Innovate by designing and selling products specifically to the very poor?

Recall the rather cynical statement that the Lord of the Universe loves the poor, because he made so many of them. Some 1.4 billion people on earth have daily income of less than one dollar, according to the World Bank. How can this possibly be seen as a promising market?

One of the world’s leading management thinkers, C.K. Prahalad (co-author, with Gary Hamel, of the most-read business article, The Core Competency of the Firm) wrote a book in 2005 making the extraordinary claim that the poor can best be helped by market forces. Let companies design and sell them products, he wrote (in Fortune at the Bottom of the Pyramid, Wharton Press), for profit. Do good..and do well. Market forces work far better, he wrote, than do-good institutions, NGO’s or governments. 

How to do this? Among his dozen key principles: 

* focus on quantum reductions in price and cost (e.g. Tata’s new $2,000 car – not exactly for the very poor, but certainly a quantum reduction).
* blend old and new technologies
* scale operations across countries
* redesign products from the outset (e.g. Hindustan Lever’s shampoo that works best in cold water), to work in hostile environments.

Examples? The global Grameen micro-credit bank; India’s e-Choupal project, creating networks of farmers that bypass rapacious middlemen; S.C. Johnson Co.’s partnership with Kenyan slum youth to provide home cleaning and waste disposal services.

Ever looked closely at a U.S. dollar bill? Notice the 13-layer pyramid? In 1932 President F.D. Roosevelt said on the radio, “these unhappy times [Depression] call for the building of plans that rest upon… the forgotten man at the bottom of the economic pyramid.” In 2008, times are perhaps not as unhappy – but are still miserable for the very poor. There are fortunes at the bottom of the pyramid. We just need entrepreneurs with sharp enough vision to see, and develop, them. 

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