Pioneering a new paradigm

Abstract

C K Prahalad is Harvey C Fruehauf Professor of Business Administration at the University of Michigan Business School, Ann Arbor. A sought after consultant, a prolific author and one of the pioneers of the concepts of core competence and strategic intent, his latest book The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profit, will be published in August 2004. Considered one of the world's top ten management thinkers, he is a member of the UN Commission on Private Sector and Development.

With multinational companies struggling to find new markets and opportunities for growth, it is time to look at the Next Practice. Next Practices become Best Practices only when people start imitating them. And by then it may be too late to really cash in on the opportunity. So if it's beginning to get crowded at the top, there may be a case for focusing on the bottom of the pyramid. C K Prahalad, who pioneered the concepts of core competence and strategic intent, is on a crusade to bring the bottom of the pyramid into the corporate focus. In a thought-provoking interview with Professor J Ramachandran, he makes out his case.

The advent of digital technologies and the dramatic easing of the regulatory framework worldwide are helping to create a new market. For the first time in the history of the world, the most advanced technology is being driven by the poorest people. In the mobile phone industry, three of the poorest countries, China, India and Brazil, will together have about 450-500 million cell phones by 2008 - far more than the US. This means that if we can start thinking commercially about the poor, and respect them as customers rather than as wards of the state, we have a fundamentally different way of thinking about product development, use of technology, scaling and price performance. One example of this is single serve, the big revolution that is getting to be 12 billion units in India.

Despite the excitement it clearly promises, the bottom of the pyramid concept has not yet reached critical mass. What kinds of changes are called for in terms of management thought and practice? Prahalad elaborates on what it takes to pioneer the Next Practice, and on the direction in which organisational forms and governance structures are likely to evolve