The Human Element: Unlocking Value Creation Across the Base of the Pyramid

For years, the business world has been captivated by the potential of the “base of the pyramid": a market made up of the four billion people living on under $8 a day. 

The theory is elegant: companies could do well by doing good, selling socially beneficial products like eyeglasses while turning a profit.

But in reality, the results remain stubbornly mixed.

In his latest paper, “Humanizing the Base of the Pyramid: Exploring the Influence of Resource (Dis)Advantages on Value Creation,” Ted London, the Ford Motor Co. clinical professor of business administration at the Ross School of Business, points to a blind spot in these strategies: a failure to humanize the market. London, alongside co-authors Lisa Jones Christensen, Tyson Mackey, Alison Mackey, Heather Esper, and Andrew Grogan-Kaylor, argues that instead of recognizing the BoP as a highly diverse group of individuals with different lives and resources, corporate managers and researchers routinely default to treating these four billion people as an undifferentiated monolith.

“Perhaps unintentionally, managers have dehumanized the BoP by viewing them as a homogeneous group of people mainly defined by their income limitations,” said London. “We know in our heart of hearts they're not; yet when you hear about businesses serving the BoP, their definition of these potential customers is very simplistic and does not meaningfully capture the diversity that is present.”

To challenge this blunt approach, London’s study tracked over 400 visually impaired people in rural India to see how buying low-cost eyeglasses created personal and financial value based on their starting wealth and resources. The concept is called value creation.

Instead of just looking at whether their income went up, the researchers took a broader approach by tracking how the glasses improved their financial situation, their capabilities and agency, and their personal relationships.

"You and I buy products that have no economic return, because they make us healthier and they connect us with people,” said London. “Same with the base of the pyramid. They don't just buy things based on financial returns, so that's why we have used a multidimensional view of well-being to understand value creation."

Head Start vs. Great Equalizer

The study’s results reveal that the relative value created from the purchase and use of reading glasses depends on a consumer's starting baseline resources, operating through two distinct mechanisms:

• The Head Start Effect (Cumulative Advantage): Driven by acquired advantages — resources that are earned, such as money or educational attainment. For example, a literate small-business owner whose eyesight is failing can immediately leverage a new pair of glasses to read more, work faster, and make more money. Because they started in an advantaged position in terms of acquired resources, the glasses let them get even further ahead compared to a less-advantaged counterpart. 
• The Great Equalizer Effect (Diminishing Marginal Returns): Driven by ascribed advantages — circumstances inherited by birth or environment, like gender or geographic isolation. Consider a small business owner whose ability to develop workarounds to overcome their failing eyesight is constrained by their isolation or their gender. For them, getting a pair of glasses can be a game-changer when compared to someone not facing similar gender or geographic constraints. Because the eyeglasses act as an equalizer for someone starting further behind, they have the most to gain, allowing them to close the gap with their more endowed counterparts. 

The research concludes that success in the BoP marketplace is based on understanding how a product’s true value depends heavily on a customer’s unique situation and broader life needs, not just their income. Companies that take this human-centered approach can develop far more effective pricing, distribution, and social impact strategies, driving both social good and stronger business performance.

The Roots of Self-Investment

For London, this insight is deeply personal. His approach to the research was inspired by his own mother’s lived experience as a single parent. 

 "She worked hard, she invested in herself and was committed to investing in us," London explained. "We didn’t have a lot of money growing up. My mom drove a school bus and cleaned houses while earning her degree as a social worker.” 

Even with limited financial resources, London said his mother prioritized experiences over material things, taking the family on camping trips across the United States and even to Europe, which offered a window into a larger world. 

“Instead of regretting what we didn't have, we began to appreciate what we did have," London said. "So it was really my mom shaping this kind of thinking for me." 

It is this same belief in human potential that drives London's work today on the role of business in addressing social issues. “We have not yet shown that we can donate our way out of poverty,” London said. “Donations are great, but we need more. We also need to use the power of business to unlock authentic social impact at scale, which is critical in raising 4 billion people. Used properly, business offers a powerful tool for making the world more equitable.” 

Ultimately, it exemplifies the Ross mission of building a better world through business.

Read the paper