There’s no fortune at the bottom of the pyramid

Sorry to break it to you.  There is no Santa Claus.  There is no pot of gold at the end of the rainbow.  And there is no fortune at the bottom of the pyramid.  There is only grinding poverty.

It was the late C.K.Pralahad who first popularized the notion of a fortune at the bottom of the pyramid.  For him it was a business proposition.  His key observation was that there were a lot of poor of customers who had not been served by major corporations with goods for sale.  His contention was that if businesses were to develop products and sales methods targeted for the poor, they (the corporations) could reap major fortunes.  Conceptually interesting, but not much evidence so far.

According to that inscrutable source, Wikipedia , “the phrase “bottom of the pyramid” was used by U.S. president Roosevelt in his April 7, 1932 radio address, The Forgotten Man, in which he said ‘These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power…that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.’”

For those tending to hold negative view of capitalism, the space of the bottom of the pyramid has always been crowded, with the weight of all those above truly crushing in terms of impact.  In this illustration from the “Industrial Worker”, it is those at the bottom who “work for all” and who “feed all”.

The more current usage refers to those people living on less than $1 – 2 per day.  An estimated 1 billion (plus or minus) occupy this space at the base of the pyramid.  Yes, it is crowded, and more than a little discouraging.  At less than $1 per day, life is mostly about subsistence poverty.  It is about barely having enough food to eat.  It is about inadequate health care.  It is about inadequate shelter for one’s family.  It was about not being able to educate some or all of the children in the household.  It is about having no savings.  It is about no fallback or cushion if crops fail.  It is about having no contingency funds for emergencies.  It is about having almost no ability for any kind of discretionary spending.  There are no fortunes down at the bottom of the pyramid.  It is hand to mouth.

IDE works with households and individuals who are poorest of the economically active segments of rural society in developing countries.   IDE does work at the bottom of the pyramid.  For farmers, it is about transforming the economics from scarcity to opportunity; and the mindset from object of charity to producer of value.  We do agree with Pralahad on the point that we should treat the people at the base as customers.  As customers, our intent is to offer them affordable income opportunities which allow them to sustainably move beyond the subsistence space to that first level of prosperity.  An annual income increase of $300 to $500 makes a world of difference.  No, they are not rich yet and they are not amassing fortunes, but now there is ability to get ahead a little and gain a measure of economic security.

IDE’s low cost irrigation technologies – low cost pumps, drip systems, water storage systems – have dramatic impacts on agricultural productivity hence household income.  If we include other value stream opportunities relating to better or lower cost inputs (eg. seeds) and/or improved market access for horticultural produce, the results get even better.

As already noted, IDE’s goal is move these base of the pyramid producers / consumers sustainably up to at least that first level of prosperity in the economic pyramid.  In a perfect world, we would end up with an empty space in that $1/day space at the bottom of the pyramid.

A phrase we often use to describe our work is “Enabling Rural Prosperity.”  We do not mean exactly that these poor rural households have become rich.  What we mean is that our farmer investor friends are moving away from subsistence grinding poverty in the direction of the entry levels of economic security.

And why do we insist on treating very poor people as customers?  It is not to generate any fortune for ourselves.  When we treat poor people as customers, we commit ourselves to listening and responding to what they need to become more productive and earn more income.  Anybody can give stuff away free.  It is when we can create investment opportunities with quick returns that we can take the first steps to creating those illusive fortunes at the base of the pyramid.  Once we achieve that, we will move to rainbows.


About Al Doerksen

I'm sort of a vocational tramp; my working career divides about evenly between non-profit and the business worlds. I have lived in Mexico, India, Germany and Canada, and now USA. I've had the good fortune to travel to 90 countries of which at least half are developing countries. The last 25 years of my "career" have involved significant (and enjoyable) international management challenges: travel industry, furniture manufacturing, food (aid) programming and ultraviolet water treatment among others. I'm now leading a development enterprise called IDE.
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One Response to There’s no fortune at the bottom of the pyramid

  1. Maria R. de Friesen says:

    You state, “In a perfect world, we would end up with an empty space in that $1/day space at the bottom of the pyramid.” I agree, that would be much better. Ideally speaking, there would be no pyramid in a perfect world. /mf

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