The SunWater Project – Advanced Solar Technology for Poor Farmers
In my last article, you heard about SunWater, a project to build a radically affordable solar water pump for $2-a-day farmers that will transform small plot agriculture, create new water markets, and significantly increase incomes that will raise bottom-of-the-pyramid families out of poverty. Our target customers are small-plot farmers in India and Africa.
These farmers need a reliable, low-cost water pumping system so that they can grow cash crops to increase their incomes. They also need electric power to add value to their crops (grinding, processing, etc.) and for household use. Current pumping systems cost too much or are unreliable.
Solar pumping systems have been available for years, and they show great promise. But they haven’t been adopted at scale for a very simple reason. They cost too much!
The purchase price of solar PV systems is much too high to be competitive with diesel pumps, even though the fuel and repair costs of diesel pumps are astronomical.
If we could cut the cost of solar pumping systems by 80%, we could transform small farmer incomes, create tens of thousands of new jobs, and significantly lower carbon emissions.
How It Can Be Done
So, how can we radically reduce the purchase price of solar PV powered pumping systems along with technologies that efficiently transport irrigation water from the source to the plant? Here’s a deep dive into the different parts of SunWater!
The good news is that affordable small farm systems are already available through the work of IDE. Through the work of IDE, the market price of drip irrigation has been drastically reduced by using comparatively thin walled lay-flat hose to convey irrigation water from sources like tube-wells to rows of plants. The cost of drip irrigation systems were reduced by designing affordable filters to remove dirt from the water, reducing system pressure to reduce the wall thickness of supply and lateral tubing bringing water to each plant, and simplifying the design of the emitters, or drip points, along each lateral. This reduced the cost of drip irrigation systems from about $1,200, or more to less than $600 per acre.
So what about the greater challenge of cutting the cost of a solar PV system and a pump motor combination from $7,000 to $2,500?
Here’s how I think it can be done:
1 Zero Based Design
In my new book with Mal Warwick, The Business Solution to Poverty: Designing Products and Services for 3 Billion New Customers we provide a detailed description of zero based design. Like zero based budgeting, it starts from scratch, making no assumptions about the technology and strategy that can best be used or created to address a specific problem. In this case, we’ve defined the problem as cutting the cost of an installed 2-kilowatt solar PV powered pumping system to $2,500. We have broken this down further to set a price target for the installed solar PV system of 70 cents a watt ($1,400 for a 2-kilowatt system), and the price of controller, pump and motor at less than $1,100, for a total retail price of $2,500. If we can achieve these targets, we believe solar PV powered pumping systems would be economically competitive with diesel-powered pumps, which would create transformative new energy markets in developing countries.
2 A Systems Approach to Design
To pull it off, we’ll need to work on solar pumping, irrigation, and livelihood enhancing high-value crop production and marketing as a total system, with each system component influencing the design of each other component, and of the total system. Figure 1 is a diagram of what this system looks like. Integrated financing also needs to be part of the system solution.
3 Mirrors are Cheaper Than Solar Panels
In spite of the fact that the price of photovoltaic (PV) solar systems have dropped significantly over the past ten years, the capital cost of an installed PV system used to pump irrigation water is still far too expensive to be competitive with diesel powered pump sets. But there are many options for further lowering the capital cost.
For example, a simple glass mirror is much cheaper than a solar panel. If we reflect the sunlight hitting ten glass mirrors that are a little bit bigger than the surface area of a 250 or 300 watt solar panel, we should be able to generate 2,000 watts from it. Since we’re pumping water, we can pump a small amount of water through a simple heat exchanger on the back of the PV panel to keep it from overheating. The mirror system would need to be incorporated into a simple frame that could be rotated to track the sun. This is just one out of the out-of-the-box solution that could lower the cost. A simple initial prototype we built in collaboration with Ball Aerospace engineers worked pretty well. See Figure 2.
4 Improving Water Conveyance and Application Efficiency
Most diesel powered pumps convey water from the pump to the crop in unlined channels, and deliver it to plants by flooding the field, with the end result that 60 to 70 percent of the water pumped out of the ground is lost to seepage before it ever gets to the plants that need it. Using thin-walled lay-flat tubing to carry the water from the pump to the field, and low-cost drip irrigation to deliver water to the plants would double the overall efficiency of traditional water conveyance and application methods. This would either double the water available for irrigation or cut the size of the pumping system in half, either of which have the same functional impact as cutting the cost of the solar powered pumping system in half.
Fifteen years ago, I and my colleagues at IDE started designing and field testing a low-cost drip system for small farms that is about one half the price of conventional drip systems. Such a low-cost drip system costs about $1,400 for 2.5-acres, including the lay flat hose to carry water from the pump to the field, and IDE field tests in a variety of countries have demonstrated that typical farmers can earn net income after expenses of 45 cents/square meter, or $4,500 from a 2.5-acre plot of diversified high-value cash crops like off-season vegetables by putting the low-cost drip system to work.
5 Improving Farmer Income
You can’t pay for a low-cost drip system and a solar PV powered pumping system, and make a profit by using the water these systems produce to grow low value crops like rice, wheat, corn, and pulses. To earn a reasonable livelihood, small farmers need to learn to irrigate in the dry season when vegetable prices are two or three times as high as they are during rainy season when everybody can grow vegetables. Savvy farmers plant four or five high-value crops, because it’s impossible to predict what the market price for any one crop will be. Also diversified cropping both lowers risk and increases probability that at least one of the crops will generate lucrative profit. So, it’s just as important to help farmers optimize income as it is to lower the cost of pumping and improve the efficiency of conveying and applying water from the source to the crop.
6 Creating a Scalable Profitable Business Model
The best way to reach scale is to release market forces, creating opportunities for every participant in the marketplace to earn a reasonable profit. This includes the manufacturers of both the solar PV powered pumping systems and the irrigation systems, the dealers who sell them, the technicians who install them, and the farmers who buy them to improve their livelihoods.
The first barrier to profitability is the capital cost of $3,900 for the total system. Even though it can earn attractive returns on investment, the upfront cost is too high for most small farmers. For this reason, an important player in the system needs to be a business that offers the solar PV powered pumping and irrigation system on a lease basis or on credit, with the lease/credit business also earning an attractive profit.
SunWater is a project run by my company, Paul Polak Enterprises. We are partnering with a group of volunteer engineers from Ball Aerospace, the company that built the instruments on the Hubble space telescope, to build the proof of concept prototype of the $2,500 solar PV powered pumping system. Jack Keller, a world authority on drip and sprinkle irrigation, and Bob Yoder, an irrigation engineer I worked with at IDE, are working on the design of the total system and its beta testing and pilot commercial rollout in Gujarat, India. There we will be working with an Indian subsidiary of Paul Polak Enterprises, and they will play the local leadership role.
From Gujarat, SunWater India will initiate a full scale rollout of the affordable solar PV powered pumping and irrigation system in India’s Eastern states, where the majority of India’s existing 19 million diesel pumps are located. My dream is that after we create a new market for solar PV powered pressurized irrigation in India and other countries in Asia, we will repeat the process with a global commercial initiative to provide affordable village electricity to a significant percentage of the billion or more people in the world who lack a connection to the electric grid.
How You Can Help
Each dream starts with a first step, and our first step is to raise $50,000 in an Indiegogo campaign to fund the completion of the proof of concept prototype by volunteer engineers at Ball Aerospace. Ball Aerospace is providing their workshop facilities and their technicians are donating their time and talents as a contribution to this initiative. We are asking for help from the public to cover the estimated $50,000 cost of materials needed to develop, build, and bench-test the transformative proof of concept prototype. If you like this idea, I would very much appreciate your help — you can contribute to the Indiegogo here.
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Transforming Solar Pumping to Eliminate Rural Poverty
What if we could harness the limitless power of the sun to carry water to the crops of millions of small poor farmers around the world?
If I want to water my petunias, I turn on the tap outside my house, hold my thumb over the end of a battered green hose, and water away.
If a small farmer in Ghana or China wants to water a small patch of vegetables he’s growing to sell in the local market, he breaks his back hauling water in two buckets or sprinkling cans from a nearby stream. It takes six hours a day every other day for three months to water a tenth of an acre of vegetables that he hopes to sell for $100.
The billion rural poor people in the world today want out of poverty, but to do that they need to grow more cash crops to increase their income. The only way to grow more cash crops is to pump water. However, the current ways of doing it don’t work.
Foot Pumps, Diesel Pumps, and Solar Pumps
A foot-operated treadle pump that costs $25 will irrigate as much as half an acre with about four hours/day of work to earn a transformative $100 or more in new income after expenses. But this is very hard work, and anybody in his right mind would prefer to use a mechanized pump if he could afford it. A five horse power diesel pump irrigates two and a half acres of vegetables, but it costs $350, and $450 a year for diesel, and another $150 a year for repairs – $2100 over three years, not counting the damage to the crop when the diesel pump is down waiting to be repaired. It is too expensive for poor farmers.
What if the same farmer could use a 2-kilowatt electric pump powered by solar photovoltaic panels instead? The fuel costs and operating costs would be pretty close to zero. But, there’s a big catch. It would cost about $7,000! Most small farmers in Asia and Africa could never afford to buy one of these either.
A Way Out of Poverty for Rural Farmers
But there is a way out! What if we could find a way to cut the cost of a 2-kilowatt solar pump system from $7,000 to $2500? What if we added a $1400, 2.5-acre low-cost drip system, and used the solar pump/drip system to grow 2.5 acres of diversified off-season fruits, vegetables and spices? Doing this, farmers can clear at least $4500, enough to make payments on a 3-year loan or lease and put some real money in his pocket. That’s the way out of poverty!
SunWater – the Project
The SunWater project aims to achieve breakthrough affordability for photovoltaic pumping and irrigation, enabling small farmers all over the world to move out of poverty. Farmers using these pumps will also provide jobs for their neighbors to plant, weed, harvest and market the crops they grow.
Today, 19 million diesel engines are being used to pump irrigation water from shallow wells in India alone, spewing millions of tons of carbon into the atmosphere. If marketplace forces could replace a quarter of them with radically affordable solar photovoltaic powered pump systems, we could transform small farmers’ livelihoods and radically reduce rural carbon emissions.
SunWater Technology
We are launching an Indiegogo campaign to develop a 2kw solar-powered pumping system that can do the same job as a 5 hp diesel pump, the most commonly used size. We’re taking a whole-systems approach – we use mirrors to concentrate the sun, which brings down the cost of the solar cell. Since we’re pumping water, we use the water to cool the solar cells, increasing their efficiency. We hook up an inverter so we can use an AC pump motor, which are widely available and cheap. Then we tune the mirrors, solar cells, cooling system, and pump so that it gives the right output for the right cost.
These pumps can only pump during the day, but they don’t use diesel fuel, they rarely break down, and when they do, they can be repaired easily. This system has very low operating costs compared to a diesel pump.
The system will cost $2,500 instead of $7,000, and when paired with a low-cost efficient drip irrigation system, a farmer can pay it off in two years. This quick payback time makes all the difference. At that price, with access to leasing to overcome the purchase price barrier the solar pumping systems should fly off the shelf . And after the payback, there’s no fuel to buy. The Indian government has a 20% subsidy on these systems, so the cost to the farmer will be close to $2,000.
How You Can Help
If you too want to help transform the lives of poor rural farmers so they can raise themselves out of poverty, you can contribute to this Indiegogo campaign at:
This project will open the door to transforming water pumping for farmers in developing nations, and start them on the path to bringing electricity to a billion people who will never connect to the grid. The best way to predict the future is to invent it. Will you help us invent a future of abundance for the people who need it most, rural farmers in India and Africa, by contributing to this Indiegogo?
If you want to hear more about the project, the team, and the technology, stay tuned for my next blog post!
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The Next Digital Revolution
Paul Polak speaking on the Next Digital Age
I was stimulated and challenged by Steve Ballmer’s keynote address this morning, especially the description of the new Windows 8 and all its bells and whistles. But I had one problem with it. What Steve talked about has no relevance at all to the 2.6 billion customers in the world who live on less than two dollars a day. I believe it’s those customers, and their tastes and preferences that will determine the success or failure of companies like Microsoft within the next 25 years.
I am going to talk to you today about three things. The first of which is: business for the other 90 per cent. Secondly, the role that simplicity and appropriate technology can play in businesses for the other 90 percent. Thirdly, I’ll touch upon the future of the digital revolution.
Let me start by pointing out that Microsoft and most of the other businesses in the world are wholly focused on servicing and delivering products to the richest ten per cent of the population. We need a revolution in business to reach the other 90 per cent. The reason for that revolution is not because it’s morally right to serve poor people as customers but because there are massive new profitable markets awaiting any bold company that is willing to take the risk to design ruthlessly affordable products and services to reach that under served market of the other 90 per cent. In my view, the most important subsector of the other 90 per cent are the 2.6 billion customers, about 40 per cent of all the customers in the world, who live on less than two dollars a day.
Let me say a little bit about appropriate technology and simplicity. When I started working in development some 30 years ago, a book called “Small is Beautiful,” by Fritz Schumacher inspired me. Unfortunately, the appropriate technology movement that was created by Fritz and that book died 20 years ago. It died because it was peopled by tinkerers who solved technical problems with technology instead of hardheaded entrepreneurs who design for the market.
The irony is that the giants of global business have used some of the basic principles of appropriate technology effectively. Those giants and the companies they formed literally transformed business as it is today.
Before I discuss that process, I want to say a little bit about what “the other 90 per cent” consists of. Let me point out that there are some 5.6 billion people in the world who earn less than $5,000 a year, which is about 14 or 15 dollars a day. There are 2.6 billion people in the world who earn less than two dollars a day. Eighty per cent of all of the people in the world earn less than ten dollars a day. That is a massive market opportunity that conventional big businesses are missing out on. Some cutting-edge businesses are indeed paying a lot of attention. Cummins Inc., as an example, earns the majority of its profit and growth in countries like China and India. But that company took the risk to get involved there 25 years ago. More than 40 per cent of Unilever’s sales come from emerging markets. Procter & Gamble, which has 20 brands that sell a billion dollars a year, is trying hard to catch up with Unilever in terms of getting more customers at the bottom of the Pyramid.
In the digital field, mobile phones are already providing a variety of vital financial services to customers who live on less than two dollars a day. They are also providing vital information for dollar-a-day, one-acre farmers concerning the best locations for them to sell their crops. Overall, there is a huge unmet opportunity.
Masai Goat Herder Making Use of A Cell Phone
Let me go back to simplicity and appropriate technology. Although I believe the appropriate technology movement died, all of the things that I consider to be major breakthroughs in business have at least two things in common. They are: radical innovations in affordability, as well as in miniaturization. For example, in 1927, the U.S. auto industry was selling primarily to rich playboys. AtPictured Left- 1927 Cadillac LaSalle, $2685, 3770 pounds Pictured Right- 1927 Ford Model T, $360, 1655 poundsthat time there were two dominant models: The Cadillac La Salle cost about $2,700 and weighed 3,770 pounds, while the Ford Model-T, introduced by Henry Ford, cost $360 and weighed less than half of the La Salle.
Pictured Left-1927 Cadillac LaSalle, $2685, 3770 lbs. Pictured Right 1927 Ford Model T, $360, 1655 lbs.
Of course, Ford’s dream was to create a car that was attractive to the working class. But what happened next? This is a trend that I’ve seen in many transformative businesses — they inevitably go up-market. The successors of Ford’s inventions in Detroit became: Chrysler, Ford and General Motors, formerly known as the “big three”. General Motors was the biggest car company in the world some years ago. The large aspirational model with high margins that General Motors, Ford, and the others made big profits on. But three years ago, Ford, Chrysler and GM were all almost brought to their knees by a number of factors, including competition from Japanese and German cars. These overseas competitors were smaller, cheaper and more fuel-efficient. As time goes on, Japanese car makers are finding that Korean cars are the new competition, primarily on price point. This is a visible trend.
When computers filled a whole room in a college and cost $50,000 to a million dollars, Steve Jobs and Steve Wozniak created the Apple II computer, which sold for about $1,300, weighed 34 pounds and was small enough to sit on a desk.
Pictured Left – Mainframe computer circa 1977 Pictured Right – Apple II Computer circa 1977
Again, it’s all about miniaturization and affordability. So, what happened to the personal computer that Apple developed? Well, IBM entered the market and through mass manufacturing and other things, created a product that was not as cool, not as user friendly, but was more affordable and readily available in large quantities. This is how IBM and an army of PC clones took over that market.
So, what’s needed to reach the other 90%? First, a company has to pursue what I call the ruthless pursuit of affordability. Second, the company needs to understand in depth, the customers in “the other 90%”. Third, it’s critical that the company know everything there is to know about the context.
It’s quite a challenge to learn about the preferences of the other 90%. Another great challenge is the problem of last mile distribution. A final challenge is how to reach scale. I think these markets can be very successful and very profitable. What I am doing now is creating new companies that are capable of each reaching 100 million customers and generating $10 billion in sales.
So how does all of this apply to the digital revolution? Well let’s look at some of the companies that are current leaders. Apple is the richest company in the world. It basically makes cool toys for the ultra rich, probably the top five per cent of the world’s customers. Microsoft’s product line is also focused on the richest 10 per cent. Although they now have to deal with the challenge of Chinese knock-offs of Windows sold through EBay. As I’ve said before, mobile phones are already in the market of reaching poor people. There is One Laptop Per Child, a charity model that provides computers to middle-class children even though there are nearly a billion people in the world who don’t know how to read and write. Then, there is the $500 iPad. Apple is making very good profits on iPads and iPhones.
Recently a company called Datawind introduced a tablet device in India, referred to as the $35 tablet, but selling for around $50. That company had problems, but it demonstrates that it is possible to create a tablet for $35.
Pictured Left- $500 iPad – Pictured Right-$35 Aakash tablet
In my view, if companies in the digital space can develop a $35 computer device, my challenge to Apple and other companies in this space to create a $15 iPad.
They could establish a base at the Bottom of the Pyramid, which will give them immense strength to serve affluent customers at the same time. Will the digital revolution learn to operate successful businesses at scale, which are profitable for the other 90%, or, will the digital companies face the same competitive challenges that General Motors faced?
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Is it Immoral to Earn Attractive Profits from Poor Customers?
by Paul Polak
There are at least 7 billion different perspectives on morality, but the viewpoint I like best defines sin as the failure to reach your potential.
By this definition we have at least 2.6 billion deep sinners – the 37% of people in the world who live on less than $2 a day. They are the future Steve Jobs’, Mohandas Gandhis, Madame Curies and Pablo Picassos who will instead eke out a living as drug dealers, child soldiers, prostitutes and destitute slum dwellers.
The three trillion dollars or more we have wasted in misguided development aid probably represent an even bigger sin. But it seems to me that the worst sin of all is our abject failure to achieve scale for the handful of projects that have produced measurable positive impacts on the lives of poor people.
How can we successfully achieve scale? It takes planning and designing from the very beginning, and the unleashing of powerful positive market forces at the locations where poor people are buyers and sellers. The only way to unleash those forces is to demonstrate to global businesses that they can earn attractive profits selling transformative products to poor customers. This is exactly what I have dedicated the rest of my life to accomplishing.
But, I am not an economist. How do some of the world’s leading economists view the prospect of earning sizeable profits serving poor customers at scale?
Is it immoral to earn profits selling to poor customers?
No!
“No!” says Milton Friedman, the celebrated free market economist.
“…there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game.” Friedman believes that a marketplace of enterprises earning profit within the rules is the most powerful lever to improve society.
Yes!
“Yes!” says economist and Nobel Prize winner Muhammed Yunus.
“Poverty should be eradicated, not seen as a money-making opportunity.” Yunus believes that investors in social businesses should only get their money back. In my view, that adds up to a sizeable interest-free subsidy, which is a constraint to scale.
Why do I believe that the answer to extreme poverty is to earn attractive profits serving poor customers?
The microfinance movement and the work of iDE combined have probably helped about 50 million extremely poor people move out of poverty. Even if we have helped 100 million poor people move out of poverty, this amounts to less than 4% of the 2.6 billion people in the world who live on less than $2 a day. This is pitiful!
I define meaningful scale as any strategy or initiative capable of helping at least 100 million $2-a-day people move out of poverty by at least doubling their income. We desperately need to find ways to bring to scale the few comparatively successful models for development that are available.
What are the common features of initiatives that have truly helped extremely poor people move out of poverty?
- They begin by thoroughly listening to poor customers and thoroughly understanding the specific context of their lives.
- They design and implement ruthlessly affordable technologies or business models.
- Energizing private sector market forces plays a central role in their implementation.
- Radical decentralization is integrated into economically viable last mile distribution.
- Design for scale is a central focus of the enterprise from the very beginning.
It is clear that all of these factors are integral components of a business system, but this takes us back to the original question: should it be a business system that enhances the livelihoods of poor people without making a profit for outside investors? Or should it make a profit for investors as well as the poor people who are served by it?
To me the answer is obvious. The only way for a business to help at least 100 million poor people move out of poverty is to follow the laws of basic economics, which means providing an opportunity for both poor and rich investors to earn what they consider to be an attractive profit from their participation.
I have no doubt that there are huge profitable virgin markets all over the world serving $2 a day customers waiting to be tapped. By the laws of economics, creating a new market requires taking a very large risk, but the reward should be commensurate to the risk. If the new venture is successful, all the investors – the poor customer who buys the product, the shopkeeper who sells it, the company employee who makes or transports the product or manages the supply chain, and all the financial investors in the company – should make an attractive profit.
Here is an example: Coal contributes 40% of global carbon emissions and releases millions of tons of heavy metals and other pollutants every year, worsening climate change and sickening people around the world. Properly carbonized biomass can be substituted for coal and co-fired alongside it in proportions up to 80%. The world’s farmers produce four billion tons of agricultural waste each year. If 100 million tons of this agricultural waste could be effectively and affordably carbonized in decentralized rural settings, a multinational enterprise finding a cost-effective way to make it happen could reach global sales of $10 billion a year within five to ten years. Such a company would not only provide attractive profits to investors willing to take on the substantial risk involved, but would furthermore double the incomes of at least 100 million $2-a-day enterprise participants in developing countries.
The only way a company like this can reach scale is with the financial backing of for-profit venture investments. And the only way to justify those comparatively high-risk, early-stage investments is if the company provides the opportunity to make exceptionally good profits if it succeeds.
We have two options. One is to keep hoping that governments will come through with billions of new aid dollars, keep asking individuals to dig deeper for charity dollars, and hope that the low-or-no-profit venture capital space takes off and becomes a truly global phenomenon. We could plod along full of hope but low on results, celebrating increases in impact of fractions of a percentage point.
The other option is to blend the designer’s sensibility, the artist’s creativity, the ground-level aid worker’s understanding of local context, and the entrepreneurs’ dynamism and drive for success, and create profitable global companies that serve poor customers with products and services that help them rise out of poverty. We could unleash the full power of the greatest force in human history – profit – and start ending poverty by the hundreds of millions.
It would be immoral to do anything else.
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Building A Better Mousetrap is Only the Beginning
Question: If you build a better mousetrap will the world beat a path to your door?
Answer: Without superb marketing and distribution nobody beats a path to your door.
In my work with a multitude of affordable technologies over the past 30 years, one key feature has become abundantly clear: If you have met the challenge of designing a transformative, radically affordable technology, you’ve successfully solved no more than 10-20% of the problem. The critical other 80% of the solution lies in designing an effective marketing, distribution, and profitable business strategy that can be brought to scale. Of these, perhaps the most important is designing an effective scale strategy.
This pump provides clean water, but it relies entirely on western donations, and to install a million of these would cost about $6.5 billion - likely an impossible sum to raise. Thus, this project will never reach scale.
Some technologies are simply not scalable. They solve a problem that exists only in a village or two but is not applicable to a thousand villages. The first step in designing an effective scaling strategy is therefore to put first priority on technologies that, if successful, can be applied to address parallel problems in at least a thousand villages.
For example, an Engineers Without Borders team successfully fixed a broken motorized pump that supplied drinking water to several hundred families in a village in Rwanda. This mechanized piped water system was too expensive to be implemented in many other villages, but fixing it addressed an important problem in one village. Designing a robust, affordable hand pump, on the other hand, could have addressed a drinking water problem for many of the other families in the village and in thousands of other villages as well.
In many instances, the design of a scaling strategy is not very complicated. What development practitioners usually miss is the importance of building design for scale into a project from the very beginning of the design process. For example, if you need to sharpen ten pencils, the way to do it is simple. If you need to sharpen a thousand pencils, you need to use a different strategy, but it can be done. If you need to sharpen 100,000 pencils, you need a still different strategy. Each of these problems is eminently solvable, but each one requires a different series of logical steps; it’s very difficult to efficiently change from a ten-pencil strategy to a hundred-thousand-pencil strategy if you’ve already committed your resources and your time to the former.
About 3 million manually powered treadle pumps like this one have been sold to $2-a-day customers
25 years ago iDE (International Development Enterprises) recognized the transformative potential of a simple, $25 treadle pump installed on a tube well. The design of that technology incorporated affordability, easy reparability, and applicability to millions of small farms.
Yet the key challenge was to design the mass marketing and distribution strategy that would make it available to several million farmers. In Bangladesh 25 years ago, there was no pre-existing system of mass distribution in rural villages, and many of the one-acre farmers who needed a treadle pump had never heard of the technology; didn’t know how to read and write; and had no access to mass media.
Private sector treadle pump manufacturer
To address the problem of distribution, we recruited 75 small private sector workshops who manufactured the treadle pumps; 3,000 village dealers who sold them at a 12% margin; and we trained 3,000 well drillers through a three-day course with a diploma, who then installed the treadle pump in the field for a fee. This set up the treadle pump market infrastructure, but that alone wasn’t enough.
A village dealer who sells treadle pumps at a 12% margin
Manual well drilling in Bangladesh costs 5-10 cents per foot and drills to a depth of up to 100 feet
The next step was to create market demand, so that each of these small enterprises could sell enough volume to make a decent living. For an illiterate population unreached by mass media, flyers, brochures, or radio campaigns wouldn’t work. So we recruited several village troubadour and theatre groups to write songs about the treadle pumps, and had them perform at markets and larger celebrations, incorporating demonstrations of working treadle pumps into their performances. Finally, we created a Bangladesh-style 90-minute Bollywood movie featuring the treadle pump that played off of a truck-mounted projector to an audience of a million people every year, in village open-air settings. Our film was often the first movie that our customers had ever seen.
Without the design of a scalable manufacturing, distribution, and installation network involving thousands of small entrepreneurs, we never could have sold the first million treadle pumps in Bangladesh. Without a large-scale marketing program incorporating activities like the Bollywood movie, neither the 75 manufacturers, the 3,000 village dealers, nor the 3,000 well drillers could have earned a reasonable living by making, marketing, and installing the treadle pump. The design of the mass distribution and mass marketing strategy turned out to be much more important to the success of the treadle pump program than the design of the treadle pump itself. Design of a transformative affordable technology was a necessary, but far-from-sufficient, condition for its success.
The design of an effective for-profit business strategy, of course, pulls all of this together. Every key player in the distribution chain has to make an attractive profit. The most important person in this chain is the end customer. A basic principle I’ve learned over the past 25 years is that for $2-a-day customers, income generation is the single most important feature of a successful technology. I don’t work with any technologies for dollar-a-day customers unless the customer can get three times his money back in the first year by using the technology. A treadle pump installed on a tube well costs $25, including a profit for the manufacturer, the dealer, and the well driller. The average farmer who buys it earns $100 net income in the first year, and could potentially earn $500 a year – 1/5 of purchasers of treadle pumps earn $500 in net income right away.
While it’s the most important, for the ultimate purchaser alone to earn a profit is not enough. The manufacturer has to make an attractive enough profit that he is likely to continue making the treadle pumps. Each dealer has to sell at least 20 treadle pumps in a season to earn enough income so that it is in his interest to continue to market treadle pumps to customers, year after year. And finally, the well driller must install enough treadle pumps in a season to make it worth his while to continue installing them. All of these active participants in the supply chain need to earn attractive profits before the technology can be successful.
A successful social enterprise serving $2-a-day customers begins with the design of a radically affordable, scalable, transformative technology. But this is only the beginning. It will fail to make a meaningful impact unless 80% of the designer’s energy is successfully turned towards designing a profitable business capable of reaching a million customers through an effective branding, marketing and distribution system.
This post was taken and adapted from Acumen Fund’s blog series on lessons in social entrepreneurship
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¡Viva la revolución
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.
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