I’m continuing to reflect on parts of C.K. Prahalad’s book The Fortune at the Bottom of the Pyramid — in particular those aspects which resonate with my interest in organizational learning and knowledge management. One example involves the development of Self Help Groups (SHGs), a key ingredient in the success of microfinance efforts in India.
Prahalad describes the experience of the Bank of Mandura, which built a market for microlending by developing SHGs as the “consumer” for the microloans. SHGs are groups of 20 individuals from a single village or community that take on loan obligations; its members work together to ensure the obligations are met and that capital is used to improve local community conditions. The Bank of Mandura benefits because it delegates some risk management duties to the SHG; SHG participants benefit by gaining access to capital and a community of support.
But what is interesting is how the the development of this market is described as essentially a learning problem. In the book, Prahalad details how the bank realized that the success of this model depended on the SHGs first learning how to save; then how to invest savings; and finally about leadership and governance. All of this learning must occur before the first loan is made. Without a foundation of understanding savings, community, trust, and the practical aspects of governance — the loans would fail and the system falls apart.
And the learning strategy is based entirely on learning-by-doing. There are individuals who help the groups organize and who (undoubtedly) share expertise. But this is not a strategy based on setting up a what might look like a traditional corporate education or consumer education approach. To me, it seems more akin to communities of practice, especially in the sense described by John Seely Brown and Paul Duguid.
There’s an insight here. Brown and Duguid talk about the importance of practice (how people actual do something) vs. process (a idealized version of what is supposed to be done). The essence of their argument, I think, is about the importance of understanding the social nature of developing real practices, and the time required for practices to develop. Brown and Duguid also suggest that social networks — communities of practice, networks of practice — are key to this development of new practices.
Is this, then, an approach to cultivating new markets? It is less about message and more about practice. In the Bank of Mandura case, there was simply no method to develop message around brand or image or product differentiation (no real advertising media available). For the market to develop, Mandura helped lay the foundation for a new set of practices to evolve (savings, governance, community building) and spread through a network of like-minded communities.
Take this lesson out of the BOP context. Can it apply to addressing consumer behaviors that impact global climate change in developed countries? Addressing sustainable food and agricultural practices?
