Caroline Nevejan
Our reading for this week is:
Serving the World’s Poor, Profitably
by Prahalad, C.K. and A. Hammond, 2002. Harvard Business Review, 80(9): 48-57.
This article is about strategies for Serving BOP Markets, about new business models and about the need for innovation. Notably, the article states that:
Having young managers spend a couple of formative years in BoP markets would open their eyes to the promise and the realities of doing business there. To date, few multinationals have developed a cadre of people who are comfortable with these markets.
Hindustan Lever is one of the exceptions. The company expects executive recruits to spend at least eight weeks in the villages of India to get a gut-level experience of Indian BoP markets. The new executives must become involved in some community project — building a road, cleaning up a water catchment area, teaching in a school, improving a health clinic. The goal is to engage with the local population.
To buttress this effort, Hindustan Lever is initiating a massive program for managers at all levels — from the CEO down — to reconnect with their poorest customers. They’ll talk with the poor in both rural and urban areas, visit the shops these customers frequent, and ask them about their experience with the company’s products and those of its competitors.
In addition to expanding managers’ understanding of BOP markets, companies will need to make structural changes. To capitalize on the innovation potential of these markets, for example, they might set up R&D units in developing countries that are specifically focused on local opportunities.