Fellows’ blog, where Tricia Morente – who is working with a chain of low-cost, high quality maternal care hospitals in India – placed talent ahead of money as the biggest challenge to scaling up a social enterprise.
On Building Talent: Goldman Invests in Ten Thousand Women
By Francisco Noguera
Who better than two remarkable female leaders to quote introducing Goldman Sachs’ recently launched “10,000 Women” program?
“Creating more female entrepreneurs in developing and emerging economies satisfies all the requirements of smart development: the benefits will multiply far beyond the investment; it is sustainable over the long run; it is adaptable to local needs; it is focused; it is measurable and it helps beneficiaries, communities and states alike.” Linda Rottenberg, Co-founder & CEO, Endeavor
“The professional development of talent is a critical component of addressing global inequities. Providing women with access to education gives them entrepreneurial tools they need to build their own futures – which in turn creates a corps of leaders with the skill and will to effect broader change.” Jacqueline Novogratz, Founder & CEO, Acumen Fund
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4. Featured Event: NYU Reynolds Program Speaker Series Event featuring Dr. Paul Farmer, Co-Founder of Partners in Health
Date: April 30. Location: New York City
About Dr. Farmer: Physician-anthropologist Paul Farmer, M.D., Ph.D., has worked ininfectious-disease control for nearly two decades. He is a co-founder of Partners in Health, an international charity organization that provides direct health care services and undertakes research and advocacy activities on behalf of those who are sick and living in poverty. Dr. Farmer is the Maude and Lillian Presley Professor of Medical Anthropology in the Department of Social Medicine at Harvard Medical School. He also trains medical students, residents, and fellows at the Brigham and Women’s Hospital in Boston, where he is an attending physician in infectious diseases and Associate Chief of the Division of Social Medicine and Health Inequalities, and at L’Hôpital Bon Sauveur in rural Haiti, where he served as medical director for 10 years. He has been a visiting professor at institutions throughout the U.S. as well as in France, Canada, Peru, the Netherlands, Russia, and Central Asia.
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5. Jobs/Careers: Associate, SeaChange Capital Partners
Location: South Norwalk, CT
Organization: SeaChange Capital Partners is an entrepreneurial nonprofit finance firm established by former leaders of Goldman Sachs. Our mission is to enhance the flow of growth capital from wealthy donors to select high-performing nonprofits, to contribute to the vital long- term effort of creating more efficient financial capital markets for the social sector. We will identify nonprofits with records of measurable success and present opportunities for supporting them to a network of potential donors, including wealthy individuals, foundations, and other funders.
Position Description: The Associate will support the development and execution of systems and processes for SeaChange’s work with its grantee organizations. In addition to being involved in the design of the program, s/he will identify, screen and help advise potential and current nonprofit grantees. The Associate will assist senior staff as they meet with nonprofit leaders and learn about organizations of interest to SeaChange, conduct due diligence on organizations to evaluate their potential for success, advise selected organizations about their growth plans, and maintain ongoing relationships with grantees to ensure progress toward agreed upon milestones. In addition, the Associate will work closely with all members of the SeaChange staff on a wide variety of projects all working toward the launch of the firm’s efforts.