The Business Solution to Poverty:
Designing Products and Services for Three Billion Customers
By Paul Polak and Mal Walwick
Review By John E. Wade II
This is a book that cries out to those of all ages who want meaning and purpose in their life. The goal is simple—bring out of poverty those 2.7 billion people who live on $2 or less per day. As the authors graphically and specifically point out—this is far from easy. But, think about it, what in life of great importance is easily accomplished?
The book itself points out some of its potential readers: entrepreneurs or investors seeking practical ways to profit from new enterprises in emerging markets, executives at major global corporations who want to address the potential customers at the bottom of the pyramid, development practitioners in government, nonprofits, the United Nations or other such organization, philanthropists and investors who want to challenge world poverty, and concerned world citizens everywhere.
I agree heartedly with one of the first statements by the authors, “…we believe that the greatest potential for reducing poverty in today’s global environment lies in the power of business.” These 2.7 billion people “…constitute an enormous untapped market.” Estimates are that these people have collective purchasing power of $5 trillion and that as they move out of poverty that figure will double and triple. These poverty stricken people will be tomorrow’s middle class; and the authors state categorically, “Approaching the problem from the top down has almost never worked…”
I have written below a long review with lots of direct quotes because I have gotten permission to do so and because the book is so well written and simply worded that paraphrasing didn’t seem necessary or appropriate. For those who want to get a summary of the book/book review, here are the book’s “Takeaways,” with a bit of commentary from me.
- “We believe there is one sure way, and only one way, to foster genuine social change on a large scale among the world’s poverty-stricken billions—by harnessing the power of business to the task.” I fervently agree.
- “Conventional approaches to end poverty have largely failed, and as Einstein taught us, to continue believing they’ll succeed would be madness.” I agree with their point that conventional approaches have largely failed. But I must say I disagree with Albert Einstein. Being persistent in repeating the same approach to a human problem oftentimes is the only way to eventually succeed.
- “The most obvious, direct, and effective way to combat poverty is to help poor people earn more money.” This may sound simplistic, but earning money can lead to sustainability whereas money through government or charity leads to low self-esteem and is very uncertain in the long term.
- “Although a handful of development initiatives have succeeded in improving the livelihoods of as many as 20 million poor people, none has yet reached significant scale.” This is a major and overriding point in this book.
- “Poor people have to invest their own time and money to move out of poverty.” Giveaways don’t work in the long term, for sure.
- “The Don’t Bother Trilogy: If you don’t understand the problem you’ve set out to solve from your customers’ perspective, if your product or service won’t dramatically increase their income, and if you can’t sell 100 million of them, don’t bother.” Scale is critical for global success.
- “To meet the biggest challenge in development—scale—your enterprise must aim to transform the lives of 5 million customers during the first 5 years and 100 million during the first 10.” I like the idea of having definite large-scale goals.
- “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.
- “In designing products that will open up new markets among the world’s poor, ruthless affordability is the single most important objective.” This is a huge challenge with a simple goal, but very hard to do. However, since we are in the Innovation Age, I believe that we can do it.
- “Design for extreme affordability rarely comes easily. Making anything both workable and cheap may take years of careful, incremental adaptation and revision.”
- “Designing a branding and marketing strategy and a last-mile supply chain that will put your product or service in the hands of millions of customers is three-quarters of the design challenge.” This is a big problem in rural areas in particular.
- “To achieve true scale, pick a problem that challenges the lives of a billion people.” This avoids a focus that is too small to defeat world poverty.
- “The product or service you plan to commercialize must be culturally independent.” This allows scale country to country. The economics of scale is one of the key factors that allowed Henry Ford to lower the price of automobiles to make them affordable for average people. Volume of production will be a key to allowing this bottom pyramid to be able to afford the products envisioned by this book.
- “A brilliant rich-country executive—or even an upper-class executive from the Global South—may be totally out of his or her element working with poor people.” To major corporations that I hope will heed this call, this may be a crucial consideration.
- “Manufacturing at scale is possible through distributed (decentralized) production facilities only if parts or modules are precisely machined to near-zero tolerances and available space and the sequence of steps on the assembly line has been optimized.” I encourage you to read the whole book, including the case studies which I did not review, to comprehend this “Takeaway.”
- “One of the greatest impediments to achieving scale is the high cost of delivering products and services, not just the ‘last mile,’ but the last 500 feet.” This is particularly true in rural areas where so many of those living on $2 or less per day reside.
- “Decentralization is one of the keys to building a large, transnational business capable of making headway against global poverty while turning a generous profit.” Remember that profits are necessary to create sustainability and scale.
- “A business that practices stakeholder-centered management can maximize the chances that it will not just survive but flourish over the long term.” I agree completely.
- “Striving for the lowest possible environmental impact is smart business.” I believe climate change is one of the top problems of our planet and I’m certainly not the only one who has that view.
- “To thrive over the long term, a business must optimize its most valuable asset—its people and the intellectual property they produce—by ensuring that they are well paid, treated with respect, engaged in building their own careers, and given ample opportunities to find meaning and balance in their jobs.” All the people in and out of our businesses globally should be treated with dignity, respect, and kindness.