I’ve been very happy with how far my Portuguese has come, especially after having been gone from Brazil for so long, yet my ability to communicate here is like being able to swim in a gentle sea, quando as coisas estão tranquilas, tudo bom! (When things are calm, all is good!) But while sitting in on CatComm’s open forum, a meeting for feedback from community partners and constituents, I experienced a very different world of linguistic aquatics; visualize the crashing waves at Ipanema, Brazil’s most famous of beaches, where the people are beautiful but the weak stay out of the water.

Last night, a dozen of us met inside the Casa do Gestor Catalisador, CatComm’s home and technology hub in Rio, located on the edge of the downtown, in a historic district by the bay and the center of the old slave trade. Around us on the Casa walls, on mounted wood or printed t-shirts, hung windows into the world of the favelas, the works of Brazilian photographer Maurício Hora, a man with an incredible capacity to capture the spirit of place on film. Maurício sat to my left, Theresa to my right, the rest were spread out in a circle around the room, community leaders and artists, passionate Brazilians all; not quite what my beach and bar Portuguese had prepared me for.

It wasn’t so bad at first, when Theresa began speaking I was able to follow along, she had prepped me before hand (in English) about the proposal she would present, about CatComm’s new strategy for partners and growth. Muito tranquilo. However once people started responding, once bodies leaned forward and hands started churning, my bearings slipped out from under me and the sea became choppy. At times I would grasp the topic of the conversation and understand its flow, but then just as suddenly a new wave of words, sounds, and Brazilian passion would descend upon me, and my head would be plunged into the deep, tumbling out of control and comprehension lost, finally clawing my way to the surface only to think “Meu Deus, como a gente veio pra cá” “How the heck did we end up here?”

The Brazilian love of talking on top of one another means a whole different set of cultural cues apply here, how do you tell if someone is staying civil and respectful, how do you tell what is a constructive conflict and what is not? Brazilians are a passionate people and many debate with animation and emotion, loudly at times, which are all traits that I can relate well to. How many times in Kenya did it appear that Erik and I were about to come to blows, when in fact, we were only just getting warmed up?

However it’s clear that for us to do Protocol work here, guiding a creative collision of world-views, will require a lot of preparation, both in our language and in our ability to train and support other people. The language barrier makes proactive leadership absolutely necessary. I can continue to improve my Portuguese, but the only effective way forward is to make sure that more appropriate people know what they’re doing and supporting them, there’s no other choice. Which, if you think about it, is really the only way our work in the Base of the Pyramid can come alive, working with others, training new people, supporting them, and then to some degree, letting go. It’s hard to imagine us doing here exactly what we did in Kenya: Erik, and I directly facilitating exercises and discussions. Here we would have to plan for miscommunication, slow down for better understanding. Though in truth we did not always understand what was going on in Kenya either, our Kiswahili was worse than my Portuguese, and patience was always key.

It’s funny to think about what has become one the defining aspects of my life, the constant search for uncomfortable situations and new things to be ignorant about. There’s something a little crazy about that, something a little strange about someone who has to go so far from what he knows to find meaningful work, to feel content yet not comfortable. I suppose it’s all a search for meaning and growth and as Erik loves to say, “If what you’re doing feels comfortable, then you’re probably not doing something new!” Optimal ignorance is another phrase we love to throw around: optimal is when you know enough to be respectful, but not enough to know what is impossible. You’re able to do things in someone else’s backyard that you could never do in your own. You just don’t know enough not to try. A clueless gringo has his uses after all, but at the very least he does need to learn to keep his head above the water.

Time to go swimming again.

***

Notes for the unfamiliar:

• Theresa -> Theresa Williamson, founder and executive director of Catalytic Communities
• CatComm -> Catalytic Communities, an amazing organization in Rio that provides spaces for community leaders to meet and exchange ideas, both physical spaces (the Casa) and virtual spaces (http://www.CatComm.org), inpsiring and empowering a global network of community leaders and solutions.
• Favela -> a Brazilian slum or shanty town, the word’s origins are from a particular slum in Rio, the first, historically known as Morro da Favela, but today known as Morro do Providência, where photographer Maurício Hora was born and raised. To view Maurício’s work visit http://www.favelarte.com/ An exposition of Maurício’s work is currently on display at CatComm’s Casa in Rio.
• Erik -> Erik Simanis, Co-Director of the Base of the Pyramid Protocol and team leader of the Protocol pilot team in Kenya
• Protocol -> Base of the Pyramid Protocol, a process by which multinational companies can engage poor communities to form new partnerships and to co-create new business opportunities for the communities and the company. For more on the protocol and pilot see http://www.bop-protocol.org and http://www.BRINQ.com/kenya/
• Me -> Patrick Donohue, a recovering computer scientist and MBA, refugee from the rapid to riches dot-com culture, and member of the BoP Protocol pilot test in Kenya; in Brazil to write a case study of Catalytic Communities and to practice swimming in Portuguese.

There’s nothing like a room full of blank stares to tell you that you have just used the wrong word, nobody there knows what you’re talking about and you need to adapt, but what do you do when that word is at the heart of what you do? When that glazed-eye-inducing offender is printed all over your business cards? Erik, Kabi, Edwin and I are in a meeting hall in Kibera, a shanty town in Nairobi, Kenya which, with an estimated one million people, is one of Africa’s, if not the world’s, largest slums. We’re running the second of four community engagement workshops in which we are preparing local community groups, entrepreneurs and social enterprises, on how to best approach and prepare for a partnership with multinational companies; in this case, how to partner with our main corporate sponsor, SC Johnson. This is what we do, we bring people from diverse backgrounds and with diverse resources together, “a creative collision of world views”, to create new market opportunities for multinationals and locally grown businesses for poor communities via a process of “mutual value creation”. Buzz phrase laden work, yes, but it’s actually all been going quite well so far, except that now our community partners are stuck on our name. Behind us, on a brown flip chart taped to the wall, is drawn a large three sided figure, a triangle really, with the words “Base of the Pyramid” written on top, or BoP for short. That’s us. A brave hand ventures forth, “Do you mean like a samosa?” For those not in the know, a samosa is a triangle shaped pastry of Indian or Persian origin, stuffed with a delightful filling of meat or vegetables. You can find samosas being fried and sold fresh on the mud tracks, pathways, and streets of Kibera; one of the tasty treats will set you back only about 5 shillings (7 cents). “Yes!” we say with a smile, thankful for a local translation, “The pyramid is like a samosa! The rich people are up top, that’s where most companies traditionally focus, but down below here in the base are some 4 billion people, a whole world that’s been…” There’s another hand up in the air now. “Tafadhali”, we prompt, “please.” “Why should people at the top of the samosa get everything,” one man asks, “when all the meat is at the bottom?” There are a few murmurs of agreement from the crowd, so the man continues, “And why a samosa? A chapati would be better, that way everyone is the same!” This time there are cheers. A chapati is a flat round fried bread, kind of like an Indian version of a Mexican tortilla, and like samosas, chapatis can be found fresh and hot all throughout Kibera. I love chapati, but I’m too much of a free market fan to buy into the idea of it as a symbol of world commerce, nor do I think it’s an accurate representation of how the world really is. Another man speaks up, “Can’t we just turn the samosa upside down?” “Upside down?” “Yes,” he explains, “turn it upside down, then all the rich people are on the bottom and we can force them up to the top!” **** “I’ve been wondering,” Salim Mohamed asks me one day, “What do you think of the phrase, Base of the Pyramid?” The question is asked in a way that doesn’t inspire a lot of confidence in the chosen descriptor for our work. Salim is the program manager for Carolina for Kibera (CFK), an incredible organization in Kibera whose offices we’ve been using as our base camp and which has acted as our gateway into the community. Salim’s question about the BoP comes in the middle of a conversation about the G8 meeting in Scotland and the resulting attention the Western media is pouring on Africa. Most often mentioned in the news are the calls for the doubling of donor aid to Africa and the unconditional cancellation of 100% of Africa’s debt. Also covered by the media are the Live 8 concerts, a massive series of shows throughout the Western world designed to “raise awareness” about poverty in Africa. They’re tied in somehow with the “Make Poverty History” campaign, of which Salim is also skeptical, “Haven’t we already spent 50 years making poverty part of our history?” Salim asks, “and what is poverty any ways? Is it just one person having more money than someone else, how can you get rid of that?” True, Salim is intimately familiar with the problems of poverty in his community, CFK’s four major programs grasp and wrestle with such issues in Kibera directly, every day, but there’s the difference, the direct contact, feeling the texture of poverty, living amongst it, working with it. Think of the Japanese martial art Jujitsu, where you engage with your opponent, body to body, skin to skin, tying your motion to his motion, until flip, you shift, you turn, and you channel your opponent’s force in a new direction, a new way. Now think instead of just dropping a nuclear bomb on your foe. Which has the worse effect? Sure your opponent may be dead, but how much worse was the curse than the cure? As Salim and many others here have helped us learn, painfully at times, the problem with the term Base of the Pyramid is that it is an income base classification, you can use it to segment your population, to find underserved markets or opportunities, but the dangerous tendency is that by selecting a group by income, you then define them solely by income. You fall into the trap of defining them based on what they lack, rather than what they have, and it’s what they have that can be built upon. “My God,” we hear so often, “how can these people get by on less than a dollar a day?” It’s a fair question, an important one even, but it needs to be asked in a way where you expect, and are willing to accept, an answer, i.e. this is how they do it. It’s too quick to say that a dollar a day is too little, and even quicker to just say that the answer is more dollars sent from afar, or even more dollars generated locally. Look at Taka ni Pato (trash is cash), a program run by CFK in Kibera and funded by the Ford Foundation. The project enables youth self help groups in Kibera to turn the community’s trash into a source of income, yet CFK has quickly learned that too much cash flowing too quickly could kill the very groups they are seeking to uplift, the groups that are now providing a much needed service to the community. Just because a group has increased income, perhaps for the first time any income at all, doesn’t mean that the group is ready to do something productive with that income. Are they mature enough to handle it? Do they have the transparency necessary to keep money issues from tearing the group apart? Do they have plans for tomorrow so they don’t spend it frivolously today? As Ibrahim Sakuda of Faulu Kenya reminds us, “As more income comes in, groups need time and help to broaden their vision beyond what they currently do.” Raising income is critical in the Base of the Pyramid, but here in Kenya we’re discovering that income alone won’t create the change we seek: to improve the quality of people’s lives and to create sustainable markets for economic growth. There are other issues that need to be wrestled with, intimately, closely, patiently, while we also seek to raise incomes. Base of the Pyramid may be an income based classification, it may be how we describe what we do, but it need not be our sole focus, we don’t need to be defined by what we call our work, because rich or poor, who really wants to be defined just by how much money you make? Besides, if we define our pyramid differently, say on strength of community, on how many of your neighbors you know, or on the size of children’s smiles, who might be in the Base of the Samosa then? Additional Resources: The Base of the Pyramid Protocol The BoP Protocol Pilot in Kenya Carolina for Kibera Faulu Kenya

"I could use a hundred people who don’t know there is such a word as impossible"
- Henry Ford, Sr.

We admit having a bit of a fascination with Henry Ford, a man, who in our minds, was one of the world’s greatest social entrepreneurs and enablers of the common man, who also happened to become insanely wealthy to boot. How could you not be fascinated with him? When people tell us we’re nuts trying to make money working with today’s version of the comman man, the 4+ billion “poor” living in the Base of the Pyramid, we point at Henry Ford and say, "He was nuts too,"and then a moment later add, "and I’m with stupid."

However, it was Ford’s notorious dislike for "experts" that we find the most compelling:

None of our men are "experts." We have most unfortunately found it necessary to get rid of a man as soon as he thinks himself an expert because no one ever considers himself expert if he really knows his job. A man who knows a job sees so much more to be done than he has done, that he is always pressing forward and never gives up an instant of thought to how good and how efficient he is. Thinking always ahead, thinking always of trying to do more, brings a state of mind in which nothing is impossible. The moment one gets into the "expert" state of mind a great number of things become impossible.

Of course even Henry Ford eventually fell into this expert trap, misreading the very market he had created, but this fact doesn’t diminish the strength of his lessons, rather it amplifies it. If someone as aware as Henry Ford fell into the expert trap, what’s that mean for the rest of us?

Which brings us to the Base of the Pyramid Protocol and the upcoming field test in Kenya.

The six of us on the Kenya team are, perhaps, experts at something.

One thing we are definitely not, however, are experts on Kenya. We’re not experts on Pyrethrum, a critical crop to the communities we’re engaging. We’re not experts at development either, though we’ve had a little training in participatory techniques. Our knowledge of SC Johnson and ApproTEC, two of the projects key stakeholders, is limited too, certainly no where close to an expert level. Finally, most of us are MBAs, which business school cynics will declare as proof positive that we’ve been specifically trained to be experts at nothing at all. Going into a situation that ignorant, what possibly do the six of us have to offer?

But think about Henry Ford and answer this, which would you rather be in a conversation, the ignorant or the expert?

Our take is that it’s the ignorant who will get the most out of the conversation. After all, by definition an expert already knows everything; someone who is already very familiar with how things should be done, someone who knows the best way forward is to build upon what you already know. Why do they believe this? Because most of the time they’re right; the best way forward often is just getting better at doing the same thing. In computer science lingo this is a "greedy" approach: an easy path to the highest point is just to go up from where you’re already standing. Unfortunately, this approach doesn’t help me in a hypothetical climbing competition if I’m on a hill in Wichita and my competitor is at the foot of Mt. Fuji.

So while the world needs experts to climb mountains, we argue that it’s the ignorants who get us to question what a mountain really is in the first place. I may be a great climber, but I’m not going much higher until I recognize that I need to get out of Kansas.

That is, more or less, what the first phase of the Base of the Pyramid Protocol is about, getting us off our mountains via a collision of world views: the ignorant with the expert, the local with the foreign, the "rich" with the "poor". We acknowledge that everyone is an "expert" at something; we acknowledge that everyone is an "ignorant" at something. Then we get busy, as nicely as possible, knocking each other off our respective peaks so we can collectively seek out new mountains to climb; and we level the playing field so that the expert has as much to gain as the ignorant.

How to do that best is what we’re testing in Kenya.

Safi! [Cool!]

As for Henry Ford, we believe he became a victim of his own success. It took another American icon, Alfred Sloan and General Motors, to show Ford that he was on the wrong mountain: people didn’t just want the Model T anymore, they wanted the Cadillac, and in red too.

The world had turned color, yet our foremost expert was still peddling black.

Pretty ignorant, huh?

*Please note, this author aside, the five other members of the Kenya field test team are actually quite an exceptional bunch of folks.

Past “Innovation from the Brinq” articles:
The Power of Play – Why Not? A Guide for Ingenuity – Discordant Notes – Bambucicletas and Other “Cycles” of Innovation – Poor People’s Knowledge – India - Innovation Central – Building a Better ATM – Keeping it Cool

Where should you look for the unexpected? Try finding a different world view.

"the unexpected success is not just an opportunity for innovation; it demands innovation. It forces us to ask, What basic changes are now appropriate for this organization in the way that it defines its business? Its technology? Its markets? If these questions are faced up to, then unexpected success is likely to open up the most rewarding and least risky of all innovative opportunities."
- Peter Drucker, Innovation and Entrepreneurship

At BRINQ, we believe those living in the Base of the Pyramid (BOP), the so-called poor, are a huge source for something unexpected: innovation. And particularly a type which we like to call "innovation in utility", the novel and unexpected ways in which people use technology. It’s simple really, when does your invention become a true innovation?

Somebody uses it.

Lots of somebodies, and often in a way you didn’t expect.

Look at the examples Harvard business guru Clay Christensen gives of disruptive innovations in his pathbreaking work the Innovator’s Dilemma, many of his examples’ early successes came from unexpected uses in unexpected markets. Or take a look at Cemex, which capitalized on the unexpected success of cement sales to Mexico’s poor by developing its Patrimonio Hoy program. Our colleague Gordon Enk (Partners for Strategic Change) summed it up best in a recent conversation, "I don’t think anyone ever sets out to invent a disruptive technology." We believe that’s because invention is about technology, but innovation is about utility, and it’s a near impossible task to guess all the seemingly crazy ways in which people might use your creation, even if those crazy ways determine your future failure or success.

Innovation in utility is rarely discovered inside a corporate R&D lab, rather it’s user and market focused: the more people you observe using your technology or service, the better chance you have to discover an unexpected success. Even better is to find people with an entirely different world view than your own, as they can create possibilities you never dreamed of, and then give them reasons to seek you out. We believe the Base of the Pyramid has a wealth of such perspectives and dreams that are ripe for this purpose.

We recommend two critical components to discovering innovation in utility: casting your net for innovation as far and wide as possible, through product offerings or services, and then drawing the resulting innovative uses back to you. In the remainder of this article we will focus on the second component, drawing the unexpected innovations back to you. We will do this the through the example of the MTN villagePhone venture in Uganda, a new venture which we analyzed in the Spring of 2004 on behalf of the the Grameen Technology Center and the Base of the Pyramid Learning Lab. These concepts (and our introduction of the "Model T Trap") were awarded the BOP Lab’s Best of 2004 Award.

(more…)

“I start with the premise that the function of leadership is to produce more leaders, not more followers.” – Ralph Nader

Last year, we designed and launched an innovative new leadership track for a top-ranked business school. The track treats student leaders as executives, providing them with hands on leadership training in which their actions create visibile results. In other words, we created a playground for budding leaders. Well, we’re proud to say that tomorrow night the program will begin its second year; it survived and thrived after our departure. Below is an excerpt from a letter I wrote to Professor Dave Hofmann, who heads the track, on one leadership lesson I’ve encountered in the last year.

And always remember, innovation is leadership.

–

I was down in LA for an awards ceremony and my brother Bernard’s inauguration as President of the Burbank Jaycees (Junior Chamber). His vision for the organization? Leadership development, of course! It must be in the blood. He wants to radically improve the Jaycee’s use of community projects in developing leaders and attract even better people to the organization, aspiring professionals looking to develop themselves. The crowd loved his vision and he received a standing ovation, which apparently never happens. My family was thrilled, Bernard alone among the eight of us never finished college, but we’ve been so proud of everything he has done.

Which brings me to an important lesson. The keynote speaker at the event was Glenn Stearns, 39 year-old entrepreneur, owner of 26 companies, and real life millionaire (who recently played and won as the millionaire on the Real Gilligan’s Island reality show). He was not a great public speaker but his speech was fantastic. Glenn barely made it through college with 2.14 GPA, but now has a net worth of $500 million. That’s half a billion dollars. A lot of money.

His secret? Well, I believe he understood better than most the need to surround himself with brilliant people and to build a better system for business. He knew he wasn’t brilliant, so he knew he needed help. Most of us so-called "brilliant" and "successful" individuals never learn that lesson, we’ve gotten by so long on our own that we never learn how much we really need others. We tend to think it’s about us and forget that it’s really about building something that’s greater than us. And by far the most successful people are the ones that surround themselves with better people and who build better systems.

It should be obvious that there really is a limit to how much one person can do or to how much one person can earn; as leaders, we should be looking for ways to create exponential value. Remind the next batch of leaders about that every time they think about going it alone. For a developing leader, every time you succeed by going it alone is just reinforcement of a bad habit; the success blinds you from seeing how much greater your success could have been if you had looked beyond yourself. Sure you may be brilliant, but doesn’t it make so much more sense to leverage that brilliance with others?

Me? I fall into this "brilliance" trap all the time, and time will tell if I’m still in the middle of it. With all my academic and workplace success, my family has always figured I’d be the really successful one. But I’m betting on my brother. I think my brother "gets it" much better than I do. Awards or not, all my past success was mostly measured as an individual, and I can’t help but wonder what exponential value I left on the table . . .

Here’s to old dogs and new tricks. Best of luck with the next batch of leaders.

Patrick

“No single measure would do more to reduce disease and save lives in the developing world than bringing safe water and adequate sanitation to all.”
- UN Secretary-General Kofi Annan, Millennium Report

How do we meet the clean water needs of the world’s billions?

Connecticut based KX Industries may have the answer.

Perhaps you never heard of KX Industries (KXI), but you probably tasted the fruits of its work, they created the technology behind the PUR and BRITA "end of tap" filters: those water purifying pitchers we all know and love. Directed by CEO Dr. Evan Koslow and investor Kevin McGovern, KXI has recently developed an exciting new water filter technology, the "World Filter". Very little is publicly available about the filter, but the company claims its "nanofiber" technology is both extremely low cost and highly effective, so much so that Cornell business professor David BenDaniel called it "magic" when presenting a business case on the company. We agree with BenDaniel’s assessment, the technology was certified against strict standards: bacterial reduction of 99.9999%, viral reduction of 99.99%, and oocyst reduction of 99.95%. The company sees huge opportunities for profit and to meet the severe water needs of people in developing markets.

As magic as the technology is though, at BRINQ we know that success in Base of the Pyramid (BOP) markets is rarely about technology alone. For instance, look at Proctor & Gamble’s failure to crack the rural water purification market (as reported in a recent Wall Street Journal article). We’ve seen many demonstrations of P&G’s PUR powder, watching the swirling powder pull dirt out of muddy water looks like magic too, but its education requirement made the powder a difficult sell:

Still, the water purifier isn’t always an easy sell, even when it is free. One problem, P&G concedes, is that the product practically needs an instruction booklet. The powder, which kills bacterial diseases such as typhoid and cholera as well as various viruses, needs to be mixed with a specified amount of water and then allowed to sit for several minutes. The clean water then must be filtered through a cloth, to separate it from any debris, before it can be consumed.

Distribution in emerging markets is a huge and costly challenge too. Add marketing, gaining local trust, combating copycats, and protecting intellectual property to the mix and you can see that even with the most magical of technologies, the solution isn’t going to be easy. Clean water is also seen by many as a medical necessity: a perception might exist that people should get it for free. Even if the government buys your product at market value before giving it away, limiting your customer base hurts the products financial sustainability. You might even destroy local jobs by cutting out potential resellers. However, we’re not sure how toxic such “philanthropic poisioning” really is, and we know of at least one great example where free can help you reach high profit margins [Aravind Eye Care].

We believe an even worse curse for multinational companies is their financial return requirements. Though we don’t know how much KXI invested to develop the World Filter technology, chances are it was a pretty significant sum. There’s an unwritten law here: the more miraculous the technology, the more R&D dollars spent, the bigger and faster you’ll need to come out the gate to meet your Top of the Pyramid returns. With those pressures, it can feel impossible to start small and grow your business organically and smartly. Organic growth gives you time and experience to learn from your mistakes, whereas a fast and furious approach means that if you fall, you’re going to fall hard.

We have a lot of hope for KXI, the World Filter technology appears to be nothing short of amazing and Koslow and McGovern employ some incredibly brilliant individuals: their technical savvy itself borders on the magical. Still, here at BRINQ we know the world needs more than just magic, if brilliance were the only missing ingredient, wouldn’t one of us billions have figured out the answers long ago?

Past “How to Change the World” articles:
Unleashing Competitive Imagination — The Fortune at the Bottom of the Pyramid – The Model T Trap – Going Beyond Networking

The Ford Model T: Available in any color as long as it’s black.

In 1908, Henry Ford introduced the Ford Model T, a "car for the common man", which both created and dominated the modern automobile market for the next 20 years, with more than 15 million units sold in its lifetime. Ford, however, failed to read the changes in perception of the market he had created, and continued to offer only one model to an evolving market looking for upgrades. The upstart General Motors capitalized on this shortcoming and surpassed Ford and the seemingly unbeatable Model T, by providing a ladder of car brands and upgrades. Some argue that Ford never really recovered from that misstep. This trap of not understanding and capturing the future value a venture enables we dubbed the “Model T Trap”*.

The “Model T Trap” is a critical issue for Base of the Pyramid (BOP) ventures, which by nature are enabling ventures, offering products and services “for the common man”. By enabling progress in the BOP, these ventures run the risk of lifting the customers they serve up and beyond the very services the ventures provide, potentially allowing others to capitalize on that future value, as GM did with Ford. Admittedly, falling into the trap itself is initially a sign of success both for the company and BOP development, but for ventures looking to attract continued investment to the BOP, they must have plans to capture the current AND future value their efforts enable.

This is even more critical if your goal is to incubate disruptive innovations in the Base of Pyramid. As Clayton Christensen details in "The Innovator’s Dilemma", before an innovation can disrupt its mainstream competitor, the innovation first incubates in an emerging market that values its attributes (attributes which are initially considered inferior by the mainstream). The innovation then follows an upward climb of improvements to eventually disrupt the mainstream market. That upward climb is a series of steps driven by customer demands in the emerging market. If you are not improving in step with your customer’s demands or you are unaware of the innovative ways in which your customers are using your offering, your unlikely to understand which aspects of your innovation are disruptive.

To avoid the trap, BOP ventures must find ways to embed themselves in their markets, capturing and leveraging local knowledge and shifts in perception, and to continue evolving their product and service offerings with their customers. Most critical is understanding how your customers are using your products and capitalizing on the new opportunities and innovations they are creating.

*The "Model T Trap" was presented at the 2004 meeting of the Base of the Pyramid Learning Lab, included in our recommendations for a consulting project to the Grameen Technology Center on the MTN villagePhone venture in Uganda.

"How do I get the resources I need to start my BOP business?"

This question came up in a recent discussion with a colleague from the Univeristy of North Carolina. Dozens of students graduate each year from UNC’s Kenan-Flagler Business School with a top-rated MBA degree and a passion to pursue Base of the Pyramid (BOP) opportunities, but few companies are hiring for these types of positions. You can always start your own business, but how does an aspiring entrepreneur from the top of the pyramid attract the resources needed to launch a new business in the BOP?

Just like any other entrepreneurial endeavor, it’s all about building credibility.

Credibility gives your entrepreneurial idea the power it needs to become a true business innovation. The higher your credibility, the higher your probability of finding funding, partners, customers, etc: i.e. all the resources you need to get going. The farther afield you are going in terms of geography, expertise or industry, the farther you have to build up your credibility to win the resources your venture needs. MBAs are taught how to do business planning and how to detail the growth of our companies, but rarely do we think of the same step-by-step methodology to plan the growth of our credibility and how we will pay for our learning curve. And credibility is critically important in the Base of the Pyramid where ideas greatly outnumber available funding*.

David Bornstein, who chronicles social entrepreneurs in his acclaimed book "How to Change the World", offers a description of this process. Bornstein states that social entrepreneurs typically start with what they know and issues they feel passionate about:

Social entrepreneurs, like business entrepreneurs, should begin with what they know best and should focus on an idea or issue that resonates deeply in their lives. Entrepreneurs rarely come up with their ideas suddenly. Typically, they spend years thinking about them–often searching for the right moment in their lives to move forward. Sometimes their ideas can be traced all the way back to childhood interests.

The budding social entrepreneurs then go through a stage of credibility building.

Before starting out on their own, they often work in jobs that teach them how a particular type of business or industry operates. Social entrepreneurs go through the same types of "apprenticeships." They usually work for several years in a particular field, profession or organization, acquiring the knowledge, skills and contacts that enable them to branch out on their own and improve upon what is currently being done. Then they enter the "launch" phase–when they start preparing to build their own organizations. Again, like business entrepreneurs, social entrepreneurs usually begin by tapping their personal networks–friends, families, colleagues, teachers, mentors. They often start with a few well-selected tests of their ideas–to demonstrate early viability–and build credibility and momentum. They enlist advice from well-connected and experienced allies about how to raise funding, think through strategy, and build a team of supporters and advisors.

For MBAs and others starting ventures in the BOP, creating a series of projects to build relationships in your target area is critical. Even if these projects are volunteer or charitable works, the credibility you build will be invaluable. For example, here at BRINQ, we seek to gain experience in new markets by running small toy-design contests with local non-profits, helping us to build the relationships and credibility we need to promote our commercial "sow & gather" approach to innovation. For another example, take a look at Theresa Williamson in Rio, Brazil, described as a "powerhouse" by WorldChanging.com. Williamson founded her high-impact "Catalytic Communities" four years ago as her doctoral thesis at the University of Pennsylvania. Williamson recounts her own learning curve in detail in her dissertation “Catalytic Communities: the Birth of a Dot Org” (PDF).

The key lesson to learn is that when you’re starting with very little and need the most help, you have to find ways to give the most help you can. And not just to the people you want to serve, but to the people you most want to partner with. You need to go beyond networking to credibility building. Afterall, you measure your network by the number of people you can call when facing a problem, but you measure your credibility by the number of people who will call you.

And when people start calling, the resources will follow.

* To illustrate the scarcity of funding, BRINQ recently made it to the semifinal round for Echoing Green funding. Echoing Green is one of the few organizations that will consider funding "for-profit" socially oriented ventures. We were one of 700 groups Echoing Green was considering for funding in 2005, we’re now one of 150. Echoing Green will eventually select 12 organizations to fund, a funding rate of under 2%.

The disruptive-innovation theory explains why new firms armed with relatively simple, straightforward technological solutions can beat powerful incumbents, often creating entirely new markets and business models. The disruptive innovation theory was popularized in Harvard professor Clayton Christensen’s "The Innovator’s Dilemma". This article points to some examples of disruptive innovations, their characteristics, how to test for disruptive innovations, and further sources for review.

Some examples of disruptive innovations:

• Peer to Peer networking, disrupting traditional distribution mechanisms
• MPEG Audio and Video Compression (MP3 et al.), disrupting physical media
• PCs, disrupting other media devices (TV, stereo, etc.)
• Smaller sized hard drives (as discussed in the Innovator’s Dilemma)
• Steel Mini-Mills (as discussed in the Innovator’s Dilemma)
• Amazon.com (disrupting traditional Brick & Mortar retail)
• Dell Direct (disrupting the whole PC Industry)
• Cell Phones (disrupting PCs and digital cameras)
• Ebay (disrupting traditional retail systems)

Potential Disruptive Innovations

• Renewable and Distributed Energy (Solar, Biomass, etc.)
• Adaptive Eye-Care’s user-adjustable corrective glasses
• WiFi and organically grown networks

Characteristics of a Disruptive Innovation>

• Its performance attributes meet the unfulfilled needs of an emerging market’s customers. These same attributes are not initially valued by the mainstream market, which instead value different performance attributes and initially see the innovation as substandard.
• Emerging market adoption enables the innovation to increase its performance and to begin overlapping with the performance expectations of the mainstream market.
• Awareness of the innovation increases as the innovation develops, influencing change in the mainstream market’s perception of what it values.
• The change in the mainstream market’s perception of what it values enables the innovation to disrupt and replace the existing offerings in the mainstream market.

Can you see why those us of working in the Base of the Pyramid are so excited about this theory? The Base of the Pyramid could be an ideal place to meet unmet needs and to incubate disruptive innovations, creating new markets and one day perhaps even disrupting mainstream markets higher up the pyramid. This idea of incubation in the BOP was put forward in Christensen and Hart’s article “The Great Leap: Driving Innovation from the Base of the Pyramid”. Quoting Professor Hart:

“It is much easier to take an innovation up-pyramid than it is to try to do it the other way around.”

We believe that same reasoning is why Hewlett-Packard set up the HP labs in India.

Is the Idea Disruptive? Christensen’s Litmus Test
Summarized by Emergic.org

Executives must answer three sets of questions to determine whether an idea has disruptive potential. The first set explores whether the idea can become a new-market disruption. For this to happen, at least one and generally both of two questions must be answered affirmatively:

• Is there a large population of people who historically have not had the money, equipment, or skill to do this thing for themselves, and as a result have gone without it altogether or have needed to pay someone with more expertise to do it for them?
• To use the product or service, do customers need to go to an inconvenient, centralized location?

The second set of questions explores the potential for a low-end disruption. This is possible if these two questions can be answered affirmatively:

• Are there customers at the low-end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price?
• Can we create a business model that enables to earn attractive profits at the discount prices required to win the business of the overserved customers at the low end?
• Once an innovation passes the new-market or low-end disruption test, there is still a third critical question to answer affirmatively:
• Is the innovation disruptive to all of the significant incumbent firms in the industry? If it appears to be sustaining to one or more significant players in the industry, then the odds will be stacked in that firm’s favor, and the entrant is unlikely to win.

Sources and Links:

The Innovator’s Dilemma, by Clayton Christensen
The Innovator’s Solution, by Clayon Chistensen and Michael Raynor
The Great Leap Forward: Driving Innovation From the Base of the Pyramid , by Clayton Christensen and Stuart Hart
HBS Working Knowledge Article - A Diagnostic for Disruptive Innovation
Optimize Magazine - Forging Innovation from Disruption
CIO Magazine - Disruption is Good - an interview with Clay Christensen Emergic.org Article - TECH TALK: My Mental Model: Creating Disruptive Innovations
Adaptive Eyecare - low cost, user adjustable eye glasses.