Social Innovation for Business and Society

Together with Social Impact,  and supported by the BMW Foundation Herbert Quandt, we have released a study that gives inspirations for companies to adopt the Base of the Pyramid (BOP) concept in Germany.

The Project Value²

Developed in 2002 by C. K. Prahalad, the BOP concept is a business model for companies that specifically targets the low-income population. People from the Base of the Pyramid can for example serve as customers, suppliers, or intermediaries and, by doing so, strengthen their material and social standing. The concept was originally implemented in developing countries. However, in Germany there are also more than 16 million people threatened by poverty and social exclusion.

Best practice in France proves that the BOP concept can be successfully implemented in European countries. Companies such as Danone, Renault and Schneider Electric have teamed up and started the “Action Tank Entreprise & Pauvreté” in order to support the low-income population with participatory, social and innovative solutions. This and other popular examples from abroad show that the BOP concept creates value both for the low-income population and participating companies.

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François Rouvier, Director Social Business Program, in conversation with Michael Alberg-Seberich regarding the program "Mobiliz" at Renault in France

Michael Alberg-Seberich (MAS): Dear Mr. Rouvier, how does one end up being the „Director Social Business Program“at Renault?

François Rouvier: Well, that’s a long and complicated history. In short, I realized, after successful years at Michelin, that there is a discrepancy between what I wanted to give to society and what I was able to initiate within the company. With Renault I wanted to take a different approach by taking concrete steps.

MAS: What exactly is the BOP-product at Renault?

François Rouvier: First of all, companies bear a wide-ranging responsibility – that’s the baseline. This responsibility includes, to some extent societal issues, such as poverty. As a global automobile manufacturer we have asked ourselves, what exactly can we do to contribute to a strengthened social solidarity in France? How can we employ our specific competences in a meaningful way? In the beginning we have set up an investment fund “Renault Mobiliz solidaire” as part of the employee savings plan, to allow employees to generate more meaning from their investment. The aim of the fund is to support social entrepreneurship with respect to mobility, that is facilitating mobility for people trying to gain access to the job market. In the meantime, we conducted research in corporation with the École des hautes études commerciales de Paris (HEC) on what concepts of mobility are already present. In the course of the analysis we came across garage solidaire [editorial note: garage solidaire is an initiative founded by Ives Moran, which focuses on car rental and repair for low-income households], which is primarily based on do-it-yourself concepts.

In light of over 3800 certified Renault dealers in France, we concluded that we expand the approach of garage solidaire insofar as offering professional repairs at cost. Thereby, we benefit low-income households, especially the ones who do not have the knowledge to repair their car on their own. In the long run we hope to gain trust in lost customers, as well as access to a new client-segment. To contribute to this strategy we gave a special credit for people willing to purchase a Renault, who normally would not have access to such credits in the first place. In conclusion, our strategy aims at nothing more than taking up the challenge for a way of CSR.

MAS: How did you manage to convince the Renault-dealers?

François Rouvier: One crucial aspect for participation was that dealers are able to strengthen their local roots and hence achieve a competitive advantage. What’s more, many of the dealers have already been in direct contact with low-income households, privately or through business. They refer to situations, like helping the son of a friend, who in a difficult situation and seeking for a cheap option to repair his car. In this respect, it was clear that these sort of favors can not be part of the operative business. Hence, we decided to outsource the decision of who is entitled to receive a repair at cost and who is not.

In order to guarantee objective and competent judgement, we have initiated a corporation with NGOs and the French employment agency (Pole Emploi (PE)), which combined obtain a sufficiently detailed database with respect to low-income households and mobility.

MAS: What about the economic probability?

François Rouvier: So far, the program is neither profitable nor creates losses. For our dealers the program is, besides the already mentioned aspect, interesting, because they an increase in flexibility: for times of the day in which no customers are scheduled, they can now schedule customers of the program Mobiliz. Further, dealers are entitled to refuse to take mobiliz-customers if it is the case, that the portion of the mobiliz-customers is too big. Ultimately we thrive for a symbioses between users of the program mobiliz and dealers.

MAS: How did you communicate the program Mobiliz?

François Rouvier: We were certain that interest of the media will be high. That is why we wanted to transport a clear key-message from the beginning: We do not start program Mobiliz to replace existing garages solidaire, but complement to their offer. We aim for a transparent exchange of information and mutual support. Concerning the internal communication, we came to the conclusion, that we will not actively market the program, but its participation to the license by our program-partners and PE.

MAS: What have you achieved so far, and what do you plan for the future?

François Rouvier: At this point in the development of the program, we have 360 participating Renault-dealers, with which we directly benefit over 2500 low-income households per year. With respect to the three to four million potential customers, we are focus to continue this path. To enhance existing external communication, we will launch a website, run by motivated current and former employees, who set themselves out to answer questions and remarks of users of the program Mobiliz.

MAS: Mr. Rouvier, thank you very much for your time.

Despite favourable economic developments, Germany still faces a number of societal challenges.

More than 16 million people in Germany (20% of the population) are threatened by poverty or social marginalisation. Furthermore, poverty is linked to other challenges in sectors such as health, education or housing.The unemployed, single parents as well as the inadequately educated are particularly affected.

Businesses can use their resources to address social marginalisation using the BOP concept.

IAs part of the BOP concept, businesses are developing products and services in a user-centred manner that are aimed at bringing long-term improvements to the quality of life of low-income households.Thereby, disadvantaged groups get access to services and products they did not have access to thus far.

Beyond the dialogue group that has been addressed, BOP approaches also benefit businesses at many levels, e.g. by…

  • … Enhanced employee loyalty.
  • … Greater capacity for innovation.
  • … Development of new markets and customer groups.
  • … Improved reputation and image perception among different stakeholders.

In other European countries, businesses have already developed business models to specifically target low-income house-holds.

In France, Belgium and the Netherlands, businesses such as Danone, Renault or Colruyt have applied the BOP concept – often explicitly aligning their ventures with the UN Sustainable Development Goals.The sectors of housing, mobility as well as food and nutrition are particularly well represented.

BOP concepts have great potential in many areas in Germany.

The market for satisfying the basic needs of low-income people is worth 80 to 110 billion euros in total, with particu-larly high spending for rent and energy, food as well as other consumer goods. Even the proportionally lowest expenses for basic health care exceed 2 billion euros.All areas of life provide great potential for innovative products and services with a societal and entrepreneurial added value.