C.K. Prahalad turned the spotlight of management thinking to the poor and the Third World
In October 2007 a series of wildfires broke out across California, endangering the lives of its inhabitants. A state of emergency was declared and the authorities started evacuating people. But even as the fires raged dangerously close to his neighbourhood, it was business as usual for one San Diego resident. He quietly packed his bag and took a flight out to Houston and then to Atlanta. He had more pressing business to attend to than bother about his house burning down. The man was C.K. Prahalad. And he was going to speak at the TiE chapters (a global non-profit entrepreneurship organisation) in Atlanta and Houston, something he always did for free — even paying his own hotel and travel expenses. His close friend and TiE Global CEO Suren Dutia told Prahalad that he could have always addressed TiE later. Prahalad said, “Suren, I had made a commitment. I have to keep my word.” That was C.K. Prahalad for you. Commitment meant more than his own well-being.
Throughout his life there was an intriguing aura around Prahalad. He wasn’t a very flamboyant speaker. He never resorted to antics on stage. He spoke with a deadpan expression, and little voice modulation. He rarely smiled — and almost never when he posed for pictures. But when he spoke, the audience was mesmerised. Bill Fischer, professor at IMD (Switzerland) and a former professor at CEIBS Shanghai, recalls the time Prahalad addressed a corporate conference at CEIBS in 1999. “I vividly recall his statement, ‘Let’s assume for a moment that having a lot of poor people is an advantage, rather than a disadvantage’,” says Fischer. “For me and a lot of others present there, this was the one moment when all the lights just go on!” This was years before Prahalad coined the term bottom of the pyramid (BoP).
Vijay Govindarajan, professor at Tuck School of Business at Dartmouth College, recalls being intimidated by Prahalad in 1974 when he had just stepped off the plane at Boston’s Logan Airport. Prahalad, who was pursuing his doctorate at Harvard at that time, had come to receive him. To kill time, Govindarajan casually asked him, “So what keeps you busy?” Once Prahalad finished telling Govindarajan about all the books and case studies he was working on and also the half-time job he was doing, the latter was a bundle of nerves — unsure if ordinary students like him were good enough for Harvard.
But Prahalad was the exception rather than the rule. He was destined for stardom, something that had become very obvious during his Harvard days. Prahalad’s doctoral thesis was on multinationals and how they do not need to choose between economies of scale (which lowers costs) and local responsiveness (which provided differentiation). Govindarajan recalls, “At that time, Mike Porter was the emerging star who argued that low-cost and differentiation are inconsistent strategies and they cannot be pursued simultaneously. C.K.’s thesis proved Porter wrong.”
After finishing his doctorate at Harvard, Prahalad went back to his alma mater IIM-Ahmedabad to teach. He was a popular professor — and often got higher ratings from students than some older, established colleagues. But India just didn’t offer the kind of research environment his restless mind yearned for. Rumour has it, Prahalad was also a victim of politics at IIM-A, orchestrated by jealous colleagues. Disappointed, in just about two years, he packed up his bags and left, something that some of his then IIM-A colleagues still feel rueful about.
It was during his doctorate at Harvard that Prahalad met his French classmate Yves Doz. The two got along like a house on fire. This was the beginning of a long partnership that would later create a seminal piece of work — a book titled ‘The Multinational Mission: Balancing Local Demands and Global Vision’. It catapulted Prahalad into the galaxy of emerging management thinkers. Prahalad also picked up a quirk from Doz that would stay with him for the rest of his life — an appreciation for fine wines.
In 1981 Prahalad, who was now teaching at Michigan Business School (now the Stephen M. Ross School of Business, University of Michigan), met Gary Hamel a doctoral student. Their collaboration led to ‘Competing for the Future’, another seminal piece of work which put the spotlight on the idea of core competence and strategic intent.
But the one book that really set him apart from the others was ‘The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profit’. The book offered a radical new way for companies to look at doing business with the poor. The book, which is into its fifth anniversary edition now, scorched bestseller charts as companies like Hindustan Unilever implemented his concepts. Till date, everyone concurs that this is Prahalad’s most influential piece of work. “Amongst his many contributions, he will be singled out for his work on the bottom of the pyramid. Who would have thought that you could fight poverty profitably?” asks Bala Balachandran, Professor Emeritus of Accounting Information & Management, Kellogg School of Management, and an old friend of Prahalad’s.
A lot of students flocked to Ross only because of Prahalad — his course was always oversubscribed. Blair Miller, a Ross MBA and currently Fellows Manager at Acumen Fund, always wanted to work in the social sector but as she points out, in a business school the trend is more in favour of corporates. “When you are in B-school, you are told to go to a McKinsey or some such company. For people like me, there was a certain comfort in having him there,” says Miller. She recalls her first meeting with Prahalad in her first year when she told him that she came to Ross specifically to study BoP business models. That let loose a barrage of questions. Prahalad asked her everything from her background to her experience in the field. He was critical of people who did lip service in that area. When she met him again next year — after finishing a summer project in micro health insurance in India — she won his admiration.
Unlike other thinkers in his league, Prahalad did not let his superstar status go to his head. Naren Bakshi, founder of companies like Versata and JumpStart, served on the global board of trustees for TiE for five years. During one of the interactions with entrepreneurs, Prahalad walked up to Bakshi and said, “Naren, remember I am just a professor. I am just talking theory, you guys know a lot more.” Says Bakshi, “He knew his limits. He recognised that intellectually there is a difference between practice and theory.” That same humility helped him deal with the most spectacular failure of his life.
In 1982, Prahalad met Ramesh Jain who was a professor in Michigan University’s engineering school. Some years later Jain moved to University of California at San Diego. One day Prahalad stopped by his lab. Impressed with the work he was doing, he said, “You and I have to start a high-tech company on this idea.” This would be Jain’s third start-up and Prahalad’s first. A couple of days later he called Jain and said, “I have a name for our company — Praja.”
Jain, who became CEO, was the tech whiz and Prahalad the business guy. He took a year’s leave from Michigan and moved to San Diego where he was a very active executive chairman working with the team on product ideas and marketing strategies. Praja created a product that was like a dashboard for execs — which in simple terms allowed the management of a multinational company to see what was happening in various locations and figure out what the problems were. “CK’s biggest strength was that he was a very critical thinker,” says Jain recalling those early brainstorming sessions. “He could look at a problem and understand what that problem was and how to solve it. These ideas could be intellectually very bold.”
But Prahalad’s biggest strength — of big bold thinking — couldn’t help Praja. When the executive dashboard was to be launched, Prahalad wanted to do it simultaneously in South America, Europe and US. “But we were a small start-up — we just didn’t have the resources to do that,” says Jain. Prahalad’s stature did open many doors — so the small start-up was suddenly dealing with big potential clients like GM.
Praja had barely taken off when the Internet went bust. Prahalad and Jain tried to salvage the situation by putting in more of their personal money. But the companies weren’t biting — Praja’s product cost between $200,000-$300,000. No one was willing to invest that kind of money. Part of the skepticism from the clients’ side came from whether Praja would still be around a few years from now. “It was such an expensive software. Normally these companies would have partly invested in us but they didn’t because of the Internet bust,” says Jain. “When nothing worked we decided to move on.”
It was very hard decision. Prahalad put up a bold face though personally he was devastated. So far, he had been associated with successful companies but here was a case where he had failed — and miserably at that. Eventually Praja was sold off to Tibco and both Prahalad and Jain returned to their flourishing academic careers.
The Prahalad we all know was a serious, no-nonsense guy. But he had a soft side too. During his stay in Ahmedabad he met Gayatri, who was studying psychology at that time. The two fell in love and decided to marry each other. But the families opposed this. It is said that the love affair went on for five years and they both made it clear to their parents that they would marry each other and no one else — but only after the parents approved. Both sets of parents relented. Prahalad was hopelessly in love with Gayatri. Says Jas Grewal, a close friend of the Prahalads and Dutia’s wife, “He had a very special relationship with his wife. All you had to do was see them together and the way he looked at her — you just knew how deeply they loved each other.” Gayatri proved to be an able companion through the years. “It was not easy to cope up with C.K.’s hectic lifestyle. But Gayatri was a very supportive wife. They say that behind every successful man there is a woman — in this case it was more than 100 percent true,” says Jain. In the last few years, Gayatri had started accompanying Prahalad a lot more so that she could take care of him.
Prahalad rarely smiled. But when he saw his grandchildren — five-year-old Arjun (his daughter Deepa’s son) and three-year-old Nithya (his son Murali’s daughter) — “his face would just light up”. He made sure that he spent quality time with both children. Ironically, Prahalad’s third grandchild was born in the first week of April — a time when he was already battling against his illness.
Prahalad loved his wines and had a huge collection. Recalls Jain, “Each time we went to a restaurant together and the waiter brought wine to the table, C.K. would reject 3-4 of them till he found the perfect one.”
Prahalad had a huge interest in Indian art, particularly Chola bronzes. When he first met Grewal at a common friend’s wedding, he was struck by the fact that she was a trustee with the San Diego Museum of Art. Thereafter he chose to spend the rest of the evening with her discussing art. “He said that we as a culture should value our art,” says Grewal. Apparently, he even lugged an old temple door all the way from India to his San Diego home.
Even as he struggled with the disease, commitment was Prahalad’s top priority. Stuart Hart, S.C. Johnson Chair in Sustainable Global Enterprise, Cornell University, authored the first article on BoP with Prahalad. Hart and colleague Ted London are working on a new book focused on the future of BoP business. Prahalad was one of the key contributors to the effort. “Knowing that he was in a fragile state, we gently inquired as to the status of his chapter for the book. One week prior to his passing he emailed, ‘You have probably given me up for dead. Yes I was there… I am in ICU in Scripps for the last 16 days and I am now stable but not recovering fully yet…Good view of the Torrey Pines golf course and ocean from my room. I do not know whether you still want my piece. If you go forward without it I will understand. But if you change your mind, I need the help of a scribe. Let me know. Warm regards CK’. Paradoxical to the end; and that was the final word,” says Hart.