Geoff's blog

Sloppy thinking at the Bottom of the Pyramid

Geoff Mulgan - 23.01.2013

I'm becoming ever more sceptical about the continued spread of the phrases 'Bottom of the Pyramid' and 'Base of the Pyramid', and whether they are either meaningful or useful. Here are some comments to prompt debate (I'd quite like to be proven wrong on this).

i) The original idea (from CK Prahalad) had a mixed reception. At root it was an argument that by marketing in small quantities, multinational companies could succeed better in winning over poor customers in poor countries.  Many smaller firms had always known this, and much of the history of capitalism has been shaped by businesses doing very well in selling large quantities of products to poor customers.  As far as I could find out (including from an interview I had with Prahalad himself) there was little new content in the 'Bottom of the Pyramid' argument; and in its original form it's most likely consequence would be a shift in power from relatively small, local producers to global ones. There was some overblown rhetoric, but to be fair most of the book was honest that it was essentially about new marketing strategies.

ii) The phrase was later extended to any kind of investment, social business or business exercise, that's directed at poor customers in countries like India or sub-Saharan Africa. It's come to imply a much more radical shift in the attention of the institutions of capitalism to the needs of poor communities - implying bigger flows of investment, jobs and opportunities. This is welcome. It's in the nature of a capitalist economy that far more money, attention and brainpower go to meeting the needs of the rich than the poor. Yet each time I see the phrase used I wonder exactly what meaning it brings. It's healthy for investors to be interested in the needs of poorer communities (though not particularly new), and as in the 19th and 20th century there is plenty of scope in the 21^st century for capitalism to improve the lives of poor people.  But there's lots of experience to show that some kinds of investment are disempowering and others are empowering.  There has been no shortage of sophisticated debate about distinguishing one from the other: but the 'bottom of the pyramid' advocates appear to be oblivious to this - or at least I never see any mention of power, or of the uneven effects that markets always bring with them. 

iii)  My third problem is with the metaphor. No societies are shaped like pyramids. Social science tells us that countries like Indonesia, India or Brazil have social shapes more like extended teardrops than pyramids, with the largest number on low incomes, a significant minority at the very bottom, and a stretching peak at the top.  Goods and services may need to be very different if they're aiming at the very bottom, or just at the poor.  Of course if you look at a teardrop shape from on top it does look like a pyramid and it's perhaps no coincidence that the BoP idea has mainly captivated the rich, and Western-based business schools. But the metaphor is misleading.  Business schools should be able to do better.