Ted London on getting smarter at the base of the pyramid

When it comes to business ventures that serve the world’s poor, great interest hasn’t always translated into great success. Enterprises that start down this path often hit a roadblock when it comes to scale.

Michigan Ross Professor Ted London has researched and worked with these base-of-the-pyramid ventures, studying what’s worked and what hasn’t. He’s written extensively on best practices in the field and now brings that expertise to a new Ross Executive Education program, Strategic Growth from the Base of the Pyramid.

“If you look back over the years, there’s so much more awareness of the opportunity. Yet what has lagged is deeper understanding of the capabilities to execute,” says London, professor of business administration and vice president and senior research fellow of the Scaling Impact Initiative, William Davidson Institute. “The good news is that now we have a set of tools, frameworks, and strategies that we’ve developed from experience in the field over the past 15 years.”

Ever since the late Ross Professor C.K. Prahalad wrote the 2005 book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, interest has swelled in providing products and services that improve the livelihoods for the world’s poorest citizens.

The idea is to design business models that have positive social impact and generate acceptable financial returns.

It’s been an elusive goal for many because the market environment is challenging for enterprise development, London says. Low incomes and lack of infrastructure means ventures have to think differently about their value proposition. They have to look at new approaches to organizational design and structure, new strategies for scale, and new models for building partnerships.

“In BoP markets, we’re not reinventing the principles of business, but we’ve seen that they need to be applied in different ways,” says London. “These ventures must understand how to adapt to a fundamentally different context, and respond effectively to the constraints faced by local producers and consumers.”

The course is hands-on, with participants building their own action plan as they go through the program. London says the idea is to learn how to apply the tools and frameworks to each venture’s particular situation. Joining London in this program is Stuart Hart, S.C. Johnson Chair Emeritus in Sustainable Global Enterprise at Cornell’s Johnson School of Management.

And, London says, it’s time to take this to an executive audience because so many companies are studying or launching base-of-the-pyramid ventures.

“These venture leaders don’t know what they don’t know,” he says. “At the very least, we want to help them avoid some classic mistakes. And more importantly, we want provide them with a toolkit of activities and strategies that offer a blueprint for increasing the likelihood of their success.”

Reprinted from Ross Thought in Action