BASE OF THE PYRAMID

SEIZING THE POWER of a new technology called radio to address Americans during a term in office marked by the Great Depression, President Franklin D. Roosevelt in April 1932 emphasized the need to help those “at the bottom of the economic pyramid.”

In the mid-1930s, the U.S. population of 130 million was poor, uneducated and without hope. Unemployment was 25 percent in 1933 and didn’t drop to single digits until the U.S. entered the war in 1941. Only one-third of Americans were high school graduates then, and millions depended on farms for subsistence.

The grip of today’s financial crisis impacts our way of life, yet it is a far cry from the way things were 75 years ago. For those who had very little, even before the fall of the stock markets, however, circumstances always have been dire.

Nearly half of the world’s population lives in acute poverty. Throughout the world, almost four billion people form what is referred to as the base, or bottom, of the economic pyramid (BoP), a term referring to people earning less than $4 a day—a vast share of humanity ignored by global markets. While individual incomes for BoP consumers are low, in aggregate they have a cumulative buying power of $5 trillion a year.

A growing sentiment is that impetus for social change, as well as simple economics, will drive the development of engineering projects that serve the BoP in developing countries in Asia, Africa, and Latin America.

Stuart Hart, the S.C. Johnson Chair of Sustainable Global Enterprise at Cornell University’s Johnson Graduate School of Management, and C.K. Prahalad, now a distinguished professor at the University of Michigan Ross School of Business, in 2002 co-authored the pathbreaking and thoughtful article “The Fortune at the Bottom of the Pyramid,” which provided an analysis of ways business could profitably serve the needs of the four billion poor in the developing world. It remains a roadmap for uniting the ambitions of profit and sustainability.

Hart and Prahalad suggested that businesses, governments, and donor agencies stop thinking of the poor as victims and start seeing them as resilient and creative entrepreneurs as well as value-demanding consumers.

For engineers, the developing world can be an ideal incubator for technology innovations. Albeit not free of barriers, sector markets for four billion consumers range from the relatively small (water, $20 billion; and information and communication technologies, $51 billion), to medium markets (health, $158 billion; transportation, $179 billion; housing, $332 billion; and energy, $433 billion), to large markets, such as food ($2,895 billion).

A study prepared for ASME’s Strategic Issues Committee, “Engineering Solutions for the Base of the Pyramid,” notes that engineers will be asked to devise cost-effective ways to increase access to food and clean water, effective sanitation, energy, education, health care, affordable transportation, and revenue-generating activities to this underserved population.

Engineers today are called to the profession both by the lure of technology and by an inspiration for social good. Focusing on those at the base of the pyramid attains both.

Next month: The role of engineers and ASME.

—John G. Falcioni, Editor-in-Chief
He can be reached by e-mail at falcionij@asme.org