OK, I have to admit that at first I found the title of this book very off-putting because it seemed to be very opportunistic and selfish: “The Fortune at the Bottom of the Pyramid.” And then I read the sub-title: “Eradicating Poverty Through Profits.” Oh, wow. This is a book that my father would definitely buy into.
Actually, you may already have heard of this tome by management guru C.K. Prahalad, because it was first published five years ago as a way to help businesses “do well by doing good.” What’s new in the revised and updated 5th anniversary edition is the addition of an entirely new Part 1 with perspectives on progress from the past five years. There’s also a new case study from Jaipur Rugs, a company in India that has created a market for high-quality rugs by helping connect local weavers with materials from a global supply chain and with the markets into which to sell their goods.
Here are a couple of excerpts from Prahalad’s new introduction, which sort of reports on progress since the book’s original publication:
Some thoughts on democratizing commerce:
I believe the real challenge for the 21st century is democratization of commerce. Often, the debate about private sector involvement in the Bottom of the Pyramid centers on questions such as “Is globalization good or bad for the poor? If we phrase the question this way, almost by definition, there will be people taking either side. However, if we accept globalization is like gravity and there is not point in denying gravity; but great benefit to defying it and build a plane, then we can answer the question differently: “How do we make the benefits of globalization accessible to all?” This formulation of the question allows us to be more creative and entrepreneurial.
Or, this thought on what REALLY constitutes the “Bottom of the Pyramid”:
The concept of the emerging consumer allows each firm to decide which segment of the Bottom of the Pyramid it wants to serve.
Prahalad has found a fan in a number of business leaders including none other than Microsoft founder Bill Gates, whose philanthropic bent has become more honed since he stepped away from his day-to-day job at the software giant. Prahalad quotes Gates’ 2008 address to the World Economic Forum:
There are two great forces of human nature: self-interest and caring for others. Capitalism harnesses self-interest in a helpful and sustainable way, but only on behalf of those who can pay. Government aid and philanthropy channel our caring for those who can’t pay. But to provide rapid improvement for the poor, we need a system that draws in innovators and businesses in a far better way then we do today.
I always found the idea that businesses couldn’t afford to pay attention to issues like this because of shareholder responsibility to be sort of a silly, short-sighted position. Consider that barely a year after Salesforce.com burst onto the scene in 1999, it established a far-reaching philanthropic missing in its Foundation, one that has continued as it has climbed in influence. This isn’t just a charity that gives stuff away, the Foundation directs at least some of its efforts to enabling the business missions of its target non-profits. In other words, Salesforce.com believes in helping others help themselves.
And, pardon the very simplistic synopsis, but that’s pretty much what Prahalad’s book advocates, too.
If you’re trying to think through the altruistic motives of your own company — or lack thereof — this definitely isn’t light reading. But it is detailed enough to let you know what you’re up against if you’re trying to embrace “inclusive capitalism.” This recent interview by the Wharton School at the University of Pennsylvania will help you get started if you find the book intimidating. If you want to dive in with both feet, here is a link to the book’s Web site, which includes links to video versions of the case studies upon which its theories are based.
