“It’s All About Social Justice”
C.K. Prahalad on Democratizing Commerce
C.K. Prahalad, a world-renowned educator, business thinker, author and consultant, delivered the 2006 Alan M. Hallene Lecture on April 21. Prahalad, the Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy at the University of Michigan, believes that companies that strive to serve the world’s five billion poor people have the potential to earn huge profits by viewing the poor as creative entrepreneurs and value-conscious consumers.
His lecture, titled “Democratizing Commerce,” focused around the question of “how we get every person to have access to the benefits of the global economy,” Prahalad said. “Poverty we can see.
“The bottom of the pyramid is an extraordinary opportunity for innovation,” Prahalad said. There are four “mother” industries that are key to creating a global economy that reaches out to the poor: connectivity, health care, energy, and microfinance. He discussed connectivity and microfinance in more detail during the Hallene Lecture, sponsored by The Hoeft Technology & Management Program. Both industries are well on their way to reaching out to those less fortunate.
For example, Prahalad explained how without connectivity, poor people are staying poor because of their lack of access to information. He expects that three billion people will be connected by cell phones and personal computers by 2010 with help of the private business sector.
Many challenges make it difficult to turn those suffering from poverty into value-conscious consumers. Prahalad focused on three major challenges that the private sector has confronted and overcome: creating the capacity to consume, creating the capacity to produce, and forming a co-creation of value.
For example, Casas Bahias, one of the largest retailers in
The capacity to produce became a reality for farmers in
“People in poverty change more rapidly than the rich,” Prahalad said, and explained how people in
In order to be successful in poor markets, Prahalad says that companies must see them as active markets with great opportunity. The value of women in society is also crucial he said. Women are critical for economic development because they are “the glue within families, the custodians of families.”
Success at the bottom of the pyramid is not all about intellect. Prahalad says the private sector must work with imagination, passion, courage, humanity, and also hope for some luck.
“Can 21st century people tolerate other people living in squalor, without opportunity?” asked Prahalad, posing an important question that leaves the future wide open.
The direction we’re heading, he said, is multinational corporations and non-government organizations co-creating to develop collaborative relationships with each other. Hopefully, that effort can begin to change world.
“There will always be a bottom to the pyramid,” he said, “but at what level will that be?”
The Hallene Lecture is named for Alan Hallene, the retired president of Montgomery Elevator Company in