Notings from C K Prahalad's "Fortune at the Bottom of the Pyramid"

I was deeply sceptical about the buzz this book generated when it was first released in 2005. The scepticism kept me away from it for all these years. I felt that preaching to corporations to look at the bottom of the pyramid(BOP) as a viable market and linking this povery allevation was too far fetched and moralistic. I believed then, and still believe now, that if there is a market,  corporations will reach it without you having to tell them. If corporations stay away from certain markets, then it is because they are not equipped to serve them profitably - the issues might range from distribution, to flexibility, trust, product fitment, etc.

However, recently I glanced at this book in the library and it struck me that I had never read it. Reading it from the library meant that I'd have saved myself a solid Rs. 500 by borrowing it instead of buying it. The offer was too good to refuse, and so, I borrowed it. I've been reading from it in small doses, and I must say, I was wrong about the book. It does hold very interesting insights about the BOP market. I still find the bits where the author sermonizes about poverty allevation a little hard to digest. But the sections where he lists down the characteristics of BOP markets and lays a framework for approaching them, are extremely interesting and insightful. As I read the book, I shall keep making notes in this blog entry. Here goes the first one...

1. Do the poor have enough money to spend? CK Prahlad makes an interesting observation about how the general public and marketers get put off by the filth and squalor that surround the urban poor in slums. The dirty surroundings lead us to believe that the poor don't have the capacity to pay, and even if they do have some money, they would rather spend it on improving the condition of their sanitation and immediate living quarters rather than splurging on consumers goods and durables. This is a wrong assumption. Prahlad proves this by citing the example of the Dharavi slum dwellers. Dharavi has no sewage system or running water, and yet Prahlad's study shows that it has 90% TV penetration. This is no exaggeration. On a recent visit to Mumbai, I remember how I was dumbstruck at the sight of DTH antennas sticking out off hutments lining the Western-Express Highway. This effectively disbunks the theory that slum dwellers have no purchasing power and are hence not a viable market. But if they do have money, why don't they spend on improving the condition of their immediate living quarters? As Prahlad says, they choose not do so because they don't have proper title for the land they stay on. Hence, they prefer to spend on movable property like TVs and mobile phones that can move with them, in the event that they have to vacate quarters. If marketers wake up to the fact that there is such a large BOP population that buys their products, they would perhaps be in a better position to tailor their offerings to increase uptake from this segment.

Prahlad also offers an interesting insight about the poverty penalty that slum dwellers have to pay. On average every item that they spend on comes at a higher cost. Slum dwellers pay a 200-300% rate of interest when the borrow money from money lenders. Likewise, all other utilities come at a higher tax imposed by the informal market eco-system that has sprung up in the absence of regular market players. If a financial services company where to figure out a way to serve this market and charge an interest rate of 25% (nearly twice the normal lending rate) they would run a profitable venture that is beneficial to both the lender and the borrower.

Of course, servicing this market is not easy. The biggest challenge is adapting to the cashflow limitations of buyers in this segment. Though this is a major hurdle, it is not intractable. As cited in the book, several companies have managed to work around the problem. In India, over the last few years, NBFCs have started venturing into this market with small customized loans.

Elsewhere in the book, Prahlad says that companies should actively start engaging with these markets and try to incorporate them into their existing business expansion plans. I defer on this view. More on this later...Cheers.

My Rotator Cuff Injury

The latest injury I've picked up is a torn rotator cuff. It happened a month back. While I was rushing up the stairs in Mumbai, where I had travelled for work, I tripped and fell forward and landed heavily on my outstretched shoulders - as if I were doing a push up on the stairs. My left shoulder let out a popping sound, and I knew I was in trouble. The pain wasn't delibitating, so, I ignored it for two days (in hindsight RICE - Rest, Ice, Compression, Elevation - would've helped in those two days immediately after the injury). The day after I landed in Bangalore, I visited my orthapaedic doctor and he diagnosed the problem as a rotator cuff injury.

The rotator cuff is a group of four tendons and muscles that surround the shoulder joint. They connect the bone of the upper arm with the shoulder blade and the collar bone. It is a complicated joint that supports the whole range of motions of the shoulder joint. When a tendon gets damaged here, mobility of the shoulder gets severely affected. There is a throbbing pain that is difficult to locate. It typically originates at the shoulder joint and runs down the outer part of the upper arm. Lifting your arm above the head becomes extremely painful.

Since this area is very cartilaginous, there is limited blood supply to the joint. Hence, an injury to this region takes a long time to heal. From the literature I've read, I believe it takes two months on average for a mild rotator cuff injury to fully heal. My doctor advised me to rest my arm, stop doing exercises of the upper body and give the affected area an oil massage everyday. The oil massage is to generate heat near the joint and improve blood circulation to the area. I neglected the oil massage during the first few weeks, because I didn't know the significance of it. But after figuring out the blood circulation theory, I've been religiously massaging my shoulder and there's been a marked improvement ever since. Many people who've been through such injuries don't know of this theory about blood circulation and tend to give cock and bull stories about why shoulder injuries take so long to heal. After hearing a whole bunch of such stories with exasperation, I did my research and found a seemingly plausible explanation that I thought I'd share with the rest of you out there.

A shoulder injury is extremely frustrating because it severly impedes your fitness and sports routine. I've stopped gymming and playing cricket and tennis for a month now. By the looks of it, it would take another month before a full recovery. Sigh.....if only I'd walked my way up those stairs in Mumbai.

ps: There is loads of online literature on the subject. The following link is a good place to start http://orthopedics.about.com/od/rotatorcuff/tp/rotatorcuff.htm .

"Hanumanji ka meeta"

Many years ago, while we were in Nigeria, I am told we had a family friend called Mishraji. He was a portly man in his fifties, had greying hair and was well-liked for being a generous host. Mishraji's wife, a great friend of my mother's, was a demure lady and couldn't hear or speak due to congenital deafness. My parents met the Mishras at the weekly bhajans where the South Asian community in the neighbourhood would gather. At the bhajans, Mishraji was legendary for his persistance while singing. People would squirm in their seats while he would stretch the last bhajan to the limits of sonic endurance with his booming voice.

Mishraji loved inviting people over to his house and my parents used to be regulars on the guest list. During every visit, Mishraji would offer homemade sweets as prasad - "Hanumanji ka meetha". On the rare occassion, when sweets weren't ready, he would call out to his wife - "Hanumanji ka meeta nahi banaya kya?" and after a short while, freshly prepared sweets would emerge from the kitchen in honour of the monkey god.

It has been over 20 years since we left Nigeria, but still every once in a while, when my mother prepares a sweet dish, she arrives at the dining table with a flourish and announces, "Hanumanji ka meeta" and we all break out into a hearty laugh. Mishraji's message endures. He liked his sweets and he liked his god. It was only fitting to combine the two and chant - "Hanumanji ka meeta" - in celebration of life and its gracious provider.

The Secret Society of Secretive People

As the name suggests, 'The Secret Society of Secretive People' (TSSOSP) is a secret organization of secretive peole. It is so secretive, that few secretive people know that it exists. The few who know, don't know where it is, because that's a secret. The fewer who know where it is, do not know how to apply, because well, that too is a secret. So, one wonders, why have such a secretive oraganization at all? Well, those who are secretive would tell you, that's a secret.