Expanding Possibilities at the Base of the Pyramid
Through an analysis of the "Appropriate Technology" NGO KickStart, BoP pioneers Stuart Hart and Erik Simanis present a "real-options strategy" to engaging the Base of the Pyramid.
In this short, easy to read article, Simanis and Hart present KickStart's history and success, discuss what KickStart espouses as the reasons for its successful impact in Kenya, and puts forth an argument using comparisons to other cases in India and Africa that demonstrate that KickStart's stated reasons are not in fact the secret behind their success. What then is behind KickStart's success?
Quote:
... let’s remind ourselves how difficult it is to build a new business, whether you are a multinational corporation entering a new-product market or a micro-entrepreneur in Kenya. The failure rate of startup businesses in the U.S. has been estimated to reach 85% in certain sectors,despite the resources people have available to them relative to the rural poor. "Good ideas" are a dime a dozen—turning an idea into a profitable business is where the rubber meets the road.Within such a context,the linear and highly regimented planning (and design) models that constitute the heart of much managerial and administrative training—both of business and development professionals—are likely to fail.It takes a different kind oforganizational strategy,one that accepts and integrates ambiguity and uncertainty,not masks it behind a facade of numeric certainty.KickStart’s success,we believe, is the result of such an organizational strategy,one which we shall call a “real options” strategy.
This article was published in the first issue of MIT's innovations journal, in February of 2006, and is available for free download.
Questions for discussion
- What does KickStart state as the reasons for its success?
- What evidence do the authors give to refute these reasons?
- What is a "real options" strategy?
- How could a company use a "real options" strategy in the BoP? In the short-term? In the long-term?
