In our recent article we were interested to investigate to what extent successful business development in Bottom of the Pyramid (BOP) markets was leveraging on structured corporate foresight approaches.
BOP markets serve more than 4 billion people that live on $2-4 a day. Prominent success stories such as micro lending in Bangladesh helped make the idea popular that companies can dramatically increase living conditions of millions of people, while making healthy profits. C. K. Prahalad argued in their book Fortune at the Bottom of the Pyramid that such markets need to be developed differently to traditional approaches in developed economies.
The 3Ps of Corporate Foresight
In our study we focus on understanding how the successful business development was conducted over time and to which extent it was using the 3Ps of Corporate Foresight:
- Perceiving: Discovering change drivers
- Prospecting: Understanding how systemic effects will create exponential growth and viable business opportunities
- Probing: Using trial-and-error-learning to develop a viable business
In addition we use the three paths to business development known to be vital for success in the BOP segment, see figure below. In each case we assess which of the paths have been used.
Case studies on Bottom of the Pyramid business development
In our study we looked at three cases of successful business development in BOP markets, that took place in different contexts. Our first case, Evershelter is a company working in the Aid & Relief industry, providing shelter solutions for refugees and in disaster relief.
Evershelter was build on visionary insights from the founder, who gradually refined the solution and business concept to build the success through two iterations in our 3P framework.
Our second case, Kamstrup is an engineering company specialising on smart metering solutions for electricity and district heating systems. Kamstrup is the most structured in the front end. Kamstrup understood early the need for smart metering in Africa was primarily triggered by the need to manage energy supply better to reduce the risk of power cuts. The business development followed a comparably structured process, but went also through two iterations.
Our third case study, Arla is a leading dairy company, which had to develop a low cost offering for the African market. While the main challenge was clear from the beginning Arla had to build on all three BOP business development paths to create a successful and sustainable business.
Our findings suggest that the probing (trial-and-error learning) phase is particularly important in unknown and uncertain environments, but that perceiving and prospecting (leveraging on systematic trend scanning and systems thinking) activities are necessary to find distant opportunities. i.e. opportunities that are markedly different from the current business. In addition, we find that successful business-development activities rely on multiple iterations between perceiving, prospecting and probing.
Our findings emphasise that corporate foresight can boost the exploration capabilities of firms and in consequence improve the ability to create sustainable growth.
Read the entire article at: Højland, J. and R. Rohrbeck (2018). The role of corporate foresight in exploring new markets: evidence from 3 case studies in the BOP markets. Technology Analysis & Strategic Management, 30(06), 734-746.