The Fortune at the Bottom of the Pyramid

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pages: 423 words: 149,033

The fortune at the bottom of the pyramid by C. K. Prahalad

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barriers to entry, business process, call centre, cashless society, clean water, collective bargaining, corporate social responsibility, deskilling, disintermediation, farmers can use mobile phones to check market prices, financial intermediation, Hernando de Soto, hiring and firing, income inequality, late fees, Mahatma Gandhi, market fragmentation, microcredit, new economy, profit motive, purchasing power parity, rent-seeking, shareholder value, The Fortune at the Bottom of the Pyramid, time value of money, transaction costs, working poor

Moore Vice President FTPH/Wharton School Publishing/ Reuters Editor-in-Chief Contents Preface xi About the Author Part I Chapter 1 ■ xix The Fortune at the Bottom of the Pyramid 1 The Market at the Bottom of the Pyramid 3 The Power of Dominant Logic 6 The Nature of the BOP Market 10 There Is Money at the BOP 10 Access to BOP Markets 13 The BOP Markets Are Brand Conscious 14 The BOP Market Is Connected 14 BOP Consumers Accept Advanced Technology Readily 15 The Market Development Imperative 16 Create the Capacity to Consume 16 The Need for New Goods and Services 19 Dignity and Choice 20 Trust Is a Prerequisite 21 Benefits to the Private Sector 22 Chapter 2 ■ Products and Services for the BOP A Philosophy for Developing Products and Services for the BOP 24 Twelve Principles of Innovation for BOP Markets 25 vii 23 The Fortune at the Bottom of the Pyramid viii Making It Happen Conclusion Chapter 3 ■ 28 46 BOP: A Global Opportunity?

What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win–win scenarios where the poor are actively engaged and, at the same time, the companies providing products 3 The Fortune at the Bottom of the Pyramid 4 Purchasing power parity in U.S. dollars Population in millions > $20,000 Tier 1 75 – 100 $1,500 – $20,000 Tiers 2–3 1,500 – 1,750 $1,500 Tier 4 4,000 < $1,500 Tier 5 Figure 1.1 The economic pyramid. Source: C. K. Prahalad and Stuart Hart, 2002. The Fortune at the Bottom of the Pyramid, Strategy+ Business, Issue 26, 2002. Reprinted with permission from strategy + business, the award-winning management quarterly published by Booz Allen Hamilton. www.strategy-business.com. and services to them are profitable. This collaboration between the poor, civil society organizations, governments, and large firms can create the largest and fastest growing markets in the world.

Praise for The Fortune at the Bottom of the Pyramid “C. K. Prahalad argues that companies must revolutionize how they do business in developing countries if both sides of that economic equation are to prosper. Drawing on a wealth of case studies, his compelling new book offers an intriguing blueprint for how to fight poverty with profitability.” Bill Gates Chairman and Chief Software Architect, Microsoft “The Bottom of the Pyramid belongs at the top of the reading list for business people, academics, and experts pursuing the elusive goal of sustainable growth in the developing world. C. K. Prahalad writes with uncommon insight about consumer needs in poor societies and opportunities for the private sector to serve important public purposes while enhancing its own bottom line. If you are looking for fresh thinking about emerging markets, your search is ended.


pages: 494 words: 116,739

Geek Heresy: Rescuing Social Change From the Cult of Technology by Kentaro Toyama

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Albert Einstein, Berlin Wall, Bernie Madoff, blood diamonds, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cognitive dissonance, computer vision, conceptual framework, delayed gratification, Edward Glaeser, en.wikipedia.org, epigenetics, Erik Brynjolfsson, Francis Fukuyama: the end of history, fundamental attribution error, germ theory of disease, global village, Hans Rosling, happiness index / gross national happiness, income inequality, invention of the printing press, invisible hand, Isaac Newton, Khan Academy, Kibera, knowledge worker, libertarian paternalism, M-Pesa, Mahatma Gandhi, Mark Zuckerberg, means of production, microcredit, mobile money, Nicholas Carr, North Sea oil, pattern recognition, Peter Singer: altruism, Peter Thiel, post-industrial society, randomized controlled trial, rent-seeking, RFID, Richard Florida, Richard Thaler, school vouchers, self-driving car, Silicon Valley, Simon Kuznets, Steve Jobs, Steven Pinker, technoutopianism, The Fortune at the Bottom of the Pyramid, Upton Sinclair, Walter Mischel, War on Poverty, winner-take-all economy, World Values Survey, Y2K

Good tools are important, but it’s even more important that architects and artisans use the right combination of tools in the right way for each decision-making task. Eradicating Poverty Through Profits? Another fashionable trend sees practitioners applying for-profit business approaches to social causes. The idea was put forth seductively by C. K. Prahalad, a professor of business at the University of Michigan. In his 2004 book The Fortune at the Bottom of the Pyramid, he wrote that the 4 billion people in the world who live on less than $2 a day could be enriched if they were viewed as a business opportunity.20 Prahalad’s motto is captured in the book’s subtitle: Eradicating Poverty Through Profits. According to Prahalad, governments and nonprofits have been going about things all wrong, especially when it comes to poverty. They commit two sins hateful to any business: First, they don’t cover their own costs; second, they’re unable to reach large numbers of people.

New York Times, Sept. 24, 2013, www.nytimes.com/2013/09/25/business/economy/for-american-women-is-it-enough-to-lean-in.html. Postman, Neil. (1985 [2005]). Amusing Ourselves to Death: Public Discourse in the Age of Show Business, 20th Anniversary Edition. Penguin. Pradan. (2014). PRADAN annual report 2013–2014, www.pradan.net/index.php?option=com_content&task=view&id=109&Itemid=88. ———. (n.d.). Mission, www.pradan.net/index.php?option=com_content&task=view&id=18&Itemid=4. Prahalad, C. K. (2004). The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Wharton School Publishing. Prensky, Marc. (2011). Digital natives, digital immigrants. In Marc Bauerlein, ed., The Digital Divide: Arguments for and Against Facebook, Google, Texting, and the Age of Social Networking. Tarcher/Penguin. Pritchett, Lant. (1996). Where Has All the Education Gone? Policy Working Research Paper 1581. World Bank, http://unpan1.un.org/intradoc/groups/public/documents/UNPAN/UNPAN002390.pdf.

See also Social media Fairlie, Robert, 12, 31 Family connections, 148, 250(n11), 257(n52) Farmer, Paul, 254(n25) Farmer Field Schools, 207 The fear of missing out (FOMO), 41, 234(n7) Feudal systems, 237(n20) Financial crisis (2007–2008), 61, 97 Finland: student achievement, 13 First Law of Robotics, Asimov’s, 217, 276–277(n16) The Flickering Mind (Oppenheimer), 10, 228(n17) Florida, Richard, 186–187. See also Creative class Food insecurity, 22, 230(n7) Ford Foundation, 86 Foreign aid, 72, 198. See also International development Foreign direct investment, 183–185 The Fortune at the Bottom of the Pyramid (Prahalad), 82–84 Foundation and Earth (Asimov), 277(n16) Foundation for International Community Assistance, 71 France: compassionate class, 190 Franklin, Benjamin, 276(n8) Franzen, Jonathan, 86 Freedom, 93. See also Democracy Free will, illusion of, 264(n45), 265(n3) Free-PC, 48 Freud, Sigmund, 161, 260(n18) Fukuyama, Francis, 276(n15) Gaddafi, Muammar, 33 Games, computerized.


pages: 251 words: 76,868

How to Run the World: Charting a Course to the Next Renaissance by Parag Khanna

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Albert Einstein, Asian financial crisis, back-to-the-land, bank run, blood diamonds, borderless world, BRICs, British Empire, call centre, carbon footprint, charter city, clean water, cleantech, cloud computing, corporate governance, corporate social responsibility, Deng Xiaoping, Doha Development Round, don't be evil, double entry bookkeeping, energy security, European colonialism, facts on the ground, failed state, friendly fire, global village, Google Earth, high net worth, index fund, informal economy, invisible hand, labour mobility, laissez-faire capitalism, Masdar, megacity, microcredit, mutually assured destruction, Naomi Klein, New Urbanism, offshore financial centre, oil shock, open economy, out of africa, private military company, Productivity paradox, race to the bottom, RAND corporation, reserve currency, Silicon Valley, smart grid, South China Sea, sovereign wealth fund, special economic zone, sustainable-tourism, The Fortune at the Bottom of the Pyramid, The Wisdom of Crowds, too big to fail, trade liberalization, trickle-down economics, UNCLOS, uranium enrichment, Washington Consensus, X Prize

Paris, Roland. At War’s End: Building Peace After Civil Conflict. Cambridge, UK: Cambridge University Press, 2004. Perkins, Dwight H., Steven Radelet, and David L. Lindauer. Economics of Development. 6th ed. New York: W. W. Norton and Co., 2006. Pogge, Thomas W. World Poverty and Human Rights: Cosmopolitan Responsibilities and Reforms. Cambridge, UK: Polity, 2002. Prahalad, C. K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Philadelphia: Wharton School Publishing, 2006. Pritchett, Lant. Let Their People Come: Breaking the Gridlock on International Labor Mobility. Washington, D.C.: Center for Global Development, 2006. Rangan, V. Kasturai, ed. Business Solutions for the Global Poor: Creating Social and Economic Value. San Francisco: Jossey-Bass, 2007. Rashid, Ahmed.


pages: 678 words: 216,204

The Wealth of Networks: How Social Production Transforms Markets and Freedom by Yochai Benkler

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affirmative action, barriers to entry, bioinformatics, Brownian motion, call centre, Cass Sunstein, centre right, clean water, dark matter, desegregation, East Village, fear of failure, Firefox, game design, George Gilder, hiring and firing, Howard Rheingold, informal economy, invention of radio, Isaac Newton, iterative process, Jean Tirole, jimmy wales, market bubble, market clearing, Marshall McLuhan, New Journalism, optical character recognition, pattern recognition, pre–internet, price discrimination, profit maximization, profit motive, random walk, recommendation engine, regulatory arbitrage, rent-seeking, RFID, Richard Stallman, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, Skype, slashdot, social software, software patent, spectrum auction, technoutopianism, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs

Amartya Sen, Development as Freedom (New York: Knopf, 1999), 46-47. 108. Carol Tenopir and Donald W. King, Towards Electronic Journals: Realities for Scientists, Librarians, and Publishers (Washington, DC: Special Libraries Association, 2000), 273. 109. Harold Varmus, E-Biomed: A Proposal for Electronic Publications in the Biomedical Sciences (Bethesda, MD: National Institutes of Health, 1999). 110. C. K. Prahald, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, NJ: Wharton School of Publishing, 2005), 319-357, Section 4, "The ITC e-Choupal Story." 111. For the sources of numbers for the software industry, see chapter 2 in this volume. IBM numbers, in particular, are identified in figure 2.1. 112. These arguments were set out most clearly and early in a public exchange of letters between Representative Villanueva Nunez in Peru and Microsoft's representatives in that country.

Amartya Sen, Development as Freedom (New York: Knopf, 1999), 46-47. 108. Carol Tenopir and Donald W. King, Towards Electronic Journals: Realities for Scientists, Librarians, and Publishers (Washington, DC: Special Libraries Association, 2000), 273. 109. Harold Varmus, E-Biomed: A Proposal for Electronic Publications in the Biomedical Sciences (Bethesda, MD: National Institutes of Health, 1999). 110. C. K. Prahald, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, NJ: Wharton School of Publishing, 2005), 319-357, Section 4, "The ITC e-Choupal Story." 111. For the sources of numbers for the software industry, see chapter 2 in this volume. IBM numbers, in particular, are identified in figure 2.1. 112. These arguments were set out most clearly and early in a public exchange of letters between Representative Villanueva Nunez in Peru and Microsoft's representatives in that country.


pages: 296 words: 87,299

Portfolios of the poor: how the world's poor live on $2 a day by Daryl Collins, Jonathan Morduch, Stuart Rutherford

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Cass Sunstein, clean water, failed state, financial innovation, financial intermediation, income per capita, informal economy, job automation, M-Pesa, mental accounting, microcredit, moral hazard, profit motive, purchasing power parity, RAND corporation, randomized controlled trial, The Fortune at the Bottom of the Pyramid, transaction costs

American Economic Review 89 (1): 103–21. 269 BIBLIOGRAPHY O’Donahue, Ted, and Matthew Rabin. 1999b. “Incentives for procrastinators.” Quarterly Journal of Economics 114 (3): 769–817. Patole, Meenal, and Orlanda Ruthven. 2001. “Metro moneylenders: Microcredit providers for Delhi’s poor.” Small Enterprise Development 13 (2): 36–45. Pauly, Mark. 1968. “The economics of moral hazard: Comment.” American Economic Review 58 (3): 531–37. Prahalad, C. K. 2005. The Fortune at the Bottom of the Pyramid. Upper Saddle River, NJ: Wharton School Publishing. Reille, Xavier, and Sarah Forester. 2008. “Foreign capital investment in microfinance.” Consultative Group to Assist the Poor, CGAP Focus Note 43. Rosenberg, Richard. 2007. “CGAP reflections on the Compartamos initial public offering: A case study on microfinance interest rates and profits.” Consultative Group to Assist the Poor, CGAP Focus Note 42.


pages: 370 words: 112,602

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit Banerjee, Esther Duflo

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Albert Einstein, Andrei Shleifer, business process, business process outsourcing, call centre, Cass Sunstein, charter city, clean water, collapse of Lehman Brothers, congestion charging, demographic transition, diversified portfolio, experimental subject, hiring and firing, land tenure, low skilled workers, M-Pesa, microcredit, moral hazard, purchasing power parity, randomized controlled trial, Richard Thaler, school vouchers, Silicon Valley, The Fortune at the Bottom of the Pyramid, Thomas Malthus, urban planning

Net assets include all savings, capital, and household assets net of borrowing. 13 Dean Karlan and Sendhil Mullainathan, “Debt Cycles,” work in progress (2011). 14 Abhijit Banerjee, Esther Duflo, Rachel Glennerster, and Cynthia Kinnan, “The Miracle of Microfinance?,” MIT, manuscript (2010). Bruno Crépon, Florencia Devoto, Esther Duflo, and William Parienté, “Evaluation d’impact du microcrédit en zone rural: Enseignement d’une expérimentation randomisée au Maroc,” MIT, mimeo. Chapter 9 1 C. K. Prahalad, The Fortune at the Bottom of the Pyramid (Philadelphia: Wharton School Publishing, 2004). 2 Tarun Khanna, Billions of Entrepreneurs: How China and India Are Reshaping Their Futures—and Yours (Boston: Harvard Business School Publishing, 2007). 3 Suresh de Mel, David McKenzie, and Christopher Woodruff, “Returns to Capital in Microenterprises: Evidence from a Field Experiment,” Quarterly Journal of Economics 123 (4) (2008): 1329—1372. 4 David McKenzie and Christopher Woodruff, “Experimental Evidence on Returns to Capital and Access to Finance in Mexico,” World Bank Economic Review 22 (3) (2008): 457–482. 5 Abhijit Banerjee, Raghabendra Chattopadhyay, Esther Duflo, and Jeremy Shapiro, “Targeting the Hard-Core Poor: An Impact Assessment,” MIT (2010), mimeo. 6 For a description of the Townsend data, see Krislert Samphantharak and Robert Townsend, “Households as Corporate Firms: Constructing Financial Statements from Integrated Household Surveys,” University of California at San Diego and University of Chicago (2006), mimeo. 7 The study in Peru is Dean Karlan and Martin Valdivia,“Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions,” Review of Economics and Statistics, forthcoming.


pages: 422 words: 113,525

Whole Earth Discipline: An Ecopragmatist Manifesto by Stewart Brand

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agricultural Revolution, back-to-the-land, biofilm, borderless world, Buckminster Fuller, business process, Cass Sunstein, clean water, Community Supported Agriculture, conceptual framework, Danny Hillis, dark matter, decarbonisation, demographic dividend, demographic transition, Elon Musk, Exxon Valdez, failed state, Geoffrey West, Santa Fe Institute, glass ceiling, Google Earth, Hans Rosling, Hernando de Soto, informal economy, interchangeable parts, invention of agriculture, invention of the steam engine, Jane Jacobs, jimmy wales, Kevin Kelly, Kibera, land tenure, M-Pesa, Marshall McLuhan, megacity, microbiome, New Urbanism, out of africa, Paul Graham, peak oil, Richard Florida, Ronald Reagan, Silicon Valley, smart grid, stem cell, Stewart Brand, The Fortune at the Bottom of the Pyramid, Thomas Malthus, University of East Anglia, uranium enrichment, urban renewal, Whole Earth Catalog, Whole Earth Review, working-age population, Y2K

To promote solidarity with the Caracas slum community, AES hired some of the more skilled pirates to help install the system. AES was trustworthy, and its new customers were trustworthy, but President Hugo Chávez turned out not to be. After initially supporting the effort, he nationalized the system in 2007 and threw out AES. (The company took its lessons learned and its Caracas team to install a similar system in São Paulo.) AES, among many other corporations, was inspired by C. K. Prahalad’s The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (2005). The book spells out how companies can reach the world’s 4 billion poor and deliver goods and services at the interface between the formal and informal economies. Prahalad writes that the poor shop after seven P.M.; they buy in tiny quantities; they welcome relief from the premium prices they often have to pay to slum (sometimes criminal) monopolies; and they are comfortable leapfrogging to new technologies.


pages: 523 words: 111,615

The Economics of Enough: How to Run the Economy as if the Future Matters by Diane Coyle

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accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop, illegal immigration, income inequality, income per capita, invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey

New York Times Magazine, 13 January. Plott, Charles. 2001. Market Institutions and Price Discovery. Collected Papers on the Experimental Foundations of Economics and Political Science. Cheltenham, UK: Edward Elgar. Praag, Bernard M. S. van, and Ada Ferrer-i-Carbonell. 2004. Happiness Quantified: A Satisfaction Calculus Approach. New York: Oxford University Press. Pralahad, C. K. 2004. The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits. Pittsburgh, PA: Wharton Business School. Putnam, Robert. 1993. Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press. ———. 2000. Bowling Alone. New York: Simon & Schuster. ———, ed. 2002. Democracies in Flux: The Evolution of Social Capital in Contemporary Society. New York: Oxford University Press.


pages: 335 words: 104,850

Conscious Capitalism, With a New Preface by the Authors: Liberating the Heroic Spirit of Business by John Mackey, Rajendra Sisodia, Bill George

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Berlin Wall, Buckminster Fuller, business process, carbon footprint, collective bargaining, corporate governance, corporate social responsibility, crony capitalism, cross-subsidies, en.wikipedia.org, Fall of the Berlin Wall, fear of failure, Flynn Effect, income per capita, invisible hand, Jeff Bezos, job satisfaction, lone genius, Mahatma Gandhi, microcredit, Occupy movement, profit maximization, Ralph Waldo Emerson, shareholder value, six sigma, Steve Jobs, Steven Pinker, The Fortune at the Bottom of the Pyramid, The Wealth of Nations by Adam Smith, too big to fail, union organizing, women in the workforce

Porter and Mark R. Kramer, “Creating Shared Value: How to Reinvent Capitalism—and Unleash a Wave of Innovation and Growth,” Harvard Business Review, January–February 2011, 2–17. 5. Bill Gates, “Making Capitalism More Creative,” Time, July 31, 2008, available at www.time.com/time/business/article/0,8599,1828069,00.html. 6. The late C. K. Prahalad popularized this idea through his book The Fortune at the Bottom of the Pyramid (Philadelphia: Wharton School Publishing, 2004). 7. B Lab, “B Corps Redefine Success in Business,” annual report, 2012, www.bcorporation.net/. Appendix C 1. Viktor E. Frankl, Man’s Search for Meaning (Boston: Beacon Press, 1959; first published in Austria in 1946 under the title Ein Psycholog erlebt das Konzentrationslager). 2. Kevin Armata, presentation in Raj Sisodia’s Conscious Capitalism class, Bentley University, Waltham, Mass., fall 2010. 3.

Frugal Innovation: How to Do Better With Less by Jaideep Prabhu Navi Radjou

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3D printing, additive manufacturing, Affordable Care Act / Obamacare, Airbnb, Albert Einstein, barriers to entry, Baxter: Rethink Robotics, Bretton Woods, business climate, business process, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, cloud computing, collaborative consumption, collaborative economy, connected car, corporate social responsibility, crowdsourcing, Elon Musk, financial innovation, global supply chain, income inequality, industrial robot, Internet of things, job satisfaction, Khan Academy, Kickstarter, late fees, Lean Startup, low cost carrier, M-Pesa, Mahatma Gandhi, megacity, minimum viable product, more computing power than Apollo, new economy, payday loans, peer-to-peer lending, Peter H. Diamandis: Planetary Resources, precision agriculture, race to the bottom, reshoring, ride hailing / ride sharing, risk tolerance, Ronald Coase, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley startup, six sigma, smart grid, smart meter, software as a service, Steve Jobs, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, transaction costs, unbanked and underbanked, underbanked, women in the workforce, X Prize, yield management, Zipcar

This was not easy to achieve: one engineer described it as like trying to change the car tyres while driving at full speed on a road that is still being built. Doing better with less Frugal innovation is not just about “doing more with less” but about “doing better with less”, and finding ways to reduce complexity in all aspects of the business. But when done right, companies will find that they are better placed to do the following. Capture underserved markets at the bottom of the pyramid In his book, The Fortune at the Bottom of the Pyramid, C.K. Prahalad, a management guru, argued that low-income people in developing economies such as India, Africa and Brazil collectively represent a huge, untapped market. But a bottom of the pyramid exists in developed economies too, and is not negligible. According to Accenture, a multinational management consulting and services company, low-income Europeans represent a €220 billion ($280 billion) untapped market.


pages: 391 words: 117,984

The Blue Sweater: Bridging the Gap Between Rich and Poor in an Interconnected World by Jacqueline Novogratz

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access to a mobile phone, Ayatollah Khomeini, Berlin Wall, business process, business process outsourcing, clean water, failed state, Fall of the Berlin Wall, half of the world's population has never made a phone call, Hernando de Soto, Kibera, Lao Tzu, market design, microcredit, out of africa, Ronald Reagan, sensible shoes, side project, Silicon Valley, Skype, The Fortune at the Bottom of the Pyramid, transaction costs

Le Guin (Creative Education) Purple Hibiscus by Chimamanda Ngozi Adichie (Anchor) Season of Migration to the North by Tayeb Salih (NYRB Classics) Shadow Lines by Amitav Ghosh (Mariner Books) Shooting an Elephant by George Orwell (Penguin Books) The Tempest by William Shakespeare Things Fall Apart by Chinua Achebe (Heinemann) Train to Pakistan by Khushwant Singh (Grove Press) BOOKS AND ARTICLES ON INNOVATIVE SOLUTIONS TO POVERTY ALLEVIATION “A Behavioral-Economics View of Poverty” by Marianne Bertrand, Sendhil Mullainathan, and Eldar Shafir (American Economic Review 94, no. 2) The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It by Paul Collier (Oxford University Press) Capitalism as if the World Matters by Jonathon Porritt and Amory B. Lovins (Earthscan Publications) Development as Freedom by Amartya Sen (Anchor) The End of Poverty: Economic Possibilities for Our Time by Jeffrey D. Sachs (Penguin Press) The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits by C.K. Prahalad (Wharton School Publishing) Making Globalization Work by Joseph E. Stiglitz (W.W. Norton) The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando de Soto (Basic Books) Pathologies of Power: Health, Human Rights, and the New War on the Poor by Paul Farmer (University of California Press) Philanthrocapitalism: How the Rich Can Save the World by Matthew Bishop and Michael Green (Bloomsbury Press) Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble by Lester R.


pages: 505 words: 127,542

If You're So Smart, Why Aren't You Happy? by Raj Raghunathan

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Broken windows theory, business process, cognitive dissonance, deliberate practice, en.wikipedia.org, epigenetics, fundamental attribution error, job satisfaction, Mahatma Gandhi, market clearing, meta analysis, meta-analysis, new economy, Phillip Zimbardo, placebo effect, science of happiness, Skype, The Fortune at the Bottom of the Pyramid, Thorstein Veblen, Tony Hsieh, working poor, Zipcar

significant proportion of the world’s population: According to one article, as high a proportion as 60 percent of the world’s population does not have access to adequate water-related sanitation; see “60% of the World’s Population Still Don’t Have the Best Innovation in Human Health,” Slate, Feb. 22, 2013, accessed on Sept. 18, 2015, at www.slate.com/blogs/future_tense/2013/02/22/_60_percent_of_the_world_population_still_without_toilets.html. “bottom of the pyramid”: This is a term introduced by management professor C. K. Prahalad to refer to those below the poverty line; C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Upper Saddle River, NJ: Pearson Education, 2005). have repeatedly shown: See Drive by Dan Pink for a reader-friendly review of this literature; D. H. Pink, Drive: The Surprising Truth About What Motivates Us (New York: Penguin, 2011). climate change: E.g., see T. L. Root et al., “Fingerprints of Global Warming on Wild Animals and Plants,” Nature 421(6918) (2003): 57–60.


pages: 515 words: 126,820

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

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Airbnb, altcoin, asset-backed security, autonomous vehicles, barriers to entry, bitcoin, blockchain, Bretton Woods, business process, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, clean water, cloud computing, cognitive dissonance, corporate governance, corporate social responsibility, Credit Default Swap, crowdsourcing, cryptocurrency, disintermediation, distributed ledger, Donald Trump, double entry bookkeeping, Edward Snowden, Elon Musk, Erik Brynjolfsson, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Galaxy Zoo, George Gilder, glass ceiling, Google bus, Hernando de Soto, income inequality, informal economy, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer lending, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, quantitative easing, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Satoshi Nakamoto, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, social graph, social software, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, TaskRabbit, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Uber and Lyft, unbanked and underbanked, underbanked, unorthodox policies, X Prize, Y2K, Zipcar

“Property Disputes in Nicaragua,” U.S. Embassy, http://nicaragua.usembassy.gov/property_disputes_in_nicaragua.html. There are an estimated thirty thousand properties in dispute. 4. Interview with Joyce Kim, June 12, 2015. 5. Ibid. 6. Ibid. 7. www.worldbank.org/en/news/press-release/2015/04/15/massive-drop-in-number-of-unbanked-says-new-report; and C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Philadelphia: Wharton School Publishing, 2009). This figure is an estimate. 8. Interview with Joyce Kim, June 12, 2015. 9. www.ilo.org/global/topics/youth-employment/lang—en/index.htm. 10. Thomas Piketty, Capital in the Twenty-First Century (Cambridge, Mass.: Belknap Press, 2014). 11. www.brookings.edu/~/media/research/files/papers/2014/05/declining%20business%20dynamism%20litan/declining_business_dynamism_hathaway_litan.pdf. 12.

The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good by William Easterly

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airport security, anti-communist, Asian financial crisis, bank run, banking crisis, Bretton Woods, British Empire, call centre, clean water, colonial exploitation, colonial rule, Edward Glaeser, European colonialism, failed state, farmers can use mobile phones to check market prices, George Akerlof, Hernando de Soto, income inequality, income per capita, Indoor air pollution, invisible hand, Kenneth Rogoff, laissez-faire capitalism, land reform, land tenure, microcredit, moral hazard, Naomi Klein, purchasing power parity, randomized controlled trial, Ronald Reagan, Scramble for Africa, structural adjustment programs, The Fortune at the Bottom of the Pyramid, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, War on Poverty, Xiaogang Anhui farmers

If the baby survives, the diarrhea contributes to her malnutrition—the child will be stunted and abnormally thin. Commonly, a baby suffering from diarrhea-induced dehydration goes into shock and dies. Preparing food with unwashed hands spreads the bacteria and viruses that cause diarrhea. In 2005, C. K. Prahalad, a University of Michigan Business School professor, wrote a fascinating book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. He shows how private firms can sometimes find it in their own interest to help solve some of the problems of the poor that are traditionally addressed by aid agencies. The Searchers in a free market do much better than aid agencies in solving specific problems of the poor, although having a profit incentive to do so is not the typical case.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

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affirmative action, Affordable Care Act / Obamacare, airline deregulation, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, income inequality, income per capita, indoor plumbing, inflation targeting, invisible hand, John Harrison: Longitude, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Rogoff, labour market flexibility, London Interbank Offered Rate, lone genius, low skilled workers, Mark Zuckerberg, market bubble, market fundamentalism, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, obamacare, offshore financial centre, paper trading, patent troll, payday loans, price stability, profit maximization, profit motive, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Shiller, Ronald Coase, Ronald Reagan, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, women in the workforce

Only those engaged in high-risk activities are willing to pay the high interest rates (the “selection” effect); to get returns to pay back the loan with interest requires the borrower to undertake highly risky activities (the incentive effect); and lenders, comforted by the high returns they get from those loans that are paid back, may put less effort into screening. See J. E. Stiglitz and A. Weiss, “Credit Rationing in Markets with Imperfect Information,” American Economic Review 71, no. 3 (June 1981): 393–410. In the United States beginning in 1980, federal laws increasingly preempted state laws that attempted to restrict usury. 27. See C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (Upper Saddle River, NJ: Prentice Hall, 2005). 28. The former governor of the Reserve Bank of India explicitly made the link between microcredit in India and America’s subprime lending: Y. V. Reddy “Microfinance in India Is like Subprime Lending,” Economic Times, November 23, 2010, available at http://articles.economictimes.indiatimes.com/2010-11-23/news/27602978_1_priority-sector-lending-sks-microfinance-microfinance-industry. 29.