Glossary

Bottom of The Pyramid

The Bottom of the Pyramid (BOP) argument is essentially based on commodification. Take existing goods and services and make them an order of magnitude or two cheaper, either to buy or to make but ideally both. Typically, this means reducing goods to their bare essentials and delivering them on a massive scale.

This requires: 1) low price points; 2) minimal marginal costs (reduce consumables and packaging to the bare minimum); 3) "de-skilling" services so non-experts can deliver them; 4) the use of local entrepreneurs.

The canonical example is the 1 cent single-serve shampoo sachet, but others include the Grameen phone (loan an entrepreneur the price of a phone and she can resell it in minute increments to an entire village), tiny tubes of toothpaste, and "Ruf and Tuf", a $6 size-and-stitch-locally jeans kit that has become the top seller in India.

Glossary

Corporate Social Responsibility

CSR refers to the ways by which a company decides to align itself with the laws, norms, expectations, and aspirations of the society in which it operates. Pro-poor business activities, like all of a company’s business activities, should be guided by a company’s CSR principles. These guidelines will assure that the projects help to provide the poor with the tools to create their own sustainable livelihoods.

Glossary

Fair Trade

Fair trade is a development-based initiative built on trading relationships and improved commercial opportunities to bridge the gap between developed and developing countries, to enable disadvantaged producers in developing countries to take up and benefit from the opportunities offered through global trading and to facilitate the better integration of developing countries into the world economy.

Fair trade initiatives give consumers the opportunity to contribute towards sustainable economic and social development in developing countries through purchasing preferences and thus contribute to poverty reduction.

The objective of fair trade is to ensure that producers receive a fair price and a fair share of any profits. Fair trade aims to contribute to establishing the conditions that can foster a higher level of social and environmental protection in developing countries. In particular, fair trade refers to direct buying, fair price, advance payment, long term and stable relations with producers, conditions of production which respect labour rights as laid down in ILO Conventions and respect of the environment, including sustainable methods of production.

A mechanism should be established to allow producers to be involved and participatory in price determination whenever feasible.

Participation in any fair trade scheme is, however, voluntary and all routes between producers and the market are private initiatives.

Glossary

Long Tail

The Long Tail is about nicheification. Rather than finding ways to create an even lower lowest common denominator, the Long Tail is about finding economically efficient ways to capitalize on the infinite diversity of taste and demand that has heretofore been overshadowed by mass markets. The millions who find themselves in the tail in some aspect of their life (and that includes all of us) are no poorer than those in the head. Indeed, they are often drawn down the tail by their refined taste, in pursuit of qualities that are not afforded by one-size-fits-all. And they are often willing to pay a premium for those goods and services that suit them better. The Long Tail is, indeed, the very opposite of commodification.

So the Long Tail is made up of millions of niches. The Bottom of the Pyramid is made up of mass markets made even more mass. Both lower costs to reach more people, but they do so in different ways for different reasons. They're complimentary forces, but fundamentally different in their approach and aims. The Mystery of the Apparently Similar Theories: Solved.

Glossary

Public/Private Sector Partnerships

1] Outsourcing - use of a third party (normally a private sector company) to supply a particular service to or, on behalf of, a public sector entity. Contracts are very rigid, involving a strict separation of client and contractor - with very little in the way of shared strategic aims.

2] Using Private Finance - Because of tight controls on public spending, many public bodies find it impossible to fund large scale capital investment e.g. new IT systems, schools, hospitals. So they use private sector bodies to fund such projects and then run them on behalf of public service

3] Partnering - where there is a high level of shared strategic goals between the customer and the service provider (rather than an arm 's length contract). A commitment by both parties, regardless of size, to a long-term relationship based on clear mutually agreed objectives to strive for world class capability and competitiveness.

Glossary

Social Enterprises

mission oriented revenue or job creating projects undertaken by individual social entrepreneurs, nonprofit organizations, or nonprofits in association with for profits

TYPES:

1. Social purpose businesses -- nonprofit, for-profit, a public/private or some combination of the three. These businesses can be new or derived from an existing program:

- "Affirmative" businesses designed specifically to provide permanent jobs for people who are disadvantaged,

- Mission-driven product or service businesses delivering services directly to their users, for example, housing and food services for program clients.

2. Earned income businesses that have an indirect impact on a social need:

- Revenue-generating activities started by nonprofits unrelated to their mission typically created from the organization's under-utilized assets (such as facility downtime, accounting expertise and copyrights) or as conveniences for its clients or patrons (gift shops, parking lots, cafeterias and so on).

- "For-benefit" companies not directly associated with a nonprofit, but created expressly to generate profits that will then be distributed to one or more nonprofit entities (for example, Newman's Own).

3. Business partnerships between nonprofits and for-profits:

- Cause-related marketing, --"Taste of the Nation" (American Express and Share Our Strength)

- Cause-related purchasing,--Boeing's "Philanthropic Work Program" out-sourcing fabrication work to nonprofit employers of the disabled.

4. Other earned income strategies, business ventures and partnerships-- Public-private partnerships for community development (CDC's, CDFI's), entrepreneurial efforts by government agencies (Seattle's Housing Levy that leverages city funds for low and moderate income housing with private and foundation funds), joint ventures between forprofits and nonprofits.

Glossary