More than a dozen years have passed since Professor Stuart Hart co-authored the landmark paper “The Fortune at the Bottom of the Pyramid” offering a blueprint for companies wanting to turn a profit while also lifting the world’s poorest people out of poverty. Two books would follow along with major investments from corporations looking to capitalize from -- and liberate -- the four billion people living on $8 a day. 

Praise from the likes of Bill Clinton and Bill Gates aside, results have varied, according to a new edited book by Hart, titled Base of Pyramid 3.0: Sustainable Development Through Innovation and Entrepreneurship. Hart, the Grossman Chair of Sustainable Business at the University of Vermont, gives an honest assessment of the Base of the Pyramid (BoP) economic theory he co-founded, and attempts to build on previous BoP models by emphasizing the importance of participatory, grassroots innovations spawned by those living at the Base of the Pyramid. 

“If the BoP 1.0 model can be summarized as 'finding a fortune at the BoP,' writes Hart, a world authority on the implications of environment and poverty for business strategy, “then the BoP 2.0 approach stresses the importance of co-creating products and compelling value propositions with underserved communities, innovating from the bottom-up, leapfrogging to environmentally sustainable technology, and creating a dedicated set of metrics and timelines suited to the unique features of the underserved space.”

BoP Version 3.0

In BoP 3.0, Hart proposes a transition from simply co-creation to open innovation that draws on the “wisdom of the crowd” – the 60 percent of humanity who live at the Base of Pyramid – to generate “previously unimagined solutions.” The biggest failure of most BoP ventures, he says, is that companies viewed them as no different than new ventures aimed at the developed markets at the top of the pyramid. “There was the assumption that all that is required for venture success is an affordable product and an effective business model for production, marketing and distribution,” writes Hart. 

Instead, Hart now believes that BoP ventures must be imbedded into larger business ecosystems rather than stand-alone initiatives. In other words, those living at the Base of the Pyramid must drive innovation and be an integral part of a conceptual shift that fosters cross sector partnerships; focuses on sustainable development frameworks rather than poverty alleviation; and that integrates a triple bottom line of people, planet and profits. 

Hart’s book will serve as a central talking point at the Base of the Pyramid (BoP) Global Network Summit, July 16-17 at UVM's Davis Center. Co-sponsored by the School of Business Administration and Hart’s Enterprise for a Sustainable World (ESW), the summit brings together sustainable business experts, corporate innovators, entrepreneurs and community leaders from more than 20 countries to talk about “Sustainable Entrepreneurship from the Bottom Up.” Some of the contributing authors of his book will also be in attendance.

The cautionary tale of the clean cookstoves

Hart uses case studies to highlight the issues encountered with BoP versions 1.0 and 2.0. He illustrates the importance of building BoP business ecosystems by examining the case of CleanStar Mozambique that sold more than 33,000 clean cookstoves to the poor before eventually folding. The entrepreneurial venture was the poster child for BoP success by generating clean cooking solutions for Africa that eliminated air pollution in urban households powered by affordable biofuel produced in rural Mozambique by subsistence farmers, who converted to a multi-crop system of sustainable agriculture.

These advancements dramatically raised the farmers' income and food security, while producing excess cassava used as feedstock at a nearby bio-refinery. The new fuel reduced the production of charcoal used in cookstoves, which accounted for a significant share of the deforestation and greenhouse gas emissions in the region. “This was a perfect example of an innovation ecosystem for inclusive and sustainable business,” Hart says.

Unfortunately, a fresh round of investment capital five years after its initial launch created pressure for CleanStar to focus the business exclusively on the sale of cleanstoves, resulting in the suspension of its agroforestry and ethanol production. Consequently, the company was liquidated by 2014 to end mounting losses.

“The ultimate goal of the book is to move the inclusive business agenda forward and transform the entire socio-economic system in which the poor find themselves,” Hart says. “Thus, it emphasizes the urgent need for scalable solutions rather than specific pilot projects that have achieved only a certain level of impact through local implementation.”

PUBLISHED

07-14-2015
Jon Reidel