Great Innovators reaping rewards at BOP

Years ago, during a business school strategy course, I read some works by C.K. Prahalad. From the first lines, I honestly felt as if the skies opened up and the entrepreneurial heavenly lights shone on me. I thought 'wow this is a man after my own heart". The late Dr. Prahalad was a strategy and innovation genius who wrote the Fortune at the Bottom of the Pyramid and many other books on strategy, innovation and global markets. He suggested that entrepreneurs and large companies alike find growth through product innovation for the largest (and most ignored) income group within the global population.

The population at base of the economic pyramid are defined as individuals with annual incomes below $3,000. Currently, this total income segment is a $5 Trillion market. The largest segment in the BOP earn roughly $1,500 annually.

While the individuals within this income segment don't have deep pockets, they do provide a petri dish for innovation and huge rewards... if only companies look at the needs of these communities.

As Dr. Prahalad believed, the worlds poor are not to viewed as charity cases. Instead companies should look at these communities for savvy consumers (looking for bang for their buck) with brand loyalty (don't have the $$$ to try every new product or trend that comes along), and unique needs. Furthermore, innovating for this demographic essentially means the creation of products and services for millions of people. While margins may not be high, volumes are enormous and the impact is even greater.

Large and small companies of the world, imagine not fighting for 1, 2, or 5% market share... take an unsexy route, develop a new product for say communities in Kenya, India or Congo. You might have millions of new customers in no time.

I was inspired to write this entry, bc over the last few weeks, I've gotten really excited by so many startups developing technology for the developing world - specifically African countries. A few of my favorite include Ushahidi which uses FOSS to Crowdsource Crisis Information. Similarly, Childcount uses improved sms technology to support child and maternal healthcare in Kenya...ultimately improving response time and treatment. On the finance front, Kenya-based Safaricom uses cell phones to perform wire transfers. Kenya was the first country in the world to offer this service!!! Now, get this, they've taken it a step further...with M-Kesho, Safaricom will offer mobile microfinance, insurance and other products...essentially mobile bank accounts for the 9.4 million M-Kesa mobile customers. How brilliant is that??!!!

What's really fantastic is that these innovations have utility across borders - even in here in the USA.

UPS International Shipping from Developing markets

I got a wake up call at 6:00 am this morning.

One of my manufacturers is preparing a shipment of lamps from Cameroon to our the Design Center Partners in San Francisco. She'd called me twice before I woke (annoyed by what I thought was my alarm clock) and called her back.

She was frazzled.

Stacy, she said, "I am so sorry to have woken you, but I am at a loss, I don't know what to do." Now, that frazzled tone got me into a panic because as a a French woman living in Cameroon for the past 15 years, Camille, is no joke. I think her Frenchness makes her tough by nature, add to that being married to a Cameroonian man and living in a village where they own and manage a 40 person furniture "atelier." I know she's seen it all.

BUT, whatever she experienced at UPS and DHL in Yaounde had her shook.

Evidently, UPS and DHL both quoted roughly 130,000 CFA ($266 USD) to ship this very small package of lamps to San Francisco. However, when she brought in the lamps after packaging, the price more than doubled to 270,000 CFA ($552!!!!). Mind you this is the discounted price after some good-ole African negotiation. I told you Camille was tough.

I'm writing this blog entry at 7 am because I want the world (or at least my small community of blog readers) to know what a major rip-off it is to ship from Africa and I'm assuming this goes for most developing markets. When you add any of the UPS & DHL'ers to the mix, the magnitude of rip-off goes beyond what we can imagine. These characters know that we don't have a choice. Using regular mail is NOT an option as the items would likely be stolen somewhere on the way to the Yaounde Airport.

So, as a fix, I'm absorbing the price differential into my net cost (reducing my already minuscule margin) so that the total cost to the customer is not hugely inflated.

If anyone knows of reliable and affordable outfits shipping from West & Central Africa, please let me know.