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The Fortune at the Bottom of the Pyramid: Innovate with Hybrids

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In this excerpt from his book, C.K. Prahalad explains that The BOP market can and must be addressed by the most advanced technologies creatively combined with existing (and evolving) infrastructure.
From the book

The BOP market opportunity cannot be satisfied by watered-down versions of traditional technology solutions from the developed markets. The BOP market can and must be addressed by the most advanced technologies creatively combined with existing (and evolving) infrastructure.

More than 70 million Indian children suffer from iodine deficiency disorder (IDD), which can lead to mental retardation. A total of 200 million are at risk. IDD in many parts of Africa is equally daunting. The primary source of iodine for most Indians is salt. Indians do eat a lot of salt, but only 15 percent of the salt sold in India is iodized. Iodine is added by spraying salt with potassium iodate (KIO3) or potassium iodine (KI) during manufacturing. Salt, to be effective as a carrier of iodine, must retain a minimum of 15 parts per million of iodine. Even iodized salt in India loses its iodine content during the harsh conditions of storage and transportation. Indian cooking habits account for further iodine loss. The challenge in India (and similar markets in Africa) is clear: How do we create iodized salt that will not lose its iodine content during storage, transportation, and cooking but will release iodine only on ingesting cooked food?

In an effort to address the immense iodine loss in Indian salt, HLL, a subsidiary of Unilever, recognized that chemicals can be protected by macro and molecular encapsulation. HLL first attempted macro encapsulation (similar to coating medicine with a covering). Although this process kept the iodine intact, it was difficult to guarantee the exact amount of iodine as the miniscule size of the salt crystals complicated the process. HLL thus decided to try molecular encapsulation. Called K15 (K for potassium, 15 ppm), the technology encapsulates iodate particles between inorganic layers, protecting iodine from harsh external conditions. The inorganic layers are designed to only interact with and dissolve in highly acidic environments (that is, a pH level of 1 to 2, as in the stomach). Here, iodine is released only upon ingesting food, only negligibly before that. The tests to validate this technology under the harsh conditions of Indian spices and cooking methods required that the researchers resort to techniques developed by the Indian Atomic Energy Agency, using radioactive tracers. The tracers did not alter the chemistry of the iodine but could detect it throughout the simulated cooking process. To be marketable, though, the iodized salt so developed must also retain its attractiveness (whiteness, texture) and, needless to say, must be priced comparable to iodized salt using the traditional methods (ineffective as a carrier of iodine) and noniodized salt. The technical breakthrough in applying molecular encapsulation of iodine in salt is now a patented process. Unilever is already leveraging this innovation from HLL to other countries such as Ghana, Ivory Coast, and Kenya, where IDD is a problem.

The concept of hybrids appears in strange places. Consider that the dairy industry in India, Amul, is organized around 10,675 cooperatives from which it collects 6 million liters of milk. Amul collects milk from the farmers in villages by providing village collection centers with more than 3,000 Automatic Milk Collection System Units (AMCUS)—an integrated milk-weighing, checking (for fat content), and payment system based on electronic weighing machines, milk analyzers, and a PC-based accounting and banking system for members. Amul makes 10 million transactions and payments in the neighborhood of Rs. 170 million. Payments can also be made instantaneously. This integrated electronic system sits in the middle of the traditional Indian village in the milk cooperatives. Many of the farmers feel that, for the first time, they have been treated “right”—the weighing and testing are honest, they are paid without delays, and they can now become part of the national milk network without leaving their villages.3


3. “Amul: The Poster Boy of Rural IT.” http://www.Expresscomputeronline.com/20020916/ebiz1.shtml.

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