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In Memorium: C.K. Prahalad, 'Bottom of Pyramid' Author

April 25, 2010

CKPrahalad Surprised to learn earlier today that management guru C.K. Prahalad, author of The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton Publishing, 2004), passed away on April 16 at the age of 68 after a brief illness. According to the Times of India, it was Prahalad's proposition "that businesses stop thinking of the poor as victims and instead start seeing them as value-demanding consumers that drove companies such as Hindustan Lever and Godrej [in India] to come out with ultra-small sachets of everything from shampoo to gutka, sparking off a retail revolution...."

As Prahalad, who came to the U.S. in the early '70s and earned a degree in management from Harvard Business School, wrote in the Preface to Bottom of the Pyramid:

...I do not want the poor of the world to become a constituency. I want poverty to be a problem that should be solved. This book is about all of the players -- NGOs, large domestic firms, MNCs, government agencies, and, most importantly, the poor themselves -- coming together to solve very complex problems as we enter the 21st century. The problem of poverty must force us to innovate, not claim "rights to impose our solutions."

The starting point for this transition [has] to be twofold: First, we should consider the implications of the language we use. "Poverty alleviation" and "the poor" are terms that are loaded with meaning and historical baggage. The focus on entrepreneurial activities as an antidote to the current malaise must focus on an active, underserved consumer community and a potential for global growth in trade and prosperity as the four to five billion poor become part of a system of inclusive capitalism. We should commence talking about underserved consumers and markets. The process must start with Bottom of the Pyramid consumers as individuals. The process of co-creation assumes that consumers are equally important joint problem-solvers. Consumers and consumer communities will demand and get choice. This process of creating an involved and activist consumer is already emerging. The BOP provides an opportunity to turbocharge this process of change in the traditional relationship between the firm and the consumer. Second, we must recognize that the conversion of the BOP into an active market is essentially a development activity. It is not about serving an existing market more efficiently. New and creative approaches are needed to convert poverty into an opportunity for all concerned. That is the challenge....

Prahalad's ideas about the BoP, which he spread through a series of books and papers, as a sought-after consultant and speaker, and as a professor at the University of Michigan's Ross School of Business, resonated with and influenced the likes of IDE co-founder Paul Polack (Out of Poverty: What Works When Traditional Approaches Fail), Acumen Fund founder Jacqueline Novogratz (read our Q&A with Novogratz here), and even Bill Gates, who, according to the Times of India, said of Prahalad's ideas that they "[offer] an intriguing blueprint for how to fight poverty with profitability."

The painful consequences of the global financial crisis have thrown into question a bunch of ideas that seemed obvious to many during the bubble years. Too big to fail, housing prices always go up, the national debt doesn't matter -- if these and others aren't totally discredited at this point, it's only because people have been distracted by American Idol and the train wreck that is Kate Gosselin. 

Similarly, whether consumer-focused strategies really are the key to alleviating the misery and unlocking the potential of billions of people at the bottom of the pyramid is still anyone's guess. No one, however, can question the fundamental premise underlying much of Prahalad's work: It's time to stop thinking of the poor as a burden and to start thinking of them as resilient and creative human beings.

-- Mitch Nauffts

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