Prahalad Lecture: Democratizing Commerce: The Challenge for the 21st Century

Monday, April 9, 2007

Business guru touts standards and locally responsive solutions for globalization.

ANN ARBOR, Mich.?People should not shy away from globalization, but harness it to the benefit of all, C.K. Prahalad said this week during his Distinguished University Professorship lecture—the highest honor accorded faculty members by the University of Michigan.

Prahalad, the Ross School’s Paul and Ruth McCracken Distinguished University Professor of Corporate Strategy, said that economic development with social equity is one of the most significant problems facing mankind this century.

His address, “Democratizing Commerce: The Challenge for the 21st Century,” highlighted that more than 5 billion people are currently seeking access to the benefits of globalization both as micro-consumers and micro-producers.

In his groundbreaking 2004 book, “The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits,” Prahalad contended that private-sector businesses can help alleviate poverty and, at the same time, make a profit by turning the poor into consumers and developing viable markets for innovative products and services in under-served and long-neglected areas.

In his talk, he uncovered recent research done in the field with India’s most impoverished villagers.

“I recently completed my own two-year experiment in rural India with British Petroleum,” he said. “I took a BP vice president with me to show him the need for a solution to cooking fuels in all Indian homes. The women in India need a personal, flexible solution that will reduce harmful smoke and increase safety.”

By working with villagers, a scalable, intelligent solution was suggested in the form of an efficient combination stove that harnesses biomass pellets and liquefied petroleum gas, based on users’ choice and availability.

“Approximately 15,000 stoves were distributed in the pilot,” said Prahalad, who projected that 100 million Indian people will be using these stoves over the next few years.

Several of his “experiments” around the world involve hands-on research and transitions in thinking. He said that multinational corporations must be willing to learn and invest the time at the highest levels. Getting key people to experience the need of those emerging from poverty is essential.

“I urge you to focus on the inclusion of the poor, research substantive issues and use the convening power of the University to shape the future,” he said. “Do some of the same courageous things the European people did at the end of World War II. They looked ahead and imagined a better life. Today, 50 years later, we have a free and stable Europe. I ask this University, then, to imagine a world without poverty.”

A globally recognized business consultant whose client list includes AT&T, Cargill, Citicorp, Oracle, TRW and Unilever, Prahalad is known as for his astute business acumen, and for giving life to the concepts of “core competencies” and “strategic intent.”

His research focuses chiefly on next practices, corporate strategy and the role of top management in diversified multinational corporations. His current work addresses a complex emerging market, the world’s poor and the innovative business models that will help end world poverty.

“This was a great opportunity for the school and the community to hear C.K.’s latest thinking,” said Robert Dolan, dean of the Ross School of Business.

Prahalad was born in Coimbatore in Tamil Nadu, India, in 1941. After studying physics at the University of Madras, he joined Union Carbide. He left four years later to study at the Indian Institute of Management and later received his Ph.D. from Harvard Business School.

Recently, Prahalad earned the third spot on Suntop Media’s 2005 “Thinkers 50” list, behind Harvard strategy specialist Michael Porter and Microsoft founder Bill Gates.

Written by Nancy Davis

Source: University of Michigan Press Release (link opens in a new window)