The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers

Book Preface

Why We’re Writing This Book and Why You Should Read It

Chances are, you picked up this book because one of the following descriptions applies to you:

• You’re an entrepreneur or investor seeking practical ways to profit from new enterprises in emerging markets.

• You’re an executive at a major transnational corporation who understands that your company’s long-term sustainability depends on its ability to gain a major share of the billions of potential customers at the bottom of the pyramid.

• You’re an eyewitness to severe poverty as a citizen of an emerging nation and hope to relieve that suffering through business.

• You’re a development practitioner working for an overseas development agency, your government, an NGO, the United Nations, or some other multilateral organization.

• You’re a designer of products and services who wants to learn about “design for the other 90 percent.”

• You’re a teacher or student in an undergraduate or graduate course of study in business, social enterprise, international affairs, economic development, area studies, design, or poverty.

• You’re a philanthropist or impact investor who’s seeking the most effective ways to make your money count in addressing global poverty.

• You’re a concerned citizen who wants to know how something effective can be done to narrow the inequities between rich and poor.

• You simply want to understand better what life is like in countries poorer than your own — and how conditions there might be improved.

If one of these statements fits, you’re in the right place.

•••

We’re writing this book to share a set of ideas that we believe — in fact, we know — can help end poverty for hundreds of millions of families around the world who are now subsisting on $2 a day or less.

While this book has major policy implications, it isn’t intended for the eyes and ears of decision makers at the World Bank, the United Nations, the White House, Zhongnanhai, or 10 Downing Street. Both of us inhabit the world of business. Although we don’t overlook the impact of high-level policy choices — far from it!; we’ll even address some of those choices — we believe that the greatest potential for reducing poverty in today’s global environment lies in the power of business. Most of the pages that follow showcase our ideas about how business, both new ventures and existing companies, can substantially lessen the impact of world poverty … while making a lot of money in the process.

Here’s our proposition in a nutshell:

• The estimated 2.7 billion people who live on $2 a day or less constitute an enormous untapped market.1 Six years ago, the International Finance Corporation and the World Resources Institute estimated the collective purchasing power of the four billion people they define as the “bottom of the pyramid” at $5 trillion.² And as millions of these people move out of poverty, their purchasing power will double and triple.

• Businesses will thrive if they offer products and services that meet the needs of the bottom billions for quality, reliability, and, above all, price. Conversely, companies that don’t quickly learn to operate effectively at scale in this market will lose out to the companies that do.

• In fact, companies that want to extend their reach into emerging markets must first aim to serve $2-a-day customers — tomorrow’s middle class — and later move up the pyramid. Approaching the problem from the top down has almost never worked, as you’ll understand better after you read this book.3