Fortune at the Bottom of the Pyramid

I read this book way back in early 2005 and it did quite change my thought process. Even though this book focus’s on helping Organizations understand how Innovative Products work in the Emerging markets, there is a key take away for Social conscious people like me.

The book embarks on a journey, in which Late Dr. Prahlad argues that organizations always work with the top and middle of the pyramid, but forget the largest part of the pyramid. Any products and service can be produced at better quality for a lower price when it reaches many more than what is anticipated. The discussion/argument is not about the exclusive products like cars or luxury items, but others which are quite necessary. The book takes you thorough case studies of organization who have innovated to help people who absolutely need few things, ranging from Home to HealthCare to daily consumables.

I am not going to go deep into any of the case studies, but would like to share how it motivated me to think differently. Before I read this book, my understanding of the world and organizations was very limited, but this book opened my eyes to a whole new world of understanding what consumer needs and how this has changed they organizations did business.

Today, we have organizations building even cars exclusively for the price sensitive population (Tata Nano car which costs only $2,500). The products and services which have been innovated for the bottom of the pyramid (price sensitive population) also has impacted the middle and top of the pyramid. Organizations realized this a bit late. The prime understanding of any good producer is that any product/service accepted by consumers will always be accepted. However, one aspect which organizations miss is that even in non-price sensitive markets, people consume only limited quantities. However, when you produce goods and services in smaller quantities, acceptance might also go up!

Look at the classic example of Aravind Eye Clinic in Madurai, Tamil Nadu, India. This organization has constantly innovated from the beginning to provide cost effective eye care. If you speak to the founder, his inspiration is McDonald’s. He was amazed the Quality of food available at any of the McDonald’s outlets across the world, which is precisely the same anywhere and everywhere. Being an ophthalmologist, he wanted to create something which has the same quality anywhere and everywhere. Today, Aravind Eye Clinic performs more than 600 eye surgeries each day and these surgeries cost as low as $50. What is the outcome? Acceptance in the 80% of Rural India that they too can better their lives.

If I keep quoting case studies, the list goes on. However, the key take away for me is to produce something/anything which can be accepted at the bottom of the pyramid and impacts their lives. This will translate to acceptance at the middle and top of the pyramid too.