Tag Archives: Wealth Base of the Pyramid

Constructive capitalism (organizational model)

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I'm of the opinion that the business model that best fits the values espoused by Constructive capitalism is what brings together the power of business to the power of philanthropy. This is a thesis that is based on work:

Muhammad Yunus, Nobel Peace 2006, which made access to credit to people who, hitherto, was denied this possibility, triggering a wave of social entrepreneurship, previously, difficult to imagine.

C. K. Prahalad who presented case studies proving the acquisition of wealth, by organizations that were able to create business models that have been meeting the real needs of populations that are the foundation of the social pyramid. simultaneously, Prahalad argued that only able to improve conditions of people in the bottom of the pyramid, if there is a market capable of generating wealth, Wealth Base of the Pyramid.

Jacqueline Novogratz that, in 2001, fundou o Acumen Fund. Project combining compassion (characteristic of charitable projects) rigor of the management (they must have a project geared to succeed in the capitalist market), support (through the patient capital) business projects that are able to transform the realities of millions of people who are at the base of the pyramid.

TOMS Shoes (Tomorrow shoes). This is a good example of how the power of business can help solve social problems. Blake Mycoskie, created a company that for every pair of shoes that sells, provides a pair, children who lack financial resources to buy.

Thinking about new models

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Thinking about new models is the task of us all. My last post, was about the model of wealth at the base of the pyramid, and opportunities within it. Lately I have been thinking, that the current crisis we are experiencing, calls for a new model: middle to base!

Nowadays, many people who previously qualified as middle class, are living a new reality, their purchasing power has fallen. Perhaps the easiest answer from all of us is – They have to stop buying unnecessary things!

However, I believe this new reality deserves a more thoughtful response. I think that people and organizations should join efforts to create innovative solutions in providing products and services that consumers have experienced (and liked) but, if they continue to be offered (only) in ancient manners (achieve maximum profit without worrying about people reality ), they will not be able to buy.

If not, I believe that all those who sell products / services that might be considered superfluous will, sooner or later, stop selling them.

Stop, think and construct

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Stop, think and construct! This motto has accompanied my recent thoughts, because of the book I've read lately (Wealth Base of the Pyramid), as well as, the situation that we currently live in Europe.

I have a passion for business and for business education (in practice), which leads me to read many books written by academics and entrepreneurs, that study business practices, and share with us (experiences from different organizations) what is best made in terms of adequacy to the reality of the business world we live in.

The Book of Prahalad, that I quoted above, is fantastic! Having been first published in 2005 (I read the edition is 2009, with the results of projects that reports up to date), shows us the existence of a new world of opportunities for organizations who can stop to think:

Who are (or they may actually be) their main customers
what their needs;
What business models that will create to meet those needs
How able to engage people in the co-creation of highly profitable business models (not only for the money they can generate, but especially the social impact that may cause).

Despite the recent Forbes list indicate that the number of billionaires has increased in the last year, the number of people living on very low incomes is disproportionately higher. According to Prahalad, these people who are part of the base of the pyramid, and are completely outside the capitalist system as we know it, can only overcome this situation by creating sustainable businesses (that can not be adaptations of models in use in countries and to people of totally different realities) and allowing access to high quality products at a price lower, a larger number of consumers.

Against this panorama, I have no doubts in stating that it is the duty of us all, stop to think and build a new model of capitalism, that focuses on people and our responsibility to change our lives!