Friday, January 31, 2014

Paul Polak interview about his new book The Business Solution to Poverty

Earlier this week I had the honor to collaborate with Paul Polak, author of The Business Solution to Poverty on this interview. Paul has been the social entrepreneur who has inspired me the most and at 80 years old he is both full of wisdom, and has an un-bounding energy. Paul has been in the business of creating markets for the poor for over 30 years. He has authored two books and created several successful companies and organizations. "Polak is best known for his work with Colorado-based International Development Enterprises (IDE), a non-profit he founded in 1981 which is dedicated to developing practical solutions that harness the power of markets and attack poverty at its roots. IDE has ended poverty for 19 million of the world’s poorest people by making radically affordable irrigation technology available to farmers." ~Wikipedia

Find out more about the new book, The Business Solution to Poverty, on Paul's website:

By Ty Hallock

What is it you’re working on that you are most excited and passionate?

I’m creating 4 frontier multi-nationals which I hope will change or transform the way we approach poverty programs, and the way business is transacted.  Each of these multi-nationals is designed to transform the livelihoods of at least 100 million, $2 a day customers, generate at least 10 billion in annual revenues, and urge sufficient profits because I track the commercial private sector internationally.  I’m also working on a creation of an investment fund that will incubate and invest in this new generation of frontier multi-nationals.

So it seems that you've stayed with some core philosophies throughout your career.  You've always advocated for listening.  You believe that business is the key to helping third world countries.  You have a real focus on a design process.  Could you talk a little bit to those core principles you use to do your work?

Sure, and there is much more detail about this in the most recent book, “The Business Solution to Poverty”, that I wrote with, Mal Warwick.  First of all, this new generation of interventions if you’d like, is totally based on what I’ve learned over the past 30 years with iDE and D-REV and with all the other work that’s done.  

Responding to the basic components that you listed.  Listening, of course everything begins with listening to the customers and so before we start anything, before we come up with a concept for a new scalable multi-national business.  We listen to customers and we do the three steps defined in the first book “Out of Poverty”.  There are actual 12 steps, but the first three are... go where the action is, talk to the people who the have problem and listen to what they have to say, and finally learn everything there is to know about the specific context of the problem. So for example, we started a company that sells safe drinking water to rural people who are drinking water that makes them sick.  But before we did that, we determined in Eastern India there are 300 million people drinking water that makes them sick. We interviewed hundreds of those people, we interviewed people in the village and so on and that lead up to the design of a strategy to reach 100 million of those people and make money doing it. 

The second issue is about design, in the past I have written a lot about the design for the other 90%, which basically assumes that, or takes note that most of the designers in the world now are designing products and services that work almost exclusively to address the problems of the richest 10% of the worlds customers.  What we need right now is nothing short of a revolution in design, to script the needs of the other 90%, specifically we are talking about 40% of the worlds customers who live on less than $2 a day.  I talked a lot about how to design following the principle of the ruthless pursuit of affordability in the first book and in talks and so on.  In the new book we talk about zero based design, which uses a systems approach and is parallel to zero based budgeting.  That is with zero based budgeting, you instead of tweaking budget categories from last year to this year.  You start asking the question what would you do if you were starting with scratch, how would you invest whatever funds you had?  The same principle is applied to design.  

So when we are working, for example, on design of our way to transform the costs of conventional foldable pegs to a level that is 80% cheaper.  We look at every component in designing a total system and we start from scratch in what is required for each component.  So for solar popping for instance, that includes a solar panel, a computerized system of controlling the electronics, a pump, a motor, each of those being systems, and a way to convey the water from the source to the field.  So our design changes every one of those starting from scratch with a purpose of achieving radical affordability targets, and when you change one part of the system, you have to take that into account then the design of the rest of the system.  For example, you got a really affordable solar panel pump and motor.  If you use surface flooding to deliver the water to the crops, you are operating at 20% of efficiency. If you use a low cost drip system you go to 80% or 90%.  That drip system is just as profound or more profound in changing the equation as lowering the cost of the affordable panel.  So that’s the design.

Your newest book, “The Business Solution to Poverty”, can you give me an introduction to that?

Yes, it’s basically describing how we can create this transformative new model of frontier multi-nationals.  They don’t exist now, the closest thing to it is the cell phone marketplace, which has reached $2 a day customers.  So, we describe in the book, the design process to create these new business, we describe the 4 examples of new businesses that I’m incubating and what we’ve learned from them, and we pull out of that the basic learning points that someone needs that wants to create a global business that not only transforms poverty but changes the valued framework of business. So for example, these businesses need to operate effectively serving customers that live in remote rural areas.  To do that you need to address not only radical affordability but how to implement a strategy to achieve scale and that’s got to be designed from the very beginning.  You also have to design a profitable last mile supply chain, because these are people living in villages where conventional business spends too much money trying to deliver goods and services or buy things, goods, and services from these customers. 

So the book describes all of that and is a basic primer for people who are interested in taking the next step in reaching significant scale.  Its based on the premise that the biggest unmet challenge in development today is failure to reach scale.  And that this new form of multi-national business will provide a strategy for achieving that scale, and changing some of the valued framework of business so that business is not just concerned with bottom line profits but achieving the common good.

How did you and Mal come together and what made you want to work with him to write the book?

Both of us were drunk once in a bar… Oh no, that’s not really it.  The editor of the first book, Steve Piersanti, who’s a publisher at Berrett-Koehler, really wanted me to expand on what I wrote in the first book.  But I’m more preoccupied with making it happen than writing about it, and I have very little bandwidth, so he ended up introducing me to Mal, who had been an editor for Berrett-Koehler in the past, who has a background in socio-venture work, who was also in the peace corp., and we met and it was a perfect partnership from the beginning so we decided to write the book together.  I don’t think I could have done it without Mal, and of course the book is based primarily on what I’ve learned over the past 30 years, supplemented by Mal’s experiences and Mal is a superb writer, so we worked very well together.

So, you’re 80 years old now and the messages and work you’ve done are extremely important.  How are you passing the legacy on? How do you see this living on?

Well at the age of 80, we are designing for scale from the beginning, every company I’ve formed, every initiative that I’m involved in.  We work on designing a succession plan from the very beginning.  So that the water company is called, Spring Health In India, and there is an executive team there.  My partner is in India, Jacob Mathew, has been my partner in India from the beginning. He is the founder of Idiom, one of the biggest design firms, and I would regard it as the best design firm in India.  And the COO of the company Kishan Nanavati, who previously ran 25000 phone kiosks in the state of Karnataka.  We have 120 full time staff in India, and the whole company is, I’m the only non-Indian person involved and I’m chairman of the board.

I’m fairly confident that if I kicked the bucket tomorrow, that business would continue successfully. And I’m building that kind of structure with every business.  But as far as the ideas are concerned, I’m doing my best to write things down so that I’ve published the two books.  And with the help of my daughter Kathryn and the whole team here, we have a presence on the social media, and I give key-note talks regularly.  Scheduled for one in Boston on Feb. 9th.  By spreading the word that way we hope to continue the work after I’m gone.

D-REV is still active and going well.  Could you explain that?  

Yes, sure.  Once again, this is in line with your question about succession.  So I’m also the founder of iDE.  I started that from scratch and then I handed that over to my successor five years ago.  So iDE, has about 400 staff around the world, is working in 15 countries, and it has continued to operate. I remain on the board but I’m really not involved in everyday matters there.  D-REV similarly is an organization I started D-REV stands for Design Revolution, and the full name is Design Revolution: Design for the Other 90%. It has overtime, focused its energy on creating radically affordable bio-medical technology.  I started that, ran it for a year or two.  We created a board, an excellent board. We added, Krista Donaldson, as the CEO.  And then after a year or two with her running it, I moved on, but I still support them in any way I can. 

D-REV has in turn designed a couple of breakthrough technologies.  The first is Brilliance, which is a way of helping infants who are born with Neonatal Jaundice, who will lose the jaundice.  This is done routinely in the west by shining a bright light at the skin of the infant.  The conventional technology costs about $4000, D-REV has come up with the technology that does virtually the same thing for $400, and is leasing it to clinics.  It has licensed the technology to an Indian commercial firm, which is distributing it.  D-REV remains involved in helping the distribution and takes a royalty.  D-REV also has developed Free Motion, which is a radically affordable knee joint.  Which is now being used by some 5000 customers around the world.  And D-REV is continuing to work on improving those technologies, widening the product range and finding other technologies in the biomedical field that have potential for a transformative impact.

So you have basically created an organization that is innovating on different technologies and is using design to do that.  Can you talk to the design process?

Sure, and this is described to a significant extent in the book.  What I’ve tried to do is implement a revolution in design for the other 90%.  So it’s not only D-REV, but my ideas were incorporated into an exhibit at the Smithsonian called Design for the Other 90%, which toured around the United States, and I’ve also helped in the creating in design courses at the universities.  For example, I was involved quite a bit in helping start Design for Radical Affordability at Stanford.  I’ve done some work at helping Andy Smith at M.I.T. and so on.  

The basic principles that I’m talking about, that is a topic for a book in itself, but the design principles involved, something we talked about already which is starting by talking to customers.  So every design is originated from learning about the problem in its real life context, and then the process goes through a proof of concept prototype, followed by a beta test with actual customers.  Learning not only about the technology but about the business strategy, and the design process then moves to a commercialization phase, early commercialization and the rapid roll out commercialization, all those 4 phases. 

In the process there are a lot of principles which I described in the book “Out of Poverty”. The first is the “ruthless pursuit of affordability”, and that required knowing how to find the trade offs acceptable to poor customers in order to reach a level of affordability which is attractive.  It’s not to be confused by making things cheap and shoddy.  Often you can lower the price and improve the performance characteristics that are desirable to the customer.  It involves such principles as going backward to design forward.  Going forward to design backward is the way I described it in the book. So for instance, if you want to design a radically affordable bicycle. It might be useful to go back through the evolutionary history of the design of the technology.  Go back to a previous model which is simpler and apply modern materials.  So all of those principles are described in “Out of Poverty”, and the next step is zero based design which is described in “The Business Solution to Poverty”, that just goes one step further using a systems design approach.

So the listening part is the very first part in your process, When I first heard about you, I was hearing you had recorded interviews and maybe hundreds of hours of interviews from some of your clients in third world countries.  Can you talk a little about how you carry out a listening project?

Yeah, first it’s useful to say a little about listening.  Listening is not just listening to what people say, in fact, the words, the verbal contact of an interaction maybe represents 20% of the information.  It’s learning to listen with your whole soul.  You listen not only to what people say but how they say it.  By that I mean you keep all five senses open.  So an important part of learning about customers and their learning about you, is seeing what kind of clothes they’re wearing, are they wearing a watch?  Does their house have a thatched roof, or a corrugated tin roof.  Is there a T.V. antenna on the house?  You learn by observing everything, and I’ve always said you can walk through the main street of a village, once and write a book if you keep your eyes and ears open.  So that’s the first context.  

The key to everything we did at iDE, which we helped 20,000,000, dollar a day people, move out of poverty.  I interviewed customers as you say and I interviewed over the first 25 years some 3000, dollar a day families, mostly living on small farms.  The normal process is I visit a village with somebody who is already known and trusted by the village as my interpreter and collaborator, and we pick the one family in the village that is a typical family. I might spend 5-7 hours with that family learning everything there is to know about them.

Thank you very much Paul Polak for being more energetic and on the ball than I think I am even now. Very pleased to have had this time and to get a chance to spread the word. Also, buy the book!

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