Last month C Prahalad, co-author of the high profile Bottom of the Pyramid (BoP) approach died. What of his legacy in big business realising the untapped fortune at the ‘bottom’ - the poorest 4 billion?
The BoP approach gained the attention of business managers worldwide after a Hart and Prahalad publication in 2002 and the 2004 bestseller The Fortune at the Bottom of the Pyramid (2009 update). It appealed to business audiences by portraying the poorest as a vast untapped market for big business, which would lead to new affordable products for the poor.
Cake for everyone
Early BoP business models targeted the poorest as consumers. Examples included small sachets of washing powder sold through networks of local shop owners. Between 2000 and 2005 the number of mobile phone subscribers in developing countries grew more than fivefold to nearly 1.4 billion – another business model targeted at the BoP market. In Nigeria the number of subscribers rose from 370,000 to 16.8 million subscribers in just four years. This early form of the BoP concept containing a set of new business models targeting new markets - outside of the niche circles of corporate social responsibility, and rooted firmly in mainstream business reasons to engage with the poor – was hyped as a veritable win-win for big business and the poor.
Strong criticism of the BoP approach emerged from the development community - the ‘mirage at the BoP’. BoP was claimed to be nothing more than a way for fat cats to make more money by selling products to the poor that they didn’t really need – a value laden judgement in itself. Criticisms included:
- An undue focus on ‘wealthy’ consumers at the base of the pyramid
- Ambiguous BoP language and changing definitions e.g. the WRI updated its definition of BoP in 2007 from Prahalad’s $1500 USD per day ($4 per day) to $3000 USD per year ($8 per day).
- A neglect of local and global politics in BoP language – a ‘tech fix’ to poverty issues
- A negation of government responsibility to deliver services to the poor, and be accountable to them.
- A lack of meaningful consultation with BoP consumers to determine what they consider important products and services – re-wrapping the same old cake sold to middle class consumers.
- A strategy to undermine promising domestic businesses in emerging markets by encouraging large multi-nationals to enter BoP markets that were being served by medium- sized domestic firms.
Then came BoP II – a response to these criticisms. The BoP Protocol, for example, emphasises the poor as producers as well as consumers – and not only part of the production process but also part of the design, innovation and value creation. This was driven by the idea that the knowledge and innovation of the poor themselves is required to meet the product and service needs of the many tiers of BoP.
As such the BoP Protocol encourages businesses to invest not only financial resources in the producers in their value chains but also to go through processes of ‘deep-listening’, ‘deep-dialogue’, and ‘co-creation’ to involve communities in the innovation and ownership of a product and production process.
Deep-dialogue, apart from being a cringe-worthy term for some, is still rightly accused of achieving only low levels of producer participation and continuing to ignore many of the factors concerning power and voice of marginalised groups. The history and experience of participation and empowerment in the development studies literature is not captured or conveyed particularly well in such simple definitions. Yet how much has business felt able to engage with that literature and to what extent has the development community reached out to big business? Of course there is room for improvement with BoP levels of participation – it’s an evolving process – and as an aside it should also be noted that the practice of participation in many development sector projects is far from perfect – often highly driven by an external donor agenda and not nearly as ‘empowering’ as claimed.
Creating spaces for engagement with business
The BoP concept started a debate in mainstream business and management schools. BoP proponents created a process of engagement with business in markets they had not previously considered viable – particularly in Prahalad’s home country of India. It has evolved beyond Prahalad’s original concept to include ideas of local innovation and products that are designed and made by the poor for the poor.
BoP was at the forefront of a movement to spawn new ideas on engaging big business in a pro-poor agenda, along with other initiatives including UNDP’s Growing Inclusive Markets, the Donor Committee on Enterprise Development, and Inclusive Business. Also, read an overview of the potential of business delivering pro-poor outcomes.
The BoP terminology may not be as trendy now as when it first made headlines. Yet BoP ‘learning labs’ continue to spring up – so watch this space. Despite its many criticisms, by creating a strong link to the management school of thought BoP has been a groundbreaking way to engage mainstream business with the poverty agenda. Using business ideas and language it has created a space for discussion and engagement with big business on poverty issues, and spawned interest in developing other pro-poor business methodologies. This is Prahalad’s legacy.
May he rest in peace.
Ben Garside is a researcher in the Sustainable Markets Group.