Learning to Trade and to Innovate at the Base of the Pyramid

By: AnneMarie Munch Birch Glynn / Louise Koch

Is sustainable business the missing link in alleviating poverty and boosting global trade and prosperity? If so, how should companies exploit this opportunity in practice? Louise Koch, Danish Anthropologist and Business Innovator, talks about best practice, mindsets and resources for sustainable, people-centred innovation in developing countries.

Is sustainable business the missing link in alleviating poverty and boosting global trade and prosperity? If so, how should companies exploit this opportunity in practice? Louise Koch, Danish Anthropologist and Business Innovator, talks about best practice, mindsets and resources for sustainable, people-centred innovation in developing countries.

The Base of the Pyramid is a socio-economic concept that refers to the demographic group of approximately 2 billion poor people around the world, who survive on 2 dollars or less a day. The Base of the Pyramid has become the common denominator for a relatively new and booming field of innovation projects and business ventures aimed at developing profitable and sustainable new markets.

User-driven Innovation: A World Apart

Danish Anthropologist and Business Innovator, Louise Koch, who for years has worked with in the intersection of anthropology, innovation and business is one of the few people in Scandinavia who has on-the-ground experience with Base of the Pyramid business development in India and Kenya. She has recently returned from Kenya where she worked for 8 months with the Danish company Grundfos Lifelink, on developing sustainable, safe water supply solutions for rural and urban communities.

Louise, what is the first task for a company interested in doing Base of the Pyramid business?

That it is first and foremost necessary to understand people’s life-worlds and the cultural contexts of their needs and aspirations, in order to innovate products, services and business models that will be of value to them. Most Western companies have very little insight into the lives and realities of people living at the Base of the Pyramid. It is a world apart – geographically, culturally and mentally.

It is a world apart – geographically, culturally and mentally.

And, you must believe that the theory in books about business development and innovation don’t mention much about market research in rural communities and the questions that are raised:– such as, how much does a camel drink? How does a mother prioritise when there is not enough food for all of her children? How does one deal with networks of informal distributors in urban slums?

The needs of people in poor communities may be quite obvious – clean water, electricity, good food, means of income, etc. But cultural perceptions about what clean water and good food are may be very specific. Therefore, it is vital to experience the contexts in low income communities in Africa, Asia and Latin America to be able to understand local needs and aspirations in everyday life, in order that we design new products, services and business models that are culturally and socially useful to the people.

Working with local chiefs in Kenya

Over the last year, you worked with Grundfos Lifelink, focusing on the provision of clean water for the Base of the Pyramid in Kenya. Could you share some of your on-the-ground experiences?

At the Base of the Pyramid, different rules and ways of doing business may apply. Often, success can only be achieved through cooperation with local leaders and established businesses in the local region. This is not a blank slate of untapped and undeveloped markets. Human societies have always had systems of business and trade. It just looks different from the model we in the West are familiar with. Well, fortunately, I am not a standard Western businesswoman: I am an anthropologist and, therefore, I am trained in this kind of research in communities around the world.

But in this recent project I was caught up in local tensions when I was trying to establish some relations with the community where I was going to conduct my research. I exploited an existing relationship with the local chief, who was very positive about the project. He opened many doors, but gradually I realised that there were internal social and political dynamics involving the chief, which meant that some doors remained closed to me because of my association with him. I had to ensure that I could be seen as independent of local political leaderships, while also needing to cooperate with local chiefs.

Whatever the innovation, it has to be properly introduced locally in order to be accepted. If it is presented in the wrong way it may cause all sorts of tensions locally that might seem rather irrelevant but which might lead to rejection of your innovation.

A broad perspective – innovation in value chains

When you worked with Danisco in India you were not only visiting local farmers and communities, but also looking into local trade networks. Why and how did you approach this issue?

When you work with Base of the Pyramid you have always to keep in mind the bigger picture. For example, if you want to design a product for farmers you have to follow the production line from sowing to harvesting to sale and distribution, to find where there may be a gap that you can bridge.

In India for example, there is a serious problem with conservation of raw milk in many poverty-stricken, rural areas, which means that small farmers waste a largepart of the milk from their cows that they could have benefited from selling. This is being resolved by the Mother Dairy Company, which has set up local collection and cooling centres where farmers can deliver their milk and receive payment. The milk is collected from these centres and transported to the cities.

Get Ready for Radical Innovation!

Do you have any last thoughts to share with me on Base of the Pyramid business innovation?

Yes I do! In short I see innovation with the Base of the Pyramid as a state-of-the-art challenge to doing radical innovation. The whole underlying ideology and mindset constitutes a radical shift in our standard mental boxes for doing good or doing well. One does not necessarily exclude the other. Base of the Pyramid business and innovation is radical innovation in the making!

By AnneMarie Munch Birch Glynn