Bottom of the Pyramid is a Curse

Late Prof. C.K. Prahalad believed in the immensity of the business potential of BOP, i.e., the Bottom of Pyramid, the poorest and the bulkiest segment of a society. He often cited Dharavi in Mumbai, perhaps the world’s biggest slum-settlement, as an example of a hot economic opportunity.

This opportunity, with apologies to the late professor, is unfortunate.

To illustrate, we will take the example of the community of commercial drivers who belong to this segment. Apart from being the victims of government apathy, drivers’ circumstances and ignorance lead them to falling prey to manipulative market forces:

  1. Extortionist loan-sharks – 20% rate of interest per month is not unheard of.
  2. Usurious finance mafia masquerading as NBFCs – Even the well-known blue chip names are not above board.
  3. Interference of co-opted middlemen – From buying a vehicle to a loan to an insurance, the driver has to hire a middleman, for a cut from both sides of course.
  4. Artificial scarcity of supply of various items – Any stipulation from the government to fix a new device (GPS, Speed governor etc.) is an opportunity for profiteering by creating artificial scarcity.
  5. Spurious products in spite of paying good money – The market is flooded with fakes and the spurious. Besides genuine and ‘known fakes’, the market is also flooded with ‘unknown fakes’.

The governments run dozens of welfare schemes which are meant to benefit the BOP. Absence of awareness and information, difficulty in accessing them and cumbersome procedures act as insurmountable obstacles for the intended ‘BOP’ beneficiaries. Invariably, either the beneficiaries remain unaware of such schemes, or the touts step in and set up shops as the go-between. Needless to say, such an operation cannot run without being in cahoots with the corrupt officials.

As one can see, the so-called opportunity for an entrepreneur becomes huge only when one looks at it from the angle of maximizing return while playing on the vulnerabilities, gullibility and ignorance of the underprivileged.

The real ethical opportunity lies in breaking the vicious mould that has been cast over decades. The users will be grateful and offer their loyalty to anyone who erects pillars of support under the base of the pyramid. They will lap up any offer that promises financial security and a brighter future. The need and the opportunity is not in exploiting by any means the potential as it exists but to change the very paradigm and dynamics of the play. That will be true constructive contribution of a business towards social change while letting it ensnare a large market.

Business model of our associate Yaanam, with help from unions, aims to break that vicious mould for the drivers. Details will be in a later post.

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