According to a new report from the Monitor Institute, the keys to success in low-income economic markets include having the right business model and knowing your suppliers and customers' wants.
Funded in part by the Omidyar Network, the Sir Ratan Tata Trust, and the Rockefeller and David and Lucile Packard foundations, the report, Emerging Markets, Emerging Models (144 pages, PDF), shares information gleaned from thirty-five field investigations involving social enterprises in twenty countries, including interviews with more than six hundred low-income customers and small suppliers and two hundred and seventy social enterprises in India. The report found that keys to success for social entrepreneurship include having a business model tailored for emerging markets; having plenty of non-commercial or "soft" funding; spending adequate time (a decade or more, on average) to achieve meaningful scale; and not confusing what low-income customers or suppliers need with what they want.
The report also found that new entrants and small enterprises were more likely than large corporations to lead the development of market-based solutions in developing countries. Of the organizations observed for the report, more than two-thirds were either small and medium enterprises or NGOs.
"Five years after C.K. Prahalad introduced the concept of 'the fortune at the bottom of the pyramid,' Monitor Group has carried out the first critical examination of how these emerging market-based solution models are functioning," said Monitor Group global account manager Michael Kubzansky. "This report provides strong evidence that engaging the poor as customers and suppliers presents an exciting — and significant — opportunity to establish new paradigms to bring genuine social change in economically sustainable ways."