When global income distribution is plotted on a graph it looks like a pyramid. Some 32m individuals (just 0.7% of the world's population) sit at the top representing 41% of global wealth, while at the very base of the pyramid are 3.2bn individuals representing just 3% of global riches.
Inclusive, or base of the pyramid businesses serve this significant cohort, and many have met with success. Examples include Vodafone's mobile phone based money service Mpesa or L'Occitane, which works in Burkina Faso to support traditionally produced shea butter. But where these inclusive business models have managed to scale up, many others have not been so successful.
Scaling inclusive business initiatives means driving profitable commercial growth as well as reaching a greater number of people at the base of the pyramid. Businesses need to see a return on investment in order to repay initial costs, turn a profit and move a proven model to scale.
Several factors feed into the scalability of base of the pyramid initiatives. A company's ability to find and work with the right partners is key, as is its success in developing or tapping into demand for a product or service, and its understanding of the local context. Businesses must have an understanding of how to use technology effectively and, importantly, how to access and mobilise finance. It's also vital they can identify and deal with internal barriers such as capability gaps.
How do companies go about ensuring they have this understanding and what can be learned from the successes and failures of others?
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To achieve inclusive business growth and scale, companies not only need to have the right products, services and business model, but also the appropriate management practices. Base of the pyramid (...