From the Debate

If we want to differentiate between responsible capitalism and business as usual in market based approaches to international development we need to expand the evidence base at the bottom of the pyramid.

This was one of the conclusions drawn by seven panelists from the world of business, strategic management and development policy who participated in an Oxford University debate on May 3^rd about the merits and risks of the Bottom of the Pyramid approach, chaired by Simon Maxwell.

 

 

Panelists speaking on either side of the debate agreed on one point, that making markets work for the poor means producing better evidence of the intended and unintended consequences of doing business at the BOP.

When the evidence base is dominated by the stories that businesses tell about themselves, the debate concluded, it is difficult to know how the BOP approach transforms existing local markets for goods and services, and what kinds of risks, vulnerabilities and inequalities it creates.

Championing the BOP approach, Jack Newnham, project director at the UK’s Business Innovation Facility said, ‘What we’d like is a better evidence base for policy discussions.’ Renowned critic of the BOP approach to development, and management scholar at the Michigan Ross School of Business, Aneel Karnani, agreed. ‘The BOP approach is empirically weak. We need more research to understand what outcomes the BOP approach actually produces on the ground,’ he said.

During the debate champions of the BOP approach pointed to a rapidly growing portfolio of social enterprises or business initiatives that are delivering goods and services to the poor, and argued that these initiatives are meeting the universal aspirations of poor people to ‘get a job’ or ‘grow a business’. Meanwhile their critics questioned the appropriateness of turning the poorest of the poor into consumers and asked what kind of opportunities were actually being created by BOP markets, arguing that these invariably precarious and low value jobs in production or distribution.

Speaking in support of the idea that business interventions aimed at the extremely cash poor offer opportunities to do good while doing well, the audience heard from Unilever Vice President of Communications Patricia O’Hayer, Business Fights Poverty CEO Zahid Torres-Rahman, and Project Director at the Business Investment Facility Jack Newnham.

Zahid Torres-Rahman spoke of his personal excitement and energy about businesses at the bottom of the pyramid, and offered a few examples of ‘world changing’ BOP businesses – pulled, he said, from the thousands. Arguing that we are witness to an important shift that ‘goes beyond ideology’ he told the audience not to be fooled by the debate format. Business people operating in the field of development, he said, ‘left business as usual a long time ago’.

Jack Newnham, speaking as someone with experience of evaluating different BOP business plans, said that ‘picking the winners and backing the right horse’ was always difficult, but emphasized the need for a focus on ‘inclusive business’ models.

Unilever Vice President defended the company against stereotypes and accusations and focused on the employment it has generated through direct distribution networks. While she admitted that she didn’t find it appropriate that Unilever marketed ‘Fair and Lovely’ skin whitening cream to poor people in South Asia she argued that she remained proud to work for a company that made products like ‘Lifebuoy Soap’ – which encouraged hand-washing and reduced deaths from diarrheal disease – widely available.

Speaking against this claims the audience heard from War on Want Executive Director John Hilary, renowned management scholar and critic of C.K Prahalad Aneel Karnani, LSE social scientist Kate Meagher and author John Madeley. As they repeatedly stated, these critics are not against BOP markets per se but are concerned to see increased regulation, transparency and accountability.

Aneel Karnani reiterated his argument that there is nothing morally wrong with tying business to development outcomes, but that in the absence of a strong state capable and willing to regulate what businesses do, we will continue to see companies creating needs and desires for mass consumer goods that leave the poor poorer.

John Hilary challenged champions to tell us what was new about the role of business in development, telling the audience that he thought the 2000s had settled any question of whether free trade and the expansion of markets benefited the poor – in the negative.

John Madeley, who began his working life selling weighing scales to small businesses for a major UK company before travelling the world to write about global corporations, offered an activist’s perspective on the violence of the transnational corporation that gave voice to widely held views about the moral perils of big business.

Kate Meagher argued that direct distribution networks allowed large scale companies to ‘free ride’ on the networks of the poor and – by tapping into the links between NGOs and communities were undermining the legitimacy of civil society organisations. Contradicting claims made by Unilever, she argued that it was access to clean water rather than access to Lifebuoy Soap which reduced the risk of diarrheal disease.

Opening up the floor for a discussion Simon Maxwell fielded wide-ranging comments from social entrepreneurs, policy makers, students and academics, among the audience.

In the discussion a clear tension emerged between products and services, with critics arguing that poor people themselves rarely consider BOP products like soap or solar lanterns to be an adequate replacement for public services like clean water or grid electricity. Pushed to say whether they thought it was at all legitimate for businesses to sell products to the poor, the panelists argued that it depended on what those products were, in which context they were being sold, and what other kinds of products they displaced.

Consensus emerged around the need to widen the evidence base on which support for BOP business initiatives is based. This might involve examining the extent to which becoming an ‘entrepreneur’ or a ‘consumer’ is experienced as empowering in the long term, it might mean asking how social enterprises transform actually existing markets, it might mean asking what kinds of employment opportunities are actually created by large-scale social entrepreneurship, and whether poor people end up paying more for public goods that are financed by private money.

At the end of the event a quick show of hands from the floor suggested that the debate appeared to leave the audience of over 100 people broadly optimistic about the possibility of doing business responsibly in contexts of international development.

But as Simon Maxwell concluded, while BOP approaches are now firmly established as a means of bringing about development the debate about their outcomes is only just beginning.