Nano-economics

At Software 2006 I had the honor of sitting next to C.K. Pralahad at a dinner. Prof. Prahalad (he continues to teach at U. of Michigan while living in San Diego) is of course well known for his seminal work on Core Competence. But his more recent work on making money at the Bottom of the Pyramid (BOP), is to me much more impactful. His perspective:  If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up. He has 12 building blocks for BOP success:

1. Focus on (quantum jumps in) price performance.
2. Hybrid solutions, blending old and new technology.
3. Scaleable and transportable operations across countries, cultures and languages.
4. Reduced resource intensity: eco-friendly products.
5. Radical product redesign from the beginning: marginal changes to existing Western products will not work.
6. Build logistical and manufacturing infrastructure.
7. Deskill (services) work.
8. Educate (semiliterate) customers in product usage.
9. Products must work in hostile environments: noise, dust, unsanitary conditions, abuse, electric blackouts, water pollution.
10. Adaptable user interface to heterogeneous consumer bases.
11. Distribution methods should be designed to reach both highly dispersed rural markets and highly dense urban markets.
12. Focus on broad architecture, enabling quick and easy incorporation of new features.

If we can find ways to make consumer products, health care, banking profitable at BOP, the Western consumer also benefits - it will make Wal-Mart look expensive. But more than micro, it will need nano-thinking. And mega- thinking. 4 billion future capitalists at stake.