Monday, July 16, 2007

Does the BOP address wealth creation?

C.K. Prahalad's book, Fortune at the Bottom of the Pyramid, The: Eradicating Poverty Through Profits is a great book with many opportunities for global companies who are trying to reach the 4 billion humans living on less than a dollar a day. The BOP (Bottom of the Pyramid or Base of the Pyramid) has enabled a new thinking among people in the development field, and has business schools re-writing their curriculum to adopt some practices from Mr. Prahalad.

As great as the BOP is, the current theory about the BOP is a little flawed in that it does not really address the most important issue in development - how can the poor make a sustainable living in emerging markets? I was discussing this issue with a colleague of mine, Dr. Reuben Abraham. Reuben is with the Cornell University’s Center for Sustainable Global Enterprise at the Johnson School of Management and a visiting faculty at the Indian School of Business (ISB) in Hyderabad. Speaking with Reuben we both agreed the theory behind BOP is great for companies who are trying to reach a underserved market, it is also good for the 4 billion at the bottom of the market to buy smaller quantities of a product they normally couldn't buy. However, how can we enable the poor to generate income and make it a sustainable revenue stream?

In CK's book he does give some examples of how Proctor & Gamble and Coke help entrepreneurs with making a living. In one example in the book, Coke supplied refrigerators to vendors as long as they use Coke products and P&G helps with logistics in India. Reuben even told me that the best selling product made for the BOP market in India is a skin-bleaching cream. This cream is so popular for this consumer-products multinational it is marketing this product and people are lining up to buy it. When I heard this I thought of my own country of Ghana...people to this day, try to bleach their skin and don't know the health implications of such actions.

Speaking with Reuben, we came to the conclusion the best way to help the world's poor is through investment and micro-financing. Reuben is a Cheetah that is doing some great things; he serves on the global board of directors of George Soros’ Economic Development Fund, a $140 million fund which is involved in catalyzing growth in emerging markets. He founded and runs the International Private Enterprise Group (IPEG), a New York based network of professionals, which promotes the role of the private sector, capital markets and technology in catalyzing economic development in emerging markets.

When you get a chance check out his blog: ZooStation

1 comment:

  1. You might also be interested in these two notes from BCG on the BOP:

    As well as this WRI/IFC report:


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