On Campus, a Different Pyramid Scheme

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She said her attitude changed as she watched her company evolve over the next five years. She ultimately made the decision to apply to Michigan because of its strong affiliation with the Davidson Institute, she said. She and her friends were elected on a base of the pyramid ticket as officers of Ross's Emerging Markets Leadership student club this year. Over her spring break, she visited University of Stellenbosch's base of the pyramid learning lab in South Africa, visiting the poor in nearby townships through a "base of the pyramid lens," she said. She is spending her summer in India working for a non-profit company that sells affordable reading glasses to low-income, rural consumers.

"I've been eager to get as much exposure as possible to base of the pyramid theory and on-the-ground projects," Henning said. "It's a new field and there are many unanswered questions about the best ways to create mutual value for base of the pyramid stakeholders and private sector companies.

A Futile Path?

It's easy to see why today's generation of socially conscious and global-minded business students are drawn to this topic, said Stuart Hart, a professor of management and chair of the sustainable global enterprise program at Cornell, and one of the early proponents of the base of the pyramid theory. "This is not philanthropy or the old aid-regime mentality where companies give things away to poor people. It's a new form of innovation and entrepreneurship," Hart said. "For a growing number of MBA students, this concept is enormously exciting. They just can't get enough of it." (For an interview with Hart, see BW.com, 8/2/07, "Cornell Professor Builds on His Base")

But some B-school professors are casting a wary eye on this development. Aneel Karnani, an associate professor of strategy at the Ross School of Business, is one of the most vocal critics of the base of the pyramid theory, which he calls "fundamentally flawed." He believes the economic potential of this market has been grossly exaggerated and that the world's poor should be producers, not consumers. Business school students could be going down an ultimately futile path, he said.

"It's a very seductive proposition and I think this is why the idea has become so popular," said Karnani, who is publishing a paper this summer in the California Management Review titled Fortune at the Bottom of the Pyramid: A Mirage. "This is wonderful that you can be rich and be a saint at the same time. The problem is that is doesn't work."

Students Take the Lead

At business schools, students are frequently behind the push for more base of the pyramid programs. Last year a small group of students at Vanderbilt's Owen Graduate School of Management approached Bart Victor, professor of moral leadership, and asked him if he would be interested in teaching a class about markets serving the world's poor. He accepted the challenge and designed an elective course called "Bottom of the Pyramid." He walked into class on the first day and was greeted by an overflowing lecture hall filled with 70 students. "I thought I was going to have 10 students in a small seminar talking about business and poverty, but it kind of exploded into this whole thing," Victor said.

Since that pilot class last year, the B-school students, in collaboration with students from the divinity school, founded "The Project Pyramid Global Poverty Alleviation Program," a student group dedicated to ending global poverty. They secured $250,000 in seed funding for the group and have become an influential voice on campus.

The students base their work on the teachings of Muhammad Yunus (see BusinessWeek.com, 12/26/05, "Nobel Winner Yunus: Microcredit Missionary"), a Vanderbilt graduate who received the Nobel Peace Prize in 2006 for founding the Grameen Bank, a microfinance institution based in Bangladesh. The group visited slums in Hyderabad, India last spring and plans to visit rural communities in Bangladesh on an upcoming trip this year. Every fall they organize the Project Pyramid Case Competition, a contest where students are encouraged to submit business plans that follow the pyramid philosophy.

"This is really a movement among students and it isn't just happening here at Owen. It's happening everywhere we turn our heads now, students are self-organizing and driving these things," Victor said.

Mosquito-Net Economy

With growing interest in this subject, people working in this field are in demand as guest speakers at business schools. Brian Trelstad, chief investment officer of the Acumen Fund (see BusinessWeek.com, 03/12/07, "A Do-Good Diary"), a social venture fund that takes an entrepreneurial approach to alleviating poverty, is frequently asked to talk at classes that offer electives in base of the pyramid theory. The subject is so popular that he says he could send someone from his fund to a B-school campus practically every week of the year.

During these visits, Trelstad often discusses some of the real-life issues that his fund grapples with, from how he gets a $6 mosquito net to to Africans living in poverty to how to provide affordable, clean drinking water to a rural community in India. Business school students show a keen interest in this topic because there are so many obstacles to be overcome when entering these markets, he said.

"People in business schools are typically interested in solving interesting problems," Trelstad said. "I think that the problems that our portfolio companies are wrestling with and the case studies that get written about us and our work are some of the most interesting problems that there are to be solved."

Damast is a reporter for BusinessWeek.com.