Post industrialization, the people at the Bottom of the Pyramid (BOP) have been looked upon as untapped but revenue generating markets for big corporations. The focus has been on bringing them into the consumption mainstream rather than empowering them to get out of their status quo. To uplift the people at the Bottom of the Pyramid, a Handout Approach will not work. What we need is a Handup approach powered by social innovation and sustainable livelihood creation.
The Handout Approach
The Capitalist View
CK Pralhad, in his famous book, The Fortune at the Bottom of the Pyramid, gives a capitalist view of looking at the 4 billion strong community at the BOP. He talks about how MNCs are essentially lifting the people out of poverty by providing them with goods that they can afford to buy, in turn citing BOP as a lucrative market for expansion and penetration.
As with any new path-breaking business concept, several multinational corporations instantly lapped it up and introduced products to chase revenue from this huge and untapped market segment. It’s been a dozen years now and the profit is still elusive to many corporations barring a few.
The reason is, large corporations have been under the impression that the people at the Bottom of Pyramid want freebies. Well, that’s not the case. Dr Neelam Maheshwari , Director of Deshpande Foundation says,
“Poor people do not want freebies. They are ready to pay whatever they can and just expect the service and accountability in return.”
The Government View
India is a welfare state and the government considers its task to provide the people at the bottom of the pyramid with education, healthcare, employment and other such means for living. However, the reality is that for past 70 years since independence successive governments have done a very poor job. The focus always was on treating the BOP as perpetual dependents on the state. It would be fair to point out that in last 4 years Central government schemes like Grameen Rozgar Yojana and Swarnjayanti Gram Swarozgar Yojana (SGSY) have boosted rural entrepreneurship.
The Charities’ View
Addressing the poor people at the Bottom of the Pyramid turned into a matter of pubic relations for most of the elite class. Religious and community based charitable foundations were set up to give free food, free clothing and free basic necessities to the needy. While the intentions are noble, that does not make the poor people self-sustained. It only makes them more dependent.
The Hand-up Approach
With 80 percent of its population in BOP, India houses one of the largest BOP market in the world, comparable only to China. Consulting firm Monitor Group conducted an extensive survey of 270 market-based solutions in India and found out that ‘only a small handful’- mostly well-known like the Grameen Bank and Aravind Eye Care, attained sufficient scale to transform a business model into a solution for the poor.
Social entrepreneurs create sustainable solutions. They look at people at the BOP as end users and design their products and services to solve their real life problems; Be that about access to digital learning or community healthcare or income generation and several others.
“A dairy farmer with many cows in his shed will buy a biogas plant from us if it can help him save money on expensive LPG. Whereas, a landless farmer will buy our product if it can help him generate income through sale of bio-fertilizer discharged from the plant.”
The very purpose of a social enterprise is to create interventions that help the people at the Bottom of the Pyramid live a dignified life and alleviate inequality and poverty in the society. The poor or the BOP community do not want freebies in the form of charity. What they want is a way of getting out of poverty.
Empowering The BOP
BOP can be positively impacted in two ways – One by solving its problems through innovative products and services and other by empowering it through livelihood opportunities by making its people into Producers instead of Consumers.
Let’s take a look at a scenario.
Imagine a BOP family of four – The Man, his wife, their two kids live in a rural area. They are Dalits and hence are deprived of any kind of land ownership. The man earns a handful of money by toiling on the farms of the bigger landlords for meager wages and the wife works as a domestic help on a need basis.
Living in a society that is marred by severe casteism, the family is kept away from any kind of community-level intervention. Because of this, they have no farmland, sparing access to education, electricity or know how. The older girl child cannot go to school as someone has to stay back and look after her baby brother.
Now, let us look at the solutions to this scenario and understand which one will actually make a difference to the family.
The family is able to afford 2 square meals, domestic goods like soap, rice, oil etc. as they benefit from government run ration shops and other subsidies provided by the Government. This will suffice them as long as the man and his wife have a job to do. Working in farms does not fetch good wages although the extent of work is huge. Landlords take all the opportunity to exploit them.
Does a handout by government really make a difference to the family? Did it change the mindset of the society around them? Did it send their children to school?
A for-profit social enterprise uses an innovative micro-finance model to enable the man to purchase a farmland along with 5-6 other farmers. Further, they help the group learn and indulge in community farming techniques whereby the profits are equally shared among them all. With farming as their main source, the farmers could earn an extra income by supplying the farm waste to biofuel companies and even sell their produce.
An additional initiative like poultry could help the lady work from home while looking after the child, therefore allowing the older kid to go to school.
In Solution 2, intervention by a social enterprise turned the BOP family into producers. Rural entrepreneurship gave them an opportunity to not only change their own socioeconomic status but also impact 5 more families around them.
People at the Bottom of the Pyramid should be empowered to challenge their status quo and beat poverty. This can only happen when they can participate in the economy as producers. Social entrepreneurs have a major role to play here.