Remembering C.K. Prahalad
“What is needed is a better approach to help the poor, an approach that involves partnering with them to innovate and achieve sustainable win-win scenarios where the poor are actively engaged and, at the same time, the companies providing products and services to them are profitable.”
C.K. Prahalad – From The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits
I’m often asked – by colleagues, friends, clients and prospective clients – what is the value of CSR?
I am always happy to run through the now well-established list of how different dimensions of a genuine commitment to corporate responsibility can impact the bottom line, directly and indirectly. From stronger relationships with communities and an enhanced license to operate to increased profitability through operational efficiency gains and materials and resource management, to management of risks and improved relations with the investment community, enhanced employee relations that yield better results and cost savings with respect to recruitment, motivation, retention, learning and productivity, to improved reputation and branding, and qualification for billions of dollars in screened business, the business value of and return on investment in CSR is increasingly clear.
In addition to these many benefits, some of the world’s largest companies have found that embracing CSR can also provide access to new “aspirational” consumers and new revenue streams in emerging markets, which in turn can foster significant product and business innovation. Recently, we lost a visionary man who made truly game-changing contributions to the world through his research, observations and recommendations on these aspects of corporate responsibility and global citizenship. Coimbatore Krishnarao “C.K.” Prahalad died last month after a brief bout with a lung ailment. Sadly, he was only 68.
Born in Chennai India, Prahalad earned degrees from Loyola College in Madras and the Indian Institute of Management, and later a PhD from Harvard Business School. He would go on to consult for some of the world’s leading multinational corporations in a variety of industries, but he is best know as a distinguished professor at the Ross School of Business at the University of Michigan, where he pioneered and popularized the “bottom of the pyramid” concept.
While his theory that the world’s poor should be viewed as consumers is more firmly established today, it was still a radical and unorthodox notion even 10 years ago.
The numbers speak for themselves – 4 to 5 billion underserved people representing more than $13 trillion in purchasing power.
Whether detergent and household products, cement and home building materials, microfinance and financial services products, or cell phones and consumer technology products, Prahalad proved to Fortune 500 companies that they could satisfy market needs, help address social problems, improve the quality of life for millions and make a profit.
Companies across the business sector – from Unilever to Motorola to CEMEX, among many others – have now embraced Prahalad’s idea of “inclusive capitalism,” and have benefitted through increased sales, tax exemptions, and increased brand awareness. This last benefit is significant for companies doing business in emerging economies, where it is important to cultivate consumers who may not be able to afford your products today, but who will demand them tomorrow. Establishing brand preference and loyalty early on can pay huge dividends over a consumer’s lifetime.
And it isn’t always developed countries selling to the poor. On occasion, innovations in products, services and business models developed in and for emerging markets have applications in established economies, providing still more benefits for enlightened global firms.
C.K. Prahalad was on my mental list of people I would love to meet at a conference or cocktail party some day. He died too young, and I’m sure he had at least one or two more books left to write, and many more innovative ideas to share with those of us working in the corporate responsibility arena and those in the broader business and public policy communities. While I’m deeply saddened by his loss, I’m appreciative of the fact that so many around the world are benefitting and will continue to benefit from the ideas and approaches to business and corporate responsibility that he pioneered. His impact will be long-lasting, his legacy is secured.
Chad Tragakis, Senior Vice President, Hill & Knowlton, Washington D.C, and writer for the Hill & Knowlton Blog, ResponsAbility