CO-CREATING BUSINESS ECOSYSTEMS IN EMERGING MARKETS

The New Global

Aalto Global Impact

Welcome We welcome you to this one-day event focusing on practical business cases and experiences of companies doing business in low-income markets. The event is organized by Aalto Global Impact together with The New Global project and hosted at Fortum. We bring together inspirational, stimulating and informative speakers from enterprises, academia, civil society, public sector and Global BOP network. The keynote speaker Stuart L. Hart, President and founder of Enterprise for a Sustainable World, will cover insights into how to build a wide value proposition and co-create inclusive business ecosystems. Speakers from Fortum, Fuzu and Funzi will provide concrete business examples in Asia, Africa and Middle East tackling key challenges and solutions for co-creation. World Vision will present win-win opportunities and examples in low-income fast growing markets in India and Sri Lanka. BOP Global Network leaders will present their living business cases on market understanding, marketing and partnering from companies in Denmark, Italy, Spain and Sweden. The New Global project will introduce process and opportunities for company engagement in India, Tanzania, Mexico and Brazil. Ambassador of India to Finland will give insights how to engage Indian government organizations as value providers in the New Global project, and Finnpartnership representative will introduce their financial instruments for Finnish companies interested in joining the project. The event moderator is Professor Mikko Koria from Aalto School of Business. Please consult this brochure for details on the program and background of all speakers. We look forward to your contribution to a productive and enjoyable event.

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Welcoming Words

Teija Lehtonen

Workshop Moderator

Mikko Koria

Director, Aalto Global Impact

Professor, Aalto University

Teija Lehtonen, M.Sc. (Econ), is currently working as a Director of the Aalto Global Impact at Aalto University. She is also promoting inclusive innovations and business at the the Base of the Pyramid (BOP) through various networks. She is a former Managing Director of the Ramboll Finnconsult, a private consultancy firm focusing on development cooperation. She has extensive international experience in business development, leading multicultural teams with different technical backgrounds, productive capacity building, participatory methodology and evaluations of development cooperation agencies. Her long-term missions include South Asia region covering Afghanistan, Bangladesh, India, Nepal, Pakistan and Sri Lanka; Abkhazia/Georgia; Sierra Leone, Ivory Coast and Denmark, a total of 10 years.

Mikko Koria’s professional career of over 25 years covers professional management, practice and research in private and public sectors. His joint background in economics (D.Sc. Economics), technology (M.Sc. Architecture) and business administration (MBA Design Management) enables a wide, analytical and cross-disciplinary perspective into the key issues at hand, enabling novel and innovative solutions based on best professional practice. Currently Professor Koria is working as the Professor and Director of the International Design Business Management (IDBM) program at the Aalto University School of Business. IDBM is a Master’s level program for students from all Aalto University Schools. He has over ten years of experience in several countries in Asia and Pacific, Africa and Latin America. 3

PROGRAM 09:30

Tea and Coffee, Registration Workshop Moderator: Mikko Koria, Professor, Aalto University

10:00

Welcoming Words Heli Antila, Chief Technology Officer, Fortum Teija Lehtonen, Director, Aalto Global Impact

10:15

Keynote: Co-creating Inclusive Business Ecosystems Stuart L. Hart, President and Founder of Enterprise for a Sustainable World (ESW)

11:00

Challenges and Solutions for Co-creation Heli Antila, Chief Technology Officer, Fortum Jussi Impiö, Founder and CEO, Fuzu Tiina Saukko, Chief Executive Officer, World Vision Aape Pohjavirta, Founder, Funzi

12:15

Panel Discussion with All Speakers

12:45 Lunch 13:45

Market Understanding and Partnering: Company co-creation business cases from Denmark, Sweden and Spain Sara Ballan, Danish BOP Learning Lab Mike Debelak, Inclusive Business Sweden Johanna Klein, Global CAD Spain

14:45 Coffee Break 15:00

Business Creation with The New Global Process and opportunities in company engagement in India, Tanzania, Mexico and Brazil Sara Lindeman, Project Manager, The New Global HE A. Manickam, Ambassador of India to Finland Siv Ahlberg, Programme Director, Finnpartnership Petri Allekotte, Business Engagement Manager, Aalto Global Impact

16:00

End of program

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Aalto Global Impact Aalto Global Impact has been created to support Aalto University’s societal mission for making the world a better place. It has been recognised that within Aalto community, there already exists a number of people, projects and practices, working both internationally and in Finland with complex societal challenges. Our aim is to bring together the already existing partners working on societal issues and further support them to develop their activities. Aalto Global Impact is involved in the New Global research project designed together with four Aalto Schools: Business, Science, Engineering, and Arts, Design and Architecture. The aim of the project is to explore future strategic themes and directions for the Finnish economy and link research with education and practical innovation work in emerging markets. New learning environments are fostered together with courses and programs within Aalto University, such as Creative Sustainability,

International Design Business Management and Product Development Project. Students have opportunities to work with real-life cases in countries such as India, Sri Lanka, Brazil, Peru, Mexico, Uganda, Mozambique, Tanzania and South Africa. New global alliances to support multidisciplinary research and educational activities at Aalto University have been established by Aalto Global Impact, especially in Africa, Asia and Latin America.

Goals 1 2 3 4

Support multidisciplinary action research in emerging markets Build student´s capabilities through interactive real-life learning environments Promote social entrepreneurship and responsible global leadership Create new global alliances for societal impact

The New Global The New Global is an innovation project integrating academic research and private sector business development to jointly innovate in fastgrowing emerging markets. Multi-stakeholder partnership networks enable co-creating frugal and reverse innovations in the complex environments of the target markets. The aim is to develop innovation platforms, and commercial, sustainable solutions that open new business opportunities for Finnish companies. The first phase of the project is 2014–2015. In 2014 the project targets India, Mexico, and Tanzania, and expands to other countries in 2015. The project is led by Aalto University.

Project principles: • Multidisciplinary action research project addressing complex sustainable challenges together across academia and industry • Follows the principles of frugal innovation: Turning resource constrains – financial, material or institutional - into advantages • On site innovation camps with companies and academy in high-potential emerging markets

• Quick prototyping and testing of promising ideas • Multi-stakeholder collaboration: Finnish companies (SMEs and MNCs), Academia (Aalto University, other local universities with researchers and students), local companies and NGOs together with local communities • Inclusiveness in business model design: Communities are included not only as consumers, but also as innovators, producers and entrepreneurs when possible, enabling new livelihood opportunities, and higher poverty reduction impact • Aims to facilitate reverse innovation, i.e. affordable resource-efficient innovations developed in emerging markets penetrating markets in developed countries

Current focus industries 1 2 3 4 5 6

Renewable energy Waste management Urban planning Water technology Housing and sanitation ICT solutions enabling technology 7

Published on March 5, 2014 on stuartlhart.com/ blog/articles)

The Dark Side of

E S R E VE R INNOVATION

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t has now been more than a decade since C.K. Prahalad and I first published the article “The Fortune at the Bottom of the Pyramid” which launched the “BoP” business movement. Over the past decade, there have been fits and starts: many BoP ventures have failed; others have been converted to philanthropic programs; but only a few have taken root and gathered significant commercial momentum. This has led some to conclude that the whole concept of enterprise-based solutions to poverty was flawed in the first place-- pronouncing variously BoP business as the latest form of corporate imperialism--focused merely on profiting from the poor; or a quixotic quest for the impossible--a misallocation of valuable investment capital. In reality, however, rumors of BoP’s demise have been greatly exaggerated (to paraphrase Mark Twain). Indeed, much has been learned over the past ten years and I believe that we are on the verge of taking the BoP business movement to the next level in the coming decade – a BoP 2.0 revolution. One area of important learning has been the potential for incubating disruptive innovations and business models starting in the underserved space

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at the base of the pyramid and later having some of these innovations move up-market. Clay Christensen and I wrote about this over a decade ago (2002) in an article entitled “The Great Leap: Driving Innovation from the Base of the Pyramid.” The idea has caught on. Over the past decade, a whole slew of new terms and buzzwords have arisen to describe this phenomenon, including trickle-up innovation, frugal innovation, and the latest incarnation--reverse innovation. Vijay Govindarajan and his colleagues have led the way in developing the strategic logic for reverse innovation and documented a growing number of cases illustrating this approach from the corporate sector, beginning with GEs development of a lowcost, hand-held ultrasound device in rural India and China. A key difference between reverse innovation and the earlier work on base of the pyramid strategy is the promise – even expectation – of large and profitable up-market migration for the innovations incubated in the underserved space: GE’s hand-held ultrasound device, for example, has “trickled up” to the US and other developed markets and now constitutes one of the fastest growing and profitable businesses for GE’s Healthcare business.

Witness the growing “trickle-up” success in point-of-care medical devices, mobile telephony, and distributed energy technologies, for example. Exciting stuff, to say the least.

There is some good news and some bad news regarding this trend. First the good news: Reverse innovation provides an attractive internal logic for undertaking such innovation initiatives within large corporations: Rather than simply focusing on the possibility of opening up new markets among the world’s poor and underserved, reverse innovation offers the potential for having your cake and eating it too – by incubating innovations in the underserved space that can migrate up-market bringing new, disruptive, affordable, and (potentially) more environmentally sustainable products and services. Witness the growing “trickle-up” success in point-of-care medical devices, mobile telephony, and distributed energy technologies, for example. Exciting stuff, to say the least. But now for the bad news--there is a potential dark side as well: The risk that corporations gradually come to view the world’s slums and rural villages primarily as laboratories for incubating innovations for the rich. The poor, in other words, come to be seen more as guinea pigs than as underserved people and communities with special needs and requirements – a place for corporations to force cost constraints on their innovation process enabling even higher returns in the eventual (ultimate) market at the top of the pyramid. Should this scenario come to pass, it would represent a double tragedy. Not only would this damage corporations’ reputation and continuing right to operate, but the evidence is also mounting that few innovations incubated in the base of the pyramid space can easily travel up-market without significant modification, threat of imitation, or competitive reaction: Frugal designs must

be upgraded to appeal to the wealthy; low-cost innovations can often be easily imitated, and competitors with lower cost structures can enter as fast seconds after the pioneers have incurred all the development costs. Allow this to serve as a cautionary tale to all those large, incumbent corporations thinking reverse innovation is the magic bullet: Focus on first things first – better serving and lifting those underserved at the base of the income pyramid. Should some of these disruptive, lower cost, or environmentally sustainable innovations eventually lend themselves to application in the up-market, that is great news for the Corporations and the World. But let us not look back in ten years and view reverse innovation as yet another classic example of the Law of Unintended Consequences.

BOP

The Base of Pyramid (BOP) refers to a market of $5 trillion constituted by 4 billion people globally, living on less than $3000 annual income (ppp adjusted). The entry of foreign companies to BOP market carries an intriguing promise of opening new business opportunities while contributing to poverty eradication by satisfying local unmet needs with commercial products and services. In order for a foreign company to overcome the challenges caused by a new business environment, there is a need for partnering with NGOs and other stakeholders allowing both parties an access to resources and opportunities they could not reach alone. 9

Keynote

Co-creating Inclusive Business Ecosystems

Stuart L. Hart Stuart L. Hart is the Samuel C. Johnson Chair Emeritus in Sustainable Global Enterprise and Professor Emeritus of Management at Cornell University’s Johnson School of Management, where he founded the Center for Sustainable Global Enterprise. He also serves as Adjunct Professor at the University of Vermont’s Business School, Distinguished Fellow at the William Davidson Institute (University of Michigan), founder and President of Enterprise for a Sustainable World, and founding Director of the Emergent Institute based in Bangalore, India. Before joining Cornell in 2003, he was the Hans Zulliger Distinguished Professor of Sustainable Enterprise and Professor of Strategic Management at the University of North Carolina’s KenanFlagler Business School, where he founded the Center for Sustainable Enterprise and the Base of the Pyramid Learning Laboratory. Previously, he taught corporate strategy at the University of Michigan’s Ross School of Business and was the founding director of the Corporate Environmental Management Program. Professor Hart is one of the world’s top authorities on the implications of environment and poverty for business strategy. In 1999, he was the recipient of the Faculty Pioneer Award from the World Resources Institute for his ground10

breaking work in sustainable enterprise. According to Bloomberg Businessweek, he is “one of the founding fathers of the ‘base of the pyramid’ economic theory.” He has served as consultant, advisor, or management educator for dozens of corporations and organizations including Dupont, S. C. Johnson, General Electric, Baxter Healthcare, Wal Mart, the World Economic Forum, and the Clinton Global Initiative. Professor Hart is an internationally recognized speaker and he has published more than 70 papers and authored or edited seven books. His article “Beyond Greening: Strategies for a Sustainable World” won the McKinsey Award for Best Article in the Harvard Business Review for 1997 and helped launch the movement for corporate sustainability. With C.K. Prahalad, Hart also wrote the path-breaking 2002 article “The Fortune at the Bottom of the Pyramid,” which provided the first articulation of how business could profitably serve the needs of the four billion poor in the developing world. With Ted London, Hart is also the author of a newly released book entitled Next Generation Business Strategies for the Base of the Pyramid. His best-selling book, Capitalism at the Crossroads (2005), was selected by Cambridge University as one of the 50 top books on sustainability of alltime.

Challenges and Solutions for Co-creation Heli Antila

Chief Technology Officer, Fortum Oyj

Jussi Impiö

Founder and CEO, Fuzu

Dr Heli Antila has held the position of Chief Technology Officer, Fortum Oyj since June, 2012. Heli received her Dr in Control Engineering from Tampere University of Technology, Finland in 1997. She has been working in energy sector management consulting for 15 years. In Fortum her main tasks are to capture and develop technology enabled business opportunities for Fortum. The framework for these new business opportunities is defined in Fortum’s vision of Solar economy. Thus the future technologies we are interested are all carbon-free and mostly renewables, e.g. bioeconomy including algae, wave and solar power as well as advanced customer solutions. The Clean Energy Ministerial (CEM) has nominated Heli as an ambassador for clean energy.

Jussi Impiö is a researcher, an innovator and an entrepreneur with an extensive experience in management of complex R&D projects in the context of developing countries, especially in Africa. His professional career of 17 years has been a combination of hands-on user research in the field, product development and commercialization of products, and management of expert teams, networks of partners and complex processes. He has lived and worked in Nairobi as a founder and leader of multisite Nokia Research Center. At the moment, Jussi is working as a founder and CEO of Fuzu Oy, developing ground-breaking skill, career building and talent finding mobile service, especially designed for rapidly growing African job markets needs.

Tiina Saukko

Aape Pohjavirta

Chief Executive Officer, World Vision Finland

M.Sc (Econ) Tiina Saukko has been working as CEO at World Vision Finland since 2009 after a four year period as Chair for the organization’s Board. As her background is on fundraising, business development, governance and youth work, Tiina is professional and passionate at eradicating poverty from children’s lives. Her special interest is in reinforcing sustainable economic development and bringing better chance for livelihood for whole community. For this need World Vision Finland has launched in 2012 a global pilot programme, Weconomy Start, which helps companies and local communities to create further cooperation. Tiina´s past experience on innovations, change management, fair trade and logistics gives her special insight in the work with developing countries.

Founder, Funzi

Aape Pohjavirta is the chief evangelist and founder of Funzi, a mobile service ecosystem for the emerging markets, and an entrepreneurship coach and lecturer in Startup Sauna, Aalto University, DTBi and other institutions. He is also a founder of Inclusion, an open source software project for mobile learning. Aape sits on advisory boards of research projects and technology programs. Formerly he was the CEO and founder of Ympyra and CMO of Exomi. Aape has worked in the mobile industry since 1997 in various management roles and has a solid track record of international business, product, and technology development. Aape is an Apple Achiever and an international patent inventor (mobile media app).

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Market Understanding and Partnering Sara Ballan

Danish BOP Learning Lab Sara Ballan is the leader of the Danish BOP Learning Lab, which is based in Denmark’s largest business membership organization (DI). In the Learning Lab she facilitates knowledge sharing and knowledge creation on sustainable business models for low income markets. She has also worked directly with small as well as large companies targeting BOP markets (primarily in Africa and Asia). Sectors include energy, health, food, consumer goods, housing etc. Sara has supported many aspects of business development including market research, business model development, scaling, financing and partnership identification. She has supplemented a degree in political science with business studies in several countries.

Mike Debelak

Inclusive Business Sweden

Mike Debelak has over 15 years experience working across Australia, Europe, Asia and Africa, focusing on inclusive business, sustainable development, corporate strategy and management consulting. He is the founder and CEO of Inclusive Business Sweden, Sweden’s national centre for the advancement of inclusive business initiatives with the Base of the Pyramid. After having established Inclusive Business Sweden as an NGO and “BoP learning lab”, he has developed a national approach for research, innovation and action for inclusive business. Mike’s work has included research focused on distribution to the BoP, which included field studies in Ghana, and was published into the book “The Bumpy Road to the BoP”. He is currently taking the Swedish lead for Emerging Market Innovation Camps.

Lucia Dal Negro

Johanna Klein

Lucia Dal Negro has a PhD in International Relations with a focus on Inclusive Business and two Master’s degrees in International Relations and Environment and Development at the Catholic University (Milan) and London School of Economics. She is the founder of De-LAB, the Italian focal-point on Inclusive Business. Lucia has previous experiences with several NGOs, institutions and companies, particularly addressing gender issues, sustainable coffee farming, fair-trade, sustainable consumption and production and human rights. Her current research focuses on social innovation and sustainable business models, with a particular attention to the scalability and replication of inclusive business strategies and CSR projects favouring social inclusion’s dynamics through social networks.

Johanna Klein is a partner at CAD and a consultant specialized in Green Economy, Partnerships for Development and Private Sector Development. She has a Master’s degree in Sustainable Development and Corporate Social Responsibility from the EOI Business School. She is a licensed trainer for the IFC SME Toolkit and PREMA, a small business training scheme from GTZ and certified with Capacity Works. She is an experienced researcher in the area of Private Sector Development and an expert in public-private partnerships. Johanna has worked as a strategic consultant for a variety of international organizations and she is authoring various strategic reports on CSR. Johanna is a member of the board at Profitable Environmental Management.

DeLab Italy

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Global CAD Spain

Business Creation with The New Global Sara Lindeman

Project Manager, The New Global

Sara Lindeman is an expert on inclusive business, and a researcher at the Corporate Environmental and Social Responsibility research group at Aalto University School of Business. Her research focuses on market creation in low-income world majority contexts. She has published in Journal of Management Studies, Journal of Business Ethics, Marketing Theory and Journal of Macromarketing. Sara has worked closely with Finnish companies on inclusive innovation in the fields of renewable energy, forestry and ICT. She teaches multidisciplinary student teams (design, technology and business) in project based slum upgrading and inclusive business development at Aalto University.

Siv Ahlberg

Programme Director, Finnpartnership Siv Ahlberg holds a Master of Science (Economics and Business Administration) and is presently the Programme Director of Finnpartnership at Finnfund. The present work involves preparatory work for investments in developing countries and setting up various partnerships for these, as well as import promotion from the same markets to Finland. The experience of projects in Africa, Asia and Latin America for more than 20 years covers the public sector as well as the private sector, from small entrepreneurs to large multinationals and in various different sectors. Siv also has experience herself from working in several private companies prior to this.

Aladiyan Manickam

Ambassador of India to Finland

Aladiyan Manickam has held the office of Ambassador of India in Finland since 2010. Prior to that, he has made a long career in the Ministry of Foreign Affairs, serving as a diplomat and a Counsellor in Embassies of India in Cairo, Muscat, Damascus, Budapest and Jakarta. He has held the position of Director and Joint Secretary at the Ministry of Foreign Affairs and Deputy High Comissioner in High Comissions of India in Canberra and Colombo. In addition, HE Manickam has worked as a Counsellor in the Permanent Mission of India to the United Nations in New York.

Petri Allekotte

Business Engagement Manager, Aalto Global Impact Petri Allekotte, MBA, is the Business Engagement Manager at Aalto University and in Aalto Global Impact. He is responsible of corporate engagement into Aalto’s business development innovation projects in developing high potential countries. Petri is also responsible of developing Aalto’s coordination of its strategic corporate partnership program and fostering international social entrepreneurship through Aalto Global Impact’s projects. He has extensive career in senior strategic business development leadership positions in globally operating technology, wellbeing and service sectors corporates. Petri has experience of being advisor for several technology startups and he also has been involved in developing Helsinki metropolis region startup incubation ecosystem model. He is also an enthusiastic amateur photographer. 13

Design and layout: Roope Kiviranta Photography: Antti Hellgren and Pyry-Pekka Kantonen Printed by: Unigrafia Publisher: Aalto Global Impact (June 2014)

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Aalto Global Impact Teija Lehtonen

[email protected]

Riina Subra

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Petri Allekotte

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Emilia Saarelainen

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Roope Kiviranta

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Emma Palonen

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Website

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The New Global Minna Halme

[email protected]

Sara Lindeman

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Henri Simula

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Susu Nousala

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Helena Sandman

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Antti Hellgren

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Tatu Lyytinen

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Website

http://newglobal.aalto.fi 15