The Fortune At The Bottom Of The Pyramid - Francis T. Guison

THE FORTUNE AT THE BOTTOM OF THE PYRAMID

By

Francisco Ma. T. Guison

THIS WORK IS LICENCED UNDER CREATIVE COMMONS ATTRIBUTION-NON-COMMERCIAL-NO DERIVATIVE WORKS 3.0 PHILIPPINES LICENCE

Fortune at the Bottom of the Pyramid Francisco Ma. T. Guison ITETHIC 3rd Term, S.Y 2008-2009

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Book Review: Chapter 1: The Market at the Bottom of the Pyramid Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A Amazon Reference: http://www.amazon.com/Fortune-at BottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2 Quote: “What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios.” I chose this statement simply because it discusses and focuses on helping out the unfortunate people. In this earth we live, we are community and since we are a community, our mission is to help other people. The concept of solidarity is the main topic of this particular quote. We must do something that is good for others. Learning Expectations • • • •

To know basically the concept of market at the bottom of the pyramid? What this is all about? Understanding how it works for the market or industry To relate it to “Markets are conversations”

Review:

This first chapter entitled The Market at the Bottom of the Pyramid. At first glance, we have no idea on how to understand this particular topic simply because; the word is not that understandable. So, the solution to this in order to understand this topic very well, we will discuss it word by word. Let’s start in the word “Market”. Just like our Vertical Solutions class, the main topics for that subject are markets and of course, all VERTSOL students know about market. The first thesis entitled, “Market’s are conversation”. Yes, markets are conversations knowing the fact that markets are now literally talking and knowing also the fact that people is the very vital part of the market. If there are no people who will be working for the market, obviously no there’s no market. The second word is the word “Bottom”. It means that it is the lowest part of something that may never reach. The farthest point particularly in the pyramid because it is the topic for this particular chapter. For the word pyramid, it is a triangular shaped object. Usually found on Egypt as we all know. Anyway, Pyramid is just a representation of statistic to further understand the meaning of this particular chapter. Now we all know the meaning of each word, the number 1 question is that, what is this for. What are the purpose of this concept or theory to the market and the purpose of it for the people and we will learn the purpose of this concept later on as we go on to this chapter.

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As stated here on the book, the 21 century number one problem is the poverty; furthermore, disenfranchisement considers the world’s number one problem. This only means that the world is in need of entrepreneurs who will be responsible for the solutions of daunting problems occurring in our world today. This chapter provides basic assumptions for the bottom of the pyramid.

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First, the poor represent as a “latent market” meaning that these poor people are underlying to active engagement of private enterprises. They don’t have the opportunity to acquire this.

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Second, the Bottom of the Pyramid provides a new growth and opportunity for private sectors. The previous solutions cannot now create markets in Bottom of the Pyramid. Meaning that these private sectors had enough power to acquire BOP as a market.

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Third, BOP Markets must become an integral part of work of private sector. That means the most important and the basic part can be conducted by the community. One way of doing this is an CSR-Corporate Social Responsibility.

These are the best guidelines to avoid poverty in our country. Appreciate each of it and these powerful concepts will go back to us and gain more advantage. It is for the betterment of the world. What I’ve learned:

As stated on this chapter, the main purpose of this book in overall is to illustrate that the typical pictures of poverty mask the fact that the very poor represent courageous entrepreneurs and value-conscious consumers. This only means that it’s time for the people of the world to know that people are changing and evolving to fight against poverty. The so called “Poverty mask” must be removed in the lives of every individual living here on earth. I’m very interested in this book because, we can apply our learning in ethical and moral values as well as integrating or combining the concept of vertical solutions particularly the market towards the fight against the poverty. Technology and Ethical values are present here. Therefore, as a student, we must learn about these concepts. Thanks to our program because we can combine our ethical values as well as marketing skills and be able to do a fortune at the bottom of the pyramid.

Integrative Questions: 1. 2. 3. 4. 5.

What is the Bottom of the Pyramid? How does it affect less fortunate people lives? Can we easily integrate this concept for them? What are the purposes or what are the advantages of this chapter? What are the so called “Tiers” for?

Citations: N/A

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Book Review: Chapter 2: Products and Services of BOP Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A Amazon Reference: http://www.amazon.com/Fortune-atBottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2 Learning Expectations: • • • • • •

What are the products and services of BOP To learn the specifics of Products offered by the BOP To learn the specifics of Services offered by the BOP How do people conduct these product and services? The twelve principles of Innovation for Bottom of the Pyramid Markets How does a company or anyone make this part happen?

Quote: “Will challenge the dominant logic the beliefs and values of the managers serving the developed markets and have been socialized with” This quote is very much alike from this particular chapter. It is stated there that the challenge will be a dominant logic. That means the people who are in the authority in a particular position must partake the challenge because they are the only one who can handle beliefs and values. For managers, they are challenged to serve, develop markets and socialize with people. Review: Since this particular chapter talks about product and services, these matter are considered as part of the business and the process of distributing it to the final consumer or customer is called a market. Again, since market is present here in this chapter, there are many ways now how to market a product and services. Markets are conversation, and as stated from the previous chapter and in Cluetrain Manifesto as part of 95 theses, people plays again the vital role of marketing a product. People are the only key to maximize the potential strength in marketing the product or services. These people will make sure that the quality of product or services they offer to the final consumer will be satisfied with this. In relation for the BOP that this chapter discussed, here is the explanation. According to this chapter, “The BOP, as a market, will challenge the dominant logic” so this means that BOP is a feature in a market that will help the product or services offered by the company or any other business firm will give more improvement for that. Another one is that the BOP will give reputation for these products and services. For BOP, it is stated here that advanced technology solutions, must coexist. We are talking here the side of BOP. Basically, in a BOP, the technology must be present or coexist because for instance, the networks are considered to be part of Markets are conversation because people can converse digitally.

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We are now in the 21 century and the thing is that we must maximize the use of technology. For BOP, yes of course the foundation of the pyramid is for the market. It’s just a representation on how markets work on BOP. Good to know that the author of this book and particular chapter aims to discuss all about the twelve principles of Innovation for Bottom of the Pyramid Markets: These are the ff: 1. Price Performance 2. Innovation: Hybrids 3. Scale of Operations 4. Sustainable Development: Eco-Friendly 5. Identifying Functionality 6. Process Innovation 7. Deskilling of work 8. Education of Customers 9. Designing for Hostile Infrastructure 10. Interfaces 11. Distribution: Accessing the Customer 12. BOP Markets essentially allows us to challenge the conventional wisdom in delivery of Product Basically, these principles are involved in the innovation and this kind of innovation is part of BOP. Identifying, evaluating, scoring of products or services offered by the company is very much effective determining the state of the product or services as well as promoting that. What I’ve learned: I learned that there are twelve principles of innovation to make the products and services of the company succeed. Knowing these principles will help the company or anyone else improve their respective offering for their consumers. This innovation must be evaluated first exactly know how can affect people’s lives. I experienced how to score a scorecard regarding the BOP and while doing it, it was very interesting because while thinking or evaluating for a particular principle, my mind flows for that principle if it is applicable or not. As a conclusion: Getting the right combination of scale, technology, price, sustainability, and usability are towards the concept of innovation for BOP Markets. Thanks to BOP because company will now have a basis on how to improve their products or services. Determining the status again of a product or services is a great factor to be able for the company to improve their performance in the eyes of the people.

Integrative Questions: 1. What are the twelve principles of innovation for Bottom for the Pyramid? 2. What are the effects of these twelve in identifying the factors being served by the company or anyone else? 3. Is it really important to score the product or services offered by the company to the consumers? 4. Is it really easy to implement? 5. How does it innovative in our world today? Citations: N/A

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Book Review: Chapter 3: BOP: Global Opportunity Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A Amazon Reference: http://www.amazon.com/Fortune-atBottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2

Learning Expectations: • • •

I expect to have an idea of Bottom of the Pyramid for Global Opportunity What is the Global Opportunity in BOP? Can these opportunities effective to markets?

Quote: “The quality, efficacy, potency, and usability solutions developed for the BOP Markets are very attractive for the top of the pyramid” These are the factors why we call them a BOP. The power of the concept of BOP is still authentic and I can say that these factors will help improve the name of BOP for entrepreneurs. Since we are talking here about Global Opportunity, the number one actors in this chapter are an entrepreneur who aims to make a difference for the world. Review: Let’s describe first what is an opportunity? Basically it is a chance of people or group to attain advantageous goals. An when we commit or attain goals, it is our pride that we commit it and we are proud of something because we did something different for others. In relation to global community, it’s also the same, each one of us can attain goals. If anyone can attain for it, of course, each one of us has the chance to meet our goals in life and that is called opportunity. In this chapter, we can say that opportunity is very much useful to meet our goals in life. In relating to market, we believe that the market has a potential to attain opportunities and goals. In determining strength and weaknesses, opportunities and threats, we can determine how to achieve a particular goal. Identify it and trust your evaluation, you can now find your answer if you have a right opportunity for that. Especially, in applying this theory to market, it is very much effective because knowing this will lead to goals. How do we engage BOP? It is stated here that there are two ways to engage the power of BOP into markets, first, the traditional approach. Traditional, it is an old style of doing things But even if it is traditional, it is the most authentic and basic way of attaining the goals considering that the market. For the BOP, the top of the pyramid is considered as the comfort zone. All business are aiming for that position.

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What I’ve learned: As stated here on this chapter (p.57), BOP Markets are a great source for experimentation in sustainable development. I agree with this statement because BOP is just a theory that is considered to be true. All part of the BOP market are considered to be scarce. This means that the natural resources here on earth are only limited, therefore, today, many companies are looking for innovation to produce or create product or services that is not harmful to mother earth as well as for the people. The sustainability in a market is a great factor for the company who offer product and services for their consumers, therefore, these companies must motivate to give the best they can offer for the consumers. Targeting poor people is a factor in BOP that aims for the global attainment. All of these must be sustainable for a company. Since innovation is the answer for BOP, the potential companies who can sustain the authentic development must go for it. This is a change for the image of the company as well as reputation of the name itself. The flow of ideas, knowledge, and innovation will become a two-way street from the developed countries to the developing countries as well. Because of this statement, we can say that those countries that had lack opportunity can make it through by helping other developed countries. Private sector as stated here has a desire to leverage resources and gain market coverage and will invent more new systems to accommodate the people they are serving with. A positive situation for both large companies and BOP Consumers.

Integrative Questions: 1. 2. 3. 4. 5.

How to engage BOP to Global Opportunity? What are the benefits of operating BOP? Is it true that BOP can be a source of innovation? How does BOP grow in market? How does BOP develop solutions for market?

Citations: N/A

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Book Review: Chapter 4: The Ecosystem of Wealth Creation Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A Amazon Reference: http://www.amazon.com/Fortune-atBottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2 Learning Expectations: • • • • • • •

I expect to learn the connection of ecosystem to BOP What is the role of Ecosystem to wealth creation? How is this effective to BOP? I want to learn the Market-Oriented Ecosystem. What is it? I want to learn the building Governance capabilities among the poor. The private-sector in ecosystem How does this transform the basis for commercial transactions within a developing economy?

Quote: “The social capital or individual entrepreneurs has a focus on both business and social developmental initiatives at the BOP” This is considered as one aspect of ecosystem. I believe that entrepreneurs are part of the ecosystem what aims for social developmental initiatives for BOP. These entrepreneurs who aims for social and developmental initiatives has a heart to help unfortunate people who are in need. A business system is at the heart of ecosystem for wealth creation. I believe this because business system aims for what is good for the people. Review: First, let us define the meaning of ecosystem. When people heard that word, the first thing comes up to our mind are living organisms living here on earth. Organisms are part of our environment. Therefore, we can say that ecosystem is an environment where people are living. Naturally, when God created this world, ecosystem already exists. People are now relating themselves to meet another organism. That’s make a better ecosystem. The explanation is in natural world. But how about in Business world? Is this concept available? It is stated here that there have been a few attempts to focus on symbiotic nature of the relationships between various private sector and social institutional players that can lead to rapid development of markets at BOP. With this support statement, the concepts of ecosystem in business world are now related knowing the fact that it is for rapid development. In relation to rapid development, let us discuss about the market-oriented ecosystem since these are related to each other. Basically, Market-oriented ecosystem is a framework that allows private sector and social actors, act together and create wealth in a symbiotic relationship. This definition is somewhat similar to ecosystem but putting it on the business side. Knowing the fact that ecosystems are very depended on each other, it is very feasible to create a market-based ecosystem simply because people are connected. Also, we consider as market are conversation, we can now find a reason why markets are ecosystem. But the big problem of market-

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oriented ecosystem is that if one sector for special can’t pick up, how can they move on with the whole system? That’s the big dilemma for the ecosystem. For the developing countries, they are the target of BOP Market because they are still developing and improving their respective economic state. One example here is the Philippines, it is considered as a developing country and considering this state, Philippines need a help for those who are in developed country. For the developed countries to help developing countries, they need a competitive condition such as the availability of new technologies, the nature of resources, and the educational infrastructure. These are the basic factors needed to help under developed countries. The private sectors are the fast-moving of consumer goods who has capabilities to help developing countries. They have good relation to the government as well as in other company.

What I’ve learned: The history tells us the result of evolution made by humans. It is stated here that the large firm was a big symptom of a maturing economy focused on system efficiencies through scale and scope. This means that large firms are advantage for those who are in developing countries because these large firms can are feasible enough to give help. But the problem is that these large firms are focused on system efficiencies. They think the most efficient way to help other ecosystems. The goal in development is to bring as many people as possible to enjoy the benefits of an inclusive market. In short, the BOP goal for ecosystem is the development or the BOP gives something to for those people who are in need so that they can meet the enjoyment even if they are not in the good state to enjoy happiness. But even if it is not that good, the goal is to meet happiness whatever it takes. This chapter tells us that the Market-based ecosystem must provide us to build basic infrastructure stated above this review most especially education. It allows large firms to build and profit growth markets which are advantageous for these companies.

Integrative Questions: 1. 2. 3. 4. 5.

What is Market-Oriented Ecosystem? What are the ecosystems for developing country? What’s the role of History in evolution of the large firms? Can Market-based ecosystem provide us an approach to build basic infrastructures? BOP consumers can benefit in local entrepreneurship?

Citations: N/A

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Book Review: Chapter 5: Reducing Corruption: Transaction Governance Capacity Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A

Amazon Reference: http://www.amazon.com/Fortune-atBottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2

Learning Expectations: • • • •

Expect to learn the effects of corruption in terms of BOP Concept Difference of corruption and local practice. Identifying the question “Are the Poor, poor?” The center for Good Governance

Quote: “Most developing countries do not fully recognize the real costs of corruption and its impact on privatesector development and poverty alleviation” The quote I chose is pertaining to the developing countries. This is stating that the developing countries do not recognize the real costs of corruption in their respective country. I agree with this statement because no one knows who did this, who did that, clueless when they are talking about corruption. Even the highest position in an organization or in a country don’t provide answers for that because they want to be safe in malicious issues about them or so called “Playing Safe” They don’t know the effect of corruption into the private-sector. Review: Corruption is the number one problem in a particular country especially for those states that are still developing countries. Countries consider this as a number one problem and they need to fight this for change. For example, the Philippines is ranked as the most corrupt countries in Southeast Asia and considering that we are the only Christian nation in Southeast Asia. It is hard to accept the reality that Filipinos are considered to be one of the most corrupt countries around the globe. But the thing is we are very afraid to fight this kind of attitude knowing that we are leading in the most corrupt country. Those people who are really involved in the corruption are avoiding the issues for them. The tendency is that many people will be involved in corruption and this will continue until they change the leader. First, we must understand the difference between corruption and local practice. In explaining this in layman’s term, local practice is only for local, within the community and only limited, unlike corruption, it is national. People can obviously know that corruption issue as fast as they could because people are concern for that thing. Transaction governance capacity is about making the entire process as transparent as possible and consistently enforced. This only means that corruption is transparent to people. As stated before, because corruption is transparent, people will know that issue immediately. To fight against corruption and to avoid this act, it is stated here that we must reduce the frictional losses in doing business at the BOP. Doing business in BOP is considered to be an easy job, but when implementing BOP to product or services, it would be a different story.

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What I’ve learned:

The primary statement of this particular chapter is to overt corruption in a business operation. I agree that corruption should be totally “killed” or avoid it as much as possible. Basing it to ethical values of the Filipinos, we have a power to avoid this particular act but the problem is we don’t have enough capabilities to overcome this challenge. I believe in the abilities of the Filipinos furthermore, we are world class people. The problem is that we don’t have an authentic solidarity. Just like Ben Quinones, the speaker from Corporate Social Responsibility for entrepreneurs, he is a very good example of an authentic entrepreneur because he combines the concept of corporate social responsibility, Bottom of the Pyramid Markets, authentic solidarity and other concepts or theory related to markets that will help people go further and surpass the state of poverty. I believe in him because he shows the characteristics of an authentic Christian. If Filipinos are like Mr. Ben Quinones, the future of the Philippines will have a good hope for the next generation of Filipinos.

Integrative Questions: 1. 2. 3. 4. 5.

Difference of corruption and local practice. What are the assumptions for poverty reduction, and developmental assistance? What is TGC? Is it difficult to implement TGC? The effect of corruption to BOP?

Citations: N/A

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Book Review: Chapter 6: Development as Social Transformation Book: The Fortune at the bottom of the Pyramid Author: C.K. Prahalad and Stuart L. Hart Library Reference: N/A Amazon Reference: http://www.amazon.com/Fortune-atBottomPyramid/dp/B00006L5AW/ref=sr_1_2?ie=UTF8&s=books&qid=1232066330&sr=1-2 Learning Expectations: • • • •

Development in BOP What is Social Transformation? The role of BOP in Social Transformation

Quote: “The poor can be a market, Serve the market is to innovate, Demands a range of innovations in products and services, business models, and management innovations, Making the government accountable to the citizens and making it accessible and transparent.” These are the foundations of development as social transformation. These are the lists of foundation are gateway to success especially in BOP Markets. If companies or government follow these foundational concepts, there will be an authentic change for the society and for the world as a whole. BOP leads to innovation and that innovation will lead to world to success. For a result, people will now motivated to work and giving them a chance of hope. Review: When a poor at the BOP are treated as consumers, they can reap the benefits of respect, choice and self-esteem and have an opportunity to climb out of the poverty state. Just like the previous chapter, it discusses about ecology as a wealth of creation. In this particular chapter, we can see that it is also applicable. We see that this chapter discussed all about development as social transformation and in part of this title, there is a “social” which we can relate it to ecology and also we can include this in the BOP market aspect. For the word social, it means that we are still connected to each other knowing the fact that we are united as one and that’s the role of ecology. On the other hand, the word “transformation” is a word of change. This means that we develop as an individual and as a social community. Since we are talking here about social transformation, through BOP Market, people will have an opportunity to literally climb out of the poverty trap. Meaning that all of us had a potential an opportunity to raise ourselves and prove that we can do it. When the time we done it, it is called an authentic social transformation. Again, we developed with our own perception and once we did it, we are considered to be part of a transformation. As stated above, the quote means that these are the foundations or guide for a development as social transformation. Each people should learn these foundational aspects so that people will know how to transform or change themselves. Even that individual is just a starter, more and more determination will acquire by him or her. The question is how will these changes impact life at the BOP? The answer is stated here. “As a BOP Consumers get an opportunity to participate in and benefit from the choices of products and services made available through market mechanism.” With this answer, as a consumer of

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BOP Markets, it will now be understand that it is easy to acquire these knowledge in BOP provided and knowing these foundations. What I’ve learned: Converting the poor into a market will require innovation. I agree with this because if people don’t think or move, how can their lives transform. I mean, what’s the use of their lives if they don’t move. Bottom of the Pyramid concept is given. People analyzed and study all about it to process an innovation for all humans. This is for all people who seek change specifically in market. All we have to do is to move and do something to implement it in our lives. We cannot call ourselves an authentic social transformation because we did not implement it yet therefore, since we aim for an innovation, we must gain knowledge for the BOP. Modern Technology, Good product and services are given; this will enable them to take a huge step in improving their quality of life. For a final remark in Bottom of the Pyramid, while doing this book review, I realized that for our country, it is hard to implement this concept because we need more knowledge about this. Even if innovations for us already existed, the basic concepts must be inherited for the people so that they will know the true value of this study. We have enough ethical values because, first, we are Christian people and we are aiming for good values for our country. We also have a big opportunity to think what is good for us and other. Given all of these, we can do this together; the only problem is the solidarity which some Filipino’s don’t have. For me, I love the study of the Bottom of the Pyramid. It is the good and best way to analyze the status of a particular company for their products and services. Thanks to this BOP because I learned a lot in expounding my knowledge as an IT Student and Business student. Integrative Questions: 1. 2. 3. 4. 5.

How will these changes impact life at the BOP? What is the Real Test? What does BOP Consumer gains? What are the foundations of social transformation? What is BOP Consumer Upgrade?

Citations: N/A

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