The Fortune at the Bottom of the Pyramid is a definitive account of the need for inclusive capitalism in the world we live today. CK Prahalad sets the tone by arguing that the poor of the world must not be a constituency. Instead, key players like the private sector, NGOs & governments can enable dignity & choice to the poor, and, in the process, realize huge profits.
The book is split into 2 parts. In the first, CK Prahalad builds a framework for poverty alleviation by arguing for large-scale entrepreneurship & innovative approaches to design and delivery. He posits out that only 2.5 billion individuals have a per capita income of over $1500 (in terms of purchasing power parity), thereby leaving the vast majority of 4 billion at the BOP. Any BOP solution, he adds, must be scalable enough to be transplanted onto a different country. A forceful argument is made that endemic corruption at the BOP can indeed be addressed.
The second part takes us through 12 exhaustive case studies of companies that have realized immense profits while providing solutions / products to the BOP.
- To solve the problem of Iodine Deficiency Disorder that could affect 20% of the Indian population (almost all of them belonging to BOP), Hindustan Lever came up with a holistic approach that encompassed manufacturing, supply chain, local distribution, communication, pricing, packaging & wastage. Thanks to a unique manufacturing technology called K15, Iodine in Annapurna Salt is neither released in extreme storage conditions nor under heat-intensive Indian cooking. Instead it is released only when it comes in contact with the acids of one's stomach, thereby ensuring that the right amount of iodine is absorbed.
- In the world of prosthetics, Jaipur Foot has no equal. Sold for $30 compared to over $8000 in advanced countries, the Jaipur Foot allows the individual to perform a lot more functions, viz. sit cross-legged, squat, walk long distances & on uneven grounds. Through rapid improvements in manufacturing, it is now possible to have a custom fit made in 4 hours. Its founders never applied for a patent & have been able to bring down their cost per unit to under $12.50. Jaipur Foot is sold today in 19 countries.
- A doctor at Aravind Eye Care, the largest eye-care system in the world, performs 2600 surgeries per year compared to the Indian average of 400. Only 40% of its patients pay. Those that do shell out $50 for a cataract surgery. Through relentless process optimization & efficiency, Aravind Eye Care has succeeded in lowering its costs & ensuring that doctors focus only on what they do best, viz. perform surgeries.
- Innovative approaches to evaluating creditworthiness of a BOP customer at Casas Bahia in Brazil, providing home building solutions to people who save for 70 weeks (and `freezing' costs for the entire period) at Cemex in Mexico and creating sustainable self help groups by ICICI Bank in India are other notable examples.
All in all, a wonderful read on how thoughtful & innovative approaches can transform the poor and widen the addressable market for the private sector. Highly recommended!!!Get more detail about The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits.
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