Market Creation Strategies Initiative to Focus on Business Fundamentals at the Bottom of the Pyramid

(12/2/13)

Center launches program in Latin America to help corporations profitably serve low-income consumers.



The Center for Sustainable Global Enterprise (Center) at the Samuel Curtis Johnson Graduate School of Management at Cornell University announces the launch of the Market Creation Strategies Initiative (Initiative) in partnership with the Argentina-based Center for the Study of Corporate Sustainability (IESC). Led by the Center’s Erik Simanis (PhD) and IESC’s Miguel Angel Gardetti (PhD), the Market Creation Strategies Initiative aims to integrate bottom of the pyramid strategies — ventures that profitably serve the four billion poorest consumers in the world — into corporations’ core business operations. It does so by re-focusing the field on what Simanis and Gardetti call “business fundamentals.”

“Over the past 10 years, the bottom of the pyramid (BOP) concept lost its connection to core business and migrated into more of a development-based mindset focusing on issues like poverty alleviation and empowerment,” said Simanis. “While not inherently a bad thing, the consequence has been that corporations — if they do make investments in this area — do so more from a corporate social responsibility angle.”

According to Simanis, that significantly limits what companies can and will invest. To re-ignite corporations’ interest in the bottom of the pyramid as a part of their core profit-and-loss operations, it is necessary to re-frame the concept in a way that speaks to the daily realities and pressures of line managers.  This also requires BOP research to re-focus on fundamental business-level issues, like boosting gross margins, accelerating penetration rates, and cutting customer acquisition costs.

In order to promote the creation of this highly applied and relevant management knowledge, the Initiative uses a unique one-on-one coaching approach working directly with individual company project teams. Focused, small-group roundtables with multiple companies will supplement the learning and cross-company sharing. Reports from the Initiative will concentrate on field-level and organizational challenges highlighted by member companies. Arcor Group, a leading Argentina-based global manufacturer of confectionery, cookies, crackers, and foodstuffs, announced its support of and participation in the Initiative last month.

The Initiative was formally kicked off in August with a webinar hosted by Drs. Simanis and Gardetti. Over 40 companies, including Corona, Natura, PwC, and Ernst & Young, tuned in to the session. The webinar outlined the Initiative’s business fundamentals approach, and then shared a tool for segmenting business opportunities in low-income markets.

About The Center for Sustainable Global Enterprise
Johnson’s Center for Sustainable Global Enterprise produces and disseminates relevant knowledge for managers seeking innovative, profitable business opportunities that address global sustainability challenges. The Center works with firms to specify innovative, entrepreneurial, and new business alternatives that can be implemented in the marketplace. Programs include those focused on market and enterprise creation, clean technology commercialization and innovation, and finance + sustainability.

About Simanis
Dr. Simanis is Managing Director of Market Creation Strategies at the Center for Sustainable Global Enterprise. Over a 20-year career, Dr. Simanis has led a successful start-up business in Eastern Europe, co-directed corporate ventures in Kenya, Ghana, India, and Bangladesh, and consulted to major corporations targeting bottom of the pyramid markets. His most recent work on driving consumer adoption of new product categories and achieving profitability in bottom of the pyramid markets through margin boosting strategies is published in Wall Street Journal, Harvard Business Review, Sloan Management Review, and the journal Innovations. 

About Gardetti
Dr. Gardetti is the director of the Center for Study of Corporate Sustainability and in 2005 founded the first Base of the Pyramid Learning Lab in Argentina. Gardetti has authored three books. His most recent book – “Textos en la Base de la Pirámide – Hacia la Co-creación de Valor y Desarrollo” was published in 2009.

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