New Paradigms for Business
a poverty Focus
C.K. Prahalad the prestigious guru strategy business and author of several books on the merits of the microfinance, talks about new ideas to develop business at the base of the pyramid.
The bottom of the pyramid
The bottom of the (economic) pyramid consists of the 4 billion people living on less than US$ 2.00 per day. By more than 50 years, the Nations of the World Bank, organizations, and support and aid agencies, Governments, and more recently, organizations civilians, all have done their best, but have not been able to suppress this poverty.
Before this frustration, C.K. Prahalad says: "If we fail to think of the poor as victims or as cargo and start recognizing them as resilient and creative and consumers aware entrepreneurs, a new world full of opportunities will open".
Prahalad four billion poor may be the engine for the next cycle of trade and prosperity global, as well as a source of innovations.Traffic news
This new concept has revolutionized the way of thinking about the future of the economy in the world. For years corporations have focused on 30% of the market in the world, where the proportion of the population with higher incomes in contempt of the remaining 70% of people with lower incomes.
Prahalad proposes to convert, through institutional and private support, all this people in business and consumer, that is, integrating them into the economy.
Prahalad has assured several times that, for example, "the first thing to lead is oneself"; "success comes to ambitious goals;" or "leadership is not change others, but to inspire them with the own example to achieve the proposed objectives".
Here some thoughts on the subject, expressed for the Harvard Magazine business.New Paradigms for Business
Many people are unimpressed
The bottom of the (economic) pyramid consists of the 4 billion people living on less than US$ 2.00 per day. By more than 50 years, the Nations of the World Bank, organizations, and support and aid agencies, Governments, and more recently, organizations civilians, all have done their best, but have not been able to suppress this poverty.
Before this frustration, C.K. Prahalad says: "If we fail to think of the poor as victims or as cargo and start recognizing them as resilient and creative and consumers aware entrepreneurs, a new world full of opportunities will open".
Prahalad four billion poor may be the engine for the next cycle of trade and prosperity global, as well as a source of innovations.Traffic news
This new concept has revolutionized the way of thinking about the future of the economy in the world. For years corporations have focused on 30% of the market in the world, where the proportion of the population with higher incomes in contempt of the remaining 70% of people with lower incomes.
Prahalad proposes to convert, through institutional and private support, all this people in business and consumer, that is, integrating them into the economy.
Prahalad has assured several times that, for example, "the first thing to lead is oneself"; "success comes to ambitious goals;" or "leadership is not change others, but to inspire them with the own example to achieve the proposed objectives".
Here some thoughts on the subject, expressed for the Harvard Magazine business.New Paradigms for Business
Many people are unimpressed
the brutal images of poverty. On the other hand, "I see a hive of business initiatives and creativity". C.K. Prahalad: Are all fully aware the fact that poverty exists, but if you Interestingly one wonders: "How can survive?" These people? What they do to keep alive? ". The best way to describe it is a kind of curiosity child, but with a business interest. When one raises these questions, you begin to see aspects of their lives that are not obvious at first view: the entrepreneurial talent, energy, persistence and hopes that these people,who are hidden by everything else. The key for men business is to ask "How can I connect with?" people who are so completely different from me? ". They give the impression of being very different, but at the same time, can teach us many things.
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There are 13 trillion dollars
purchasing untapped in poor countries power multinationals are changing radically, whether they are Microsoft, Intel, Unilever, Procter & Gamble, Nestle and Danone - all they are experiencing, some with great dynamism, and all of them share the view that this market It is vital for its future-. Therefore, you are to develop a debate and an experimentation in these markets. I do not think that in five or six years continue still analyzing the "base of the pyramid" as a strange concept.
purchasing untapped in poor countries power multinationals are changing radically, whether they are Microsoft, Intel, Unilever, Procter & Gamble, Nestle and Danone - all they are experiencing, some with great dynamism, and all of them share the view that this market It is vital for its future-. Therefore, you are to develop a debate and an experimentation in these markets. I do not think that in five or six years continue still analyzing the "base of the pyramid" as a strange concept.
The discussion will focus on the other hand, on how we can build new business models and creative solutions for a completely new category of global consumers. Some people claim that, in general, markets to sell to the poor do not involve economies of significant scale. But the reality is quite another: when there is 5 billion poor, this is a "large scale".
The problem is not the volume, but the margins: the real problem is how to build models of business that are completely scalable at a low cost and with a low density of capital, and that it is a question very different. The volume is there, and represents a excellent opportunity if one can manage appropriate cost structures.
New Paradigms for Business
The challenge of cost benefit.
This means that one begins with affordable prices for the poor, but with great quality products - not with luxury products, but with the same standards that we enjoy you or I-. And then one should be profitable; Therefore, "price less benefits" is the same the challenge of the cost, and one has the ability to experience not only with technologies, but also with business models. An excellent example is the prepaid mobile phone cards, which They allow people to have access to the phone without necessarily having a domicile.
Mere consumers
Some critics argue that, rather than the poor as consumers, we should focus on its role as producers, i.e. that we should do emphasis on buying products instead of selling them. But I decided to use the term consumer because consumers they have dignity and the capacity to make choices and the biggest problem of poverty is the lack dignity and choice. In addition, in the book there are some interesting examples in so far as to improve the quality of life: look at the case of farmers who supply the agricultural Division ITC and that are connected in the markets national in through international a new network computer and logistics thanks to the program eChoupal, developed by ITC; and we do reference to companies such as EID Parry and Amul, which they are improving the quality of life in ways very various.
However, a most interesting argument, something nuanced, that some people do not understand It is our goal is to both increase the quality as income: If a poor person. It is going to ask for borrowing money from a local lender to a 500% interest and your company can provide you with that money to a 20% interest through a medium microfinance or through a Bank, becoming the question: has helped to increase revenue? from that person or not? That person will ask a loan anyway for the wedding of his daughter or because a family member is sick, so the options they are 500% compared to 20%. As for me, that It is the same that increase revenue.Traffic news
One of the most counterintuitive examples is that the
products and services of high quality offered by the organized private sector are increasing revenue. In the book use the expression criminalization of the poverty: this refers to the fact that people poor they pay significantly more than you and I by everything you buy. Only in United States, the penalty poverty is situated around the 65,000 millions of dollars. I do not say this, but the Brookings Institution, which published a report a couple months. Therefore, the book does not speak only of the poor as consumers, but it also considers them both microconsumidores and microproductores; and is not only consumption, but also to increase revenues.New Paradigms for Business
Greater access to the talent and innovation wing
Access to the talent and innovation is the spirit in the next round of global competition. If one part of this premise, outsourcing is only a manifestation of the pursuit of speed, the innovation, quality, and at the same time, the benefit added on lower cost. Many companies started This process for reasons of cost, but now is they are realizing that the real reason to outsource It is the talent and innovation.
I forced managers to rid of its "dominant logic". If you want your business to remain competitive managers cannot stop on models of obsolete thinking. It is important to be capable of change our mental models, in a way that our "map" also change. Otherwise, we will be circulating with an outdated map, something that does not He is very intelligent. Basically, obligo managers to search for opportunities and teach them that there are many ways to do the same. Show them models of conduct and, more importantly, he taught them to highlight the signs of weakness. The aim is that the people understand that there is a different way and forcing them to confront their own prejudices. For example, returning to the imagery of his first question, when I go to the India, I see the business momentum of the poor, but others do not see it. The key is to achieve that people will realize from the that you can see and, more importantly, what not seen, and why.
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products and services of high quality offered by the organized private sector are increasing revenue. In the book use the expression criminalization of the poverty: this refers to the fact that people poor they pay significantly more than you and I by everything you buy. Only in United States, the penalty poverty is situated around the 65,000 millions of dollars. I do not say this, but the Brookings Institution, which published a report a couple months. Therefore, the book does not speak only of the poor as consumers, but it also considers them both microconsumidores and microproductores; and is not only consumption, but also to increase revenues.New Paradigms for Business
Greater access to the talent and innovation wing
Access to the talent and innovation is the spirit in the next round of global competition. If one part of this premise, outsourcing is only a manifestation of the pursuit of speed, the innovation, quality, and at the same time, the benefit added on lower cost. Many companies started This process for reasons of cost, but now is they are realizing that the real reason to outsource It is the talent and innovation.
I forced managers to rid of its "dominant logic". If you want your business to remain competitive managers cannot stop on models of obsolete thinking. It is important to be capable of change our mental models, in a way that our "map" also change. Otherwise, we will be circulating with an outdated map, something that does not He is very intelligent. Basically, obligo managers to search for opportunities and teach them that there are many ways to do the same. Show them models of conduct and, more importantly, he taught them to highlight the signs of weakness. The aim is that the people understand that there is a different way and forcing them to confront their own prejudices. For example, returning to the imagery of his first question, when I go to the India, I see the business momentum of the poor, but others do not see it. The key is to achieve that people will realize from the that you can see and, more importantly, what not seen, and why.
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