- Introduction to The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition
- The Role of the Private Sector
- Who and What Is the Bottom of the Pyramid? What Have We Learned?
- Bottom of the Pyramid as a Business Opportunity
- Key Lessons from Experiments
- Business and the New Social Compact
- Democratizing Commerce: The Challenge for the 21st Century
- Endnotes
This chapter is from the book
This chapter is from the book
This chapter is from the book
Democratizing Commerce: The Challenge for the 21st Century
I believe that the real challenge for the 21st century is democratization of commerce. Often, the debate about private sector involvement in the Bottom of the Pyramid centers on questions such as “Is globalization good or bad for the poor?” If we phrase the question this way, almost by definition, there will be people taking either side. However, if we accept globalization is like gravity and that there is no point in denying gravity; but great benefit to defying it and build a plane, then we can ask the question differently: “How do we make the benefits of globalization accessible to all?” This formulation of the question allows us to be more creative and entrepreneurial. Therefore, I would like to define “democratizing commerce” as bringing the benefits of globalization to all micro consumers, micro producers, micro innovators, micro investors, and micro entrepreneurs.
As shown next, we start with the assumption that everybody must have the right to the benefits of globalization. This implies that as individuals we have multiple roles—as consumers, producers, investors, innovators, and entrepreneurs. At a minimum, all must be treated with dignity and self-esteem—as micro consumers. They must be able to exercise choice and must have access to world-class goods and services. World class does not mean luxury. A cell phone that the poor get is world class; it might not have a fancy case, a fine camera, or a great color display. But in its core functionality, it is no different. Treating people as consumers is not the same as creating a wasteful consumer culture. The CEO of the Acumen Fund, Jacqueline Novogratz, had this to say:
We agree with Dr. Prahalad that choice is where dignity starts, and that the world will change only when we view truly low-income individuals as full participants in their local economies and communities, as producers and consumers, rather than as passive recipients of charity.
We have to start with respect for individuals irrespective of their current condition. Deciding “what is good for them” is against the very spirit of co-creation. Yes, we can educate them on the risks and benefits of choices. But they must exercise their choice. Those of us who have had the pleasure to see firsthand the extraordinary intelligence of the “uneducated” and how they “make do with what they have” are convinced that capability building for personal choice is a critical component of democratization of commerce.
Figure Intro.2: Democratizing commerce.
Although we treat all with respect as “consumers,” we must also ensure that all can participate in the global economy as micro producers, micro entrepreneurs, and micro investors. Increasingly, this is becoming a reality. The case of Amul, ITC e-Choupal, Jaipur Rugs, and Nestlé are examples of connecting rural, subsistent farmers to regional, national, and global markets. There are now a large number of examples of organizing the poor to ensure that they have the benefits of information—as in the case of farmers using cell phones to check weather and price information before they sell to farming cooperatives or working with large firms such as ITC or Nestlé. At the same time, individuals must have access to become entrepreneurs. The story of village level entrepreneurs—Shakti Ammas (Unilever), Jyoti Ammas (BP), Grammenn Bank, and self-help groups all over the world, demonstrate that given a chance, the poor are willing to be entrepreneurial and invest in their own success. There are those entrepreneurial women who start a “salon” in their neighborhood, to those who settle for a more traditional opportunity of raising cattle or chickens. The key is that they learn to be self-reliant, confident, and capable of understanding investment and returns, credit, and profit. Finally, we have to provide opportunities for them to save and become micro investors. Access to savings accounts and modern finance is key to fulfill this role. Many of them are also innovators. Today, there are opportunities for them to be organized and their innovations recognized. Prof. Anil Gupta has built an incredible database of micro innovators from villages, and this role is getting recognized.
Democratization of commerce is based on everyone having the right to exercise their roles as micro consumers, micro producers, micro entrepreneurs, micro investors, and micro innovators. Access to information removes the first impediment to building this brave, new world. Information asymmetry has always been at the heart of poverty. It was information asymmetry that allowed local moneylenders to have sway over the poor farmers; or buyers have advantage over fishermen who had no idea of what the prices were. Secondly, access to credit and micro finance products (including micro insurance) from the organized sector—micro-finance institutions and banks—allows people to build equity and escape usurious moneylenders and continuous struggle with poverty. Access to regional and national markets, coupled with information, allows them to get a “fairer” wage. When organized and connected, the poor have a fighting chance to get a fair wage for their work. Finally, they, as micro innovators, can find a market for their innovations if they are organized.
I do recognize that what we are seeing are a “ray of hope” and weak signals that suggest that we can democratize commerce. We have to actively engage the private sector in a collaborative relationship with civil society, governments, and philanthropists. However, the organizing idea that illuminates this new social compact must be
Respect for the rights of the individual
The use of transparent transactions or a focus on market-based solutions
Scalability to solutions
Reducing the rural-urban, rich-poor divide through information technology and organization
Focus on entrepreneurship and innovation
Focus on ecologically sustainable solutions
Five years after the initial publication of this book, I am more excited and energized about the possibilities of the Bottom of the Pyramid than ever before. The capacity for change and creative thinking I have seen from everyone who has embraced the challenge—from nongovernmental organizations, multinationals, and the poor themselves—has been inspirational. A change this ambitious cannot happen overnight. There have been setbacks, missteps, and disappointments. But that is true with all fundamental change. I am hopeful that the debate about the Bottom of the Pyramid has shifted away from convincing people that there is a market to debating how best to serve it. I am confident that the simple fact that so many more people are searching for answers will lead to better and more complete solutions.
It used to be that the rich felt a sense of entitlement. I hope that as a result of more companies engaging with the poor, they too begin to feel a sense of entitlement—to dignity, choice, and mobility. I believe that this change will help not only people across the world, but society and the environment as well, because it will require change and innovation on a massive scale. It is too early to pronounce Bottom of the Pyramid markets an unqualified successes. I think, however, there are enough signals to illustrate that the “invisible hand” of entrepreneurs reaching out to the invisible markets of the world has the capacity to help create the solutions that people—and the planet—so desperately need.