I just learned that C.K. Prahalad, most recently author of The New Age of Innovation, died on Friday, April 16, at the age of 68. Here are remembrances of him from the WSJ.
Because I read the economics literature more than the business literature, I had not come across Prahalad until I read his well-known book The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (recently republished in an updated 5th anniversary edition). Prahalad’s book argued that both the business world and the poor could benefit if the former began to focus on the provision of goods that served the poor. Incomes in poor nations are rising fast enough that those previously thought to be to poor to be a part of global markets now can participate, and business should wake up and start paying attention to them. Obviously, the anti-globalization crowd has attacked his thesis, on that grounds that it would turn the poor into consumers, who would then be exploited by large MNCs selling high-volume single-use goods. The packaging of such goods would create an additional problem, the critics have argued, because they would add to our environmental problems.
But the critics missed Prahalad’s real emphasis, which one sees when you turn to his most recent book, The New Age of Innovation (Google Books link). At root, Prahalad’s argument is that the world has changed in fundamental ways that now allow us to address poverty by creating innovative and entrepreneurial environments everywhere, and reducing the barriers to everyone’s involvement in them.
My interest in Prahalad has been focused on his argument about the consumer’s role in creating products. He argues that many consumer products today are really platforms for producer-consumer collaboration in creating individualized products that serve the needs of a particular consumer, which the company then can meet because the company has figured out how to optimize a global network of resources. While I had previously thought of these individualized products as “high-end” or almost “luxury” goods — “boutique drugs” adapted to one’s unique DNA, or personalized blush and lip gloss, Prahalad helped me to see that the processes that enabled these high-end uses was also making its way across the market and even down to the bottom of the income pyramid. The process was fueled, of course, by the progress of technology: the ubiquitous presence of cell-phones in the poorest parts of the world opened them to purchase opportunities never available to them, and social media lowered their transaction costs of learning about them. Using Skype, our daughter in Michigan talks on her cellphone almost daily with her Kenyan friend about fashion, politics and life.
Not only does Prahalad’s argument suggest the collaborative nature of innovation (which most of the anti-capitalist crowd takes to be a one-way street running from “big business” to your pocketbook), but he also points to the notion that poor nations need to focus on creating an innovative environment for people to work in, rather than seeking some of the more traditional conceptions of economic development and growth, which focused on supply-side resource expansion. Prahalad’s argument is similiar, therefore, to the literature I draw on in my arguments about innovation: that if innovation is essential to economic growth and prosperity, than creating an innovative society is the long-term key to prosperity, regardless of whether you are in a rich or poor nation. It’s not the resource base that matters, it’s whether you enable people to innovate with what’s at hand.
Thank you for teaching me about this, C.K.
This entry was posted on Monday, April 19th, 2010 at 11:18 am and is filed under Collaborative Creativity, Poverty and Innovation, Venturesome Consumers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
[...] approach to poverty reduction. Here are thoughts and reminiscences from the WSJ, HBR, Ross Emmett, and the Ross School. HBR has already set up a Prahalad page. Here are previous O&M mentions. I [...]