Illusions at the Bottom of the Pyramid

Prasad Boradkar, IDSA | Arizona State University and Unmesh Kulkarni | Philips Electronics

Introduction

In his book, The Fortune at the Bottom of the Pyramid, C.K. Prahalad suggests that we consider the world’s poor—those at the base of the economic triangle who survive on less than $2 a day—not as victims but, instead, as consumers representing a large latent market. Published in 2004, this book has become immensely popular with industry leaders, and the authors list several successful case studies of companies engaged in this strategy. Indeed, according to the United Nations Conference on Trade and Development (UNCTAD), “FDI [foreign direct investment] inflows to South, East, and South-East Asia maintained their upward trend in 2006, rising by about 19% to reach a new high of US$200 billion.”

While global businesses chase the dream of making money at the bottom of the pyramid, they often forget that they need to create value for the “consumers” in this group. Well-researched insights about people’s aspirations and lifestyles, demographics, and statistics, as well as strategies and potentials are being discussed in global boardrooms. Ambitious business plans are being formulated. Pilot programs, dubbed “innovation strategies,” are being launched in developing countries to sell consumer appliances designed for the bottom of the pyramid. However, the reality on the ground is different. A good number of these programs are not as successful as expected, due to fundamental flaws in perspective.

Excessive corporate desire, poor research insights, lack of local perspective, and unfamiliarity with the consumer are a few of the reasons for these failures. Popular theories of business strategy designed to reach the bottom of the pyramid do not always work. Fortunately, designers are uniquely positioned to change these failed practices and approaches. Through human-centered approaches, an emphasis on local context, systems thinking, and other strategies, it is possible to create true value for this segment of the human population. However, this requires a serious commitment from corporations who are keen on establishing a presence in such emerging markets as India, the world’s most populous democracy.

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