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The Fortune at the Bottom of the Pyramid

8/11/2010

 
COIMBATORE KRISHNARAO PRAHALAD, known as C.K. PRAHALAD, was one of the most creative thinkers of his generation. He brought new thinking on business strategy and economic development, and made a generous contribution to innovation. His admirers were legion, big co ceo's, heads of NGOs and founders of small start-ups. From Bill Gates to yours truly. 

Ten years ago in stark contrast to popular thinking of its time C.K. Prahalad, saw a big idea, but the big idea was not about big companies and grand visions for cloud computing or some such: he dreamed of creating wealth at the 'bottom of the pyramid'! His idea was about how firms should focus on the bottom of the pyramid—a phrase he shortens to BOP - the opposite of TOP. His book "The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits” (Wharton School Publishing is essentially all about the potential profits to be made from serving the 4 billion-5 billion people on under $2 a day—an economic opportunity he values globally at $13 trillion a year. The win for the poor of being served by big business includes, he says, being empowered by choice and being freed from having to pay the currently widespread “poverty penalty”. In shanty towns near Mumbai, for example, the poor pay a premium on everything from rice to credit—often five to 25 times what the rich pay for the same services. Driving down these premiums can make serving the BOP more profitable than serving the top, he argues, and points to a growing number of leading firms—from Unilever in India to Cemex in Mexico and Casas Bahia in Brazil—that are profiting by doing precisely that. 

Written for the Harvard Business Review, “The Core Competence of the Corporation” (1990) incidentally remains one of the most frequently reprinted articles ever published by Harvard Business Review. C.K. Prahalad died April 16th 2010, may he rest in peace. Find out more at http://www.ckprahalad.com/.

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    Mark is a management consultant and professional mentor helping companies and individuals achieve their goals.

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