The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits

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Summary: "Give a man a fish, he'll eat for a day...
Review: ...Teach a man to fish, and he'll eat for a lifetime". A famous Biblical quote, one that resonated with me strongly, and profoundly influenced my thinking on international aid, but more broadly, the problem of poverty, and the reticence of Capitalism in addressing it.

I'm a strong believer in capitalism, this wonderful book reinforced my belief in that system. It did so by showing how world poverty and consistently non-functional economies aren't because of capitalism, but for lack of capitalist attention.

Times have changed, technology and it's rapidly increasing efficacy in efficient delivery of products and services, necessitates that we change our attitude about heretofore neglected markets, and the nearly 5 billion people in them. "Inclusive Capitalism" as the author calls it.

Rich with important concepts like "Installment Sales" (which address the needs and constraints of low-income consumers), this book is a virtual blueprint for companies, as well as entreprenuers, who are interested in serving low-income consumers around the world.

The hardcover book also contains a CD. I usually skip viewing those, but I'm glad I didn't in this instance. Prahalad gives the introduction, then roughly a dozen case studies follow. From Appliance sales companies in Brazil, to a Cement company in Mexico; seeing the passion on the faces of their customers, how the companies have changed their lives, it is incredibly touching. You aren't watching customers, you're watching "evangalists" that would make your most devout American iPod fan seem like an unsatisfied customer.

I recommend this book highly.

Enjoy,

Christian Hunter
Santa Barbara, California

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Summary: Convert poverty into prosperity
Review: C.K. Prahalad has written about a bold new idea to fight poverty using profits.

"IF WE stop thinking of the poor as victims or as a burden and start recognising them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up." That "simple proposition" begins a controversial new management book that seems destined to be read not just in boardrooms but also in government offices. "The Fortune at the Bottom of the Pyramid. Eradicating Poverty Through Profits" (Wharton School Publishing), is essentially a rallying cry for big business to put serving the world's 5 billion or so poorest people at the heart of their profit-making strategies. It has already been praised by everyone from Bill Gates-"a blueprint for fighting poverty"-to a former American secretary of state, Madeleine Albright-"if you are looking for fresh thinking about emerging markets, your search is ended."

Ultimately, profits aren't made by screwing people out of their money. Profits come from solving customer problems and meeting customer needs. Any market with unmet needs and/or inefficiencies in process is ripe for someone to come in and make profits while still providing good value to consumers. I hope this book starts to change the thinking patterns of society. The best thing that could happen to those in poverty is that we unleash the power of capitalism to raise their standard of living.

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Summary: An unusual book by a great expert.
Review: C.K. Prahalad offers his unique insight on the emerging countries with a special focus on India. The book presents unusual statistics about the size of these markets. Prahalad, presents a good case about the possibility of profits in these markets as well as covers the challenges that these markets present to companies interested in doing business. However, when it comes to Public policy the author moves from one topic to other-- corruption, effective governance, communism vs democracy, etc without effectively making a complete case about each one. The cases are very beautifully covered and the overall book is very interesting for readers interested in India and other emerging markets and their potential. This book can be better summarized as a book on how to profitably do business in these markets rather than a book on eradicating poverty. The author tries hard to relate the two.

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Summary: Great frameworks on doing business in emerging market!!!
Review: For thought leaders, consultants, MBA students, corporate and social workers, this is a must read. It has more "aha" statements than any book I have ever picked up. It is essential reading for educators. The growth rate for "bottom of pyramid" demands that we begin to look seriously at how business interface with this segment. Reading Dr. Prahald's book will put you on the right path for your journey.

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Summary: A new innovative thinking that opens the traditional mindset
Review: Historically, there has been a negative image relating to corporations and people of the developing countries. The minute someone mention "business" and "the developing countries", everyone assumes the consequence of evil capitalism exploiting cheap labor.

This book has really opened up this topic and allow the public to understand that it is possible to use business as a positive solution for eradicating poverty. On the other hand, corporations should look at the successful examples described in this book and realized that could be profitable to bring products to the developing world, as long as companies undertand to be innovative with their business strategies. The result is a win-win situation if done properly.

I read this book to try out the whole Wharton Publishing launch and I was very satisfied. The stories are extremely inspirational and I recommend EVERYONE to read this.

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Summary: Must read book from Wharton School Publishing!!!
Review: Looking to the poor for new markets The Fortune at the Bottom of the Pyramid,by CK Prahalad( Wharton School Publishing) Conventional wisdom states that "the poor will always be with us". This attitude and perception has tended to determine the approaches that we have adopted to deal with a most undesirable situation - it is unacceptable that enormous numbers of people live in conditions that are considered to be deprived of the basics of life.

As a result the poor have tended to be perceived to be an issue that can be addressed only through a process that is best described as charity or transfer of resources. CK Prahalad has written widely on business strategy and success in the future - the worldwide best-seller Competing for the Future is the best known of his books. In this book he is applying a simple dictum to the challenge of the poor, that is if current approaches are not making inroads into the problem, then it is likely that the approaches need to be changed, not that we just work harder at those "old" approaches.

This means we need to find new and innovative approaches to the challenge of the poor. One of the more important assumptions that Prahalad makes is that the poor need to seen as a market, but a market that is different in very important ways from the markets that the average, economically empowered person or organisation perceives. This assumption has some immediate consequences - all of the traditional business concepts are a part of the solution but each and every one of those traditional concepts needs to be applied from a new and different perspective.

As a result this book is a practical example of the application of innovative thinking and innovation to an intractable problem - the more than 4-billion human beings who do not form part of the target market of the organisations that are driven by conventional assumptions about products, services, value and needs. In a recent article, Geoffrey Moore of The Chasm Group identified eight different sources of innovation in business (disruptive innovation - "new to the world innovations of product"; application innovation; product innovation; process innovation; experiential innovation; marketing innovation; business model innovation; and structural innovation). Prahalad has taken the view that the challenge presented by the 4-billion at the bottom of the economic pyramid will not be resolved unless innovation and innovative approaches are applied in each and every area of the business process. The starting point is the assumption that the poor are a market. What makes this book so very powerful are the examples and case studies produced to support the ideas.

Case studies of profitable businesses operating in the poor communities of India, Mexico, Brazil, Kosovo, Peru and other nations address products and services as widely different as salt and soap, health services, home building, financial services and other retail operations. The common thread is the target market and the profitable innovations that have been applied to supply responses to needs of this often ignored, large community.

CK Prahalad has written a book that challenges so many conventional theories about the poor and economically deprived that it will be quite controversial. But it also illustrates the power and value that can be gained from innovation in all aspects of business. This book is required reading for every person who considers the wellbeing of the poor. It is essential reading for every business person and everyone who is concerned about the efficiency and effectiveness of today's economic system.

Its content is a challenge to the way in which we approach the world. And the responses to the challenges are illustrated by powerful and convincing examples. It will be a very closed mind that does not receive an injection of innovative thinking and enthusiasm for the opportunities that can be created by adopting a different and innovative perspective of all of our activities - whether at the bottom or top of the economic pyramid.

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Summary: Transforming the BOP into a Global Opportunity
Review: The book begins with an affirmative "yes" to the question of whether the BOP is a huge market that can be effectively tapped for a win-win outcome for the poor across the globe and the multinationals who serve them.

I was keenly awaiting this book after reading the path breaking "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else" by Hernando Desoto. This book as acknowledged duly by Prof Prahalad has been an eye opener in unlocking the vast untapped potential of dead capital and entrepreneurial abilities of over two thirds of the world's poor who are trapped outside the bell jar of market based economies. Prof Prahlad shows us the way to social transformation and economic freedom while providing choice with dignity for the individuals through a market based ecosystem involving large multinationals, NGOs, Governments and the individuals themselves.

Before reading the book it is advisable the see the videos. These are true case studies across continents and industry verticals at the BOP. One cannot resist the temptation of reading the book from cover to cover soon after.

Addressing the huge BOP market needs innovative approaches. Large multinationals that try to transplant high end technologies from developed countries into developing worlds often meet with markets that are "not yet ready" or "too small". Instead they need innovative approaches to develop products that address the needs at the "lower end" of the market. Perhaps Prof Clayton Christensen's theory on disruptive innovations can be well utilized for this. Incumbents ignore these segments that are huge market opportunities for new entrants.

Prof Prahalad introduces the process of "inclusive capitalism" as a means of viewing the poor as individual consumers, creating choices with entrepreneurial skills, and providing them the dignity and path to prosperity. One of the important dimensions to achieve this is to ensure "Transaction Governance Capacity" or TGC which is basically the availability of the necessary legal framework for honouring market transactions and enforcing contracts. This reminds me of another recent book "Culture and Prosperity" by the eminent economist John Kay that talks of "Disciplined Pluralism" in developed countries.

The case studies prepared by Prof Prahalad's students under his supervision book are excellent. I could really appreciate the Indian cases due to first hand interaction with some of these household names here in India.

Bound to be not just another excellent business book, but a roadmap for business strategy for multinationals who do not wish to ignore two thirds of humanity.

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Summary: C. K. Prahalad Does It Again
Review: The Fortune at the Bottom of the Pyramid is one of those rare books that presents important research findings, and then explains in a concise and compelling style how to explore opportunities in the world's largest and fastest growing markets. I have given this book to several business partners who will benefit from C.K. Prahalad reseach.

Hats off to C.K. Prahalad, who was not content to sit back and grin after co-authoring the highly successful Competing for the Future, but tackled a book that should make an even greater impact on the future of businesses, countries and nations.

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Summary: Must-have for people who believe capitalism is the answer.
Review: The Fortune at the Bottom of the Pyramid..well, this was the book I have always been looking for. The best book ever on how markets can improve quality of life for the poorest people.

There are over 4 billion people, who are relatively untouched by intense capitalism - Gucci, Speedo or AOL do not target them as a market. But why? Just because these 4 billion people do not have a per-capita of $30K?

Averaged out, even if the per capita of billions of people is $500 an year, the benefits that will accrue to them by using better services, are immense. And they can afford it.

Consider this, Dharavi, a slum in Bombay, produces goods worth $2 billion annually. Yet, most of the houses do not have access to clean water. So the residents pay a surcharge to private water suppliers. The same for loans. As the big banks will not lend to poor people who need $100 loans, esp. if they do not have all valid legal documents, the poor go to greedy moneylenders who charge 1000% interest.

Microloans - dont lend $100,000 to one person in one shot. Lend $100 to 1000 people who will get 1000% benefit each - in the process getting richer, and the loans, even if priced at 30% for any bank, will make financial sense. The default rates for microloans is much lower than for our normal bigger loans.

And you will be more impressed if you read the book. Definitely worth it, nay, necessary, for anybody interested in alleviating the poor through markets. Sustainable markets, not aid, is the answer.

There is a challenge though, how do you market $50 cosmetic products to somebody who earns $50 a month? Well, there is an answer. an answer already working in places like India. Improe your processes, and make single use packets - price it at 5 cents and see 10 million people buy it the next day - making more money for you than 100,000 rich consumers.

For more interesting insights, and case studies, grab hold of this book.

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Summary: One of my favorite books of 2004 year
Review: This has been one of my most favorite books of 2004. It is a new look on how the poverty problem could be solved. Should it mandatory reading in the MBA programs!!!