C.K. Prahalad

Coimbatore Krishnao Prahalad (b. 1941) was born in the town of Coimbatore in Tamil Nadu. He studied physics at the University of Madras (now Chenai), followed by work as a manager in a branch of the Union Carbide battery company, gaining experience of management, He continued his education in the US, earning a PhD from Harvard. He taught both in India and America, eventually joining the faculty of the University of Michigan’s Business School, where he holds the Harvey C. Fruehauf chair of Business Administration.

At Ann Arbor he met Gary Hamel, then a young international Business student. Their collaboration ultimately resulted in Competing for the Future(1994). This book, described how stated management was in transition. It was moving from the old control- and-command model towards one where managers had to find new market opportunities. Much depended on markets and the delivery of customer satisfaction. This was a riposte to the concept of Business Process Re-engineering, which told companies to look for core competencies.

In his most recent book (written with Venkat Ramaswamy) The Future of Competition: Co-Creating Unique Value with Customers (2004) Prahalad argues that companies have not made enough use of the opportunities provided by globalisation. There is an inability to realise that not only have the rules of the game changed but the role of the players has been transformed too. The “customer” is more powerful and pro-active figure. They are no longer abstractions that have to be satisfied. Thanks to the Internet they are agents creating and participates in transactions. The concept of value has also changed. It is not inherent in products or services. It can’t be instilled by producers or providers. It has to be co-created with consumers. They build this by experiencing it. The only way companies can compete successfully is through building new strategic capital.

He desired a bigger “hands-on” approach in business. In 1997 he co-founded Praja (common people in Sanskrit, in San Diego. This Internet startup wanted to pull the Internet away from information-based content towards something more experiential. The company’s fortunes were badly hit by the puncturing of the tech bubble. Prahalad commented philosophically that this experience had taught him a lot.

Prahalad maintains a deep interest in the world’s poor. This led him to write The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits(2004). It stemmed from a “long and lonely journey” to find a solution to the world’s poverty. He identified the world’s poor (the ‘Bottom of the Pyramid’ or BOP) as a potential untapped market for companies, worth anything up to $13 trillion a year. “The real source of market promise is not the wealthy few in the developing world, or even the3 emerging middle-income consumers. It is the billions of aspiring poor who are joining the market economy for the first time.” A market at the bottom of the pyramid could be co-created by multi-national and domestic industry, non-governmental organisations, and most importantly the poor themselves. They would then have choice over their lives and the products they used. He pointed to Hindustan Lever’s success in marketing soap-powder and detergents in smaller, cheaper units. This created prosperity downstream through new distribution mechanisms. The book is accompanied by a CD ROM containing interviews with people whose lives have been improved. This has nothing to do with philanthropy. It is preferable to what has gone before. Too often poor people are patronized by some aid agencies. He wants them to have real power in the marketplace.

The book also highlights the victimization of the poor in some areas. In India there persists a “poverty penalty” where poor Indian families are forced into the arms of money-lenders charging interest rates in excess of 400 per cent.

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