BOP Challenge (BOP) – Big markets for Small business
Providing targeted business assessment for SMEs in order to reinforce and/or adopt business models to serve the Bottom of the Pyramid (BOP) sectors
Improve the economic conditions in the BOP markets, whilst improving companies’ product portfolios and diversifying sources of revenue achievement; finally, tackling the poverty issues.
By BOP we refer to Bottom (or Base) of the Pyramid markets. C.K. Prahalad and Stuart Hart, authors of The Fortune at the Bottom of the Pyramid, describe it as “4 billion people with an annual per capita income – based on purchasing power parity in U.S dollars – of less than $1500 dollars, the minimum considered necessary to sustain a decent life.” Essentially, we’re speaking of both the largest group of consumers in the world as well as the group with the least amount of income. Worldwide, this represents a multi-trillion-dollar market because of its size. And while this should excite companies to invest, this enormous market has largely been ignored.
So why care about the BOP? The reasons should be obvious. The BOP represents enormous opportunities for companies to invest in providing products and services to this segment as well as providing employment to its consumers. Currently, multinational companies have been considered most suitable to take advantage of the opportunities in the BOP and most capable of creating value for the same. But what about small and medium enterprises?
Colombia is a country in which approximately 32.7% of its population belongs to the bottom of the pyramid. Given the economic reality in Colombia, supporting SMEs is fundamental to ensuring more inclusive development in the country, especially given their contribution to employment (roughly 80% of all jobs). For these reasons, orienting these companies to create value in the BOP may be beneficial to both SMEs and their customers.
The BOP program formed a team, made up of a senior consultant, a company and local and international students, and presented three phases:
- Virtual training (remote): Three days, International and local students take virtual classes (6 hours; two hours per day) where they received information about program, experiences, methodologies and tools.
- Companies Diagnostic (Remote): Two weeks; in this phase, the senior consultant and local students visit the companies to gather information and feed the diagnostic, share data in parallel with international students, via remote meetings
- Creation of proposal: One week, face to face; previous arrival of international students, team works together to create and present the most suitable proposal to the company. In addition, the team visits vulnerable communities in order to collect valuable information for proposal.
- Development of BOP business consulting skills
- Awareness of the inequity and poverty problems in the world
- Development or support of business models which include social and financial components.
- Despite financial constrictions, it is possible to propose innovative ideas to improve conditions of poverty in communities through private sector companies.