Made in Japan, Outsourced Globally

After reading The Fortune at the Bottom of the Pyramid by C.K. Prahalad and an insightful observation by Chris, I have to agree with Chris that there needs to be a critical look at the Bottom of the Pyramid (BOP) model. (by the way, the video clips on the Amazon.com site for the book (link above) are worthy case studies that bring the model to life).

There were some colloraries and criticisms about the BOP concept. Mainly:
1. It has a heavy (if not pure) emphasis on the economic profitability from the poor. Prahalad's language is meant to lure MNCs and entrepreneurial investors, but the motivation cannot be sustained by financial profitability alone, since it will be a long time before the profitability will compare to anything that the developed world is producing today. It seems too much like putting the cart before the horse. If anything, from a global private sector prospective, the real powerful message is the potential to get an early access to the "future consumer market".

2. The theoretical framework of Prahalad's book calls for collaboration by government, private sector, public sector (NGO/NPOs), and the local community. However, in many of the case studies, Prahalad is biased towards the private sector, lauding their enterpreneurial solutions that could not be solved by government and NGOs. This is more of a personal preference, but such an opinion seems counter-intuitive. The government, private/public sector, NGO/NPO segregation and cooperation is a fairly modern model, and there are different trends with time (e.g. - late 60s was about private banking lending to 3rd world entrepreneurs and governments, leading to the debt crisis in the 70s with the oil crisis (source of private bank loans); hence the clamp down on private lending and the birth of World Bank and IMF as the global police on financial lending; 80s Regan and Thatcher led to a flurry of NGO/NPOs in 90s with emotional backlash on ultra-laissez-faire economics). Simply put, each institution/entity has a time and a place. This book was published in 2004 - can we laud the business community today with the same gusto as we face the 2008 subprime financial crisis? Most importantly, it is advisable to distinguish the "who" but not get distracted by who gets credit for success - creating a sustainable BOP model is a humble occupation.

Overall, it is important to recognize the poor not simply as dead weight but as a productive part of society. BOP has a role in itself to rally for such a recognition, and the businesses (as described in the case studies) are worth celebrating about. Many of them have tangible and social consequences beyond economic gains, such as health and a sense of confidence & worth in people. It is a refreshing change from schools of thought that concentrate on the middle class (which is also very significant to the business community - as seen in McKinsey Quarterly's study on the Indian middle class).