Finding New Fortune at the Bottom of the Pyramid

Five years ago, global management expert C.K. Prahalad introduced the term “bottom of the pyramid” (BOP) to the corporate world. He argued that there was a way to eliminate global poverty and a fortune to be made, both for corporations seeking new markets and for consumers. "It is about doing well by doing good," says Prahalad, who was just ranked #1 by Thinkers 50 for the second time in a row, a biennial ranking of global business gurus, http://www.thinkers50.com/profile/1/2009

How do you reach consumers in developing countries and offer them innovative products that meet their needs? Prahalad showed companies how, in his groundbreaking book, The Fortune at the Bottom of the Pyramid. From soap to salt, banking to mobile phones, healthcare to housing, Prahalad equipped multinational firms with a blueprint for building BOP markets, reducing poverty, and creating inclusive capitalism that works for everyone.

In The Fortune at the Bottom of the Pyramid, Fifth Anniversary Edition: Revised and Updated: Eradicating Poverty Through Profits , Prahalad, Professor of Strategy at the Ross School of Business, The University of Michigan, demonstrates the latest strategies and tactics companies are using to succeed in today’s developing world. Readers will find that all innovations outlined in the book five years ago have proven successful, quite a departure from traditional cases featured in most management books. The revision includes the voices of operating managers on the issue of the role of the private sector in alleviating poverty.

The revision to The Fortune at the Bottom of the Pyramid presents:

• A brand new introduction in which Prahalad offers his insights on the progress made in solving global poverty (with help from the private sector) over the past five years
• Perspectives from ten corporate leaders from such firms as Microsoft, ThomsonReuters, ING, Unilever, and GSK on how the book influenced their strategies for the BOP markets
• A new case study of Jaipur Rugs, which connects rural poor with global markets through an innovative global supply chain
• Updates to the original case studies provided by the CEOs of the firms
• Exclusive video that accompanies the case studies in a CD format included with the book, and accessible online at www.whartonsp.com/Prahalad and www.whartonsp.com

Lessons from The Fortune at The Bottom of the Pyramid

Following are some key lessons learned by multinational firms who are working to develop the markets at the BOP:

• Build an Ecosystem: Because BOP markets have remained underserved by the private sector, they have remained local and fragmented. Managers must invest the time and energy to build an appropriate ecosystem. For example, it is impossible to enlarge the market for cell phones without building a large network of micro entrepreneurs who will sell prepaid cards.
• Co-create Solutions: Managers who are used to developed markets are often surprised by the sophistication and demands of the BOP markets. It is not just about making cheap versions of the products sold in developed markets. BOP markets demand that managers acquire “local knowledge and trust” before they develop markets.
• Use Technology: It is normal to assume that BOP markets are not high-tech markets. But that is not always the case: Aravind (India) or Narayana Hrudayalaya (India) use the latest medical technology. The use of information technology to manage the logistics and manufacturing infrastructure is widespread.
• The Challenge is Market Development: The biggest challenge to managers who are trained to “serve existing markets efficiently” is to change their mindset when they approach BOP markets. Airtel, a telecom company (India) had to develop the market since the tele-density in India was so low.

“It is too early to pronounce the BOP markets an unqualified success,” states Prahalad. “I believe there are enough signals to illustrate that the ‘invisible hand’ of entrepreneurs reaching out to the invisible markets of the world has the capacity to help create the solutions that the people and planet so desperately need.”

Global companies ranging from Microsoft, Philips Electronics, Unilever, GlaxoSmithKline, and ING have felt the impact from the first book, and their CEOs provide in-depth reactions in the new, updated edition.

“The results are proving to be quite exciting, not only in terms of market impact in developing economies, but also seeing how innovations targeting the BOP can ‘trickle up’ to the developed world, said Craig Mundie, Chief Technology and Strategy Officer, Microsoft.

“To win the consumers at the BOP requires rethinking traditional approaches around the supply chain and encouraging the organization to face the realities of affordability and profit requirements,” said Ian McPherson, President, GlaxoSmithKline.

“The capacity for change and creative thinking I have seen from everyone who has embraced the challenge in the past five years, from nongovernmental organizations, multinationals, and the poor themselves, has been inspirational,” says Prahalad. “A change this ambitious cannot happen overnight, and this change is still ongoing. There are still lessons to be learned and new ideas developing as a result of The Fortune at the Bottom of the Pyramid.”

For more information, visit www.whartonsp.com/prahalad .

About the Author

C.K. Prahalad is Paul and Ruth McCracken Distinguished University Professor of Strategy at the Ross School of Business, The University of Michigan and is a globally recognized management thinker. In October 2009 C.K. Prahalad was ranked as the #1 Living Management Thinker for the second time in a row by Thinkers 50 ( www.thinkers50.com), a global poll, in connection with The Times of London. He is coauthor of bestsellers in management such as Competing for the Future, The Future of Competition and The New Age of Innovation. He has won the McKinsey Prize for the best article four times. He has received several honorary doctorates including one from the University of London and the Stevens School of Technology. Prahalad has worked with CEOs and senior management at many of the world’s top companies and is also member of the Board of NCR Corporation, Pearson plc., Hindustan Unilever LTD., World Resources Institute, and The Indus Entrepreneurs (TiE).

About Wharton School Publishing

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The Fortune at the Bottom of the Pyramid, Fifth Anniversary Edition

C.K. Prahalad

October 2009

$29.99, 432 pages

ISBN-13: 9780137009275