Successful Models

Submitted by Derek Newberry on May 14, 2008 - 08:34.

Guest blogger Sagar Gubbi is a technology graduate based in Bangalore with a deep interest in social and environmental sectors in India. He maintains a popular social entrepreneurship blog on Social Edge, and he is the co-founder of 'EcoForge', an investment advisory and consulting firm for social and environmental venture funds.

In this post, Gubbi responds to Allen Hammond's series on taking Base of the Pyramid models to scale. This week, NextBillion.net will publish responses from a number of BoP experts and practitioners, followed by a concluding post from Hammond.

By Sagar Gubbi

When I first read the BoP article by C.K. Prahalad and Stuart Hart three years ago, it triggered several thoughts in my mind and I remember having endless discussions with my friends on the ideas put forth in the article. Reading through Allen Hammond's posts this week on ‘Transformative Sector Strategies', I have experienced a sense of déjà vu, with a lot of thoughts being triggered in my mind all over again. If the work carried out by people like C.K. Prahalad, Stuart Hart and others was responsible for triggering widespread interest in the BoP, WRI's model, outlined in Al's posts, has the potential to take it to the next level.

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Submitted by Manuel Bueno on May 13, 2008 - 11:25.

We live in a world obsessed with growth. According to the National Bureau of Economic of Research (NBER), there have been only four recessions in the US since 1980. Between March 1991 and March 2001, the US experienced the longest economic expansion in its history. It comes, therefore, as no surprise that BoP experts seem to be concerned only with applying BoP lessons toward stimulating growth. In this post, I would like to suggest the possibility of using BoP knowledge as a palliative action in places that are experiencing extreme hardship and as a first step towards returning to normalcy.

One of the defining characteristics of BoP markets is the lack of connections with global markets. This lack of connections results in smaller markets with fewer competitors and higher prices. Furthermore, BoP markets suffer from a lack of infrastructure, efficient bureaucracy and the legal, political and economic certainties that are normally provided by public actors. Now, what happens in an area afflicted by disaster or violence where some or all of these variables are totally non-existent? Would BoP lessons be applicable in these cases?

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Submitted by Derek Newberry on May 12, 2008 - 08:50.

Guest blogger Brian Trelstad is the Chief Investment Officer of Acumen Fund. Before joining Acumen Fund, Brian spent four years at McKinsey as a consultant in the healthcare and non-profit practices and as an editor of the McKinsey Quarterly. Prior to McKinsey, he worked as a case writer at Stanford University's Center for Entrepreneurial Studies and was the lead environmental staffer for President Clinton's AmeriCorps program.

In this post, Trelstad responds to Allen Hammond's series on taking Base of the Pyramid models to scale. This week, NextBillion.net will publish responses from a number of BoP experts and practitioners, followed by a concluding post from Hammond.

By Brian Trelstad

Al Hammond's enthusiasm for the bigger picture is refreshing. His transformative sector strategies are a bit of a departure from the norm for someone like me, who spends most of his time evaluating individual investments and, as a result, often loses the forest for the trees. I am surprised, however, to hear that this topic doesn't keep Jacqueline up at night, as the entire Acumen Fund team is constantly thinking about how to take businesses - even those serving upwards of a million people - to the next level of scale.

Our strategy is to find great models like Medicine Shoppe or Water Health International and build them into profitable companies that are providing critical goods and services to the poor at scale (defined as 1 million plus customers). It's also critical for us to share the lessons and insights gleaned from the investing/management experience with the private capital markets and public sector to help shape the next generation of investment strategy and public policy.

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Submitted by Al Hammond on May 8, 2008 - 08:16.
This post is the third in a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I describe how this strategy could transform the health sector in emerging economies.

Last Mile Health Care Delivery

Talk to people in the rural communities of southern Mexico, in the new urban communities on the southern edge of Bogota, or in almost any village in rural Africa about getting decent access to healthcare, and their answer is the same: it usually costs more to get to a clinic, a doctor's office, even a pharmacy, than the cost of the service itself. In Bogota, most of the government-supported health services are in the north of the city, such that it can cost people in these new refugee communities a day's work plus bus fare across town and back to get help. Lack of access defines part of the last mile health care dilemma, and that means distributional business models, such as franchising, can be important.

Talk to Health Stores in Kenya, an enterprise trying to staff small pharmacies with nurses, and another part of the problem becomes clear: the sheer lack of doctors, nurses, and pharmacists in emerging markets. There are not anywhere close to the number of skilled professionals needed to cover rural areas, and these health workers overwhelmingly refuse to live either in rural areas or in urban slums. So technologies, organizational models, and legal changes that enable local diagnosis and remote practice by doctors and pharmacists could play a critical role.

Still a third factor leaps out from the data in The Next 4 Billion report that shows clearly that low-income households spend between a third and a half of their out-of-pocket health care expenditures on drugs. They typically don't go to doctors or clinics or hospitals, but rather to pharmacies or some other source of medicines and seek to self-medicate. That means they often get a guess as to what's wrong with them instead of a diagnosis.

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Submitted by Al Hammond on May 7, 2008 - 08:31.
This post is the second in a five part series on a radical new approach to scaling BoP business models, what we call a transformative sector strategy. In this segment, I tell the story of a rural connectivity pilot project; an example of this new model for development in action.

A Last Mile Model for Rural Connectivity

Son Tay commune, Quang Ngai Province. I was sitting across a table in a remote rural outpost of Vietnam, negotiating (via a translator) with the manager of a local radio station about access to his tower. He asked a series of technical questions and seemed satisfied with the answers, but then he wondered aloud: "Can we get Internet access here?" He didn't just want it for the radio station, it emerged, but for the surrounding small community - even though nobody there yet owned a computer. The manager understood that internet access could help transform their opportunities. And when we agreed to mount a small antenna to serve the community, the tower was ours.

The negotiation was part of a two year long process to pilot a novel approach to rural connectivity. It involved building an advanced, broadband network in three communes (groups of villages) in a very poor province in central Vietnam to provide Internet-based phone service and Internet access. Quang Ngai Province has no Internet access for its million-plus population outside of the provincial capital, and phone ownership is about 3 percent.

But the province does have an AUSAID-funded rural development project (RUDEP) that had built trust by doubling farmer's incomes in many communes, and optical fiber to every district capital (owned by the national electric utility, EVN, which also owns a mobile phone company, EVN Telecom). Ultimately all of these became partners in the effort, as did USAID's Last Mile Initiative, Intel and other equipment providers.

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Submitted by Derek Newberry on May 7, 2008 - 08:23.
Date of talk or publication:
May, 2008
Speaker Name / Title:
Allen Hammond
Organization:
World Resources Institute
Description:
A PowerPoint presentation by WRI Vice President Allen Hammond summarizes lessons learned from a pilot project to provide WiFi access to three areas of rural Vietnam.
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Submitted by Francisco Noguera on April 24, 2008 - 12:11.
Published in:
April 24, 2008 - 00:00, NPR
Paul Polak, Tackling Global Poverty His Own Way

Interview from Fresh Air from WHYY on April 23, 2008

Paul Polak, founder of the nonprofit International Development Enterprises, has spent 25 years working to eradicate poverty in Bangladesh, India, Ethiopia, Zimbabwe and other countries in the developing world.


His perhaps-surprising conclusion: Government subsidies for the rural poor often make things worse.

Instead, Polak teaches families and farmers - many of whom live on a dollar a day and own perhaps an acre of land - how to increase crop yields with simple technologies, such as cheap, foot-operated water pumps and inexpensive drip hoses for irrigation.

Submitted by Francisco Noguera on April 24, 2008 - 08:19.
Published in:
April 23, 2008 - 20:36, The Boston Globe
Creator of Low-cost Pumps for African Farmers Wins MIT Prize

A San Francisco man who is credited with changing the lives of thousands of farmers in Africa with his irrigation pumps has won the $100,000 Lemelson-MIT Award for Sustainability.

Martin Fisher is co-founder and chief executive of the San Francisco-based non-profit KickStart, which has developed and marketed low-cost, human-powered pumps that allow farmers to boost the productivity of their land -- and increase their earnings.

Rather than simply giving the pumps away, KickStart has worked with wholesalers and retailers to market the pumps, with the idea of someday creating a self-sustaining market for them.

Submitted by Derek Newberry on April 14, 2008 - 12:41.

All of us at NextBillion.net were both humbled and thrilled to see the New York Times Sunday Magazine draw on our work - and the work of many colleagues - to write an extended piece on the impact of cell phone usage in emerging economies.

Sara Corbett's article follows Nokia researcher Jan Chipchase as he navigates the human terrain of countries like Ghana, Brazil and Uzbekistan, trying to figure out why a farmer in Kenya or a prostitute in Brazil is finding unique value in their cell phone. The article uses Jan's experience as a device for sparking a broader discussion on the potential for the booming cell phone market to increase incomes and quality of life among the BoP.

What was most interesting about the piece is that the author poses her central theme as a question, not an assertion: "Can the Cellphone Help End Global Poverty?" In her narrative, while laying out the case that cell phones increase productivity, she does not present this technology as a silver bullet development solution.

Rather, we get a very rich, on-the-ground account of how technology is changing people's lives in BoP markets everywhere.

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Submitted by Al Hammond on April 9, 2008 - 12:36.

A new paper posted in our resources section gives a specific regional example of the potential benefits of biofuels for the BoP (this adds to our previous discussions on the subject here, here and here).

The paper - by Kathleen Robbins of the GreenMicrofinance Group - tells the story of a small NGO, aided by GreenMicrofinance and an enlightened multinational company, that is piloting an environmentally sound and economically sustainable approach to biofuels. The key element is a jatropha nursery that is incubating young plants and teaching a group of Haitian farmers how to grow them.

The oil squeezed from the plant will be burned in lamps and cookstoves and the remaining seedcake used as fertilizer. As supplies grow, a small refinery will be built to process the plant oil into biodiesel-and the local mobile company is willing to buy it to fuel the diesel generators on their cell towers.

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Submitted by Al Hammond on April 9, 2008 - 12:22.
Speaker Name / Title:
Kathleen Robbins, Director of Clean Energy
Organization:
GreenMicrofinance Group
Description:
The paper, by Kathleen Robbins of the GreenMicrofinance Group tells the story of a small Haitian NGO, that is piloting an environmentally sound and economically sustainable approach to biofuels. The key element is a jatropha nursery that is incubating young plants and teaching a group of Haitian farmers how to grow them.
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Submitted by Rob Katz on April 5, 2008 - 09:28.
April 04, 2008 - 09:00, Red Herring
Acumen Fund's Big Ambition

By Joel Dreyfuss

The Acumen Fund, a non-profit global venture fund with a mission, celebrated its seventh anniversary this week. A relative newcomer to the world of philanthropy, Acumen has drawn a lot of attention for its entrepreneurial approach to doing good: investing in new companies in developing countries that use technology to make a difference in the lives the people at the bottom of the pyramid.

Acumen’s web site (www.acumenfund.org) bluntly declares founder and CEO Jacqueline Novogratz’s goals on its home page: invest $100 million and make an impact on the lives of 50 million people by 2011. She should easily achieve her objective. Acumen has some $32 million invested up to now in Kenya, India, Pakistan and Tanzania. Funding comes from wealthy individuals as well as institutions like Lehman Brothers, the Bill and Melinda Gates Foundation, and Google.org, the charitable arm of Google.
Submitted by Francisco Noguera on April 3, 2008 - 15:44.
Published in:
April 03, 2008 - 10:50, Fortune Magazine
Muhammad Yunus on Tech, Profit and the Poor

The Bangladeshi Nobel laureate wins yet another award - this time for contributions to technology. He talks to Fortune about where tech might take the poor.

NEW YORK (Fortune) -- "Technology is making more changes in our way of life than ever in human history," says Muhammad Yunus. "The way the Internet and the mobile phone are spreading, you cannot compare with any technology of the past." Yunus is known for his visionary leadership in microfinance and helping the poor. He and the Grameen Bank he founded won the Nobel Peace Prize in 2006. Now he wants to see the tech industry work more explicitly to empower the poor.

Yunus has just been awarded the James C. Morgan Global Humanitarian Award by the Tech Museum of Innovation. The Tech Awards are to be presented in San Jose in November and are funded by chip-equipment maker Applied Materials (AMAT, Fortune 500). In addition to the Morgan Award, they annually recognize 25 people for visionary uses of technology to solve the world's problems.

Yunus is an impatient man. Perhaps that's why he has accomplished so much. In addition to the micro-lending bank, Yunos has created a variety of other businesses under the Grameen family of companies. It has helped create about 25 other companies or institutions in Bangladesh and around the world, including fish-farming and knitwear businesses and a provider of health-care services. But most of Grameen's businesses have something to do with tech: Bangladesh's largest cell phone company (which is also its largest private employer), an Internet service provider, an electronics manufacturer, a business IT consultant and a developer of high-tech office buildings.

Submitted by Francisco Noguera on April 1, 2008 - 08:54.
Published in:
April 01, 2008 - 08:00, World Ark Online
Designing New Technologies for a Better Life

By Lauren Wi
lcox | World Ark Contributor

In 1985, a young mechanical engineer named Martin Fisher traveled to Kenya on a Fulbright scholarship. Fisher planned to stay for a few months, putting his degree to meaningful use working on projects for the rural poor, but he soon found himself absorbed in the world of international development. Months turned into years as Fisher worked on rural water projects with communal wells, helped women's groups start small businesses and helped produce farm equipment to give to farmers.

But after a few years, Fisher took a hard look at the work he and his colleagues had done and found it disappointing. Although the projects were successful in the short-term, they turned out to be "totally unsustainable," Fisher explained. "We would walk away from these things and they would collapse." Communal pumps would break, and no one would repair them. Efforts to provide people with things that they desperately needed - water pumps, homes, farm equipment - were simply temporary fixes, no matter how inexpensive, simple or well-intentioned.

What, he wondered, did poor people really need? Rather than beginning yet another attempt at a charitable solution, Fisher put this question directly to the poor, trying to determine what would be most useful to them.

What he found surprised him. Designing products to help the poor, Fisher discovered, was in some ways a through-the-looking-glass experience, a reversal of traditional assumptions. Where design efforts for the poor often focused on saving them time and labor, poor people had both time and labor in abundance. Where design traditionally emphasized quality and durability, the extremely poor, whose lives and needs often changed unexpectedly, preferred affordability. Above all, Fisher found, the innovations that had the most impact were often those that helped individuals earn money, not those that solved quality-of-life issues or were the basis of a community project.

Today, two decades later, Fisher and a small but growing contingent of designers, engineers, businesspeople and nonprofit workers are pioneering a new approach to international development: designing and distributing affordable, useful and in many cases, income-producing products to the extremely poor. Garnering national attention with the recent exhibit, "Design for the Other 90%," at the Cooper-Hewitt Museum in New York City, the nascent movement is not simply a design revolution, or an ambitious business plan, but a combination of both. It has also begun to change some of the basic assumptions about design, business and solutions to poverty.




Submitted by Francisco Noguera on March 27, 2008 - 16:50.
Published in: |
March 25, 2008 - 16:00, Business Week Online
4 Lessons to Learn from Tata's Nano

The announcement in January by Tata Motors of its newest car, the Nano, was revealing on many levels. The announcement generated extensive coverage and commentary, but just about everyone missed the Nano's real significance, which goes far beyond the car itself.

But, OK, let's start with the car itself - particularly the price. At about $2,500 retail, the Nano is the most inexpensive car in the world. Its closest competitor, the Maruti 800, made in India by Maruti Udyog, sells for roughly twice as much. To put this in perspective, the price of the entire Nano car is roughly equivalent to the price of a DVD player option in a luxury Western car. The low price point has left other auto companies scrambling to catch up.

Thinking outside the patent box


How could Tata Motors make a car so inexpensively? It started by looking at everything from scratch, applying what some analysts have described as 'Gandhian engineering' principles - deep frugality with a willingness to challenge conventional wisdom. A lot of features that Western consumers take for granted - air conditioning, power brakes, radios, etc - are missing from the entry-level model.

More fundamentally, the engineers worked to do more with less. The car is smaller in overall dimensions than the Maruti, but it offers about 20 per cent more seating capacity as a result of design choices such as putting the wheels at the extreme edges of the car.

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