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Next Generation Value Creation
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Our video
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Welcome
Emily Cristina Sharon
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Why are we here?
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• Introductory conversation• Case studies• Breakout discussion• Wrap up & action items
Overview of Session
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Let’s jump right in
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What is collaboration at the BOP?
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Business PhilosophyCollaborationSales of
Products and Services
Inclusive Growth
Wealth Creation
Consumption
Business Philosophy
Next Generation
Value Creation
BOP Engagement Matrix
PartnerProducerCollaboratorCreator
CustomerPurchaserShopperClient
Traditional View of BOP
BO
P E
ng
agem
ent
E
ng
agem
ent
BO
P
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Organized, developed, leveraged as inputs to
business
Collaboration
Productive capacities of BOP
Strengthens competitiveness & business growth
BOP becomes important contributor
to economy
Prosperity Regeneration
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Benefits for MNCs
Market Share
Increase Penetration
Market Entry
Product Innovation
Expand Distribution
Build Brand Loyalty
Sourcing Efficiency
Global Leadership
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Benefits for BOP
Adv
ance
men
t
Social Empowerment
Generation of income Dev
elop
men
t
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How can you identify the right strategy for your organization?
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Ask the right questions
Define the Goal
Determine BOP Strategy
Execute on the How
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Cases Considered
Nestlé HindustanUnilever
ITCe-Choupal
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Nestlé Até Você
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Nestlé Até Você - Challenge
• Nestlé’s goal in Brazil was to deepen their penetration into both densely populated urban areas and remote rural parts.
• Nestlé created Nestlé Até Você, and innovative distribution strategy to reach BOP consumers in the favelas through a network of micro-distributors and direct sales agents.
• Nestlé Até Você has created additional business value for Nestlé Brazil, while generating livelihood and prosperity at the BOP.
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Nestlé Até Você - Solution
Nestlé
Micro-distributor
Saleswomen
Homes Micro-retailers
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E
Grow sales and market share
Innovate distribution
models involving community members
Reach customers in their homes and customary
places of purchase
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Nestlé Até Você - Benefits
Nestlé
Micro-distributor
Saleswomen
Homes Micro-retailers
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E 15% sales growth/yr
3 x Nestlé Brazil
Jobs created
Income generated
2-3 training sessions/yr
Access to nutritious foods
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Hindustan Unilever
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Hindustan Unilever - Challenge
• Hindustan Unilever’s goal was to create a distribution network in rural India to reach untapped buying potential.
• However, rural India suffered from a lack of brand awareness, complicated and expensive access, low per capita consumption, and low brand awareness.
• As a result, Hindustan created Project Shakti, a distribution strategy reaching BOP consumers in villages of less than 2000 people.
• Project Shakti has capitalized on expansive market potential and built branding, while generating empowerment and income opportunities for rural Indian women.
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Hindustan Unilever - Solution
Hindustan
Micro-distributor
Women’s network
Homes
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E
Enter rural Indian market for long-term opportunity
and growth
Create distribution
models involving SHG community
members and micro-credit financing
Personally reach customers in their
homes
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Hindustan Unilever - Benefits
Hindustan
Micro-distributor
Women’s network
Homes
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E Untapped potential reached through new sales & distribution channel
Model replicated elsewhere
13,000 Shakti ‘ammas' earn independent monthly
income of 700-1,000 rupees
Key partnerships established with micro-
creditors and SHGs
Micro-entrepreneurs act as brand ambassadors,
promotingstandard of living
improvements
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ITC e-choupal
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ITC e-choupal - Challenge
• ITC’s goal was to enter and compete in the international commodities market.
• But regional bureaucracies created information asymmetry between farmers and agribusinesses, resulting in slow, inflexible and expensive access to low quality farm output
• ITC created the e-choupal concept, which created a dual link to farmers: informational, through the installation of internet kiosks at the village level, and physical, through the installation of crop aggregation sites near farmers.
• e-Choupal has lowered the cost and raised the quality of inputs for ITC and raised farmers’ disposable income
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ITC e-choupal - SolutionT
AC
TIC
S
ITC
e-choupal
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E
Saagar aggregation
Compete in global markets
Source directly from farmers
Information transparency via
technological innovation
Crop aggregation close to farmer
Information
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ITC e-choupal - BenefitsT
AC
TIC
S
ITC
e-choupal
ST
RA
TE
GY
TA
CT
ICS
OB
JEC
TIV
E
Saagar aggregationInformation
ITC savings $100K per day
Farmers costs cut by
$250K per day (aggregate)
Reduce transaction cost of sale by 50%
Incentivize growth of higher quality
crops
Increase income
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What are key factors for success?
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4 C’s for Sustainable Collaboration
Local market knowledge Local legitimacy Relationship building Location matters Intermediaries
Environmental Ethical
Inclusive development Innovative thinking Unshackling the
organization
Building buy-in Incentives
Education & training Ongoing support
Community Continuity
Co-creation Conduct
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Key Success Factors: Community
• Engage local market knowledge • Involve local people and local partners• Focus on key relationship building• Create jobs and livelihood to incentivize success • Create local legitimacy by identifying key gatekeepers• Understand community constraints and politics• Identify geographies and communities that are a good fit;
location does matter• Work with intermediaries, such as community
organizations, nonprofits, NGOs, government agencies
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Key Success Factors: Co-Creation
• Engage individuals from the host culture at the onset for inclusive development
• Learn from and about the host culture• Ask questions to understand the current mindset• Cultivate a two way-dialogue• Partner with and empower local entrepreneurs• Be open to innovative thinking and nontraditional
sourcing of ideas; the “trickle up effect”• ‘Unshackle’ the organization: be open to letting go of
preconceived notions and traditional concepts that may have worked in developed countries
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Key Success Factors: Continuity
• Cultivate a long term perspective both internal to your organization, and external to the community
Internal• Build buy-in within your organization at all levels• Align incentives with your program goals• Consider the entire value chain for engagement
opportunities• Share best practices to foster continuous innovation
External• Focus on the education and training of local partners• Provide ongoing support to partners
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Key Success Factors: Conduct
Ethical• Plan holistically for the success of all partners involved• Consider the sensitive needs and desires of the culture
and community
Environmental• Consider the entire ecosystem and how your operations
may impact it both positively and negatively (eg. which needs will your strategy meet, and which current solutions will your strategy displace)
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What challenges do we see?
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Challenges are significant but surmountable
Community Continuity
Co-creation Conduct
Cultural nuances Market fragmentation Lack of Infrastructure
Regulatory hurdles Resource
Constraints
Preconceived notions Shift of Mindset
Lengthy Returns Upfront Investment Internal buy-in
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Challenges: Community
• Cultural nuances may be unique to a certain geography, rendering learnings non-transferable
• Market fragmentation can create significant inefficiencies• Lack of or weak infrastructure may exist• Agendas of community leaders or interests groups may
not align with your goals
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Challenges: Co-Creation
• Creating a shift of mindset: organization practices may be based on developed countries or successes elsewhere in the developing world
• Disrupting preconceived notions of culture may be more complicated than expecting
• Cultivating a true two-way dialogue takes patience• Promoting ideas that originate external to the
organization may create resentment and defensiveness
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Challenges: Continuity
Internal• Upfront investments may be significant to ensure
success• Returns often require a longer term perspective• Quantification and measurement of returns is hard• Building internal buy-in at various levels and among
disparate business units can be challenging
External• Cultivating relationships and training may be costly and
require ongoing maintenance
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Challenges: Conduct
• Regulatory hurdles, both legal and political, are unique to the geography and ever-changing, requiring evolution and constant adjustments
• Dealing with resource constraints may require flexibility and the ability to find alternative solutions
• Sustainability and profitability goals may conflict with one another or those of partner organizations
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Vision, Mission, and Values
Balanced measurement scorecard
Objectives Strategies Tactics
Program
Measurement
Learning
BOP Impact
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What is your role?
Others?
MNC NGO Government
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Rules of Engagement
No criticism
There are no wrong answers
Contribute, don’t be shy
Be enthusiastic
Have fun
Develop other people's ideas
Stay focused!
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What is your plan of action?
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Let’s share
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Wrap up
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Share your vision. Change our world.Kellogg Innovation Network at the Kellogg School of Management
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Appendix
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KIN Model for Global Prosperity
Sustainable Profitable
Ethical
Environment Economy
Community
Prosperity
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Base of the Pyramid
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