We learned a great deal from Prahalad about the bottom/base of the pyramid and also remembered what Yunus proposes social businesses to be. What is definitely obvious from both of these thinkers is that there are some very interesting things happening in the world of business as it relates to poverty. There are so many different businesses out there doing interesting things and this is your space to pick your favorite and tell us about it. In addition to that, review the handouts on Prahalad and Yunus' views in order to relate the organization to their ideas.
The following is one that I chose. Make sure to check if someone already has blogged about yours!
Business: A to Z Textile Mills
Where they operate: Tanzania
What they do: produce over 10 million insecticide treated bed nets that last up to 5 years. Employ local people and continue to reduce the costs of producing the nets. They sell directly to the people but also to many NGOs and governments.
Bottom of the Pyramid principles: they meet several, here are three.
- Process Innovation: insecticide in bed net traditionally lasted only 6 months, making them useless for many people who could not retreat them with insecticide.
- Education of Consumers: the nets are distributed mainly through NGOs and governments that also provide education on malaria issues.
- Distribution: this is related to the above, but the biggest innovation was to install the production facility in Tanzania. If the need is in Africa, why not make the product there as well? An obvious question, but one that is not usually asked. They did!
What I think is awesome: what attracts me the most about the A to Z idea is that they established the industrial operations in the country. In this way, the dramatic problem of malaria turns into an employment opportunity for the country. This is a very strong example of how you can find opportunities in problems. I'm not saying that people should make money from issues of poverty, I'm saying that people WILL. This is a reality: people need bed nets, someone will need to sell them. It makes so much sense to close this circle and have these economic benefits go to Tanzania and contribute to the development of the country and people. I wonder if there are any other health (or social) needs that can be met in this way as well...
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Business: Solar Electric Light Fund (SELF) www.self.org
Where they operate: Over 15 countries [Bhutan, Benin, Brazil, China, India, Indonesia, Navajo Nation, Nepal, Nigeria, Sri Lanka, Rwanda, Soloman Islands, South Africa, Tanzania, Uganda, Vietnam]
What they do: SELF created sustainable energy systems in order to achieve advancements in healthcare, education, agriculture and in the economies of developing countries. They bring solar power and wireless communications to rural villages throughout the world, to places without these amenities. By providing electricity, SELF has been able to assist with the installation of water pumps and purification systems, irrigation, health clinics (with refrigeration), schools, household and community lighting and lastly by creating income-generating micro-enterprises.
Bottom of the Pyramid principles: I will describe a few.
•Sustainable Development: reliance upon solar energy to power rural villages, website states that they take a “great deal of care has been taken to ensure that this project will be technically, financially and organizationally sustainable.”
•Deskilling of Work: SELF helps to create micro-finance enterprises in many of the nations that they work in, including setting up sewing factories, training people to install the water pumps and regulate electricity, etc…
•Distribution: SELF didn’t just focus on one area needing sustainable power, but instead they focused on many different areas throughout the world and has thus mobilized a lot of people that all serve as catalysts for change within their own respective villages, since SELF partnered with locals to assess the needs of each individual place separately
Social Business: I am not exactly sure that SELF is maximizing profits, since they have declared themselves to be a non-profit organization. However, I would categorize them as a social business, because their primary aim is to provide a social benefit, in the form of power, which has enabled them to change peoples’ lives and livelihoods.
What I think is awesome: I think it is awesome that SELF has had great success and has not limited their efforts to just one area, but they are maximizing opportunities in efforts to help more people. I think the idea of bringing electricity to places without it opens up a world of opportunity and this organization has helped to decrease malnutrition by designing good irrigation systems, has powered schools so that more children can learn and has equipped mothers and fathers with the tools to become entrepreneurs.
Business: Endeavor (endeavor.org – coolest web design ever, btw)
Where they operate: New York, Argentina, Brazil, Chile, Colombia, Mexico, Uruguay, Turkey and South Africa
What they do: Identify and support High-Impact Entrepreneurs in emerging markets. Their model engages the private sector in mentoring and advising the most promising-yet-undiscovered entrepreneurs and jumpstarts entrepreneurial support networks in these economies. (Think Ashoka but for both traditional and social entrepreneurs)
BoP principles:
1)Scale of operations: Endeavor’s model is based on high impact entrepreneurship so they look for markets that have a critical mass of these high-growth potential, innovative entrepreneurs.
2)Identifying functionality: Ties to existing Endeavor countries - language and cultural similarities – make it easier to expand out.
3)Distribution (Accessing the customer): Since Endeavor’s entrepreneurs start businesses in their native countries, they have local knowledge of consumer needs and understand the opportunities & barriers in their local markets.
Social business?: A snippet of Endeavor’s mission statement: “ We scour a country for these entrepreneurs, help them break down a society’s barrier to success, offer world-class strategic advice, and open the doors to capital.” They hope that others will take notice, innovate, take risks, and create sustainable economic growth. The social aspect is definitely there, and the business by-the-books side of Endeavor is apparent in its organizational structure and language. Metrics for success include 5 kinds of capital: financial, social, intellectual, human, and cultural. Because of this, I think it’s most definitely a social business.
What I think is awesome: I love love love that they include social and cultural capital in their metrics. Oftentimes, it seems as though elements unrelated to $$$ are left out of the equation. Also, I love that they’re trying to foster a spirit of entrepreneurialism, not only in the areas where they operate, but also in their staff, board, volunteers, etc. And you gotta admit – their website is pretty baller.
Business: Calvert Foundation www.calvertfoundation.com
Where They Operate: Calvert works mainly in the US, but they coordinate with projects all over Africa, Southeast Asia, and Latin America
What They Do: Calvert Foundation, works to make community investment a safe and logical option for all investors seeking to make a positive social impact. They focus on using investment capital, rather than conventional philanthropy, to create a sustainable, scalable model that enables nonprofit organizations and social enterprises to address critical social problems. They invest in housing, microcredit, small business funding, fair trade, community facilites development, social innovations, gulf coast recovery, environmental issues. On their "What is Community Investment?", Calvert says:
Around the world, millions of individuals face this dilemma. They lack access to the essential financial services necessary to be self-sufficient. As a result, the gap between rich and poor is widening.
Community investment helps close this gap by channeling flexible, affordable capital to areas underserved by traditional financial institutions. This capital enables individuals to live in affordable housing, expand their small businesses and rise above the cycle of poverty.
As an investor, you create a positive social impact while earning a modest return on your investment. Your interest and principal are returned at maturity.
Scale of Operations: Calvert works all over the world, but depending on the size of the country, they partner with other non profits. They do a great job of allocating processes depending on the size of their projects.
Education of consumers: Calvert works with some of their borrowers about debt repayment and lenders about the importance of investing in under resourced communities.
Distribution: Calvert spreads their resources around a multitude of different projects, so they ensure they are having an impact on different areas.
Social Business: they are maximizing profits and using the profits to expand their work and look for new places to lend.
Why I think it's awesome: They have such a wide range of services that are focused on long term results. They help build up the resources of the poor in all different areas of the world, and work with great non profits.
Business: Grameen Bank (http://www.grameen-info.org/)
Where they operate: They have partner organizations in many locations. Primary country of operation is Bangladesh
What they do: "Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust, accountability, participation and creativity. GB provides credit to the poorest of the poor in rural Bangladesh, without any collateral. At GB, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the over all development of socio-economic conditions of the poor who have been kept outside the banking orbit on the ground that they are poor and hence not bankable."
Bottom of the Pyramid principles:
In my mind, Grameen was one of the original social businesses and fits Yunus' definition rather well. Grameen is a bank that provides a social benefit and is owned by the poor and disadvantaged that it serves.
From Prahalad's perspective, Grameen does well in follwoing BOP principles. It is a sustainable business model with high repayment rates. They have stopped taking outside investment entirely. This self-sufficiency will ensure their continued existence and ability to reach the poorest of the poor in Bangladesh.
Grameen, like many other MFIs, have begun to master the art of distribution as well. You now no longer need to be literate to secure a small loan, or often times even see a loan officer to make a repayment. Through this they are reducing overhead costs and providing loans to the poor at ever lower interest rates. Grameen has pioneered the use of technology in its efforts to reach lower and lower on the pyramid. Many of their loan officers are former borrowers and from the villages in which they are working. This facilitates the relationships and trust, so important in the giving of MF loans.
Hopefully I will be able to tell you all a lot more after this summer! Let's keep the blog alive.
Business: Lijjat
http://www.lijjat.com/
Where they operate: India
What they do: Lijjat began when a group of women began producing and selling Papads (crispy Indian bread). The business is collectively owned by these self-employed women (known as "sisters"), and as it has expanded it has diversified its product line. Women work from their homes--for many of them, working outside of the home is not socially acceptable. Lijjat provides an opportunity for income generation for women that would otherwise be unable to earn money for their families. The only requirement for a Lijjat sister is that she remain true to Lijjat's core values.
Bottom of the Pyramid Principles:
1) Scale of Operations: Lijjat employs 42,000 people across the entire country and has had sales of over $68 million.
2) Distribution: Since it employs so many women, and it operates like a village industry, word of mouth was an extremely affective way to access high density urban markets.
3) Deskilling of work: All labor is manual (since the goal is self-employment for women), so no machinery is used.
Social Business: Lijjat meets the second definition of a social business: “Profit-maximizing businesses that are owned by the poor or disadvantaged. Dividends and equity growth produced by it will go to benefit the poor, thereby helping them to reduce their poverty or even escape it altogether.” Lijjat is collectively owned and all profits are shared by the "sisters." The intention is to increase household incomes and provide benefits to families.
What I think is awesome: The emphasis on core values--
(1) The concept of Business: Production of quality goods and at reasonable prices. They do not accept donations or charity, and many sisters donate to good causes based on capacity.
(2) The concept of family: all sisters seek to promote the welfare of each others families through mutual trust, affection and concern.
(3) The concept of Devotion: "the institution is never merely a place to earn one's livelihood - It is a place of worship to devote one's energy not for his or her own benefits but for the benefit of all." They have daily all-religion prayers.
Is that a social business or what!??! Check out their website, I don't think I did them justice!
So I started writing about a Sexual Health Group in the UK that manufactures sexual health products. I ended up passing over it.. partly because they claimed that one of the social benefits of their product was that they produced condoms that "the Vegetarian Society approved and is suitable for Vegans too".
http://www.sexualhealthgroup.com/products_and_services.htm
It made me laugh... I'm going to go find another social business.
Business : Pioneer Hi-Bred
http://www.pioneer.com/web/site/portal/
Where they operate: Worldwide, in over 70 countries
What they do : They are primarily an agricultural service provider with an array of facilities and services for people in line with the agricultural business/work. Examples of their services include : field by field performance analysis, crop production resources, field by field planting records that track precipitation records as well as pesticide use, harvest summary reports, seed and crop protection financing need, crop management…whew and a lot of other stuff.
They also offer a top of the line research program for focused on developing products for their customers based on their needs.
Bottom of the Pyramid Principles :
Scale of Operations : Operates in over 70 nations and is considered to be the world’s leading developer and supplier of plant genetics to farmers, and employs about 5,000 employees worldwide
Education of Consumers : all of the customers have control over expressing their specific needs and accessing current and up to date research that Pioneer Hi-bred makes available through ongoing customer assistance. Extensive information is provided for any type of hybrid farming.
Social Business: Though this company is reaching out to millions of people worldwide with their innovative services of making farming more convenient, more accessible and providing top of the line research, I’m not sure that I would consider this a social business. They seem to be an extremely profitable business on their own.
What I think is awesome: The number of options for so many different types of agricultural needs! You can spend hours on their website, going through different vegetables, different products and research that’s been done on them in terms of hybrid cropping.
Business: Bakhtar Bastan Solar Wind Co.
Where they operate: Afghanistan
What they do: They collaborate with US companies to install and publicize solar and wind technology to save companies money and to improve sustainability and efficiency of businesses. This business currently works at a small scale operation, mainly working with individuals and small businesses. This is due to lack of infrastructure in the Afghan government.
Bottom of Pyramid Principles:
Designing for Hostile Infrastructure: Very few companies in Afghanistan focus on environmental practices due to lack of infrastructure and the war, it is seen as a waste of time and energy. This company has had success despite these challenges.
Education of Consumers: Nobody in Afghanistan knows how this energy works...education and training is a huge part of their company and long-term success.
Sustainable Development: Self-explanatory.
Why it is awesome: Shows an example of environmental focus in a time of war and devastation. Afghanistan is essentially a failed state, but that doesn't mean that sustainable practices can't be a goal.
Business: Fairgift
http://www.fairgift.co.uk/
Where they operate: Based in UK, but international
What they do: Fairgift promotes fair market access for producers in developing countries by enabling sales of fair trade products and campaigning for greater trade justice. Fairgift directly targets weddings, civil partnerships, and other special occasions in such a way that consumers in the UK are positively impacting developing countries through their gift consumption.
Bottom of the Pyramid principles:
Scale of Operations: Small vs Large Countries-- Fairgift is connecting the scales of large and small countries and allowing them to socially and financially profit off of oneanother.
Sustainable Development-- Fairgift has a strong focus on sound & sustainable environmental policies in production, and packaging & transportation which includes widespread use of recycled materials.
Distribution-- Fairgift promotes distribution by connecting producers in developing countries with consumers in developed countries.
Social Business: The company, though not owned by the poor itself, promotes small for-profit businesses owned by the poor in developing countries. In this way Fairgift is creating social profit by supporting small social businesses that are pursuing traditional financial profit.
What I think is awesome:
This business empowers and promotes the Base of the Pyramid by considering them as producers. Targeting and marketing to the BOP is very important and empowering, however, both sides of the coin need to be addressed. To alleviate poverty we need to do more than provide quality services for the poor to consume—a means for the poor to afford these services need to be created and this business addresses this need.
What I think is not so awesome:
Though not all the businesses being connected through Fairgifts rely on developing markets alone to market their products, creating a dependency on foreign demand within developing countries could be injurious to that economy. It is important to build infrastructure and enterprises within the company that are sustainable and utilize outsourcing but are not solely dependent upon it. This also perpetuates the idea of the Western world as consumers and lovers of luxury. Hart might say that this is solely slowing progress in the wrong direction—that the Western economy needs to transition away from excessive consumption and material goods.
Business: Terracycle (www.terracycle.net)
Where they Operate: United States, new factory in Brazil
What they do: Terracycle "upcycles" trash into new products. Seriously. It started with worm poop that was made into fertilizer and packaged in used plastic bottles. Now Terracycle manufactures products from trash varying from backpacks and home cleaning products to fire-starting logs and trash cans. Also, the company is the world's first carbon-neutral corporation and has done some really cool, socially responsible stuff in Trenton, NJ (like hiring ex-convicts).
Bottom of the Pyramid Principles:
*Sustainable Development: Terracycle is literally keeping trash oout of landfills. Cool.
*Process Innovation: In order to get the trash from which they make their products, Terracycle pays community groups (like the Boy Scouts and church groups) and individuals to collect product components (soda bottles, corks, Capri Sun containers, etc.)
*Challenge the conventional wisdom: Making trash valuable!! (?!?!?)
Social Business: Terracycle does net a profit, so it cannot be considered a social business in the purest sense. Yet Terracycle also maximizes the social and environmental good it produces, and turns conventional hiring practices, corporate location strategies, and business sense on its head (Mr. Yunus' "I do the opposite.")
What I think is awesome: Tom Szaky, the owner, really inspired my creativity in socially/environmentally responsible business. Terracycle is expanding in a big way, and reducing the amount of waste. Plus, last night I saw Bill McDonough of the cradle-to-cradle design philosophy, and the amount of waste we are creating, particularly plastic, scares the crap out of me. Anything to reduce that is a-ok in my book.
Business: The Green Belt Movement
Where they operate: Based in Kenya and throughout Africa
What they do:
The Green Belt Movement takes an holistic approach to development by focusing on environmental conservation, community development and capacity building
They organize poor, rural Kenyan women to plant trees to restore the environment, generate income restore fuel source and stop soil erosion. They are focused on helping improve the lives of local people by mobilizing their own abilities to improve their lives by protecting and developing their local environment and economy. The project empowers women by helping them generate their own economy through planting and seed sales. In addition to the grassroots tree planting the Movement now includes civic and environmental education, advocacy and networking, ecotourism and Women for Change, a capacity building program for girls.
Bottom of the Pyramid principles:
• Scale of Operations: The Green belt movement has grown immensely. They have planted more than 30 million trees, trained more than 30,000 women in various trades and organized communities to prevent further damage.
• Sustainable Development – The main drive behind the project is to protect and restore the environment, and GBM shows that it is possible to have economic development by working with and for the environment as opposed to harming it.
• Education of Consumers: GBM places its clients and consumers as the top priority and recognizes that only through empowering individuals and communities can their work be done. They especially work to empower women and girls because they know that is the key to sustainable development.
Social Business:
I’m not sure if the Green Belt Movement is operating without incurring costs, they are technically and non-profit, but they seem to fit Yunus’ second definition of a social business, a business “owned by the poor or disadvantaged. Dividends and equity growth produced by it will go to benefit the poor, thereby helping them to reduce their poverty or even escape it altogether.” (Page 28). In this case the dividends come on the individual level of the women who are trained in various trades and can now have their own income, and the dividend of a healthy environment, which allows for prosperity.
What I think is awesome:
Having worked in Haiti I’ve seen the devastating impacts of deforestation and I’ve seen of a lot of people and organizations with a defeatist attitude about it. What is awesome about the Green Belt Movement is they not only tackled this enormous challenge and not accept that the fate that they are environmentally doomed, but also used it as a tool to address many other challenges, such as women’s empowerment, education and community economic development.
Business: Nirma
Where they operate: India
What they do: Nirma produces soap—all kinds! It caught my attention as I was actually reading about Unilever, another much larger soap/detergent producer in India. After Nirma had been operating for a few years, Unilever realized that although they hadn’t lost any profit to Nirma; the tiny company had somehow managed to capture 35% of the market share of detergent sales. They had managed to tap into all the markets that existed at the BOP—rural and urban low-income areas—mass markets of consumers who were previously ignored and were profitable even with a huge monopolist like Unilever. What qualifies it as a social business, in my opinion, is its creation of the Nirma Education and Research Foundation—which now is basically a university, but was founded by Nirma with the idea that “use of scientific, technological discoveries and management techniques should be made for the welfare of mankind and should resolve the problems of society in general and the technological field in particular.”
Bottom of the Pyramid principles:
• Sustainable Development: It’s not an uber (if at all) environmental sustainability-focused company, but I think its focus on promoting technical education is important to note, in that it’s working to promote a sustainable market via creating a means of human capital development.
• Distribution & Price Performance: Nirma identified underserved markets and found ways to produce their detergents that made them affordable to that market at the BOP.
Social Business & Why I think it’s cool: Honestly, it doesn’t seem to scream “social business,” when you first read about its operations and such. But I think the idea that they created a foundation, later to become a university, with a mission directed at creating a pool of skilled labor within a region struggling to develop because it lacks that aspect of social capital. I think it qualifies as a social business in that it realizes its commitment to the market it has targeted and is steadily profiting from, and took the initiative to create a center that furthers both the firm’s development and regional development through education.
Business: Nirma
Where they operate: India
What they do: Nirma produces soap—all kinds! It caught my attention as I was actually reading about Unilever, another much larger soap/detergent producer in India. After Nirma had been operating for a few years, Unilever realized that although they hadn’t lost any profit to Nirma; the tiny company had somehow managed to capture 35% of the market share of detergent sales. They had managed to tap into all the markets that existed at the BOP—rural and urban low-income areas—mass markets of consumers who were previously ignored and were profitable even with a huge monopolist like Unilever. What qualifies it as a social business, in my opinion, is its creation of the Nirma Education and Research Foundation—which now is basically a university, but was founded by Nirma with the idea that “use of scientific, technological discoveries and management techniques should be made for the welfare of mankind and should resolve the problems of society in general and the technological field in particular.”
Bottom of the Pyramid principles:
• Sustainable Development: It’s not an uber (if at all) environmental sustainability-focused company, but I think its focus on promoting technical education is important to note, in that it’s working to promote a sustainable market via creating a means of human capital development.
• Distribution & Price Performance: Nirma identified underserved markets and found ways to produce their detergents that made them affordable to that market at the BOP.
Social Business & Why I think it’s cool: Honestly, it doesn’t seem to scream “social business,” when you first read about its operations and such. But I think the idea that they created a foundation, later to become a university, with a mission directed at creating a pool of skilled labor within a region struggling to develop because it lacks that aspect of social capital. I think it qualifies as a social business in that it realizes its commitment to the market it has targeted and is steadily profiting from, and took the initiative to create a center that furthers both the firm’s development and regional development through education.
Business: Counter Culture Coffee
Where they operate: Headquartered in North Carolina, but trading directly with growing partners around the world. Available at The Daily Grind on campus!
What they do: Provide consumers with high-quality coffee sourced directly from farmers while respecting local cultures, farms, and individuals at the origin. They are dedicated to sustainable agriculture and they actually pay “at least $1.60/lb. for green coffee, which exceeds the Fair Trade Certified floor price by at least 19%, not including quality-based financial incentives paid to growers.” They concern themselves with natural decaffeination, organic and shade-grown coffee, and understanding their footprint.
Bottom of the Pyramid principles: I found Counter Culture met a few of the principles...
Sustainable Development – They manage the environmental impact of their processes by only trading with organic, shade-grown (a practice which protects aviary habitats) coffee farmers. Additionally, the company has adopted “green” practices. They are flexible with farmers about trading with them each season and improving varieties sustainably.
Education of Consumers – Their publicity efforts are replete with consumer education, with an emphasis on deriving quality from sustainable practices and conducting business in a way that does not exploit the farmers.
Social Business: Ultimately, their aim is to have you vote with your dollar, to subscribe to their mission by buying coffee. They are absolutely profit-motivated, but as is evidenced on their website, they place a greater emphasis on their economic, environmental, cultural, and social impact. Their priority in marketing the products is to ensure transparency and all-around education for producers and consumers.
What I think is awesome: Their website has a blog about where employees of Counter Culture have traveled throughout the world, establishing significant relationships with communities to ensure a fair, direct trade. Instead of terminating relationships with partners by refusing to buy their coffee the next season, they provide advice and offer an alternative to economic penalty. As evidenced by their success at UNC-CH, they also offer a fantastic product coupled with a wealth of educational resources.
Business: Stonyfield Farms
www.stonyfield.com
Where they operate: U.S.
What they do: Stonyfield Farms is an innovative business that produces natural, organic yogurt in partnership with local farms and producers. Stonyfield not only encourages and nurtures relationships with farmers, but also supports sustainability and uses a great deal of its profits for environmental ventures. A few of these examples include giving 10% of their profits each year to approved profits and organizations that work to restore the earth and in-depths plans and procedures for how Stonyfield itself works to fight climate change and global warming, mimimize solid waste, conserve energy, and making the most recyclable packaging choices. They also have a Menu for Change program in many of the nation's schools to better nutrition, decrease obesity, and instill positive habits in children right from the start.
BOP Principles: The Stonyfield headquarters are sustainable and solar-powered themselves and they promote sustainability through their support of organizations across the country working to do this, as well. They are also maximizing their profits by distributing them towards the environment and nutrition.
What I like and don't like about Stonyfield: When I heard Gary Hirshberg speak last semester, I was truly amazed at how every step of the process in making, packaging, and distributing the yogurt was thought out carefully and with the environment constantly in mind. Now that I have read about Yunus and heard him speak, I can see that Gary is constantly thinking at every step what more can be done to make Stonyfield and the U.S. more sustainable (probably not quite to the extent of Yunus, but there are traces there). I also like that Gary and Stonyfield are focusing on needs right here in the U.S. I believe it is important to have a balance between causes at home and abroad and I am happy to see an American social business targeting the environment and nutrition.
I am not sure how accessible this product is to the majority of the U.S. population, however. It is wonderful that Stonyfield supports environmental awareness and sustainability, but I don't know how wide their audience and distribution really is. They are having a social impact upon the environment, small, family farms, and nutrition, but I am not sure if some members of society are receiving these benefits.
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