Archive for June 23rd, 2010
Enabling Access to Energy at the BoP
The focus on renewable sources of energy has been reinforced in recent weeks by the BP oil spill off the Gulf Coast in the U.S. While one part of the globe voraciously consumes energy, 1.6 billion people globally have no access to electricity. A further 3 million still use traditional biomass for cooking, the health hazards of which have been substantially documented.
However, there are several – mainly local entrepreneurs – that are offering valuable energy solutions to this very segment of people. Most of these enterprises are removed from the traditional energy enterprises, and offer solutions based on local needs, and local possibilities. The Ashoka Network, in collaboration with Hystra, a hybrid organization that works with business and social sector entrepreneurs to design and implement strategies for the BoP, conducted a study on the work of these enterprises.
The study, “Access to Energy for the Base of the Pyramid,” is an in-depth look at several market-based approaches to BoP energy requirements. It looks at the different kind of technology available such as:
- Grid connections: which turns the BoP into legal, paying consumers
- Devices: such as solar lanterns and biomass cook stoves
- Solar home systems: Which deliver electricity to households
It also looks at systemic support to deliver these solutions. These include the roles of co-operatives which take on that challenge of providing sustainable power supply and create income generating opportunities, and the role of finance and various financing intermediaries. It also makes recommendations for action, outlined for various system enablers – aid agencies, governments, social investors and so on.
The study puts out two interesting observations – that it is not only important to focus on providing solutions that are cost and need-efficient, but also to optimize “human capital.” And secondly, that the most successful social entrepreneurs are also the ones who have tried harder to get the users who were implied in the value-addition process involved.
Download the entire report via the Hystra website.
Global Village vs. Small Towns
The global village is no longer an abstract concept. We live in a world that is more interconnected than ever, including the BoP. The business networks that exist at every level of our economies have implications for the workings of enterprises in the global village — multinationals.
Multinationals would particularly benefit from understanding the networks that exist at the base of the pyramid. This is a class of people often not studied enough or well-understood. Some firms have been able to distinguish their products well enough to serve this segment, while others have not.
Authors Miguel Rivera-Santos, and Carlos Rufin, work from the International Business Review, April 2010, “Global Village vs. Small Town: Understanding Networks at the Base of the Pyramid,” make the distinction for those building business models and strategies for the BoP. An excerpt from their paper is below.
“We compare and contrast business networks at the Base of the Pyramid (BOP) and at the Top of the Pyramid (TOP), and analyze their implications for multinational enterprises (MNEs). We first identify the specificities of BOP environments in terms of competitive environment and institutions. Building on this analysis, we develop a series of propositions regarding the impact of these specificities on the structural characteristics of BOP networks, their boundaries, the characteristics of their ties, the diversity of their partners, and their evolution over time, as compared to TOP networks. Our analysis suggests that major differences exist between both types of networks along all dimensions and that these differences have important implications for MNEs active in BOP environments.”
The Algorithm of Social Enterprise
Can social enterprise be brought down to an algorithm? And through that medium can it be proved to be sustainable? That’s what Jeff Trexler of Pace University, USA, looks at in his piece “Social Enterprise as an Algorithm: Is Social Enterprise Sustainable?”
Trexler begins his piece by taking a look some of the reasons for some of the inherent problems in understanding what a social enterprise is, and how the terms used are often quite contradictory. One reason is that there is poor understanding of organizational structures and mediums. In the beginning of his piece, he also takes a closer look at the term ‘sustainability’ and how it applies to social entrepreneurships. Trexler argues that the terms and ideas used to associate the industry – for example, the notion that social enterprise is the first mode of organization to respect natural system ecologies – leads to a level of rhetoric about the sector, which might not be based in any principle.
To enable social enterprise to move beyond being the latest fad in doing good, Trexler puts the industry through an assessment of its links between system dynamics and social institutions. The aim of his paper to this end is to:
- To offer a new definition of social enterprise, one that looks at delivers a concise explanation as well as explains the diverse values and ventures within the industry. Trexler sets out to accomplish this through moving away from trying to identify a “prescriptive mission or an array of common characteristics.”
- He also aims to provide an explanation for the social enterprise sector’s organizational altruism that goes beyond it being a social fad. Trexler argues that social enterprise is not so much of a disruptive innovation as it is viewed. Rather, it works on the recurring tendency of those engaged in charity to adopt traits of potential supporters, which in themselves are sustainable.
- Lastly his article sets out to explain why social enterprise is transitional. His view is that social enterprise is a particular organizational technology, and that every enterprise is a social enterprise. This he says flows from the very nature of corporate identity, and not from ethical imperatives.
Trexler provides some compelling reasoning to the notions of social enterprise. Most interesting is the point he keeps reiterating, that social enterprise is transitional, that its greatest contribution would be to remind the world of what corporate identity is. That there should not be a distinction between “social” businesses or non-profit/for-profit businesses. His argument for his is that the distinction slots social enterprise as a niche sector, inherently assuming a conceptual divide between social and business values.
Read Trexler’s entire article here.