Tuesday 23 February 2010

The Base of the Pyramid is a Lie

The “Base of the Pyramid”. I want you to take a moment and picture it. What did you imagine? Be honest with yourself. A billion vulnerable souls in different environments, many of them inexorably losing their struggle against brutal realities… OR… a triangular pyramid; a textbook line drawing?

Of all the jargon in the social sector this is the one I hate the most. It reduces people to statistics, vast complexity into a homogenous group, raw reality into emotionless concept, and human beings into a neat simplification: The fabled ‘fortune’, the market, at the base of the pyramid.

The thing is that the base of the pyramid is a nonsense on two counts.

1. It is not a pyramid.

Here’s how it really looks: 1bn high income. 2.5bn middle income.1.5bn low income. 1bn extreme poor. (see Jeffrey Sachs, End of Poverty)

The last group are people who, for example, cannot even afford the $1 a day needed for the life saving AIDS treatments that Cipla provides.

Global Wealth Distribution 

2. It is not a market.

The so called market that many social enterprises and social investors are chasing is not at the base, but somewhere in the middle. The market that allows social enterprises to be viably self-financing and which is being targeted by social investors, is not the bottom billion, but the middle four. This is where, for example, the microfinance entities make their profits, and where you can sell technological or service innovations that address social need at costs that fit available income. At the bottom, no social ‘enterprise’ is going to work. The bigger challenge is to keep people alive in the face of conflict, and famine, and AIDS.

Market for Social Enterprise 

Maybe this area of focus for social entrepreneurs should be called the 'Middle of the Michelin Man’ or the ‘Middle of a Weirdly Shaped Top Heavy Ball’ but of course that would be stupid and dehumanising. But not any more than the base of a hypothetical pyramid that isn’t.

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