A few weeks ago, I had the pleasure of interviewing Ted London, a Senior Research Fellow at the William Davidson Institute and faculty member at the Ross School of Business at the University of Michigan. He recently co-authored the book Next Generation Business Strategies for Businesses for the Bottom of the Pyramid which collaborates with a handful of major players in the social enterprise industry to move the discussion forward from simply finding a fortune at the Bottom of the Pyramid (BoP) to creating a fortune with the BoP. This is part two of a two part interview
RP: You speak of risk: the risk that you bear, but also the risk that you share with others, whether it’s your consumer or your partner. On the flip side there’s also the risk to the investors as well. We have seen and learned from Acumen this concept of ‘patient capital’. What are your thoughts on mixing investors with different success metrics? If your goal is to prove that there is a market based solution, the profit may come in different shapes and forms as compared to your traditional multinational for-profit organizations. When you’re starting up, should you focus purely on patient capital vs. traditional investors or mixing the two?
TL: The simple answer is ‘it depends’, but I think there are two big aspects to this issue. One is the need for better transparency across different sectors. In some sense we’re using a venture capital model or applying the power of markets and free enterprise in the patient capital world often without the explicit recognition that this is subsidized capital. We’re providing subsidized capital to help catalyze these enterprises which I think is a fantastic idea that makes a lot of sense.
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A few weeks ago, I had the pleasure of interviewing Ted London, a Senior Research Fellow at the William Davidson Institute and faculty member at the Ross School of Business at the University of Michigan. He recently co-authored the book Next Generation Business Strategies for Businesses for the Bottom of the Pyramid which collaborates with a handful of major players in the social enterprise industry to move the discussion forward from simply finding a fortune at the Bottom of the Pyramid (BoP) to creating a fortune with the BoP. This is part one of a two part interview
Rising Pyramid: In your first chapter you outline six key principles that BoP venture leadership teams should apply to increase their chance of success. They are based around the stages of design, pilot, and scale. I agree with you, and to me it makes sense, but in your opinion, how or is this fundamentally different from how you would organize a traditional for profit business?
Ted London: It’s a good question. Obviously the three stages are pretty natural in venture development in that you want to design first, then pilot followed by sustainability and scale. In some respects the principles that underlie these stages are relevant to traditional business, but their application is quite different in the BoP context.
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How many times have you had a young person look up to you and follow your every lead? Growing up, my four younger siblings all looked up to me in one way or another and my actions, whether I liked it or not, had profound impacts on what they did or said. My grandparents tell me that my sister used to wait as long as two hours until I woke up and decided what I wanted for breakfast so that she could have the same. Sean, my brother, would often withhold his opinion of activities and things until he could guess what I my interest level was. I wasn’t a particularly cool older brother, but they followed me nonetheless. Children are dramatically influenced by role models, good or bad.
In developing countries, role models and early influences play just as much of a role as they do here in America. When thinking about how to create stability and an improved standard of living for those at the BoP (base of the economic pyramid), its critical to keep in mind the impact that the role of influence, particularly of young people, can have on the adoption of various living strategies, products and services. In Eboo Patel’s book, Acts of Faith, he talks about how early positive influence over young people can dramatically affect the way they contribute to (or take away from) society later in life. Building institutions that build up and empower young people can have a lasting impact on the state of well-being for their respective societies. Read more »
Things Fall Apart by Chinua Achebe is a powerful narrative that is both exhilarating and touching. Though the novel doesn’t necessarily carry a direct connection with the modern social enterprise movement, it has strong overtones that anyone who wants to be a changemaker should take to heart. African to the core, Things Fall Apart tells the story of a man named Okonkwo who is a traditional tribal leader as he encounters various life difficulties and struggles. Through Okonkwo’s story the reader experiences British colonialism from the native’s perspective. Broadly, Achebe’s account demonstrates the pain and confusion caused by the clash of cultures and religions between the tribe and the colonialists. Read more »
Usually it takes me at least a few weeks to read any book, but when I picked up Half the Sky by Nicholas Kristof and Sheryl WuDunn I was immediately captivated and finished it (while also reading Building Social Business by Muhammad Yunus) in just a few days. Like an addictive drug, I couldn´t stay away from the book for too long before tearing through a new chapter. Nicholas and Sheryl are practiced storytellers (not surprisingly as they have both won the Pulitzer prize) and they use their talent to tell captivating stories about the women of the world who have been abused and systematically mistreated. They use stories (rather than statistics) to convey very powerful images that leave the reader wishing he or she could do something to help immediately. The authors aren´t shy about their tactics either; they write, “Frankly, we hesitate to pile on the data, since even when numbers are persuasive, they are not galvanizing. A growing collection of psychological studies show that statistics have a dulling effect, while it is individual stories that move people to act…So we would prefer to move beyond statistics and focus on an individual…” Needless to say, their approach worked on me.
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I’ve been eager to read Philanthrocapitalism: How Giving Can Save the World by Matthew Bishop and Michael Green for some time now; the book has always intrigued me and of late it has been often cited as the antithesis of Michael Edwards’ recent book Small Change: Why Business Won’t Save the World (recently reviewed here). In short, Philanthrocapitalism struck me as a very well written account of everything that is going on in the social sector, from the past four golden ages of philanthropy to the various contemporary attempts to solve social issues. Bishop and Green endorse the social business concept, which is what draws the comparison with Michael Edwards’ book; however, I would argue that a book like Capitalism at the Crossroads by Stuart Hart is a better contrast (see review here). Still, Philanthrocapitalism is perhaps the best account of the current philanthropy landscape.
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Earlier this year, Michael Edwards published a book titled “Small Change: Why Business Won’t Save the World” in response to a book that has been out for a few years now: “Philanthrocapitalism: How Giving Can Save the World” by Matthew Bishop and Michael Green. Philanthrocapitalism is a book that chronologs how philanthropy has evolved from a way of supporting the arts to a mixture between giving and business. To put it simply, Bishop and Green argue that as philanthropists start to adopt business practices and as businesses start to put more emphasis on social responsibility, many of the world’s social problems can be solved. In Small Change, Edwards takes a very adamant stance against Bishop and Green (yeah, you probably guessed that based on the title). As an author of Rising Pyramid, its fairly obvious that I believe that business-like practices, when applied to international development, can make a significant impact on the lives of those at the base of the economic pyramid (BoP). Of course, most of what I’ve read about the concept has been very rosy and positive, so I was eager to read a critique. In my experience, feedback (both positive and negative) has always been an extremely powerful and eye opening tool, so I picked up Small Change hoping to challenge my thinking and test my beliefs. Read more »
The renowned author David Bornstein, in conjunction with the CEO of BRAC, Susan Davis, is just about to release a new book titled “Social Entrepreneurship – What Everyone Needs to Know”. Though the book is not officially released until April 15th, we already have a book review here on Rising Pyramid (Those who pre-ordered received the book a bit early)! The book is meant to be a general introduction into the Social Entrepreneurship space for those who would like to understand the basics. In many ways it is meant to provide readers a brief snapshot of all the key players and recent happenings in the space. To accomplish this, the authors base their chapters off of a series of common questions about social business. The questions/chapters are grouped into three primary parts:
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The Blue Sweater by Jacqueline Novogratz begins with a touching anecdote about how Jacqueline realized as early as the 1980s how truly interconnected the world that we live in is. Nowadays, with the prevalence of the internet and the rise of the mobile era, we are even more connected than ever before. Even in developing countries, access to the internet and information is becoming commonplace. As Jacqueline has stated, “[the story of the blue sweater made me realize] how interconnected we are, how our action and inaction can impact people we might never know and never meet everyday of our lives all around the world.”
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In the second edition of “Capitalism at the Crossroads” Stuart Hart makes a very strong case for MNCs to start thinking about the bottom of the pyramid (BoP) and environmentalism as opportunities. The book, which is subtitled “Aligning business, earth and humanity”, manages to cover the most significant global issues of our time – global warming, global poverty and terrorism – in a way that is comprehensive and insightful. Hart argues, in a very compelling manner, that to be successful tomorrow, the businesses of today need to embrace green practices and target the world’s poor. As if that weren’t enough, Hart goes on to provide unique guidelines for how businesses can go about transforming themselves. The title reflects Stuart’s argument that businesses have a choice to make; they can invest to become the leaders of tomorrow, or they can continue to operate under the status quo and miss the next big wave of growth. Read more »