Bottom of the Pyramid - Profits Before Gifts
Prahalad's now classic book on economic development strategy in India is well-known. It details a whole series of steps to take to help folks at the bottom of the pyramid help themselves up. Then it gives successful case studies from around the world that show that people, given tools and incentives, are very happy to help themselves succeed. Here are some words on governance that are applicable lots of places (Prahalad, 98):
The Bank of Madura initiated a model of village development in southern India that has shown great promise. It was based on three assumptions:
- Microsavings must precede microlending. Bottom of the Pyramid (BOP) consumers must learn to save, and there were no institutions to support microsavings.
- BOP consumers must start trusting themselves. They must be actively involved in solving their problems. Outside help (financial and other) can go only so far. The village must break its cycle of dependency built by more than 40 years of subsidies and government handouts, NGO interventions, and the like. Private-sector development (in this case, banking based on commercial principles) and subsidies do not mix.
- There is no dearth of latent leaders in the villages. Given the opportunity, they will emerge and will influence the start of a transparent and commercially viable system. This group will then become the custodians of transaction governance instead of lawyers or the local slum lords.
Since Orange County is a medical device haven, I was enticed by the story of Jaipur Foot (Prahalad, 275). We have at least on major prosthetic manufacturer in town. Their devices cost thousands of dollars and are, indeed, wonderful. Jaipur Foot's devices are themselves wonderful. Wonder comes not only from their many satisfied customers who appear at the Jaipur Foot infirmary to leave, only days later (if not the next day) with a new foot. Wonder comes also from the price. Early on, Jaipur provided durable and very useful limbs for thirty dollars or so. The Orange County manufacturer's costs are significantly higher, being somewhere more than $8 thousand all the way up to $30 thousand. I'm not even going to do the math. This is wonderment.
When you take the time to consider the needs of your customer, to put them first, there are solutions that remain a wonder long after the sale. Prahalad's book is chock full of them.
Reference
Prahalad, C. K. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Pearson Education. 2010.