Finding Fortune at the Bottom of the Pyramid: An Interview with C.K. Prahalad

How do you reach consumers in developing countries and meet their needs? This was the question C.K. Prahalad tackled in his influential book, The Fortune at the Bottom of the Pyramid. With Wharton School Publishing releasing the updated fifth anniversary edition of the book, complete with commentary from CEOs of global companies like Microsoft, Philips Electronics and Unilever, it seemed like a good time to catch up with Prahalad, a strategy professor at the Ross School of Business at the University of Michigan, about bottom of the pyramid (BOP) markets.

BNET: What are some examples of the products and services companies have successfully introduced in BOP markets?
Prahalad: Consider cell phones. More than four billion people are connected. Wireless carriers and device makers are both profitable. New applications are developed continuously at the BOP. Similarly, fast moving consumer goods firms (FMCG) -- domestic and global -- are doing very well at the BOP. So is microfinance. Increasingly, healthcare is becoming a big opportunity with a new approach to remote delivery using telemedicine.

BNET: Are there any common factors among businesses that have been successful in BOP markets?
Prahalad: Innovation in business models is key. We have to build businesses that focus on the four A's: Awareness, Access, Affordability and Availability. No single firm can do it alone. Successful firms build an ecosystem of local entrepreneurs, small and medium size firms, NGOs and large firms acting together as one. The solutions must be co-created. That means the poor -- the customers -- must participate in developing solutions that are relevant for them.

BNET: What are some initial steps businesses can take if they are interested in pursuing BOP markets?
Prahalad: Start with humility. There is a lot to learn. Focus on immersion with the new consumers. Learn about their needs and priorities. We have to focus on them and their requirements. It is not difficult to start with no knowledge of these emerging micro-consumers and micro-producers and start a viable business in less than two years. Neither does it take a lot of investment. What it takes is a small group of dedicated individuals who are committed to innovate and explore a new market opportunity. This is a market development task.

BNET: In the five years since the book's first release, how much progress has been made in the fight against world poverty? Have the businesses involved in BOP markets made a significant impact?
Prahalad: Five years is a very short term to measure the impact of an idea on a problem like global poverty. But much progress has been made. First, the debate has changed. It is now well understood and appreciated that businesses have a significant role to play in poverty alleviation. Lot of very successful industry efforts have shown that it is possible, as in wireless, FMCG, finance, agriculture and so on. As you see in the book, several CEOs as distinct as Thomson-Reuters (Information), GSK (Pharmaceuticals), Microsoft (Software) and DSM (life sciences) are experimenting with the BOP market with success.

BNET: If you could give an elevator pitch to a CEO reluctant to venture into BOP markets, what would you say?
Prahalad: If you want to build a Wal-Mart, Casas Bahia or Ford, start with the poor. The poor can make you innovate and build great companies.