Ending poverty and growing markets: brass tacks for business – live chat
Wednesday, June 4, 2014
Can businesses play a key role in ending poverty? Proponents of the “base of the pyramid” – a business concept made famous by CK Prahalad’s book, The Fortune at the Bottom of the Pyramid, a decade ago – think the answer is yes.
The theory is simple enough: by selling products and services to the world’s poorest people, companies can improve conditions for those people while also growing new markets. The potential market is low-spending but vast, with half the world’s population living on $2.50 per day or less.
Ten years later, the reality has proven far more complex than originally anticipated, and tapping the base of the pyramid far more difficult.
“Things are working very differently than expected,” said Mark Milstein, director of the Center for Sustainable Global Enterprise at Cornell University, after a Guardian panel at the Social Innovation Summit in New York last week: “There’s a difference between the aspiration of the initial ideas and … empirical proof that something works as theorized.”
Numerous initiatives have failed to yield profit, much less a fortune, and many in the business community are walking away from the whole idea, he said.
But some still believe. Big companies such as SC Johnson andSABMiller, as well as startups such as CleanStar Ventures and d.light, are working hard to find workable business models to improve conditions in developing countries beyond philanthropy.