One of the most pervasive false assumptions about the base of the pyramid (BOP) is that the only products and services appropriate for this market are simplified or obsolete versions of those offered in developed countries. However, if one thing characterizes the BOP, it is precisely the unmet needs that call for new products and services. For this reason, companies that enter the BOP must know and understand these real needs and seek innovative formulas to meet them. This innovation must encompasses not only products and services but also business and organizational models.
In this process, it is crucial to get involved with non-traditional partners – customers, NGOs, minority groups, communities, local leaders, social entrepreneurs, and so forth – since in addition to other important assets and skills such as distribution and training, they also offer what has been termed "competitive imagination". That is, they open up companies’ mental horizons, allowing them to acquire new knowledge and decide what new resources and skills they must develop in order to spur their current and future competitive advantages. These direct relationships with the BOP are so important that companies such as Cemex and Hindustan Lever require their R&D executives to spend some time in rural Mexico and India, respectively. In this way, the new products and services aimed at the BOP are based on in-depth knowledge of both market and customers.
Source of Disruptive Innovation
Despite what the majority of executives think, the base of the pyramid is a huge market for disruptive technologies, those that revolutionize the market by making existing technologies obsolete. Due to their ability to meet the needs at the base of the pyramid and thus create value, and due to companies’ ability to learn by competing with "non-consumption" in a market with real as opposed to generated needs, here many technologies can find fertile terrain allowing them to overcome the glitches inherent in any new technology.
In developed countries, it may be extremely difficult for disruptive technologies to mature for a variety of reasons, including the interests created and the fact that customers are already satisfied with what they have. Solar energy is a fine example. It is spreading very slowly in developed countries despite the subsidies available, yet in Tanzania, Sri Lanka, and Guatemala it is flourishing. The reason is that in these countries it meets a real need. In contrast, in developed countries, besides environmental reasons, what might motivate inhabitants to replace the safety, comfort and power they already enjoy with the promises of solar energy? Penetrating the BOP may be the only route to allow this alternative energy to undergo the improvements it needs in order to shift in the future to meet the demands in developed countries. This was the route taken by Honda and Toyota. After creating value in impoverished post-World War II Japan with utilitarian motorcycles and cars, these comapnies flooded the American and European markets until becoming a clear benchmark for quality in little more than two decades.
Technological development tends to entail large investments, hence it seems that the path of commercializing a new technology must start at the peak of the socio-economic pyramid and later trickle down until reaching the users at the base. Perhaps this is a route dictated by the logic of money, and it might even be true for technologies that generate needs. However, at the BOP, technological advances may meet needs instead of generating them, and in doing so become more efficient. For this reason, the BOP is becoming the largest source of innovation and the fundamental goal and springboard for moving forward towards a more sustainable model of development for the entire planet.