Video: Prahalad on Development Through Enterprise

Photo credit: Flickr user Mike Dillingham

C.K. Prahalad discusses the future of sustainable, private sector-led poverty alleviation.

Mr. Prahalad is a WRI board member, professor, and author of the groundbreaking book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profit.

His work inspired the creation of NextBillion.net, a site where business leaders, social entrepreneurs, NGOs, policymakers, and academics can explore case studies and new ideas on development through enterprise.

In the interview, Mr. Prahalad encourages people to visit the recently redesigned site to share success stories and help bring about what he describes as a “fundamental change to the nature of poverty and poverty alleviation through market-based, private sector-oriented solutions.” He believes the site can demonstrate how “the poor can be extraordinarily good micro-entrepreneurs, micro-producers, micro-consumers, and micro-innovators.”

Full interview

Q: You were one of the pioneers of the term and the idea of the bottom of the pyramid, which inspired NextBillion.net. What are your views on the evolution of the concept since then and how it is being put into practice around the world?

PRAHALAD: The book is about five years old, so it is premature to judge both its impact and its diffusion. That said some very interesting things have happened since then. For example, all the multilaterals – the United Nations, World Bank, IMF - have accepted the idea of the role of the private sector in poverty alleviation. That is a big shift from the traditional ways of thinking. There is also significant attention from multilaterals, the large private sector, the World Economic Forum, and a wide variety of other groups. So today I can say that this is not a new idea. People accept the idea, and the goal is experimentation to see how to make it work.

Q: So looking ahead, how do you see the role of emerging markets as drivers of global innovation and sustainability?

PRAHALAD: Fundamentally, what has been shown is that new business models, new approaches to capital intensity, new ideas about affordability, can come out of the bottom of the pyramid. For example, the NetBook computer initially had its origins in making operating systems available for the poor…but two million NetBooks have been sold in the Western world. So I think some innovations will come from the poor countries and some innovations from the rich countries. It’s going to be a much more level playing field.

Sustainability is a different question. When you add an additional five billion people - as both producers and consumers - suddenly you have a very different equation regarding the ability of the planet to absorb the stresses, whether the cause is water, whether it’s packaging, whether it’s waste.

I think this is going to force a fundamental rethinking. For a long time, the debate has been about compliance and regulation. We are going to move into a territory where sustainability is looked at as providing potential opportunities for innovation. That, I think, is the key—to move from a compliance orientation to an innovation orientation, and I think the bottom of the pyramid will force it. For example, I expect to see waterless detergents. I expect to see biodegradable packaging. I expect to see construction which is totally green. I also expect to see a lot more renewable energy sources. I think the world is begging for new business models, and I think the pressure is on, and therefore I expect a lot of innovations.

Q: Can you give your views about how, through NextBillion.net, WRI could highlight good innovations and models?

PRAHALAD: We desperately need success stories. Success inspires others to follow. Part of it is good analytics, part of it is frameworks, but a lot of it is good models. Even if the model doesn’t apply to my company, the fact someone else has done it gives me the confidence to go try. So what we need is for iconic companies doing things at the bottom of the pyramid to be highly publicized. WRI can provide caselets that allow people to understand that this is a real market opportunity, that the poor can be extraordinarily good micro-entrepreneurs, micro-producers, micro-consumers, and micro-innovators. And that it is in the interest of the large company to participate in these markets. I think case studies should be an integral part of what we do because that motivates others.

Q: What do you see as WRI’s role in adding value and promoting private sector-led approaches to sustainable development?

PRAHALAD: WRI for me is a notable player in this game. We have the opportunity in the next ten years to make a fundamental change to the nature of poverty and poverty alleviation through market-based, private sector-oriented solutions—not exclusively, but in a significant way. Therefore, in order to motivate others, it is quite critical for those who have understood the problem, who have found solutions, to share it widely so that a larger group of people can benefit and participate in this process of making this world a different place, with more social justice and more inclusion. That’s a worthy cause. So I invite companies and managers, civil society organizations to share success stories with WRI so that it can diffuse this knowledge around the world, and motivate other people to do the same.