A growing number of multinationals are now devising creative business models to serve the bottom of the economic pyramid (BOP) — people who live with an annual per capita income of less than $1,500. But despite their good intentions, these global corporations still view the BOP as a market — where poor buyers dream about buying their goods and services.
But two firms – Marico and Microsoft — are now approaching the BOP in India not as a commercial market, but as a creative source of innovation that can sustain their long-term growth in that region. These exemplars are unleashing, and harnessing, the creative potential of grassroots Indian entrepreneurs. In doing so, these vanguard firms are pioneering a new business model — by integrating their business strategy with corporate citizenship goals in a coordinated effort.
Take Microsoft’s Unlimited Potential (UP) program, set up 17 months ago. UP embodies Bill Gates’ vision of “creative capitalism” — i.e., doing well while doing good for the 5 billion people who make up the middle and bottom of the pyramid, by making technology’s transformative power available to them. UP partners worldwide with influential community stakeholders — businesses, governments, educators, and nongovernment organizations (NGOs) — to co-create viable economic solutions for social ills like illiteracy and deficient healthcare from which their communities suffer.
In India, for instance, UP nurtures and facilitates grassroots Innovation Networks — made up of local Inventors, Transformers, Brokers, and Financiers — to co-develop and co-market innovative technology offerings that address the most pressing socioeconomic needs of underserved communities. For instance, Microsoft is co-inventing with IIT-Chennai Professor Ashok Jhunjhunwala wireless computing solutions for deployment in Indian villages.
UP also reaches out to external Transformers and Brokers to rapidly scale the deployment of jointly developed tech offerings. For example, UP worked closely with ICRISAT, an NGO, to set up Rural Knowledge Centres (RKCs) all across India. The RKCs aim to provide computer literacy and an array of IT-enabled services to Indian rural communities, with a special focus on empowering women in these areas.
Marico is another company that works closely with Indian grassroots innovators to co-develop and co-market solutions that enhance local communities’ standards of living. Marico is one of the most innovative and well-respected Indian consumer goods firms.
In my last trip, I met with Marico’s CEO Harsh Mariwalla, and am truly impressed by his philanthropic efforts to boost India’s self-image as a world-class innovator.
Eager to give back to the society, Mariwalla set up Marico Innovation Foundation (MIF), with a charter to galvanize India’s innovation capabilities at the very grassroots level. Chaired by Dr. RA Mashelkar, India’s most prominent scientist, MIF seeks to identify and publicly recognize independent business and social entrepreneurs, especially in Indian villages.
The most creative entrepreneurs, and their noteworthy inventions, are showcased in a highly-publicized award program that MIF organizes each year. MIF also brokers these grassroots Inventors’ access to Financiers like banks and VC firms, and to Transformers like the National Innovation Foundation, which can transform their promising inventions into large-scale commercial applications.
Here is the kicker: several of these social entrepreneurs rewarded by MIF are…illiterates. This goes to show that you don’t need a fancy PhD to drive social innovation!
While other companies run similar social innovation award programs as a PR stunt, Marico has actually deployed some of these grassroots inventions within its own value chain, because they were deemed helpful in driving the firm’s growth. For instance, Mariwalla told me about a farmer who had invented a “robot” that climbs up coconut trees to harvest coconuts. Such an invention is a godsend to the Indian agriculture sector which, plagued by a deepening labor shortage, is facing huge pressure to boost its productivity. So Marico partnered with India’s Coconut Development Board and the National Innovation Foundation to transform this prototype into a commercially-viable machine. Marico then tapped its nation-wide logistics network to distribute the machine to its hundreds of coconut oil suppliers, who increased their supply chain efficiencies with the use of the machine.
Both Microsoft and Marico have realized what many zealous corporations still don’t understand: you don’t need to invent a solution for the socio-economic problems affecting BOP communities. The solution is already invented by social entrepreneurs in these communities. Rather than reinventing the wheel, firms should broker and finance the transformation (replication) of these grassroots inventions into large-scale applications for use across multiple communities worldwide.
Microsoft and Marico are shining examples that corporations can do well while doing good in the world. But to get there, corporations must stop treating BOP communities merely as markets, and learn to forge innovation network partnerships with them.