The guru who wanted managers to climb mountains, not molehills

The news of C.K.Prahalad’s death came just when this journal was going to press last month, so my tribute to him has had to wait. Newspaper obituaries of one of the world’s most influential management thinkers have referred to how “over the last three decades he launched radical new ideas which would soon become conventional wisdom” and to how he “had the rarest of combinations: deep insights coupled with compassion and practical relevance”. In the Harvard Business Review Adi Ignatius has written how Prahalad was Bill Gates’ immediate choice of a panelist at a 2008 discussion on “creative capitalism” —  Gates’ idea for spreading the benefits of capitalism to the billions who have been left out.

I do not have the luxury of space, nor, honestly, am I qualified to write in detail about Prahlad’s work, more so because he was so prolific, writing intelligently about so many subjects. I shall thus touch briefly on what might be of special interest here. Replace “India” with “Mongolia” in the following quote from him and you will see what I mean: “India has got independence, but we haven’t got freedom. Just like the leaders who fought for independence, entrepreneurs are the freedom fighters again. Only making available world class services to all would help India prosper.”

People who know India will appreciate the efforts it took for a boy who began his studies in an indifferent school in a small town to stand tall in groves of academe. He was modest enough never to cite himself, but often said history is full of examples of greatness sowed in the vision for a child when the family could ill afford even the basic necessities. The essence of a strategic intent (or vision) is that it works in an “opportunity-backward” manner, not a “constraint-forward” manner. In other words, the act of strategic intent disregards the scarcity of resources in the present. The style of thinking changes from a “budgeting” orientation to an “innovation” orientation. Why does a compelling strategic intent provoke an innovative response? Because people are drawn to challenging goals. Deep inside, we feel uplifted by the thought of climbing a mountain in a way we are not by the idea of scaling a molehill.

Prahalad was the same age as I and I wonder if his celebrated 1990 article (with Gary Hamel) that coined the term “core competencies”, was not brought about by our adolescent and perhaps shared amazement and admiration as we watched  Indian companies wanting to do anything. Whereas companies in the West shed unrelated activities, Indian business houses routinely entered new and unrelated industries as though it were a “flavour of the year”. Now we know it to have been actually a failure to focus. Maybe this is true here also, stopping businesses from stressing on core competences and identifying competitive advantages, succumbing to the easy temptations of diversification. I am aware that the matter deserves more careful analysis which will possibly find me wrong.

Prahlad lived and worked in the USA and travelled all around the world, but never lost touch with India where people looked forward to hearing his wise, assured, and often blunt words of insight. During a talk on “creative capitalism”, he said the movement will not go forward if the stories from the poor countries are always those of poverty and corruption.
He urged large Western companies against trying to impose their models of commerce on developing countries, and to shed their narrow and often arrogant perspective that tended to see countries simply as targets— agglomerations of would-be consumers hungry for modern goods and services. This “corporate imperialism” has distorted the operating, marketing, and distribution decisions multinationals have made in serving developing countries. Principally, companies have tended to target small segments of relatively affluent buyers—those who most resemble the prototypical Western consumer. They have missed, as a result, the very real opportunity to reach much larger markets further down the socioeconomic pyramid. Succeeding in these broader markets requires companies to spend time building a deep and unbiased understanding of the unique characteristics and needs of developing countries and their peoples. This would also allow them to tap emerging markets as a source of technical and managerial talent for their global operations. 
Carrying this argument farther in the both brilliant and humanitarian “The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits”, Prahalad showed how the world’s poor could and should be a valuable market. This changed forever the way global corporations view emerging markets, and helped improve quality of life for countless underprivileged people.

Asserting that we are constrained less by resources than by imagination, Prhalad said the real source of market promise is not the wealthy few in the developing world, or even the emerging middle-income consumers. It is the billions of aspiring poor who are joining the market economy for the first time. This market at the bottom of the pyramid could be co-created by MNCs and domestic industry, NGOs and most importantly, the poor themselves. Stimulating commerce and development at the bottom of the economic pyramid will not just radically improve the lives of billions of people, but will also help bring in a more stable, less dangerous world. He did not see this as global charity. Companies will be acting in their own self-interest, for there are enormous business benefits to be gained by entering developing markets. In fact, many innovative companies are already serving the world’s poor in ways that generate strong revenues, lead to greater operating efficiencies, and uncover new sources of innovation. Technology, including upgradation and replacement of obsolete ones, will, thus, be crucial to the efforts.

If he were lecturing here, he would say the distinction between Ulaanbaatar and the rural provinces are just not there any longer. Connectivity has created a link that bridges the two, drawing a curtain upon the past. All that rural should mean is that logistics is a little more cumbersome and expensive, nothing more.  See how cell phones have penetrated remote areas in Mongolia. If the telecom boom can happen, what stops us from achieving similar success in other areas? Underprvileged people are not statistics to be lent a hand to cross the poverty level; they have to be treated with respect as consumers. As soon as the power of choice is conferred upon the poor, they would be able to take a thoughtful economic decision.

Prahlad  always said he aimed to show how globalisation, connectivity, inclusive growth, and sustainability were inextricably linked. Globalisation means nothing if it does not include more people. As soon as you include more people, it’s going to impact sustainability. And, as soon as you have connectivity, people are going to be more informed. It is  this intersection of the four that’s going to create the next opportunities for management, the next opportunities for humanity in general.

For Prahlad, it was essential that there was collaboration among the public and the private sectors, small and medium enterprises and society at large. Always assuming that we have to invest in everything makes investment a constraint and we must start looking at collaborative capacity as a substitute for investment capacity. 

Prahlad exhorted businesses to uncover the immense possibilities at the bottom of the pyramid, not only because of the latent business opportunities, but because of his conviction  that this was how the poor could be uplifted, and also how businesses could win the legitimacy and trust that they deserved. His contention was that business interests and the interests of society could be intertwined, and doing business and doing good did not have to be two distinct initiatives.
This is something he said all his life. His very first column was drawn from a lecture he had delivered to his students in 1977, outlining the duties of the “responsible manager”. It laid out his thoughts so succinctly that he made it his annual last lecture for the next 33 years — without changing a word. Indeed, it’s a timeless call for managers to be the best they can. “Leadership,” he concluded, “is about self-awareness, recognizing your failings, and developing modesty, humility, and humanity.”