The Eco - opportunities and threats of designing for the emerging markets by Jente Minne

Jente Minne Mentor: Dr.C. Baelus Artesis university Antwerp, 2009 - 2010

The Eco - opportunities and threats of designing for the emerging markets

The Eco opportunities and threats of designing for the emerging markets The emerging markets are developing very rapidly, and this has a substantial influence on the ecological footprint on our earth. The emerging markets weigh as well as the emerged markets ecological impact against social or economical profit, and unfortunately the latter is often prioritized. The climate top in Copenhagen illustrates the concern of the western markets of raising impact of the emerging markets on the environment. Although, the developing countries aren’t following the same path and could jump ahead of the developed countries.This is because of their greater willingness to adopt break through innovations and because of their huge population. This makes that sustainability problems are especially urgent for them. (Immelt, 2009)

Preface

This topic has lately gained a lot of attention by the media, NGOs, civil society and politicians, but still very few research has been executed in this field.

The study tends to identify and categorize the threats and opportunities the specific characteristics of designing for the emerging markets offer to design products and services in a more ecological sustainable way. The project is focused on the entrepreneurship of multinational corporations (MNCs) in the emerging markets. “Emerging markets” in this project is defined as the markets with customers that earn between 2 and 8 dollar purchase power parity (PPP). A general literature study was executed, focused on the topics

of sustainable development, designing for the emerging markets and the existing Eco-design techniques. Afterwards a list of 53 concrete business plan solutions for the emerging markets was designed and linked to different other guidelines to design for the emerging markets. These guidelines have another level of abstractness and contain quantific information.The method used is literature study. Afterwards the correlation with the LiDS Eco-strategies was defined. This theoretic framework was tested on 3 cases, where the influence of the business plan solutions on the LiDS strategies was measured. The author has made conclusions on the levels of the different guidelines by executing certain statistic techniques, as the cluster analysis and the search of outliers. The study resulted in a list of 53 business plan solutions for the emerging markets, some valid conclusions on the level of the business plan principles as well as a list of strong correlated principles. The recommendations made for further research are focused on using this model in a more geographically and case based context. Which should allow the researcher to quantify the correlation and extract more conclusions on higher levels of abstractness This project wouldn’t have been the same without the cooperation of my intern promoters Chris Baelus and Ann de Keersmaecker, my extern promoter David Peck, Ovam and many other people who supported and helped me during this project.

Abstract

Pg.

Title

1 2 3

Cover Abstract Table of content

INTRODUCTION 5 In which way do we want to evolve ? 6 The three pillars of sustainability and the function of Eco design within. 7 The challenges the world is facing while new markets are emerging 8 Utility and peculiarities of designing for the emerging markets. 10 Which products are designed for the emerging markets/ bottom of the pyramid?

Preface

RESEARCH PROJECT 13 Literature study 14 Problems and goals of the research project 15 Definitions and demarcation of the terms used in my hypothesis 16 Selection of the emerging market-characteristics 17 Methodology of the research project 17 Choice of the different Eco techniques 18 Selection and reasoning of the followed path 19 BoP information used in this project 20 LiDS Eco strategies used in the project

EXECUTE 22 UNDP - BoP - BPSEM - LiDS overview 24 How to place the BPSEMs under BoP categories?

ANALYZE Comparisons made on the level of the BPSEM 61 The BPSEM LiDS matrix 64 The BPSEMs divided over the LiDS strategies. (A3) 65 Clustering BPSEMs on content 66 Description of the several categories 69 Cluster analysis on similar counts (SPSS) 70 Comparison: clusters on content ft. clusters on counts 71 Case 1: The â&#x20AC;&#x153;Chulhaâ&#x20AC;? oven 76 Conclusions 76 Case 2: A battery charging system for youngsters 79 Conclusions 79 Case 3: One laptop per child 83 Conclusions 84 86 87

Comparisons made on the level of the BoP principles. Comparisons made on the level of the UNDP issues Comparisons made on the level of the UNDP Solutions

CONCLUSIONS 89

General conclusions made based on the previous analysis

DISCUSSION 92 Discussion about the research project 93 Is designing for the emerging markets going to save the world? 94 Further recommendations REFERENCES 96 References ATTACHMENT 100 - 111 Attachments referred to in the file

Table of content

INTRODUCTION Nature is tr ying ver y hard to make us succeed, but nature does not depend on us. We are not the only experiment. R. Buckminster Fuller

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- 2009-2010

1. In which way do we want to evolve? In this relative short period of the research project, several cases were published in the press leading to a controverse about in which way the emerging markets should develop and at what price. For example: The Belo Monte dam. The Belo Monte hydroelectric dam is a project of the Brazilian president Lula. The president has decided to approve the building of a huge hydroelectric dam (3rd biggest in the world) in the Amazon forest on the Xingu River in order to provide Brazil enough energy for an economic growth of 5 percent until 2015. The argument is that the dam is needed to keep obtaining economical growth.

Introduction

The social and ecological effects of this dam are overwhelming. The project is strongly critized since it will cause the directly displace of over 20,000 people, a flood of 400 square kilometers of forest and the drastically cut off access to water in the area where the Paquiçamba indigenous territory of the Juruna people is located. According to the economists, a small price to pay compared to the economical benefits although the dam will only perform with a 10 percent efficiency during the dry season.

I don’t want to focuss on the details and the technical information but rather on the way the trade off is made. To quote a Brazilian activist: “ how can we compare the size of a gold piece with the capacity of a hell? The loss of a piece of gold doesn’t affect life, the loss of air does.” In the same discours he highlighted the fact that economicall growth isn’t endless and the decisions that are made here

are neglecting this matter, leaving the country with a big unsustainable infrastructure, built for rapid growth and causing a lot of environmental and social harm. The decisions made are based on unsufficient research about the long term ecological effects. A new coal plant in South Africa In 2009 the World Bank granted a controversial loan for the building of a high polluting coal plant in South Africa, The coal plant will pollute more than the two most polluting power plants in the UK together. Is this the way we want to evolve? The majority of the world still need to go through the industrial revolution, should they follow our path or is there another way? How can we obtain sustainable growth? Another way? Development aid has often been presented as big plans and big investments in infrastructure to help develop the emerging markets. Rapid scaling causes rapid economic growth, but is often ignoring minorities and ecological aspects. Although,more and more, multinational companies are investing in the emerging markets, trying to earn money while eradicating poverty on a smaller scale. This research project reveals the opportunities and threats for the environment of this bottom up strategy. But first an introduction of the role of ecological sustainable development will be drawn.

Introduction

At the world summit of 2005, it was noted this means the reconciliation of environmental, social and economic demands, the “three pillars” of sustainability. (2005 world summit).

Introduction

It is known that human consumption nowadays is depleting too much natural resources, and according to some studies, in 2030 we will need two planets if we don’t change our way of consumption. (WWF, 2008). The changes in human behavior have to be radical if we want to become sustainable: “The severity of global sustainability challenges leads to an increasing awareness that incremental solutions will not be enough to maintain critical levels of natural and social capital” (Russo, 2003)

If we focuss on the topic of Eco design we can say that a recognized way of developing ecological products lies within the field of Eco design (Brezet & van Hemel, 1997). In this project we define Eco design as: “Design which addresses all environmental impacts of a product throughout the complete life cycle whilst maintaining other criteria” We can conclude that Eco design is a way of foster more sustainable solutions

The topic of Eco design will be addressed in the context of the emerging markets, which can be understood as markets in China, India, Brazil, Mexico, etc. The next page will demonstrate why the focus on these ecological aspects is especially important in the emerging markets. change accordingly. Similarly, the scale of environmental concerns was chosen to indicate distinctions. These gradations are fairly self-explanatory; although it is worth noting that “X products” refers to the negative environmental impact of a group of products, and that a scope equivalent to “ One Manufacturer” would indicate concern about all the activities of a single manufacturing firm whereas “ X Manufacturers” indicates activities among a group of manufacturers.

Scale of Organizational Concern

The previous page illustrated some examples of unsustainable economical growth, but what is exactly meant with sustainable development? Sustainable development can be defined as: “Fulfilling today’s need without jeopardizing future generations’ possibilities to reach their goals” (WCED, 1987).

For this project, the focus will lay on the level of the industrial ecology as showed below in the scheme. This choice is made because, in order to penetrate emerging markets, a big investment is needed, and often it wouldn’t be viable to assure short term profits (product life time). Furthermore network is an essencial aspect of designing for the emerging markets, which offers a lot of possibilities and threats. Focusing only on 1 manufacturer would ignore these possibilities and threats.

Society

X Manufacturers 6

One Manufacturer

Single Product Life Cycle

2. The three pillars of sustainability and the function of Eco design within.

X Products

1: Environmental Engineering 2: Pollution Prevention 3: Envir. Conscious D&M 4: Design for the Environment 5: Life Cycle Design 6: Industrial Ecology 7: Sustainable Development

Disposal Use Manufacturing

3,4,5 2

Manufacturing Use

Disposal

Product Life Cycle

Human Lifetime

Civilization Span

Scale of Temporal Concern

SOURCE Figure 2 – Environmental and Temporal Scale of Environmental Impact Reduction Approaches We note that three classes of approaches can be identified, namely, • those which are applied within a single product life-cycle and focus on specific life-cycle stages, • those that focus on a complete product life-cycle and cover all life-cycle stages, and • those that go beyond single product life-cycles.

Sustainable development in the emerging markets

3. The challenges the world is facing while new markets are emerging The emerging markets are developing very fast, and this influences the ecological footprint on our earth in a substantial way. (Immelt, 2009) Emerging markets also weigh ecological impact against social or economical profit.

Introduction

On the previous page was argued that sustainable development has an influence on the economical ecological and social aspects of development and the 2 examples given in the introduction already illustrated some issues. The following pages will illustrate why sustainable design for the emerging markets is necessary

Waste problemacy The waste problemacy is a big issue in several emerging countries. The emerged markets where able to dispose their waste in other countries, but the emerging markets have to search for alternatives. In the emerging markets garbage belts result in the poisoning of ground water and rivers are filled with garbage, which lead to floods. (Panama, 2005) Burning waste is another a common technique, which leads to an increase of CO2 emissions and an impact on the health of the local population. (BTC, 2009). If the developing economies will consume in the same way as the emerged markets, the waste problemacy will increase and thus also the negative impacts on health and nature.

ecological crisis The ecological crisis is very current: tsunamis, hurricanes, global warming, leading to floods... There are many ecological and social disasters that are related to the ecological footprint humankind is leaving on the world. Although scientists disagree on the responsibility of mankind in relation to these disasters, most scientists see a connection. Regulations related to the ecological impact are imposed by local or international governments and local and international NGOs are focusing the attention on the ecological risks of unsustainable behavior. The emerging markets are suffering the most of ecological disasters, since they are more depending on agriculture for their economy, the meteorological conditions are often more sensitive (CTA august 2008), and the infrastructure isnâ&#x20AC;&#x2122;t prepared on big ecological impacts (Haiti, 2009)

Sustainable development in the emerging markets

According to some scientists, local production, consumption and waste treatment will lead to more sustainable behavior (Curtis, 2003) Shortage of raw materials “Global climate change and the accelerating depletion of natural resources are just two of several phenomena indicating that the world is not well aligned with the concept of sustainable development “(Hockerts, 2009). The emerging markets as defined in this project is nearly half of the population. It is obvious that up scaling their consumption will result in faster depletion, if no radical different way of consumption is used. Several cases are also known, where digging raw materials causes social disasters as deportation and slavery (BTC, 2009).

Introduction

economical crisis To remain sustainable, as well economically (Immelt,2009) as ecologically (Russo, 2003) incremental innovation won’t suffice. Growth percentages of 1-2 percent are to small to remain economical sustainable and ecologically we need to challenge a lot of severe challenges. Designing for the emerging markets allow (and force) us to challenge existing paradigms (Prahalad, 2006) and can result in more sustainable products or services for the emerging and the emerged markets.

The last topic argues that the peculiarities of designing for the emerging markets can lead to more sustainable products, which can lead to more sustainable development. But what is so specific about designing for the emerging markets that existing paradigms are challenged? To answer this question, we will focus on a reference work about designing for the emerging markets, the fortune of the Bottom of the pyramid by C.K. Prahalad.

4. Utility and peculiarities of designing for the emerging markets. The fortune at the bottom of the pyramid. The fortune at the bottom of the pyramid is written by C.K Prahalad and is published in 2005. The book describes how profits can be made by eradicating poverty. The book uses the millennium development goals as a source of innovation, and believes in a bottom-up approach to eradicate poverty. This is the same strategy William easterly is proposing in his famous work: “the white man’s burden”. (easterly, 2006) The future of developing the emerging markets lays according to Prahalad in investing and producing products and services for the people below the poverty line, people who earn less than 2 dollars a day purchase power parity (PPP). This markets is called the bottom of the pyramid (BoP).

“Developing countries aren’t following the same path and could actually jump ahead of developed countries because of their greater willingness to adopt break through innovations. Because of their huge population, sustainability problems are especially urgent for them. Because of this they are likely to tackle many environmental issues years or even decades before the developed world.”

How GE is disrupting Itself?

Sustainable development in the emerging markets

Essential in his theory that the development of these markets is considered to be an economical activity and thus also leads to economical sustainability. Several cases will be shown on the next page. Designing for the BoP is considered to be a serious activity where many multinational corporations (MNCs) are involved in not only for obtaining a better reputation. And Prahalad refutes the misconceptions that the BoP cannot afford products or services, the poor don’t have use for products and that only developed countries appreciate and pay for technological innovations,... (Prahalad, 2006)

Introduction

A remark has been made on this statement. Prahalad received criticism, according to his inconsistency of the defining the BoP, and the fact that many of the cases mentioned in his book aren’t addressing the poorest people. (<1.25 dollar PPP/ day). ( Karimi, 2007) This is why the author avoids to use this term, and prefers speaking about the emerging markets,defined as an income between 2 and 8 dollars PPP, more information on this on pg.16

The difference with glocalization (producing products for local markets and also sell them in the rest of the world, with some adaptations) is that BoP designing focuses on reaching the big mass of the emerging markets, and not only the top of these markets. To do so Prahalad defined twelve principles, which will be further discussed in this file (Pg.21) (Prahalad, 2005: BoP innovation Principles).

“Companies following the BoP proposition often fail because they overestimate the purchasing power of poor people and set prices too high. Virtually none of the examples cited by BoP proponents supports the recommendation that companies can make a fortune by selling to the poor. Several of the examples that apparently support the BoP proposition involve companies that are profitable by selling to people well above the $2-per-day poverty line, but who seem poor only in relative terms, especially to a Western researcher.”

The misfortune at the bottom of the pyramid

These principles explain how the totally different situation of the customers in the BoP markets (as well geographically, demographically, culture based as economical) demands another approach for innovation. (Prahalad,2005) In this project the hypothesis is made that these peculiarities offers opportunities and threats to Eco-design. Reverse Innovation Reverse innovation is related to this different approach of innovation. “Reverse innovation is doing the opposite as glocalization, it means producing products for the emerging markets and bringing these products back to emerged markets. In this way radical innovative products can be obtained which are more price performance and fulfill different needs, which can be implemented in the western markets if they proved themselves in

Sustainable development in the emerging markets

the emerging countries.â&#x20AC;? (Immelt, 2009) PPP termsâ&#x20AC;? (Prahalad, 2006). What servicesmarkets, and products areMNCs beingas designed the BoP ? This means that products4.2 designed forkind the of emerging Unilever,for Phillips, Nokia, GE, HP,Ericson, Voxiva CEMEX, may also influence products in our markets, which even Jaipur foot, Casa Bahia, and many more have already successfully increases the importance of Eco design in the emerging designed for the bottom markets. of the pyramid. Every year 40 students at Tu Delft graduate with a

5. Which products are designed for the emerging markets/ bottom of the pyramid?

The book â&#x20AC;&#x153;the fortune at the bottom of the pyramidâ&#x20AC;&#x153; mentions that MNCs can make profits by serving the bottom of the pyramid. Scaling is the essential condition: â&#x20AC;&#x153;The basic economics of the BoP market are based on small unit packages, low margin per unit, high volume, and high ! return on capital employedâ&#x20AC;? (Prahalad, 2006) He also mentions the economical opportunities the BoP markets offer: â&#x20AC;&#x153;China is already a $5.0 trillion PPP economy, making it the second largest economy behind the United States in PPP terms. Similarly, the Indian economy is worth about $3.0 trillion in

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6. The radical innovation scheme The author designed a scheme based on the literature he has executed in the first semester and that is summarized in this chapter. The scheme argues that MNCs need to change to radical innovation to maintain high enough profits. (Immelt, 2009) This can be done by doing Eco-socio radical innovation or by execute ecological radical innovation. One of the solutions of the former is to design for the emerging markets:

Introduction

“The rapid economic growth of the emerging markets stimulates multinationals to expand beyond high-end segments in places like China and India and to preempt local companies in those countries from creating similar products and disrupting them in the developed markets.” (Immelt, 2009) The upcoming trend of corporate social responsibility and the bad reputation MNCs suffer can also push companies to invest in projects for emerging markets.

The latter can be done by investing in techniques as cradle to cradle, permaculture or biomimicry. But according to GE designing for the emerging markets can also result in radical ecological innovation: “Developing countries aren’t following the same path and could actually jump ahead of the developed countries because of their greater willingness to adopt breakthrough innovations. Because of their huge population, sustainability problems are especially urgent for countries like China and India. Because of this, they are likely to tackle many environmental issues years or even decades before the developed world.” (Immelt, 2009)

For the implementation of radical innovative products and services, the customers have to go through an adaptation process. The products designed for the emerging markets are often only incremental ecological innovative, which doesn’t suffice to encounter the environmental issues. (Russo, 2003). And thus if sustainable development wants to be obtained, a new innovation process will be needed to obtain also ecological sustainability, leading to a new adaptation process that be harder as the previous one. The attention on ecological sustainability is growing and the it was already argued that designing for the emerging markets offers the opportunity to also obtain radical ecological innovation, especially since unsustainable development will have to most impact on the emerging markets. If sustainable products for the emerging markets are designed, this can influence the products on the western market, as reverse innovation explains.

File Analysis 2ma IPO

Sustainable development in the emerging markets

RESEARCH PROJECT There is a sufficiency in the world for man’s need but not for man’s greed. Mohandas K. Gandhi

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1. Literature study The literature study has been executed to define the goal and the scoop of the project. Below, the main topics of the literature study can be found, together with the main authors that are read. A lack of research on reverse innovation and on sustainable design of products for the emerging markets was remarked. Focus on the latter has been chosen for the further project. (Red arrow). The information given in the first chapter was obtained in this stage.

Research project

The previous chapter gave us an introduction about the context the design project is taking place in. It mentioned the importance of Eco design to obtain sustainable development, and the hypothesis that the peculiarities of designing for the emerging markets may imply opportunities and threats for the environment. This chapter will explain the goal of the project, the scoop of the project and the methodology that is used. First, a quick overview is showed on the literature study which leaded to the demarcation of the project.

The research project

2. Problems and goals of the research project The hypothesis of the project, extracted from the literature study, is: Designing products for the emerging markets offers opportunities and challenges for Eco-design The literature study about designing for the bottom of the pyramid and sustainable development revealed the hypothesis that the specific characteristics of designing for the bottom of the pyramid can positively or negatively influence the Ecoimpact on the environment.The goal of the project is :

Research project

To identify and categorize the threats and opportunities the specific characteristics of designing for the emerging markets offer, to design products and services in a more ecological sustainable way.

By identifying the threats and opportunities: MNCs, ngos and governments can focus their attention on these aspects to obtain more environmental sustainable products, and a verification can be made if the Eco-technique that is used is viable for the whole process of designing for the emerging markets, since Eco-design is a recognized way of developing ecological products and to become more sustainable.

Where the millennium development goals (MDGs) attract a lot of attention on the social aspect, the current Copenhagen climate top attracted a lot of attention on the ecological sustainable development of the emerging markets. By executing this project the researcher hopes to achieve: • A collection of strategies that are viable for designing for the emerging markets, as defined on the next page. • A collection of Eco opportunities and threats based on the specific characteristics designing for the emerging markets offers + the conditions in which they are a threat of opportunity. • recommendation for further research in the same field. • An indication on the completeess of the Eco technique to serve for designing for the emerging markets. The following page will explain what is meant with the emerging market in the context of this research project, it is important to define this term since terminology in this theme is often mixed up.

The abbreviations written in black can be found back in the “Reader’s guide”

Relevance of the project. It is proofed that a more economical sustainable way of developing is needed for the emerging markets, but research on how this specific context can influence Eco-design is nearly non existing. This projects tends to make a bridge between the three pillars of sustainability (social, economical and ecological).

Description and methodology of the project

3. Definitions and demarcation of the terms used in my hypothesis The investigated literature tends to mix up the terms: “BoP”, “emerging markets”, “low income markets” and “the poor”. In this project the focus lays on people that earns between 2 and 8 dollars PPP/day, which is called the “emerging markets”. The line of 8 dollars is set equal to the “BoP” income line, mentioned in “the next 4 billion”. PPP stands for purchase power parity which means the purchase power people in the US have with 8 dollars/day.

bottom billion is still excluded from the “inclusive” capital system, and doesn’t attract any investors. (Collier P, 2009) for this target group different techniques of development are needed,and thus this falls out of the scoop of this project. In this project, the term emerging markets will be used, besides while referring to literature that uses other terms. On page 18 there will be explained how the researcher dealt with the different market settings. There is acknowledged that important variations exist across BoP markets (Simanis et al., 2005). the focus of this project lays on general attributes that are found in literature in general about emerging markets.

Research project

The target group is defined in this way because the emerging markets have disposable income to spend on products, and do have a substantial ecological impact on the planet. Examples as the belo monte dam, the coal plant in south Africa, and the fuzz about the role of the emerging markets like India, China and Brazil, demonstrate this. Since these markets are growing 2-3 times faster than the emerged markets, ecological sustainability will be a major challenge to overcome. The setting of the target group is important since certain information may or may not apply for certain markets. The literature of Prahalad, and his BoP “innovation principles” refer to a target group with less than 2 dollars PPP/day. Which means less than the target group set for this research project. Although the biggest critique on the fortune of the bottom of the pyramid is that the cases and principles Prahalad is mentioning, aren’t viable for his target group. And that the real Bottom of the pyramid (<2 dollars PPP) are still excluded from the international markets. Other literature like “the bottom billion” also mention that the

Emerging markets

< 2 dollars PPP: 2.6 billion

2 < X < 8 dollars PPP : 2 billion

- Few products : Health care, food, basic education, fuel and water - No disposable income - Eco impact very limited - Not so interesting for business -> NGO

More products Small disposable income Big Eco impact MNCs interests Last Billion ?

The next 4 billion

Description and methodology of the project

4. Selection of the emerging market-characteristics In order to link the various types of information, the author used several techniques. In the diagram below, you can see the paths the author has followed and the way he linked several sources of information. More information and details about this process can be found in the â&#x20AC;&#x153;attachmentâ&#x20AC;? On the next page a scheme is given of the path that is followed in the rest of this project

Research project

5 different BoP/emerging markets characteristics have been analyzed in order to define which one would be the most appropriate to compare with the LiDS Strategies, they are also linked to each other in order to prove that they viable for the emerging markets, as defined on page 15. Also a list with business plan solutions for the emerging markets (BPSEM) is created, by doing a literature study. In this way a more complete list of business plan solutions for the emerging markets could be drawn than only depending on 1 source would do. Where some sources focus more on designing the services and the products, other sources are more focused on the regulatory or the networking aspect, and other have more a corporate social responsibility input (like sustainable consultancy)

Description and methodology of the project

Abstract

5. Methodology of the research project The research project is based on the triangle structure. The research will bring the BoP information on the same level of abstractness as the most detailed strategies of the LiDS strategies. On this level the researcher will compare the 2 strategies through a literature study. Afterwards the researcher will try to extract conclusions on the level of the BPSEMs, the BoP principles and the UNDP issues. In this way the relation between social, economical and ecological aspects of designing for the emerging markets can be revealed. More information about the UNDP issues and the BoP principles can be found on pg. 19, more information about the LiDS strategies will be given on pg. 20

Research project

In order to fulfill the goal the researcher executed:

• a literature study: Development, emerging markets, reverse innovation and Eco strategies. • a literature study: issues with the implementation of Ecodesign • a literature study: about Eco-design techniques • a literature study: emerging markets design characteristics • a comparison between several BoP/ emerging markets principles • the creation of a list of business plan solutions for the emerging markets (BPSEMs), a total of 53 BPSEMs based on 14 different sources • the comparison of the selected Eco stategy with the selected emerging market principles • extraction conclusions and discussion

UNDP issues

ecological sustainability

(pg.19)

BoP principles (pg.19)

(pg.20)

BPSEMs (pg.19)

LiDS strategies

Sub-strat LiDS

Concrete 6. Choice of the LiDS wheel as Eco technique The LiDS strategy is been chosen to be the most appropriate Eco design technique to make a comparison with the selected BoP principles: • LiDS wheel has a checklist with clear, unambiguous criteria which can be compared to the chosen BoP characteristics. • The LiDS wheel has different levels of abstractness, this allows to choose different level to compare but also to make conclusions. • The LiDS wheel is a complete technique that verifies the whole life cycle of the products/ services. • It doesn’t ask any quantitative information, which would be impossible to obtain. • Several different checklists exists, even one that is focused on designing for the emerging markets. ( D4S)

Description and methodology of the project

7. Selection and reasoning of the followed path For this project, the path which links the UNDP issues to the BoP principles and to BPSEMs has been elected. The BPSEMs will be compared with the LiDS strategies and eventually the link with the UNDP solutions can be used in the conclusions.

The following path has been chosen because of the relevance and the profitability of the links between the several steps. On the next page information about the BoP principles the UNDP solutions, the UNDP issues and the BPSEMs will be provided and in the next chapter the link between the BoP principles and the BPSEM will be further defined.

In this way the author hopes to: Make conclusions on the level of the BoP principles and if possible also on the UNDP issues, this would be interesting since they are quantified. Although this possibility can’t be predicted. “Which emerging markets’ issues motivate / demotivate MNCs to design more Eco-friendly, and by how many cases are these issues experienced. • Make conclusions on the level of the UNDP solutions, which are also quantified. “Which solutions have a big influence on the Eco impact and how much are these solutions used. • Make conclusions on the level of the BPSEM; which principle can cause a threat or an opportunity under which conditions

Research project

•

Description and methodology of the project

8. BoP information used in this project

Research project

This table gives an overview of the emerging markets/BoP information used in this research project. No link between any of the information between several columns is insinuated in this table. More detailed information about the information will provided on the following pages which also will explain the link between the several columns (Chapter “execute”).

The LiDS strategies and sub-strategies are shown on the next page. The LiDS wheel is an Eco design technique that provides a basic framework that you can use systematically to review the entire life cycle of a product. It has the shape of wheel and it contains a checklist of strategies. The LiDS wheel Stimulates the creative design process, Assists in visualizing current environmental performance and highlights opportunities for improvement. The LiDS wheel can be found on the backside of the “Reading guide”.

UNDP issues (BoP < 4 $ PPP)

12 BoP innovation Principles (<2 $ PPP ???)

Market information 25% Price performance Hybrid solutions Regulatory environment’ Scale of operations 25% Eco friendly

Business plan solutions UNDP solutions for the emerging (<44 $ PPP) markets (BPSEMs) 1 Firm/NGO collaborations to market research ... 7 Collective payment / Use ...

Adapt products and processes’ 44%

12 Scale the operations to make profits with smaller margins

Engage in policy dialogue with governments 25%

Invest in removing market constraints 60%

Identify functionality physical infrastructure’ 25%

Distribution innovation

Knowledge and skills 79%

Interfaces

Access to financial services 44%

Deskilling

Designing for hostile infrastructure

Process innovation

Education

15 Use local materials Leverage the strengths to lower the costs of poor constraints’ ... 42% 44 Eliminate mistrust in MNCs ... and many more (see “execute” chapter)

Combine resources and capabilities’ 65%

Based on 14 sources

(Jagtap et Kandachar 2008)

New challenges (Jagtap et Kandachar, 2008) + (UNDP, 2008)

(Prahalad, 2006)

(Chapter “execute”)

Description and methodology of the project

Research project

9. LiDS Eco strategies used in the project

0. Optimize Functionality Sub strategies: A) Dematerialize B) Increase shared use C) Provide a service

5 Reduction of impact during use a> Low energy consumption b> Clean energy source c> Fewer consumables needed d> Cleaner consumables e> Reduce wastage of energy and other consumables f> Health supporting, social added value

1 Selection of low impact materials Sub strategies: a> Cleaner materials b> Renewable materials c> Lower energy content materials d> Recycled materials e> Recyclable materials

6 Optimization of initial lifetime a> Reliability and durability b> Easier maintenance and repair c> Modular product structure d> Classic design e> Strong product-user relation f> Involve local maintenance and service systems

2 Reduction of material usage a> Reduction in weight b> Reduction in (transport) volume

A) Optimize functions B) Strong user-product relationship C) Integrate product functions

3 Optimization of production techniques a> Alternative production techniques b> Fewer production steps c> Lower/cleaner energy production d> Less production waste e> Fewer/cleaner production consumables f> Safety and cleanliness of the workplace

7 Optimization end of life system of the product a> Re-use of product b> Remanufacturing/refurbishing c> Recycling of materials d> Safer incineration e> Taking in consideration local (informal) collection recycling systems f>Design for disassembly

4 Optimization of the distribution system a> Less/cleaner/reusable packaging b> Energy efficient transport mode c> Energy efficient logistics d > Involve local suppliers (distributed economies)

Sources sub strategies: A), B), C), ... : http://www.nrc.ca/dfe a>,b>,c>, ... : D4S manual

Description and methodology of the project

EXECUTEt It would be nice if the poor were to get even half of the money that is spent in studying them.

Jente Minne

Bill Vaughan

New products planning

2009-2010

For the Full size scheme please check â&#x20AC;&#x153;A3 file pagesâ&#x20AC;?

2. How to place the BPSEMs under BoP categories? In this chapter all the links between the UNDP issues and the BPSEMS and the correlation with the LiDS is explained, referring to the literature about Eco design and designing for the emerging markets. The difference is made between a negative correlation (written in red), a positive correlation ( written in green) and no correlation. The link between the UNDP issues and the BoP innovation principles can be found in the table on pg.... Positive effect: green Negative effect: red

MARKET INFORMATION (UNDP issue) Market information containts: • The knowledge of businesses regarding the BoP : What the poor need, what capabilities the poor can offer, etc. (UNDP)

UNDP Issuess

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BoP principles

Detect functionality (BoP principle)

Recognizing that the functionality required in products or services in the BoP market might be different from that available in the developed markets is a critical starting point. (Prahalad, 2006)

Business plan solutions

LiDS strategies

1 Firm/NGO collaborations to market research According to the literature about BoP, co-creation with NGOs can help MNCs to obtain important market information: Most NGOs involved in social issues in developing countries have ‘on-the-ground’ facilities and staff who will have firsthand experience of the cultural specs, living conditions, typical hardships and lack of infrastructure in a developing country.

The influence of the BPSEMs on the LiDS strategies

They will be acutely aware of its population’s economic and social needs, as well as being in touch with social trends, and thus able to identify potential local markets and products. Collaborating with NGOs possessing these insights can allow a firm to develop a product or service offering better adapted to the local market context. (Dahan et al., 2009) 1b Positive impact on the LiDS strategies This influence can be made on following LiDS strategies: n°0 Optimize functionality If partnership with NGOs reveals more market information as the needs, and market trends, it can result in products that are fulfilling the needs of the customer. (see also LiDS strategy n°6) Furthermore NGOs will avoid that the poor don’t loose money on products they don’t need, or that don’t function well. So in this way it will force companies to invest in products that are necessary to fulfill the basic needs of the poor.

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“One of the strategic objectives of consumer internationals is to Establish an ongoing series of high-quality, influential comparative research reports focused on the performance of international businesses in providing key products and services.” (Consumers International, strategical plan for 2007-2011)

“Confrontational approaches are still quite common for NGOs in pointing out problems to business, but NGOs are increasingly developing more strategic ways to force companies to listen. They are now encouraging the public to exercise its shareholder power.” (kong et at.,2002)

n°6 Optimization of initial lifetime “By producing goods and services with local needs and consumer desires in mind, local economies may produce higher quality, longer lasting and more locally appropriate and useful products.” (Curtis, 2003) 2 Local research to obtain information local needs and wishes Some examples will show how research is used to obtain information about the locals’ needs and wishes: This text is about CEMEX, a Mexican company that offers construction materials to the poor people in Mexico: “A special research team set out to explore neighborhoods in and around the city of Guadalajara to identify high-growth opportunities. In a broad sense, the team identified potential pockets or cells based on income, construction progress, housing development, concentration of poor people, distributor network, and population growth.” (Prahalad, 2006) The other reference shows the difference between glocalization and designing for the BoP. It argues that deep consumer research is needed to obtain the high sales, which are necessary, when really designing for the BoP and not for the upper society of BoP countries. “That emerging markets are considered small is a self-fulfilling prophecy. Products and programs transplanted from affluent markets only appeal to the affluent elite: no more than five per cent of the population. Delving deeper into the consumer base to establish mass-market positions would create the economies of scale necessary to justify localization. And localization along characteristics that are common across emerging markets allows

The influence of the BPSEMs on the LiDS strategies

M. Pedercini, G.O. Barney / Socio-Economic Planning Sciences 44 (2010) 89–99

the costs to be spread over much larger volumes. (Dawar et Chattopadhyay, 2002) 2b impact on the LiDS strategies Local research to obtain information about the local needs and demands of the Customer can have an impact on 2 LiDS wheel strategies:

(Pedercini et Barneya, 2010)

Fig. 1. High level representation of the T21 model and the impact(s) of MDG interventions. Note: ROW ¼ rest of the world.

n°0 Optimize Functionality Like mentioned before (pg.21) local research can be execute to understand the functionalities needed of a certain product or service. n°6 Optimization of initial lifetime “By producing goods and services with local needs and consumer desires in mind, local economies may produce higher quality, longer lasting and more locally appropriate and useful products.” (Curtis, 2003)

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3 Market information: The next 4 billion / Millennium development goals and PRSP Theses documents are made to obtain information to institutions that want to invest in the emerging markets, and thus they contain useful information about the needs of the poor and the situation of the country. The reference below demonstrates that the MDGs aren’t written for funded institutions, but also for the private sector.

The passage below shows an explanation of the PRSPs, since the country itself often makes them, it can foster an interesting inside for MNCs who want to design for this market.

high poverty rates, and insufficient progress towards MDGs, but with relatively good governance. Of these, we selected Ghana as the pilot country for our study because of its more extensive and available data base. We then customized the general structure of Fig. 1 to represent Ghana’s most important development mechanisms. The following sections outline the key assumptions underlying T21-MDG-Ghana, present our analysis of the resulting MDG interventions, and provide results of the calibration and validation processes. 3.1. General assumptions involving the study’s population, economy, and government

3.1.1. Population The T21-MDG-Ghana model disaggregates the country’s population into 82 age cohorts, and two by gender. The population cohort stocks are affected by four different flows: births (only for the first age cohort), deaths, migration, and aging (save the last age cohort) [23,24]. Births are based on the size of the population in reproductive age, and on the total fertility rate3 (TFR). The TFR, in turn, is a function of income and education [25]. Mortality rates are based on income and the level of services in the health sector [26–28], while migration is exogenous, and reflects the latest projections from the United Nations Population Division [29].

functions [30], which we expanded to include the effects of technology [31], education [32], and prevalence of malaria and HIV/ AIDS [33] on total factor productivity. Investment is endogenously based on private savings, public investment, and foreign direct investment, and is allocated across the sectors on the basis of sector-specific relative prices [34]. Consistency of the macroeconomic framework is assured through the use of a social accounting matrix (SAM) and conventional closure rules [35].

3.1.3. Government The government sector is structured according to the International Monetary Fund (IMF) standard accounting framework [36]. The government utilizes tax and non-tax revenues from the household/private sector to cover public consumption, public investment, and any transfers to the household/private sector. The government allocates its resources across several sectors, including, but not limited to: administration, social security, education, health, water and energy, agriculture, and military. The level of service offered in each of these sectors depends on the amount of public expenditure, and affects the development of the population and economy. In our analysis, we assume that constant tax rates and increased government spending for MDG interventions are maintained throughout the projection period, as also assumed in the MP’s pilot study. Also consistent with such study, we assume that the external financing required to implement MDG interventions will be covered by external grants.

“Poverty Reduction Strategy Papers (PRSP) are prepared by the member countries through a participatory process involving domestic stakeholders as well as external development partners, including the World Bank and International Monetary Fund. Updated every three years with annual progress reports, PRSPs describe the country’s macroeconomic, structural and social policies and programs over a three year or longer horizon to promote broad-based growth and reduce poverty, as well as associated external financing needs and major sources of financing” (website IMF,2010)

3.1.2. Economy Economic production in T21-MDG-Ghana is divided into agriculture, industry, and services production. Production in each of these three sectors is based on Cobb–Douglas (CD) production

3 The total fertility rate is a concise indicator of fertility: it represents the number of children an average woman would have assuming that she lives her full reproductive lifetime.

3.2. Assumptions underlying the MDG interventions

3.2.1. Cost of the interventions The MP’s pilot study identified a set of MDG-specific interventions and estimated their costs for Ghana, both on a per capita (i.e., per person served) and total cost basis, as well as their direct effects on the

Although a lot of criticism has emerged about the PRSPs, they can still be considered to be a source of useful information. (Dijkstra,2005) The book “The next 4 billion” provides useful market information about BoP markets, and is very useful for companies who want to invest in BoP markets.

The influence of the BPSEMs on the LiDS strategies

3b Positive impact on the LiDS strategies n°0 Optimize Functionality PRSP and MDGs are made to explain the basic needs that are lacking in the emerging countries and how to counter this poverty problem. By consulting them, the real needs could be better revealed which can lead to higher functionality. n°6 Optimization of initial lifetime “By producing goods and services with local needs and consumer desires in mind, local economies may produce higher quality, longer lasting and more locally appropriate and useful products.” (Curtis, 2003)

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4 Difference rural/urban marketeers “In urban areas, these small retailers generally carry a surprisingly wide selection of brands in each product category. They are able to achieve this despite limited shelf space and inventory by rapidly turning over their stocks. Manufacturers and wholesalers make several deliveries every day to these small stores to maintain inventory levels. In this environment, remaining on the shelf, developing a differentiated position, and creating brand loyalty are keys to survival.” (Dawar et Chattopadhyay, 2002)

“In contrast, rural retailers are also less specialized and carry a wider range of products. Since frequent deliveries are not possible, they tend to carry only a single brand in each product category. In this environment, being first on the shelf, and developing a privileged relationship with the retailer is a competitive advantage. Many brands that are first on the shelf become synonymous with the product category, and are difficult to dislodge.” (Dawar et Chattopadhyay, 2002)

5 Smaller portions Smaller portions are also addressing the problem of low purchase power: “For products like consumer goods, the low disposable income has been tackled by offering smaller packages of the good,” (SadreGhazi et Duysters, 2008) 5b impact on the LiDS strategies n°2 Reduction of material usage It is obvious that smaller package implies more waste per amount of food, About this topic Prahalad mentioned: “BoP markets can also represent an emerging problem. Singleserve packaging is advantageous to create the capacity to consume at the BoP but can also lead to a major environmental problem. More than 13 billion single-serve packages are sold annually in India and this trend is growing rapidly. Although plastic bags appear attractive, they are not biodegradable. MNCs involved in the BoP markets have the ability and the motivation to find solutions to the problem of packaging in emerging markets.” (Prahalad, 2006) n°4 Optimization of the distribution system “BoP markets also require a distribution network that is not only designed for very frequent purchases in difficult-to-reach areas, but also strongly adapted to local specificities in response to the relative cultural isolation of BoP markets” (Anderson & Markides, 2007; Hammond & Prahalad, 2004, Cited in Rivera-Santos et Rufin,2008) “Consumers in emerging markets shop daily and have 365 opportunities a year to switch brands, while the weekly purchasers in developed markets have 52.” (Dawar et Chattopadhyay, 2002)

The influence of the BPSEMs on the LiDS strategies

This implies that the stores need to be supplied more often, some in rural areas. This can result in a higher CO2 emission, if motorized vehicles are used.

ACCESS TO FINANCIAL SERVICES (UNDP issue)

Positive effect: green Negative effect: red

“Access to financial services includes the fact of having low purchase power, lack access to credits, insurance, products and banking services, and also not able to protect their meager assets from events such as illness, rought etc.” (UNDP)

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Price performance

6 Focus on functionality Following passage explains how putting the focus on functionality helps to overcome the problem of lowpurchasing power, which is related with the topic access to financial services: “As to overcome the problem of low-purchasing power, some companies have put more attention on the improvement of the price-performance ratio and have started to focus on functionality in terms of offering a product that simply

does the job without extra bells and whistles” (SadreGhazi et Duysters, 2008) 6b Impact on the LiDS strategies n°0 Optimize Functionality Both strategies are the same and thus it is obvious that this strategy belongs here. n°5 Reduction of impact during use “Started to focus on functionality in terms of offering a product that simply does the job without extra bells and whistles” (SadreGhazi et Duysters, 2008)

The influence of the BPSEMs on the LiDS strategies

This means an improvement to sub strategy E: Reduce wastage of energy and other consumables as mentioned by D4S n°6 Optimization of initial lifetime This is equal to the LiDS subs strategy “Optimize functions” mentioned under the strategy of optimization of initial lifetime mentioned by source: http://www.nrc.ca/dfe 7 Collective payment / Use Collective payment was mentioned in the table pg 22 of the UN nations paper as a promotion activity to overcome the low purchase issue. And it is obvious that this improves the price performance for products that the customer doesn’t need to use all the time, since they can share the costs with more. This means less costs for the same product. (SadreGhazi et Duysters, 2008)

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7b Impact on the LiDS strategies n°0 Optimize Functionality Increase shared use is one of the strategies mentioned under this LiDS strategy, this is equivalent to collective use. source http://www.nrc.ca/dfe

8 Substitute capital with consumers’ labor Following strategy improves the price performance of products and services for the emerging markets: “Careful consideration of the value of the various elements of the augmented product marketed by international firms often reveals that the firm’s cost of creating some of the benefits offered is higher than its value to the emerging market consumer. Engaging the consumers’ time and energy as a substitute can allow the firm to market the product at an affordable price to the mass market” (Dawar et Chattopadhyay, 2002)

8b Impact on the LiDS strategies n°0 Optimize Functionality The lack of a lot of disposable income forces the client not to waste money on convenience but only on the necessary -> optimization functionality n°5 reduction of impact during use Consumers’ labor is a Clean energy source which is the sub strategy b mentioned by D4S under the the LiDS strategy of Reductiona of impact during use. 9 Limited segmentation and no time segmentation programs. The first passage explains why fine segmentation increases the costs, more than the marginal utility in the BoP : “Segmentation at such fine levels (as for the developed countries) is expensive in terms of product development, branding, and distribution costs. These costs are justified if consumers are both able and willing to pay for specialized products, which they perceive to better meet their needs. But the mass market in emerging economies is unable to afford this level of segmentation. Segments there are far coarser than those to which multinationals are accustomed” The second reference explains the inefficiency of fine segmentation at the BoP: “Targeted media that allow fine segmentation are simply unavailable in many emerging markets.” (Dawar et Chattopadhyay, 2002) The third text explains why segmenting on opportunity cost of time is often not useful for the BoP markets: “But, segmenting the market on opportunity cost of time is not

The influence of the BPSEMs on the LiDS strategies

useful because, in most instances, time can be bought. Richer consumers substitute others’ time for theirs, and the market for time-savings is served through inexpensive services rather than products” (Dawar et Chattopadhyay, 2002) 9b Impact on the LiDS strategies n°0 Optimize Functionality This is also related to improving the functionality of the products by focusing on the real needs of the emering markets customers. n°5 Reduction of impact during use Consumers’ labor is a Clean energy source which is the sub strategy b mentioned by D4S under the the LiDS strategy: “Reduction of impact during use”.

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10 Price awareness of the consumer forces to efficiency The 2 texts below show how the price awareness of the BoP forces the MNCs to make more efficient products, also during the use of the product: “Because the BoP forces an extraordinary emphasis on price performance, firms must focus on all elements of cost. Shortage and the cost of capital force firms in BoP markets to be very focused on the efficiency of capital use.” (Prahalad, 2006)

“Automotive and two-wheeler manufacturers are learning that the BoP customers are very attuned to the total cost of ownership and not just the cost of purchase. The miles per gallon—the efficiency of energy use—is a significant determinant of market success. Similar demands are imposed on water use.” (Prahalad, 2006)

The last example shows that the BoP can be well informed about the cheapest/most efficient services, and thus the importance of being price performant to obtain big sales: ”During the last quarter of 2003, India was adding 1.5 million new subscribers per month! Both GSM and CDMA technologies are readily available, as are a host of features and pricing options. The regulatory process is also rapidly evolving. This milieu can be confusing at best. However, most value-conscious consumers do not seem to be concerned. There are so many comparisons of the alternate technologies, features, and payment schemes that are debated in newspapers, on TV and radio, and in magazines, that consumers are well- informed. Even those who cannot read tend to consult with others who can. Word of mouth is so powerful that the consumers seem to have found an efficient process— combining analyses offered by journalists, companies, consumer reports, and their friends—for evaluating the price–performance options available to them.” (Prahalad, 2006) 10b Impact on the LiDS strategies n°5 Reduction of impact during use “The miles per gallon—the efficiency of energy use—is a significant determinant of market success. Similar demands are imposed on water use.” (Prahalad, 2006) this fall under the sub strategy e of Reduce wastage of energy and other consumables mentioned by D4S 11 Financial service + product In succession of the grameen bank, BoP companies also offer financial services: “While in terms of promoting the product, some companies have embedded financial services in their product offering to overcome the credit problem of these markets”

The influence of the BPSEMs on the LiDS strategies

11b Impact on the LiDS strategies No relation with the Eco LiDS strategies was found.

Scale of operation

Positive effect: green Negative effect: red

Scale of operations emphasis on the fact that MNCs need to foster high sales to make a return on investment with small margins, 2 strategies are mentioned in relation with this topic:

12 Scale the operations to make profits with smaller margins “Scale of operations is a prerequisite for making an economic case for the BoP. Given a stringent price–performance equation and low margins per unit, the basis for returns on investment is volume.” (Prahalad, 2006)

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Further it was mentioned that this often has to happen over countries borders, since not all emerging countries as big as Brazil, China or India (see also reference below)

12b Impact on the LiDS strategies According to the permaculture ideology the only way of becoming sustainable is to consume less, the ethical principles of permaculture are: “Care for the earth (husband soil, forests and water) Care for people (look after self, kin and community)

Fair share (set limits to consumption and reproduction, and redistribute surplus).” (Holmgren, 2007) This can influence following LiDS strategies: n°2 Reduction of material usage countries borders, since not all emerging countries as big as Brazil, China or India (see also reference below) 12b Impact on the LiDS strategies According to the permaculture ideology the only way of becoming sustainable is to consume less, the ethical principles of permaculture are: “Care for the earth (husband soil, forests and water) Care for people (look after self, kin and community) Fair share (set limits to consumption and reproduction, and redistribute surplus).” (Holmgren, 2007)

The influence of the BPSEMs on the LiDS strategies

This can influence following LiDS strategies: n°2 Reduction of material usage This is in contrast with Eco-localism which implies that: “Reduction of environmental impact to levels within sustainable limits is the joint result of both lowered average material standards of living and lowered throughput per unit output via the use of locally appropriate technologies and the shortening of the economic distances separating production and consumption.” (Curtis, 2003) “The boundaries of Eco-local communities and the joined goals of the reproduction of local natural and social capital require small-scale business and associated small-scale technologies.” (Curtis, 2003) Other ecology strategies as C2C mention that not a reducation of consumption is needed but a change of consumption:

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“In Eco-effective industrial systems, the material intensity per service unit of each individual element is irrelevant to the effectiveness of the whole. As long as those materials that enter industrial systems are perpetually maintained at the status of resources, the system is perfectly effective and no waste is produced.” (Braungart et al.,2007)

n°3 Optimization of production techniques Scaling --> more energy devouring production techniques? in the same way as in developed nations, the EIP concept is being spread in developing and newly industrialized nations (DN/NIN) as a way to foster sustainable development. In some Asian and Latin American nations, the rapid industrialization process has increased resource consumption and environmental degradation [13] and [14]. In these nations, particularly in China [13] and [15], Singapore [16], Thailand

[17], South Korea [18] and [13], India [19] and [20], Colombia [21], Puerto Rico [22], [23] and [14] and Brazil ((Veiga et Magrini, 2009) n°4 Optimization of the distribution system Scaling of operations in this context implies producing and selling more products and thus also transporting more products. This can lead to an increase of CO2 if the distribution isn’t Eco effective. The fact that products need to be transported over big distances increases potentially the impact on the environment. “Further, such economies of scale and centralized production support the economic specialization inherent in comparative advantage theories of free trade. economies of scale imply long distance trade (and, of course, cheap oil).” (Curtis, 2002) n°5 Reduction of impact during use “The environmental limits of standardized technologies are well illustrated by the case of mass produced detergent Manufacturers produce a single detergent soap product for markets throughout the US and Europe. The same formula is use in areas with hard or soft, spring or filtered waters, whether soap laden waste water enters rivers and streams or treatment facilities. The standardized soap is designed to function the same under the most difficult conditions, regardless of local variations. This results in more and stronger chemicals being used than necessary in many areas. Such standardized ‘‘worst case’’ technologies ignore significant differences among local Eco-systems to maximize markets and profits.” (Curtis, 2002) n°6 Optimization of initial lifetime “To achieve such economies of scale requires production of standardized products on a large- batch basis” ...

The influence of the BPSEMs on the LiDS strategies

‘‘The larger the distance between producers and consumers, the harder it is to fine-tune products to the particular tastes of local markets.’’ (Shuman, p. 57; cited by Curtis, 2002) n°7 Optimization end of life system of the product Scaling means --> more products, and thus more waste and CO2 impact (burning process).

13b Impact on the LiDS strategies The impact on the LiDS strategies are similar to BPSEM 1 ( Optimizing functionality and initial lifetime) since consumer testing leads to more wanted and functional products.

Making the process more affordable

According to the author, there should be made a difference between, alternating the process to lower the costs and alternating the process to suit the infrastructure; This part of the process innovation only talks about how to lower the costs of the process. This implies that the BoP strategy “ process innovation” is divided over 2 UNDP strategies: “Access to financial services” and “Physical infrastructure”.

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13 Firm/NGO collaborations to product R&D This strategy explains how in a more efficient way operations can be scaled: “In NGO/corporation collaborations, corporations are often involved in more ‘upstream’ R&D areas - i.e., actual product creation - whereas the NGOs are closer to the market side of the process, identifying needs or providing feedback on the various options being considered by the firm, either through their intimate knowledge of local needs or through

test marketing in a small market to fine-tune a concept before a broader launch. (Dahan et al., 2009)

The influence of the BPSEMs on the LiDS strategies

14 Use cheap labor of local producers The following passage shows how MNCs can improve their customers Purchase power while lowering the production costs, which leads to a better price performance:

14b Impact on the LiDS strategies n°3 Optimization of production techniques Using human labor instead of energy devouring machines is causing lower and/or cleaner energy production and is thus decreasing the environmental impact.

“In terms of production, considering the abundance of labor in low- income markets, creating conditions for employing local labor in production can rise their income (i.e. consumption power) while reducing the unit costs” (SadreGhazi et Duysters, 2008)

this falls under the category of Alternative production techniques, mentioned as a sub strategy under the strategy 3 (Crul et Diehl, 2009)

The first topic is more general on how using local resources can lead to more efficient markets, the second emphasis on the need to co-operate with local entrepreneurs to remain competitive:

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“A market-based approach starts from the idea that having a low income does not eliminate market processes: almost all poor households trade cash or labor to meet their basic needs. A market-based approach to low-income markets considers local people as both consumers and agents that can be part of the business process (e.g. as producers, distributors, promoters, etc). Such an approach can lead to creative solutions that can make markets more efficient and competitive and thus more beneficial for the communities who live in low-income communities (UNDP, 2007).”

“Multinational corporations may never be able to beat the cost or responsiveness of local entrepreneurs. In fact, empowering local entrepreneurs and enterprises seems to be key to developing solutions for poor communities.” (Dawar et Chattopadhyay, 2002)

n°6 Optimization of initial lifetime If products can be repaired locally, and no long travel/ transportation cost are needed for repairing it, or it can be repaired by the consumer himself, this will lead to a decrease of discarded still functional products, furthermore reparations and updates can improve efficiency and functionality. Just like recycling, repairing decentralized the economy. This is linked to the sub strategies of “easier maintenance and repair” and “involve local maintance and service systems” as mentioned by D4S (sub strategies b and f) n°7 Optimization end of life system of the product This strategy is similar to the strategy of taking in consideration local (informal) collection recycling systems (sub strategy e) as mentioned by D4S. “Recycling decentralizes the economy. Manufacturing plants that use recycled materials require less capital to build and operate than virgin materials manufacturers. Far less energy is used as compared to the use of virgin resources in manufacturing. Recycling based manufacturers can be close to their sources of materials to reduce transportation costs. Each level of collection, processing, manufacturing and consumption means jobs, skills,

The influence of the BPSEMs on the LiDS strategies

small businesses, profits. These, in turn, add to the local and regional tax base and recycling of dollars.” Source: http://www.ilsr.org/recycling/newmovement2.html About this topic the Eco–localistic theories also mention: “Second, Eco-local consumption is largely consumption of goods produced within the boundaries of the Eco-local community, where the consumers themselves reside. This creates what I will call an IMBY (in my back yard) effect mentioned by many Eco-localists. Any pollution, waste disposal or resource depletion arising from the production or use of locally produced goods and services remains in the community, to be borne by the local purchasers of the goods and their neighbors. As a result, only such products whose environmental impacts are acceptable to the community will be produced. In any such economy, the concept of waste, for example, does not really exist. Things that cannot be consumed and things whose waste products cannot be absorbed within such a distinct Eco-region cannot be produced. Such a moral economy in a particular region requires, evidently, a community that feels responsible for sustaining the self-regenerative capacities of the region. (Bennholdt-Thomsen and Mies, 1999, p. 153; cited by Curtis, 2002)

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This can lead to the re-use of products, recycling, remanufacturing or safer incineration, and it’s also related to LiDS strategy 3: “optimization of the production technique”

15 Use local materials to lower the costs Also using local materials can lower the costs of a product/ service, This paper proves that using local natural fibers can lower the costs of their building materials:

“Natural fibers are low-cost, locally available in abundance and obtained from renewable resources” (Mathur, 2006) “A systematic research program on potential of natural fibers has been planned for making low cost composite building materials [22–27].” (Mathur, 2006) 15b Impact on the LiDS strategies n°1 Selection of low impact materials “Natural fibers are low-cost, locally available in abundance and obtained from renewable resources” (Mathur, 2006) (sub strategy b as mentioned by D4S) n°3 Optimization of production techniques Many projects of building materials based on imported technologies closed down with colossal financial losses as they proved to be highly energy intensive and incompatible with the physical properties of local materials. (Mathur, 2006) (sub strategy c as mentioned by D4S) The IMBY principle explained above can also occur in this context: “By uniting production and consumption within Eco-local boundaries, both positive and negative externalities of the production and use of goods and services are localized”. (Curtis, 2003) n°4 Optimization of the distribution system “Globalization and long distance trade and investment undermine the place-specific knowledge, communities, cultures and economies necessary to sustainability”. (Curtis, 2003) “Reduction of environmental impact to levels within sustainable limits is the joint result of ... the shortening of the economic

The influence of the BPSEMs on the LiDS strategies

distances separating production and consumption.” (Curtis, 2003) 16 Partnerships with NGOs to lower the costs Talking about partnerships with NGOs: “In such cross-sector partnerships, parties contribute complementary capabilities along each stage of the value chain to develop products or services that neither could produce alone, creating and delivering value in novel ways while minimizing costs and risks” (Dahan et al., 2009) 16b Impact on the LiDS strategies “NGOs are gradually steering away from confrontation to focus more on forming proactive partnerships with business/ industry. However, the level and depth of engagement between NGOs and companies still varies.” (kong et at.,2002)

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“This is the view of the public at large,’ said one of our interviewees. Supporters of NGOs, and possibly society more widely,want NGOs to work as watchdogs holding corporations accountable for their impacts.” (Dahan, 2009) This can influence all of the LiDS strategies.

17 Switching the focus from products to services The first passage indicates the increasing of services in the emerging markets: “Further, it is apparent that services are increasing as an economic force in countries such as China, India, and other fast-growing and developing nations. In fact, in China, the government has mandated a focus on services growth for the next 5 years and further into the future.”(Bitner et Brown, 2008) The second indicates the importance of focusing on services

for emerging markets: “Consider what could be accomplished if researchers and innovators were to focus on this challenge (Prahalad, 2006), and put their minds to solving social problems through environmentally-friendly and sustainable services. The quality of life benefits could be multi-fold, both short- and long-term. In another realm, service innovation directed at improvements in the quality of work life could also have tremendous societal and individual benefits.” (Bitner et Brown, 2008) Besides that, many examples of switches from products to services can be given, below you can find 3 examples: • A battery charging system for youngsters: One of the projects of Tu Delft is a service where youngsters can rent batteries, use them and when they are empty they can recharge them for a small price, instead of needing to buy a charger, the batteries and to be provided of electricity to charge them, this service offers the same functionality as several products in the developed market would do. • Housebuilding service: Cemex offers a service where they offer all the building materials + consultancy, besides the products (raw materials) the service gives this company his strategical advantage, this also can be seen in the BoP trend of making itself instead of buying. • BushProof Safe Water Subscription: Poor customers are charged for the service of using the well instead of buying bottles of water. 17b Impact on the LiDS strategies n°0 Optimize Functionality Provide a service is mentioned as a sub strategy under this strategy (http://www.nrc.ca/dfe), although some literature

The influence of the BPSEMs on the LiDS strategies

mentioned that the switch from product to service doesn’t always result in more ecological sustainable solutions : “The decoupling of environmental impact from economic growth with ‘‘Factor X’’ is only valid for result- oriented services and even then it is not certain. Result-oriented PSS, in the classification of SusProNet, are traditional services, which are shown not to be more environmentally sound than products. However, some PSS business examples do indeed report higher level improvements (Factor 2e5).” (Tucker et Tischner, 2006)

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n°2 Reduction of material usage “... any combination of products and services that delivers the function that satisfies the customer need. This shift in the starting point for design may raise the importance of the immaterial part of the offer, lead to higher user value and thus to higher profits. (Tucker et Tischner, 2006)

It is obvious that offering some services can result in material savings: • The battery charging system for youngsters: In this project high quality rechargeable batteries are offered and than reloaded for a small price, this will subsantially decrease the amount of dispossable batteries needed and thus decrease the material needed to fulfill the consumer’s wishes • BushProof Safe Water Subscription: this service causes a decrease of materials used since no plastic bottles are needed anymore. n°6 Optimization of initial lifetime The optimization of the initial lifetime can occur by creating a longer lifetime of the product, increasing the reliability and

improving the product-user relation: If we go back to our case of a battery charging system for youngsters It becomes clear that this service leads to a signifcant change in initial lifetime. Instead of buying individual batteries, one set of batteries can be bought and be used over and over again. Good quality batteries can be offered which are more reliable than the cheap disposable ones, which improves the reliability of the product. (LiDS subcategory a: Reliability and durability) The other two references illustrate how services can create a stronger product-user relation: “Increasingly, companies are also recognizing that, particularly in service contexts, customers are actually “co-creators” of the service and that the value derived from service(s) comes through usage and co-creation, rather than exclusively through service provision or delivery in the traditional sense” (Vargo & Lusch, 2004; Michel, Brown, & Gallan, in press) “In recent years, a major trend in manufacturing, information technology, and other non-services industries has been the introduction of value- added, revenue-producing services” (Bitner et Brown, 2008) this implies n°7 Optimization end of life system of the product A reduction in material used, will also lead to less material that need to be recycled, burned or land filled. But changing services for products can also lead to a better recycling system in general: If we go back to the example of the battery charging system we can remark that the youngsters don’t own the battery but they just pay for the service of charging them. This means they have to bring back the discharged batteries. When the batteries are at the

The influence of the BPSEMs on the LiDS strategies

end of their life cycle, they won’t be disposed by the customer, since the battery is their membership, but the charging company has them and can recycle them. Where customers otherwise wouldn’t be so motivated to return the batteries, in this case they are.

PHYSICAL INFRASTRUCTURE (UNDP issue) The chapter physical infrastructure includes: process innovation to suit the infrastructure, designing for a hostile infrastructure, distribution innovation, hybrid solutions and the channels used to spread education/ promotion. The content of education will be addressed in the chapter: “knowledge and skills”

Process innovation to suit the infrastructure

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Process innovation doesn’t include the distribution, since there is a separated topic dedicated to this issue.

18 Local production research Table pg 22 in the UN nation paper explains that building local research laboratories is an activity the R&D can perform to overcome issues in relation to the weak infrastructure of the emerging markets (SadreGhazi et Duysters, 2008)

Positive effect: green Pos/neg effect: gray

18b the impact on the LiDS wheel No correlation has been found in the literature 19 The use of local materials to overcome infrastructure issues The other 3 texts are about the need of using local materials in the production of BoP products: “In India, the shortage of traditional materials in which cement claims a share of 17 million tones, brick 54,898 million, timber 13.34 million cubic meter, steel 2.70 million tones and aggregate for concrete 286 million tones.

The influence of the BPSEMs on the LiDS strategies

Many projects of building materials based on imported technologies closed down with colossal financial losses as they proved to be highly energy intensive and incompatible with the physical properties of local materials. A consensus is therefore, necessary of developing indigenous technology for producing building materials from local resources which could provide sustained housing growth” (Mathur, 2006)

n°4 Optimization of the distribution system The use of local materials implies that the raw materials don’t need to be (so far) transported which results in a decrease of CO2: “Reduction of environmental impact to levels within sustainable limits is the joint result of ... the shortening of the economic distances separating production and consumption.” (Curtis, 2003)

19b Impact on the LiDS strategies n°1 Selection of low impact materials Local materials often tend to have a lower impact if they are natural and because of the place specific knowledge and the in my backyard (IMBY) effect: “By uniting production and consumption within Eco-local boundaries, both positive and negative externalities of the production and use of goods and services are localized”. (Curtis, 2003)

20 The use local labor: producers / recycling / repairing to overcome infrastructure issues According to the UN paper, building local production capacity and creating dedicated distribution networks can help overcome infrastructure issues About recycling: “Recycling decentralizes the economy. Manufacturing plants that use recycled materials require less capital to build and operate than virgin materials manufacturers.” Source: http://www.ilsr.org/recycling/newmovement2.html

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“Globalization and long distance trade and investment undermine the place-specific knowledge, communities, cultures and economies necessary to sustainability”. (Curtis, 2003)

n°3 Optimization of production techniques Sometimes traditional materials are highly energy intensive: “Many projects of building materials based on imported technologies closed down with colossal financial losses as they proved to be highly energy intensive and incompatible with the physical properties of local materials. A consensus is therefore, necessary of developing indigenous technology for producing building materials from local resources which could provide sustained housing growth” (Mathur, 2006)

20b Impact on the LiDS strategies This strategy is similar to strategy n° 14 Use cheap labor of local producers/distribution , and has the same influence on the LiDS strategies (strategy 3,6 and 7) 21 Firm/NGO collaborations to procurement and production “For their part, NGOs can help with procurement, particularly of low-cost labor, and can both identify and develop the local labor pool through training. ... Where production is local, as well as sourcing and developing local labor, NGOs can often manage it better than can a foreign partner firm. (Dahan et al., 2009) 21b Impact on the LiDS strategies This can influence LiDS strategy 3 (Human labor is a clean energy source)

The influence of the BPSEMs on the LiDS strategies

22 Investments in infrastructure “The most interesting and, at the same time, the most disturbing aspect of the BoP market is that the problems are known; so are the solutions. Often, the missing link is the need for investments in the education of customers, technology to develop that solution into an affordable product, and the distribution channels to make it widely available. Because BoP markets are often under the radar screen of large firms, these opportunities do not attract the necessary technical or market development investments.” (Prahalad,2005) 22b Impact on the LiDS strategies n°3 Optimization of production techniques If investment in the infrastructure implies automatization, and thus replaces human labor by energy consuming machines, it will result in a increase of the environmental impact. Other examples here are the investment in the Belo monte dam ( BBC 20 April 2010) or the high polluting power plant in south Africa (BBC 9 April 2010)

“Components of this approach include green design of park infrastructure and plants (new or retrofitted); cleaner production, pollution prevention; energy efficiency; and inter- company partnering.” (Veiga et Magrini, 2009) n°7 Optimization end of life system of the product Santa Cruz EIP’s main goals: “1. Byproduct and waste management program: implementation of a central waste and effluent treatment station serving the whole park; development of waste inventory; identification of possible synergies, reuse and recycling possibilities.” (Veiga et Magrini, 2009)

Designing for hostile infrastructure

In this topic more about the specs for durability (what can the product handle), while hybrid solutions will discuss more about the specifications under what conditions the products has to work.

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But investments in infrastructure can also increase energy efficiency: “The establishment of Eco-industrial parks (EIPs) is a concept that is being spread in many nations as a new industrial model that can reconcile the three dimensions of sustainability,

as it reorganizes industrial practices and activities in order to meet sustainable development goals. This mutual benefit to the community, economy and environment is clearly stated in the definition of the EIP concept.” (Veiga et Magrini, 2009)

The influence of the BPSEMs on the LiDS strategies

23 Local research laboratories in relation to infrastructure Table pg 22 of the UN nations paper mentions that building local research laboratories is an R&D activity which can overcome the issue of the weak infrastructure, (SadreGhazi et Duysters, 2008) it is logical that local research is necessary to understand the conditions the product will be exposed to: max temperatures, moisture, dust, impact while being transported ... 24b Impact on the LiDS strategies n°6 Optimization of initial lifetime Doing local research on the conditions the product need to bare, and designing to meet this specifications will improve the durability of the product (Sub strategy a)

25 Robust products (what can it bare?) “Much of the physical infrastructure conditions that is taken for granted in advanced markets is not available or is rather weak in low-income markets. Fluctuating electricity, and hostile environment (e.g. heat, moisture etc) require specific changes in product design, especially considering the fact that access to repair facilities is more difficult in such markets.” (SadreGhazi et Duysters, 2008) 24b Impact on the LiDS strategies The same LiDS strategies are influenced in the same way as strategy 24

Hybrid solutions

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“The BoP market can and must be addressed by the most advanced technologies creatively combined with existing (and evolving) infrastructure.” (Prahalad,2005) This is how Prahalad describes hybrid solutions in the context of designing for the BoP. Following strategies should help to obtain hybrid solutions.

The influence of the BPSEMs on the LiDS strategies

25 Specifications research (working) Like designing for a hostile environment, local research can help to dedicate the right product/service specifications, which can lead to hybrid solutions. It also falls under table pg 22 of UN nations R&D x weak infrastructure: Building local research laboratories, turning infrastructure constraints to sources for innovation. (Prahalad,2005) 25b Impact on the LiDS strategies n°5 Reduction of impact during use By understanding well in which conditions the product needs to work, no too high specifications will be used which can lead to more efficiency. BPSEM 9 (using the consumer’s labor) is an example of how defining the specifications can lead to an improvement on LiDS strategy 5.

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n°6 Optimization of initial lifetime Doing local research on the conditions the product need to work in and designing to meet this specifications will improve the reliability of the product ( Sub strategy a)

26 Substitute capital with consumers’ labor (infrastructure) In some cases substituting capital with consumers’ labor doesn’t only help to lower the price but it can also help overcome infrastructural issues. Power supply isn’t always stable, Thus instead of depending on expensive and unreliable energy, these products can be driven by the consumers’ labor. The most obvious example is the bike instead of the car. This topic is related to the next topic, where you can find references.

26b Impact on the LiDS strategies n°5 Reduction of impact during use Consumers’ labor is a Clean energy source which is the sub strategy b mentioned by D4S under the LiDS strategy of Reduction of impact during use. 27 Depending on stable/ sustainable energy (prod+use) Both text explains that as well the accessibility as the bad sideeffects, force BoP companies to switch to sustainable and stable sources of energy: “Understanding and assisting in putting to use the laws of nature for the transition towards a sustainable energy system is the fundamental challenge of today’s and tomorrow’s scientists & engineers. One of the greatest challenges ahead is to connect the 1.6 billion people in developing countries currently without access to modern energy services in an environmentally benign manner” “Lack of access to electricity means no refrigeration for medicines or food, limits on what type of businesses can be developed, as well as no effective lighting. As a result, children cannot easily study in the evenings. Most Africans, even in urban areas, still use firewood, crop residues or charcoal for cooking and cook on inefficient stoves, resulting in a high incidence of respiratory diseases because of smoke. Many women and girls have to spend hours collecting firewood, and cutting trees contributes to deforestation.” 27b Impact on the LiDS strategies n°3 Optimization of production techniques This is similar to the sub strategy c: Lower/cleaner energy production, as mentioned by D4S

The influence of the BPSEMs on the LiDS strategies

n°4 Optimization of the distribution system This is similar to the sub strategy b: Energy efficient transport mode, as mentioned by D4S n°5 Reduction of impact during use Energy from renewable sources as solar power or labor, are stable and sustainable and fit under the the susbstrategy of clean energy source. n°7 Optimization end of life system of the product Depending on stable and sustainable energy, like solar power or human labor, will decrease the CO2 impact compared to using automatization based on unclean energy sources.

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28 Greenfield innovation / technology jump “Greenfield development, broadly defined, refers to any business investment by a firm which involves setting up an operation in a new location rather than expanding or acquiring existing operations. Greenfield investments may result from a desire to move away from existing production locations or because of the specific attractions of greenfield sites” (Breathnach, 2009)

“In this solution we are focusing on the fact that product innovations in emerging markets often are less predefined because of the existing infrastructure.This can lead to a technology jump. An example is the fast adaptation of the cellphone in many emerging countries” (Prahalad, 2006) First reference below refers to the misassumption that BoP consumers wouldn’t accept advanced technology:

“Contrary to popular belief, the BoP consumers accept advanced technology readily.” (Prahalad, 2006) The other references show the necessity of using new technologies: “BoP consumer problems cannot be solved with old technologies. Most scalable, price- performance-enhancing solutions need advanced and emerging technologies that are creatively blended with the existing and rapidly evolving infrastructures” (Prahalad, 2006) “Modern technology not only allows them to realize better prices, but also to improve their logistics.” (Prahalad,2005) The last reference gives an example on how fast the emerging markets adapt on new technologies, and how new technology can foster high sales: “The spread of wireless devices among the poor is proof of a market at the BoP. For example, by the end of 2003, China had an installed base of 250 million cell phones. India had an installed base of approximately 30 million. The Indian market is growing at about 1.5 million handsets per month. The expectation is that India will reach 100 million handsets by 2005. Brazil already has 35 to 40 million. Both the current market size and the growth rates suggest that the BoP market is a critical factor in worldwide wireless growth.” (Prahalad,2005) 28b Impact on the LiDS strategies According to the author, greenfield innovation offers big opportunities in the emerging markets to jump ahead of de developed markets. The developed markets are stuck in their infrastructure which is very expensive and experiences a slow evolution. The emerged markets have created the need of this infrastructure (electricity, public transportation, gas stations),

The influence of the BPSEMs on the LiDS strategies

which makes it a lot harder to compromise on this needs. The infrastructure is also available for the competition, which decreases the motivation to investment in new infrastructure, since not investing means less R&D costs on that need to be charged to the customer. Basic infrastructure often lacks in the emerging markets, which gives them the opportunity to develop in a more sustainable way, free from these infrastructure constraints: “With far smaller per capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultralow cost -a50%solution at a 15% price. And they lack many of the legacy infrastructures of the developed world, which were built when conditions were very different. The need communications, energy, and transportation products that address today’s challenges and opportunities, such as unpredictable oil prices, and ubiquitous wireless technologies.” (Immelt, 2009) Technology jump and greenfield innovation can influence following LiDS strategies:

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n°1 Selection of low impact materials “Green technologies may enhance the bottom line in several possible ways. They may reduce energy or materials costs, appeal to niche markets of green consumers, avoid pollution fines, develop new, competitive product lines, or improve the firm’s public image.” (Curtis, 2002)

“From the conventional perspective, environmental impact is reduced as business adopts resource- and energy-efficient and pollution-reducing (or ‘‘green’’) technologies. They both lower pollution levels and resource consumption. They thus reduce throughput per unit of goods and services produced (the T variable) and hence lower environmental impact (I). (Curtis, 2002) Some examples: “All this isn’t theory, it’s already happening, emerging markets are becoming centers of innovations in fields like low-cost health) care devices, carbon sequestration, solar and wind power, bio fules, distributed power generations batteries, water desalination, microfincance, electric cars, an even ultra low cost homes.” (Immelt, 2009) Although the author mentions that the improvement made doesn’t necessarily leads to sustainability: While such green technologies may have reduced environmental impact, there is no guarantee that they have benign or sustainable impact; better or ‘‘less bad’’ is not necessarily good. The ‘‘greenness’’ of such technologies is limited by specific environmental regulations, the extent of consumer concern and knowledge, markets for new green products and technologies, and the relative importance of energy and materials in the overall costs of production. In other words, the ‘‘greenness’’ of technology depends on the financial bottom line. (Curtis, 2002)

n°5 Reduction of impact during use Newest technologies can help to efficiently foster energy out of clean energy sources:

The influence of the BPSEMs on the LiDS strategies

Distribution innovation

“Distribution systems that reach the BoP are critical for developing this market. Innovations in distribution are as critical as product and process innovations.” (Prahalad, 2006)

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Prahalad mentioned 2 solutions in the fortune of the BoP: • Partnerships with large rural marketers, direct sale • Using solutions with the latest technologies to overcome infrastructure issues

29 Local distribution research Following example explains why local distribution research is important to come to process innovation that suits the infrastructure: “In contrast to the highly concentrated retail and distribution industry in developed markets, the retail trade in emerging markets is extremely fragmented. While major international retail chains such as Ahold, Carrefour, Nanz, Metro, and Walmart operate in many emerging markets, they have yet to develop a retail format that has mass. Overall, chain stores account for less then 3 per cent by value of the retail market in China. (Dawar et Chattopadhyay, 2002)

Positive effect: green Pos/neg effect: gray

“BoP markets also require a distribution network that is not only designed for very frequent purchases in difficult-to-reach areas, but also strongly adapted to local specs in response to the relative cultural isolation of BoP markets” (Anderson & Markides, 2007; Hammond & Prahalad, 2004, Cited in RiveraSantos et Rufin,2008) 29b Impact on the LiDS strategies n°4 Optimization of the distribution system Local aspects as difficult to reach areas may imply more CO2 emissions if more heavy vehicles need to be used.Although this is not a direct effect of doing research and is thus not applicable on this issue.

The influence of the BPSEMs on the LiDS strategies

The cultural aspects in contrary can also create opportunities as the example of India showed us : “A survey conducted by National Geographic Society and the international polling firm GlobeScan has placed Indians on top with regard to environmentally sustainable behavior. Released in May 2009, the survey suggests that Indian’s are the most Eco friendly people, due to their frugal lifestyle which places less burden on the environment as opposed to the consumerism driven lifestyles of the West.” ... “From the religion, Hinduism of Nature worship (whether pagan or not is an argument for another day), we learnt that man’s dependence on nature is undeniable. Apart from the fact that others sciences (Ayurveda for instance) and schools of thought derives from this basic belief; Indian Culture is inherently based on protection of the source that sustains our life and in turn becomes larger than life.” (oneindia website, 2009)

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30 Direct selling This topic is related to the partnership with large rural marketers: “A market-based approach to low-income markets considers local people as both consumers and agents that can be part of the business process (e.g. as producers, distributors, promoters, etc)” (SadreGhazi et Duysters, 2008)

furthermore there are examples on how local distribution can work:“HLL serviced urban markets through dealers and suppliers and boasted the best distribution access in India. However, the company found that it was unable to access remote villages through the traditional system. As a result, HLL started a program whereby village women are involved in distributing their products in villages that

were not fully serviced by HLL’s existing systems of suppliers and dealers. The program, called Shakti, empowers women to become entrepreneurs. HLL’s CEO, M. S. Banga, believes that this additional arm of distribution will eventually provide coverage in the 200- to 300-million-person market at the BoP currently not served by existing systems. (Prahalad, 2006) 30b Impact on the LiDS strategies n°4 Optimization of the distribution system “Developed markets have clearly moved towards heavily capitalintensive distribution with the introduction of electronic data interchanges, mechanized movement and monitoring of goods, and vending machines that replace salespeople. By contrast laborintensive distribution remains economical in emerging markets.” (Dawar et Chattopadhyay, 2002) 31 Building a multi-layered distribution system “Many companies use multiple levels of wholesalers and distributors to capture shelf space one store at a time. The multi-layered distribution channel of course puts a large distance between mass markets (especially rural markets) and manufacturers, impeding learning and marketing adaptation” (Dawar et Chattopadhyay, 2002) “Unilever’s distribution network in India, now serving over 800,000 retail outlets directly, and relying on wholesalers and distributors to reach another 3.5 million, provides it with a formidable barrier to the entry ambitions of competitors.” (Dawar et Chattopadhyay, 2002) “Over a period of six years, through this unconventional approach to retail customer access—PCs, ATMs, self-help groups, NGOs, micro finance organizations, large rural marketers and their

The influence of the BPSEMs on the LiDS strategies

networks, Internet kiosk operators, and some traditional branches of their own—ICICI has a retail base of 9.8.million customer accounts and is growing at a rapid rate.” (Prahalad,2005) 31b Impact on the LiDS strategies n°4 Optimization of the distribution system “Consider that the dairy industry in India, Amul, is organized around 10,675 cooperatives from which it collects 6 million liters of milk. Amul collects milk from the farmers in villages by providing village collection centers with over 3,000 Automatic Milk Collection System Units (AMCUS)—an integrated milk-weighing, checking (for fat content), and payment system based on electronic weighing machines, milk analyzers, and a PC-based accounting and banking system for members”....” Many of the farmers feel that, for the first time, they have been treated “right”—the weighing and testing are honest, they are paid without delays, and they can now become part of the national milk network without leaving their villages.” (Prahalad, 2006)

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In the example above the distribution through NGOs or other organizations, or kiosks can avoid a lot of traveling for the customer to receive the product/service, and it offers opportunities that goods can be collected/offered all together in 1 central place, leading to less transportation and as a consequence often lower CO2 emissions.

32 Adapting to existing means of transport This strategy can be found in the table pg 22 of the UN nations paper. (SadreGhazi et Duysters, 2008)

32b Impact on the LiDS strategies n°4 Optimization of the distribution system If the existing means of transport aren’t sustainable, like in the emerged markets, this can cause a big increase of CO2, especially since vehicles in the emerging markets often are less efficient and fulfill les regulations towards CO2 emissions: “Secondly, emissions from vehicles cause local air pollution, particularly photochemical smog during summer. Urban air pollution has, in recent decades, become a worldwide public health problem, particularly in many large cities in the developing world. An estimated 130 000 premature deaths and 50–70 million incidents of respiratory illness occur each year due to episodes of urban air pollution in developing countries, half of them in East Asia (31).” (McMichael,2000) Although it also offers Eco-opportunities: “Modes of Transportation over three million retail outlets in India are reached by companies that produce packaged goods. Methods of transportation used include camels, bull- drawn carts, bicycles, trucks, and trains (Prahalad and Lieberthal, 2003). In addition, poor roads and unreliable electricity are two additional obstacles common to the distribution networks in rural communities (Kripalani, 2002).” Cited by (Huhmann,2006) The use of camels, bull-drawn carts and bicycles are a lot better compared to our traditional ways of transport in relation to CO2 emissions. 33 Firm/NGO collaboration for distribution “NGOs and corporations can often provide each other with complementary distribution capabilities, with corporations providing global distributions systems and NGOs - who have knowledge of, and access to, local networks and existing

The influence of the BPSEMs on the LiDS strategies

distribution systems and have built trust with various local stakeholders - facilitating the ‘last mile’ local distribution. For example, ‘Doctors Without Borders’ extensive on-the-ground networks in developing countries make it a reliable, efficient and trustworthy partner for pharmaceutical companies for distributing medications in such environments.” (Dahan et al., 2009)

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33b Impact on the LiDS strategies The MNCs can also use the distribution channels of the NGOs, which offers more opportunities towards ecological sustainability. This belongs to the LiDS wheel strategy n°4 Optimization of the distribution system.

Education

Education in this topic is focused on the channels of education and not on the content, the content will be addressed in the chapter, knowledge and skills Characteristics Prahalad is mentioning about this topic are: - Poor infrastructure for customer’s access - Collaboration NGOs/government - mouth to mouth publicity - manifests and events (Prahalad,2005)

34 Networking government for education “In order to access and educate consumers at the BoP, more than a single format and approach is called for. Often, collaboration between the private sector firms, NGOs, the public health authorities (Ministers of Health), and the World Health Organization can be of great value. However, collaboration is not without its attendant problems” (Prahalad,2005) 34b Impact on the LiDS wheel No relation with the LiDS wheel strategies have been found

The influence of the BPSEMs on the LiDS strategies

35 Other techniques of communication Mass communication is often not working for BoP markets and thus other ways of communication need to be found, a few characteristics can be found here: “Mass media, the mainstay of communication efforts in developed markets, are also less effective in emerging markets. Large proportions of the population live in rural areas, distributed across vast distances in small isolated groups, with limited access to broadcast media. The existence of a multiplicity of languages (several hundred in large countries), and varying levels of illiteracy complicates the task of communication further.” (Dawar et Chattopadhyay, 2002)

with advertisements for Unilever products. The company also provides product usage demonstrations to the captive audience because written instructions on the pack may not be read by consumers who are either illiterate or do not understand the dialect.” (Dawar et Chattopadhyay, 2002)

Prahalad mentions the power of mouth to mouth publicity in his book “ the fortune at the bottom of the pyramid” as an alternative technique of communication. (Prahalad, 2006)

found to underpin this statement.

35b Impact on the LiDS wheel No impact on the LiDS wheel have been found 36 Create own mass media In relation with the previous topic an other alternative is to design your own mass media channel: “To overcome some of these challenges, Unilever pioneered the concept of the “Unilever’s video vans” travels from village to village screening films in the local language, interspersed

Prahalad also mentions this topic, he proposed to organize events or manifests. 36b Impact on the LiDS wheel Although some negative impact can be expected that the transportation of these vans (CO2 emissions), has a bigger impact than broad casted publicity, no evidence in the literature has been

KNOWLEDGE AND SKILLS (UNDP ISSUE) The chapter Knowledge and skills implies that BoP customers have different skills as the customers in developed markets, according to the UNDP the issues are: • Illiteracy and different knowledge and skills in relation to availability and use of products • The lack of skills inhibits them from starting their own businesses (UNDP) the following BoP principles are related to this topic:

Interfaces

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The influence of the BPSEMs on the LiDS strategies

37 Detect unusual habits “Interface design can also provide some interesting and unexpected surprises. For example, in the case of rural agricultural kiosks, EID Parry found that its customers prefer an English-language interface to their PCs rather than the local language (Tamil). (Prahalad,2005) “Wireless customers in India and Bangladesh were able to take to the new technology more rapidly than expected. Indian housewives—rich and poor alike—are avid users of SMS messaging; on average they send 60 messages per day. Farmers in the ITC e-Choupal network, in a very short period of time, were sufficiently knowledgeable to navigate the Web to check on soybean prices at the Chicago Board of Trade or the latest cricket score” (Prahalad,2005)

n°6 Optimization of initial lifetime The standard document ISO 9241-11 suggests usability covers the following three components: effectiveness, efficiency, and satisfaction. (Andrzejczak et Liu, 2008) This can influence the reliability, durability and the productusers’ relationship in positive way (sub strategies a and e) 38 Eliminate text / Language problems “For example, India boasts more than 15 official languages and 500 dialects, and 30 percent of the total population is illiterate. How then can we develop user-friendly interfaces for products that the poor and the illiterate can understand and utilize?” (Prahalad,2005) 38b Impact on the LiDS strategies Eliminating text or recognizing language problems has the same influence on the LiDS strategies as strategy 39 and thus can influence the same LiDS strategies (5 and 6).

Deskilling

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37b Impact on the LiDS strategies n°5 Reduction of impact during use Usability leads to more efficiency when you use the product, which can reduce the amount of energy needed: The standard document ISO 9241-11 suggests usability covers the following three components: effectiveness, efficiency, and satisfaction. (Andrzejczak et Liu, 2008)

“67 Misuse of the product as a whole must be avoided by clear instructions and appropriate design.” (D4S)

The influence of the BPSEMs on the LiDS strategies

39 Local usability research The following references focus on the importance of local usability research when designing interfaces: “Research on interfaces is critical given the nature of the consumer population. The heterogeneity of the consumer base in terms of language, culture, skill level, and prior familiarity with the function or feature is a challenge to the innovation team.” (Prahalad,2005) “How we interpret the future of interface design is critical and significant research is necessary.” (Prahalad,2005)

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“In order to make the product acceptable and usable for the large number of less skilled customers in low-income markets, research has taken place by some companies to identify the solutions that communities already have developed on their own based on their culture, believes and endogenous knowledge. Instead of pushing a new proprietary product into the market, such locally based approaches help to design a product with which consumers are familiar. It makes it easier for consumers to adapt when they make the shift to use the product.” (SadreGhazi et Duysters, 2008)

39b Impact on the LiDS strategies In the text above there is made a reference to root grass innovation, being inspired by solutions the community developed, based on their culture. This is important since respect for nature is more inherent in some other cultures as mentioned is strategy n°30. (example about India) This can influence all the LiDS strategies. Furthermore Local usability research is a strategy that includes solutions 37 and 38 and thus can influence the same LiDS strategies ( 5 and 6).

40 Adapt production to the Skills of the employees The following example shows how production can be deskilled, Jaipur foot is a company that produces prosthetics for the emerging markets: “Fabrication of the Jaipur Foot, as well as the process by which a patient is fitted, is a very labor-intensive process. This process capitalizes on the large supply of skilled artisans in India and their manageable labor rates. A Jaipur Foot artisan is a craftsman with several years of experience who is further trained for several more years to mold, sculpt, and form the Jaipur Foot. The Society typically schedules 70 trained technicians and artisans each day to achieve a one- to-one patient-to-employee ratio. Artisans and technicians, who are more experienced artisans, operate in a supervisory capacity and are paid by the hour plus overtime.” (Prahalad,2005) Another example in this topic is the Phillips “Chulha” oven for the BoP, this oven is designed in such a way it can be produced by the local population with labor work. It is designed to use the skills of the Customer to produce this oven and to sell it. In this way , it can be locally produced and sold without needing a lot of expertise by the local illiterate population. For the small learning process, they depend on the NGOs. 40b Impact on the LiDS strategies n°3 Optimization of production techniques If machines are replaced by human labor, a green source of energy is used which is LiDS sub strategy c) as mentioned by D4S

The influence of the BPSEMs on the LiDS strategies

EDUCATION (content)

41 Firm/NGO collaboration for marketing “NGOs usually have recognized expertise in a social issue and the public legitimacy to address it, and the impact of commercial firms’ marketing messages is greatly enhanced by endorsements from non- profit organizations. This ‘cobranding’ brings tremendous credibility to the firm’s claims regarding the benefits of its product/service, increasing the perceived value of its offering.20 As developing market customers often have little (or no) education, and illiteracy levels may be high, NGO staff can provide much-needed local consumer education about how to use a product or service.” (Dahan et al., 2009)

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41 b Impact on the LiDS wheel This can improve the efficiency and the life of time of the product since teaching how to use the product has a similar effect als usability. This influences LiDS strategies 5 and 6.

42 Guidelines how to use the product “The company (Unilever) also provides product usage demonstrations to the captive audience because written

instructions on the pack may not be read by consumers who are either illiterate or do not understand the dialect.” (Dawar et Chattopadhyay, 2002) Another example here is CEMEX who combine selling their product with consultancy/ education about how to build a house and a service where they estimate which and how much of which materials the BoP need, in this way they gain the trust of the customer and educates them, while selling their products: “The women knew before they started the savings program what kind of a room they could add, including its size, appearance, and materials needed to build it, including cement, steel, paints, tools, and so on. All of the necessities would come in a package and Cemex would hold it in storage until the customers were ready.” (Prahalad, 2006) 42b Impact on the LiDS strategies This BPSEM has a positive correlation with the use of less materials, the reduction of impact during use and the optimization of the initial lifetime

The influence of the BPSEMs on the LiDS strategies

n°2 Reduction of material usage If we go back to the example of CEMEX we can see that Informing about the material needed can avoid that the customer buys too much material that they don’t need and which would get lost n°5 Reduction of impact during use having clear guidelines can lead to more efficiency when you use the product, which can reduce the amount of energy needed. n°6 Optimization of initial lifetime Guidelines on how to use the product can improve the Reliability and durability of the product which is sub strategy a as mentioned by D4S

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43 Combination marketing education A few examples show how marketing and education can go hand in hand: “Innovation in BoP markets requires significant investments in educating customers on the appropriate use and the benefits of specific products and services.”

“HLL decided to approach village schools and educate children on the cause of disease and how to prevent it. HLL built simple demonstrations using ultraviolet dirt and bacteria detectors on “clean-looking hands.” The point was that washing hands in contaminated running water might give the appearance of cleanliness, but such water harbored invisible germs that cause the damage. They co-opted teachers and NGOs and used their own “evangelists” who went to village schools and spread the messages of cleanliness, washing with (HLL) soap, and disease prevention.” (Prahalad,2005)

“HLL selected entrepreneurial women from these villages and trained them to become distributors, providing education, advice, and access to products to their villages. These village women entrepreneurs, called Shakti Amma (“empowered mother”), have unique knowledge about what the village needs and which products are in demand” (Prahalad,2005) 43b Impact on the LiDS strategies 8 OTHER/ educating customer “To the business/industry sector, sustainable consumption means the ‘greening’ of the supply chain, producing more environmentally friendly or Eco-efficient products, and providing consumers with information about sustainable consumption through advertising, marketing and product information.” (kong et al.2002) This reference explains that educating the customer can lead to more sustainable behavior, although no resemblance with any LiDS strategy is found. 44 Eliminate mistrust in MNCs “As a result, transactions are governed by relationships and networks rather than by contracts. For an outsider, building legitimacy and trust, and becoming a network member is both a necessity and a challenge (Wheeler et al., 2005), as the strength of ties within communities is paralleled by deep-rooted divisions, mistrust, and potential conflicts between communities. The link between communities and the outside is often created by intermediaries such as local NGOs or influential members of the community (Arnould & Mohr, 2005)” Cited by (Rivera-Santos et Rufin,2008)

The influence of the BPSEMs on the LiDS strategies

44b Impact on the LiDS strategies CSR can be directly linked on offering more sustainable products and services and contributing to sustainable development, this can be on all the levels of the LiDS wheel strategy.

REGULATORY ENVIRONMENT (UNDP issue) • Regulatory frameworks are under or undeveloped in the BoP • Enforcement of the existing rules is inadequate. Business plan principles on dealing with this issue are:

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NO BOP PRINCIPLE

45 Recognize other restrictions and laws Although this is for every country different, we can ask ourselve the question if there is a comparison that can be made about the influence on sustainability, the law and the enforcement of the law in the emerging markets and the emerged markets cause?

“Firms in these environments (BoP) have to adapt their structure and strategies to fill the institutional gaps (Khanna & Palepu, 2000). Weak institutions create particularly acute problems in BoP markets. Enforcement of laws and regulations at the BoP is typically low, leading to informal dispute resolution (Ricart et al., 2004) and non-existent protection for workers and consumers (Karnani, 2007). Tax evasion, corruption, and clientelism are prevalent (Transparency International, 2007). Finally, property rights may not exist, may depend on traditional community norms, or may not be enforced (De Soto, 2000; London & Hart, 2004; cited by Rivera-Santos et Rufin,2008)

The influence of the BPSEMs on the LiDS strategies

45b Impact on the LiDS strategies n°0-7 All the LiDS strategies “Though environmental regulations have been in use now for approximately 30 years, it is generally recognized that their efficacy in controlling pollution emissions has been dampened by a lack of appropriate monitoring and enforcement.” (Dasgupta et al. , 2001) It is obvious that low enforcement of laws can cause a big harm for the environment, this implicates that even if there are national or international regulations to protect the environment, companies can avoid respecting them. In the topic about CSR the opportunities of Eco design of the weak enforcement will be discussed.The following references shows that economical aspects can prioritize ecological sustainability.

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“Even though everybody involved has at least some understanding that they are heading for a collective catastrophe, no individual or national government has sufficient personal interest to prevent overfishing. In addition, most governments oppose fishing restrictions because of the subsequent job losses.” (Kong et al., 2002)

Other examples where economic growth prioritize on ecological sustainability are the “Belo monte dam” (BBC 20 April 2010) and the power plant in south Africa. (BBC 9 April 2010) The copenhague climat conference showed that many emerging countries weren’t motivated on adapting substantial

investments in ecological sustainability, where Europe showed themselves more willing to pay for preserving the earth: “ But developing countries differ in their views about the outcome of the Convention track. India and China have insisted that developed country parties agree to a second commitment period under Kyoto, but have opposed the adoption of a new legal agreement addressing their own emissions.”(Daniel Bodansky, 2010) Although other sources show us a more optimistic image of te efforts o the emerging countries: “the Chinese government is by no means a dropout in the recent worldwide ecological movement. Particularly within the last decade, it has formulated a series of laws and regulations to protect the environment. These measures have contributed to the gradual increase in environmental consciousness and green purchases among Chinese citizens.” (Chan, 2000) It is hard to predict if the differences in regulation will remain a serious treath for the environment, but the lack of enforcement and control can definitely have a big impact on the sustainable behavior of the companies. 46 Corporate social responsibility as a license to operate CSR can be defined as: “a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment” (COM 2001, 4;cited by Weber, 2008) by integrating “social and environmental concerns in their business operations and in their interaction with their stakeholders” (COM 2001,6;cited by Weber, 2008)

The influence of the BPSEMs on the LiDS strategies

“Benefits often come from positive and improved relations with regulators and other stakeholders. For example, regulators may ease the permitting process for companies who have consistently demonstrated a strong sustainability performance record, thus reducing the time and investment required to bring new products and services to market.” (Epstein & Roy, 2001) 46b Impact on the LiDS strategies n°0-7 All the LiDS strategies CSR can be directly linked on offering more sustainable products and services and contributing to sustainable development, this can be on all the levels of the LiDS wheel strategy.

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“The global climate is such that companies are seen as obstructionist when it comes to matters of environmental impacts and social development. To combat the climate of suspicion and mistrust companies must engage with stakeholders to learn their concerns and expectations.” (Prakash-Mani et al.,2002)

47 CSR to Eliminate mistrust in MNCs “The NGO sector is a very powerful driver and traditionally the business sector has been wary of dealing with it. The feeling has been mutual — some NGOs have mistrusted business deeply, especially during the Marcos regime. But over the past few years, the business community and civil society have started to work together and identify areas of collaboration.” (Prakash-Mani et al.,2002) “As a result, transactions are governed by relationships and networks rather than by contracts. For an outsider, building

legitimacy and trust, and becoming a network member is both a necessity and a challenge (Wheeler et al., 2005), as the strength of ties within communities is paralleled by deep-rooted divisions, mistrust, and potential conflicts between communities”(RiveraSantos et Rufin,2008) 47b Impact on the LiDS strategies n°0-7 All the LiDS strategies The influence on the LiDS strategies is similar as business plan solutions n°46 48 CSR to get better access to capital “Better access to capital is another benefit as the financial community pays greater attention to environmental and social performance and gives preference to companies with favorable records.”(Epstein & Roy, 2001) 48 Impact on the LiDS strategies n°0-7 All the LiDS strategies The influence on the LiDS strategies is similar as business plan solutions n°47 49 Obtaining monopoly position by networking with the government “Well-intentioned entrepreneurs in new Societal Wealth Enterprises (SWE’s) in emerging markets are particularly vulnerable to weakness on both legitimacy and influence dimensions. We have also found - in all our cases - that deep, non-transparent ties exist between the management or owners of incumbent firms and members of local or national governments. These often manifest themselves as an opaque ‘cloak’ inhibiting new firms from understanding the actions (or the seemingly inexplicable inactions) of such authorities. In one project, for example, we

The influence of the BPSEMs on the LiDS strategies

learned that a competitor with strong ties to a government office had managed to instigate sudden and unexpected difficulties in obtaining work permits for key project employees, without which they were unable to begin (or continue) to work in the country, which risked compromising the effective management of project operations” (Thompson et MacMillan,2009)

centers, Celtel and the local village chief. “Less centralization in BoP networks means that MNEs, like any other network member, will have to share major roles and decision power with the other market and non-market actors at the BoP.” (Rivera-Santos et Rufin,2008) This topic is also related to BPSEM n°53: Decentralization

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49b Impact on the LiDS strategies n°0-7 All the LiDS strategies This BPSEM is comparable to BPSEM n°45. The example above can cause threats since monopolies can be created where the power of the MNC raises, and where environmental sustainable design isn’t use to produce competitive advantages.

50 Networking with local/ religious informal leaders The text below shows the importance informal leaders may have in the emerging markets, which can result in shared decision making: “As a result, BoP networks will have at least several centers, such as the MNE with ties to suppliers and international markets, a local NGO with ties to other NGOs and local community members, and the local government officials with ties to regional decision-makers, rather than one or very few centers, as is typically the case in TOP environments (e.g., Sako, 2004). we thus expect BoP networks to be less centralized than TOP networks. For instance, when Celtel Nigeria, a cell phone company, expanded into rural BoP markets, it had to negotiate with village chiefs and local community leaders not only to get their approval to build towers, but also to recruit local entrepreneurs as distributors and to ensure safe passage for its staff (Anderson & Kupp, 2008), leading to local BoP networks with at least two major

50b Impact on the LiDS strategies n°0-7 All the LiDS strategies The shared decision making offers opportunities if the informal leaders are well informed, this could be the job of NGOs : “A notable practice of conflict prevention in the self-governing cooperatives has been the active involvement of the villages’ informal leaders. Using their social influence, these leaders mediate disputes between members. Especially when setting up a new cooperative for promoting rural development, there arise frequent conflicts of opinion that make the ability of informal leaders to mediate disputes all the more necessary.” (Mondal, 2000) In this case, co-operating with informal leaders is used to prevent conflicts, but co-operating with informal leaders may also be used to influence the decision making of MNCs The next strategy is a BoP principle that isn’t particularly related

The influence of the BPSEMs on the LiDS strategies

New challenges (BoP principle)

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According to Prahalad new challenges imply: • Breaking with existing paradigms • Breaking with the paradigm that BoP markets aren’t viable

to 1 UNDP issue and will therefore get the letter “A”:

new TV.” (Prahalad, 2006)

51 Changing from a short to a long term planning “Multinationals’ stance is rapidly evolving from one of ‘exploration,’ ‘investment,’ and ‘establishing a beachhead,’ to more prosaic reasons such as ‘generating a return,’ ‘growing long term sales volume,’ and ‘building a dominant position’. Local subsidiaries are being called to account, and losses that may earlier have been viewed as investments in market building are no longer tolerated.” (Dawar et Chattopadhyay, 2002) “Customers should be viewed for their long-term potential as lifetime customers. Although they can’t afford something right now, their situation will improve and then they can buy that

51b Impact on the LiDS strategies n°0-7 All the LiDS strategies This case illustrates how long term planning can result in more ecological sustainable behavior: “The fishing industry provides a perfect example of cooperation between NGOs and corporations. Although the depletion of fish stocks will have a negative impact on the growing world population, fish are still freely available and can be commercially exploited. Even though everybody involved has at least some understanding that they are heading for a collective catastrophe, no individual or national government has sufficient personal interest to prevent overfishing. “(Kong et al., 2002) “In addition, most governments oppose fishing restrictions because of the subsequent job losses. Given this environment,

The influence of the BPSEMs on the LiDS strategies

two leaders from very different ‘businesses’ decided to tackle this pressing problem together. In 1997 Unilever, a leading consumer goods manufacturer and the largest seller of fish sticks in the world, and the World Wide Fund for Nature (WWF) started the MSC”. (Kong et al., 2002) The aim of the MSC was to establish a certification scheme for sustainable fishing.Unilever and WWF had different goals for starting the MSC. For Unilever, it was a way to protect market share and ensure long-term survival. Moreover, the company expected some spillover in goodwill/corporate citizenship among its consumers.” (Kong et al., 2002) 52 Applying radical innovation, not only in the way products are designed but also on the level of business plan “By its very nature, success in BoP markets will break existing paradigms.All examples used in this book challenge conventional wisdom. They challenge the current paradigms in innovation and product and service delivery in fundamental ways.” (Prahalad, 2006)

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52b Impact on the LiDS strategies n°0-7 All the LiDS strategies In my first file I recognized that radical ecological innovation is needed and that designing for the emerging markets may be a good opportunity to also rethink products in a ecological way:

“The severity of global sustainability challenges leads to an increasing awareness that incremental solutions will not be enough to maintain critical levels of natural and social capital “ (Russo, 2003)

About radical innovation with product service systems: “Further, the discussion of factors that determine sustainability per type of PSS (product service systems) is helpful and comparison between various types of PSS and their corresponding products in terms of their sustainability improvement is presented. The chapter concludes that more radical system changes have higher sustainability potential.” (Tucker et Tischner, 2006) Like mentioned before designing for the emerging markets allows the companies to break existing paradigms. 53 shift in company organization: decentralization and localization Business plan solution 50 already revealed some opportunities. The centralized, product-focused structures and practices that have made multinationals so successful at glocalization actually get in the way of reverse innovation which requires a decentralized, local-market focus. Almost all the people and resources dedicated to reverse innovation must be based and managed in the local market According to GE their new company structure is based on local growth teams (LGTs) that support 5 principles: - Shift power to where the growth is <--> centralization - Build new offering from the ground up - Build LGTs from the ground up - Customize targets, objectives and metrics - Have the LGT report to someone high in the organization. (Immelt,2009) 53b Impact on the LiDS strategies n°0-7 All the LiDS strategies The Eco opportunities of are mentioned in the strategy : 2,20,21, 24, 30,40. Eco-localists and permaculturists have created a whole theory

The influence of the BPSEMs on the LiDS strategies

ANALYSIS â&#x20AC;&#x153;For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled.â&#x20AC;?

Richard Feynman

Jente Minne - New products planning

- 2009-2010

In this chapter we will analyse the information, obtained by the desk research.the information will be analyzed on the level of the BPSEMs, the BoP principles, the UNDP issues and the UNDP solutions.

1. Comparisons made on the level of the BPSEM On the following pages, a matrix can be found which shows the relation between the 53 Business plan solutions (BPSEM) and the LiDS strategies. Green shows a positive correlation (applying this BPSEM is a potential LiDS strategy opportunity), while the red squares show a negative correlation between both strategies. The strength of the correlation isn’t mentioned since more and another type of research is needed in order to do that.On pg. 64 an A3 page, makes the division of the BPSEMs over the LiDS strategies.

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On the pages following on pg 64, a clustering of the BPSEMs is made of the most positive and negative influencing BPSEMs. These clusters are made based on qualitative information. The aspects for measuring the importance are:

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• The importance for designing for the emerging markets (are they addressed in the literature about designing for the emerging markets as a detail, or is it treated as important matter, nd in how much of this literature is it mentioned .) • The relation for Eco design (are they addressed in the literature about Eco design as a detail, or is it treated as important matter, and in how much of this literature is it mentioned .) • The amount of times they come back in the BPSEMs, fulfilling other functions.

• The relation between each other Also a cluster anaysis is executed and the results will be compared with each other. In this way the researcher will select the BPSEMs with the most potential for Eco-design. At the end a few cases will illustrate the effect of several BPSEM on the Eco LiDS wheel strategies. The cases chosen here are: the Phillips “Chulha” oven, the battery charger for youngsters and the $100 laptop. This will show how this model can work in practise.

1.1 The BPSEM LiDS matrix The matrix reveals that partnerships with NGOs, using local usability research, applying CSR, changing from short to long term planning, eliminating mistrust and applying radical innovation can influence all of the LiDS strategies in a positive way. Recognizing other laws and restrictions, and networking with the government (obtaining monopoly position), can mean a threat for all of the LiDS strategies. This is because these BPSEMs are focused on a more general level and thus can be applied on all the LiDS strategies. It also means that these BPSEMs can have a big influence on the Eco impact of the product and the service, although often this depends on the quality of the execution of the principle. (for ex. corporate social responsibility (CSR) can be just minor changes to prevent reaction or it can be applied in the strategical decision making of the company) Further in this chapter we will discuss the importance of these BPSEMs.

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BPSEM-LiDS strategies matrix Counts: 0pportunities - threats Business plan solutions (BPSEM)

18-2 0 Functionality

Detect functionality (BoP principle) 1 NGOs --> market reseach 2 Local research 3 Market information Price performance 5 Smaller portions 6 Focus on functionality 7 Collective payment 8 Capital ->labor ( consumer) 9 No time segmentation 10 Price awareness Scale of operations 12 Scale of operations 13 NGO --> R&D

13-2 1 low impact materials

12-4 2 Reduction materials

15-3-1 3 Production techniques

21-4 4 Distribution system

20-3 5 Impact during use

+ + +

22-3

16-3

6 Initial lifetime

7 end of life system

+ + + -

+ + + +

+ + + -

+ + +

+ +

Process innovation to lower the price 14 Use of cheap labor

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15 Use of local materials (cost)

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+ 16 Partnerships NGOs (costs) + 17 Product -> service Process innovation to suit the infrastructure 19 The use of local materials 20 Use local labor 21 NGO -->procurement 22 Investment in infrastructure Invest in infrastructure 23 -24 Local research/ robust

+ +

+ + + -+

+ +

Comparisons made between different strategies

Business plan Solutions (BPSEM)

0 Functionality

1 low impact materials

2 Reduction materials

3 Production techniques

4 Distribution

Hybrid solutions 25 Specs research 26 Capital -> consumersâ&#x20AC;&#x2122;labor 27 sustainable energy

6 Initial lifetime

7 end of life system

+ + + +

+ +

+ + +

28 Technology jump Distribution innovation 29 Local distribution research

5 Impact during use

+ + + ++

30 Direct selling 31 Multi-layered distribution 32 Adapting distribution 33 NGO --> distribution Interfaces 37 Detect unusual habits 38 Eliminate text / language Deskilling 39 Local usability research

40 Skills employee Education 41 NGO ->marketing 42 Guidelines: use the product

+ + 44 Eliminate mistrust in MNC REGULATORY ENVIRONMENT (UNDP ISSUE, no BoP principle) 45 Recognize other laws 46,47,48 CSR

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49 Obtaining monopoly 50 Networking with informal New challenges (BoP principles) 51 Short to long term 52 Radical innovation 53 Decentralization

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+ +

+ + +

+ +

+ + +

Comparisons made between different strategies

0 Optimize functionality Dematerialize Increase shared use Provide a service

1 NGOs --> market research 2 Local research 3 Market information 6 Focus on functionality 7 Collective payment 8 Substitute capital with consumers’ labor 9 No time segmentation 13 NGO --> R&D 17 Switching the focus from products to services

1 Selection of low impact materials 15 use of local materials 19 The use of local materials (infrastructure) 28 Technology jump 2 Reduction of material usage

5 smaller portions 12 scale of operations 17 Switching the focus from products to services 42 guidelines how to use the product

3 Optimization of production techniques

12 14 15 19 20 21 22 27 40

scale of operations Use cheap labor of local producers The use of local materials The use of local materials Use cheap labor NGO collaboration to procurement and production Investments in infrastructure depending on sustainable energy New production techniques: Skills of the employees

4 Optimization of distribution system

5 smaller portions 12 Scale the operations to make profits with smaller margins 15 The use of local materials 19 The use of local materials 27 depending on sustainable energy 29 Local distribution research 30 direct selling 31 Building a multi-layered distribution system 32 Adapting distribution to existing means of transport 33 NGO --> distribution

5 Reduction of impact during use

6 Focus on functionality 8 Substitute capital with consumers’ labor 9 No time segmentation programs. 10 Price awareness -> efficiency 12 Scale the operations to make profits with smaller margins 25 specifications research 26 Substitute capital with consumers’ labor 27 Depending on stable/ sustainable energy 28 Greenfield innovation / technology jump 37 Detect unusual habits 38 Eliminate text / language 41 Firm/NGO contributions to marketing LiDS 42 Guidelines: use the product

6 Optimization of initial lifetime

1 Partnerships with NGOs 2 Local research 3 Market information 6 Focus on functionality 12 Scale the operations to make profits with smaller margins 13 NGO --> R&D 14 Use local labor to lower the costs -> reparation 17 Switching the focus from products to services 20 Use cheap labor 23 Local research laboratories -> specs 24 Robust products 25 specifications research 37 Detect unusual habits 38 eliminate text / language 41 Firm/NGO contributions to marketing LiDS 42 Guidelines how to use the product

7 Optimization of end of life system

12 Scale the operations to make profits with smaller margins 14 Use local labor to lower the costs: recycling 17 Switching the focus from products to services 20 Use cheap labor 22 investment in infrastructure 27 depending on sustainable

For the Full size scheme please check “A3 file pages”

NOT ABLE TO FILL IN 4 Rural marketers: difference rural/ urban 12 Financial service + product 19 Local production research 35 Partnerships NGOs / schools 36 Networking government for education 37 Other techniques of communication 38 Create own mass media 44 marketing-education

FIT IN EVERY COLUMN 17 Partnerships NGOs (costs) 41 Local usability research 45 Eliminate mistrust in MNC 45 Other restrictions and laws 46,47,48 CSR

49 Obtaining monopoly 50 51 52 53

Networking with informal leaders Changing from short to long term Radical innovation Decentralization localization

1.3 Clustering BPSEMs on content A clustering has been made on the base of the similarities in influence on the LiDS wheel strategies and similarities in the content. 9 categories are defined. Partnerships/ co-creation with civil society 1 Partnerships with NGOs 13 Partnerships NGOs (scale) 16 Partnerships NGOs (costs) 21 Partnerships NGOs (infrastr.) 31 Multi-layered distribution 33 Co-creation civil soc (impl.) 50 Networking with informal 53 Decentralization

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Functionality 2 Local research 3 Market information 5 Focus on functionality 7 Collective payment 8 Capital ->labor (consumer) 9 No time segmentation 10 Price awareness 17 Product -> service

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Use of local resources 14 Use of local labor 15 Use of local materials (cost) 19 The use of local materials 20 Use cheap labor 29 Local distribution research 30 Direct selling 32 Adapting distribution 41 Skills employee

Greenfield innovation/ technology jump 27 Depending on sustainable resourcers 25 Specs research 22 Investment in infrastructure 23 -24 Local research/ robust Ownership 38 Detect unusual habits 39 Eliminate text / language 40 Local usability research 42 Guidelines: use the product 43 Marketing-education CSR 44 Eliminate mistrust in MNC Overal (broad) 51 Changing from short to long term 52 Radical innovation Scale of operation 6 Smaller packages 12 Scale of operations Other restrictions and laws 49 Networking government (monopoly)

Comparisons made between different strategies

Partnerships/ co-creation with civil society Partnerships and co-creation are considered to be crucial to design for the emerging markets, many literature refers to this strategy to overcome multiple issues (Prahalad, 2005;Simanis et Hart, 2008; Rivera-Santos et Rufın,2010; Oetzel et Doh, 2009;...). This strategy can be used to help overcome every UNDP issue. But also on the side of Eco design co-creation and networking with NGOs offers opportunities. We have seen that networking with NGOs can influence all of the LiDS strategies. If we are talking about the quality of the link, we may argue that the professionalization of NGOs combined with the fact that the MNCs are reliable on them offers strong opportunities for sustainable development.

Functionality It is essential to recognize other functionality when designing for the emerging markets and to fulfill this functionality with a radically new price–performance relationship compared to that currently employed in developed markets. Products and services often need to fulfill other and some higher expectations at a price that might be 50 to 75 times lower than in the developed markets. (Prahalad, 2006). Furthermore population of the customers of the emerging markets are often more price aware about the consumables needed for the product offered. (Prahalad, 2006) On the other hand functionality is the first Eco LiDS strategy (0 Optimize Functionality) and reducing the cost implies efficiency which is a sub strategy of strategy 5 (Reduction of impact during use). It also has influence on strategy 6, sub strategy “optimize functions” (http://www.nrc.ca/dfe)

“NGOs have been playing a powerful role in sustainable development, particularly in their partnerships with key stakeholders, in serving the needs of individuals and communities. Many of these NGOs are developing a more sophisticated understanding of environmental problems, based on sound scientific research and are developing effective strategies to solve environmental problems through strategic partnerships.” (Kong et al., 2002)

Use of local resources The use of local resources in this context is focused on the use of local labor, the present infrastructural and natural resources and local materials. The 3 main raisons argued in this file to use local resources are lowering the price, creating purchase power for the poor and overcome infrastructural issues (transport and fabrication).

1.4 Description of the several categories

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furthermore business plan solution 53 argues that MNCs have to share their decision power with other players, including NGOs.

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In the literature about ecological sustainability, the use of local resources plays one of the mayor roles, as wel permaculture as Eco-localism, implies that the key to sustainability lays in making every local etentity self sustainable and avoid transport of products and goods.(Holmgren,2007; Curtis,2002) The use of local resources is likely to cause a positive effect on LiDS strategies 1,2,3,4,5,6 and 7. furthermore Eco-localists argue that localism leads to the in my backyard (INMBY) phenomenon,

Comparisons made between different strategies

which leads to more sustainable behavior from both producer and consumer (Curtis,2002) Greenfield innovation/ technology jump Greenfield innovation and technology jump are tools used to tackle infrastructural issues. the lack of infrastructure in many emerging markets gives emerging markets the opportunity to develop in more sustainable way, without being stuck on obsolete infrastructure : In this solution we are focusing on the fact that product innovations in emerging markets often are less predefined because of the existing infrastructure.This can lead to a technology jump. An example is the fast adaptation of the cellphone in many emerging countries (Prahalad, 2006)

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“With far smaller per capita incomes, developing countries are more than happy with high-tech solutions that deliver decent performance at an ultralow cost, a 50% solution at a 15% price. And they lack many of the legacy infrastructures of the developed world, which were built when conditions were very different. The need communications, energy, and transportation products that adress today’s challenges and opportunities, such as UNDPredictable oil prices, and ubiquitious wireless technologies.” (Immelt, 2009)

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The influences on Eco design are be on the level of Eco strategies 1,3,4,5,6 and 7. Besides that new technologies are also mentioned by Eco localism and permaculture as a benign strategy to lower Eco impact, although they mention that this doesn’t mean that technology will be able to make all products and services sustainable:

better or ‘‘less bad’’ is not necessarily good. The ‘‘greenness’’ of such technologies is limited by specific environmental regulations, the extent of consumer concern and knowledge, markets for new green products and technologies, and the relative importance of energy and materials in the overall costs of production. (Curtis,2002; Holmgren,2007) Ownership and usability Ownership is a term which means the state or fact of being an owner. (dictionary.com) and it is used in the development aid to point out that the population itself has to feel they are the owner of the project. A sustainable development project needs to be supported, respected and maintained by the local population. When designing for the emerging markets, it is also important that the products and services made earn this support and respect: “In order to make the product acceptable and usable for the large number of less skilled customers in low-income markets, research has taken place by some companies to identify the solutions that communities already have developed on their own based on their culture, believes and endogenous knowledge. Instead of pushing a new proprietary product into the market, such locally based approaches help to design a product with which consumers are familiar. (SadreGhazi et Duysters, 2008) The product that is made need to be acceptable for the customer, the civil society organisations and the formal and informal leaders of the society. furthermore usability is very important since the skills of people in the emerging markets lay different from the skills in the emerged markets. 79% of the MNCs mentioned different skills as an issues while designing for the emerging markets ( Jagtap et Kandachar, 2008) The percentage of illiteracy lays a lot higher and

Comparisons made between different strategies

the percentage of formal education a lot lower for example Also, they are less familliar with electronic devices (Prahalad, 2006). This strategy can lead to substantial improvements on the LiDS strategies 2,5 and 6 and doing local usability research can even have influence on all the LiDS strategies since other cultures tend to feel more conected to the nature and reject products that are harmfull to the environment. Corporate social responsibility The definition of CSR is: “A concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment” (COM 2001, 4;cited by Weber, 2008) by integrating “social and environmental concerns in their business operations and in their interaction with their stakeholders” (COM 2001,6;cited by Weber, 2008) As proven before, CSR can be a way to obtain a license to operate, to get access to capital and to reduce mistrust in the MNCs, all of them necessary to do business in the emerging markets.

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CSR is seen as a strategy to achieve competitive advantage over other companies, and CSR is closely related to partnership with NGOs, achieving ownership and networking with the government.

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The positive impact can affect all of the LiDS wheel strategies and can range from making small changes in products to improve their image, to radically rethinking products to achieve sustainable solutions. A good example on how CSR

can help to achieve sustainable solutions will be given in one of the cases. Scale of operation Scale of operation is necessary for being economically sustainable for MNCs. Since they need to obtain rapid growth with small margins per product, scaling is necessary. Scaling of operations can cause certain threat for the environment and these are reflected in the LiDS wheel strategies 2-7.Besides just the scaling there is also the fact that consumers in the emerging markets can only afford smaller dosises (packages), and need to make their purchases on a daily basis. This causes furthter threat for LiDS strategy 2 and 4. Besides the use of more materials and the more intensive use of the distribution system, Eco localists are concerned about disappearance of the IMBY phenomenon. This leads to exernalities in the economy, a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved. (apple dictionary) Because of the size of the emerging markets, this is a very serious issue and many ecologists believe that the only way of sustainability includes reduction of population and consumption. (Holmgren,2007) Other contradict and believe in another way of consuming instead of consuming less (McDonough et braungart,2002) This issue will also be addressed in the case about the $100 computer Other restrictions and laws Laws and restrictions that are more lax in relation to environmental issues are a big threat of sustainable design. as well as weak enforcement of the regulations. This can cause threat on all of the LiDS strategies.

Comparisons made between different strategies

1.5 Cluster analysis on similar counts (SPSS) A clustering has been made with SPSS based on the effect on the lids wheel strategies. This means SPSS makes clusters based on which BPSEMs have a postive or no correlation with similar LiDS strategy. A binary cluster analysis “within groups” is executed and 7 clusters have been made. These clusters are only made on the positive correlated BPSEMs (restrictions binary). The BPSEMs with a negative correlation have been executed seperately (2 clusters). The names of the clusters is extracted from the content of the BPSEMs of the respective cluster. (subjective) The blue words don’t fit with the content of the cluster

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Focus on functionality 1:Ngo->market research 2:Local research 3:Market information 6:Functionality 13:Firm/NGO -->R&D 17:Product --> service

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Infrastructural issues 4:Rural/urban market 7:Collective payment 11:Financial service 18:Local production research 21:NGO ->procurement 23:Local research labor 24:Robust products 29:Local distribution 30:Direct selling 31:Multi layered distrib

33:NGO --> distribution 34:Networking with the government 35:Other technique com 36:Create own mass media 40:Use skills of employees 43:Marketing/education Efficiency ( price) 8,26:Capital -->labor 9:No time segmentation 10:Price awareness 28:Greenfield innovation Local Labor (prod) 14:Use cheap labor 20:Local labor -->infrastructure Local materials 15:Use local materials 19:Use of local materials -->infrastructure CSR and networking (more general) 16:NGOs --> lower cost 39:Local usability research 44:Eliminate mistrust in MNCs 46:CSR-> license to operate 47:CSR ->mistrust 48:CSR -> access capital 50:Network informal 51:Short -> long term 52:Radical innovation

Comparisons made between different strategies

53:Decentralization Usability (ownership) 25:Specs research 37:Unusual habits 38:Eliminate text 41:NGO ->marketing 42:Guidelines product Other restrictions and laws 49 Networking government (monopoly) 12 Scale of operations Smaller packages 6 Smaller packages

1.6 Comparison: clusters on content ft. clusters on counts The differences between the clusters made on content and the cluster analysis are big.

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The clusters based on content are: Partnerships with NGOs, Functionality, use of local resources,greenfield innovation/ technology jump,ownership,CSR,Scale of operation,Other restrictions and laws

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The clusters based on SPSS can be best defined as: Focus on functionality, infrastructural issues, efficiency, local Labor, local materials,CSR and networking,Usability,Other restrictions and laws and Smaller packages

usability and the combination of partnerships with NGOs and CSR is similar to CSR and networking. Although all of the BPSEMs, they contain may differ. The differences between the content based clusters and the clusters based on counts can be understand since: • The correlation couldn’t be quantified what infected the reliability of the Cluster analysis based on SPSS. • Sometimes topics with a totaly different subject might have influence on the same LiDS strategies as CSR and partnership with NGOs. • Sometimes similar strategies might have a different influence on the LiDS strategies, the best example here is networking with NGOs which is divided over many clusters in the case based, this is understandable since the author split this term up to overcome several issues on the whole of the design process, and thus will influence different LiDS strategies. • There is a level of abstractness between some BPSEMs which causes that some are clustered together since they are more broadly defined. for example the cluster of CSR and networking with NGOs. The author relies the most on the content based clustering, also because the clustering based on similar counts has some BPSEMs that don’t fit in content of the cluster: for example radical innovation has nothing to do with CSR or networking with NGOs.

On the next page some cases we illustrate how some BPSEMs can influence the LiDS strategies in practise, for every BPSEM there will be argued which LiDS strategies it influences.

Similar clusters are: functionality, other restrictions of laws,

Comparisons made between different strategies

1.7 Case 1: The “Chulha” oven The “Chulha” oven is an oven invented by Phillips for the emerging markets of India. The most important feature of the oven is that it causes great health benefits comparing to the original way of cooking that was used in rural India, and the reduction of fuels needed to operate. The WTO estimated that yearly, 1,6 milion people die because of intoxication of inhouse cooking and that 25 Percent of them were living in India. This means India represents a very big market for this kind of products. Furthermore this example is interesting because it uses natural raw materials that are locally available and that can be locally processed, without need of extra infrastructure. Because of an inteligent business plan, the oven is produced by Phillips itself but through NGOs local entrepreneurs are motivate to build and sell this oven locally for a fair price. This combines capacity building of the poor with overcoming infrastructural issues and has also a positive infuence on the environment. The oven is also build in such a way that it fits to the Indian culture and local studies have proven that the local population are attracted by the design. In this case Phillips offered the plans for free to the NGOs since this project was ment as an act of CSR. But with some minor changes, this kind of designs can lead to profitable solutions for the emerging markets. (Rocchi et Kusume, 2008)

efficiency of the oven. (Rocchi et Kusume,2008?) This can have an influence on all the LiDS wheel strategies: LiDS wheel strategy 0 (functionality) “all (traditional stove users) affected by specific diseases / mental wellness issues, or with learning and educational access problems. Such issues were identified by desk and field research, and by the NGOs that participated in the workshop” This can lead to a product with a better functionality which leads to more sustainable products. LiDS wheel strategy 1,2,6,7 Improvements on this strategy are made but it is not clear how much cooperation with NGOs have had any influence in this topic

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If we analyse this oven further we can conclude that the BPSEMS used include:

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1 Cooperation with NGOs: The cooperation with NGOs is used to obtain market information, R&D, procurement of entrepreneurs, distribution of the guidelines, marketing purpose and assesment of the

Comparisons made between different strategies

LiDS wheel strategy 3 (production) The NGOs help with the procurement of local labor forces which is related to BPSEMs 14 and 20.

Effect on the LiDS wheels strategies: LiDS wheel strategy 0 (functionality) These strategies are equal

LiDS wheel strategy 4 (distribution) The plans are distributed through NGOs although no direct relation between LiDS strategy 4 and cooperation with NGOs has been found.

LiDS wheel strategy 6 (initial lifetime) The chulha oven is easier to repair because of its modular structure, and creates a better band with the customer

LiDS wheel strategy 5 (impact during use) “Particularly instrumental in this humanitarian design project was the cooperation of ARTI (Appropriate Rural Technology Institute), an NGO with considerable expertise in the smokeless cooking domain. ARTI helped the team to scan available technologies and benchmark current smokeless and non-smokeless solutions; identify specific challenges and opportunities for design interventions and scalability; and carry out technology development and field tests.” (Rocchi et Kusume,2008?) 5 Focus on functionality The design team focused on flexibility of use for roasting and steaming, additional functional features and appealing design format,Leading to extra features as:

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• Reduce indoor air pollution from smoke by up to 90% in comparison with indoor open cooking fires.

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• Exhaust gases and carbon monoxide emissions were reduced in comparison with other concrete-based indoor smokeless stoves.

10 Price awareness -->Efficiency: for 1 liter of water 11.5 min. and 255 gm for “Saral” (Chulha) ft. 22 min. and 415 gm (traditional stove). This means a significant difference in fuels needed. LiDS wheel strategy 5 (impact during use) The use of less consumables is a sub strategy under LiDS strategy 5 as defined by D4S. 12 Scale of operations “However, the aim is to shift to a semi-decentralized model where localization takes place at district level: with this model of scalability, the new entrepreneur will be able to serve up to 30-40 villages, with 200-250 households each.” (Rocchi et Kusume,2008?). The business plan allows Phillips to scale the production as well locally as geographically and India is the biggest market for this product. LiDS wheel strategy 2 (Reduction of materials) scaling of operations will lead to a an increase of materials used, and thus will have a negative impact, if you compare it to fulfilling the need. If you compare it to making the switch from the traditional stove to the Chulha stove, positive correlation can

• Reduction stove’s weight and improve thermal efficiency A LiDS wheel with the LiDS wheels strategies can be found on the back side of the Reader’s guide.

Comparisons made between different strategies

be found in this topic. Since the chulha stove has a longer lifetime. LiDS wheel strategy 3 (Production technique) Originale the scaling took place in decentralized model depending on human labor and thus it didn’t have a negative impact on the production technique , but the current production and distribution model proposed for the ‘Sampoorna’ and ‘Saral’ stoves can easily be adapted so trained entrepreneur invests in a mould that is able to cover the demand of a couple of villages, with 50-60 households each.” They are going to switch to a semi-decentralized model, and this means they probably change to more energy devouring production techniques, no research has been published to underpin this statement . LiDS wheel strategy 4 (Distribution technique) A more decentralized model will mean more transportation needed, probably causing more CO2 emissions, depending on how they will organize the distribution system.

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LiDS wheel strategy 5,6,7 (see the reader’s guide) Until now no research has been executed but we can expect that the IMBY effect disappears, leading to externalities, and less attention to the local environmental specifications and a decrease of product - consumer band.

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17 The change from product to service: Phillips offers the plans and through NGOs the explaination how to build it, the product itself is built by local entrepreneurs (B2B) According to my study this BPSEM influences LiDS strategies 0,2,6 and 7)

LiDS wheel strategy 0 (Functionality) The product is offered by the MNC as a service which allows local entrepreneurs to build it themselves and to use it as an economical activity (local economical capacity building). LiDS wheel strategy 2,6,7 Since the service isn’t the end product, the local entrepreneurs are still going to make it as a product, in this case it doesny’t result in any material saving 14, 20 The use of cheap labor As well local knowledge and skills as local labor are used to produce the oven. LiDS wheel strategy 3 (Production) According to Eco localists, local production, consumption and the disposal products leads to the “in my backyard” (IMBY) effect, also influencing clean production. And by using hand labor, the use of energy devouring machinery is avoided. LiDS wheel strategy 6 (Initial lifetime) Since it is locally produced, it can also be locally repaired. “broken parts can be easily replaced over time” (Karve 2007). LiDS wheel strategy 7 (End of life) This can be influenced by the IMBY effect and local production means also that some parts may be locally recycled, although no literature has underpinned this assumption 15, 19 The use of local materials Local raw materials are used to produce this oven. This results also in overcoming distribution issues, improves the local economy and a more ecological product. LiDS wheel strategy 1 (Low impact materials) “The stoves and their chimneys are mainly made of concrete

Comparisons made between different strategies

modular components, covered with clay. The stoves can be packed in recycled woven polypropylene bags, which are byproducts of waste from agricultural storage, etc.” (Rocchi et Kusume,2008?) LiDS wheel strategy 4 (Distribution) Since the product can be produced, installed and repaired locally, less transportation take place which results in less CO2 emissions. 39 Local usability research: Local research was very important in this project and extended field and desk research has been held, also cooperation with NGOs and agencies for research has been executed: “The design team - with the support of Green Earth, a local sustainable development agency dealing with grass root behaviors and social studies – gathered deeper, more specific insights into people by carrying out research in the villages of Kerwadi, Phaltan, Maltan and Karad, all in the state of Maharashtra” (Rocchi et Kusume,2008?) “Chulha is considered to be more attractive and it has improved functional features” This can have an influence on all the LiDS wheel strategies:

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LiDS wheel strategy 0 (Functionality) The chulha oven has improved functional features

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LiDS wheel strategy 1 No influence on this LiDS strategies have been found,as for the materials, research revealed that concreet was necessary instead of using the traditional and improved mud, to obtain a longer lifetime. Concreet has an higher ecological impact than

the local mud. LiDS wheel strategy 2 (Reducation material use) Since the lifetime of the product improved with a factor 6, less material is also needed to fulfill the customers needs on a long term. LiDS wheel strategy 3 (Production) However, at this stage, additional knowledge was necessary to develop a truly effective solution: knowledge of people’s purchasing power; specific culinary habits; cooking behavior and user interaction with available devices; information on local production and distribution channels, etc.(Rocchi et Kusume,2008?) field research was held too understand local production, this topic is related to “the use of local labor) LiDS wheel strategy 4 (Distribution) “infrastructural conditions, production facilities and distribution channels for stoves currently in use were investigated using the ARTI network” Resulting in: “modularity to facilitate distribution, installation and reparability of both the stove and the chimney” The stove is distributed locally which leads to a decrease of CO2 emissions. LiDS wheel strategy 5 (Impact during use) “The research previously carried out (for the ‘Sustainable Design Vision – Design for Sense and Simplicity’ workshop) on indoor air pollution in India was sufficient to provide a basic understanding of the issue and its context, and to feed the initial creative process” (Rocchi et Kusume,2008?)

Comparisons made between different strategies

Influence of cooperation with NGOs 0

This resulted in a product with a higher retention of soot. LiDS wheel strategy 6 (Initial lifetime) in ordre to improve subtrategy e: Strong product-user relation: “A lot of local research has been done to understand the sociocultural context.” “Chulha that has a better chance of succeeding than other concrete smokeless stoves because it is more attractive, and has improved functional features” (Rocchi et Kusume,2008?)

“It was observed that the durable improved chulha takes over the problem of short life span of traditional and improved mud chulha” “The improved mud chulhas has only six months to one year life. There is a need to design a chulha made up of cement concrete that would have at least five years of life.” (Kale et al., 2004)

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“Chulha” oven: green Traditional oven: Red

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Influence of scaling

0 1

3 4

Influence of product -> service 0

Influence of cheap labor 0

3 4

Influence of efficiency 7

LiDS wheel strategy 7 (end of life) No information between BPSEM 39 and LiDS strategy 7 has been found. On the following page, some schemes will show how every BPSEM influenced the LiDS wheel, the black arrows show the relative evolution for the respective LiDS strategy, an increase means the product is more sustainable, since no quantitative information is obtained, and some information was lacking, this is a subjective presentation. It is important here that the influence of certain strategies are researched, and not the whole product or service.

But also by understanding better the conditions it has to work in (also BPSEM 24, 25)

Influence of functionality

3 4

LiDS wheel

3 4

Comparisons made between different strategies

3 4

1.9 Case2: A battery charging system for youngsters

Influence of local research

Influence of local materials

3 4

1.8 Conclusions: Not always all the opportunities and threats are caused because of the respective BPSEMs, for example only a positive correlation between 3 of the LiDS strategies and cooperation with NGOs is found. • Influence of local research had a negative influence on LiDS strategy, this was not predicted from the theory.

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• Because of the aplication of the BPSEMs the Chulha oven resulted in an improvement of LiDS strategies 0,1,2,3,4,5 and 6

Energy has a strong link with poverty reduction; unfortunately about one third of the world’s population does not have access to electricity and deals with expensive, alternative energy sources. Standardized batteries form a low investment for instant energy. Batteries are available worldwide, are cost-efficient and fit into many products, which makes them an interesting energy source. However, the disposable batteries that are currently used in Company Graduation date The Gambia are of very poor quality and leak hazardous, toxic NICE April 4, 2008 chemicals. This project. Offering a battery charging service with rechargeable AA- and AAA- sized batteries, would provide a low cost, sustainable solution. The battery charger is a product in a network of multidisciplinary,solar powered shops called NICE. these shops offer Internet, education and a mini-cinema, and are set up in The Gambia In this project there is focused on the youngsters, they are the biggest group of potential users and they are very trend sensitive If we analyse this project more in detail we can conclude that

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and care much about their image. NICE batteries can add to their appearance as being a high quality and popular product. (kandachar,2009)

A rendering of the design; the left side is for AA batteries and the right side for AAA batteries.

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• This graphics are a presentation and aren’t based on quantitative information, needed to measure the real Ecoimpact, for this purpose a life cycle assessment needs to be executed.

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• A lot of BPSEMs are related to each other which makes it difficult to detect which BPSEMs is causing the Eco-impact.

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Comparisons made between different strategies

BPSEMs can be related to this design, including: 5 Focus on functionality By offering rechargeable batteries the price can be lower than the disposable batteries while offering a better result. Sharing (of the charger) improves the price performance and the battery is used as a status symbol and subscription for the service. “The system assures users a cost advantage within 1.5 months, because the charging fee is 30% lower than the cheapest batteries available in The Gambia. It is projected that profit is generated for NICE within a year.” (kandachar,2009)

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LiDS wheel strategy 0 (Functionality) It causes the shared use of the charger and the solar panels. this falls also under the sub strategy of shared use

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LiDS wheel strategy 3,5,6,7 No correlation found LiDS wheel strategy 4 (distribution) Scaling would imply using more transportation and this will probably increase the CO2 emissions 17 The change from product to service: Instead of selling the batteries the charging is charged and the battery is just an initial membership cost. LiDS wheel strategy 0 (Functionality) Switching from product to service is a sub strategy of functionality.

LiDS wheel strategy 5 (Impact during use) Better quality batteries, that don’t leak toxic waste are used.

LiDS wheel strategy 2 (Less materials) The charger demands some extra material, but because of reusing the batteries, the use of hazardous material is reduced a lot.

LiDS wheel strategy 6 (Impact during use) f you compare it to the traditional cheap batteries the lifetime of the rechargeable batteries can be between 100 and 1000 times ( amount of charges rechargeable batteries)

LiDS wheel strategy 6 (Initial lifetime) similar to BPSEM 5

12 Scale of operations “With a growing population of nearly 2.8% per year, this group forms a rapidly growing market segment.” (kandachar,2009) LiDS wheel strategy 2 (less materials) If compared to not fulfilling the demand it is obvious that scaling is negatively correlated with this LiDS strategy, but comparing to the customer using the traditional batteries this can mean a big positive correlation

LiDS wheel strategy 7 (End of life) Because the batteries always need to be brought back, the Batteries are all collected in the store where they can be picked up to be recycled. It was not clear from the literature if this is done. But it offers opportunities which can result in collecting a bigger percentage of disposed batteries than in the developed countries, since here the consumer doesn’t win nothing with doing the effort of bringing them to the battery collection point.

Comparisons made between different strategies

28 Greenfield innovation and technology jump Because 70% of population doesn’t have access to electricity, the infrastructure didn’t allow to depend on the existing infrastructure. Therefore solar power is used to charge the batteries. (kandachar,2009)

Influence of Scale of operation

Influence of functionality 0

LiDS wheel strategy 1 (Low impact materials) no relation have been found. 5

LiDS wheel strategy 5 (Impact during use) The batteries are charged with green energy. 39 Local usability research: Local research revealed that youngsters are the best target group, that they are trend sensitive and that registration is unwanted by costumers.Furthermore useability research has been executed. LiDS wheel strategy 0 (Functionality) Enhancing of the function to status symbol.

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LiDS wheel strategy 6 (Initial lifetime) A consumer-product relation is created which is a sub strategy of LiDS wheel strategy 6 as mentioned by D4S

Influence of product ->Service 0 7

Influence of techn. jump 0 7

LiDS wheel strategy 1,2,3,5,7 No relation has been found LiDS wheel strategy 4 (Distribution) Research to local shops has been executed: The battery are lent by a chain of shops, they can also be charged in another shop. This means a significantly difference from having to transport disposable batteries all the time.

3 4

Influence of Local research 0 1

“NICE” battery: Green Traditional battery: Red 5

3 4

Comparisons made between different strategies

1.10 Conclusions: • Not always all the opportunities and threats are caused because of the respective BPSEMs. • Influence of local research had a negative influence on LiDS strategy, this was not predicted from the theory. • Because of the aplication of the BPSEMs the Nice batteries resulted in an improvement of LiDS strategies 0,2,5 and 6 • LiDS strategy 12 scale of operation had also a good influence on LiDS strategy 2, this was not expected, this is because the use of the nice batteries will result in less use of the traditional batteries which have a worse impact on LiDS strategy 2

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1.11 Case 3: One laptop per child

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The non-profit One Laptop Per Child foundation (OLPC) [1], founded in 2005, designed and manufactured the “$100 laptop”, otherwise known as the XO. The XO laptops are rugged, low-cost, and low-energy laptops designed for children living in underprivileged and developing regions of the world. The goal of the OLPC foundation is to provide “one laptop per child” so that all children have access to educational technology and resources. Backed by several sponsor organizations such as AMD, Google, and Red Hat, and supported by many open-source developers, OLPC finished construction of the XO in July of 2007 and began distribution in November. Since then, over 500,000 laptops have been distributed to countries worldwide. Initial reception to the XO in developing regions has been positive, however certain limitations have been observed. (Burnside et al., 2008)

12 Scale of operations The project has as goal to provide every child a computer, this means an immense scaling.Their goal is: “to create educational opportunities for the world’s poorest children by providing each child with a rugged, low-cost, low-power, connected laptop with content and software designed for collaborative, joyful, selfempowered learning.” (official website OLPC) Scaling is necessary to decrease the price: “Cost considerations also prevented device customization, and constrained manufacturers to building a single version of a device, rather than a suite of products the current price of the device is about US$208, but is expected to decrease with volume.” (pal et al.,2009) The OLPC approach of selling in huge quantities (orders for one million or more pieces) is good for cost reduction, but seems

If we analyse this project more in detail we can see that some BPSEMs are aplicated including:

Comparisons made between different strategies

to be better suited for countries with a comparatively more centralized decision-making process on large state purchases. (Patra et al, 2008) LiDS wheel strategy 2 (Less material) It is obvious that this results in an increase of material use, since millions who wouldn’t be able to afford a laptop are receiving a laptop now. The fact that the goal is to give every child a laptop instead of sharing, even enlarges this problem. Also the environmental benefits are greater as second hand PCs are reused. LiDS wheel strategy 3 (Production) In the case of XO laptops, the environmental impacts of the laptop production, eat up all the benefits which are achieved by low energy use during usage period, and recycling at end of life. (Böni, 2008)

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LiDS wheel strategy 4 (Distribution) The laptops are not locally produced and scaling up implies an increase of CO2 emissions because of the transportation: “The targeted supply is achieved by purchasing ‘XO laptops’. They are provided as fully assembled products to Colombia.” (Böni, 2008)

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LiDS wheel strategy 5 (Impact during use) although This laptop is considered to be one of the most energy efficient laptops, it is obvious that scaling up and providing everybody an individual laptop will increase energy use. Besides if it always get recharged manually. LiDS wheel strategy 6 (initial lifetime) No relation has been found between the initial lifetime and

scaling up production. LiDS wheel strategy 7 (End of life) “XO is also non-toxic and fully recyclable. We are planning a full take-back program. In other words: these machines are not destined for landfills at the end of their approximate 5 year lifetime. 2.5X the lifetime of a typical laptop.“ (OLCP) Although they can be recycled scaling up will still lead to an increase of CO2, especially since they want to make the computer individual. 23,24 Robust products Considering everything from extreme environmental conditions such as high heat and humidity, and it is also designed to be robust enough for kids. (pal et al.,2009) LiDS wheel strategy 6 (Initial lifetime) According to Mr. Negroponte the laptop can be drowned and it can endure dust, heat. This can cause a longer lifetime in harsh conditions. The 100 dollar computers have a lifespan of 5 years, which is longer than the average laptop (Böni, 2008) 28 Greenfield innovation and technology jump Because the computer needs to be used in areas where no electricity is available , new technology is used to devoure low power and it can be recharged manually: “There is no hard disk, but a 1 GB flash memory. A dual-mode SVGA LCD screen (Monochrome and Colour mode) helps saving power” (pal et al.,2009) The battery has an autonomy of 10-12 hours. Furthermore they make use of open source technologies and the Wifi antenna has a 2-3 times better range

Comparisons made between different strategies

LiDS wheel strategy 1 (Low impact materials) No relation has been found LiDS wheel strategy 5 (Impact during use) The laptop uses a lot less energy and it can be recharged by using human labor. 39 Local usability research: Field research has been executed and these specifications were realized: “According to Mr. Negroponte, kids, even these who have never seen electricity, start knowing how to use the device in 3 minutes, although some critism has been made about this statement.” (interview Negroponte) “It has two modes — color and black and white. The black-andwhite mode consumes very little energy and has an extremely high resolution that makes for easy reading, even in sunlight”. (Young, 2005)

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“By using two batteries, users can also insert a hand-cranked charging device to recharge the machine on the go. Mr. Negroponte said he hoped the laptop would run at least 10 minutes for each minute of cranking. That means students will get a physical workout while using the machines, but they will be truly wireless and portable.” (Young, 2005)

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But there is also some critism related to this topic: tive. “Cost considerations also prevented device customization, and constrained manufacturers to building a single version of a device, rather than a suite of products. For example, you can buy only one conaguration of the OLPC” (pal et al.,2009)

“Some design decisions, while optimized for a certain group of users, could end up defeating a product’s appeal for a general audience... This was the case with features of the Simputer and perhaps the keyboards of the OLPC or Classmate, which are quite optimal for young children, but a difacult sell for adults or other potential buyers of the otherwise powerful devices.” (pal et al.,2009) LiDS wheel strategy 0 (Functionality) No clear correlation between this LiDS strategy caused by local usability research has been found, although if we look at the discussion whether every child needs a laptop, some research stated that some other projects would be more sustainable. “Using field studies and interviews conducted in rural Indian classrooms, we show that shared rather than single-user devices constitute a more realistic and sustainable approach for lowcost computing projects targeting children’s education” (pal et al.,2009) “The shared-computer use model that we propose here may not have the best case beneats of an ideal “laptops for all” scenario, but our argument is that it is not feasible to think of the former” pal et al.,2009) In this case a decrease of functionality also leads to a decrease on ecologica impact, since the education process doesn’t improve while the ec impact does. (reverse of the sub strategy of shared use) LiDS wheel strategy 1,2,3,4 No literature mentions local research in any of these strategies,

Comparisons made between different strategies

Because only 1 model of the OLPC would be scaled over the whole world, probably no local research has been held in this categories LiDS wheel strategy 5 (Impact during use) Some results coming from local research leaded to a less energy devouring computer that can be researched manually, this has a positive influence of the sub strategy of decreasing energy use, mentioned by D4S. LiDS wheel strategy 6 (Initial lifetime) Because of local research, local specifications have been made in relation to which conditions the computer have to endure, leading to a computer that has a lifespan of 5 years, this is related to the BPSEM of robust products.

This means that if the product gets implemented, competition in this market is nearly impossible. “The least sustainable scenario is ‘XO laptop’. Both scenarios do not, or only little, benefit local human resources. The local economy is involved only partly and none of the solutions create considerable employment” (Böni, 2008) Influence on all the LiDS strategies Although OLPC claims that their laptop is very environmental friendly, Some studies prooved that it might not always be the most sustainable solution, and the strategy they are using may discourage other companies to come up with more sustainable solutions (as for example shared solutions)

LiDS wheel strategy 7 (End of life) No local research about the disposal of the products has been found but there was stated that OLPC will conduct a full take -back program, if they want to execute this, local research will have to held on how the customers dispose non functioning products, although no literature to underpin this statement is found.

Analyze

49 Obtaining monopoly We can’t really speak about obtaining a monoploy but Mr. Negroponte is lobbying with governments to buy large amounts of his laptop and to implement his project.

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“The OLPC approach of selling in huge quantities (orders for one million or more pieces) is good for cost reduction, but seems to be better suited for countries with a comparatively more centralized decision-making process on large state purchases” (Patra et al, 2008)

Comparisons made between different strategies

Influence of Robust products

Influence of scale of operations 0 7

Influence of Local usability 0

Influence of greenfield inn. 0 7

3 4

Influence of monopoly

Analyze

OLPC project Current situation 2

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• This case shows an example how not executing a certain strategy can decrease environmental sustainability. Not recognizing the functionalities in a right way (by offering every child a laptop), means higher costs and a higher ecological impact, while the social benefits don’t seem to raise a lot. • The comparisson is made between the situation how it is today, no computers are used. Allhtough there is a difference in fulfilling the needs, according to the project the computers fulfill the need of education, which is a very important need . But there be discussed if using this computers is the best solutions, and if every child need a computer for that. Some studies argue that the costs of giving every student a laptop don’t justify the benefits. • We can’t make an overal Eco assessment since only certain strategies have been addressed, but we can conclude that some choices made in the design process leaded to a big ecological impact, especially the scaling aspect, also leading to trying to obtain a monopoly, is an important issue. • many BPSEMs haven’t been addressed in this project leading to some missed opportunities, for ex.: “The local economy is involved only partly and none of the solutions create considerable employment” (Böni, 2008)

0 7

1.12 Conclusions:

3 4

Comparisons made between different strategies

2. Comparisons made on the level of the BoP principles. To compare on the level of the BoP principles, a count of the amount of times certain LiDS strategies are positive and negative influenced is executed. The tables can be found in the attachment chapter pg.92 The conclusions that can be made interpreting this counts are limited since these numbers depend on how many business LiDS strategies are representing the BoP principles, which alterates, since the BoP principles have a different level of abstractness towards each other. Therefore the amount of counts won’t be discussed in details, but the focus will lay on which LiDS strategies are addressed in every BoP principle in a positive and negative way, and outliers will be discussed focusing on the qualitative information. Although real outliers (alpha 5%) were very scarce. (see pg. 92)

Analyze

Identifying Functionality Identify functionality positively influences LiDS strategy 0 (functionality) and LiDS strategy 6 (improving the initial lifetime). The LiDS strategy 6 is logical in the way that improve functionality and doing research about the market, can lead to a better product costumer relationship, and can avoid products used for other applications than they are made for. No negative influences are found.

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Price performance The BPSEM related to price performance have mainly a positive influence on LiDS strategies 0 and 5 (functionality and reduce impact during use) Efficiency and cheap energy sources (in the BoP often labor) are the main issues discussed in this topic. It causes threat on the LiDS strategies 2 and 4, this has to see with the small packages, smaller packages mean more waste

and smaller doses and distribution needs to happen more often since many local stores aren’t able to buy in a big scale. Scale of operations The only reason Scale of operations also has a positive impact on some LiDS strategies ( functionality and lifetime) is because the cooperation with NGOs is included in this topic. Besides this principle only a negative impact on LiDS strategies 2-7 are remarked. Scaling of production can be considered a threat for the environment. Process innovation Only positive influences have been found, and they are more or less equally divided. This is logical since process innovation is a broad term including many aspects of the product’s life cycle. Designing for Hostile Infrastructure Designing for a hostile infrastructure can have a positive influence on LiDS strategy 6. (optimizing initial lifetime) Hybrid solutions The topic hybrid solutions might have a positive impact on all of the LiDS strategies besides strategy 0 and 2 (functionality and reduction materials usage) The LiDS strategy 5 (impact during use) is addressed every time, This is so because this topic is related with in which conditions the product has to work. Distribution innovation Distribution innovation can have a positive influence on LiDS strategy 4, and also 1 threat is remarked (optimizing distribution channels)

Comparisons made between different strategies

Education of Customers The impact during use might be an outlier here, although result are poor analyzing the education/marketing. We might say this topic goes beyond the LiDS strategies. No LiDS strategies were addressed with the channels of education and besides the one count of the BPSEM “reducing mistrust in MNCs”, only LiDS strategy 5,6 are addressed. 1 other has also be mentioned here, this is the BPSEM 43 “Marketing-education” which also offers opportunities for Eco design but doesn’t fit in any LiDS Strategy. This means the BPSEM go beyond the scoop of the LiDS wheel strategies.

Challenge the Conventional Wisdom in Delivery of Products and Services This is a more broad topic and it can influence all of the LiDS strategies in a positive way. This topic included the radical rethinking of products and the shared decision making, that might happen in the emerging markets context. This topic can influence all of the other BoP principles and it is the starting point of the author on why designing for the emerging markets can cause opportunities for Eco -design. The important fact here is that designing for the emerging markets triggers the companies to rethink conventional paradigms.

Analyze

Interfaces Interface innovation may have a positive impact on LiDS strategies 5 and 6, the impact during use and the optimization of end of life. The limited range of strategies is addressed is understandable since this principle is more specific than other BoP principles.

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Deskilling of Work Deskilling of work can positively influence all of the LiDS strategies because it contains the BPSEM “local usability” where adapting to the culture gives broader character to this term. The main focus in this topic in “the fortune of the bottom of the pyramid” lays within the skills of the customer and there may be argued that therefore the influence to the LiDS wheels may be similar to these of usability. But in our diagram we also included “the use of the skills of the employees”, which influences LiDS strategy 3 (optimizing production) REGULATORY ENVIRONMENT Regulatory environment is not a BoP principle and will be addressed in the chapter about the UNDP solutions.

Comparisons made between different strategies

3. Comparisons made on the level of the UNDP issues The same methodology is used to evaluate on the level of the UNDP issues, no outliers are found and the tables can be found at pg. 95 (Attachment) 1 Market information (25%) (6 counts) Obtaining market information can influence LiDS strategy 0 and 6 (functionality and optimize initiate lifetime). This issue contains the same BSPEM as the BoP principle “Detect functionality” and has thus the same outcome. 2 Access to financial services. (44%) (33 - 8 counts) All LiDS strategies can experience a positive influence from the BPSEMs related to obtain access to financial services. The most counts were measured for the LiDS strategies of “optimize functionality”, “reduce impacte during use” and “optimize initial lifetime”. These strategies seems to be more connected to price performance.This can be understood from the fact that efficiency causes as wel an economical as ecological advantages, especially on these LiDS strategies.

Analyze

The negative aspect are caused by scaling the production and smaller packages. these are the threats that are connected to price performance.

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a high correlation because of the lack of infrastructure, which forces MNCs to find alternative sources of energy and optimize distribution is highly addressed since distribution is highly correlated with the physical infrastructure. 4. Knowledge and skills (79%) (24 counts) Knowledge and skills seem to be the issue MNCs are experiencing the most. Although the BPSEMs offer opportunities for all of the LiDS strategies the most counted are clearly the impact during use and optimize initial lifetime. This can be explained because many of the BPSEMs are related to usability in this topic, which is most correlated with these LiDS strategies. 5 Regulatory environment (25%) (32-16 counts) This topic is situated on another level of abstractness and thus has an influence on all of the LiDS Strategies in an equal way. Regulations and the right enforcement of the regulations could cause very drastic changes in the Eco impact of products, as well in the emerged as the emerging markets. But unfortunetaly this seems not to happen, especially not in the emerging markets. Therefore the regulatory environment are considered to be negative correlated to the LiDS strategies. The positive counts are all related to CSR and gaining trust of the local population/leaders.

3 Physical infrastructure (25%) (35 counts) All LiDS strategies can be positively influenced by the BPSEMs related to Physical infrastructure. The most addressed LiDS strategies are optimize distribution, impact during use and optimize initial lifetime. 20 of the 53 BPSEMs are related to the issue of Physical infrastructure. Optimize initial lifetime is important since products often have to bare and function in a very different geographicall situation. Impact during use shows

Comparisons made between different strategies

4. Comparisons made on the level of the UNDP Solutions The same methodology is used to evaluate on the level of the UNDP issues, no outliers are found and the tables can be found at pg. 97 (Attachment) Adapt processes and products 44% (23) Adapting processes and products leads to opportunities for all of the LiDS strategies, and the most BPSEMs influencing positively strategy 5 and 6 (impact during use and optimize Initial lifetime) with 11 and 10 links of the 23 BPSEMs. This solution includes the BPSEMs of scaling and smaller packages. Which might be severe threats for the environment.

calls for a LiDS strategy are 3 and thus itâ&#x20AC;&#x2122;s hard to make comparisons, since this UNDP solution is only related to 8 BPSEMs. Most of these BPSEMs are related to the use of local labour and extra services linked to the goods (as collective payments...). Combine resources and capabilities 65% (8) All the LiDS strategy are influenced positively by 4 or 5 BPSEMs related to resources and capabilities. There are no negative correlations found but 1 of the BPSEMs offered as well opportunities as threat (investing in infrastructure.) Most of the BPSEMs involved with this topic are related to networking and co-creation with civil society.

Invest in removing market constraints 60% (9) Investing in removing markets contraints is related to 9 BPSEMs. All the LiDS strategies are positively influenced by the BPSEMs and their are no outliers between the counts. A lot of the BPSEMs in this topic are related to CSR which influence all of the LiDS strategies. The other ones are related with research.

Analyze

Engage in policy dialogue with government 25% (5) All of the BPSEMs can have influence on all of the LiDS strategies. This is because the level of abstractness is different and laws and regulations and a part of CSR are integrated in this topic, both important drivers for Eco design.

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Leverage the strength of poor constraints 42% (8) LiDS strategies 1 and 2 (reduction impact materials and reduction use of materials) arenâ&#x20AC;&#x2122;t addressed by any BPSEMS in this topic. There are also no negative correlations found. The maximum

Comparisons made between different strategies

CONCLUSIONS “Do not go where the path may lead, go instead where there is no path and leave a trail.” Ralph Waldo Emerson

Jente Minne - New products planning

- 2009-2010

1. General conclusions made based on the previous analysis - The peculiarities designing for the emerging markets contain offer opportunities and threat for Eco-design, more specific, positive or negative correlations can be found between most of the BPSEMs and the LiDS strategies. - Radical ecological innovation is needed if we also want to develop the emerging markets, The depletation of the raw materials and the ecological footprint of human being aren’t sustainable and the emerging markets and the BoP represent a market of 4 billion persons. Furthermore the BoP and the emerging markets are suffering the most from the ecological crisis .

Conclusions

- The economical crisis followed by the period will force MNCs to apply radical innovation, a separation has been made between entering new/forgotten markets and applying radical ecological innovation. The importance in doing both has been argued from the easier adoption of radical innovative products in the emerging markets compared to the emerged/ saturated markets.

- A cluster on content is made, and in general, the strategies that are likely to have the most potential to improve sustainability ecological, economical and social) issues while designing for the emerging markets are: • Partnerships/ co-creation with Civil society • Functionality • The use of local resources • Greenfield innovation • Ownerships/ usability research • Corporate social responsibility

- The strategies that are most likely to cause threats for for the environment are: • Scale of operations • Recognizing and adapting to other regulations and the lack of enforcement of regulations - Especially “scale of operations” seems to be the biggest treath, designing for the emerging markets by MNCs, works through the ideology of rapid growth by obtaining small profit margins on very high volume. This is in contradiction with the meaning of many environmentalists which believe in lower consumption and slower economical growth as inevitable to become sustainable. - The cluster on content is compared to a cluster made on correlations with similar LiDS strategies. The clusters were different from the ones made based on content. The reasons for this difference are mentioned in the “Analyse” chapter - A few cases have given us an insight on how certain BPSEMs can lead to more ecological sustainable design, or which Eco pitfalls need to be avoided. It demonstrates how the theoretical model can work in practise. Although the cases revealed a few contradictions in the theoretical model, which emphasises the importance on executing the research model in more concrete context. (target group and geographically more defined). - The few cases also show how the lids wheel can be used in the decision making process in combination with the BPSEMs, if we apply this BPSEM, how will it influence the ecological sustainability of the project and Do we obtain a win-win situation?

Conclusions

- Very few outliers have been found on the level of the BoP principles and no outliers have been found on the level of the UNDP issues and solutions, quantification of the correlation between de BPSEMs and the LiDS strategies might foster more results on these levels. - Many different BoP and emerging markets information is used and terms tend to be mixed up, BoP information might be also applicable on the emerging markets and income isn’t the only parameter on defining which rules may be applicable. This study showed that in general similar issues are recognized in the different lower income classes but local research is necessary to know which of the BPSEMs, UNDP solutions or BoP principles might be useful for a certain project. - Only a few negative aspects have been defined in this project, although a lot of environtmental issues have to be overcome when designing for the emering markets. An explaination why so few are found is given in the discussion chapter.

Conclusions

- Very few links between the LiDS wheel strategies and marketing/ education were found and some of the Eco opportunities this topic offers didn’t fit in any of the LiDS strategies, this means that the LiDS strategies don’t fully cover the whole field of Eco-design, ignoring the aspect of having an impact on consumer’s behavior.

General conclusions extracted from the project.

DISCUSSION â&#x20AC;&#x153;Pollution is nothing but the resources we are not harvesting. We allow them to disperse because we've been ignorant of their value.â&#x20AC;? Richard Fuller

Jente Minne - New products planning

- 2009-2010

1.Discussion about the research project This project is situated in a relative new topic of ecologically designing for the emerging markets, from the point of view of the MNCs, this means that this project was in a way explorative. It was a quest to define the right words, understand the differences and similarities in different terminologies and finding a the right level of abstractness. Some critics that might be mentioned on the project: • The author decided to make a checklist of possible BPSEMs that might be aplicable when designing for the emerging markets. This means the scope of the project is very broad and the author was limited in time and resources. Therefore some of the BPSEMs might not have received the attention they diserve.

Discussion

• The author mentioned the BPSEMs that have the most potention, and further research related to specific regions and more defined income classes might have to take place. In the recommendations for further research these topics will be addressed.

• There are very few negative influences found, this can be understood since the Eco opportunities and threat are derived from design principles. In this way threat are often turned into opportunities. For example the infrastructural problems for recycling is turned into the positive BPSEM of investing in infrastructure or use local labor for recycling. Of course not all of the BPSEMs will always be followed and thus the develpment of the emerging markets will result in serious threat for the environment

• Hard to distract conclusions from UNDP isues solutions and BoP principles, The validity of the counts my be questioned since some topics (as local labor) are more represented than other solutions. Also some BPSEMs will have a lot more influence on as well Eco design as designing for the emerging markets, and some BPSEMs are more abstract than others (smaller packages ft recognize other restrictions and laws). Therefore no direct conclusions are extracted from the counts, which undermined the potential of the project. Quantifying the correlations between the BPSEMs and the LiDS strategies might foster more conclusions on these levels, but therefore the project needs to be defined more geographically.Here the methodology presented in this project can be used to extract interesting information, on different levels of abstractness. The author didn’t have the time and resources to focus on 1 certain region, since literature about this topis is very scarce. According to the author the good aspects of the research were: • The broad scope allowed the author to understand different points of views and to make links between development aid institutions, NGOs and the business world as well as Eco philosophies from C2C to permaculture (which reject the capitalistic/ Global way of living) • A list of 53 more concrete design rules is created which can be useful for everybody who wants to design for the emerging markets, local research might be necessary to understand which BPSEMs are applicable but it is a decent checklist. • A methodology of researching about this topic is presented with further recommendations.

Discussion

• The project is underpinned with literature about designing for the emerging markets and about ecology from a high quality and verificate by specialists in Eco design and development aid. • More information about the cases was desired, another technique of obtaining the information like in depth interviews might be proper.

2. Is designing for the emerging markets going to save the world? - Nearly all of the examples given in designing for the emerging markets are for people with more than 2 dollars PPP, the poorest 1 billion don’t have any disposable income, and are still ignored MNCs. Furthermore often political instability, war, or demografic specifications dificult implementation of services and products in these areas (Collier P, 2009)

Who can benefit this project Institutions: Recommendations for further research has been created and a list of busines plan principles for designing for the emerging markets, which are illustrated by some inspiring cases. This can help collegues who are interested in designing for the emerging markets or who want to do research about this topic, as well as institutions who are involved with doing research about the emerging markets.

Discussion

NGOs: NGOs who are designing products with the emerging markets, or who are co-creating with MNCs can use this work as a base for further research, which BPSEMs might be crucial to focus on to also obtain ecological innovation.

CSR companies: Companies that want to use green design as a strategical choise, can use this research project as a base for further research or can be inspired by the cases used in this project

- Humanitarian help, which is expected to become a bigger part of the development aid, isn’t included in this topic. Expected is that the increase of ecological disasters will Increase the importance and share in the development aid. - One of the maior issues of sustainability is the overpopulation, this topic goes beyond the scope of this project, (Holmgren, 2007) Design projects that increase peoples life expectation can be a treath for the ecologica sustainability. - Only a few threats have been recognized because of the approach the author used, although the threats that are recognized can have a big impact. - The model shows how a positive correlation with the LiDS wheel strategies can be obtained by applying certain BPSEMs, there has to be understood that not applying some BPSEMs or applying them in another way can cause threats also. (like in the case of the OLPC). The examples of sustainable products and services (for the emerging markets) are scarce. - Institutions as the UNDP argue that sustainable development of the poor can only be acheived by a cooperation of many

Discussion and recommendations for further research

institutions:

other laws and restrictions and obtaining a monopoly position.

â&#x20AC;&#x153;Eradicating extreme poverty continues to be one of the main challenges of our time, and is a major concern of the international community. Ending this scourge will require the combined efforts of all, governments, civil society organizations and the private sector, in the context of a stronger and more effective global partnership for development.â&#x20AC;? (United Nations Secretary-General BAN Ki-moon)

Research on how to measure customer behavior change, and implementing in the Eco Lids wheel, might be an interesting topic to do a research project on. The influence of marketing and education on the Eco impact is not addressed in the LiDS wheel technique.

3. Further recommendations The 53 BPSEMs can be tested on project of students, or other cases, designing for the emerging markets, observations can foster inside on how this checklist will help students.

Further research on which conditions encourage the use of which BPSEMs and which BPSEMs are most commonly used can be a good addition, for the methodology ,the authore refers to the study of the UNDP where was measured which UNDP issue is addressed with which UNDP strategy, This would allow to find the correlation with more concrete guidelines.

The methodology used in this project can be used to measure the influence of the BPSEMs on the LiDS strategies in a more defined contex. In this way the correlation might be quantified which can lead to more satisfying results on the level of the BoP principles, the UNDP issues and the UNDP solutions

Discussion

A full research project on applying the theoretic model to cases, can be executed to evaluate how correct and complete the assumptions made are. The cases used in this research project can be analyzed further using in depth interviews.

More research can be done on the topics that are considered to be the most influencial: partnerships with civil society, using local usability research, applying CSR, changing from short to long term planning, eliminating mistrust, applying radical innovation, recognizing

Discussion and recommendations for further research

REFERENCES Let a hundred flowers bloom, let a hundred schools of thought contend. Mao Tse-Tung

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- 2009-2010

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Rethinking Multinational Corporations’ Strategies. United Nations University-MERIT. Available at: http://www.merit.unu.edu/ publications/wppdf/2008/wp2008-024.pdf Samyuktha, K.,2009. Indian Culture is an Eco-friendly culture. available at: http://news.oneindia.in/feature/2009/indianculture-is-an-Eco-friendly-culture.html Seldman,N,2003. The New Recycling Movement Part 2. Recycling as Necessary But Not Sufficient for a Sustainable Industrial economy available at: http://www.ilsr.org/recycling/ newmovement2.html Work - Human Centered Design Toolkit - IDEO. Available at: http:// www.ideo.com/work/item/human-centered-designtoolkit/ [Bezocht November 10, 2009]. Simanis, e.a., (2005). Strategic Initiatives at the Base of the Pyramid: A protocol for mutual value creation (Version 1.0). Racine, WI. www.bop-protocol.org. Thompson, J.D. & MacMillan, I.C., Business Models: Creating New Markets and Societal Wealth. Long Range Planning, In Press, Corrected Proof. Available at: http://www.sciencedirect.com/ science/article/B6V6K-4Y3KVBG-1/2/4599bfd60ae877e6a45d5f5 a17a01a9c [Bezocht Maart 25, 2010].

International conference,(pp.221-226).Salzburg. • Weber, M., 2008. The business case for corporate social responsibility: A company-level measurement approach for CSR. European Management Journal, 26(4), 247-261. • WCED. 1987. Our common future.londen: Oxford University Press,World commission on Environment and development.World Wildlife Fund Intenational.(2008).Living Planet Report.Gland.

References

• Unknown, Lecture BTC november 2009, “setting up micro projects in Bolivia”

• Unknown,2009. United Nations Development Programme Annual Report 2009. Available at: http://www.UNDP.org/publications/ annualreport2009/pdf/EN_FINAL.pdf • Unknown,2006. Consumers International STRATEGIC PLAN FOR 2007–2011 Available at: http://www.consumersinternational.org/ Templates/Internal.asp?NodeID=95997 • Verhulst,E.,& Baelus.C.,2006.Implementation of an Ecoefficiency Approah into the Methodology roadmap for integrated product development.Educating designers for a global context? Proceedings of the 4th Engineering&productdesign education

Literature used in this research project

ATTACHMENT If you find a good solution and become attached to it, the solution may become your next problem.â&#x20AC;? Robert Anthony

Jente Minne - New products planning

- 2009-2010

1. The different paths that are followed to link the BoP characteristics The path shows how the researcher has tried to link several sources of information. First the paths are described and from pg101 the tables can be found, probably it’s necessary to see the tables to understand the text below

Gray path: UNDP issues -UN low income characteristics BoP principles (See A3 pages)

The link between the UN low income markets and the BoP innovation principles can be made in a similar way. 2 BoP principles have been split up, because they belong in various categories, although this split is clear, without overlap.

Attachment

The gray path makes the link between the UNDP issues, the UN low income market characteristics and the BoP (innovation) principles. An A3 sized table with all the information about this can be found on pg101. The link between the UNDP issues and the UN low income market characteristics is made by comparing the descriptions

given in the literature. In general, a full overlap was generated and thus it was easy to proof the link. The topic “market information” needed to be divided over low purchase power, which mentions detecting other functions and dispersed markets, which lays the focus on the fact that products need to be scaled over cultures and borders, and this can also influence the information the company needs. For the UNDP issue of regulatory environment, no UN low income market characteristic could be found. The UN paper mentioned political instability as a characteristic, which falls under this issue, but it is just a small part of the a lot broader issue of regulatory environment.

100 100

Extra information about the topics in the file

Process innovation is split up in “making the process more affordable” (belonging to “low purchase power”) and “suit the infrastructure” (belonging to “the bad infrastructure” characteristic). Education can be split up in the organization and channels (belonging to “dispersed markets”) and the content of the education programs (belonging to the “lower skills” topic) Also 2 BoP principles couldn’t be placed in one of the topics. The first one is new challenges, which is more abstract, and can fit to all the BoP issues and low income characteristics. The latter is Eco friendly which isn’t addressed in the UNDP issues and the UN characteristics. It won’t be used in the comparison with the LiDS wheel strategies, since it fully overlaps with all the LiDS strategies (Other abstraction level). There is no BoP principle found that is related to the regulatory environment issue.

Attachment

Black path: UNDP issues - BoP innovation principles

101 101

In this path the direct link between the UNDP issues and the BoP principles is made, this happens with the same methodology as used in the gray path. Like with the “UN strategies” the same division needed to be made for “process innovation” and “education/ marketing innovation”. Detailed information about the links can be found in the table pg 104, where a separate column explains for every topic the link. The table of the gray path is also a check of the consistency of the way the BoP principles are divided over the UNDP issues. There has to be noted that no BoP principles were found about dealing with the regulatory environment, although this issues has been addressed in ‘the fortune of the bottom of the pyramid”, a chapter is dedicated in the book but it can be

found back in his BoP innovation principles. The “Eco friendly” BoP principle isn’t included in the table since it won’t be used in further research. The advantage of linking the UNDP issues to the BoP innovation principles, is that there might be a way of quantifying the importance of the BoP principles, since the issues are quantified. The percentages are based on 48 cases. The BoP innovation principles are less abstract and are therefore easier to compare with the LiDS strategies. Although they are still to abstract, and not complete enough, therefore a list business plan solutions for the emerging markets has been drawn.

Black path: BoP principles- Business plan solutions for the emerging markets? (BPSEM) After an extended literature research about entrepreneurship for the emerging markets, a list of more detailed business plan solutions for the emerging markets is made, based on 14 sources. The 53 obtained solutions were divided over the BoP innovation principles, or the UNDP issues; this is in the case of “regulatory environment”, because no BoP principles was found to cover this. Probably more BPSEMs can be found, and the literature about this topic is evolving very fast, but the author strived to obtain a list that is as complete as possible, yet still clear. These BPSEMs are more specified and can be directly compared with the LiDS strategies.

Extra information about the topics in the file

All the links between the BoP innovation principles/ UNDP issues and the BPSEMs are documented with References which also further define the solutions. These references will be used in the comparison with the LiDS strategies. It’s in important to understand that not all of the business principles are need to be used in every emerging markets context. The BPSEMs were also divided into the UNDP solutions categories (Different from the UNDP issues). This can also be interesting since they also contain percentages based on the same 48 cases. This can also be used to extract conclusions after the comparison with the LiDS strategies. The link between the Business solutions and the UNDP solutions are based on logics.

Black path: BPSEM - LiDS strategy All links with the LiDS strategies are documented and argued by scientific literature about ecological sustainability and ecological sustainability and designing for the emerging markets. (Chapter “execute”) Some BPSEMs didn’t match with any of the LiDS wheel strategies.

Other paths: MEI-BoP clustering-own clustering-Verhaert Green path, MEI matrix, Purple path and light blue path: These have been filled in according to the logics of the author, and are less scientifically substantiated than the other paths. It can be considered to be an exploration and it was used to detect the most useful BoP information to compare to the LiDS wheel strategies. Furthermore it was a check-up on the completeness of the BPSEMs. Since this is a list that is made by the author. The paths won’t be used in the further stages of the research, and thus more documentation isn’t provided Light blue path: Verhaert methodology By sorting the business plan principles over the different stages of design according to Verhaert, a match with a paper of Elli Verhulst was explored. In this papers she integrated an Eco design strategy in the methodology of Verhaert, and thus it could be interesting to see how BoP principles interact with this model. Although the level of abstractness between the business plan principles and the Eco strategies mentioned in this paper are too big to make an useful comparison. Source: Educating designers for a global context

Attachment

Orange path: BPSEM - UNDP solutions

102 102

This table can be found on pg.105. In this step the BPSEMs are linked to the UNDP solutions by using the description of the UNDP solutions and linking the similarities. This allows us to obtain a faster link to quantified information which may lead to conclusions on the importance of several BPSEMs based on their correlation with resolving issues.

Extra information about the topics in the file

The Gray path UNDP issues (BoP < 4 $ PPP) Access to financial services 44% - Lack access to credits, insurance products, and banking services. - Limits to the purchases - Can not protect their meager assets from events such as illness, drought, etc. Market information 25%

BOP innovation Principles (<2 $ PPP ???)

UN low income market Characteristics (Not specified)

Price performance

Low purchase power

- New price performance - Inform about price`

Unsteady income

Process innovation - Making affordable

Lack of access to credit

Scale of operations

Other functions

- Scale across geographies ?? - MNCs + NGOs

- The knowledge of businesses regarding the BoP

Identify functionality

- Look for anomalies <-> EM - Technical requirements

Distribution innovation

Market information 25% - What the poor need, what capabilities the poor can offer, etc.

Dispersed markets - More diverse cultural variety and geography - Lack of logistics infrastructure - Delivery distribution and service --> more difficult - Limited access to media

- Partnerships with large rural marketers, direct sale - Technology jump -> infrastructure

Fluctuating electricity Hostile environment

- The inadequate infrastructure

Access to repair facilities

Education

- Poor infrastructure for customer access - Collaborations NGOs/government, public organs - Mouth to mouth - Manifests, events

Distribution innovation

Bad infrastructure Physical infrastructure’ 25%

- Partnerships with large rural marketers, direct sale - Technology jump -> infrastructure

Process innovation

- Suit the infrastructure

Low degree penetration information and communication Limited transportation and logistics Major restrictions on the use of usual distribution models

Hybrid solutions

- Technology jump - Combined - infrastructure

Designing for hostile infrastructure Voltage fluctuations + interruptions - Hygiene problems (last step)

Interfaces

- First-time users of products and services - Small learning curve - Customized - Unusual habits

Knowledge and skills 79% - Illiterate and do not possess knowledge and skills - Availability and use - Inhibits them from starting their own businesses.

Lower skills - Illiteracy - Less experience technology intensive products - Lack of traditional channels for educating

Deskilling

- Illiteracy - Less knowledge electronic devices - Reducing the need for a complex technology

Education

- Innovation educational process - Poor infrastructure for customer access - Collaborations NGOs/government, schools - Mouth to mouth - Manifests, events

Regulatory environment’ 25% - The regulatory frameworks are under- or undeveloped in the BoP. - Enforcement of the existing rules is inadequate.

Political instability New challenges

Attachment

Other

- Break existing paradigms, BOP markets accept the most advanced technology easily. - Breaks ... BOP markets are not viable

Eco friendly

- Not be based on the same patterns of resource use,. - More innovative, sustainable solutions will increasingly emerge from serving the BOP Santosh Jagtap1 and Prabhu Kandachar (2008) + UNDP (gim_full_ agust..)

103

For the Full size scheme please check “A3 file pages”

Prahalad, C K and Hart, S L (2002)

Extra information about the topics in the file

The Black path

UNDP issues (BoP < 4 $ PPP) Market information 25% - The knowledge of businesses regarding the BoP - What the poor need, what capabilities the poor can offer, etc.

BOP innovation Principles (<2 $ PPP ???) Identify functionality

- Look for anomalies <-> EM - Technical requirements

Explanation

Like mentioned in the Market information field, it is necessary to identify what the poor need. Lack of access to credit and limits to the purchases cause that products have to be price performant, people with

Price performance

- New price performance - Inform about price`

limited money to spend will pay a lot more attention to get the maximum out of their small disposable income, Information to the customer is still seen as a big

Access to financial services 44% - Lack access to credits, insurance products, and banking services. - Limits to the purchases - Can not protect their meager assets from events such as illness, drought, etc.

externality which offers opportunities to companies. Because the return on investment has to be made on a smaller margin for each product, the product needs to be sold more. Like this products who are lot cheaper can still

Scale of operations - MNCs + NGOs

be profitable for the company, the lack of access to credit , and the small disposable income forces BoP companies to make profits and quantity, which is obtained by scaling the operations. In order to make the products a lot cheaper, the way

Process innovation - Making affordable

products and services are produced and offered to the customer has to be rethought In order to make the products and services working and

Process innovation

- Suit the infrastructure

accessible for the costumer, the process has to suit the

Designing for hostile infrastructure

The differences in infrastructure causes and hostile infrastructure for the products and services, these products and services have to be adapted to this specifications.

infrastructure, which is different from the TOP markets Voltage fluctuations + interruptions - Hygiene problems (last step)

Physical infrastructure’ 25% - The inadequate infrastructure

Distribution innovation

- Partnerships with large rural marketers, direct sale - Technology jump -> infrastructure

Hybrid solutions

- Technology jump - Combined - infrastructure

Education/marketing innovation

- Poor infrastructure for customer access - Collaborations NGOs/government, schools

For the Full size scheme please check “A3 file pages”

In order to fit the physical infrastructure the distribution has to be rethought, for ex.: In places were no roads are available, other ways of transportation have to be found to deliver the products.

Hybrid solutions means that the solutions takes infrastructure into count and thus is directly related to Physical infrastructure

The inclusion of education/ marketing in this section is only valid when we split up the education topic in two directions, the content and design of the education/ marketing belongs more to knowledge and skills, the paths (media) MNCs are using to spread their message is directly influenced by the Infrastructure of the market.

The red path

Attachment

The Black path

105

For the Full size scheme please check â&#x20AC;&#x153;A3 file pagesâ&#x20AC;?

Extra information about the topics in the file

2. Counts on the level of the BoP principles (Pg. 79) 1 MARKET INFORMATION 25%

Counts

counts

Red = Outlier (alpha 5%) A) detect functionality

C) Process innovation (more affordable)

Positive

0 Functionality

6 Initial lifetime

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

2 ACCESS TO FINANCIAL SERVICES 44% A) Price performance Positive 0 Functionality

5 Impact during use

6 Initial lifetime

3 PHYSICAL INFRASTRUCTURE 25% A) Process innovation (suit infrastructure)

Negative 2 Material usage

Positive

4 Distribution system

0 Functionality

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

B) Scale of operations

Attachment

Positive

106 106

0 Functionality

6 Initial lifetime

1 B) Designing for hostile infrastructure

Negative 2 Material usage

Positive 6 Optimization of initial lifetime

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Attachment

Counts on the level of the BoP principles C) Hybrid solutions

Counts

B) Deskilling

Counts

Red = Outlier (alpha 5%) Positive

Positive

1 Low impact materials

0 Functionality

3 Production techniques

1 Low impact materials

4 Distribution system

2 Material usage

5 Impact during use

3 Production techniques

6 Initial lifetime

4 Distribution system

7 End of life

5 Impact during use

6 Initial lifetime

7 End of life

D) Distribution innovation C) Education Positive 4 Distribution system

Positive 0 Functionality

Pos - Neg 4 Distribution system

E) Education No LiDS strategies 4. KNOWLEDGE AND SKILLS 79%

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

8 OTHER/educating customer

Attachment

A) Interfaces

107 107

Positive 5 Impact during use

6 Initial lifetime

Extra information about the topics in the file

Counts on the level of the BoP principles 5 REGULATORY ENVIRONMENT 25%

Counts

A) New challenges

Red = Outlier (alpha 5%) Positive

Positive

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

5 REGULATORY ENVIRONMENT 25% Negative 2

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Attachment

0 Functionality

108 108

Extra information about the topics in the file

3. Counts on the level of the UNDP issues (Pg. 81) 1 MARKET INFORMATION 25%

Counts

3 PHYSICAL INFRASTRUCTURE 25%

Counts

Positive 0 Functionality

Positive

6 Initial lifetime

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

2 ACCESS TO FINANCIAL SERVICES 44% Positive 0 Functionality

5 Impact during use

1 Low impact materials

6 Initial lifetime

3 Production techniques

7 End of life

4 Distribution system

5 Impact during use

Positive-negative

6 Initial lifetime

3 Production techniques

7 End of life

4 Distribution system

Attachment

Negative

109 109

4. KNOWLEDGE AND SKILLS 79%

2 Material usage

3 Production techniques

Positive

4 Distribution system

0 Functionality

5 Impact during use

1 Low impact materials

6 Initial lifetime

2 Material usage

7 End of life

3 Production techniques

4 Distribution system

No outliers found (alpha 5%)

5 Impact during use

6 Initial lifetime

7 End of life

8 OTHER/educating customer

Extra information about the topics in the file

Counts on the level of the UNDP issues 5 REGULATORY ENVIRONMENT

Counts

Positive

5 REGULATORY ENVIRONMENT

Counts

Negative

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Attachment

No outliers found (alpha 5%)

110 110

Extra information about the topics in the file

4 Counts on the level of the UNDP Solutions (Pg. 82) Adapt processes and products

Pos influence

Neg influence

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Amount BPSEM

Pos/neg

Invest in removing market constraints 0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Amount BPSEM

Attachment

Engage in policy dialogue with government

111 111

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Extra information about the topics in the file

4 Counts on the level of the UNDP Solutions Adapt processes and products

Pos influence

Neg influence

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Amount BPSEM

Pos/neg

Invest in removing market constraints 0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Amount BPSEM

Attachment

Engage in policy dialogue with government

112 112

0 Functionality

1 Low impact materials

2 Material usage

3 Production techniques

4 Distribution system

5 Impact during use

6 Initial lifetime

7 End of life

Extra information about the topics in the file