What is Embedded Enterprise?
Entrepreneurs working with populations in impoverished areas need to approach their business development in a way that is significantly different than the way of business in established markets. Successful bottom of pyramid (BOP) ventures are able to embed and integrate solutions into their customers’ lives in one of four distinctive ways, as defined by Ted Ladd in his article, The Embedded Enterprise:
Many entrepreneurships serving BOP communities rely heavily on the social networks of local residents as a main source of benefit. A local person can be appointed to create demand, deliver products, collect payments and to provide support to their community. The potential micro-entrepreneur will work within their existing network by determining who they are already connected to through family or other close interaction, allowing them to engage on a personal level and sell to that particular person or family’s needs.
“We help them do a map: ‘Here’s you. Now, who is in your family? How about your husband’s cousins? Draw a picture of your social network.”
Successful BOP ventures are able to integrate their products into the daily lives of their customers existing routines and activities. When residents are accustomed to powering their products with propane or kerosene, they are in a habit of purchasing, refilling and returning the product and packaging every few days. This model can easily be implemented with solar energy products to establish an ease of integration and with minimal disruption to patterns.
Each population is accustomed to certain mental models based on their experience with products and previous trust with marketed items. These preconceptions help individuals to determine their use of a product and their comfort level with the process of integration. One company, Simpa Networks, sells home solar kits in India at a low up-front cost, and then charges customers a fee per hour of light usage. This model has been deemed successful due to its similarity with pay per use cell phone plans that are popular in the region and customers autonomy in usage.
It is important to introduce new products that will work well with products that are already in use within the population. Electricity as a power source is only effective when the population is already using or strongly desires energy-consuming products. Also, listening to the desires of the community is essential- while lighting and phone chargers are high on people’s list of items to power, companies have seen demand for powering convenience items like TV’s and electric shavers. The four solutions of Embedded Enterprise allow companies to integrate their products into new marketplaces in an accessible and invitational manner, incorporating their offerings into the community and creating demand through established networks and pathways for ultimate success.