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November 16, 2010 / compassioninpolitics

Criticism of Fortune at the Bottom of the Pyramid

My (Friendly) Internal Critique of “Fortune at the Bottom of the Pyramid” as a way to address base of the pyramid Poverty

I earlier summarized some of the key parts of “Fortune at the Bottom of the Pyramid” and after thinking more about the BOP and MNC strategy when addressing the market,

1) Ignores local capacity in BOP countries (even as Prahalad celebrates it)
2) Doesn’t mention customer interviews of research to my knowledge
3) Undercovers important procedural concerns in strategy development for BOP countries (obviously #1 and #2 have to be embedded in #3)

Obviously, Mr. Prahalad may have taken these into account as fundamental assumptions when multinational companies address new markets, but not all of new firms or larger MNCs would take the foundational role of customer research into account (or what types of research that might involve)

Obviously both the Strategy and Business article (2002 by CK Prahalad and Stuart Hart) as well as the BOP Protocol 2.0 takes these criticisms into account to a great extent. I think the idea of deep customer research via interviews, ethnography, and observation is the best way to avoid incorrect assumptions about customers, contexts/systems, and markets. But I think the process of entering news markets still needs to be fleshed out more. Hopefully in subsequent publications of the book Stuart Hall or the editors will include an adendum which includes these vitally important issues if Prahalads vision of eradicating extreme poverty via market solutions is to become a living actuality. ***

I’m deeply respectful of the work CK Prahalad and Stuart Hart have done the area of bottom of the pyramid markets. Hopefully, further application of the concept will take these issues into account along with looking at some of the criticisms of developing aid which BOP both addresses the problems of development (ie government is obviously less involved in a market transaction than an aid transaction) but also risk replicating them by not:

1) listening to locals
2) respecting the dignity of locals
3) collaborating with locals

This need is reiterated by Madhubalan Viswanathan and Srinivas Sridharan in recent Ivey Journal article on the BOP:

…the sustainable marketplaces perspective will require businesses to acquire a deep understanding of marketplace behaviors and sustainability practices of the poor, and engage in conversations with them on an equal plane. Marketplace research conducted with this egalitarian and learning mindset can allow firms to develop sustainable marketplace solutions from the ground up, solutions that genuinely alleviate the constraints of poverty and enhance quality of life. Thus, this perspective addresses the question of how business can meaningfully participate in the poverty alleviation process, rather than if they can. In this regard, the central question for businesses is not whether subsistence contexts represent markets for their products. Rather, it is the more nuanced question of how they can provide solutions that fit within the rich context of existing marketplace dynamics characterized by myriad influences from diverse sectors of society, and how they can enable such marketplaces to be ecologically and socially sustainable while also generating profit for the business.

So context, listening, and respect are all key in the BOP context.

Hopefully, as Clayton Christensen gets more time after his work in disruption in education and disruption in health care–he and Stuart Hall will collaborate on new work or even a treatise on BOP disruptive innovation, strategic process, case studies, models and opportunities.

For more on entering BOP markets check out this article on Next Billion by Mark Beckford.

Are there other key omissions in “Bottom of the Pyramid? Are there other viable criticisms of the base of the pyramid concept or book?

*** Note & Caveats: I’ve only read the 2006 edition–not the 2010 edition at the date of publication. I plan on taking that on soon.

***Note & Caveats: if individual case studies have a better coverage of these issue, that is obviously insufficient. Also, the index seems to lack coverage of this issue or the complexities of market entry (this seems like a reflection of the larger problem in business literature that focuses on current innovation, but not creation and early stage growth).

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