The second in a series of IDB-hosted Strategic Partners’ dialogue proposed a forward-looking agenda centered around the topic of market-based strategies and the results they can deliver for the base of the pyramid in the region. Mixing strategic stock-taking with practical discussion on current issues, a lively dialogue was created that touched different topics, ranging from strategy and innovation to the role of multilateral institutions in this new space.
Taking stock: BOP as a means to an end?
Development banks, corporations, investors, governments and other large organizations operating in Latin America and the Caribbean have inter-related but fundamentally different core mission objectives, ranging from poverty alleviation to shareholder value creation. However, many of them are now adopting market-based BOP strategies to achieve those objectives.
For them, market-based BOP strategies are a relatively new addition to a much larger, longer-established and more mainstream portfolio of activities used by such organizations to help achieve their overall goals in the region. This is in contrast to organizations that specialize in BOP as their core objective and central activity.
In this context, BOP initiatives are one of several ‘means to an end’. They may complement other activities and programs, or may compete with them internally for management attention and resources based on profile and value-for-money (especially in an economic climate of crisis recovery).
This presents some key questions:
- How big a role can BOP strategies play in the ‘product mix’ of development banks, corporations and other diversified organizations in achieving their overall mission objectives?
- How are such organizations developing BOP capabilities and what are the challenges of start-up, internal mainstreaming and external partnership?
- How can BOP strategies be linked to other priority themes such as climate change mitigation/adaptation, disaster recovery or energy security?
- How effective is the interplay between organizations that specialize solely in BOP, and those for whom BOP is just one strand of activity?
We explored some of these questions and provoked new ideas in the first main session of the day led by Michael Fairbanks, co-founder of the SEVEN Fund, editor of the highly acclaimed book In the River They Swim: Essays from Around the World on Enterprise Solutions to Poverty, and advisor to world leaders ranging from the President of Rwanda to IDB President, Luis Alberto Moreno.
A space for innovation?
We all know that achieving results through business strategies for the base of the pyramid involves a long-term investment: refining, demonstrating, replicating and - hopefully – achieving scale with the various products and models that are in current practice. Looking at the need to achieve deeper results over the decade ahead, it’s also important to support the innovation of new products, distribution platforms and strategies, and perhaps to even contemplate the possibility of radical ‘break-out’ models.
What is the status of base of the pyramid innovation in Latin America and the Caribbean (and how does this compare to other regions)? What are the most interesting new organizations and initiatives that could be influential over the next half-decade? How much risk appetite should we have for experimentation, and can we best shape and support new innovation efforts in the region?
Michael Chu, Managing Director and co-founder of the Ignia Fund and Senior Lecturer at the Harvard Business School, lead a discussion on Innovation, which was followed by Jordan Kassalow, Chairman and co-founder of VisionSpring, an organization that empowers “Vision Entrepreneurs” to distribute affordable eyeglasses in majority markets.
Measuring impact: is LAC properly positioned for socially-driven investment?
Measuring the impact of market-based BOP strategies is notoriously difficult, but work on this challenge is becoming increasingly important for attracting and retaining support from the growing ranks of social investors.
Experience suggests that BOP market participants in Latin America and the Caribbean are not as engaged in impact measurement efforts as their counterparts in other emerging market regions.
Why is this? Given the global range of choices available to social investors (and government donors), does this trend put the region at a competitive disadvantage? What actions can be taken to strengthen BOP impact measurement efforts in Latin America and the Caribbean?
This and other topics were addressed during the final discussion, including ivaluable inputs from the Global Impact Investing Network (GIIN), the not-for-profit organization dedicated to increasing the effectiveness of impact investing.
We hope this brief overview will give you a taste of the discussion of the day. A more complete summary of the second Strategic Partners’ dialogue will follow shortly.
