Author: C.K. Prahalad

ISBN: 0131877291

There are billions of people in the world, indeed the great majority, who live on incomes of less than US$2 per day. Since their incomes are so low, they are ignored by the world of business and are isolated, as a consequence, from many of the economic advantages available to other people. But, being poor, they surely have no chance to participate in a market economy, or so most people would conclude.

However, noted professor of strategic management C.K. Prahalad argues otherwise in this impressive and compelling work. He points out, for example, the Jaipur Foot story, in which an organization in India drew together expertise that enabled the technicians to produce a prosthetic limb that is not only the equal of anything in the west but has the added benefits of working well in the Indian environment – where the poor people need to walk lengthy distances daily, need to be able to walk barefoot in many contexts, need to crouch or squat for some activities and do not have the opportunity to return to technicians or medical staff for lengthy and perhaps expensive post-fitting consultations. Not only can these limbs be tailor made for individuals, they are tailored in less than a few hours and enable the person concerned to spend less than day away from home and avoid expensive accommodation and meal costs. And not only that, but the cost of the limb is only around US$50 dollars, which is a fraction of what can be managed in the west. This is far from a unique story.

Prahalad, drawing on the work of a skilled research team, highlights dozens of examples of how new thinking and new approaches enable the delivery of high-quality and low-cost products to the billions of low income people of the world. Such thinking would, it hardly needs stating, revolutionise the efficient use of resources in the western world and help reduce the ruinous reliance on heavy use of hydrocarbon fuels.

Yet it is not just through technology and management design that the poor may be brought into a market economy. Providers of goods and services can do more by rethinking their operational methods, through for example providing single serve portions to those people who cannot afford to buy multi-portion packs or else by deskilling certain operations or activities: people in the remote South American highlands can receive accurate diagnosis of conditions if health workers are provided with accurate photographs of patients with existing conditions which can be compared with the appearance of local people. Similarly, Indian nurses can help to facilitate dozens more operations per day than their western counterparts by being trained specifically and only in the particular area in which they will work. 

Prahalad also builds on the work of Hernando de Soto, who pointed out that the reason most people are poor is not because they are feckless or lazy or in some other way dysfunctional but because, primarily, they are obliged to live in an environment where laws (when there are laws) are improperly policed. This means that they find it difficult to obtain credit on their assets, because their assets cannot be properly registered. How many hours of income, Prahalad asks, could the poor gain if they did not have to wait so long queueing up to pay their bills? Using more evidence from

India, he demonstrates how good and transparent government governance which enables swift and efficient interaction with government services enables the poor to gain more time and therefore improve their economic opportunities significantly. He also brings back technology as a means of liberation for the poor. Villages linked to government services by common computer kiosks enable villagers to take control of the trading of the commodities they grow. Fishermen in Kerala can use mobile phones to contact several different ports to determine the best place to land their catches. Over and over, the poor are shown as resourceful and diligent and full of good sense about how to improve their lives and the lives of their families. It is difficult to imagine a more important or worthwhile book than this. However, it is not always brightness and light, since there are obstructive forces which prevent these good things from happening, particularly the role of corruption. Prahalad considers these themes too and proffers some suggestions as to the hard answers necessary to tackle the problems involved.

This is a book that everyone should read.

The above review was contributed by: John Walsh PhD:  Professor at Shinawatra International University CLICK TO VIEW  John Walsh's Reviews