You've got to wonder what the atmosphere is like when Aneel Karnani and C.K. Prahalad rub shoulders in the hallways at the University of Michigan's Ross School of Business. The two professors have similar backgrounds: They both graduated from campuses of the Indian Institute of Management (Karnani from Calcutta, Prahalad from Ahmedabad); they both have Ph.D.s from Harvard dating back to the 1970s; and they both are very interested in the economic lives of the poor.
But that's also where they differ, and in the world of academe, the rhetoric is getting a bit pointed.
C.K. Prahalad is famous in development circles as an evangelist for a concept known as the "bottom of the pyramid." The "BoP" represents the billions of poor people living on the planet whose buying power is, says Prahalad, a terrific, and stunningly underexploited, business opportunity. A good summary of his views can be found in an article he co-wrote with Allen Hammond in 2004 for Foreign Policy, "Selling to the Poor." He's also written a book on the subject, "The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits," and if you are willing to wade through a generous dose of hype, you can visit a somewhat overenthusiastic Web site devoted to his life works.
In August, his Michigan colleague, Aneel Karnani, blasted the BoP concept in a paper titled "Fortune at the Bottom of the Pyramid: A Mirage," calling it "at best a harmless illusion and potentially a dangerous delusion." The gist of his critique: Not only isn't the market as big as Prahalad claims it is, but the very act of encouraging poor people to consume products that they don't need may actually make them worse off. Instead of trying to get them to buy more stuff, argues Karnani, we should be striving to find ways to help them produce more, so we can buy from them.
Prahalad answered this blast in muted tones, in a five-page response posted to the NextBillion.Net Web site (which is part of the World Resources Institute, an organization for which Prahalad serves on the board of directors). He ended his self-defense with a polite coda: "This is a longer letter than I usually write. Because of the high regard I have for you I have taken the time to give a detailed and diligent response. Hope it helps." But this week, Karnani released a new working paper, "Doing Well by Doing Good Case Study: Fair and Lovely Whitening Cream, an exhaustive look at one of the products that Prahalad has previously named as an example of something that can be successfully sold to the very poorest sectors of society, for both profit and social benefit. Fair and Lovely is manufactured by the Anglo-Dutch conglomerate Unilever, and marketed in India by a Unilever subsidiary, Hindustan Lever Limited.
In "Selling to the Poor," Prahalad and Hammond declare:
Beyond such benefits as higher standards of living and greater purchasing power, poor consumers find real value in dignity and choice. In part, lack of choice is what being poor is all about. In India, a young woman working as a sweeper outdoors in the hot sun recently expressed pride in being able to use a fashion product -- Fair and Lovely cream, which is part sun screen, part moisturizer, and part skin-lightener -- because, she says, her hard labor will take less of a toll on her skin than it did on her parents'. She has a choice and feels empowered because of an affordable consumer product formulated for her needs."
In "Fortune at the Bottom of the Pyramid: A Mirage," Karnani scoffed at the notion that a skin-whitening cream could be considered socially positive, noting that such creams have been widely pilloried for playing into sexist and racist stereotyping.
This is no empowerment! At best, it is an illusion; at worst, it serves to entrench her disempowerment. Women's movements in countries from India to Malaysia to Egypt obviously do not agree with Hammond and Prahalad, and have campaigned against these products. The way to truly empower this woman is to make her less poor, financially independent, and better educated; we need social and cultural changes that eliminate the prejudices that are the cause of her deprivations.
In his response, Prahalad dismissed the criticism: "I know that you think 'Fair and Lovely' is a bad idea. This is an ideological stance."
This must have annoyed Karnani, because his newest paper is a comprehensive study of how Fair and Lovely has been marketed in India. (Thanks to NextBillion.Net for the link.) Fair and Lovely is a skin cream whose "special patented formulation" supposedly "safely and gently controls the dispersion of melanin in the skin without the use of harmful chemicals frequently found in other skin lightening products" and that is "proven to deliver one to three shades of change," according to Hindustan Lever Limited (HLL).
Karnani establishes with little room for disputation that Unilever and HLL have been playing on racial sensitivities to market Fair and Lovely to poor women in India and elsewhere in Asia. The television and magazine advertisements he describes would not last a nanosecond in Western markets, if any advertising director was suicidal enough to run them. They show depressed dark-skinned women getting progressively more light-skinned, and in the process, getting good jobs, landing boyfriends and achieving happiness. In India, two egregiously racist advertisements were forced off the air after a lengthy controversy.
Prahalad is fond of stating that corporations can "do well by doing good" -- that by marketing to the poor they can make money and achieve a socially responsible goal. And if you go to HLL's home page you will see, up front and center, that "HLL believes that to succeed requires the highest standards of corporate behavior towards our employees, consumers and the societies and world in which we live." Karnani makes a convincing case that Unilever and HLL are not living up to their own self-avowed standards.
Fair and Lovely is clearly doing well; it is a very profitable and high growth brand for Unilever in many countries, especially in India. The company is not breaking any laws; millions of women voluntarily buy the product and seem to be loyal customers. However, it is, at least, debatable whether it is doing good. It is unlikely Unilever is fulfilling some "positive social goal" and might even be working to the detriment of a larger social objective. This paper does not mean to demonize Unilever. But, there is no reason to canonize Unilever either.
One can reasonably ask whether focusing on one product to the exclusion of all others is an effective rebuttal to Prahalad's larger theses on whether the poor represent an underserved market and whether companies can both "do well and do good." That is a huge and complex subject, and both men agree that such examples as Mohammad Yunus and the Grameen Bank show that there are indeed socially beneficial ways to provide services, for profit, to the poor.
But there's one thing that doesn't get mentioned in either of Karnani's papers or Prahalad's rebuttal, and it's an odd omission. Prahalad serves on the Board of Directors of HLL. Karnani's thorough-going attack on the skin cream has to be read, in part, as a direct attack on Prahalad personally, for condoning, at some level, a marketing campaign based on pushing the message that happiness, beauty and success are dependent on having skin that is light, instead of dark.
I know what cold winter days are like in Ann Arbor. I'll bet it can get even colder in the faculty lounge at the Ross School of Business.
UPDATE: I spelled Aneel Karnani's last name wrong in the original post. Ithas been corrected.