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Early childhood development (ECD) is a term used to describe the personal growth of a child until the age of 6. During this period the brain of a child continues to develop and form neural connections – a process that started during the pregnancy. Adequate nutrition, cognitive stimulation and care strongly influences the extent to which a child’s health may develop to their fullest potential, as well as her cognitive and social and emotional abilities (Young, 2002).

Unfortunately, in many low-income countries, poverty also begins at birth. Children from low-income families are much more likely to be malnourished, live under unhygienic circumstances and receive low levels of education. A shortfall in early childhood development will have irreversible consequences on individuals’ future lifetime opportunities. This will reverberate later in life in the form of lower quality jobs, lower wages, shorter life-spans, worse health and lower cognitive abilities, thus perpetuating an intergenerational cycle of poverty.

Return on investments in early childhood will be higher than returns to investments made later in life.  Firstly, because beneficiaries have a longer time to enjoy the rewards from these investments; secondly, because investing on, for instance, better health or education has a stronger impact on young children than on any other population segment, even if the amount of years was the same. Therefore, supporting ECD generates a positive impact that will have a stronger impact on the individual’s wellbeing than at any other later stage of her life (Recent Nobel laureate James Heckman, has studied this topic extensively, see for instance, Heckman, 2006).

To assist ECD, the child’s family environment is pivotal, hence ECD interventions should at least also consider the child’s mother (as I suggested in a previous post) or at least the child’s primary caretaker. The parental environment and family income of a child are, moreover, far more decisive in promoting human capital and school success during early childhood than in later years (Vegas and Santibañez, 2010).

Although ECD is a very multifaceted concept (at the end of the day everything may have an impact on the child’s development), a recently published book by the World Bank suggests prioritizing 3 goals:

1. Enhancement of a child’s development early in life, including her cognitive and social and emotional development, physical growth, and well-being;
   
2. Enhancement of a mother’s antenatal care with services and information to strengthen the probability of delivery of a healthy baby;
   
3. The education of parents and/or caregivers in better parenting, health, and hygiene practices, as well as providing them the opportunity to participate in the labor force.
   

In other words, at the child’s level there are three main and interdependent needs: nutrition, education and health. At the family level, and especially for mothers, health and education about how to take care of a baby are essential. Therefore adequate ECD programs should ideally be multi-sectorial (straddling more than one industry) and target the child and her family. Along these lines, the most successful ECD programs are:

1. Conditional Cash Transfer (CCT) programs: CCT programs transfer money (in cash or in kind) to families in exchange for them to comply with certain conditions. These conditions normally revolve around children's education and health, such as school attendance or regular vaccinations. In Latin America, where CCTs have been successful, it is estimated that they have benefited more than 15 million poor families and over 60 million low-income people.
2. Parenting Programs: These programs try to educate parents in childrearing and child stimulation techniques and often also include child preschool programs that have been found to significantly affect long-term educational attainment.
3. Nutrition and supplementation programs: This third type of programs have been mainly geared to improve the children’s physical wellbeing and growth as well as stimulating better cognitive outcomes. For instance, subsidized milk and milk fortification programs for children and lactating women have been massively popular and successful in places like Colombia, Mexico or Guatemala.

Unfortunately, the role played by the private sector in ECD is minor at best. Such a state of affairs stems partly from the belief that nutrition, education or health for infants and young children are sectors better taken care of by the public sector rather than by private enterprise. Moreover, scandals such as in Nestle’s baby-feeding formula have not encouraged BoP firms to try to tackle this set of unmet needs for fear of a public backlash.

This represents a missed opportunity for BoP businesses. I believe that businesses operating in low-income markets would have three main advantages over state–run programs as far as ECD programs are concerned. Firstly, many BoP businesses have accumulated a very high degree of trust and legitimacy at the local level. This high status enables them to more convincingly sway families into changing the way many children are brought up and improving their health and hygiene standards.

Secondly, most BoP business are hierarchically flat in order to decrease operational costs to a minimum and be financially sustainable. This means that a smaller portion of investments in ECD programs would be devoted to the maintenance of business structures and a greater portion would end up on the hands of those who need it most. This is a serious problem in many state-run programs where often a big percentage of the money devoted to development is diluted after passing through the hands of several public organizations (even when there is no corruption).

Thirdly, the integrated nature of ECD programs, and the fact that the most effective interventions include components that are usually the domain of different government sectors (such as education, health, welfare, and labor), makes it complicated to implement and sustain them at the public level. However, most of the most successful low-income businesses exploit hybrid business models. The fact that they straddle more than one sector often represents a strength rather than a weakness or a source of difficulty in their business model.

As I have argued before, it is time to extend the focus of BoP businesses beyond male adults and try to develop products and services targeted to other comparatively hidden population segments such as women and, as I have argued in this post, small children. By refocusing and growing our field of vision, private sector development will achieve increased legitimacy vis-à-vis other more traditional forms of aid and realize higher social impacts.

You have to see it to believe it - no pun intended.  VisionSpring, the award-winning social enterprise, has released a new video highlighting its impact on base-of-the-pyramid communities around the world.

I had the pleasure of attending a recent VisionSpring community gathering here in New York, where the team debuted the video and introduced its new Chief Operating Officer, Sean Mayberry.  It's fantastic to see (pun intended) VisionSpring grow with my own eyes.  In just the past two years, they have spun out from Scojo New York, changed their name, launched a runway capital campaign and developed a fantastic storytelling machine.  In addition, they're working closely with leading BoP academics - most notably the University of Michigan's Ted London - to measure their social and financial impact on low-income consumers.

Without further ado, the new video:

VisionSpring 2009 Global Video from John-Michael Maas on Vimeo.

(Full disclosure: Acumen Fund, a sponsor of NextBillion, is an investor in VisionSpring.)

The formal launch was perhaps the most difficult part of the journey so far. Because both the Governor of the State and the Finance Minister were coming, the local political officials were determined that everything should be perfect. And they made demand after demand on our local staff, who literally worked around the clock for several days to pull everything off. And they did! The launch was perfect, capped by the public request of the Finance Minister that we build 600 units across the state and the private promise from both officials that they would help in numerous ways. 

Even more moving, to me, was the experience of seeing patients-lots of patients-crowding our waiting rooms.

On some days, we had as many as 50 patients come to a unit-compared to a design goal, 6 months after launch, of 35. So we scrambled to hire more doctors, train more clinical assistants, and equip a second clinical room that we had fortunately designed into the healthpoints.  A couple of incidents brought home to me what our service meant to these communities. One patient had come in with a wound in her thigh, running a bad fever. Guided by the doctor on the telemedicine link, the clinical assistant cleaned and bandaged the wound, and the pharmacist filled the doctor's prescription of antibiotic.

I saw the patient two days later, and she was feeling much better, and very happy that she had not had to go to the district hospital many miles away.  And one of our drivers had a high blood pressure incident-so we took him into the healthpoint, and the clinical assistant/telemedical doctor promptly took care of him.  In both cases, prompt, accurate treatment helped avert what could have been a much worse outcome. Equally meaningful was seeing a young boy come to collect his family's safe drinking water from our unit-less dramatic, but equally important for health.

We randomly survey our patients after treatment, and the feedback is that they feel very well treated at a healthpoint and think our prices fair ($1 to see a doctor, with an introductory rate of 60 cents, which just happens to be the price most of the village quacks-informal practitioners-charge). Women, in particular, like our service and the opportunity to see a woman doctor via telemedicine; the village quacks and the occasional government doctor are all male.

Of course, formal surveys can be misleading-sometimes people tell you what they think you want to hear. But an informal survey gave the same answer-our driver spent long days sitting in his car, listening to the villagers talk among themselves as they walked past him on the way home, and he reports the same consensus. The bottom line is that we seem to be on target with our customers, and that the pent-up demand for high quality healthcare services-at least in this part of rural Punjab--is larger than anyone knew.  

We still have a long way to go to build a successful business, even though we are already getting inquries from other countries that also want healthpoints-a team from the Philippines is coming in December, and one from Vietnam soon after. And building village healthpoint units eats lots of cash, so we have to raise much more. But now we know exactly what we need to do to improve processes, gain efficiiencies, and continue to build volume to get to scale. And more importantly, we know that our market wants the product-and we have the satisfaction of seeing a concept turn into a living-even life-preserving-venture. 

Editor's note: Al Hammond, entrepreneur in residence at Ashoka, writes a series of reports documenting his experiences and the learning involved in started a "base of the pyramid" (BoP) healthcare venture to serve developing countries. This is his third report in the "Notes From the Field" series. You can read the first three parts here, here and here.

Building a new venture from scratch often takes a lot of time. Operating in a rural area with imperfect infrastructure only makes it harder. But we were able to leverage the existing field force of our Indian partner to begin construction of our healthpoint units almost immediately after incorporation.  Getting pharmacy licenses could have posed a big barrier--anyone who knows India will tell you that government approvals can take months-but we got our licenses approved in a week, thanks to our partner's strong relationship with the Punjab Government. 

We could be efficient in our pre-launch marketing campaign, because it was based on the prior experience and on-the-ground knowledge of our local partner. And the bottom line is that we initiated a pretty complex business and started seeing patients just 3 months after we began activities in India -a huge saving in time and money. Those are just a few of the benefits of our hybrid model in which our NGO partner, the Naandi Foundation, helped get us off to a running start and whose brand equity has given us a huge initial credibility with our customers (Naandi's logo is on our units, along with the logo of the Punjab government and that of the company, Healthpoint Services India Pvt. Ltd. See above.) 

At the same time, the company hired lawyers and negotiated with several suppliers of telemedical software and with a couple of Indian diagnostic companies to pick our key technology suppliers. As a result, we offer more than 60 different diagnostic tests from day one.

We hired staff in Hyderabad, and promptly moved a lot of them to Punjab to help with the launch. We set up banking services (not as simple as it sounds-the number of pieces of paper that have to be signed, authenticated, and countersigned for banking in India is fairly amazing, and it still took us 6 weeks to get internet access to the account, because that's a whole different application process) and mastered the art of wiring money to India via Mauritius (don't ask). Also, the school programs we ran as part of our marketing efforts were a huge hit-the kids got telemedicine and its potential right away, and went home to tell their parents all about it. At the launch, we also distributed baseball caps with our ehp logo (for E Health Point, our Indian trade name) to kids, who proudly wore them everywhere.

Not everything went smoothly. It's a startup, after all, and our model requires four different, fairly complex services, from telemedicine to advanced diagnostics to pharmacy to water treatment.  Our broadband connections worked sometimes and sometimes not, until we got our suppliers focused. Software tools went on the fritz, and our IT team stayed up all night getting them ready to operate in the morning. The electrical grid was so undependable we broke down and installed generators (we are now moving to solar/battery power supplies).  We narrowly averted one serious disaster, when a cast iron connector snapped and wireless tower under construction at one unit collapsed, so that the tower worker had to jump 30 feet to the ground, fortunately without injury.

To ward off any sense of bad luck that could have kept patients away, the local holy man was engaged to conduct a Hindu healing/blessing service at the site (whatever it takes!). But finding and training clinical assistants from the villages served by our units and getting doctors to staff our urban telemedical unit went reasonably well. The biggest challenge for the clinical assistants was not the diagnostic training -they all now take blood or measure vital signs like pros- it was learning how to use a computer, which none of them had seen before.

In short, it was a fairly typical business startup, compressed in time, but successful because, I think, the overall model and advance planning were mostly right, and the skill and dedication of the India team-and the Naandi staff-were superb.  

Editor's note: Al Hammond, entrepreneur in residence at Ashoka, writes a series of reports documenting his experiences and the learning involved in started a "base of the pyramid" (BoP) healthcare venture to serve developing countries. This is his third report in the "Notes From the Field" series. You can read the first two here and here.

When BOP entrepreneurs share war stories, they are inevitably about raising money. And I'm often asked, how do you do it? So here in brief are my experiences in raising money for our rural healthcare venture, which now has 3 operating E Health Points in rural Punjab, India. 

I have written previously about some of the elements we are incorporating into the healthpoint model --call center and telemedical approaches that provide access to doctors where there are none, while also deskilling care delivery and radically lower-cost diagnostics, part of an ongoing revolution in point-of-use diagnostics. And in the current issue of Innovations, I and other colleagues have an article about a third key component, low-cost water treatment, based around a detailed case study of the Naandi Foundation's community-scale safe drinking water business, whose marketing and community engagement strategy served as a template for both our water and our healthcare efforts. 

For fund-raising, my timing couldn't have been worse. I started making calls in January, right in the middle of the worst financial crisis in 70 years. I thought I had a compelling story about a model that could potentially transform both rural healthcare and the safe drinking water problem. I was lucky enough to have a partner in shaping the model who became my lead investor: Todd Park, co-founder of athenahealth, perhaps the leading US ehealth company, and an advisor to Ashoka on healthcare-and since August, Chief Technology Officer for Health and Human Services in the Obama Administration. Todd opened his rolodex and played a major role in rounding up an initial set of commitments, before he had to put all that behind him upon joining the government.

But then things got harder, as the crisis settled in.  I talked to everyone I could think of or could get introduced to. My partner and I revised and re-revised our presentation. I sought advice from anyone I could reach. I cultivated a set of intermediaries, who could open their networks to me. In the end, I met and had serious discussions with over 100 potential investors --individuals, funds, international organizations, foundations-in the US, India, and (by phone and in person) in several other countries, and peripheral conversations with many more. So one answer to how is, don't give up, and source your capital globally.

I eventually raised a seed round that closed at the end of August --not as large as I had hoped, but still perhaps remarkable given the circumstances and enough to get the company started and pilot units up and operating.  Indeed, because some of the investors were willing to let me take their money and start spending it before it was all formally closed, we actually began operations on the ground in India at the end of June, shortening our time to market. (Caution: a "rolling close", as this is called, can be very risky-don't try it without expert advice.)

But the secret of this success was only partly persistence. A larger reason was Ashoka, who has been, in effect, a cofounder of the venture-providing me a platform to work from, lots of advice, and deep relationships that led to funder introductions and immediate credibility.  From Ashoka's point of view, launching a transformative healthcare venture was simply my day job as a social entrepreneur --it's what they hired me to do.  As it turned out, every one of my initial seed investors either has a deep tie to Ashoka or came in through someone who does.  And like a founder, Ashoka will have an equity stake in the venture.

To me, it's a powerful demonstration of the value of a hybrid model in which Ashoka helped develop the ecosystem that could nurture and support the venture, and its worldwide network of Fellows (many of them working in health) will also provide incredible market intelligence to guide how and where we scale.  In my next post, I'll explain why the hybrid approach and the venture's partnership with the Naandi Foundation in India also enabled us to get up and operating in 3 months-an incredibly short time-and some of the adventures and misadventures that ensued. 

How can we design, fund and implement affordable solutions for the developing world's toughest challenges? How can we maximize social impact with our designs? The "Design for Extreme Affordability" panel at Net Impact conference tackled these very issues.

Jeffrey Gangemi, Communications Consultant at Dun & Bradstreet moderated a conversation between two entrepreneurs who have designed affordable solutions: Peter Frykman, Founder & CEO of Driptech and Ting Shih, Executive Vice President of ClickDiagnostics.

Problem: Farmers in drought-ridden regions of the developing world need better, cheaper, more effective ways to use their meager water supplies efficiently.

Solution: Driptech creates affordable, water efficient irrigation systems for small-plot farmers in developing nations. Their drip irrigation product is low cost and low tech, but designed using high-tech expertise.

The Driptech team met at Standord in a course called Entrepreneurial Design for Extreme Affordability. Traveling to Ethiopia, they noticed that farmers were unable to grow crops due to scarcity of water and high costs drip irrigation products. This spurred their invention of Driptech tubing, which is 2-5x less costly than the alternatives and works better and more reliably. In a 5-month pilot with 15 subsistence farmers, Driptech was found to save farmers water, labor and time while enhancing their dry-season crop income.

Problem: The developing world lacks doctors, particularly in rural areas leading to poor healthcare coverage.

Solution: ClickDiagnostics uses accessible mobile technology infrastructure to arm community health workers with the ability to connect to remote medical specialists who provide remote consultation. Rural healthcare professionals that lack adequate expertise to make diagnoses can take photos of patients, send them for review by the proper physician anywhere in the world, and then make a diagnosis based on their expert input. Treatment can happen immediately. ClickDiagnostics' solution can work anywhere in the world with decent cell reception.

Both Driptech and ClickDiagnostics offer elegant, cost-effective solutions. But getting there hasn't been without challenges. Frykman and Shih described their challenges and keys to success building affordable products to serve emerging markets.

Frykman described how he was able to get funding to get Driptech off the ground, despite the process being slow and gradual. The first bit of funding was the hardest to get. After that they were able to talk about the money raised and convince other investors to get on board. They'll be going out for their A round in 8 to 12 months.

Both panelists mentioned the need to understand the country specific context in which they are working. For Driptech, distribution has hinged on successful country-specific strategies. In India, Driptech piggybacks on established commercial agricultural input distribution networks. In China, they've worked with local governments on distribution. At ClickDiagnostics, Shih has found the key to success is understanding how the healthcare structure works in each country they operate in. While her product can work anywhere, she absolutely needs to understand the context.

Driptech is eager to serve the base of the pyramid. "It's easy to design another attractive mp3 player to sell to rich people. But it's much harder to design a product to serve dollar a day farmers," Frykman said.

Both entrepreneurs are dedicated to sustainable revenue models with social missions. The for-profit model enables growth and expansion. "I'm adamant about doing well by doing good and attracting more products and services to this sector through enabling technologies," Frykman said, touching on the idea of trickle up innovation.

Keeping these products low cost is of utmost importance. Frykman acknowledged that he sacrifices durability for low cost to some extent. Driptech is currently manufacturing in India, laser punching the tubing in Palo Alto and then selling the product back in India. They plan to do all pieces of the manufacturing process in India, but for now they are eating the excess cost of transit to California to test market acceptance.

I was pleased to learn that competitive threats are not top of mind for Driptech or ClickDiagnostics. Frykman isn't worried about competition. The market he serves is untapped and a "rising tide lifts all boats" as he sees it. Similarly, partnering has been key to Shih's success so far. Shih described how ClickDiagnostics seeks out its competitors and then figures out how to collaborate, and leverage their technology, research or other assets. When solving big problems, we need to think more and more in this mind set of radical collaboration, rather than competition.

I just got an email from our friends at Ashoka announcing the launch, just two days ago, of a venture that promises to disrupt and transform rural healthcare in India. Led by NextBillion co-founder and The Next 4 Billion lead author Al Hammond, the E Health Points are joint venture of Ashoka, the Naandi Foundation, the Government of the State of Punjab and and Healthpoint Services India Pvt. Ltd.

It's very exciting to hear about this launch and see the pictures of it in action. I've had the opportunity to work in and out with Al Hammond over the last 18 months and in several of our conversations this project was a dominant theme. His vision of bringing together technological and business model innovations to produce a disruptive new model for healthcare services in rural areas is now a reality. I'm already looking forward to hearing about the launch and the prospects of this venture in his own words. I'm sure he'll be looking forward to sharing these through NextBillion as well, so stay tuned.

For now, I want to extend my congratulations and best wishes to Al and the team that has led the charge in launching this pilot. If you wish to learn more about this project and its various components, I encourage you to read Al's earlier posts related to eHealth, the future of healthcare and community scale water treatment facilities. I also urge you to read the complete press release and take a look at the Flickr slideshow.

When you think about critics of the base of the pyramid (BoP) movement, the most notable name that comes to mind is Professor Aneel Karnani at the University of Michigan.  Aneel has written a number of articles that are highly critical of the BoP idea.  Some of his most prominent articles are "Romanticizing the Poor", "Microfinance Misses its Mark," and "The Mirage of Marketing to the Bottom of the Pyramid."

Now, as many of you know, I have been a very strong supporter of business and its role in addressing societal issues. Over the past two years, I have blogged on this quite extensively. I am even co-teaching a course at the undergrad level here at the University of Michigan on the topic of Social Entrepreneurship this fall. 

Since Aneel and I both work in the same building, I decided to stop by his office to talk with him in depth on his perspective of the BoP concept.  From that conversation (which went really well), we both decided to put our energy into writing a case study on the topic of vision correction in the developing world. In the case study, we looked at two enterprises - Essilor and VisionSpring - that are trying to address global uncorrected refractive error by selling eyeglasses.

In writing the case study we wrestled with three main questions:

1. How effective are Essilor and VisionSpring in addressing vision correction in the developing world?
2. Does either organization have long-term viability and ability to reach significant scale? Why or why not?
3. What other solutions might work better to solve the problem of vision correction?

Since we plan to use this case in the classroom, and hope that other academics will too, I'm not going to divulge our conclusions. If you are a student, perhaps one of your professors will use this case study in your class. If you are an educator, you can review the case study and the associated teaching note on by logging onto www.globalens.com.  (If you need help registering, you can shoot me an email).  If you want to simply read the case study without accessing to the teaching note, you can purchase it here.

Aneel and are I planning to write an article based on this case soon, so be on the lookout! 

A tiny bead of sweat ran down the ridge of my nose.  It reached the end, teetered for a split second, then dropped quietly onto the doctor’s desk.  I sat behind the desk, inside the Vijay Nagar Women of India clinic, which is tucked into a government-built housing project in the Bandra East area of Mumbai.  As the sweat hit the desk, it made a soft splat, and little Natra’s eyes followed it down.  About 3 years old, he seemed pretty interested in the inability of this strange white man to deal with the Mumbai heat – not surprising, all things considered.

Natra and his mother, Surekha, had agreed to take a survey about healthcare administered by Acumen Fund Fellow Joanna Harries and her colleague, Rubina Dsouza.  Joanna and Rubina work for Dial 1298 for Ambulance, a professionally-run, high quality ambulance service run in Mumbai (51 ambulances) and Kerala (30 ambulances). You dial 1298 to get a fully-equipped ambulance with doctor and medical equipment on-board.  1298 is affiliated with the Ambulance Access for All Foundation, whose mission is to provide high-quality service for all Indians, regardless of income.  (Full disclosure: I work for Acumen Fund, an investor in Dial 1298 for Ambulance.)

But will poor Indians call an ambulance?  That’s what Joanna and Rubina are working to find out.  Service for all is not only a noble goal, it’s good business as well – after all, some 40 to 60 percent of Mumbaikers live below the poverty line, in slums.  If you fail to serve this customer segment, you miss a huge number of calls – and your ambulances can run below capacity.

Effectively serving this market begins with listening, and that’s what Joanna and Rubina are doing.  They have been spending time visiting various Women of India clinics, all of which are located in slum areas, and asking a simple, 5-question survey: what do you do when you get sick?; how do you get to the hospital?; which (if any) ambulances do you call?; why wouldn’t you call an ambulance?; who helps you when you get sick?

Joanna and Rubina and I did eight surveys today, just the tip of the iceberg.  What is interesting is that 1298 takes its commitment to the low-income segments seriously – both in terms of social impact and in terms of business sense.  The company is marketing in a number of innovative ways – tying up with schools, hospitals, train stations, and more.  Slum outreach is an element of their business plan.  Regardless of income level, growing 1298’s customer base is an awareness game – call it marketing, brand management, outreach, whatever – you have to have potential customers know about your service before you earn their business.

The UN Millennium Development Goals (MDGs) set out clear and ambitious targets for reducing child and maternal mortality worldwide, but a growing shortage of healthcare workers and other economic and environmental trends have made achieving these goals by 2015 more and more unlikely. As mobile phone usage continues its explosive growth, mHealth, the use of mobile devices in health solutions, has the potential to revolutionize healthcare delivery in much of the developing world. mHealth includes a range of applications such as remote data collection, education and awareness, remote monitoring, communication and training for healthcare workers, disease and epidemic outbreak training, and diagnostic and treatment support.

A recent announcement in February 2009 by the Rockefeller Foundation, United Nations Foundation and Vodafone Foundation to form the mHealth Alliance to facilitate global innovation and ensure maximum impact in the field of mobile health (mHealth) has drawn attention to this area. The Alliance will expand upon the mHealth initiatives of multiple organizations around the world.  It will also encourage the development of scalable, sustainable, and open-standard health solutions that can be made widely available while supporting projects and research focused on increasing opportunities for mobile health, particularly in emerging economies.

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