The world loses C.K. Prahalad, but his strategies for the BoP live on

Both the business and development communities are mourning the recent death of Professor C.K. Prahalad, the man who redefined the term "Bottom of the Pyramid" (BoP) in the context of the four billijavascript:void(0)on poor people across the developing world. Dr. Prahalad, a professor at the University of Michigan, passed away suddenly on April 16, 2010, at the age of 68. His best known book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, introduced some of the largest corporations in the world to the concept that there is money to be made in the poorest areas of the world. More recently, Professor Prahalad's work was integrating the concepts of corporate sustainability into business at the BoP. 

In the past year, many multinational organizations have adjusted their focus within developing-country markets to capture the higher-income "Middle of the Pyramid" (MoP), or the emerging middle class in these countries. The shift away from BoP strategies is largely borne of these companies' limited success in realizing the significant growth in the BoP needed to offset razor-thin profit margins. Indeed, other leaders of the BoP movement, including Al Hammond of Ashoka and Stuart Hart of Cornell University, are focusing their efforts on social entrepreneurship and sustainability as a primary mechanism for reaching the BoP.

However, this does not imply that multinational corporations (MNCs) should stop addressing the BoP. Companies such as Nokia with significant economies of scale have succeeded in penetrating this market with a combination of low-priced offerings and innovative solutions such as product financing. Furthermore, many firms are beginning to realize that the end users of their products are not always the buyers. Governments and development organizations are important purchasers of products and services on behalf of those in the base of the pyramid. By separating the concept of end user and "economic buyer", MNCs can realize near-term BoP business expansion by tapping into budgets that allow for profitable revenue growth. The key to this strategy is tracking the money flows and expenditures in public budgets and development organizations. Doing so can allow firms to not only provide appropriate offerings, but to develop the necessary relationships for successful sales.

Brazil's New Mobile Regulations: Pro-consumer, Pro-Operator or Both?

by Karen Coppock
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Several news outlets, including cellular-news.com, carried a story today reporting that "Brazil Regulator Announces New Pro-Consumer Cellular Rules."

Could these rules, which include the requirement that prepaid mobile phone credits must be reactivated when phones are recharged and must be valid for 180 days rather than current requirement of 90 days, be good for mobile operators as well? Definitely.

During a global study of potential first-time mobile handset purchasers, our field researcher team in Egypt reported that Mobinil's new Lifetime Validity program (allows customers to make only one charged call every three months to retain their prepaid-account) was mentioned as an incentive for low-income individuals to finally buy a mobile phone. Mobinil's CEO notes “...this has had a very significant market impact for us. We saw large subscriber growth following the introduction of this offer...” Vodafone soon launched a lifetime validity program of its own and in its July 2007 Interim Management Statement, it noted that "Organic customer net additions were 1.0 million, with a positive reaction to the introduction of lifetime validity for prepaid customers."

Whether they are forced, as in the case of Brazil, or pushed for, as is the case of Mobinil in Egypt, business model innovations will put mobile phones and service at the reach of individuals lower and lower down in the economic pyramid - likely to the benefit of both consumers and corporations.