11.08.2007

Porter, Prahalad, and the Poor

It probably won't surprise you for me to tell you I'm a fan of Michael
Porter and C.K. Prahalad. Both of these management gurus, in their
own special ways, advocate doing business and not charity in the most
economically disadvantaged places in the world. Porter argues that
America's run-down inner cities actually have a number of competitive
advantages that make them attractive places to site business activity.
Prahalad argues that multinational corporations that figure out how
to make money in the most impoverished countries stimulate themselves
towards the kind of innovation necessary to thrive in today's economy.

Far from offering a handout that only further marginalizes and
segregates, these business approaches offer participation that leads
to products needed by impoverished consumers and activity needed by
impoverished businesses. One might wonder if it is the for-profit
sector, and not the non-profit sector, that can have the biggest
impact on alleviating poverty around the world. In fact, there is a
groundswell of interest in achieving traditionally non-profit aims
with for-profit mechanisms: witness Google.org, which is for-profit
because the lost advantage of avoiding taxes is offset by the ability
to form partnerships with venture capitalists, fund start-up
companies, and lobby Congress.

Who knew that management gurus like Porter and Prahalad or tech mavens
like Brin and Page had so much to offer on behalf of the 3+ billion
people in the world who live on less than two dollars a day? And who
knew that it would be not by offering one-way charity but by engaging
in two-way commerce?

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