“Bottom of the pyramid” is a misonomer

Category: Marketing Published: Wednesday, 26 July 2017 Written by Xavier Prabhu
 

Well, if the headline made you think and assume the tone of the article to be otherwise, it has served its purpose. Coming to the focus of the article, would like to put forth my views on why “Bottom of the pyramid” should be top on the priority list not just for businesses of all hues and sizes irrespective of where they are based and operate.

Serving the served markets definitely does not serve the purpose of growth
Cal this parody or an irony. Corporates whose sole aim and professed aim is to keep growing healthily or exponentially year on year are only now beginning to look at something which could have served that aim well long back. Because Prof.Prahlad and Co. woke them up and gave them a catch phrase. Called “Bottom of the Pyramid” which is the opportunity of a multi-billion consumer market across the world which is either under served or not served at all. The simple question that begs for an answer is how long more serving the served is going to help a company either interms of market share growth or growth in market penetration. Or more pointedly how long more it is going to help companies to protect their margins and market shares from ever more nimble and new competitors by serving the served which has always been the red ocean, again to borrow another catch phrase. All the while, the untapped and under served Blue ocean of customers much larger in numbers and more in need (in select categories) were there and around.

The immediate and the most expected reposte to this from many a company would be, how can one be sure that this market is real, scaleable, profitable etc. etc. and are not the level of challenges of higher in taping or penetrating or addressing such virgin markets. The answer is yes. But if you overlook one key factor. Which is that growing market share in the currently tapped/served (red ocean) markets, companies have to face equally large but different challenges, have to equally reinvent themselves and spend as much. So, the choice is not between the devil and the deep sea.

The bad aura around big business is not so easy to be wished away
Despite millions of dollars in public relations efforts and lot more in donations and contributions the big business is still not anywhere close to moving of the bottom pit of the perception pyramid. It is still distrusted, looked at with suspicion and is seen as the last place to find kinder hearts. It is not true as we all know but then the way we have attempted to explain or reach out does not have enough doses of genuineness for anyone with reasonable amount of distrust to change their perception. So it is often a question of We Vs Them. The companies Vs the NGOs. The rich Vs the poor.

In reality it is not so. There is so much in common between these often warring audiences. There is so much win-win that can be created by a little twist in their relationships and approach that one often wonders why has it not been on top of the corporate agenda over six sigma, lean manufacturing, balanced score card and p-cmmi.

All the twist one needs is like what Bottom of the Pyramid is based upon. Serve the underserved and the poor in partnership with a NGO or any suitable organization with a scaleable and profitable (but no highly profitable) value proposition. Just visualize the shift in scenario. The poor gets served with something they need and find useful and at prices they can afford, the companies get good topline growth and penetration into a new market and more importantly the NGO who till now was the other side is an active partner working along. And this reeks of genuinety because businesses are quite genuinely happy when they see their toplines grow with a spurt in bottomline as well. So, the almost Himalayan public perception hurdle becomes easier to surmount than ever before.

Society needs the way private businesses operate more than ever before
There are only three primary types of institutions in the world – government/public, private for profit and non-profit. Of all these the government is least preferred for its’ unwieldy, unfocused and often has enough wheels grinding within to make any movement a major achievement. And governments have constraints in the way they operate and often lack the flexibility required to bring about sustainable change. Non-profit sector while known for its lofty ideals/great intentions often is found wanting in accountability, results-orientation and sustainability. They are often driven by an individual or a group of individuals’ vision leading to a vacuum at the exit of those individual(s). This makes them good bubble creators but not good enough to catalyze massive social change.The only model which is focused on processes, performance, accountability and sustainability is the private business where the only hitch is that it exists in its own universe. If the lofty ideals and genuine intentions are married with the private sector way of operating, you get the best mix to address huge social issues profitably. This need for private business ideas and practices and its involvement may not be so outspoken or evident but is there latent just under the surface. Scratch it and you will come to contact with it. It is time businesses shed this idea and step out of their cocoons and look at the larger world and realize there is a contribution they can make and businesses they can build.

I can go on and on. Let us face it. The refinement and continuous learning that business inculcates in us and our processes are direly needed by a larger universe. Just start. In no time you would be a social entrepreneur or your company will be into social entrepreneurship with “bottom of the pyramid” as your territory.

Hits: 53