Lesson Goals
- Understand the basics of the Business Model Canvas
- Investigate some Business Model Factors at the Base of the Pyramid
- Learn from the Kiva Case Study
Bring to Class- PC5 (note this is due on Thursday 9/7!!)
Remember that all “Bring to Class” assignments should be done on a flash card. See directions.
- Flashcard of Kiva answers
- Review briefs send out on Thursday
Concepts & Definitions
BusinessModel: “describes the rationale of how an organization creates, delivers, and captures value.” (Osterwalder & Pigneur, 2010)
The Business Model Canvas
Product Types:
- Fast-Moving (BD): consumable, usually less expensive & smaller…(food, grooming products, clothing)
- Durable (MW): larger investments for longer-lasting value…………..(computers, cars)
- Infrastructure Projects (BD): large-scale for long useable lives…….(buildings, electrical systems, cell phone networks)
Base of the Pyramid Innovations:
- Packaging Strategy – accessible & relevant………………………..(smaller packages of soap, detergent)
- Pricing Strategy – at a willing & able level………………………….(pay-as-you-go phones)
- Product Design – by material selection & utilization……………(tools & skills to maintain are accessible)
- Distribution Strategy – accessibility to BoP environments…….(Grameen phone)
- Product Financing Strategy – willingness & accessibility………(no up-front cost, longer pay-back periods, group purchasing)
- Production Strategy – practical & effective in environment……(yogurt microfactories)
- Marketing Strategy – common, accepted, effective………………(word of mouth, media)
- Payment Strategy – common & accessible………………………….(M-Pesa/pay by phone)
Major Challenges to Business Planning:
- Stakeholder Contributions and Benefits – determining when and how contributions happen and benefits are realized
- Transparency and Trust – cooperating though different culture/values/assumptions; plus often less regulation/public oversight
- Marginalized Stakeholders – giving everyone a voice
- Power Relations and Privilege Systems – varying by culture & context, especially complex as outsiders
- Identifying Champions – inspiring/empowering passionate locals for your cause
- Micro-jealousy and Public Relations – dealing with preconceived notions (on both sides) and balancing who you partner with
- Business Planning with Non-cash Equity – negotiation how to ensure equity between stakeholders contributing different forms
- Quick read of the p. 14-27 in Business Model Generationtextbook – 20 min
Pre-Class Activities
- Check out Kiva! (D.I.Y. Foreign Aid & A Fistful of Dollars) – 20 min
- Pick an entrepreneur on Kiva.org in whom you’d ideally invest in…
- Who are they and what’s their venture?
- Why would you invest in them?
- What 3+ other interesting things did you learn in this activity? (Think about things that might help you pitch your own ventures)
- What’s their profile (be prepared to pull up in class)?
- Whose business models do you admire? How do those business models fit the context in which they work?
- What challenges have you seen organizations face with their business models? Where have you seen business models fail?
- What other challenges might BoP conditions cause? What other opportunities?
Connection to Venture
- Examining challenges and opportunities at the BoP
- Making your own business model case study!
Additional Resources
- TED Talk: Ray Anderson on the Business Logic of Sustainability – Sustainability Models from Big Business
- TED Talk: Charles Leadbeater on Innovation – Innovation & Business as Collaborative and Consumer-based
- Strategies for the Bottom of the Pyramid: Creating Sustainable Development (Prahalad, 1999)