Paul Polak & Mal Warwick’s The Business Solution to Poverty
If you had one month and a $50,000 budget to tackle any project, what would it be?
That’s one of the questions futurethink founder Lisa Bodell offered in a recent strategy+business post entitled Fourteen Interview Questions to Help You Hire Your Next Innovator. Like many prompts similarly used in interview situations – from “Sell me this pen,” to “Persuade me to book the middle seat on an airplane” – I had no idea how I’d answer it.
At least, not until I read Paul Polak and Mal Warwick’s The Business Solution to Poverty: Designing Products and Services for Three Billion New Customers (Berrett-Koehler, 2013).
These authors are true thought leaders in the sense that they have taken an issue – global poverty — and shared an actionable, commercially relevant, experientially supported, new way of thinking about it. A fresh point of view that could help inspire other leading thinkers (aka you!) to develop ruthlessly affordable products and services for the almost three billion people around the globe who live on less than $2 a day.
Sounds crazy, right? Well, no more than what we’ve been doing all these years.
Charity, philanthropy, foreign aid, handouts, to the tune of $2.3 trillion (that’s $2,300,000,000,000, by the way) have been “invested” in the problem of world poverty since World War II. Yet, “there are more desperately poor people today (2.7 billion) than the total population of the world 60 years ago (2.6 billion).”
Why? Because as this article on the failure of the U.S.’ War on Poverty initiative suggests, conventional approaches address symptoms, not causes. Hence the need for a radically different way of thinking about poverty.
The authors’ argument is this: If you can produce a treadle pump costing $25 instead of, say, $100 then more farmers in Bangladesh can afford to buy them. In doing so they can produce much greater yields for their crops, earning exponentially more than they would have otherwise. That extra income not only results in more food on the table and more jobs created for the additional pickers who are needed, but more money for the farmers to invest in their business. Ergo, you help shift not just one family but potentially many out of the lowest income strata and into the middle class.
Polak and Warwick outline what they call zero based design or “assumed ignorance.” This requires all those businesses who’ve glommed on to the trend for jugaad innovation without really understanding what that means, to “assume nothing you’ve done before is suitable to address this new challenge.” Sounds right up a thought leader’s street, doesn’t it?
Here’s part of the recipe, (to get the rest, read the book!):
- THINK ABOUT and challenge your long held beliefs and perceptions by talking less and listening more. You’ll discover that the “poor” is an new, untapped market who don’t want crap any more than you do. They are discriminating customers attracted to high quality, aspirational brands. It’s just that their most pressing needs are for clean water, nutritious food, cheaper energy, improved housing, universal health care, and enhanced education.
- THINK LIKE STEVE JOBS and desire to dent the universe! You’re not serving a market, you’re creating one.
- THINK RUTHLESSLY AFFORDABLE: Put your mind to ways to slash costs. So that (as Polak’s iDE team have done in India), you can sell a conventional drip-irrigation system to farmers with one acre for $200, not $750– potentially offering alternatives relevant to smaller acreages ranging from $3 to $25.
Aging populations, global urbanization, and climate change are three significant, evidence-backed trends that are useful for understanding emerging system-scale disruptions…The business community has just as much cause to be worried as the rest of society. ~ Eric McNulty, No More Business As Usual
But, you may be thinking, no one’s going to fund your idea when the profit margin is so narrow, right? Wrong! Embracing Polak and Warwick’s philosophy means THINKING A HELLUVA LOT BIGGER than you’re used to. This isn’t about niche markets, or an idea for a product or service meeting the needs of thousands, even millions of customers. The big, hairy, audacious goal here is to create a global enterprise serving hundreds of millions. After all, it’s no different to what companies like Walmart have done, creating huge profits from small margin, large volume sales.
As the authors argue, if you can’t come up with an idea for which sales of 100 million over ten years is entirely possible, don’t bother. There are plenty of people already conducting “business as usual.” But those days are numbered, as Eric McNulty articulated in his recent strategy+business post (see link above).
Do you want to sell sugared water for the rest of your life or do you want a chance to change the world? ~ Steve Jobs to PepsiCo VP John Sculley.
Polak and Warwick put this another way, pointing out that “Coca-Cola sells aspirationally branded, carbonated sugar water for about 25 cents a bottle in villages all over India. In those same villages, 50 percent of the children are malnourished.”
What would happen if someone were to come along “selling an appealing and nutritious soft drink at a nickel a pop in millions of villages around the globe, backed up by world-class branding and marketing equal to Coke’s?”
I visit India at least once a year. Many of my friends are concerned about the influence that western products have on their children. Products like Coca-Cola, that they believe is having a detrimental effect on their kids’ health and ability to study. (Personal note: I refused to allow my children to drink sodas when they were little, after just one experience of terrifying hyperactivity in my son.)
So what would I do with a spare $50 grand and a free month? I’d be figuring out how to serve bottom-of-the-pyramid customers in India with a delicious, ruthlessly affordable, innovatively distributed, high quality drink. One marketed as brain-enhancing that would speak to the importance that Indians place on education.
What would you do?
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