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Executive Interviews: Interview with Ravi Ramamurti on Bottom of the Pyramid
November 2008
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By Dr. Nagendra V Chowdary
Dr. Ravi Ramamurti CBA Distinguished Professor of International Business & Strategy, and Director of the Center for Emerging Markets at Northeastern University. 
To askmore of private companies is to
undermine their ability to survive as
profit making entities that provide an
adequate return to their owners. A
firm that cannot earn a return above
its cost of capital is unlikely to
survive and therefore to be of
service to customers, communities, or
employees. It is self defeating to
expect companies to serve all kinds of
social purposes that do not contribute
in some way to their own long run
viability. Private firms can and do
contribute to a countrys economic
and social development, but their
raison detre cannot be the country's
economic and social development.
Of course if a private firm is a sole
proprietorship or has a small group of
owners who wish to sacrifice
financial returns or use their personal
wealth
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to promote economic or social
development that would be entirely
legitimate, even laudable. Bill Gates provides a good example of
the point. As founder and largest
shareholder of Microsoft, he
competed fiercely for customers and
market leadership; government
regulators made sure he didn't stifle
competition or exploit consumers.
Within this system, Gates amassed a
fortune. He then turned over most of
that fortune to charitable causes
through his foundation. He thus
separated very clearly his roles as
wealth creator and philanthropist.
Had he attempted to achieve both
goals in the same organization he
would have achieved neither. Your other question about how
much businesses should try to
influence government is much
trickier. As key economic actors, it is
good for business and government to
have a cooperative relationship rather
than an adversarial one. But there is a
fine line between business
cooperating with government and
business capturing government to
promote its narrow goals. My
impression is that in the last few
decades companies have become
more adept at managing and
manipulating public opinion and
policy makers to their own advantage,
whereas governments have not
become any better at regulating private
firms. This worsening asymmetry in
capabilities is a worrying long term
trend. What according to you are the five
most important trends that are going
to shape the way global business
will be carried out and what advice
would you offer to the top managers
operating those businesses?
Economically, the rise of emerging
economies such as China and India is
probably one of the most important
trends underway. This trend will
affect all aspects of business, ranging
from where products and services are
produced, where the world's growth
opportunities lie, where innovation
will occur, and where the world's
new competitors and multinational
firms will come from. For most
companies in India, this is good
news, because they happen to be
located in one of the worlds most
dynamic markets. A second important economic trend
will be the proliferation of what are
called 'born-global firms. These are
firms that take a global view of
markets, technologies, and suppliers
from the time they are founded or
very soon thereafter.We used to think
that firms had to be of a certain size
before they could internationalize, but
that is less and less so. The born global trend is fuelled by several
concurrent developments, such as
the rise of the Internet, the sharp fall
in computing and communication
costs, outsourcing and offshoring,
the globalization of capital markets,
and the internationalization of service
firms, such as venture capitalists,
investment bankers, management
consulting, legal, advertising, and
accounting firms. These
developments have made it easier for
firms to draw on resources from all
corners of the world and to sell to
customers in all corners of the world.
Socially and culturally, one of the
most important trends will be
changes in demography. In the rich
countries, this will consist of slow or
even slightly negative population
growth, decreasing size of nuclear
families, and the aging of the
population. This will change the
nature of demand across all
population groups. In the emerging
markets, we will witness the rise of
the middle class and a rapidly
expanding population. The one
important exception will be China,
whose population is expected to level
off in the next few decades. China is
likely to be the first country that gets
old before it gets rich and this will
present unique challenges of its own.
Finally, the next decade or two will
continue to witness startling
technological breakthroughs, as in the
recent past. The exciting new fields
include such areas as biotechnology,
genomics, nanotechnology, wireless
communications, and robotic
medicine. Such trends will spawn
new applications and businesses. What do these trends mean for the
organizational preparedness? Do
you advocate that companies should
invest heavily in 4Ps people,
processes, platforms and programs
to be at the forefront of innovation
in the new business order?
Most of the trends I have mentioned
are long term trends. They occur slowly but surely. For that reason,
companies will have plenty of time to
see them coming and to adapt to
them. The real problem will lie in
understanding fully and deeply how
environmental trends such as these
can create specific opportunities and
threats for ones firm. That is where
the quality of the organization
becomes important It is not enough for the CEO to be farsighted
and visionary; many others in
the organization should be vigilant
and capable of identifying key trends
and what they mean for the firm. So
people will always be a very
important part of the answer for
dealing with megatrends. The other
important piece is organizational
processes, because the best people
will not function well if the
organization structure, information
system, or reward system give them
the wrong signals. The other Ps on
your list platforms and programs
are less critical in my view, because if
you have the right people and
processes, they will ensure that your
platforms and programs are right.
1.
Bottom of the Pyramid Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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