Next Generation Value Creation

Our video

Welcome

Emily Cristina Sharon

Why are we here?

• Introductory conversation• Case studies• Breakout discussion• Wrap up & action items

Overview of Session

Let’s jump right in

What is collaboration at the BOP?

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

Organized, developed, leveraged as inputs to

business

Collaboration

Productive capacities of BOP

Strengthens competitiveness & business growth

BOP becomes important contributor

to economy

Prosperity Regeneration

Benefits for MNCs

Market Share

Increase Penetration

Market Entry

Product Innovation

Expand Distribution

Build Brand Loyalty

Sourcing Efficiency

Global Leadership

Benefits for BOP

Adv

ance

men

t

Social Empowerment

Generation of income Dev

elop

men

t

How can you identify the right strategy for your organization?

Ask the right questions

Define the Goal

Determine BOP Strategy

Execute on the How

Cases Considered

Nestlé HindustanUnilever

ITCe-Choupal

Nestlé Até Você

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.

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

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

Hindustan Unilever

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.

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

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

ITC e-choupal

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

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

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

What are key factors for success?

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

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

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

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

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)

What challenges do we see?

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

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

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

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

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

Vision, Mission, and Values

Balanced measurement scorecard

Objectives Strategies Tactics

Program

Measurement

Learning

BOP Impact

What is your role?

Others?

MNC NGO Government

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!

What is your plan of action?

Let’s share

Wrap up

Share your vision. Change our world.Kellogg Innovation Network at the Kellogg School of Management

Appendix

KIN Model for Global Prosperity

Sustainable Profitable

Ethical

Environment Economy

Community

Prosperity

Base of the Pyramid

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