Bottom of Pyramid in Education – Opportunities and Challenges

 

The concept of BOP has so far largely been confined to consumer goods markets while little or no attention has been paid to hitherto vital markets like education. Education is one among those promising sectors that can cater effectively and profitably too to the needs of the BOP market. Today, even people living in BOP are emphasizing on the value of education as a long-term investment. Therefore, business organizations who are interested to invest in education should take this as an opportunity. Free basic education and affordable technical education to the poor through public-private partnership is the need of the hour, as this can help the poor in terms of making better choices and proper allocation of resources. Corporates need not follow the herd mentality and need to devise unique strategies to play a significant role in bringing education closer to the BOP consumers and do it profitably too.

“BOP markets break our traditional ways of thinking and acting – their biggest allure and challenge alike. Unless we are willing to discard our biases, this opportunity will remain invisible and unattractive.”

– C K Prahalad, Management Guru

A common perception about the concept BOP (bottom of the pyramid) has been that it is all about offering FMCG products at affordable prices to the people lying at the bottom of the pyramid. However, it is not so as of late marketers have discovered that there is a huge market lying untapped. And education is one among those promising sectors that can cater effectively and profitably too to the needs of the BOP market. Experts say that low-income consumers require social and economic services, especially basic education.

What is behind this new thinking? The answer is not far to seek. Over the years, those at the top of the pyramid have focused on the poor by delivering charity. They have been donating money to the organizations that will do the best job of delivering services and necessities to those in need of food, potable water, health care, and education to those at the bottom of the pyramid. However, global aid has done little to elevate the poor from their lowly economic status, especially the education sector.

People living in the BOP are aware of the value of education as a long-term investment. Therefore, entrepreneurs who want to invest in education should take this as an opportunity, instead of leaving the weight of education on the government or non-government organizations (NGOs). The policy-makers in developing countries should note that poverty can be alleviated only through enhancing income generation of the poor and there cannot be BOP shortcuts. It is impossible to achieve miracles in the BOP market without improving the basics. Improvement in the quality of life of poor people and consequent economic growth are mainly driven by investment in education and generation of large-scale employment.

Education or Lack of Access to It?

The (NGOs) and other related organizations should focus on education for the poor, as governments in developing countries are unable to create opportunities for poor people. The poor, in fact, are vulnerable by virtue of lack of education.

They suffer because of lack of access to information and this lead to economic, cultural and social deprivations. Against this backdrop, the focus is now on what is called “inclusive education”. According to UNESCO (United Nations Educational, Scientific and Cultural Organization), “Inclusive education is a developmental approach to the learning needs of all children, youth and adults, especially those who are vulnerable to marginalization and exclusion”. Most importantly, the concept of BOP has so far largely been confined to consumer goods markets while little or no attention has been paid to hitherto vital markets like education.

Many experts feel that the economic pyramid model concept in someway ignores many fundamental elements of poverty alleviation and education is one such element. Education plays a crucial role in economic prosperity and quality of life of citizens of a nation. The success of East Asian countries such as Japan, Singapore, China and Korea, which have made large investments in basic education, in comparison with South Asian countries like India, Pakistan and Bangladesh, which boast of large BOP population, tells it all. Even the amazing rise of a nation like Singapore, which lacks resources possessed by some of the large countries like India and China, has grown tremendously due to its unstinted focus on eradicating illiteracy.

Inclusive Education – Need of the Hour

“Inclusion should not be viewed as an add-on to a conventional school. It must be viewed as intrinsic to the mission, philosophy, values, practices and activities of the school… Full inclusion must be embedded deeply in the very foundation of the school, in its missions, its belief system, and its daily activities, rather than an appendage that is added on to a conventional school.”

– Professor of Economics and Education, Teachers College, Columbia University.

Inclusive education “reflects the values, ethos and culture of a public education system committed to excellence by enhancing educational opportunities for all students.” Going by the recent studies by the World Bank and The World Economic Forum, entrepreneurs are realizing that there is a demand for private education services in the BOP. Even people in the BOP at the same time are also starting to “invest” in private education for their children. Private schools are taking the in poor areas that charge $1 or $2 a month and provide better education.

Why private schools are preferred over government schools for the BOP market? Private schools for the poor are superior to government schools as teachers are more committed, the provision of important inputs are better, and education outcomes better even after controlling for background variables. All this is accomplished for a fraction of the per-pupil teacher cost of government schools. And there is a greater need for more such initiatives.

According to the World Bank, underinvestment in education results in severe losses in economic growth and development. Given that, free basic education and affordable technical education to the poor through public-private partnership is the need of the hour, as this can help the poor in terms of making better choices and proper allocation of resources. It can provide the poor with the marketable skills and increased employment opportunities.

Research done by Prof. James Tooley, the winner of the Financial Times Gold Prize Essay suggests that there are many people in the BOP who are willing to invest their money in private education. The research from this professor found that “… a large majority of schoolchildren in selected poor urban and periurban areas of India and Sub-Saharan Africa using private schools, while in rural India, half of the schoolchildren are privately enrolled. Even in impoverished rural China large numbers of private schools exist off the official radar”. The research further reveal that “private schools for the poor are superior to government school teachers are more committed, the provision of important inputs are better, and education outcomes better even after controlling for background variables. All this is accomplished for a fraction of the per-pupil teacher cost of government schools”.

Business Schools – Training to Tap

The latest report from the Aspen Institute (of C K Prahalad and Stuart Hart), discovers that business school courses dealing with the “bottom of the pyramid” markets serving the world’s poor are growing exponentially in business programs around the world. Some of the leading B-Schools such as IESE Barcelona, North Carolina, Cornell, and University of Michigan have set-up BOP centers and offer MBA courses in this area. Today, BOP is the subject of a vigorous debate at business schools across the globe, whether marketing to the world’s poor can make a difference in people’s lives. Encouraged by Aspen Institute’s work, these institutions are showing the way to others to tap into opportunity called the BOP. According to Rich Leimsider, Senior Program Associate at Aspen suggests, “If business leaders are going to make a difference, then we need to approach them when they’re in a formative state. The idea is to get these future leaders, when they’re on campus, thinking about the world and their place in it”.

The goal of B-schools is not to convert all business students into microfinanciers, but rather to plant the seed, so that tomorrow’s leaders have an awareness of bottom of the pyramid issues. As Leimsider puts it succinctly, “There are too many business schools where the presumption is that your job is just to make money for yourself and your shareholders. So whether or not BOP is a way to change the world or not, we think it’s wonderful that the questions are being addressed.” according to the Aspen Institute’s biennial survey on BOP disclose that more and more business schools are instructing BOP material in their classrooms today than in the past. The survey attempts to give an overview of the pioneering coursework and teaching resources being used in this budding field as follows:

·         The BOP concept is being introduced into MBA classes in a wide range of disciplines like strategy, entrepreneurship, and business ethics etc.

·         Curricular integration of this theory is not just taking place in North American programs but also in top business schools in Asia, Latin America, Europe, and South Africa.

·         Business schools are using innovative approaches to promote the BOP concept. For instance, The Project Pyramid Case Competition, of is a unique concept offered by Vanderbilt University’s Owen Graduate School of Management.

BOP Market – 12 Innovative Principles

C K Prahalad, in his book, “The Fortune at the Bottom of the Pyramid: Eradicating Poverty through

Profits” has suggested some 12 principles of innovation for BOP marketers. They are:

• Companies need to focus on price performance of their products and services

• Innovation requires hybrid solutions

• Operations in this market must be scalable and transferable across different markets

• Sustainable development: Eco-friendly; focus on conserving resources

• Identifying functionality, how the BOP market is different from developed markets?

• Process Innovation

• Deskilling of Work

• Education of customers about product usage is a key factor

• Designing for hostile infrastructure

• Interfaces

• Distribution: Accessing the customer

• BOP markets essentially allow us to challenge the conventional wisdom in delivery of products and services.

Source: The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits.

Even corporates are joining the BOP bandwagon. Since the poor lack income to finance technical education, easy availability of educational loans as well as governmental interventions such as education subsidies can be useful. Private sector is actively participating in literacy missions. For instance, One Laptop Per Child association (OLPC), of the Massachusetts Institute of Technology (MIT) is one classical example to uplift the education among the world masses. Followed by another example, The Children’s Machine project and the construction of the XO-1 “$100 laptop.” This project was funded by a number of sponsor organizations, including AMD, eBay, Google etc. likewise there are many good example are there. These examples indicates that the increasing role of corporate in education sector.

Doing it Differently

The BOP doctrine argues that multinational companies can make fortunes by selling to poor people and simultaneously help eradicate poverty. They should join governments, especially in low-income countries to remove uneven access to quality secondary schooling. The governments of developing countries should emphasize on raising the quality and quantity of schooling. It’s time that they need to intervene directly to encourage the rapid diffusion of technology which attributes to market innovation. However, Alan Gelb, Chief Economist of World Bank warns, “Although direct interventions have sometimes been associated with some important technology successes, in many instances they have not. Policies that have succeeded have tended to make subsidies conditional on performance and put in place high quality and independent-of-industry oversight systems.”

On the other hand, after realizing the potential of largely untapped market, companies are coming out with innovative ways to serve the market. These include from the model of co-operative and inclusive growth, followed by companies like Amul or SEWA, to Hindustan Unilever’s Project Shakti, which is a unique program that provides micro-enterprise opportunity to rural women in remote villages, making them entrepreneurs and in the process increasing its rural reach phenomenally. To conclude, corporates need not follow the herd mentality and need to devise unique strategies to play a significant role in bringing education closer to the BOP consumers and do it profitably too.

N Janardhan Rao, Senior Economist.