Wednesday, April 21, 2010

C K Prahalad

The business community in India was effusive in its praise for C K Prahalad. So were some commentators in the media. That Prof Prahalad, an alumnus and former faculty member of IIMA achieved fame and recognition, is something we should all be proud of. But what one missed was a serious and critical evaluation of his contribution.

Today's Business Standard editorial makes up for what was missing elsewhere. The edit makes three important points:
  • Prahalad was good at articulating existing practices rather than predicting future trends. 'Core competence' had come into being at many MNCs long before Prahalad wrote about it. This stands to reason. That is what the case method that Prahalad was raised on at IIMA and HBS is all about.
  • Co-opetition, taking the customer into account in designing products, is elementary marketing
  • Bottom of the pyramid, his most famous theory, is not about making money from the poor, it is more about designing products for the lower middle class in the rural areas.
Let me add: BoP has little to do with poverty alleviation. Companies do little to alleviate poverty when they address the mass market, they only take care of their own shareholders. You alleviate poverty not by viewing the poor as customers but viewing them as producers and giving them purchasing power, a point that Aneel Karnani, Prahalad's colleague at Michigan, made in his devastating critique of the BoP thesis a few years ago.

The idea that we can leave it to companies to alleviate poverty can be dangerous because it provides another argument for government to vacate the space, something that neo-liberals would pounce on. Thank God, we are thinking in terms of right to education and right to food instead of embracing the BoP thesis.

The BS edit has a scathing finale:
Perhaps the best commentary on its (BoP's ) efficacy came from Praja, the BOP company Prahalad co-founded to provide a platform for common people to personalise their own experiences on the Internet. In 2002, the company was sold having made a $55 million loss and laid off one-third of its staff!
Must people abandon their critical sense in paying tributes to the departed? Whatever Prahalad's gifts of exposition, comparing him with Peter Drucker was quite a stretch.

9 comments:

Anonymous said...

Excellent post!

Ashok

Anonymous said...

Mr. Prahalad, well said, you really analysed what are the problems facing business communities nowadays in India.

Well done.
Business Community

Anonymous said...

Dear Sir,

I have a question to you. I am not sure if you will answer me, but if you do that will be very helpful. I did my MBA from a very good non-IIM b-school in India. I am currently in the final year of my PhD in a non-Ivy (yet fairly high-ranked) b-school in the USA. I have a R&R in a top journal (top 5 in my field according to UT Dallas list). My question is, will I be considered for an entry-level faculty job at IIMA (since I am a non-IIM grad)? What are my chances? What do you look at in a candidate? Any pointers are really welcome.

regards,

Anon.

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Anonymous said...

I think the focus on trying to make the poor "producers" stems from the same wellspring that created the failed import substitution model of the 1960s and 1970s and leads to the export-led model of today.

I am not sure what basis you have for the optimism regarding to right to education and right to food. One create as many rights as one wants, but without any credible mechanism to deliver on those, they are, like "garibi hatao," empty slogans.

I want to emphasize that I am not a carrying the brief for neoliberals. On the contrary. However, the way governments function in the industrialized nations is quite different from how they function in India and other tinpot countries. Local governments in the US (where I live) are accountable to the local and local voter base and the local voter base is highly engaged in local affairs, especially in school affairs. Without accountability, you are only going to get rent seeking and no results. As far as I can see, right to education is going to achieve nothing and possibly harm the market driven solutions (not very good, but still better than nothing).

Markets are no panacea but where governments are dysfunctional, innovative market-based solutions may be the only game in town. That is my take from the BOP. Yes, some of its claims are fanciful (anybody who needs to market an idea needs to make tall claims, is that surprising). BTW, it is not at all clear to me that touting BOP is somehow undermining the need for government action. I don't recall any such thing in the BOP book. Correct me if I am wrong.

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T T Ram Mohan said...

Hello Anonymous,

I think any applicant from a good US b-school would stand a good chance of getting into IIMA. If you are in Finance, pl let me know.

best,

TTR

T T Ram Mohan said...

Anonymous,

Yes, there are serious infirmities in government delivery. But I see no alternative to working on improving these. After all, we have had some success with NREGA in some states. Improving local governance to ensure accountability would be part of the task.

Under the right to education, private schools have to offer 25% of seats to the poor. This is worth trying out for what it is worth.

As for BOP displacing government, the danger with the BOP approach is
that you assume that the market or corporates selling products to the poor are somehow addressing poverty removal. (I have pointed out this is a serious misconception). Then you may be tempted to say: let us leave it to the market to tackle much of poverty!

-TTR

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