Al Hammond's Transformative Sector Strategies and the six comments can be found here. This blog post is a re-run of my comment on Al's model, which was originally posted on www.nextbillion.net.

When I first read the BoP article by C.K. Prahalad and Stuart Hart three years ago, it triggered several thoughts in my mind and I remember having endless discussions with my friends on the ideas put forth in the article. Reading through Allen Hammond's posts this week on ‘Transformative Sector Strategies', I have experienced a sense of déjà vu, with a lot of thoughts being triggered in my mind all over again. If the work carried out by people like C.K. Prahalad, Stuart Hart and others was responsible for triggering widespread interest in the BoP, WRI's model, outlined in Al's posts, has the potential to take it to the next level.

If the previous level saw the birth of Social Venture Funds, Social Entrepreneurs and Corporations targeting the BoP, this new model can create financially successful enterprises and corporations making a real world impact on the triple bottom line. The model's focus on developing sector-specific scaling strategies can make BoP businesses more evolved and, in a way, more mainstream.

The rural connectivity example from Vietnam, cited in Al's second post, is a very interesting experiment and the results are very encouraging. A similar pilot project is being tried out in India by Ericsson - the Gramjyoti rural broadband project. It is India's first 3G wireless network (based on Wireless CDMA/HSPA technology) and it is being pilot-tested in 18 villages and 15 small towns near Chennai in Southern India. The results of this pilot are not yet available, but the Gramjyoti business model is quite interesting since Ericsson has tied up with domain experts (Apollo Hospitals, Edurite Technologies and Turner Entertainment) to offer healthcare, e-learning and entertainment services to BoP customers through the Gramjyoti network.

The rural healthcare examples, cited by Al in his third post, also throw up some very interesting results and the combination suggested - franchise pharmacy and remote diagnostics - has a definite potential to bring quality healthcare to the BoP. Bangalore-based Vaatsalya Healthcare has already implemented the distributed system model and works closely with Neurosynaptic (which manufactures "ReMeDi" range of low-cost remote medical diagnostic equipment) to offer healthcare services to its BoP customers.

The challenge now is to put this model into practice worldwide. Perhaps, the most important aspect of scaling up and replicating such sectoral strategies is adaptability. The BoP in each country, probably in each region in a country like India, has its own needs. For example, how to offer affordable internet access to a rural community, where mobile phone penetration is already high? The Wi-Fi service implemented in Vietnam can be a good solution here, if it is packaged as an attractive alternative to mobile phones, by offering Skype-style internet-based calling facility and value-added infotainment services.

Another important aspect that needs to be understood is the interplay between the different sectors. As in the Gramjyoti example, connectivity can be the backbone for other sectors such as healthcare and education. In such a scenario, scaling strategies for these sectors can be evolved in parallel. However, in a BoP community which has no power supply, the energy sector scaling strategy should evolve before connectivity. The energy sector, especially the renewable energy sector, has a lot of potential in itself at the BoP and harnessing the benefits of carbon-trading industry, which is also a market-based solution to a global problem, to subsidize BoP energy offerings, can be a good scaling strategy for this sector.

Transformative sector strategies offer an exciting prospect of rapidly scaling up BoP businesses and I am eager to see these strategies trigger the market to meet the needs of the BoP, not just in connectivity and healthcare, but also in energy, education and agriculture.

The informal sector is never included while evaluating economic parameters of India - such as GDP growth - perhaps because not many of these street vendors pay taxes, though they end up bribing the cops to obtain their ‘licence to sell’ on the streets. What I found especially interesting was the customer base of these street vendors. Though their customers include people from all sections of the society – from the very rich to the urban poor – a vast majority are from the lower middle class and poorer sections. I personally feel that there is a lot to be learnt from these vendors - the businessmen in Mumbai’s informal sector. Agreed that many of them sell counterfeit and smuggled goods but they do understand the base of the pyramid market much better than any multinational company’s sales and marketing departments; they know what sells and what doesn’t among the poor. More importantly, they understand the needs of the poor. Entrepreneurs or corporations targeting the BoP markets will do well to tap into the knowledge base of Mumbai’s (and India’s) informal sector. The knowledge that these guys have, can be valuable in conducting market research, developing products and carrying out marketing campaigns at the BoP. It would be even better if they are engaged as critical links in the value chain, such as franchisees. This could be a win-win situation for both sides and to the country as a whole since such an arrangement would help in formalizing the informal sector.