How to Design and Implement Social Business Models for Base-of-the-Pyramid (BoP) Markets?

Abstract

This article studies for-profit social enterprises, which bundle entrepreneurial attitude with the passion to design and implement inclusive business models targeting the basic needs at the Base-of-the-Pyramid (BoP). The research objective involves understanding the challenges and strategic choices required for inclusive business models at the BoP. A qualitative multi-case-based research methodology is used for data collection and analysis. The experience of four social enterprises studied helps to gauge the ‘provisioning-for-all’ discourse, and resolve the theoretical tension as to why ‘self-sustaining’ should mean ‘profit driven’, as self-sustaining can signify ‘not-for-profit’ as well. The BoP market challenges include market imperfections; ethical dilemmas; missed identity; scarce resources; identifying real needs; quantifying socio-economic impact. The corresponding strategic choices are identified and mapped to the challenges, to enable social entrepreneurs to implement better informed decisions and social interventions at the BoP.

Abstract

Cet article s’intéresse aux entreprises sociales à but lucratif, qui combinent à la fois l’attitude entrepreneuriale et la passion de créer et de mettre en œuvre des modèles d‘entreprise inclusifs qui ciblent les besoins primaires, ceux à la base de la pyramide. L’objectif de l’étude est de comprendre les défis et les choix stratégiques nécessaires aux modèles d‘entreprise inclusifs pour la base de la pyramide. Pour la collecte et l’analyse des données, nous utilisons une méthodologie de recherche qualitative, basée sur plusieurs études de cas. L’expérience de quatre entreprises sociales étudiées ici nous aide à juger de la façon dont les besoins de tous sont pris en compte, et à résoudre la tension théorique à propos de l’amalgame entre l’autosuffisance d’une entreprise et la recherche du profit, alors qu’une entreprise autosuffisante peut également avoir un but non lucratif. Les défis du marché à la base de la pyramide comprennent les imperfections du marché ; un dilemme éthique ; une identité manquée ; des ressources limitées ; l’identification du vrai besoin et la quantification de l’impact socio-économique. Les choix stratégiques sont identifiés et mis en relation avec les défis correspondants afin de permettre aux entrepreneurs sociaux d’appliquer de meilleures décisions et de mettre en œuvre des interventions sociales à la base de la pyramide.

Appendix

Overview of the Social Enterprises

Selco (SE#1)

Selco was launched in India by Dr Harish Hande and Mr Neville Williams in 1995. The focus was on enabling access to renewable solar energy solutions for low-income segments living across the rural and semi-urban areas in India. Selco is credited with bringing about the disruptive business model innovation comprising the door-step financing and door-step servicing. The end-to-end solution-based approach made the solar energy affordable and accessible to the underserved population. By 2012, it created a network of 30+energy service centres, 8+regional offices and impacted the lives of 110 000+households living across the rural areas.

Boond (SE#2)

Boond was launched in India by Mr Rustam Sengupta in October 2010. The focus was on enabling access to renewable solar energy solutions to the low-income segments living across the rural and semi-urban areas in Rajasthan and Uttar Pradesh (India). The business model of Boond focused on enabling energy access to the rural poor by enabling access to the end-to-end energy solutions. This comprised product offering along with the door-step financing and door-step servicing. By 2012–2013, it created a network of self-sustainable 3+energy service centres and impacted the lives of 6000+households living across the rural areas.

Narayana Hrudayalaya (SE#3)

Dr Devi Shetty founded Narayana Hrudayalaya in 2001. Its mission was to deliver tertiary health care to all irrespective of the paying capacity. Its successful business model was driven by continuous process improvement measures related to cost efficiency, accessibility, affordability and availability of the core resources. The success rate of surgeries was comparable to the best hospitals in the world. The business model was scalable and sustainable with high growth rate of revenues and positive cash flow. By 2012, it created a network of 17+hospitals having 6000+beds in India.

E Health Point (EHP) (SE#4)

Rural communities rely on the informal (untrained/mostly non-qualified) health providers, fake/expired medicines and lack access to the diagnostic laboratories. EHP was launched in 2009 to offer a combination of preventive and curative health care to the poor people living across the peri-urban and rural areas. It was set up as a fee-for-service model, which offered core services of clean drinking water, primary health care, medicines and diagnostics. It used modern technologies (including rural broadband, tele-medical software, low-cost point-of-care diagnostics and inexpensive water treatment methods) and de-skilled many aspects of primary care (through standardized procedures and thorough training of local staff) to bring down the costs within the ability/willingness to pay of most rural households. By 2012, it created a network of 7+health-points and 115+water-points across Punjab and Andhra Pradesh. By 2012, EHP provided safe drinking water to 300 000+users daily; telemedicine consultation to 31 000+patients and undertook 17 000+diagnostic investigations.