BOP Organisational Barriers To Implementation

Bottom-of-the-Pyramid:
ORGANIZATIONAL BARRIERS
TO IMPLEMENTATION
Mette Olsen
Eva Boxenbaum
The leading global companies of 2020 will be those that provide goods and
services and reach new customers in ways that address the worlds major challengesincluding poverty, climate change, resource depletion, globalization,
and demographic shifts.World Business Council for Sustainable
Development, 20061
he idea that corporate sustainability is not only the right thing

to do, but also sensible from a business perspective is becoming
increasingly popular. 2 However, efforts to establish an explicit link
between sustainability and a companys nancial performance have
so far provided mixed results. Strategic models for sustainability rarely extend
beyond intangible reputation effects or incremental cost advantages.3 As a result,
the business case for sustainability remains a fairly illusive one.
One of the most promising avenues for establishing a stronger business
case for sustainability is the emerging emphasis on sustainability as a driver
for the creation of a new market space and a catalyst of creative destruction.4
Efforts to apply this business case in practice have primarily targeted the largely
untapped market opportunities in the developing world, considered by many to
be an ideal arena for integrating business with sustainability.5
In this area of research, one of the earliest and most inuential schools
of thought has come to be known as Bottom-of-the-Pyramid (BOP). Coined
by C.K. Prahalad and S.L. Hart, the BOP concept proposes that there is a strong
business case associated with the pursuit of the largely untapped purchasing
power at the bottom of the worlds economic pyramid. By viewing consumers in the developing world as resourceful entrepreneurs and value-conscious
consumers rather than as victims, Prahalad and Hart were among the rst
to suggest that large multinationals (MNCs) can make signicant prots and
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Bottom-of-the-Pyramid: Organizational Barriers to Implementation
simultaneously help alleviate poverty by selling products to the poor. Some of

the rst initiatives along these lines were taken by Procter & Gamble and Unilever, which have developed affordable, for-prot consumer products for some of
the poorest regions of the world and simultaneously targeted widespread social
problems such as water pollution and iodine deciency. For the present purpose,
we dene BOP as the creation of new prot-seeking market opportunities to
low-income segments in the developing world while simultaneously contributing to the sustainable development of these regions.
Interestingly, while both scholars and practitioners have paid much attention to BOP management theory and proclaimed it to be the next big wave to
hit large multinationals, few companies have as yet succeeded in implementing
it. Despite the widely reported successes of early adopters like Procter & Gamble
and Unilever, a more prevalent adoption has yet to manifest itself in organizational practice. This contrast provokes the question: What is preventing companies that adhere to the principles of BOP from adopting this new sustainability
practice?
While most current debates on BOP either outline the business case for
it6 or challenge its features,7 there have also been some attempts to identify barriers to adoption. Most of this attention has been paid to the external barriers
that might be preventing a more wide-spread adoption of such ideas, e.g., lack
of infrastructure, corruption of local governments, problems with distribution
networks, low educational levels, and lack
Mette Olsen holds an M.Sc. in International
of buying power.8 Although external facMarketing and Management and conducts research
tors are most certainly important, they do
in the Department of Organization at Copenhagen
not account for the internal organizational
Business School. <mette_olsen_80@hotmail.com>
barriers that, regardless of the external
Eva Boxenbaum is an Associate Professor in
conditions, may affect the implementation the Department of Organization at Copenhagen
Business School. <eb.ioa@cbs.dk>
of BOP in organizational practices. Until
now, very little attention has been paid
to the internal organizational barriers that, all else being equal, can pose signicant barriers to the bringing of BOP from idea to action, even within the most
procient and forward-thinking MNCs. Further insight into the organizational
implementation of BOP is important because this practice will often have more
signicant organizational ramications9 than less radical types of sustainability
practices that can be implemented piecemeal.
Our study traces recent efforts to implement a BOP strategy in the Danish
biotech company Novozymes. This multinational company is the worlds largest
producer of enzymes and micro-organisms for industrial use and is, more importantly, widely recognized as a top performer in corporate sustainability. For the
seventh year in a row, the Dow Jones Sustainability Indexes ranked the company as the top sustainable biotechnology share in 2007, not only in Europe but
also worldwide.10 Despite its unquestionable commitment to sustainabilityand
a long track record of successes in the implementation of new sustainability initiativesNovozymes encountered signicant obstacles in the implementation of
BOP. We report on the organizational barriers that the corporate sustainability
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unit has encountered over the past three years in its efforts to implement a BOP
initiative within key business areas.
Since few companies undertake the BOP challenge in the rst place,
Novozymes represents a unique case. Not only is it one of the few large multinational companies that is trying to implement this new branch of sustainability
practices, it is also a company that makes industrial products and hence deals
only indirectly with the end consumers that might be targeted in conventional
BOP strategies.11 The empirical study was conducted in two steps. We started
the study in the spring of 2007, a year after the rst implementation efforts had
been initiated, and followed up a year later when the initial implementation
strategy had been abandoned and a new strategy was well under way.
Our study of the organizational barriers that the BOP project encountered
in Novozymes sheds new light on the question of how to go about implementing
new sustainability-driven business initiatives into organizational practice. This
topic is a salient one for companies that desire to build or maintain a sustainability prole and to pursue new business opportunities through sustainability. The
World Business Council for Sustainable Development predicts that the companies that will place amongst the top sustainability performers in future years will
be those who reach out to new markets while simultaneously addressing some
of the worlds biggest social and environmental problems.12
Bottom of the Pyramid

BOP can be dened as the creation of new prot-seeking market opportunities to low-income segments in the developing world with the simultaneous
goal of contributing to the resolution of signicant societal problems in these
regions. A key component of the BOP rationale is the belief that there is a prot
to be made from doing good. This is also what distinguishes it from corporate philanthropy, which traditionally does not require an income-generating
component. Another central element in the BOP argument is the conceptualization of market opportunities, which generally refers to the introduction of
new products, or a reconguration of existing ones, that allows output to be
sold above the cost of production to consumers in low-income segments.13 The
emphasis on consumers in low-income segments in the BOP rationaleoften
living in extreme poverty under one dollar per daydistinguishes it from some
of the later branches of this discourse, e.g., the notions of sustainable livelihoods and inclusive business.14 These newer concepts generally take a broader
view of the market opportunities available to large MNCs. They propose that
the people at the bottom of the pyramid should not only be regarded as consumers but also as producers and business partners, a line of thinking that was put
forth by Karnani in his critique of the BOP concept.15 While there are potentially
compelling reasons for widening the denition of market opportunities beyond
consumer goods for low-income segments, we focus on the BOP concept in its
original form, i.e., as a business strategy aimed at selling prot-seeking products
to low-income segments while simultaneously contributing to the resolution of
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signicant societal problems in these regions. This denition is closely linked to

the framework set forth by the United Nations Millennium Development Goals.
These goals include hunger alleviation, universal education, gender equity, child
health, maternal health, HIV/AIDS combat, environmental sustainability, and
global partnerships.16 One specic target is to reduce extreme poverty to half
its current level by the year 2015. According to the BOP experts Prahalad and
Hammond, the BOP initiative will not only eradicate poverty, but also cure economic stagnation, deation, governmental collapse, civil wars, and terrorism.17
Multinational companies, in collaboration with other global actors, are considered instrumental in achieving these goals.
One of the most interesting implications of BOP is the radical impact it
can have on a companys core business model. Contrary to much of todays corporate sustainability activity, a great proportion of which consists of the development and communication of corporate sustainability policies and targets, BOP
requires companies to conjure up new products and venture into completely
different market segments with a concrete sustainable development component.
This orientation implies the crafting of entirely new business solutions related
to buying, manufacturing, packaging, marketing, distributing, and advertising
products. Accordingly, BOP projects cannot be executed by only a few people
within the company, they must be integrated into key areas in operations where
decisions on new products and markets are made and executed. For most companies, BOP therefore requires comprehensive organizational change and heavy
involvement of key business areas responsible for new market creationsomething that far exceeds what is required to implement most other sustainability
activities.
The Case of Novozymes

The Danish multinational corporation Novozymes is the worlds largest
producer of enzymes and micro-organisms, which enable industrial producers
across a wide range of industries to create better end-products while also saving signicant raw materials and energy consumption in the production process.
The company employs state of the art genetic engineering to develop and produce enzymes, biological organisms, biopolymers, and pharmaceutical proteins
that substitute for more toxic or more costly synthetic chemicals that are used
in the production of everyday products such as detergents, pharmaceuticals,
food, and textiles. Novozymes is also the worlds largest producer of enzymes
for the production of bio-ethanol, which is believed by many to be a sustainable substitute for fossil fuel sources. Hence, in many instances the company is
demonstrating its commitment to sustainable development by delivering more
environmentally friendly alternatives to a wide range of industrial processes.
This is also clearly stated in the companys overall vision, which states that the
company will use its biological solutions to create the necessary balance between
better business, cleaner environment, and better lives.18
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Sustainability Policies, Performance, and Structure

Novozymes has a long history of working with corporate social responsibility and sustainability, a past it shares with the Danish pharmaceutical
company Novo Nordisk from which it demerged in 2000. Up until the commencement of this study in 2006, the majority of Novozymess sustainability
activities were anchored in a corporate sustainability function whose mandate
is to ensure compliance with corporate sustainability policies and to facilitate
the implementation of selected sustainability activities into various areas of the
business.
At that time, the corporate sustainability function reported to a sustainability strategy group that dened the strategic direction for the companys
sustainability activities, an organizational structure that resembles that of many
large companies. Most sustainability initiatives were formulated centrally and
took the form of corporate sustainability policies, targets, or management systems with which specic units within the company subsequently had to comply.
Examples include targets for a decrease in the consumption of water and energy
within Novozymess production facilities and compliance to core human and
labor rights principles across all areas of the business as well as in relation to key
suppliers.19
To ensure accountability to the companys sustainability policies and targets, Novozymes was one of the rst companies to report on its nancial, social,
and environmental performance in an integrated annual report. This triple bottom line reporting practice is supplemented by a bonus scheme that rewards
employees and managers for the companys ability to reach not only its nancial
targets, but also its social and environmental targets.
Novozymes consistently receives international recognition for its corporate sustainability performance. For instance, in 2007, Novozymes was rated the
most sustainable biotechnology company in Europe as well as worldwide.20 In
2008, Novozymes was ranked amongst the world's 99 most ethical companies
by the Ethisphere Institute.21 This result indicates not only that the company is
highly committed to sustainability, but also that it has a remarkably strong track
record of implementing key sustainability initiatives of importance to the investor community.
New Sustainability Strategy:

From Risk Management to Business Opportunity
In response to new developments in the global sustainability debate,
Novozymess sustainability strategy group launched a new corporate sustainability strategy in 2006. This new strategy shifted the focus from a risk management
approach to a business opportunity orientation. While the previous sustainability strategy had focused primarily on the development of (and compliance
with) corporate sustainability policies and targets, the new sustainability strategy
wanted to shift the focus towards the creation of new sustainability-driven business opportunities. Essentially, the change consisted in conceptualizing sustainability as a potential source of revenue rather than a necessary expense. The
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change implied a greater focus on the companys technologies and capabilities,

which in many instances required a more active engagement of the business
areas that are responsible for developing and marketing new products. The new
strategy therefore specically targeted the cross-functional strategy groups and
afliated actors in operations responsible for developing new market opportunities within Novozymess existing industries. The purpose was to make these
strategy groups embrace sustainability as a core parameter for prot-generating
activities, including product development, marketing, and sales. As part of this
strategy, two new sustainability initiatives were launched in 2006.
One initiative was to make more intensive use of the so-called Life Cycle
Assessment (LCA) studies in the companys strategic sales and marketing efforts.
LCA is a methodology that makes it possible to calculate the environmental
impact of the companys products from cradle to grave. In 2006, key pioneers in
the environmental group had already conducted several studies demonstrating
the positive environmental impact of Novozymess biological solutions. A project
team composed of sales and marketing representatives helped bring this idea to
the cross-functional strategy groups, which dene the current and future direction for Novozymess major industries. Without any major obstacles, the LCAs
were adopted as a strong sales tool and implemented into the core operating
procedures in many of the strategy groups. Today, LCA represents a standard
methodology in Novozymes and the studies are in high demand by the strategy
groups as well as related areas of the organization, not least marketing and sales.
The other initiative that derived from the 2006 sustainability strategy
related to the fundamental ideas associated with BOP and the Millennium
Development Goals. It targeted the lowest consumer segment, i.e., the least fortunate consumers in the developing world living for less than one dollar per day.
This project, which we shall refer to as the BOP project, took inspiration from
some of Novozymess largest customers, Procter & Gamble and Unilever, which
at that time were already pursuing pro-poor, for-prot business activities in the
developing world. The BOP initiative, which came from a segment of high-level
managers represented in the sustainability strategy group, was inspired by the
Millennium Development Goals. As one respondent said:
The idea that we should do something along the lines of the Millennium Development Goals started in our sustainability strategy group, which was a layer of top
managers in the company that denes the sustainability strategy for the company.
It was said at that time that we should investigate the possibilities that we could
contribute to the Millennium Development Goals with our technology. The Director of Sales and Marketing was a member of this group and his idea was that we
could possibly nd some areas where we could contribute with our technology
without it being too expensive.
Under the heading Unlocking the potential of our technologyCreating business opportunities by solving some of the worlds biggest problems, the corporate sustainability function formulated two objectives for the BOP project: to
contribute to solving some of the worlds biggest problems; and to create new
business opportunities capable of securing long-term revenue growth. The BOP
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project was to create new products (or recongure existing ones) that would
have a high societal impact on chosen segments in the developing world, while
also establishing an opportunity for future revenue streams. A brainstorm session was held with selected people from R&D and sixteen BOP-related business
ideas were generated, most of them imaginary couplings between the companys
existing technologies and one or more of the Millennium Development Goals,
such as the alleviation of hunger or the reversion of the spread of HIV. It was
expected that the cross-functional strategy groups would select one or more of
these creative ideas and bring them to fruition with support from the sustainability unit. This, however, did not happen.
Although the BOP project was initiated and presented simultaneously
with the LCA project in 2006, the BOP project did not receive the same warm
welcome in the strategy groups. In contrast, it was largely regarded by the strategy groups and afliated actors as a rather utopian business proposal. Where
they could immediately envision the added value of the LCAs, they regarded the
BOP project as intangible, risky, and potentially extremely costly. This remarkable difference in the reception of the two projects forced the corporate sustainability function to re-consider its initial implementation strategy for the BOP
project. They adopted a new approach in which they themselves decided to
pursue one of the BOP project proposals with the intention of making it more
tangible and perhaps eventually transposing it to the strategy groups yet again.
While this effort is still well under way, the BOP project has not yet been implemented into organizational practice today, almost three years after the introduction of the new sustainability strategy. This timeline underscores the difculty
associated with implementing a radically new sustainability initiative like the
BOP project. Our aim here is to explain why this particular project was so difcult to implement into the operating practice of the strategy groups. We also
consider the strategies used by the corporate sustainability function to overcome
the organizational barriers to implementation.
Methods
We traced the corporate sustainability functions implementation effort
from early 2006 to mid-2008, a period that stretches from the initial launch of
the new sustainability strategy to the more recent change in implementation
strategy. During this period, the corporate sustainability function has attempted
two distinct implementation strategies, a decentralized and a centralized
approach, which we examined separately.
Implementation Strategy 1: The Decentralized Approach (2006)

In keeping with the fundamental line of thinking in the corporate sustainability strategy from 2006, the sustainability function initially sought to
transmit the BOP idea to the cross-functional strategy groups and afliated
actors in operations and let them drive the project forward. In theory, this
approach meant that the strategy groups would have to allocate the necessary
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resources to these projects themselves, as with any other business project, and
develop new products and market creation strategies on their own. The head
of sustainability at that time explained the reasoning behind this decentralized
strategy as follows:
The short version is that sustainability cannot be some detached branch tended
to by the corporate sustainability function while the core business does nothing
at all. The idea was that we have to make money on it if we do something in the
third world. We do not want to separate it because then it will turn into this religious thing completely detached from the everyday business.
The corporate sustainability function was of the opinion that line-of-business

anchoring would be the best way to implement the BOP project. In line with
this thinking, the sustainability managers and selected representatives from Sales
and Marketing introduced the project to the strategy groups in the summer of
2006 alongside a presentation of the LCA project. It turned out that while most
of the strategy groups were willing to embrace the LCA project, the BOP project was collectively rejected by these top decision organs in operations, none of
whom found it to be realistic within the scope of their current business operations or applicable to their specic industries.
We collected data on this phase of implementation in winter and spring
2007. Our data sources include policy and strategy documents, PowerPoint presentations, and other corporate material that might in some way represent the
2006 sustainability strategy, key features of the BOP project, and the sustainability functions presentation of the project to operations. We also collected
data directly from employees, interviewing seven employees, two from the sustainability unit and ve from operations, all of which were directly involved in
some way with the implementation of the BOP project. A few days prior to the
interview, each informant lled out a short survey about their perceptions of the
BOP project, after which we interviewed each of them for about 60 minutes to
deepen our understanding of their perceptions. These semi-structured interviews
were conducted in person and on-site; they were tape-recorded and subsequently transcribed.
Implementation Strategy 2: The Centralized Approach (2007-2008)

As a result of the general skepticism toward the BOP project among the
strategy groups and afliated actors in operations, the corporate sustainability
function returned to the drawing board in late 2006. After some consultations
and debate, they decided to temporarily abandon the decentralization strategy
and nd alternative solutions to implementation. As part of this process, they
recruited a new employee with the specic mandate to further develop the BOP
project. The decision was also made to anchor the BOP project in the corporate
sustainability function where it would be developed, as in an incubator, before
another attempt at transferring the project to operations. Having forfeited the
idea that the strategy groups in operations would allocate resources for BOPrelated project ideas, this centralized approach implied that managers in the
corporate sustainability function would mobilize external and internal funds
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for a small portfolio of ideas that they would develop into concrete projects in
collaboration with both external and internal collaborators. Action was taken
on this new implementation strategy in 2007 and 2008.
We collected data on the centralized implementation strategy in the summer of 2008. Our data consist of corporate sustainability policies and descriptions of the BOP project contained in PowerPoint presentations from 2007 and
2008. We also interviewed two managers in the sustainability function who are
actively involved with the BOP project. These interviews revolved around new
initiatives to implement the BOP project and their efforts to get feedback from
top management, operations, and external collaborators on these new initiatives. Both interviews were recorded and transcribed.
Data Analysis
We wrote up detailed case study notes on an ongoing basis to facilitate
the processing of the extensive amount of data. We also kept a logbook where
ongoing reections were jotted down. These write-ups and the logbook were
central to the generation of more structured insights. A more systematic analysis
of the interview data consisted in coding the transcripts for barriers to implementation. In line with the principles of inductive analysis, we let the barriers
emerge from the data rather than from existing literature or preconceived ideas
about barriers to implementation. We later compared the identied barriers with
theoretical constructs from the change management literature.
A common way of thinking about change management is to conceptualize cognition, routine, and structure as more or less discrete steps in the process
of implementing a new practice. For instance, change in mental models is often
regarded as a step that precedes the challenge to existing routines and structures.22 However, cognitive change does not always lead to behavioral and structural change. In fact, many change efforts fail, some suggest as many as 50% of
them.23 Stepwise models have come under increasing critique in recent years for
their inability to capture the more circular and complex nature of organizational
change processes.24 Just how cognition, routine, and structure interact with each
other to block the implementation of new practices remains a somewhat elusive
topic.25
During the rst part of the study (i.e., the decentralized strategy), we
arrived at four organizational barriers by moving back and forth between data
and theory (one cognitive, one processual, and two structural barriers) that
seemed to have prevented a change in behavior and hence blocked the rst
attempt at implementing the BOP project. The rst part of the case study therefore identies the four barriers and the mutually reinforcing relationship among
them.
When revisiting the company a year later in 2008 we identied a signicant change in implementation strategy from a decentralized to a centralized
approachboth of which align well with approaches described in the change
management literature.26 In our study of the centralized approach, we looked
more specically at how the sustainability function has tried to overcome the
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cognitive, processual, and structural barriers identied in the rst part of the
case study.
Organizational Barriers to Implementation

During 2006, it became increasingly apparent to Novozymess corporate sustainability managers that they were facing a number of rather rigorous
organizational barriers as they sought to motivate the cross-functional strategy
groups in operations to adopt the BOP project. These barriers posed a signicant
obstacle to implementation and ultimately contributed to the replacement of the
decentralized implementation strategy with a more centralized orientation. The
four barriers include a cognitive barrier of conicting mindsets, a process-related
barrier of radical change to routines, as well as two structural barriers that
appeared to underpin and reinforce them, namely, project evaluation criteria
and reward structures.
Barrier 1: Conicting Mindsets

The rst and perhaps most fundamental barrier to implementation relates
to the dominant mindsets of key actors in operations, which seems to have
deterred them from embracing the BOP project. Through a close investigation
of how key actors with a close afliation to the strategy groups in operations
made sense of the BOP project, we identied two fundamentally different mindsets: a trade-off mindset and a win-win mindset. These two mindsets, which
turned out to operate simultaneously, made contradictory claims about the
relationship between a companys nancial performance and its commitment
to sustainability.
The rst mindset, the trade-off mindset, reects the emphasis on shareholder value as the primary (and only) purpose of any business. This, of course,
resembles Friedmans classic proposition that the only responsibility a company
has is to increase its prots.27 In this mindset, any contribution to sustainability is seen as a cost to the company and not as a potential revenue driver.
When subscribing to this particular mindset, actors in operations were therefore
inclined to view the relationship between Novozymess nancial performance
and the commitment to sustainability as mutually exclusive.
On the opposite end of the spectrum, the win-win mindset resembled a far
more convergent understanding of the relationship between nancial performance and sustainability. This mindset seemed reminiscent of the more instrumental sustainability discourses that have emerged in recent years and subscribe
to the fundamental belief that sustainability and nancial performance can coexist peacefully and even mutually reinforce each other.28
Interestingly, when asked to indicate their view on the relationship
between sustainability and Novozymess nancial performance in the pre-interview survey, respondents from operations clearly indicated that both mindsets
were equally dominant at the operating level. More precisely, they gave equal
weight to the following two statements: companies have to accept certain
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compromises and trade-offs in nancial performance in order to accommodate

their social and environmental responsibilities and companies that serve society are automatically also serving the long-term interest of their shareholders; a
companys social and environmental responsibility and its nancial performance
are thus essentially a win-win relationship. Since both mindsets seemed to be
equally present at the operating level in Novozymes, they were both available to
subscribe to when interpreting a new sustainability practice. The following questions thus arose: which mindset did relevant actors in operations apply to the
BOP project? and why did they do so?
A careful analysis of the responses revealed that the win-win mindset
turned out to be applied primarily to sustainability projects that were perceived
to have a positive effect on product differentiation and the companys overall
reputation. It was striking that especially key sales and marketing representatives with a signicant inuence on the nal destiny of the BOP project gave
more weight to the win-win mindset when it provided an additional claim or
differentiator to their current sales and marketing efforts. As one such representative said:
For everyone in Marketing, if you have something where you can show an
added value to your customers, well, youll take it in a second.
In contrast, the win-win mindset, promoted by the corporate sustainability

function, proved far less prevalent when it came to the BOP project. Selected
representatives from operations tended not to endorse the statement that sustainability, in itself, could serve as a catalyst for the development of new product and market opportunities. In fact, when elaborating on the direct nancial
benets to be derived from such opportunities, most respondents found sustainability and new market creation to be an unlikely combination. Accordingly,
they tended to perceive the BOP project through the trade-off mindset, i.e., as
a project that would detract from the companys nancial resources rather than
generate them. As another respondent said:
A sustainability case is typically something that will involve a huge amount of
work, an extensive amount of resources, and a long time horizon before anything
at all happens. And part of what does happen is the creation of goodwill and a
good feeling and thats just not . . . thats not a nancial thing.
It appeared that the trade-off mindset, which has dominated much of the debate
on corporate social and environmental responsibility in the past, was indeed a
fairly prevalent logic in operations. Here, one representative from operations
explains how such trade-offs will occur when deciding between new BOP market opportunities with a wider societal objective and a more conventional (and
nancially convincing) business case:
You have a total of 10 resources and you can choose to use 5 resources on one
project that gives you 500 million and the last 5 on a project that give you 400
million. Now lets say you can now only use 3 resources for that last project
because you have to use the last two for something that gives us 0 million.
Come on! In that prioritization, we would always go for the rst scenario.
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A clear sign that operations generally subscribed to the trade-off mindset when
making sense of the BOP project was their tendency to divide corporate activities into two separate categories, business or sustainability. That the BOP project
fell into the latter category was evident from the informal christening of the BOP
project as the Save the World project. This nickname, coined by key actors in
Sales and Marketing who were involved in presenting the BOP project to the
strategy groups, helped further the perception of the BOP project as an act of
philanthropy rather than a viable business opportunity. As a consequence, the
project was deemed irrelevant to the priorities of the strategy groups. As this
same representative said:
That youre doing something that benets the world is not relevant in our prioritization. If it was, youd have to be a philanthropist saying: damn it, were doing
this! If we did a thing like this, we wouldnt be fullling our mandate.
What these ndings show is that the win-win mindset through which the sustainability managers were perceiving the BOP project did not carry through
to operations. When actors in operations made sense of the BOP project, they
applied the trade-off mindset, which erected a signicant barrier to implementation. While the issue of conicting mindset may well represent the most fundamental obstacle for the BOP project, it did not operate in isolation. A processual
barrier and two structural barriers prevented important actors in operations from
switching to a win-win mindset in their perception of the BOP project.
Barrier 2: Radical Change to Routines

Another reason that the BOP project did not receive a warm welcome
in Novozymess strategy groups stems from their difculty in establishing a continuity between this new sustainability practice and their existing work procedures. In contrast to the BOP project, the LCA project was immediately adopted
by the strategy groups since it appeared to many of them as an incremental addition to existing practice. The close afnity between the LCA project and their
work at the operating level meant that the LCAs did not present any conict.
The only operational change required by the strategy groups and afliated actors
in operations was a communicative one, namely, that of adding LCAs to existing
practice. As a respondent said:
The LCAs are a good operational supplement to what were already doing today
in that it can put numbers on some benets relatively easy. Thats no problem.
A related observation seemed to be that the LCAs simply t better with the
established way of thinking about and working with sustainability in Novozymes. The general perception seemed to be that Novozymess major contribution to sustainability was to make products with a positive environmental impact
within their existing industries and not to resolve a broader range of societal
problems in the third world. Another respondent noted:
You might say that the kind of sustainability we employ is the sustainability that
deals with environmental impact. You could probably write a list of 40 different
buzzwords like social responsibility, diversity, anti-bribery, environment, and all
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that stuff. When we are talking sustainability in the hallways, we are most often
discussing environmental impacts, greenhouse gasses and that stuff. . . . Should
we then feel guilty for not solving all the problems in the world? No. Because we
have made a better product that helps clean the world from carbon dioxide emissions, so we still have a healthy business and a healthy environmental prole in
everything we do. . . .
In contrast, since they could not connect the BOP project to anything familiar,
actors in operations perceived the BOP project as fundamentally misaligned with
their existing work processes and hence as requiring a complete reorientation of
practice:
In the [BOP] projects you would do, youd have to take a completely different
path from the way weve handled this stuff historically. . . . Its separate from the
way we normally sell our products so wed have to develop a completely different
business model.
This interpretation resonated with other respondents from operations, all of

which emphasized that one of the major reasons for the failed implementation
of the BOP project was that they simply had no idea how to approach a project
of this sort. Not only did they nd it difcult to apply the companys industrial
and high-technological business model to low-income consumer markets in the
developing world, they also struggled with the very notion of having to combine
business and sustainabilitynotably the socially oriented kindin one and the
same market development strategy. As one repondent observed:
Who even knows what the real problems are in these areas of the world? We
sure dont. We can sit and watch it on the news, but we have no clue about these
kinds of famine situations and nobody were in business with knows anything
about it either. So it would require a huge effort for us to undertake anything
close to serious in this area.
In contrast, the LCA project had been far easier for operations to translate into
commercial value. As mentioned before, the LCAs were presented as a sales
tool that could relatively easily demonstrate the positive environmental impact
of Novozymess products. Not surprisingly, this feature appealed strongly to
the sales and marketing organization who had a prominent role in the strategy
groups and immediately recognized the LCA project as a great opportunity and
willingly sponsored its adoption. It also helped that most of the strategy groups
had previously encountered the LCA tool and intuitively knew how to apply it
to their respective products and markets. Finally, the quantiable attributes of
the LCA project posed a sharp contrast to the more intangible BOP project. Since
operations had no prior experience with BOP projects and was offered no specic guidelines for how to proceed, they perceived this project as uncomfortably
ambiguous and highly intangible. Accordingly, one respondent asserted:
Here is something [the LCA tool] they can understand how to use. They feel
they can do something about it and that they can use it here and now. Whereas if
you take the . . . [BOP project], then what are we supposed to do about that? Its
so difcult and intangible!
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This difference in how the two new sustainability projects were received in
operations clearly demonstrates the barrier of radical change to routines. While
actors in operations were sufciently familiar with the LCA tool to connect it
to existing practice, the BOP project was out of reach and hence impossible for
them to integrate into their work routines.
It appears that this second barrier reinforced the previous one of conicting mindsets, which collectively produced a signicant obstacle to the implementation of the BOP project. In principle, though, obstacles of this kind could
be overcome by organizational learning and training programs. However, two
structural barriers added another layer of obstacles that effectively prevented
such learning from taking place.
Barrier 3: Project Evaluation Criteria

The third barrier, a structural barrier, relates to the project evaluation
criteria that the strategy groups in operations typically employed to assess new
market opportunities. It seemed that the BOP project collided particularly with
two specic evaluation criteria, respectively Net Present Value (NPV) and business risk evaluation. The NPV criterion is a common nancial metric used by
most companies when evaluating the value of new market opportunities. Business risk evaluation is similarly used to assess the risks associated with new projects. Since the BOP project was intended as a new market opportunity, it was
subject to both of these evaluation criteria in operations, just as were all other
new business projects.
However, when applying the NPV nancial metric to the BOP project,
key decision makers in operations were not able to identify business opportunities signicant enough for them to incorporate BOP into their existing product
portfolios. In fact, an NPV conceptualization seemed virtually impossible due to
the high levels of uncertainty surrounding any future revenue streams in a BOPrelated project. This outlook contributed to their collective refusal to undertake
such projects within the scope of their current businesses. In fact, a common
theme throughout all interviews was that the economic value that could be
derived from the BOP project was virtually non-existent:
This [type of project] does not add value. We havent identied any [BOP] projects that add economic value to an extent great enough for us to prioritize them.
The doubtful prospects for creating a viable return on investment result from
the NPV metric, a structural barrier, yet they also reect the trade-off mindset,
i.e., the general perception that costs will always exceed revenues when pursuing new market opportunities in the developing world. More specically, not
only was the lack of buying power in these regions perceived as a major obstacle
but so was also the high initial investment and signicant amount of nancial
resources that would be required to succeed in such regions. One of the respondents from operations explained the perceived magnitude of the required costs:
We would have to go to some of the emergency aid organizations like DANIDA.
We would have to go to the World Bank or other relevant actors who are looking
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at nancial models for how to go about stuff like this. We might even have to go
to companies like Nestl who has an interest in doing something similar and who
have a distribution network in those countries that we could benet from. And
nally, we would have to apply for funding either through United Nations related
organs or through the European Union.
To sum up, the BOP project appeared to be a complex, resource-intensive, and

time-consuming affair. Worst of all, however, was the general expectation that
BOP projects would produce meager nancial gains at best. The prospects for
more substantial gains were perceived to be extremely long term compared to
conventional business projects. This has a far longer time horizon than what
were used to, said one respondent.
The long time horizon of the BOP project fell entirely outside the scope of
the shorter-termed NPV metric, which was meant to ensure alignment between
activities in operations and Novozymess current market strategy. Another
respondent noted:
We have a short-term focus in almost every single one of our strategy groups. We
are concerned with strategically relevant thingsthings that can be brought to
market within four-ve years. And its just not possible to solve the worlds poverty issues in ve years even though somebody here might think it is.
The other project evaluation criterion that worked against the BOP project was the evaluation of business risks. This criterion was employed to assess
whether the risks associated with new projects might outweigh the opportunities of carrying them out. BOP projects tended to also receive a negative rating
on this assessment criterion. One identied risk pertained to price differentiation, a key inhibitory factor associated with the launching of a product specically for consumers or partners in the developing world. There was a general
understanding that products resulting from a BOP project would have to be sold
signicantly below the companys normal pricing policies. However, one concern
in the strategy groups was that undertaking a project of this kind could cause
resentment from existing customers in the developed world who were paying a
far higher price for the exact same product. As a result, the business risk would
be assessed as being high. A second identied risk consisted in causing lasting
damage to the companys reputation, e.g., if the project in question somehow
backred and caused unwanted media attention or damage to an otherwise
untainted public image. As a respondent explained:
We obviously cannot afford selling products to third world countries and then,
four months after, end up on the front page of a newspaper reporting that weve
given cancer to 700 Sudanese people.
Both the NPV and the business risk assessments indicate that the BOP
project failed to receive a passing grade. Gains were too low, risks were too high.
It may well be that the BOP project would hold promising economic potential
for large multinationals if it were assessed using more long-term criteria. Yet,
fact remains that the evaluation criteria applied to assess the viability of new
business projects in Novozymess strategy groups captured only the gains and
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the risks that would manifest short term. Hence, the use of short-term nancial
metrics and an emphasis on lower-risk projects ultimately created unfavorable
terms for the implementation of the more long-term and high-risk BOP project. This structural barrier had the effect of reinforcing the application of the
trade-off mindset to the BOP project and of preventing learning that could have
helped integrate the BOP project into existing work routines. A similar effect
was produced by incentive structures and discrepant mandates of the sustainability unit and operations.
Barrier 4: Incentive Structures and Discrepant Mandates

The fourth and nal organizational barrier gives us further insight into
how structural barriers prevented actors in operations from shifting mindsets
and learning new practices that would enable them to embrace the BOP project.
This barrier pertains to the presence of the discrepant organizational mandates
of various actors involved in the BOP project and to the incentive structures that
reinforced certain behaviors in operations. These two features turned out to be
pivotal in understanding what blocked the strategy groups from adopting the
BOP project.
Part of the resistance to the BOP project at the operating level appeared
to be rooted in different mandates assigned to two segments of the organization:
the core decision makers in operations; and the corporate sustainability function.
The objectives of these two segments are distinctly different and may at times
come into opposition with one another. At one end of the spectrum, the corporate sustainability function has as its primary role to advocate some of the latest
external trends in corporate sustainability and to diffuse such ideas from the corporate level to the operational level. As representatives of organizational change,
in this case with the BOP project, the managers in the corporate sustainability
function pursued an agenda that turned out to collide with the priorities of the
strategy groups in operations. At the other end of the spectrum, the strategy
groups and afliated actors in operations struggled to protect their operational
efciency in the face of organizational pressure to engage in what they perceived
as costly change.
A closer look at the different mandates reveals that these mandates are
reinforced in the companys incentive structures. Employees do not necessarily adopt new practices because they reect their dominant mindsets; they may
sometimes do so simply because they are rewarded for it.29 The incentive system
in Novozymess strategy groups played an important role in motivating actors in
operations to refuse the BOP project. Rewards for the strategy groups and afliated actors in operations are allocated as a function of their key performance
indicators (KPIs), which are often highly tangible nancial performance targets
related to the companys performance within a given industry. With the companys incentive structures closely tied to the nancial KPIs of the strategy groups,
organizational actors in operations had no incentive to prioritize projects that
scored poorly on the strict criteria of KPIs. As one of them explained:
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When something cant be measured in concrete terms then its not going to be
valued. And I think when youre busy and you have a deadline tomorrow, then
youll do whatever you can to fulll your KPIs. Thats what the KPIs are there for;
to make sure you keep your focus.
The incentive structures thus represent an extra dimension that made the strategy groups and afliated actors in operations reject the BOP project. These structures assigned priority to the projects that awarded actors in operations with the
highest remuneration, prestige, and, not least, personal bonuses in accordance
with their KPIs. As such, the incentive structures effectively protected operational efciency and discouraged the strategy groups from taking nancial risks.
As an unintended consequence, it became very difcult for the sustainability
function to accomplish their mandate of implementing the BOP project. By
blocking initiatives that would distract from operational efciency and nancial performance, the incentive structures kept the strategy groups focused on
achieving short-term nancial gain rather than on exploring long-term win-win
opportunities in the BOP project. Accordingly, the strategy groups had no structural incentive to expand their horizon and to develop capabilities related to the
BOP project.
The collective ndings above suggest that the barriers to implementation that the sustainability department faced were rather signicant. They consisted of a cognitive barrier and a routine-related barrier that were reinforced
by structures that were put in place to ensure high nancial performance of the
company. In summary, although a win-win mindset was cognitively available
to actors in operations, the required radical change to routines, the short-term
evaluation criteria and the companys existing incentive structures effectively
prevented the strategy groups from applying this mindset to the BOP project.
As a result, the sustainability function had to abandon the decentralization
approach that it had applied since 2006 in the hope that operations would
embrace the BOP project and implement it. The decentralization strategy was
promptly replaced by a centralization approach that took effect in 2007. Since
this strategy is still under development in Novozymes, we report only on their
recent initiatives with this implementation strategy, not on the outcomes that
may eventually ow from it.
Shift in Implementation Approach

After abandoning its initial efforts to convince the strategy groups in
operations to embrace the BOP project, the sustainability function reformulated
its implementation strategy along the lines of a more centralized approach.
This change in strategy was accompanied by a realization that top management
would have to become more involved if this project were to succeed. Arguably,
if top management was fully determined to implement this project, it would
be possible to do so. Top management could, in principle, remove or lower the
structural barriers to change in the strategy groups, e.g., by allocating the necessary funds needed to outweigh the initial development costs. The question thus
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arises: Just how supportive of the BOP project was top management? Perhaps
surprisingly, our data indicate that top management had supported this project
since its very beginning. As a result, when the sustainability function asked for
more resources to pursue the idea through a centralized effort, top management
was forthcoming. As a respondent from sustainability noted:
Top management has given us space in which to work, they nd it interesting,
and they give us time. We received generous nancial support to conduct a large
workshop in South Africa this past February and we have been given additional
resources and have had consultants involved. So we are engaged in many activities and have beneted from additional resources and more patience.
While top management has been supportive, it has also maintained a set of strict
conditions for its support, notably that it must be convinced that the BOP project
can eventually realize its inherent win-win feature. As another responent stated:
Top management does not proclaim that we simply must have this project [the
BOP project] at whatever expense. They could have done so, but they did not. So
it may be fair to say that we do not have the easiest of conditions for this project.
We really have to believe in it ourselves, work on it ourselves, and then try to
convince themconstantly, that is. I do believe that this is the right way to do
it because it will generate a real organic growth rather than something glued-on
that subsequently has to be integrated.
Clearly, this criterion presents signicant challenges for the sustainability function because the BOP project is regarded more as a strategic intention than as
a formal project with the afliated resources. Accordingly, access to company
experts (e.g., in product development, sales, and marketing) is limited. This
obstacle has not, however, prevented the sustainability function from exploring
other avenues. The sustainability managers have taken the initial steps to overcome cognitive and processual constraints by trying to create real evidence of
the win-win business case for BOP and by building up practical experience and
knowledge in this area. It has also proceeded to discuss the structural barriers to
implementation and is contemplating alternative solutions in this area.
Building Experience and Providing Evidence of Win-Win

A key element in the centralized implementation approach has been to
overcome some of the cognitive and processual constraints identied in the initial implementation efforts. Via the centralized strategy, the sustainability function is attempting to make the BOP project more concrete by pursuing a specic
project track which can provide more convincing evidence of the inherent
win-win potential of BOP strategies. The rst step in this direction has consisted
of selecting a specic product area that would help turn the more abstract Millennium Development Goals into something more tangible. The sustainability
manager who was hired to further pursue the BOP project after the initial implementation effort had failed explains the approach:
First I collected all the arguments and talked to our R&D people, tried to describe
a possible path forward. It was probably then that we selected nutritional products as our focus area. . . . Now we no longer talk about projects in terms of the
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Millennium Development Goals, now we focus on what we call hidden nutritional hunger in Bottom of the Pyramid Markets.
The sustainability functions choice to focus on nutrition is not a coincidence

. In the initial implementation efforts, the nutrition case had been the one project proposal from the initial Research and Development (R&D) workshop that
resonated best with Novozymess technology in relation to the Millennium
Development Goals. A respondent explained:
If we target the food chain in the BOP market, it is because it is gigantic, because
we believe we can make an enormous difference with enzyme technology in
terms of increasing the nutritional value of basic food products, calorie-wise as
well as in terms of minerals. Then we will be able to do something very good for
the people who eat this food every day.
After choosing nutrition as the overall focus area, the sustainability function
decided that they needed to operationalize the project in greater depth and build
up more experience and knowledge within this area. Together with a few people
in R&D, they started building a potential road map which explored different
market development scenarios and different partnership models in the nutrition
area in Sub-Saharan Africa. As one of them noted:
We drew up a value chain with some suppliers and some producers and some
products and some recipients. We found school nutritional programs to be most
meaningful, also in relation to the Millennium Development Goals and the need
of these countries to develop. Then we were able to select some of our large current customers in this value chain and convince them that we could use the
enzyme technology in a new way and thereby contribute to doing additional business on behalf of our customer.
While these efforts are currently under way, it is the hope of the sustainability
function that the centralized strategy will eventually lead to the initiation of a
concrete BOP nutrition project, which will provide a more compelling case for
the rest of the organization on the importance, relevance and feasibility of BOP
strategies to Novozymes. Furthermore, this respondent noted:
If just one project succeeds, it will reinforce the argument that other projects
should be pursued more aggressively. . . . I just know that if we made a project
with 22 million children spread across 10 developing countries in Africa and Asia,
then it would be the rst thing we would give as an example. My point is that
there is employee attraction in the wider societal perspective; a brand value. I
believe that a signicant part of our human relations and the drive people have
relate to the fact that the solutions we provide accomplish something good. Not
only do we do something for the environment, we also do good for people. I
think it would give an entirely new boost, a boost of energy, if we were allowed to
develop such projects.
However, building up experience within BOP and providing evidence of its

inherent win-win potential are not the only elements of the centralized strategy.
The centralized strategy also has a structural component.
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Lowering Structural Barriers

Another key element of the centralized implementation approach has
been to nd a solution to the structural barriers encountered in the cross-functional strategy groups in operations. Even though the central implementation
strategy successfully circumvents the barriers encountered in the strategy groups
and, hence, allows the BOP project to be further conceptualized, it clearly also
has its own shortcomings. Firstly, a centralized approach requires heavy investments from top managements and external investment funds since resources
are not allocated to the project from areas such as R&D, Production, Sales, and
Marketing. Secondly, considering the goal to make BOP an integrated part of the
companys future market development efforts, the centralized approach is, at
best, a temporary solution. Here, one of the sustainability managers explains the
limits to which the sustainability function can (and should) be involved in the
actual implementation efforts:
My job is not to complete the process, I just have to make it to the point where
the strategy groups say: Fine, we will register this as a project and run it. We will
get back to you with questions.
However, how can the sustainability function enable a successful transition

process to the companys operating core considering the structural barriers to
implementation in the strategy groups? To address this issue, the sustainability
function is currently considering two options: Either structural changes can be
executed within the existing strategy groups to better prepare them for future
BOP efforts or, alternatively, a whole new set-up can be created within the company where projects with longer payback horizons and ambiguous, high-risk
business climates would be better nourished. The sustainability manager further
noted:
Either you could tell all the strategy groups in operations to take X percent BOP
projects or you could make a new strategy group reserved for BOP projects. It
would have very different goals than the other groups. If you did it this way you
could keep the status quo for all the other groups. This new function would then
resemble what is sometimes called Front End Champions: if someone has a good
idea for business but we have not yet developed the technology or we do not
have any experience with it, then there are some people called Front End Champions that you consult. Tiny new ideas start there, the ideas that may take 10-15
years to develop. Ideas that will take only a few years go directly to R&D.
Since these discussions were still under development at the time of data collection, we cannot report on its nal form or on responses from top management.
It is clear, however, that sustainability managers and top management continue
to collaborate on making the BOP project succeed without compromising corporate nancial performance. The sustainability function is therefore very much
aware of the need to develop a viable transition strategy for potential projects.
What this analysis showed is that a new and more centralized implementation strategy is well under way in Novozymes. While the business case has yet
to be established, a number of concrete ideas are under development and an
eventual transfer process has been envisioned. This centralized implementation
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strategy requires signicant initial investments from top management and the
corporate sustainability function; investments that may prove helpful in loosening the cognitive, processual, and structural grips that until now have prevented
the implementation of the BOP project.
Interlocking Cognitive, Processual, and Structural Barriers

Our case study identied four barriers to implementation, the rst of
which was conicting mindsets, a cognitive barrier. This barrier reects previous
research that found employees to be unlikely to implement new practices that
they regard as unjustied or otherwise counter-productive for organizational
performance.30 Similarly, employees are unlikely to implement new practices
that collide with the deeper values and beliefs that guide their interpretations
and actions.31 In contrast to some previous studies, we did not nd support for
the claim that employees were cynical about implementing an incessant ow of
new managerial initiatives that they regarded as impediments to organizational
productivity.32 Aside from the occasional ribbing about the companys save the
world project, employees in operations did not express a persistent sentiment
of cynicism about the steady ow of new sustainability practices that they are
asked to implement. However, employees may have been responsive to negative
perceptions of the BOP project that were held by some managers with inuence
on the decision to initiate the implementation of the BOP project; such inuence has been pointed out as salient in the organizational change literature.33
The BOP project may certainly have come across to some managers as a poorly
justied project, which is likely to be interpreted by employees as a sign that
the new practice is not fully endorsed by top management and hence not that
important.34
The second barrier, radical change to routines, is more processual in
nature. We found that the work processes in Novozymes did not lend themselves to integrating the BOP project in the companys operational routines. A
lack of familiarity with the procedures associated with this new type of sustainability practice certainly discouraged key actors in operations from adopting it.
This nding resonates with the extensive research on dynamic capabilities
and other organizational capabilities as important ingredients for organizational
change and performance.35 The mutual reinforcement of cognitive barriers and
processual barriers that we found in this study also reects insights into absorptive capacity, i.e., the prior experiences and knowledge that enable a company
to innovate.36 It is evident that managers and other employees in operations
were poorly equipped to embrace a sustainability practice such as BOP, which
was so radically different from their existing capabilities in the area of sustainability. However, had cognitive and processual obstacles been the only barriers
to implementation, then organizational learning would have been sufcient
to overcome them. The structural barriers made such organizational learning
unlikely.
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We identied two structural barriers that prevented a change in patterns

of thought and behavior: the evaluation criteria for new projects; and the incentive structures and discrepant mandates for different actor groups. Managers
and other employees were structurally prevented from experimenting with the
BOP project in the sense that they were discouraged from taking nancial and
business risks if they were to fulll their mandate in the organization. These
structural barriers served the purpose of protecting the nancial performance of
Novozymes, but also one that effectively prevented risk-taking. The strength of
the structural barriers suggests that positive perceptions of a new practice and
capabilities to carry it out are insufcient to implement organizational change;
changes must also be made to the organizational structures.37 In fact, the structural barriers seemed to have effectively prevented the learning of new routines,
skills, and capabilities that could have enabled actors in operations to change
their perception and proceed to implement the BOP project.
Interacting with each other, the cognitive, processual, and structural barriers can inadvertently block organizational actors from changing their behavior.
This interlocking system conrms the complex, systemic nature of organizational change processes. 38 It further explains why the sustainability managers
in Novozymes, a company devoted to sustainability, has encountered such difculty in implementing the BOP project in operations. They rst tried decentralization, a highly recommended approach to change management,39 which failed
to produce change. To circumvent the cognitive, processual, and structural barriers in key areas of operations, they then shifted to a centralized position by pursuing a concrete BOP project themselves. While it is still uncertain whether the
sustainability function will eventually succeed in implementing the BOP project
in Novozymess operational routines, its current strategy of working simultaneously on mindsets, capabilities, and structures seems to be a promising avenue
for unlocking the interrelated cognitive, processual, and structural barriers that
hinder the implementation of this new sustainability practice.
Avenues for Action

The new implementation strategy that the corporate sustainability function has been pursuing in recent years testies to their deepening insight into
the interlocking barriers that have prevented operations from embracing the
BOP project. They have become procient in working with the cognitive and
structural barriers to implementation and they have been acquiring BOP-related
skills and capabilities themselves. Realizing that they had to take the initiative to
develop a successful BOP strategy, the corporate sustainability function has been
engaging directly in issues related to new product development and the identication of market opportunities for these products, rather unusual activities for a
sustainability unit. They have learned to conceive new sustainability products in
collaboration with external partners and stakeholders, to identify potential market opportunities, and to make the business case for the development of these
new products together with managers in operations. In so doing, they have been
developing skills and capabilities related to BOP implementation that were
weakly developed in the strategy groups in operations.
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The necessity of this work speaks to the radical nature of the transition
to BOP strategies for companies that have not (yet) developed the capabilities
required to implement a BOP project. Such a transition is presumably more difcult for companies that do not sell directly to consumers, such as is the case for
Novozymes. Many of the Millennium Development Goals, from which the BOP
project takes its inspiration, are aimed at end users. When Novozymes ventures
into the development of affordable products for disadvantaged consumers in the
developing world, the company is targeting a consumer segment with which it
does not have much experience. A larger leap of imagination is thus required
for product developers and marketers in Novozymes than for similar employees
in a company such as Proctor & Gamble that already produce goods for such
consumers.
Conclusion
The companies that will place amongst the top performers in sustainability in future years will be those that have been able to turn sustainability into
a key business driver. The companies that stand to prot will be those that take
efcient action to overcome the identied barriers to implementation.
BOP can pose signicant organizational challenges for companies that
seek to incorporate sustainability into their practice. In Novozymes, these challenges manifested in four mutually reinforcing organizational barriers that have
collectively been sufcient to prevent the company from implementing such a
project. Although our ndings are particular to Novozymes, the difculties it
encountered reect those that many other companies are experiencing. Accordingly, this case may contribute to a deeper understanding of why the implementation of BOP in large global organizations lags behind the interest in the
concept.
When companies seek to enhance their competitive advantage through
efforts to implement new sustainability initiatives, they may inadvertently overlook organizational barriers that prevent the implementation of some of the
most novel and promising initiatives. Structural barriers can prevent cognitive
shifts and skill acquisition, which are required for organizational learning to take
place, for new routines to emerge, and for BOP capabilities to develop.
A signicant new challenge in corporate sustainability management is
anchoring new sustainability practices in operations. Most corporate sustainability managers have traditionally performed their tasks in a relatively centralized manner and, as a result, new sustainability practices often have little, if any,
impact on day-to-day operations. With sustainability projects such as BOP, this
implementation strategy is clearly insufcient, even for companies with a strong
track record in corporate sustainability. As many companies expand from a
compliance-oriented approach to sustainability to also include a market creation
component, they are likely to encounter some of the same barriers that Novozymes encountered. Such a change in sustainability strategy requires a stronger link between business activities at the operating core and the work of the
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corporate sustainability function. Instead of simply complying with behavioral

directives and corporate sustainability policies, managers in operations must
now also engage creatively on sustainability-related topics in the pursuit of new
business opportunities. Similarly, the role of the corporate sustainability manager will increasingly consist of understanding organizational barriers to implementation and subsequently facilitating the adoption of sustainability projects
at the operating level.
Notes
1. The World Business Council for Sustainable Development, From Challenge to Opportunity
The Role of Business in Tomorrows Society, WBCSD, c/o Earthprint Limited, Switzerland, 2006.
Publication available at <www.wbcsd.com>.
2. Sustainable development is most commonly dened as the ability of current generations
to meet their needs without compromising the ability of future generations to meet theirs.
The World Commission on Environment and Development, Our Common Future (New York,
NY: Oxford University Press, 1987). The business communitys response to corporate sustainability is typically dened as a business approach that creates long-term shareholder
value by embracing opportunities and managing risks deriving from economic, environmental, and social developments. See Dow Jones Sustainability Indexes, <www.sustainabilityindexes.com/07_htmle/sustainability/corpsustainability.html>.
3. The business of sustainability has been explored from numerous angles ranging from the
benets from eco-efciency [Cf. M.E. Porter and C. Van der Linde, Green and Competitive: Ending the Stalemate, Harvard Business Review. 73/5 (1995):120-134] to the benets
of social/environmental marketing [F. Reinhardt, Environmental Product Differentiation:
Implications for Corporate Strategy, California Management Review, 40/4 (Summer 1998): 4373]. Based on the business case debate, Margolis and Walsh took it upon themselves to try
to establish a tangible nancial link. J. Margolis and J. Walsh, People and Prots? The Search for
a Link Between a Companys Social and Financial Performance (Mahwah, NJ: Lawrence Erlbaum,
2001).
4. Sustainability as a source of creative destruction was made famous by S. Hart and M.
Milstein, Global Sustainability and the Creative Destruction of Industries, Sloan Management Review, 41/1 (Fall 1999): 23-33. Here they argue that the emerging challenge of global
sustainability is a catalyst for a new round of creative destruction that offers unprecedented
opportunities. For similar observations see K.N. Hockerts, Sustainability Innovations.
Ecological and Social Entrepreneurship and the Management of Antagonistic Assets, dissertation, Difo-Druck GmbH, Bamberg, 2003. Also, see A.L. Larson, Sustainable Innovation
Through an Entrepreneurship Lens, Business Strategy and the Environment, 9/5 (September
2000): 304-317.
5. Cf. C.K. Prahalad and S.L. Hart, The Fortune at the Bottom of the Pyramid, Strategy + Business, 26 (First Quarter 2002): 2-14. For more recent publications with a similar theme, see
S.L. Hart, Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the Worlds
Most Difcult Problems (Upper Saddle River, NJ: Wharton School Publishing, 2005); Hart and
Milstein, op. cit. Also, see J.D. Sachs, The End of Poverty: Economic Possibilities for Our Time
(New York, NY: The Penguin Press, 2005).
6. C.K. Prahalad, The Fortune at The Bottom Of the PyramidEradicating Poverty Through Prots
(Upper Saddle River, NJ: Wharton School Publishing, 2004).
7. A. Karnani, Fortune at the Bottom of the Pyramid: A Mirage. How the Private Sector Can
Help Alleviate Poverty, Ross School of Business Working Paper Series, 2006.
8. Sushil Vachani and N. Craig Smith,Socially Responsible Distribution: Distribution Strategies
for Reaching the Bottom of the Pyramid, California Management Review, 50/2 (Winter 2008):
52-84.
9. The notion that BOP will require a radical reinvention of existing practices is not only indicated by Prahalad [(2004), op. cit.], but also resonates in similar pieces describing the characteristics of sustainability-driven market creation. Cf. Hockerts, op. cit.; Hart and Milstein,
op. cit
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CMR.BERKELEY.EDU
123
10. Novozymes is widely recognized for its performance in sustainability. Some of their achievements include top rankings in the Nordic Sustainability Index, Sustainable Business.com,
Storebrand SRI, and the FTSE4Good Index Series. Novozymes also holds the number one
spot in their industry in the Dow Jones Sustainability World Indexes (DJSI World) and in
the pan-European Dow Jones STOXX Sustainability Indexes (DJSI STOXX). Cf. <www.
novozymes.com/sustainability>.
11. Conventional BOP literature and practice has tended to focus on the delivery of end-consumer products to some of the poorest people in the world [cf. Prahalad (2004), op. cit.].
12. The World Business Council for Sustainable Development, op. cit.
13. It is important to distinguish between the line of thinking brought forth here and some of
the later branches of this discourse, like sustainable livelihoods and inclusive business.
These concepts generally take a broader view of the market opportunities available to large
MNCs by looking at the people at the bottom of the pyramid not only as consumers, but
also as producers and business partners. This line of thinking was brought forth by Karnani
[op. cit.] in his critique of the BOP concept and while there is denitely a strong reasoning
behind widening the scope of BOP from solely looking at consumers, this article will focus
on the BOP concept in its original form, i.e., as a business strategy aimed at selling protseeking products to low-income segments. This is due to the empirical case which follows a
similar denition.
14. The concept of sustainable livelihoods (SL) has its origins in the UN system, particularly
the United Nations Conference on Environment and Development (UNCED), and refers to a
way of approaching development that incorporates all aspects of human livelihoods and the
means whereby people obtain them. The concept has become popular in the World Business
Council for Sustainable Development,where it refers to inclusive business models as a sustainable business that benets low-income communities and thus contributes to sustainable
livelihoodsnot necessarily by selling them consumer products, but also by (for example)
directly employing low-income people or targeting development of suppliers and service
providers from low-income communities. See <www.inclusivebusiness.org>.
15. Karnani, op. cit., p. 108.
16. <www.un.org/millenniumgoal>.
17. Karnani, op. cit., p. 108.
18. <www.novozymes.com/aboutus>.
19. <www.novozymes.com/en/MainStructure/Investor/Financial+reports/>.
20. <www.novozymes.com/sustainability>.
21. <www.ethisphere.com>.
22. Venkataraman Nilakant and S. Ramnarayan, Change ManagementAltering Mindsets in a
Global Context (London: Sage, 2006).
23. Robert E. Quinn, Building the Bridge as You Walk on It: A Guide for Leading Change (San Francisco, CA: Jossey-Bass, 2004).
24. Burke W. Warner, Organization Change: Theory and Practice, 2nd edition (Thousand Oaks, CA:
Sage, 2008); Haridimos Tsoukas and Robert Chia, On Organizational Becoming: Rethinking
Organizational Change, Organization Science, 13/5 (September/October 2002): 567-582.
25. Dennis R. Self, Achilles A. Armenakis, and Mike Schraeder, Organizational Change Cotent,
Process, and Context: A Simultaneous Analysis of Employee Reactions, Journal of Change
Management, 7/2 (June 2007): 211-229; Warner, op. cit.
26. Nilakant and Ramnarayan, op. cit.
27. M. Friedman, The Social Responsibility of Business is to Increase its Prots, The New York
Times Magazine, September 13, 1970.
28. D. Wheeler and M. Ng, Organizational Innovation as an Opportunity for Sustainable Enterprise: Standardization as a Potential Constraint, in S. Sharma and M. Starik, eds., Stakeholders, the Environment and Society (Elgar Publishing, 2004).
29. Cf. R.W. Scott, The Adolescence of Institutional Theory, Administrative Science Quarterly,
32/4 (December 1987): 498.
30. Jamal Ouadahi, A Qualitative Analysis of Factors Associated with User Acceptance and
Rejection of a New Workplace Information System in the Public Sector: A Conceptual
Model, Canadian Journal of Administrative Sciences, 25/3 (September 2008): 201-213.
31. Loizos Heracleous and Michael Barrett, Organizational Change as Discourse: Communicative Actions and Deep Structures in the Context of Information Technology Implementation, Academy of Management Journal, 44/4 (August 2001): 755-778.
32. Self, Armenakis, and Schraeder, op. cit.
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33. Ma Valle Santos and Ma Teresa Garcia, Organizational Change: The Role of Managers
Mental Models, Journal of Change Management, 6/3 (2006): 305-320.
34. Self, Armenakis, and Schraeder, op. cit.
35. David J. Teece, Gary Pisano, and Amy Shuen, Dynamic Capabilities and Strategic Management, Strategic Management Journal, 18/7 (August 1997): 509-533; Robert M. Grant, Prospering in Dynamically-Competitive Environments: Organizational Capability as Knowledge
Integration, Organization Science, 7/4 (July/August 1996): 375-387.
36. Wesley M. Cohen and David A. Levinthal, Absorptive Capacity: A New Perspective on
Learning and Innovation, Administrative Science Quarterly, 35/1 (March 1990): 128-152.
37. Warner, op. cit.
38. Warner, op. cit.
39. Nilakant and Ramnarayan, op. cit.
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BOP Organisational Barriers To Implementation

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Bottom-of-the-Pyramid:

he idea that corporate sustainability is not only the right thing

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

simultaneously help alleviate poverty by selling products to the poor. Some of

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Bottom of the Pyramid

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

signicant societal problems in these regions. This denition is closely linked to

The Case of Novozymes

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Sustainability Policies, Performance, and Structure

New Sustainability Strategy:

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

change implied a greater focus on the companys technologies and capabilities,

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Implementation Strategy 1: The Decentralized Approach (2006)

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

The corporate sustainability function was of the opinion that line-of-business

Implementation Strategy 2: The Centralized Approach (2007-2008)

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Organizational Barriers to Implementation

Barrier 1: Conicting Mindsets

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

compromises and trade-offs in nancial performance in order to accommodate

In contrast, the win-win mindset, promoted by the corporate sustainability

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Barrier 2: Radical Change to Routines

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

This interpretation resonated with other respondents from operations, all of

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Barrier 3: Project Evaluation Criteria

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

To sum up, the BOP project appeared to be a complex, resource-intensive, and

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Barrier 4: Incentive Structures and Discrepant Mandates

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Shift in Implementation Approach

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

Building Experience and Providing Evidence of Win-Win

CALIFORNIA MANAGEMENT REVIEW VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation

The sustainability functions choice to focus on nutrition is not a coincidence

However, building up experience within BOP and providing evidence of its

UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 51, NO. 4

Bottom-of-the-Pyramid: Organizational Barriers to Implementation