Santa Clara University

Breaking Down Barriers to a More Equitable and Prosperous World

Introduction

Ten Principles to Break Down Barriers and
Make Markets Work for Everyone

1.  Overcome “civil engineering” deficits through affordable infrastructure innovation in sanitation, safe water, energy, housing, and transportation.

2. Overcome the barrier to capital access for those with no collateral or credit history through micro-finance.

        3. Overcome the barrier to standard Internet access and value-added content through advanced services over TV, cell phones, and Web 2.0.

        4. Overcome the reality of fragmented markets through distribution and supply chain innovations.

        5. Overcome the barrier of inefficient markets through successful intermediation.

        6. Overcome the challenge of deploying technology through localization and the creation of livelihoods to manufacture, distribute, and maintain technologies.

        7. Overcome skill shortages and education deficits through simplification.

        8. Overcome “non-consumption” as a barrier to adoption through education and a compelling value proposition that encompasses cost innovation.

        9. Overcome “market failure” through the creation of sustainable business models. 

        10. Overcome barriers to entrepreneurship at the base of the pyramid through the seeding of “innovation ecologies.”

Principles 1 and 2: 
Systems Change through Distributed Infrastructure and Financial Market Innovation

            Off-grid energy in the form of low cost solar systems, biomass, and efficient stoves (an illustration of principle 1, overcoming civil engineering deficits, in Table 1) are made affordable to the poor in Bangladesh by Grameen Shakti (GS) with the help of access to micro-finance (principle 2). The work of GS illustrates how many of the factors in Table 1 work together to create opportunities for environmentally and economically sustainable innovations at the base of the pyramid.  GS addresses the basic need for electricity and the potential to combine extant technological innovations in new ways to provide access to clean, efficient energy as an alternative to kerosene. Kerosene creates smoke-filled rooms, requires women to trudge miles for fuel, and causes premature deaths due to cancer, asthma, and other air-pollution diseases.  GS, through its Solar Home Systems (SHS), provides low-cost alternative for light and energy.  It also creates livelihood opportunities (principle 6) through Renewable Energy Entrepreneurs for manufacturing, distribution, and maintenance of 10-20 watt solar systems, as well as bio-gas systems that utilize Improved Cook Stoves (ICS).  Distribution barriers (principle 4) are overcome by GS through the creation of 264 rural based offices with trained women engineers to repair, maintain, and supply SHS spare parts.  The economic barrier of high up front SHS costs is addressed by providing micro-credit access (principle 2).  The related non-consumption barrier is overcome through free user training and the low costs that come with high volumes (principle 8).  GS plans to reach one million customers by 2015.  A scaleable business model (principle 9) is evidenced by the rapid growth of GS, with 1,600 SHS systems installed per month in 2006 and the current rate of installations at more than 4,000 per month, making GS one of the largest and fastest growing rural-based companies in the world.

                Gameen Shakti illustrates how technological and market creating innovations at the base of the pyramid can foster broader innovation ecologies (principle 10). A healthy population—in this instance through reduced indoor air pollution—is also a more productive population. In addition, SHS energy systems have opened up new opportunities for employment in community T.V. centers, electronic repair shops, and mobile phone shops.  Similarly, bio-gas innovation has created secondary organic fertilizer markets for poultry and cattle owners.  This organic compost is a lower cost, less polluting alternative to chemical fertilizers. GS has constructed more than 2,000 biogas plants in the past year.

Principle 3: Advanced Services Over TV, Cell Phones, and Web 2.0

                Cell Bazaar in Bangladesh improves market functioning in settings where prices and availability vary from one village to the next.  It provides online listings (think of eBay over cell phones) and user interaction in the local Bengal language. In addition to creating a wider market for rice, vegetables, used motorcycles, TV’s, and apartments, it creates market access for tutoring, medical, and other services.

                TakingITGlobal.org is one of the world’s best examples of using  Web 2.0 community building tools and learning management systems to overcome barriers to the awareness of collaboration opportunities and to provide local language access to resources. It utilizes user profiles to build individual identities as global citizens and tap the power of social networks and digital media as tools for learning, collaboration, dialogue, and action. TakingITGlobal.org develops projects for this online community with partner international NGOs, UN agencies, and national governments. Seventy-eight percent of its members state that they have become more aware of global issues and challenges, and sixty-seven percent have been inspired to take regional, country, or community-level action. 

                Canal Futura in Brazil uses TV as a channel for educational content in a nation where ninety percent of households have TV, but only three percent have access to broadband and cable.  Canal Futura educational content is seen by more than thirty million citizens and civic engagement is ten percent greater among its viewers. Perhaps one day enhanced services over cell phones will augment content rich educational TV in Brazil.

                Elluminate, Inc. in the U.S. provides real time collaboration through high quality voice over Internet and interactive functionality for  participants  and moderators in both asynchronous and synchronous venues. It is designed to accommodate remote geographical areas where bandwidth connectivity is limited to dial-up connection speeds as low as 28.8kbs.

Principle 4:  Distribution and Supply Chain Innovation

                PATH’s Vacuum Vial Monitor overcomes the cold storage problem in delivering vaccines to the poor where refrigeration is lacking.  Vaccines must travel from manufacturing facilities in Europe by plane to Ghana and then by trucks or bicycles across dirt roads to reach rural clinics with sporadic electricity. PATH develops and manufactures vial monitors that signal spoilage of a vaccine.  It has worked with vaccine manufacturers to gain adoption of their print-on labels, as well as with vaccine purchasers who pay a few cents extra per vial.  The latter receive the benefit of cost savings through reduced vaccine waste.  PATH’s success in altering unsafe supply chain practices benefited from endorsement of its vial monitors by the World Health Organization, as well as educational efforts in developing countries in the form of culturally appropriate, low literacy materials that included posters, fact sheets, training cards, and manuals.

Principle 5:  Successful Intermediation

                Kiva.org  provides an excellent example of successful low cost intermediation between supply and demand.  It links financial surplus households to deficit households in poor countries and people with good business plans who lack access to the financial resources to exploit them.  It fosters trust by working through on-the-ground micro-finance organizations to vet projects and utilizing Pay Pal to provide secure payment systems.  In addition, it provides lenders with feedback on the impact of the successful ventures they fund.

                Counterpart International utilizes data warehousing to create a logistics system to assure donors that donated commodities get to those in need and to assure beneficiaries that commodities are inspected, safe, and in useable condition. The system builds trust through its information system and its relationships on the “demand” or need side with local organizations, communities, and governments, as well as relationships on the supply side with charitable organizations.  Its services encompass assessment of humanitarian needs, project design, commodity inspection, managing shipments, planning distribution, monitoring use, gathering feedback, and reporting to donors, governments, and the media.  By increasing efficiency and accountability in the supply chain it not only builds trust, but it encourages future giving and hence the flow of commodities to where the needs are greatest.

Principle 6:  Localization and Livelihoods

                Association la Voute Nubienne has revived an indigenous technology by standardizing and modularizing the construction process for timber-less, vaulted-earth, brick buildings in sub-Saharan Africa.  In this way it has increased the skill levels and productivity of local builders, fostered livelihoods, and broadened access to affordable housing.

                blueEnergy provides off-grid access to energy through the integration of wind and solar power.  Its efforts combine technical and organizational innovations for producing windmills in series and at higher volumes with locally trained workers who have the skills to provide onsite maintenance.

                HELPS International’s ONIL stove provides efficient, safe, and environmentally sustainable cooking.  ONIL stoves are manufactured, distributed, and maintained through 120 NGO’s in Guatemala.  These organizations understand local needs and language.  They are trusted locally, and they can serve to create an “economic buyer” by facilitating access to micro-credit or providing direct subsidies to users.  HELPS also provides micro-credit to subcontractors for use in purchasing modern equipment. Its “business model” includes funding to train approximately five women in assembly and maintenance for each community.  These women provide follow-up visits to ensure that stoves are functioning properly.

                Fundación Terram has developed a system for cultivating kelp to absorb fish waste in Chilean salmon farms.  This environmentally sustainable system also produces feedstock for cultivated abalone.  Through a profitable supply chain, Fundacion Terram provides sustainable livelihood opportunities for indigenous populations.

Principle 7:  Simplification—Overcoming Knowledge and Skill Shortages as

Barriers to Technological Adoption

                Diagnostics Development Unit in Cambridge has developed easy-to-use tools for the detection of infectious agents for millions of people living in resource poor regions.  Its sensitive tools enable low-skill health workers to diagnose infections like trachoma—a leading cause of blindness for children in poor countries—before they develop into clinical symptoms. Unlike other medical technologies, these tools provide rapid, intuitively simple testing at a low cost and they do not require access to instruments.  Local health workers can be trained to use them in one hour because of the “rule-based” nature of test interpretation. A steady purple line on a dip stick test strip means that a child is infected, and an infected child can be treated on the spot.  This is critical in a place like Africa where there is only one ophthalmologist per million people.  Tools like this also support the wider trend of decentralizing diagnostic testing to consumer outlets such as pharmacies.  Simple, rapid, and high performance diagnostic tests that do not require sophisticated machines or highly trained personnel can provide healthcare access to the poor and could become a disruptive innovation in the delivery of healthcare to the wealthy.

                Tropical Forest Trust utilizes an icon or picture-driven ruggedized hand-held touch screen system that is linked by satellite receiver to a Global Positioning System (GPS) to inventory and develop community resource maps.  This system is used by non-literate indigenous people in forest management.  Working in concert with Forest Stewardship Council, the gold standard for sustained forest management, forest resource sellers like the Congolaise Industriellle des Bois can charge a premium rate for legally sourced, sustainably produced timber in the 1.3 million acres under its management.

Principle 8: Creating a Compelling Reason to Buy in the Presence of Non-Consumption through Education and Cost Innovation

                HELPS International, Diagnostics Development Unit, PATH, and Jaipur Food have all created a compelling reason to purchase their products in the presence of non-consumption.  HELPS in Guatemala, for example, has a value proposition that includes reductions in respiratory and eye problems, reduced firewood use (deforestation), and local maintenance and service that, in turn, provides livelihoods for indigenous populations.  HELPS provides users with independent lab tests to certify reductions in indoor carbon monoxide by a factor of 400; reduced carbon particles by a factor of 100; and, a 70 percent reduction in firewood use.

                Diagnostics for the Real World, the for-profit spin-off out of Diagnostics Development of Cambridge has a value proposition that centers around its rapid, simple, and accurate diagnostic tests for infectious agents that are common in the developing world, with certified predictive values of 97 percent v. only 44 percent for conventional clinical observation.

                PATH’s Vaccine Vial Monitor value proposition is similarly compelling.  For a few cents per vial its temperature-sensitive labels on vaccine vials reveal heat damage and ensure the efficacy of hundreds of millions of vaccine doses each year.

                Jaipur Foot provides an example of extraordinary cost innovation. Its prosthetics provide functionality for kneeling, sitting cross-legged, running, climbing a tree, and driving at one two hundredth the cost of typical prosthetics ($35 v. $8,000).  Jaipur Foot has combined its radical transformative design, together with its distribution and managerial system innovations to become the world’s largest limb fitting organization.  It has developed 16 centers across India in addition to 30-40 “camps” that it organizing all over India every year, and two mobile workshops.  (Note: “Camps” have been identified as a helpful organizational mechanism in previous Tech Awarda organizations, including Educational Camps for Conservation Awareness in Nepal among this year’s Laureates, as well as Scojo, and Aravind two other widely recognized social ventures). In 2006-07, 20,475 limbs were fitted by Jaipur Foot.  No other organization fits even 2,000 limbs a year.  Administrative costs at Jaipur Foot are only four percent in comparison to 30-60 percent in conventional prosthetics-fitting organizations.

Principle 9:  Innovative, Sustainable  Business Models

                Diagnostics Development Unit (DD) has developed a hybrid business model.

As a Cambridge non-profit it developed its low cost diagnostics technology which was then spun off to Diagnostics for the Real World (DRW), a for-profit start-up in Sunnyvale, California.  DRW uses a two-tier pricing structure by providing tests at close to manufacturing costs for developing countries and at high profit margins in developed countries.  By creating a for-profit start-up, DD was able to access Small Business Innovation Grants, a form of capital that was not available to it as a non-profit.

                Kiva.org’s financial mediation services to finance social ventures around the world and PATH’s Vacine Vial Monitor provide examples of business models with declining marginal costs and increasing returns to scale. In its first 18 months Kiva.org originated $6 million in loans to more than 7,000 projects from more than 60,000 Internet users.  PATH has sold more than 1.5 billion vial monitors to more than 25 vaccine suppliers since 1996, with its monitors now used in more than 20 countries.

                Proctor and Gamble’s Children’s Safe Drinking Water is a single-use sachet that combines alum (for flocculation to remove particulates) and chlorine-based disinfection to kill bacteria, parasites, and viruses.  To overcome distribution barriers and educate the market on the importance of safe water, Proctor and Gamble has worked with PSI (Population Services International), the U.S. and U.K. governments and NGOs in Kenya, Pakistan, Uganda, Malawi, Ethiopia, and elsewhere.  Social marketing adapted to regional customs and language, and working with trusted local organizations have been keys to success in the delivery of more than 600 million liters of potable water and to the saving of more than 3,000 lives.  

Principle 10. Fostering Innovation Ecologies

                This year marks the seventh anniversary of the Tech Museum Awards.  Two innovation ecologies are evidenced across the 175 finalists who have been recognized to date: the “gradual slope” innovation ecology and the “accelerated slope” ecology.  The search for solutions to the growing need for safe drinking water reflects the former, while innovation in the appropriation of information and communications technology to address human needs appears to be accelerating.

                The 2007 State of the Future report of The Millennium Project concludes that by 2025, 1.8 billion people in water scarce regions are likely to be desperate enough to produce mass migrations. An additional three billion will live in water stressed regions like California with ever-diminishing water supplies relative to population demands.  These concerns are most acute in poor countries and they are being exacerbated by global warming. The innovations we have witnessed over the seven year history of the Tech Awards have ranged from community-based municipal treatment systems, to bleach products, to mechanical and rope pumps, to solar energy treatment systems, high quality ceramic filters, and single-use sachets at point-of-use.  None of these systems appears to be scalable, and the gradual slope of innovation in this area in relation to the escalating slope of the water crisis is placing more and more of the world’s population at risk every year.

                By contrast to the pessimistic situation in the water category, an “accelerated slope” ecology exists in the areas of information and communications technology.  Here innovations appear to be building on each other and fostering increasingly valuable social returns. For example, one of this year’s Tech Laureates in the education category, Open Educational Resources (OER), has developed a solution that builds on the work of two previous Tech Laureates, MIT’s Open Course Ware (OCW), and Rice University’s Connexions.  The OER Commons aggregates existing open educational resources like those at MIT and Rice within a social networking environment that provides pointers to 10,000 open educational resources from 65 content partners.  In combining access to enriched metadata with the social networking features of Web 2.0 (e.g., tags, ratings, reviews, shared portfolios, user surveys and contests, blogging, and discussion forums),  OER  Commons provides a personalized environment for searching, saving, annotating, sharing favorite sites, and collaborating.  In less than a year it is receiving more than 1,500 visits per day and claims 2,000 members.

                Another innovation ecology that is evidenced through seven years of Tech Museum Awards history is “complementary innovation.”  For example, the micro-lending work that was pioneered by Grameen Bank enabled the accelerated diffusion of cell phones through thousands of village phone lady franchisees in Bangladesh.  Micro-finance also has been a key to success in the business models for selling home solar systems, in scaling up small village or urban businesses, and in the growth of franchising as a means of overcoming the distribution barrier posed by fragmented markets. Successful micro-enterprises, however, will seek new channels for growth and the ability to provide advanced services over cell phones is enabling these small scale enterprises to reach wider regional and even global markets. In addition, advanced services over cell phones can provide on-line banking access and, by eliminating intermediaries and asymmetries in market information, services over cell phones can provide better prices for the products of micro-entrepreneurs from farmers and fisherman, to artisans and shopkeepers.

Conclusion

                In our world of 6.6 billion people, income disparities are great and growing.  Two percent of the world’s richest people now own half of the world’s wealth, while the poorest half now holds only one percent of the wealth.  With stable or declining populations in nearly all developing counties, the poorest half of the world population will account for nearly all of global population growth over the next twenty five years.  Too many people are convinced that help in closing the gap between rich and poor will come from some magic bullet, the product of an “unknown Edison” working in obscurity somewhere, ready to step forward when the world needs saving.

                But there is another, more likely and hopeful scenario, demonstrated by the dedicated effort of the many social entrepreneurs and technical innovators profiled here and honored by the Tech Museum Awards.  Rather than a singular solution, the collective efforts of dedicated visionaries throughout the world are breaking down barriers and defining new market principles in a search for a more just and prosperous world.

                As Argentine writer Jorge Luis Borges so poignantly wrote in Boast of Quietness, “my humanity is in the feeling we are all voices of the same poverty” and all of us “are indispensable, singular, worthy of tomorrow.” By enlarging our worldview, developing new solutions, and considering new paradigms, we are assuring the foundation for a century that is healthier, more prosperous, and more opportunity-rich for the entire world’s people.

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