Ted London is a faculty member at the Ross School of Business, and a Senior Research Fellow at the William Davidson Institute, where his recent work is centred on scaling impact. Over the past decade there has been increasing interest in building enterprises that serve low-income (BoP) markets. The current challenge is that too much of these efforts remained as pilots, with very few enterprises achieving scale in a sustainable and significant way. Ted, a recipient of the 2016 Aspen Institute‘s Faculty Pioneer Award, focuses his work developing actionable strategies, tools, and frameworks that can facilitate an enterprise journey to scale in BoP markets. His most recent book is The Base of the Pyramid Promise: Building Businesses with Impact and Scale.
Ted, thank you for participating in this interview. So many pilots fail without achieving scale. Do you see that there is a certain skill set missing that leads to a number of failing enterprises?
There is a skill set, but also a mindset. Too many pilots are designed in a way that requires significant and intensive investments in specific strategies, such as behaviour change, building distribution networks, and working closely with local producers. While this may allow the pilot itself to work, that level of intensity is not scalable in an economically feasible way. So, I often ask entrepreneurs that are piloting, when you're done with your pilot, what do you hope to have learned? And that's the big question. I hope they can answer with something along the lines of what we are focused on is understanding how to build a business model that can go to scale.
Talk to me about what is needed to scale impact.
Scaling impact requires, among other things, building the right team. And that has been a challenge for many enterprises, in that they don't always think about the team they need to scale with—and the subset of skills they need. For example, I think it is important that there is someone who has a title, either full or part-time, that is something like a Chief Ecosystem Director. This person deeply understands the development community, the non-profit community, potential funders and partners on the ground, and can speak the language of development and connect it to the language of business.
It is a difficult and time-consuming process to build those relationships, but they are critical if you want to go to scale.
Considering the special nature of the BoP markets, is there a blend of skills that is needed to succeed? And if so, what does this blend look like?
Most enterprise leaders talk about, but often perhaps don't execute as well as they might aspire to, this notion of co-creating with the BoP. Many enterprises don’t necessarily have either the talent or the skill sets to do that well. This isn't something that would come naturally to entrepreneurs who have been trained and have worked primarily in higher-income markets.
Who from the BoP is on the leadership team, either formally as an employee, or informally as a respected advisor? Who is helping to guide that co-creation process in a meaningful way?
And sometimes the missing piece is the mindset of the enterprise itself. Does the leadership team have enough humility to ask the right questions and recognise how much they don’t know? Without that mindset, together with the right kind of talent, co-creation becomes words, but not effective, actionable efforts.
During your career, has there been a change or a general trend evolving in the types of talent initiatives that exist?
As I look back, things have changed dramatically. Thirty years ago, I was a Peace Corps volunteer in Malawi, advising a small business development programme in the major commercial centre of Blantyre. Our focus was on providing training and advice for local Malawian entrepreneurs as they built their micro, small, and even medium-scale businesses. The entrepreneurs understood the context, and most of our focus was on more technical skills, such as marketing or cash flows or operations, which could be very impactful in growing a more sustainable enterprise in these communities.
That had been the focus of market-based development for many years: working with local entrepreneurs. The enterprises, however, generally remained quite small. A big change that came with the advent of “base of the pyramid” and “value chain” and other initiatives is an interest in also supporting entrepreneurs and companies that did not originate from the BoP. That has led to a lot of interest from, if you will, non-locals in serving these local markets. What hasn't happened concurrently, is a robust training programme. Or a robust methodology for those entrepreneurs to think about how to execute effectively in what is an unfamiliar market context for them.
What are the best practices you would advise companies to consider when it comes to talent development at the BoP?
At a company level, I think the first best practice is humility and a recognition that you know a lot of things, as an entrepreneur or a company leader, but there are also some important gaps in your knowledge. Understanding those gaps and the biases you may bring to the enterprise and the market are critical. How do I learn about best practices? How do I learn about the types of talent I need moving forward? I shouldn't just be assuming that nothing has been learned about BoP and inclusive business. It really starts with humility.
What are the specific challenges and opportunities when it comes to recruiting and developing talent at the BoP?
I think business schools at universities are an under-tapped resource. A growing number are offering classes or developing programmes that share some of the latest thinking about developing these kinds of enterprises. More outreach to these business schools would allow the enterprise to identify some of the younger generation that has initial skills, enthusiasm, and interest in this space. I think that not recruiting from universities where people are beginning to get a skill set that's useful and valuable in that context is often a miss opportunity for BoP and inclusive businesses.
What are your experiences with these BoP and inclusive enterprises and ventures in terms of talent recruitment and development?
This doesn't necessarily apply only to low-income markets, but enterprises tend to set aside their failures and only access and share their successes. But the failures, the activities that didn't turn out quite as planned, are filled with knowledge. And for an emerging domain, like inclusive and BoP business, focusing on what has been learned from the activities that are less successful, is an imperative that more enterprises need to adopt.
Is there anything else that you would still like to add?
I remain very optimistic about the impact that BoP and inclusive business can have, in terms of achieving the SDGs and alleviating poverty, while also being profitable and generating the returns that stakeholders desire. Like any other new area, there's going to be some ups and downs and some bumps. But BoP and inclusive business are part of the future of global commerce and our planet. The question is no longer “are we going to build businesses that serve the BoP?” The real question now is “how can build better businesses that serve the BoP?”