Tata Centre for

Technology and Design

IIT Bombay

Tata Centre @ IIT Bombay

MGN 629 Pro-Seminar I (6 credits)

Autumn Semester: Institute Elective
Shailesh J. Mehta School of Management
Instructor:
Shishir K. Jha [skjha9@gmail.com]
Co-instructor:
Arti Kalro [kalro.arti@iitb.ac.in]
Post Doctoral Fellow:
Disha Bhanot [disha.iitb@gmail.com]

Introductions

Tata Centre Areas Of Research And Project Activity

Agriculture & Foo Water

d
Energy
Housing
Waste Manageme
nt

Education
Healthcare

Design

TCTD

Technology
Management

Political Economy Of
Development

Enveloped By Social, Political, Economic and Environmental

Crisis:
1. Escaping The Drudgery Of Everyday Life:
Who will build India, if all we want to do, through our
education, is to
continuously escape from the
everyday drudgery?
2. Economics, Politics Or Business Is Basically A Struggle
Over:
making choices under conditions of constraint or
scarcity
4. Ram, Radha and Rupa struggle over a flute:
[libertarian, egalitarian, utilitarian schools of thought]
5. India as a developing country:
a) impact of colonialism
b) lack of resources for development

Can The Acquisition Of New Knowledge Be Threatening To One's

Self Understanding?
Education is everywhere 'sold' as an escape from the emasculating
drudgery of everyday life.

Family, friends and society therefore ecstatically calculate the big

But
one
cannot
quite
package waiting at the end of the 'education' rainbow.
escape the 'drudgery' of
everyday
life.
Serious
education
makes
one
really grapple with the
everyday 'conditions.
Therein lies the fascinating
internal battle between
wanting to hold onto an
intense desire for 'escape'

Epistemological Crisis
Why are we [mostly] unable, and sometimes,
unwilling to understand the
requirements for those at the BOP?

problems

and

How do we give Value to the various kinds of

knowledges [techinical, experiential, etc.] that we
have and many which we dont have? [Article from
HT]

Need to examine the power relations that is at the

heart of our so called Knowledge apparatus.

Epistemological Crisis: Power

Relations

Power infects all forms of knowledge structures

Questions: knowledge for whom, for what, towards what end?

Any questioning/knowledge that deepens our understanding of
the unknown other requires taking a RISK.

All knowledge creates some form of ethical engagement

[knowledge can/should aim to transform our world views].

Choice: When questioning takes one to the root of any

problem, then a choice is usually made:
either one has the courage to go ahead, immaterial

of the difficult or

unpalatable conclusions that may result

or one attempts to foreclose the questioning process itself [science is filled
with discoveries around anomalies].

Crisis of Globalisation

Flat or falling incomes in advanced economies (Poorer

than their parents)

Between 65 - 70 % of households in 25 advanced economies,

the equivalent of 540 mn. to 580 mn. people, were in segments of
the income distribution whose real market incomeswere flat or
had fallen in 2014 compared with 2005.

This compared with less than 2% [or fewer than ten million people]
who experienced this phenomenon between 1993 and 2005.

Todays younger generation is at risk of ending up poorer than

their parents. Most population segments experienced flat or falling
incomes in the 200212 decade but young, less-educated workers
were hardest hit.

Nearly a third of those who felt they were not advancing

expressed negative opinions about trade and immigration.

If the slow growth conditions of 200512 persist, as much as 7080% of income segments in advanced economies may experience
flat or falling market incomes to 2025.

Indian Rural Economy

Three-fourths of all rural Indians individually earn less
than Rs 5,000 per month.

Nine out of every ten rural households have no

member earning more than Rs. 10,000 per month.

Over a third [38.3%] of rural household own no land

and earn a majority of their income from manual casual
labour.

Another 30 % of households own un-irrigated land.

A massive urbanization in emerging markets 65
million additional people a year are moving to the cities. It
is 10 times as fast and at 300 times the scale of the British
industrial revolution.

Statistics on South Asia/World:

South Asia is home to 1.6 billion people (or 22 per cent of humanity).
Its share of global real income is 6 %; its per capita GNP is lower than
any other region in the world, with > 600 million people surviving below
the absolute poverty.

The region holds 46% of the world's illiterate population, over twice as
high as its share of the world's population.

There are more children not attending school in SA than anywhere else
in the world, & 2/3rds of this unfulfilled generation is female.

SA suffers the highest depravation: 260 mn. people lack access to basic
health care, 337 mn.
lack safe drinking water, 830 mn. have no access to
basic sanitation facilities, & over 400 mn. go hungry every day.

Yet, election after repeated election in India it is those who are at the
BOP who vote in
much higher percentages than those at the TOP.
Year 1960
2000
Income of richest 20%
70% (2.3%)
85% (1.1%) (Income of poorest 20%)

Economics, Politics Or
Business
Is Basically A Struggle Over
____________

Economics, Politics Or
Business
Is Basically A Struggle Over
making choices under
conditions of constraint
or scarcity

Arguments and Theories

Can you decide which of the three children Ram, Radha, or Rupa
should get a flute over which they are quarrelling?

Rupa claims the flute on the ground that she is the only one of the
three who knows how to play it [the others do not deny this].
Utilitarian School

Ram defends his case by pointing out that he is the only one among
the three who is so poor that he has no toys of his own [the other
two concede they are richer]. Economic Egalitarian School

Radha points out that she has been working diligently for many
months to make the flute with her own labor and just when she had
finished her work she complains that these expropriators came
along to try to grab the flute away from me. Libertarian School

A Brief History:
Why Are We Called Developing

As
ia

r
nt
e
C al

i
er
Amca

Africa
Latin
Ameri
ca

British Colonial Empire

The Conquest Of America

Tzvetan Todorov:
Recall that in 1500 the world population is approximately 400
million, of whom 80 million inhabit the Americas. By the middle of
the sixteenth century, out of these 80 million there remain ten.
Or limiting ourselves to Mexico: on the eve of the conquest, its
population is about 25 million; in 1600, it is one million.
If the word genocide has ever been applied to a situation with
some accuracy, this is here the case. It constitutes a record not
only in relative terms (a destruction on the order of 90% or more)
but also in absolute terms, since we are speaking of a population
diminution estimated at 70 million human lives. None of the great
massacres of the twentieth century can be compared to this
hecatomb.

http://hrsbstaff.ednet.ns.ca/mwebb/maps_of_the_transatla
ntic_slave.htm

Global Incomes Since 1700

S
H
A
R
E

45

O
F

30

W
O
R
L
D
I
N
C
O
M
E

40
35

25
Europe

20
15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Global Incomes Since 1700

S
H
A
R
E

45

O
F

30

W
O
R
L
D
I
N
C
O
M
E

40
35

25

Europe
US

20
15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Global Incomes Since 1700

S
H
A
R
E

45

O
F

30

W
O
R
L
D
I
N
C
O
M
E

40
35

25

China
Europe
US

20
15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Global Incomes Since 1700

S
H
A
R
E

45

O
F

30

W
O
R
L
D
I
N
C
O
M
E

40
35

25

India
Europe
US

20
15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Global Incomes Since 1700

S
H
A
R
E
O
F
W
O
R
L
D
I
N
C
O
M
E

35
30
25
20
China
India

15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Global Incomes Since 1700

S
H
A
R
E

45

O
F

30

W
O
R
L
D
I
N
C
O
M
E

40
35

China
India
Europe
US

25
20
15
10
5
0
1700

1820

1890

1952

1978

1995

Year

Year

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

Impact of Colonial [European] States On Global Development:

Distribution of World Income: 1700-1995
_______________________________________________________
Year >>
1700
1820
1890
1952
1978
1995
_______________________________________________________
China
23.1
32.4
13.2
5.2
5.0
10.9
India
22.6
15.7
11.0
3.8
3.4
4.6
Japan
4.5
3.0
2.5
3.4
7.7
8.4
Europe
23.3
26.6
40.3
29.7
27.9
23.8
US
1.8
13.8
21.8
21.8
20.9
Russia
3.2
4.8
6.3
9.3
21.8
2.2
___________________________________________________________________________________

Chindia 45.7

48.1 24.2

9.0

8.4 15.5

Source: Angus Maddison, Chinese Economic Performance in the Long Run, OECD, Paris, 1998

THE GLOBAL INDIAN CHALLENGE

India literally has no comparative model of development before
it. No other country of this diversity and size and once
colonized has successfully and democratically industrialized.

The Market Pyramid In China, India and Brazil

What are appropriate models for Bottom of Pyramid customers?

Population in Millions
In PPP Terms

1
2
3

China India

>> Rs. 12 lakhs

Rs. 6 12 lakhs

Brazil
Traditional
economic
TOP
models address
the top of the
Pyramid.

3 10 11

Saturation
68 85 18

Rs. 3 6 lakhs 372 165 33

Opportunity

<< Rs 3 lakhs

880 900 128

(66%)

(75%)

(70%)

What will be
the new
modelsBOP
that
will address
the BOP?

* By 2015, 1,300 largest cities of the world will account for some 1.5 billion to 2 billion
people roughly half of whom will be BOP consumers now served primarily by informal
economies [1.5 million per city].

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Every Crisis Creates An Opportunity

WATER, AIR & LAND
Maximise economic benefits
while ignoring the social costs [externality]

Sources:
2. http://iitmenvis.nic.in/menu/Atmospheric_Pollution/Pollution_Articles_Page-1.html
3. http://scroll.in/article/693116/thirteen-of-the-20-most-polluted-cities-in-the-world-are-indian
4. http://www.thehindu.com/multimedia/dynamic/02241/delhi_map_eps_2241497g.jpg
5. http://sikhsangat.org/2012/punjab-green-revolution-a-death-to-a-civilization/

The Milk Co-operative

Twenty years ago, milk was in short supply in India.
Today, India is the worlds largest producer of milk.
Indias NDDB : the countrys dairy cooperative network now
claims 10.7 million individual farmer memberowners, covers
96,000 village-level societies, includes 170 milk-producer unions,
and operates in more than 285 districts. Milk production has
increased 4.7 percent per year since 1974. The per capita
availability of milk in India has grown from 107 grams to 213
grams per day in 20 years.
And between them, and the other state co-operatives, control a
turnover that is at least Rs. 5,000 crore.
Deal with 1.2 crore liters of milk everyday

The BOP Challenge & Why Cant We Seem To

Address It
to give consumers something that actually
serves their needs well, at a price they can
afford, and yet be sustainable by creating and
selling them through a system that is low cost
enough to do so.
the three golden keys: affordability, availability
and relevance (perceived value)

Re-examining Orthodox Assumptions About The BOP

Assumption #1 The poor are not our target consumers because with our
current cost structures, we cannot profitably compete for that market.

Assumption #2 The bottom of the pyramid is not important to the longterm viability of our business. We can leave Tier 4 to governments, nonprofits and CSR activity.

Assumption #3 Managers are not excited by business challenges that

have a humanitarian dimension.

Assumption #4 Intellectual excitement is in developed markets. It is

hard to find talented managers who want to work at the bottom of the
pyramid.

High Cost-Economy Of The Poor

Dharavi (A) Warden Road (B)
Cost of credit (annual interest- 600-1000% 12-18%

(A)/(B)
60-75X

calculated on a daily basis)

Municipal grade water (cu.m)

Rs. 100

Rs. 6

~17X

Examples of companies addressing buying power:

Grameen Bank: Ninety-five percent of its 2.3 million customers are women with a 95%
rate of return.

Source: C K Prahalad and Allen Hammond, Serving the worlds poor profitably, HBR 2002

Re-examining Orthodox Assumptions About The BOP

Assumption #1 The poor are not our target consumers because with our
current cost structures, we cannot profitably compete for that market.

Assumption #2 The bottom of the pyramid is not important to the longterm viability of our business. We can leave Tier 4 to governments, nonprofits and CSR activity. [No cure for infectious diseases]

Assumption #3 Managers are not excited by business challenges that

have a humanitarian dimension.

Assumption #4 Intellectual excitement is in developed markets. It is

hard to find talented managers who want to work at the bottom of the
pyramid.

Re-examining Orthodox Assumptions About The BOP

Assumption #1 The poor are not our target consumers because with our
current cost structures, we cannot profitably compete for that market.

Assumption #2 The bottom of the pyramid is not important to the longterm viability of our business. We can leave Tier 4 to governments, nonprofits and CSR activity. [No cure for infectious diseases]

Assumption #3 Managers are not excited by business challenges that

have a humanitarian dimension [since we seemingly cannot apply all the
strategies learnt during MBA].

Assumption #4 Intellectual excitement is in developed markets. It is

hard to find talented managers who want to work at the bottom of the
pyramid.

High Return on capital employed (ROCE)

Arvind Hospitals in Madurai Has conducted the largest number of eye surgeries by any hospital in the
world employing the same advanced techniques and equipment as done in
the U.S. but at a fraction of the cost in the U.S. and free to 60 per cent of
the patients.

Re-examining Orthodox Assumptions About The BOP

Assumption #1 The poor are not our target consumers because with our
current cost structures, we cannot profitably compete for that market.

Assumption #2 The bottom of the pyramid is not important to the longterm viability of our business. We can leave Tier 4 to governments, nonprofits and CSR activity.

Assumption #3 Managers are not excited by business challenges that

have a humanitarian dimension.

Assumption #4 Intellectual excitement is in developed markets. It is

hard to find talented managers who want to work at the bottom of the
pyramid.

 identify invent implement

Identify: How does one identify an important unmet need where

there is good scientic and market knowledge to suggest that a
solution to the need will be feasible and will have a reasonable
likelihood of commercial viability?

Invent: How does one next develop a solution to this need, taking
advantage of the creative group process and the power of prototyping?

Implement: How does one then transform an idea and a prototype into
a product that can be used to address the problem for any user at the
bottom of the economic or industrial pyramid?

Tata Centre @ IIT Bombay

49

The End