Base of the Pyramid (BoP) Markets, Marketing the BoP, Inclusive Business and BoP Consumers

This report illuminates the enormous opportunities in emerging markets for companies to drive competitive advantage and sustainable impact at scale.

It identifies how over 30 companies across multiple sectors and geographies design and measure business strategies that also improve the lives of underserved individuals.

Navi Radjou is a Silicon Valley-based strategy consultant and an internationally-recognised voice of business innovation and leadership.

He is a Fellow at Judge Business School, University of Cambridge, and a World Economic Forum faculty member. He is the co-author of the best-selling book, “Jugaad Innovation: A Frugal and Flexible Approach to Innovation for the 21st Century” (see my book review here). Navi joins us in this exclusive interview with YourStory, on topics ranging from startups and innovation to investments and leadership.

Last week in Sao Paulo more than 100 investors, entrepreneurs, philanthropists and services providers gathered to discuss what it will take to unlock more capital for impact investing in Brazil and across Latin America.

The gathering of this diverse set of actors was one among a growing number of signals that impact investing -- investments intended to generate both social/environmental good and financial return -- continues to attract interest around the world. Against a backdrop of rising income and wealth inequalities, high volatility in commercial capital markets and a growing sense that "business as usual" is neither sustainable nor desirable, it should perhaps not be surprising that impact investing, with its potential to unlock trillions of dollars aimed at generating positive social and environmental impact as well as financial return, has gained such traction.

You are a drug developer selling in India. What would you do if you had to choose between developing a drug that would cure 80% of the people who had a certain condition for $1/day or a drug that would cure 99% of the people for $200/day?

He calls his work “inclusive innovation.” This concept may be best demonstrated through the following example: Drinking water through pumps often wastes the water, so a grassroots innovator in India developed a two-sided pump: one side for drinking, the other side for filling a bucket and trough that catches the unused water for animals. Inclusive innovation is a concept that starts with the needs of the user, but also considers economics, the environment and animals.

The cost of mobile phones has decreased steadily, and what was once considered a luxury good is now a necessity for many Kenyans.

In order to understand mobile phone usage at the Base of the Pyramid (BoP) in Kenya, iHub Research and Research Solutions Africa conducted a 6-month study, funded by infoDev (World Bank).

A total of 796 face-to-face interviews were conducted along with 178 diaries, 9 interviews with Kenyan developers, 12 focus group discussions (FGDs), and 10 interviews with key stakeholders in the industry. The full report will be released to the public in November 2012.

As Nesta announces its GBP 25million social investment fund today, there are promising signs that HNWs and investors are seeing the value of social or impact investing.

A term that was itself only coined a couple of years ago, impact investing aims to shift industries and make an impact, not just to screen out negative or harmful investments.

There is currently a $1 trillion opportunity in impact investing, in which the current industry trend is to invest in enterprises in emerging markets that are ready to scale.

While India is a hub for impact investing and social enterprise, neighboring Pakistan’s social enterprise ecosystem is only slowly maturing. Acumen Fund is one of the few impact investors in Pakistan and until recently, no one was working at the seed-stage of the investment pipeline.

Charities have always been investing their money. But traditionally trustees' focus has been on maximising the potential financial return rather than considering the positive social impact of their investments. Charity commission guidelines to trustees until recently have emphasised the importance of getting the best financial return so more money can go into grants and services.

But in recent years, things have started to change with growing recognition that good causes often need loans, as well as grant funding. This has been exemplified by the popularity of the microloan organisation Kiva and the emergence of the social impact bond (SIB) product.

The Project
EcoZoom cookstoves are being used in a large-scale project in Rwanda. Over the summer the distributor, DelAgua Health & Development (which has ties to a professor at PSU), conducted a 100-stove pilot.

The Product
Rural Rwanda primarily uses wood for cooking so the Zoom Dura cookstove was the best fit. Before the pilot we learned that people in Rwanda use bigger pots than other places in Africa so our typical 26cm stovetop wouldn’t be big enough. Ok, easy fix. We put a 32cm top on the Zoom Dura and modified the handles to accommodate. Now we needed to get the stove into the hands of cooks to see what else had to change for wide-scale adoption.

How do you evaluate an organisation’s theory of change and all that it encompasses in impact performance?

Before addressing the question of how one can incorporate theory of change into due diligence processes, it is important to take a step back and consider due diligence within the context of impact investing.

There seems to be confusion around how due diligence can effectively be incorporated to enhance and inform effective impact investment decisions. While traditional investment decisions tend to be focused exclusively on financial profit in investment, impact investment decisions ultimately are made for more equitable and sustainable outcomes. Decision-making has to include social and environmental issues, and their consequences on the performance of a business.

Innovators from San Francisco to Sao Paolo are rethinking the roles of markets and philanthropy to address the world's most pressing problems -- and now there's a way they can work together.