Thursday, August 02, 2007

The BOP Debate Rages On!

In my post titled Fortune at the Bottom of the Pyramid - What I liked and what I didn't I wrote about my impressions on Dr CK Prahalad's work titled 'The Fortune at the Bottom of the Pyramid'.

Frankly when I read the book, I did not come out fully convinced.It all sounded very nice, but not very pursuasive. My curiousity led me to search a bit more on this debate. I came across a paper by Prof. Aneel Karnani published in California Management Review. The paper titled Fortune at the Bottom of Pyramid: A Mirage comes out hard on the BOP concept as enunciated in Fortune at the Bottom of the Pyramid by Dr Prahalad.

While Dr Prahalad's work focusses on how corporations can make money selling even to the marginal wage earner, Dr Karnani questions the viability of such a proposition, even talks on issues such as affordability of this segment of consumers. He even questions the suitability of the cases used to substantiate the BOP proposition (such as Annapurna salt).Frankly anyone who has been to countryside markets where many of India's marginal earners live and seen the buying behaviour would tend to agree to Dr Karnani's paper. I would recommend that you read Dr. Karnani's paper in entirety.

Dr Karnani's paper also comes down hard on the facts and figures quoted in this book.If one were to believe the BOP work, an Indian housewife send an average of 60 text messages a day(Page 43, paperback edition) on their mobile phones. Frankly, I am not an expert on numbers but find this quite ridiculously high. A tenth of this number would have sounded more convincing.

The good thing is that the debate talks about a segment that is not SEC A which is where most of the strategic thinking generally remains focused. Followers of the BOP school have created a site to carry on the argument and it is interesting to watch this debate growing. Dr. Prahalad's arguments for a change sound defensive, quite indicated by the Ads in Google if you run a search on 'CK Prahalad' which read 'Learn about Prahalad's BOP strategy and his response to criticism'.

Interesting!

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