Five years ago, at the Aspen design summit, I said that 90% of the world’s designers spent all of their time addressing the needs of the richest 10% of the world’s customers. I also said that before I die I want to see that silly ratio turned on its head. What followed was an amazing sequence of events that included the creation of the traveling exhibit Design for the Other 90% at the Smithsonian Cooper-Hewitt Design Museum; the formation of D-Rev: Design Revolution, a Palo Alto based non-profit incubator for the design and mass market of radically affordable technologies; and earlier this year the launch of DR100, an initiative to create courses providing hands on experience with the ruthless pursuit of affordability in one hundred universities in the West and in developing countries. Last week, the Health section of the New York Times published a special issue called “Small Fixes” which described a rapidly growing movement applying the principles of Design for the Other 90% to biomedical technology.
All in all, the New York Times issue is very exciting for the Design Revolution movement, though it barely scratches the surface of what is needed. It exposes about 20 or so low-cost technologies to solve problems of global health in the developing world, some of which have the potential to make a big impact. But to push this further, we need a revolution in affordable on site testing for the basic major diseases.
In many cases of malaria in rural area clinics, if they are treated at all, the clinicians make a guess at which kind of malaria they are dealing with. The stage is set for better treatment with low cost testing for diseases like malaria and tuberculosis that can be done at clinics on site. Beyond testing, we must not forget the need for techniques to ensure patient follow-through and completion of treatment. One exceptional example of this is an organization in India called Operation ASHA: a non-profit with a 97% completion rate in treating patients with tuberculosis. The Operation ASHA model uses a method called eDOTs to keep track of each patient with an electronic fingerprint tracking system that allows them to ensure no dose is missed.
Stanford’s Design for Extreme Affordability class has produced other good examples of biomedical technologies for poor customers, such as a 20-cent inhaler used by people in developing countries as an alternative to the expensive inhalers used in the West.
There has also been an increasing amount of work on creating a low cost computer. India recently announced the production of a $35 tablet computer for students (which costs $50 pre-subsidy); their goal is to get it down to $10. With the same energy, a $50 microscope could be invented, which would have a sizable impact on global health.
Biomedical technology is around a $10 billion industry, with the potential to be even more profitable. In the same way, radical affordability is a big business for developing countries. Just as we need a revolution in simple fixes for health issues, we need simple fixes for education, water, and energy. With the design revolution underway these are in the process of coming to fruition.
Viva la Revolución!
Paul In The News – New York Times Article: An Entrepreneur Creating Chances at a Better Life by Donald G. McNeil, Jr.
The Future Corporation will remain competitive in the global marketplace by creating vibrant new markets serving $2 a day customers at scale. Three years ago, General Motors, the biggest, most powerful corporation in the world,was brought to its knees by failing to react quickly and effectively to competition from Japanese imports, which were smaller, more fuel efficient, and cheaper.
Companies like Wal-mart, Coca-Cola, and Microsoft will soon face the same do-or-die crossroads General Motors did if they don’t react quickly and effectively to the challenge of earning attractive profits at scale from emerging markets. This will require nothing less than a revolution in how businesses currently design, price, market, and distribute their products. I plan to spend the rest of my life helping foment that revolution.
Thirty million people shop at Wal-Mart every day. But there are three billion people in the world who will never set foot inside a Wal-Mart store. They include 2.6 billion potential customers who live on less than two dollars a day. Most of live in rural areas in developing countries and earn their livelihoods from one or two acre farms.
Many more live in urban slums and live on what they can earn from informal enterprises like small shops selling consumer items or tailoring enterprises. I’ve had long personal conversations over the past 30 years with more than 3,000 of these customers who are routinely bypassed by existing markets, and they have become my teachers and my friends.
Coca-Cola sells what amounts to aspirationally branded fizzy sugar-water for about 25 cents a bottle in villages all over India. In those same villages, 50 per cent of the children are malnourished. What would happen to Coca-Cola if a well-financed Chinese company started selling a nutritious soft drink at a nickel a pop in millions of villages around the world? I believe Coca-Cola could quickly find itself in the same position General Motors faced three years ago.
The Gates Foundation has helped millions of people move out of poverty, and improved the health and education of millions more.. But as far as I know, Microsoft, the parent company, does not make a single product that sells to the 2.6 billion people in the world who live on less than $2 a day.
The opportunities to create profitable businesses serving three billion bypassed customers are almost limitless. For example, there are a billion people who will never connect to electricity. That’s about the same as the total population of the United States and Europe combined. There are another billion people who don’t have access to safe drinking water. Many of them get sick and some of them die because of it.
Why aren’t existing businesses successfully involved in emerging markets? There are three main reasons:
1. They don’t see a profit in it.
2. They don’t have a clue how to design the radically affordable products and services that poor people need
3. They don’t know how to design and operate profitable last-mile supply chains.
Three key practical strategies need to be incorporated by businesses serving $2/day customers.
1. Small margin x large volume = attractive bottom line profits. Supermarkets used this formula to replace mom and pop grocery stores, and Wal-Mart improved on it. For emerging markets, it’s really the Wal-Mart strategy x 100.
2. Design for radical affordability. A movement, called design for the other 90% is gaining a lot of momentum: learning to design things that are affordable enough for people who live on less than $2 a day and that also are income generating.
3. Implement profitable last mile supply chains. Spring Health, the company I’ve started with my partners in India will,if successful, will create a model platform for profitable last mile supply chains to small rural villages in India
Three years ago, I started a private company, Windhorse International. This year, I started a related company operating in India, called Spring Health. The mission of Spring Health is to sell safe drinking water at scale to people who don’t have access to it now. There are some 300 million people in eastern India alone that don’t have access to safe drinking water. Most of them live in small villages with 100 to 300 families, and those villages have little in the way of markets. But every one of these small villages has three or more mom and pop shops. They sell everything from cigarettes to soap to candy to cookies and all kinds of consumable household items. What Spring Health has done is build a 3,000 liter cement tank for about $100 beside each shop, and then purify the water in it using a radically affordable water purifier liquid. The shopkeeper sells the purified water at a cost of less than half a cent a liter to people in the village. Our customers, most of whom live on less than $2 a day, report that they are experiencing a major drop in illnesses and medical bills — each family estimates that they pay between $25 and $250 a year for medicines to stop diarrhea, visits to clinics and doctors, electrolyte replacements, IVs, and hospital stays to treat the illnesses they get from drinking bad water.
The mission of Spring Health is to provide safe drinking water to five million people through 10,000 village shops within three years, and to provide safe drinking water to more than 100 million people through shops in 400,000 villages around the world within ten years.
I believe there are thousands of opportunities for creating new markets and creating new companies to serve the three billion customers in the world who are bypassed by current markets. It will take nothing less than a revolution in how business designs, prices, markets and delivers its products and services to accomplish this. But the outcome of this revolution will be to create millions of new jobs, help more than a billion people move out of poverty, and take a giant step toward ending environmental imbalance on the planet.
My Recent Talk In Denver Colorado
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This week Paul Polak has guest blogger Bhavna Toor. Bhavna will be talking about the new work Paul has been doing in India.
Meet Bina Behera. She is in her early fifties. She lives on the outskirts of a small village in the Khurda district of Orissa. She earns approximately Rs. 100 a day making small handicrafts and selling them to a local trader. She became the sole bread-winner of the family six months ago after her husband repeatedly fell ill from all kinds of water-borne diseases to the point where he was completely bed-ridden. Over the past year, she has spent upwards of Rs. 10,000 on health-care bills for her husband.
Spring Health International, founded by Paul Polak, with the goal to provide clean and affordable drinking water to rural areas in Eastern India, partnered with a local shop-keeper in Bina Behera’s village to set up a water kiosk that would provide safe drinking water to all villagers at 20 paisa per liter. One would assume this would be the perfect solution for Bina Behera’s family, saving them considerable lost income and health-care fees from water-related sickness. But it was not; at least not at first. Why? Bina Behera and her family belong to a community of untouchables, also known in India as Dalits.
When another member of her community went to the water kiosk to fill his jerry can, he accidentally touched the water tap for the 3000-liter water tank. This was considered to be such a grave offence by the rest of the villagers that the shop-keeper was forced to empty out the entire water tank, and perform a ritual to purify the water tank that had been rendered impure by “the untouchable”. Following this episode, not a single member of the Dalit community dared to go to the kiosk to purchase water. Therein lay the problem. Market forces alone cannot be the panacea when there are powerful social forces at play.
Untouchability has marred the social fabric of India for over 3000 years. Largely a social construct, Dalits came to be associated with all occupations that were considered to be impure according to Hindu norms, such as leather tanning, butchering, and manual scavenging (the removal of human feces from toilets without a flush, a practice that, though banned, continues in several parts of India till today). As a result, Dalits were historically banned from entering temples, drinking from the same wells as others, and were required to stay on the outskirts of villages. Untouchability was officially outlawed in 1950 by the Indian Constitution, which gave the right to equality and right to freedom from discrimination to all citizens of the country. In practice, however, prejudice against Dalits has been so firmly entrenched into the ethos of Indian society, particularly in the rural areas, that it has been difficult to uproot completely.
Spring Health had quite a conundrum at its hands. Had it been a conventional enterprise, perhaps it would have looked the other way, and been sufficiently satisfied with providing water to a majority of the villagers that are not Dalits (only 12 out of the 100 households in the village are from the Dalit community.) But, because Spring Health has a social mission of equal and affordable access to clean water to all those living on $2 a day or less built into its business model, it looked for a creative solution, and found one.
Spring Health, at the suggestion of their business and design consultant Idiom, started a home delivery system, allowing the shopkeeper to deliver clean water to the hamlet that houses the Dalit households in 10-liter jerry cans, at a small premium. The shop-keeper was happy to try this method as the extra sales increased his revenues, and the Dalit households were happy as they now had access to an income-saving, and potentially life-saving, resource.
The great thing about a market is that it does not discriminate. Anyone who has the ability to pay for a product or a service can theoretically access it, which is why I am a big believer in market solutions to poverty. However, conventional enterprise may not provide an effective solution when strong social prejudices stand in the way. In those instances, it can become all too easy for an enterprise to simply adapt to, and therefore, perpetuate the power hierarchy in society. Whether you call it a social enterprise or not (I know Paul Polak would strongly object to calling Spring Health a social enterprise per se), in order for an enterprise to effectively serve underserved populations, it must have an explicit social mission to do so. Only then will it go the extra mile to come up with innovative solutions to the most intractable social constraints that prevent equal access.
Paul Polak and I went to visit Bina Behera to see the results of the home delivery method. At the time of our visit, 5 out of 12 Dalit households were availing of home-delivered water. To our delight and amusement, Bina Behera candidly reported that she and her family were ritually consuming the clean water almost as if it were medicine. As a form of gratitude, or maybe just sheer hospitality, she offered us fresh coconut water, which we drank immediately. Paul reached out his hand to thank her, while I put my arm around her. Little did we know, these seemingly small gestures filled her with great joy. She grabbed my hand tightly and muttered something in Oriya, which our translator later told us it meant, “You are like a daughter to me. I am so happy you came to visit me.” It was then that we realized, that by “touching an untouchable” we had subtly conveyed to her that she is indeed, not untouchable, but our equal in dignity.
It may take several generations to completely eradicate untouchability from Indian society, but at least with socially-minded enterprise, and the economic empowerment that it creates, we may just be able to give Bina Behera and others like her a fighting chance to avail of the same opportunities as others, and hope for a better life ahead.
More than 160 million people in India are considered “Untouchable”—people tainted by their birth into an irrational caste system that defines them as impure and less than human. Ghandi called them Harijans, or “children of God” and launched campaigns to improve their lives, but in spite of his efforts, Untouchables in India are still not allowed to drink from the same wells as upper class Hindus, or attend the same temples, or drink from the same cups in tea stalls. They spend their lives doing menial jobs like cleaning toilets, and are frequent victims of violence.
Jacob Mathew, my partner in a company that sells affordable safe water to poor rural customers in India, learned that a Harijan family came to a water kiosk we opened in a small village in Orissa, and bought ten liters of drinking water from the shopkeeper. But while they were filling their ten liter jerry can, they inadvertently touched the spigot of the 3,000 liter water tank. A family belonging the high status Brahmin caste in the village complained, and the shopkeeper had to open the spigot and let 3,000 liters of water run out on the ground, and then purify the tank before he could resume selling water. Understandably, not a single member of the 12 untouchable families in the village of 120 families ever came to fetch water from the kiosk again.
Then Jacob came up with an ingenious solution. We would test applying our bicycle home delivery system, which brings water to customers’ homes at about twice the price of water at the kiosk, to see if carrying water to the home of Harijan families would be culturally acceptable.
While it is culturally taboo in most villages for untouchables to purchase drinking water from the same kiosk that sells water to Brahmins, it appears to be culturally acceptable for higher caste laborers to deliver water to the homes of harijans. Within two weeks, five of the 12 harijan families had become customers for home delivered safe drinking water. This opens up a whole new market for our company, and raises the possibility that we can begin to carry products like handicrafts made by untouchables back by bicycle for sale in market towns or even for export.
It seems to me that every society creates an untouchable underclass. Jews, gypsies and homosexuals were the untouchables In Hitler’s Third Reich, and in the United States for many years we treated black people in much the same way that harijans are treated in India now. Just as it did for many black people in the United States, I believe that economic empowerment provides the greatest opportunity to transform the status of 160 million untouchables in India to-day.
The single biggest reason that the appropriate technology movement died and most technologies for developing countries never reach scale is that nobody seems to know how to design for the market.
Over the past 30 years, I’ve looked at hundreds of technologies for developing countries.
Some provided elegant solutions for challenging technical problems. Some were big and clumsy. Some were far too expensive. Some of were beautifully simple and radically affordable.
But only a handful were capable of reaching a million or more customers who live on less than two dollars a day.
If you succeed, against all odds, in designing a transformative radically affordable technology, you still have addressed only 25 % of the problem. The other 75% is marketing it effectively, which requires designing and implementing an effective branding, mass marketing and last mile distribution strategy.
Any competent electrical engineer can design a beautiful solar lantern that provides enough light to read or cook by in a village thatched roof house. But designing it with the features that a poor family is willing to pay for, at a price providing them a 4 month payback from savings in kerosene, batteries and candles, is an entirely different matter.
Designing a branding and marketing strategy and a last mile supply chain that will put it in the hands of a million or more customers is three quarters of the design challenge.
Eight Practical Steps to Design for the Market
1. Interview 25 Likely Customers before you start.
We planned to sell battery charging services to villagers in eastern India using affordable solar technology, but when we interviewed 30 customers in ten remote villages, we learned that there wasn’t enough market demand to justify it. Many villages were being electrified, and what we learned is that when one village gets electricity, the fifty villages around it within a half hour bicycle ride get functional electricity, because villagers prefer to put a battery on a bicycle and plug it in at a village with electricity, to paying more money to a village solar powered battery charging service.
2. Design to a Customer-Derived Target Price-point from the very beginning
The reason US $10 is a sweet spot price point for solar lanterns for customers in developing countries who earn less than $2 a day is that most of them spend $3-$5 a month on kerosene, flashlight batteries and candles. If they save $2 a month after subtracting costs like battery replacement for the lantern, they get their money back in five months, which falls into the 2-300% return on investment most poor customers look for.
3. Select the price/effectiveness Tradeoffs Acceptable to Customers to reach the target price
Government standards for a subsidized solar lantern in India called for 8 days of reserve light for days when the sun didn’t shine. But when I interviewed 25 people who had used solar lanterns in Kenya for a year and asked them what their source of light was before the solar lantern, they said they used kerosene lamps, which they still had. So one trade-off to reach the target price of $10 is to bring the number of days of reserve light to zero. Any rational poor customer will gladly use their kerosene lamp on dark days if they can bring the price of the solar lantern down to what is affordable for them
4. Create a Proof of Concept Prototype
When we designed the first proof of concept prototype for a low cost drip system in Nepal, we simply drilled holes as emitters in black High Density Polyethylene Pipe lateral lines, and let water flow through them from a 55 gallon drum about 2 meters above the ground. Then we put a glass under each emitter and measured how much water came out over a fixed period of time. The proof of concept prototype worked well.
5. If it Works, Put it in the Hands of at Least Ten Customers, learn what’s wrong with it, and fix it.
When we put these prototypes in the hands of ten one acre farmers in the hills of Nepal for one growing season, they told us that water squirted sideways out of the holes away from the plants, so we put plastic sleeves over the holes. Then the plastic sleeves came away from the holes when the lateral lines were shifted, so we designed and extruded a baffle that fit snugly over the holes and didn’t move when the lateral lines were shifted.
6. Design a Branding, Marketing and Distribution Strategy capable of reaching a million customers
With the treadle pump in Bangladesh, we used staff from a commercial marketing firm in Dhaka to create the name Krishak Bandhu, meaning farmers’ friend, which is also now being used in India. We implemented a strategy of recruiting 75 small manufacturers, 3,000 village dealers, and about 3,000 well drillers, each of whom acted in their own economic self-interest to make market and install treadle pumps. Then we launched a national marketing initiative, including Bollywood type movies, to create sufficient volume sales to make each of the small enterprises in the last mile supply chain profitable
7. Field Test the Technology and the Branding, Marketing and Last Mile Distribution Strategy in at least five different villages for at least four months, and modify it from what you learn.
Windhorse International, the new private company I founded, is currently testing our strategy to sell safe drinking water to people without it in ten villages for six months, with a full independent evaluation. We have changed our strategy in at least six important ways already. For example, we introduced attractive jerry cans, but when they fell off the rack of customers bicycles, they dented easily, so we had to double their wall thickness.
8. Scale Up Systematically to Reach at Least a Million Customers
IDE reached 1.5 million customers in Bangladesh simply by replicating the model of manufacturers, dealers, and well drillers supported by IDE staff to reach scale in more and more geographic regions, and putting a lot of emphasis on supporting the Krishak Bandhu brand and national mass marketing campaigns.
Design for the Market: Practical Examples
The following video is a little long, but if you can suffer through it for nine minutes, it describes how three real social enterprises need to change what they are doing to reach a mass market.
In the late 1980’s after launching IDE, I knew we had a big problem. We were convinced that treadle pumps, a simple $25 StairMaster device that could earn a net income of $100 a year or more for one-acre farmers could make a huge impact in Bangladesh. And we knew that market forces were the best way to bring them to scale. But how could we put
them in the hands of millions of small farmers?
We started out by energizing a private sector network of 75 small manufacturers, 2500 village dealers, and 3,000 village well drillers who we trained a three day course with a paper diploma. None of these small rural enterprises could survive without reaching a threshold volume of sales. And nobody in rural villages had heard anything about the treadle pump- it was like a politician with no name recognition.
The first thing we tried was hiring wandering troubadours, were common in rural Bangladesh. They wrote songs about the treadle pump, and performed at farmers’ markets and festivals, where our customers gathered. While the others sang their song and played their musical instruments, one member of the troupe operated a re-circulating demonstration pump, and another handed out pamphlets saying, you want to buy a treadle pump go to Honest Sam the dealer.”
But this didn’t reach the large number of potential customers we were looking for.
So we decided to make a Bollywood Movie about the treadle pump We hired Mrinal Sarkar, who was working for a commercial marketing firm in Dhaka, and he put together a list of the key messages we wanted to communicate about the treadle pump to small farmers. To make a 90 minute Bollywood movie, we hired the top movie director in Bangladesh, the top male lead, and the top female lead, at a total cost of $25,000.
A typical Bollywood movie in Bangladesh has a wedding, a funeral, a near suicide, and lots of singing and dancing. The plot for the first movie was boy meets girl, (lots of singing and dancing) but they can’t get married because her father
is too poor to come up with a dowry. So she falls into the clutches of a dowry bandit (near suicide, more singing and dancing). As the movie nears its climax, the movie suddenly stops. Its intermission time! Now local dealers put
the potential customers they have invited on re-circulating treadle pumps, so they can get the
touch and feel of them.
When the movie resumes, the father meets an old friend, who tells him about the Treadle Pump! So he buys one, earns enough to pay the dowry, and they get married and live happily ever after. It sounds a little hokey, but this movie played to an audience million customers a year. We used a mobile video-van with a generator. With publicity from village dealers and a Barnum and Bailey rickshaw procession with loudspeakers blaring before the show, two to five thousand people showed up at each open-air performance.
Remember, most of our customers couldn’t read or write, and had no access to mass media. The Bollywood movie was a major contributor to IDE’s success in convincing and one and a half million families in rural Bangladesh to buy and use a treadle pump.
Since then, treadle pumps quickly spread to many countries, including India, Nepal, Myanmar, Kenya, Tanzania, Malawi, and Zambia. Well over two and a half million habeen bought by very poor farmers and used to increase their net annual income by more than $250 million a year!
The happy use of Bollywood movies to inform small farmers lives on.
Amitabha Sadangi and the excellent staff of IDE India continue to produce and show them with great success.
Take a look at the highly compressed three minute segment of Lakshmi, a real tear-jerker about a poor family in India who didn’t have enough to eat because their land has no water. Their youngest daughter just about dies from cholera because they have no money for food and Medicinesut the older daughter saves the day. She goes to work at a prosperous farm that uses IDE India’s Krishak Bandhu low cost drip system, brings it back to her family’s farm, and
rapidly transforms her family from paupers into prosperous happy farmers who joyfully sing and dance!