In the year 2002, C.K. Prahalad and Stuart Hart published a groundbreaking article in Strategy+Business magazine that introduced to the world the idea of the Bottom of the Pyramid (BOP). The idea, which says that the poor present a vast untapped business opportunity, and if companies serve the poor, they can help eradicate poverty and also make a profit, revolutionized business thinking. Funnily though, before 2002, the idea had no takers: various management journals including Harvard Business Review didn’t publish Prahalad and Hart’s article for nearly four years because it didn’t have enough evidence in terms of multinational companies who had successfully experimented with the idea.
I’ve thought about it, and my colleagues Erik Simanis, Ted London and others have thought about this as sort of a BOP 1.0 version. One of the things we have learned from the first decade of activity is that simply coming up with a lower cost version or single-serve version, sachet-packaged version of current products, then seeking out distribution into rural areas or into slums with NGO partners, or outsourcing to NGOs, getting production costs down, is structural innovation. It’s important because for a large corporation thinking about this completely different business model, is a significant change.
Q. Moving on to your work in sustainability, most companies are caught in a very one-dimensional view of sustainability: one small initiative here, one small initiative there, and they think they have done their bit. How would you really rethink the idea of sustainability so that it includes a lot more than what companies are used to thinking about?
But we’re also reaching a point where that strategy now is reaching its limits purely from an economic and financial point of view. You can only strip so much cost out of a high-cost model as you step it down, that eventually you start to run into the limits. As you try to move further down the income pyramid, people simply can’t afford this stuff, or doesn’t really fit what they need. The first attempt was BOP 1.0, you just strip more cost out of it, put it in a sachet package. It hasn’t worked so well. Environmentally and from a purely financial affordability point of view, it does not (work well).
Q. You’ve often talked about China and India and how these two countries with their very unique environmental and social problems, might end up leading the transformation as far as green leap technologies are concerned.
[This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge.]
If u look back from where this guys are coming from, you will agree with me that it has been a fantastic journey but with difficulties because they were challenges concerning the whole concept of BOp. They never relented. Today it has caught the global flame. Finally the word will definitely become better if me and you seek to do something for the poor. They must be self sustainability in all our approaches.
on Sep 15, 2013August 8 is the birthday of the Great Management Guru Dr.C.K.Prahalad. Here is a Tribute: Coimbatore Krishnarao Prahalad (8 August 1941 – 16 April 2010) was the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the Stephen M. Ross School of Business in the University of Michigan. He was renowned as the co-author of \"Core Competence of the Corporation\" (with Gary Hamel) and \"The Fortune at the Bottom of the Pyramid (with Stuart L. Hart). On April 16, 2010, Prahalad died of a previously undiagnosed lung illness in San Diego, California. He was 68 at the time of his death, but he left a large body of work behind. Early life Prahalad was the ninth of eleven children born in 1941 in to a Kannada speaking family inCoimbatore, Tamil Nadu. His father was a well-known Sanskrit scholar and judge inChennai. At 19, he joined Union Carbide, he was recruited by the manager of the local Union Carbide battery plant after completing his B.Sc degree in Physics from Loyola College, Chennai, part of the University of Madras. He worked there for four years. Prahalad called his Union Carbide experience a major inflection point in his life. Four years later, he did his post graduate work in management at the Indian Institute of Management Ahmedabad. At Harvard Business School, Prahalad wrote a doctoral thesis on multinational management in just two and a half years, graduating with a D.B.A. degree in 1975. Professorship and teaching After graduating from Harvard, Prahalad returned to his master\'s degree alma mater, the Indian Institute of Management Ahmedabad. But he soon returned to the United States, when in 1977, he was hired by the University of Michigan\'s School of Business Administration, where he advanced to the top tenured appointment as a full professor. In 2005, Dr. Prahalad earned the university\'s highest distinction, Distinguished University . Writings, interests, and business experience In the earlier days of Prahalad\'s fame as established management guru, in the beginning of the 90\'s, he advised Philips\' Jan Timmer on the restructuring of this electronic corporation, then on the brink of collapse. With the resulting, successful, 2–3 year long Operation Centurion he also frequently stood for the Philips management troops. C. K. Prahalad is the co-author of a number of well known works in corporate strategy, including The Core Competence of the Corporation (with Gary Hamel, Harvard Business Review, May–June 1990) which continues to be one of the most frequently reprinted articles published by the Harvard Business Review.[9] He authored or co-authored several international bestsellers, including: Competing for the Future (with Gary Hamel, 1994), The Future of Competition (with Venkat Ramaswamy, 2004), and The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (Wharton School Publishing, 2004). His last book, co-authored by M. S. Krishnan and published in April 2008, is called The New Age of Innovation. Prahalad was co-founder and became CEO of Praja Inc. (\"Praja\" from a Sanskrit word \"Praja\" which means \"citizen\" or \"common people\"). The goals of the company ranged from allowing common people to access information without restriction (this theme is related to the \"bottom of pyramid\" or BOP philosophy) to providing a testbed for various management ideas. The company eventually laid off 1/3 of its workforce and was sold to TIBCO. In 2004, Prahalad also co-founded the boutique management consultancy, The Next Practice, to support companies in implementing the strategies outlined in The Fortune at the Bottom of the Pyramid. The company continues in operation today. At the time of his death, he was still on the board of TiE, The Indus Entrepreneurs. Prahalad has been among top ten management thinkers in every major survey for over ten years. Business Week said of him: \"a brilliant teacher at the University of Michigan, he may well be the most influential thinker on business strategy today.\" He was a member of the Blue Ribbon Commission of the United Nations on Private Sector and Development. He was the first recipient of the Lal Bahadur Shastri Award for contributions to Management and Public Administration presented by the President of India in 1999. Honors and awards • In 1994, he was presented the Maurice Holland Award from the Industrial Research Institute for an article published in Research-Technology Management titled \"The Role of Core Competencies in the Corporation.\"] • In 2009, he was awarded Pravasi Bharatiya Sammaan. • In 2009, he was conferred Padma Bhushan \'third in the hierarchy of civilian awards\' by the Government of India. • In 2009, he was named the world\'s most influential business thinker on the Thinkers50.com list, published by The Times. • In 2009, he was awarded the Herbert Simon Award by the Rajk László College for Advanced Studies (Corvinus University of Budapest). • In 2010, he was posthumously awarded the Viipuri International Prize in Strategic (Technology) Management and Business Economics by Lappeenranta University of Technology. • In 2011, the Southern Regional Headquarters of Confederation of Indian Industry (CII) was named as Prof C K Prahalad Center(Source: Wikipedia) Dr.A.Jagadeesh Nellore(AP),India
on Aug 9, 2013Good post. It has become fashion to use the saying BOTTOM OF THE PYRAMID. Whether it comes from BOTTOM of the heart or not is another question. It can be easily seen that the Indian Railways from Second Class passengers is much much higher than the AC Passengers. This gives the answer for Business Venture between Bottom of the pyramid or top of the Cone! Dr.A.Jagadeesh Nellore(AP),India
on Jul 31, 2013BOP is the most relevant one to uphold the villages of India because India live in it's villages. It's a good concept to awake and presiding of rural communities in better way.
on Jan 4, 2019