‘The guru at the bottom of the pyramid’, Schumpeter column, Economist, 22nd April 2010

The Schumpeter column is a relatively recent feature article in the Economist and was proudly praised by Marjorie Scardino when she spoke at our 21st anniversary event in January. We have followed it carefully since and have been impressed by the way it comments on interesting and topical business issues.

I probably should have heard before but I have to admit that the Schumpeter article was the first time I knew of the death of C.K. Prahalad, one of the most well known and highly lauded gurus of the management world; in the view of Schumpeter – ‘the most creative management thinker of his generation’. The article examines an issue that has also made me curious – why was his reputation so high when, compared to others like Porter and Drucker, he has produced relatively few books and articles?

Perhaps this is because it is quality rather than quantity that matters, maybe it is also evidence that learned articles and thick books are not all that it takes to become a recognised guru. The article confirms how Prahalad sat on the board of some of the world’s top companies – including Pearson, owner of the Economist! – and acted as consultant to many others. And it was his contributions on strategy and innovation in this context that elevated him to superstar status.

The thinking that most defines Prahalad was first communicated in 1989 when two articles in HBR made a big impact. He introduced into business language the concept that we at MTP use more than any other when discussing strategy – Core Competences. It could be argued by Tom Peters that this was not original thought; only a few years earlier he had argued that good companies ‘stick to the knitting’ as part of his best selling book, ‘In Search of Excellence’. But the core competences concept was to stand the test of time.

His reputation was further enhanced with the publication of his classic book – Competing for the Future – jointly authored with his now famous former pupil, Gary Hamel. This book took the concept of core competences further and suggested that companies could capitalise on their competences by redefining markets in their favour. Prahalad was fortunate thereafter to detach his reputation from that of Hamel and was not tarnished by Hamel’s oft quoted love affair with the Enron business model prior to its collapse.

This suggests that perhaps the main reason for Prahalad’s high reputation was his ability to move on with the times and develop new interests and themes. One such change was captured in his second major book – ‘The Fortune at the Bottom of the Pyramid’ which censured major corporations for not recognising the profit potential of meeting the needs of developing markets; he simultaneously criticised those who saw the profit motive as incompatible with doing business in the third world.

The article defines this obsession with moving on as being ‘intellectual restlessness’ and provides evidence by confirming that Prahalad never wrote more than one article on the same subject. This was linked to his tendency to work with partners whom he would leave behind as he moved on to his next interest. This led to criticisms by some of his peers that he left unfinished business and failed to answer real-life developments that challenged his theories. Schumpeter justifies this weakness by saying that he was a ‘big ideas man’ but others might see it as a sign of superficiality. But the fact that companies like AT&T, Pearson and Unilever so valued his advice must be confirmation that his thinking was a cut above the rest.

To read this article go to:
http://www.economist.com/research/articlesBySubject/display.cfm?id=14391731