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The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits

Submitted by: Wharton School Publishing

Categories: Community Development

Posted: Aug 24, 2004 – 12:00 AM EST

 

A Radical Approach that Delivers on Two Bottom Lines: Financial and Social

To read a pdf excerpt from The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, click here.

The lead book of Wharton School Publishing/Pearson's new business imprint

"C.K. Prahalad argues that companies must revolutionize how they do business in developing countries if both sides of that economic equation are to prosper. Drawing on a wealth of case studies, his compelling new book offers an intriguing blueprint for how to fight poverty with profitability." - Bill Gates

  • Globally, 1.8 billion people lack access to electricity, keeping them from the fuel and connectivity necessary for modern life. How does low cost, clean and fast sustainable energy - solar-power - now reach into the hinterlands of Nicaragua through local entrepreneurship where the average per capita income is less than $300? And, can this example be copied?

  • The world's leading cause of mental disorders and retardation is Iodine Deficiency Disorder (IDD). In India alone there are 70 million people who have IDD and another 200 million are at risk. This rampant disease can be found in Kenya, the Ivory Coast, and Nigeria. How did Hindustan Lever Ltd, a branch of a multinational company, solve the problem and make a profit at the same time?

  • Because 24 million poor Mexicans earn less than $5 a day, they have been unable to get access to credit. How did this change so that the Mexicans could build affordable housing for themselves while the third largest cement manufacturer in the world, Cemex, continues to reap the financial rewards?

  • Blindness affects 12 million people in India. Since 80% of blindness would be avoided with medical treatment, could a clinic serve more than a million patients and do it mostly for free, yet continue to be highly profitable? Can this local
    solution be replicated elsewhere?

    These are four examples of the provocative 12 in-depth case stories from India, Peru, Mexico, Brazil and Nicaragua that illustrate the world's most exciting, fastest growing and perhaps most lucrative market -the bottom of the pyramid (BOP). First discussed in a Harvard Business Review article and then in Foreign Affairs, this transformative business idea is the mission of C.K. Prahalad, who has been called one of the top 20 business thinkers today. He brings this radical concept to life in his book that launches Wharton School Publishing/Pearson new business imprint, THE FORTUNE AT THE BOTTOM OF THE PYRAMID: Eradicating Poverty Through Profits (Publication Date: August 25, 2004; $27.95 hardcover). The 25-minute CD (included with every book) shows the results of companies and organizations creating sustainable win-win scenarios -- the lives of real people at the BPO are dramatically improved in many ways.

    The market for goods and services at the bottom of the pyramid is enormous and under utilized. Prahalad shows that the 18 largest emerging countries have 680 million households with an annual income of about $6,000 or less per household. Those numbers translate into a huge, untapped market of approximately $1.7 billion - waiting to be recognized and served.

    Largely ignored by most traditional companies because they only have a small, often fixed amount of money, the poor are an invisible market, but only because we've been socialized to think that way. Prahalad believes the business community has had blinders on. They haven't been able to imagine how to sell something when money isn't readily available. Growth has been misguidedly focused on ownership rather than access, on the luxury market or on copying "best practices." These strategies can only account for a portion of revenue and efficiency over time. On the other hand, the BOP is enormous with almost limitless growth potential. C.K. Prahalad says serving the bottom of the pyramid is the "next practice," the challenge that will lead to a radical leap forward.

    THE FORTUNE AT THE BOTTOM OF THE PYRAMID proves that the future will develop from serving the poor, because the innovations that are developed are superior-- top quality, low price, high volume and world-scale. Only the best innovations will work for both sides of the equation, those in poverty and those in the "developed" countries. New products and services that improve the lives of poor people aspiring to the middle class make the world a safer place, while protecting and conserving the earth's resources.

    The case studies, based on research done by Mr. Prahalad and his graduate students whose biographies appear at the back of the book, cover a wide variety of industries: retail, housing, food, agriculture, healthcare, financial services, wireless technology, renewable energy, e-governance, and infectious diseases. The new solutions come from diverse types of business, multinational corporations, local businesses, and newly developed local entrepreneurs. They include such unusual examples as groups of women selling time on their cellphones.

    The ramifications of this book are just beginning. Globally, this is a movement in the making that will affect everyone and the life of the planet. After all, what company or individual entrepreneur wouldn't want to make money, create successful products and services that no one else has thought of, and save lives and our earth at the same time?

    About the Author

    CK Prahalad is a professor, researcher, speaker, author and prominent consultant. Business Week has called him "a brilliant teacher at the University of Michigan" and also described him as "maybe the most influential thinker on business strategy today."

    In addition to serving as the Harvey C. Freuhauf Professor of Business Administration at the University of Michigan Business School, Prahalad specializes in corporate strategy and the role of top management in large, diversified, multinational corporations.

    He is a prolific author. In 1994 he co-authored the bestseller, Competing for the Future, with Gary Hamel. Translated into 14 languages, it was named the Best Selling Business Book of the Year in 1994. Other books he has authored or co-authored include Multinational Mission: Balancing Local Demands and Global Vision (1987) and The Future of Competition: Co-creating Unique Value with Customers, published earlier in 2004.

    He has won numerous awards (please see notes to editors below). The most recent include the McKinsey Prize three times, the SMR-PWC award, and the ANBAR Electronic Citation of Excellence.

    A prominent world-class guru, Professor Prahalad has consulted with the top world companies (see bio for list) and services on the Board of Directors of NCR Corporation, Hindustan Lever Limited and the World Resources Institute.

    THE FORTUNE AT THE BOTTOM OF THE PYRAMID
    Eradicating Poverty Though Profits
    Enabling Dignity and Choice Through Markets
    By C.K. Prahalad
    Published by Wharton School Publishing/Pearson
    Publication Date: August 25, 2004
    Price: $27.95 hardcover U.S.
    ISBN: 0131467506
    CD-ROM included

    * * *

    Notes to Editors: ABOUT THE AUTHOR, C.K. PRAHALAD

    If you google C.K. Prahalad, you will find that over the past ten years, he has been included in every survey of top ten management thinkers in the world. He is the Harvey C. Fruehauf Professor of Business Administration at the University of Michigan Business School, in Ann Arbor, specializing in corporate strategy and the value added by top management in large, diversified, multinational corporations. Business Week said: "...a brilliant teacher at the University of Michigan, he may well be the most influential thinker on business strategy today."

    In addition to his other achievements, Mr. Prahalad is a prolific author. His books include the international bestseller Competing for the Future (1994) that he co-authored with Gary Hamel. It was published in fourteen languages and was named the Best Selling Business Book of the Year in 1994. Business Week described his most recent book The Future of Competition: Co-creating Unique Value with Customers (2004) coauthored with Venkat Ramaswamy; "provocative", "an important book full of disruptive ideas," and "what the authors contemplate is nothing less than the democratization of commerce." Although the book was recently published, it is already being translated into nine languages.

    He is also the author of numerous award-winning articles. Harvard Business Review awarded the McKinsey Prize to him three times for: "The End of Corporate Imperialism", co-authored with Kenneth Lieberthal (1998); "The Core Competence of the Corporation", co-authored with Gary Hamel (1990), and "Strategic Intent", also co-authored with Gary Hamel (1989). "The New Frontier of Experience Innovation" published in Sloan Management Review won the SMR-PWC award for the best paper published in 2003. "Weak Signals vs. Strong Paradigms", published in the Journal of Marketing Research (1995), was awarded the 1997 ANBAR Electronic Citation of Excellence. "The Dominant Logic: A New Linkage between Diversity and Performance" (1986), co-authored with Richard Bettis, was selected the Best Article published in the Strategic Management Journal for the period 1980-88. "The Role of Core Competencies in the Corporation" (1993) received the 1994 Maurice Holland Award as the Best Paper published in Research Technology Management in 1993. "A Strategy for Growth: The Role of Core Competence in the Corporation" won the European Foundation for Management Award in 1993.

    A member of the blue ribbon commission of the United Nations on Private Sector and Development, he is the first recipient of the Lal Bahadur Shastri Award for contributions to Management and Public Administration presented by the President of India in 2000.

    A prominent world-class figure, Professor Prahalad has consulted with the top management of many of the world's foremost companies, such as Ahlstrom, AT&T, Cargill, Citicorp, Eastman Chemical, Kodak, Oracle, Philips, Quantum, Revlon, Steelcase, and Unilever. In addition, he serves on the Board of Directors of NCR Corporation, Hindustan Lever Limited and the World Resources Institute.

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