rsz_ls_004In writing The Business Solution to Poverty, co-authors Paul Polak and Mal Warwick compiled the techniques that had worked so well in building profitable new ventures serving the bottom of the pyramid throughout the Global South. They called it “zero-based design,” deriving the term from zero-based budgeting, an accounting term that implies every line item in a budget is to be reevaluated on an annual basis, under the assumption that nothing should be sacrosanct.

Zero-based design requires that you begin from scratch, without preconceptions or existing models to guide you, beginning with your goal in mind — a global enterprise that will attract at least 100 million customers and $10 billion in annual sales within a decade, operating in a way that’s calculated to transform the lives of all your customers.

We believe that any effort at social innovation to address the needs and challenges of the world’s poor should be based on a similar set of techniques, beginning with the sine qua non of zero-based design: listening to your customers — lots and lots of them — before you lift a hand to design any product or service intended to benefit them.

Paul Polak and Mal Warwick’s award-winning book, The Business Solution to Poverty, highlights 20 “takeaways” that encapsulate much of the book’s essence. Today we have featured the seventh of those takeaways. Future posts will include others.

2 Responses to “What is “zero-based design?””

  1. dennis McMahon

    Hi to you Paul and mal

    Have a few questions (and I’m sorry I haven’t read the book yet as shipping charges to Malaysia (surrounded by the asean poverty belt as we are) were some ridiculous multiple of the book price:)

    Question 1: about the model – product type

    Based on your $10b annual revenue / 100m CUSTOMER model, the business will assist the customer base by providing them (I assume) with products and services that are necessary to their own improvement (drinking water, energy etc) or products that they can use to enhance their lives (insurance, mobile phone services, agri market information access etc) – this is correct ? Rather than being an effective pipe for more stuff they dont need?

    Question 2: inclusiveness of the model

    Does your model also project the number of local direct business agent participants within that $10b / 100m stream?

    For example, a village based distributor would have 100 customers with a turnover of $1,000 a month / profit of $250 month, so within the $10b there are 100,000 village based distributors?

    This may seem a simplistic example but my real question is not whether you can build such businesses, but how inclusive they will be for locals – ie does the model include necessarily delivering entrepreneurial opportunities for locals – or could the businesses end up as just an excellent delivery pipe for products but the majority of revenues leave the region?

    Question 3: have you been able to tap into existing village distribution networks for last mile delivery eg micro credit groups, insurance agents, mlm networks etc

    Thank you

    Dennis mcmahon
    CEO Green Business JV Marketing (Malaysia)
    Author The Poverty Pit
    http://www.gbjvt.com/povertypit
    http://www.facebook.com/thepovertypitbook

    Reply
    • Mal Warwick

      Dennis —

      Question 1: about the model – product type. Based on your $10b annual revenue / 100m CUSTOMER model, the business will assist the customer base by providing them (I assume) with products and services that are necessary to their own improvement (drinking water, energy etc) or products that they can use to enhance their lives (insurance, mobile phone services, agri market information access etc) – this is correct ? Rather than being an effective pipe for more stuff they dont need?

      The model is to provide $2 a day customers with products and services that either help them increase their income (energy for irrigation, for example) or save money now wasted (safe drinking water to avoid unnecessary healthcare costs).

      Question 2: inclusiveness of the model. Does your model also project the number of local direct business agent participants within that $10b / 100m stream? For example, a village based distributor would have 100 customers with a turnover of $1,000 a month / profit of $250 month, so within the $10b there are 100,000 village based distributors? This may seem a simplistic example but my real question is not whether you can build such businesses, but how inclusive they will be for locals – ie does the model include necessarily delivering entrepreneurial opportunities for locals – or could the businesses end up as just an excellent delivery pipe for products but the majority of revenues leave the region?

      Yes. Our model requires local distributors, service agents, even manufacturers where appropriate.

      Question 3: have you been able to tap into existing village distribution networks for last mile delivery eg micro credit groups, insurance agents, mlm networks etc?

      We hope to do that. Currently, at Spring Health, our safe water drinking company, we’re working with women’s self-help groups as a sort of evangelist corps.

      Thank you for writing!

      mal

      Reply

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