Oasis or Mirage?

Submitted by Rob Katz on August 23, 2006 - 14:22.
Published in:

Many of you have noticed that Professor Aneel Karnani's post, Mirage at the Bottom of the Pyramid, has remained at the top of NextBillion.net's home page for the last 48 hours or so. This is no technical glitch - the moderators made an editorial decision to let it stick there for a day or two, since it was one of the first times a serious BOP critic has made his or her case on NextBillion.

I first caught wind of Professor Karnani's paper a few weeks ago, when it was in draft (read: not bloggable) form. I read it with great interest, and found myself agreeing with him on many points but disagreeing on many others. My boss and known BOP expert Al Hammond will post to this space later this week with an "official" response.

In the meantime, you can still read and comment on Karnani's paper - and I would highly encourage anyone truly interested in the BOP hypothesis to do so. As an idea becomes a movement, disagreement grows over the movement's direction and purpose. Perhaps that's where the BOP hypothesis is trending. For those of us interested in the BOP - from an academic, professional, or casual point of view - Karnani's paper is required reading. Not only that, it's only available via NextBillion. So get in on the ground floor now, and decide where you stand on Karnani's points. Comments remain open - tell us what you think.
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They are both at U Mich -
Submitted by Pablo on August 24, 2006 - 12:45.
They are both at U Mich - I'm sure someone has thought of organizing a discussion bw the two?
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BoP Proposition Misleading
Submitted by _macharia on August 24, 2006 - 13:32.

Many thanks Aneel Karnani for a great paper which clarifies a very important issue. C.K. Prahalad's BoP Proposition is misleading for its lack of balance. Prahalad proposes that there is much untapped purchasing power in the BoP, and that private companies can make significant profits selling to the poor, and by selling to the poor MNCs can help eradicate poverty.

MNCs have known since time immemorial that there is fortune in the poor countries, and they have exploited that fortune to the fullest extent possible, without blinking or shame. MNCs were involved in the extraction spree, which is perhaps directly responsible for the prevailing deep state of poverty in many countries today. To suggest that designing ingenious methods of selling to the poor is a way of driving poor people out of poverty is obviously misleading. This is a fact that is not possible to believe. MNCs will love the BoP Proposition, because the idea legitimizes their extraction spree...this time, for the few dollars and cents left in the pockets of the very poor, but not because of their deep sense of social responsibility.

What is believable and perhaps what will ultimately lead people out of poverty, is our discovery of how to unleash the capacity for entrepreneurship among the local nationals of developing countries. Successful entrepreneurship requires, at a minimum, respect for conditions for establishing property rights, the rule of the law, and good governance. A good framework for leadership will establish clear guidelines engaging the BoP without hurting the poor; a good framework for leadership will help an MNC to work with the people to discover their true capacity for entrepreneurship, and paying a fair price for their products.

The true fortune at the BoP, which is necessarily coupled with pulling people out of poverty will come ONLY with moral corporate leadership, which considers and respects people living in poor conditions and deals with them like humans. Breaking down products to smallest sachets possible so as to reach the few dollars and cents left in those pockets is perhaps not the most human thing to do. That is where the BoP Proposition is misleading.

Macharia Waruingi, MD

www.kdnc.org


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Karnani and Prahalad
Submitted by Rob Katz on August 24, 2006 - 15:26.
Pablo - great idea. I'm not at Michigan, and I'm not sure how their schedules work out, but if it happened, we would cover it here at NextBillion. That said, I believe that both Professors Prahalad and Karnani have been passing drafts of their papers between each other, effectively stoking the flames of debate. I hope this will continue down the line...
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