I reviewed this book for my Theology of Technology course as a part of my Non-Profit Management degree at City Vision University.
In Western Businesses, we usually do not consider the poor of the world (roughly 90 percent of the world’s population) as customers to products and services that we produce or develop. We have false assumption that “our” products are not needed, the poor can’t afford it, and that it’s not profitable. The Fortune at the Bottom of the Pyramid by C.K. Prahalad shows the opposite to be true.
This, admittedly, was a new concept for me. It is simply something I never thought about. In America, we donate and expect that charity is doing good. Yet, Prahalad claims that in order to help the poor, charity is not enough – even failing. It is a quick fix for immediate needs, but it does not sustain needs forever. Prahalad advocates that private sector businesses can better provide. How is this so?
The poor are denied access to a lot of services. Their choices are few, if any. For example, there may be only one store that sells rice that is accessible or only one place to get clean water. If these items are highly overpriced (often) than people have to pay what is called the poverty premium. They have to pay significantly more for basic needs that are cheap in the West. Yet, if there was a competitive private business there could be a second and fair alternative option. Just as we, in America, value having options and being able to “shop around,” those in extreme poverty are no different. They need access to more services and products that only a businesses can provide.
So how would someone living on less than 2 dollars a day be able to afford anything? When serving the bottom of the pyramid (BoP), one has to keep eight main principles in mind: price, product innovation, scale, sustainable or eco, functional, process innovation, deskilled work, education of customers, design for hostile infrastructure, interfaces, access, and change of whole paradigm.
Though the concept of serving the poor through business is a fairly new concept that still hasn’t caught on to all business schools and businesses, Prahalad provides many examples of how these eight BoP business principles have been used successfully. Basically, when providing a product, everything needs to start from scratch with no prior assumptions. The business model as well as everything about that product has to be innovative. Things like dusty air and unpredictable energy need to be considered. With that, price needs to be a factor from day one. This, along with creating in scale or bulk makes the end product considerable cheaper (80 percent). High innovation is needed not only to lower cost, but because the needs of varies areas, cultures, and income levels makes the product unique. Other principles are also discussed in depth.
In all, I loved learning about all the amazing business ideas that have been uniquely developed in the developing world. For example, a clay fridge, a baby warmer, a mobile health clinic, mobile banking, and a more effective way for farmers to sell produce.
At first you might have some ethical questions. It is easy for the poor to be exploited. It should be understood that though this is a business (in America we often associate businesses as being more or less corrupt), business is still essential to all people’s livelihood. Think if there was only one store for every town in America. Our livelihood would decrease, too. Businesses are forced to be creative in order to be competitive. New technology that suits the needs of the underserved can most effectively come from businesses.
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Top reviews from other countries
Vamsi Krishna Thota
Excellent read, valuable research from the author who is most respected
Reviewed in India on June 8, 2015
