At the base of the pyramid with Paul Polak (Part II of II)

(Continued from previous blog.)

Some facts Paul shared:

(1) Of the 90% of the customer base in the world, 2.75 bil living on less than $2 a day,
(2) 1.2 bil living on less than $1 day,
(3) 800 million (maybe 850 m) live on small farms depending on agriculture,
(4) There are 525 million farms in world (85% are less than 5 acres)
(5) Avg size of farm in Africa is 4 acres.

Given the above, Paul argues that small farm prosperity is the key to ending rural poverty.

Marketing is a critical element. There is no mass media at the BOP; people cannot read or write. So at IDE they recruited troubadours to write songs and skits with marketing messages imbedded. Bollywood movies were produced every year, they hired a top director and a top male and female lead and adopted familiar Indian plots: boy meets girl, they want to get married, there is a near suicide, then... INTERMISSION!! The actors talk of the benefits of low cost, effective pumps for poor farmers. They put customers on treadle pumps and after intermission, the movie continues where the father tells the boy to buy a treadle pump and boy and girl get married.

Polak says there are three (3) great myths of poverty eradication that must be overcome:

1. We can donate people out of poverty.
2. We can end poverty through GDP economic growth.
3. Multinationals as they are now will end poverty.

He also suggests, instead, 12 Steps for Ending Poverty:

1. Go to where action is
2. Talk to the people who have the problem and actually listen to what they have to say (interview at least 25 people)
3. Learn everything about the specific context
4. Think and act big (minimally reach 1 million people)
5. Think like a child (children have no limit to their thinking but get to the heart)
6. See and do the obvious (rural farms)
7. If someone invested it you don’t have to
8. Design for critical price targets
9. Design for measurable improvement
10. Work off of a practical 3 year plan
11. Keep learning from your customers
12. Stay positive: don’t be distracted by what other people think.

Moving forward in his quest, Paul has left IDE (although still on their board). He has launched another non-profit (D-Rev) – fomenting a design revolution to reach the other 90% of the population not targeted by marketers, aka the BOP. He is also launching a for-profit (Windhorse International) that takes on projects and influences how big business designs prices and markets its products. Its mission is to earn remarkable profits by serving the world’s poorest customers.

Paul started his career in poverty alleviation by talking to homeless people in Colorado where he lives and at the time worked with a friend of mine. We talked of our mutual friend then I asked him if he felt his approach to ending poverty would also work in developed economies. "Absolutely!" he said. "All the rules apply here too." I'm not convinced of the latter (yet) but I was very convinced by his approach and results at the BOP.

Paul Polak has done 1000+ interviews (all of which he records himself) with poor people around the globe, mostly with poor farmers at the base of the pyramid. His very first interview was with a homeless man in Colorado.

At the base of the pyramid with Paul Polak (Part I of II)

This entry is about global extreme poverty. It looks at solutions that may have implications about homelessness in the U.S. which is where Paul Polak's interest in poverty began.

Paul Polak is in his mid seventies, witty and funny, and has an old school charm that is engaging and even comforting as he throws his revolutionary ideas and stunning facts at you. If they made a Paul Polak doll I would buy one. A psychologist by training, Paul has spent the last 25+ years working at alleviating extreme poverty for those living at the "base of the pyramid (BOP)" and released a book in 2008 called, Out of Poverty: What Works When Traditional Approaches Fail. I heard him speak at a breakout session at Pop!Tech.

The Base (or bottom) of the Pyramid is an expression popularized in C.K. Prahalad's The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (2005). The BOP is the 4 billion people, the majority of human beings, that together make up a huge potential market. Prahalad believes "if we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepeneurs and value-conscious consumers, a whole new world of opportunity will open up" for both poor people and businesses. He adds that serving the BOP will "demand innovations in technology, products/services, and business models, and require large firms to work collaboratively with NGOs and local government." This collabrative approach is a big part of IA's Accelerator Expedition.

Polak is all about the BOP. The NGO he founded, IDE, has helped 17 million people out of extreme poverty in 25 years. Its approach is to apply business models to help extremely poor entrepeneurs with innovative design of their products and to creatively and effectively bring those products to market.

He believes that there needs to be a revolution in how multinational corporations design and market to people at the BOP. In his Wed. presentation, after Bunker Roy showed the amazing work and ingenuity of poor, illiterate women, young and old, and others were doing at the Barefoot College, Polak asked, "What if we had a million amazing barefoot people, and designed a package that a multinational corporation develop as an offering to them as franchisees? What if you franchised these 1 million folks and had a product they could sell to poor people. There would be money to be made for investors, for the franchisees, and products that could help the poorest people out of poverty (e.g., efficient lighting, watering systems for small farmers, cheaper electricity, etc.)

"We need a revolution where you can create a revenue stream for the poor person and the parent company," Paul exclaimed. He talked about combining vital products with "the ruthless pursuit of affordability" for true sustainables solutions. So, embrace the profit model and we'll create a true revolution when big business enters the market place for poor people because it makes money. Once there exists a workable model, the marketplace responds and soon big corporations start tweaking products that have a real benefit to poor consumers. The world runs on bottom line process, he says.

For part II of II of this blog click here.