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The Fortune at the Bottom of the Pyramid, by C.K. Prahalad

November 28, 2010

(work in progress..)

What is the Bottom of the Pyramid?

It is the 4-5 billion people in the world who are the most in need economically. Some books and/or experts refer to:

  • The base of the pyramid
  • The bottom-most 1 billion people
  • The people living on less than $2/day

The bottom of the pyramid is not a monolith. It consists of people and communities who are different in their culture, politics, environment, and psychological and economical needs.

What does the book mainly talk about?

There is growing recognition that marrying the local knowledge of the nongovernmental organization with global reach of the multinational firm can create unique and sustainable solutions.

Our goal should be to build capacity for people to escape poverty and deprivation through self-sustaining market-based system.

Notes

To be effective, a market development at the BOP should have an ecosystem that includes all parties:  large firms, small- and medium-size enterprises, micro entrepreneurs, civil society organizations, and the public sector. These parties need to work collaboratively. The BOP particularly are active participants: being the producers and/or consumers in the new market. Private firms are there to provide guidance and expertise; but they are to respect the individuals and communities, giving them options and educating them about the risks so they can make the better decisions.

Along the way, we cannot just measure income, but should also use Life Style Measures (LSMs):  what life style do the people aspire to? What life style do they invest in?
There is usually an interesting phenomenon about individual’s life style choices. For example: a poor mother may elect to invest more money for her son’s education even though she goes hungry in the process. In India, I found that most people–even teenagers from low-income families–own cellphones, but they may not have clean clothing on.

Which companies work with the BOP?

Some of them are:

  • Casas Bahia in retail, Brazil
  • Habibs in fast food, Brazil
  • Bradesco in banking, Brazil
  • Elecktra in retail and banking, Mexico
  • Groupo Bimbo in food, Mexico
  • Pattrimonio Hoy in housing, Mexico
  • Globe in telecom and water, Philippines
  • Grammen in micro finance, telecom, and food, Bangladesh
  • Amul in dairy, India
  • Aravind Eye Hospital, Jaipur Foot, and Narayana Hrudayalaya in health care, India
  • ITC e-Choupal in agriculture, India
  • SKS Finance in micro finance, India
  • Airtel in telecom, India
  • Pick and Pay in retail, Africa
  • Mobile Telephone Networks in telecom, Africa
  • Savory and Brestler in ice cream, Chile

Useful Links

  • Kiva.org: the website enables us to evaluate business plans and to extend micro-loans, from US$25 upwards
  • Novica.com: the website provides a network of traditional crafts and artisans, and to make purchases from them

Quotes

It used to be that the rich felt a sense of entitlement. I hope that as a result of more companies engaging with the poor, they too begin to feel a sense of entitlement—to dignity, choice, and mobility. I believe that this change will help not only people across the world, but society and the environment as well, because it will require change and innovation on a massive scale.

Terms

  • Shakti Ammas = rural entrepreneurs who educate and distribute their products
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