This article is co-authored with Allen Hammond, Vice President for Special Projects and Innovation and Director of the Development Through Enterprise project at the World Resources Institute.
C.K. Prahalad has done it again. He’s come up with an idea as radical as his and Stuart Hart's suggestion 5 years ago that there was significant value to be found in business engagement at the base of the pyramid. [Full disclosure: C.K. is a friend, a partner, and a WRI Board member.]
With apologies to the musical Oklahoma, what he and co-author Jeb Brugmann suggest is that the farmer and the cowman should be friends—indeed, even business partners. That the farmer (development NGOs and grassroots community groups) and the cowman (multinational companies) should be friends and partners goes against our preconceived notion of both groups. Moreover, C.K. suggests that in such partnerships and co-created value chains we find the elements of a new social compact that will benefit both the bottom line and the BOP.
If C.K. is correct, this is a transformative vision. His article suggests how to harness market forces and the power of civil society to bring tangible benefits and full citizenship in the global economy to 4 billion people. He points to lots of examples that show beneficial co-existence (stage 1), cooperation (stage 2) as corporate CSR and NGO enterprise development efforts overlap, and a few examples of full engagement (stage 3), where companies and NGOs create businesses together. And he argues that full engagement is the future.
Like the BOP idea itself, this will initially seem counter to the conventional wisdom and wrong for all sorts of reasons. Disagree with it if you like—but don’t ignore it.
What would this vision mean? If it led to widespread business partnerships between civil society and business, would that represent the co-opting of civil society—or a new, smarter development strategy? Would it mean a more sustainable NGO movement, not subject to the whims and fashions of philanthropy? Would we see businesses seconding up-and-coming execs to NGOs to gain experience? Would rural communities, and the NGOs that serve them, gain new and powerful corporate advocates for local empowerment via policy change? Would the co-created businesses provide an opportunity for the legion of socially-minded young MBAs? Clearly, it’s too early to call.
Based on our experience at WRI, we can say that the cocreation vision jibes with what we are seeing in our work on small- and medium-sized enterprises in the field and in our surveillance of the broader BOP market via NextBillion.net.
What does cocreation mean for the environment? Well, truly cocreated business models will have to be triple-bottom-line by their nature, as long as the NGO partners stay true to their roots (which is why co-opting is such a concern.) An example of this is a new, cocreated business operating in Bangladesh. Grameen Danone Foods Ltd is a 50:50 joint venture between the Grameen Bank (Muhammad Yunus') and the French multinational Groupe Danone. They have partnered to produce low-cost, high-nutriet yogurt products - a clear play at the BOP consumer market. What makes the model - based on what little we know - so cool is that they are doing it on the producer and distributor sides as well. First, Grameen Danone will source the yogurt inputs (read: milk) from hundreds of microenterprises. These microenterprises are, more often than not, 1 or 2 cows owned by a woman or family, which they purchased using a microloan. Furthermore, Grameen Danone plans to utilize a network of microentrpreneur-run stands and food kiosks to sell the yogurt. Best of all? Every serving of yogurt contains three times as many nutrients as the competition, costs less than $0.07 each, and comes in a 100 percent biodegradeable cup. Is cocreation the future? You could argue that it's already arrived, and that it takes "bright" and "green" to a whole new level.
If you don’t subscribe to the Harvard Business Review, this article is worth the paid download, or a trip to the local library to use the copy machine. For a bit of history, consider reading C.K. Prahalad and Stuart Hart’s seminal article in strategy+business, or an article a few months later in the Harvard Business Review.
