Reaching the Real Bottom of the Pyramid.

An article from the Stanford social Innovation Review discusses the concerns of market based solutions that focus on targeting consumers at the bottom part of the social pyramid. Such ideas had been advocated in Prahalad’s book and writings on serving the poor profitably. Concern related to the potential success of such strategies is based on new thinking in the field of the endogenous growth models of new economic growth theories.

A research working paper article written by Jean-Louis Warnholz, investigates the validity behind the initial assumptions made about the amount of purchasing power commanded by the so-called dormant market of societies at the bottom of the pyramid. The finding of the article was that the assumptions of large amounts of monies commanded by BoP communities, was in fact based on flawed surveys on the distribution of income within less developed countries. Thus, attempts to penetrate these markets have not been successful.

An emerging alternative for reaching those at the BoP more meaningfully was covered in article published in the Economist on August 12 2010. The article discusses the hope by British and American Governments that partnerships with social entrepreneurs can help societies at the bottom of the bottom of the pyramid out of underdevelopment traps. The partnerships envisage crucial collaboration between civic society, the public sector and the private sector. A recent development has been based on providing social venture capital for improving education opportunities in less developed countries.

This raises the question, how can venture capital begin to develop a sustainable demand through creating employment for those at the bottom of the Pyramid?