Innov Tech4society Final

Hyderabad 2010 A quarterly journal published by MIT Press
innovations
TECHNOLOGY | GOVERNANCE | GLOBALIZATION
Special Edition for Tech4Society: A Celebration of Ashoka-Lemelson Fellows
Invention-Led
Development
Lead Essays
President Paul Kagame Entrepreneurship Is the Surest Way
Julia Novy-Hildesley By the Grace of Invention
Matthew Bishop and Michael Green The Capital Curve
Cases Authored by Innovators

Heike Schettler Science-Lab
commentary: David H. Eddy Spicer
Pradip Kumar Sarmah Rickshaw Bank
Gustavo Gennuso Pumping Life into Marginalized Communities
Anil Chitrakar and Babu Raj Shrestha The Solar-Powered Tuki
commentaries: Timothy Prestero; Christopher Bull, Barrett Hazeltine, and
Nick Stoker
Greg Van Kirk The MicroConsignment Model
commentary: Brett R. Smith
Analytic Essays
Paul Polak, Peggy Reid, and Amy Schefer 2.4 Billion Customers
Boru Douthwaite Enabling Innovation
ENTREPRENEURIAL SOLUTIONS TO GLOBAL CHALLENGES

Editors-in-Chief Advisory Board Editorial Board
Philip Auerswald Lewis Branscomb David Audretsch
Iqbal Quadir Susan Davis Michael Best
Senior Editor Bill Drayton Matthew Bunn
Winthrop Carty Robert Frosch Susan Cozzens
John Gibbons Maryann Feldman
Strategic Advisor Anil Gupta Frank Field III
Erin Krampetz Daniel Kammen Richard Florida
Consulting Editors Don Kash Keenan Grenell
Julia Novy-Hildesley David Kellogg James Levitt
Peggy Reid Neal Lane Martin Malin
Abby Sarmac Eric Lemelson Peter Mandaville
Monique Maddy Julia Novy-Hildesley
Associate Editors Granger Morgan William J. Nuttall
Elizabeth Dougherty Jacqueline Novogratz David Reiner
Adam Hasler R. K. Pachauri Kenneth Reinert
Dody Riggs Gowher Rivzi Jan Rivkin
Helen Snively Roger Stough Steve Ruth
Assistant Editors Karen Tramontano Peter Spink
Allison Basile James Turner Francisco Veloso
Christian Duttweiler Xue Lan Nicholas Vonortas
Alex Gudich-Yulle Yang Xuedong
Intern Publisher
Whitney Burton Nicholas Sullivan
Innovations: Technology | Governance | Globalization is co-hosted by the Center for Science and
Technology Policy, School of Public Policy, George Mason University (Fairfax VA, USA), the Belfer
Center for Science and International Affairs, Kennedy School of Government, Harvard University
(Cambridge MA, USA), and the Legatum Center for Development and Entrepreneurship,
Massachusetts Institute of Technology (Cambridge MA, USA). Support for the journal is provided in
part by the Lemelson Foundation, the Ewing Marion Kauffman Foundation, and the Center for
Global Studies, George Mason University.
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innovations
Lead Essays
3 The Backbone of a New Rwanda:

Entrepreneurship Is the Surest Way
President Paul Kagame
7 By the Grace of Invention: How Individuals Power Development
Julia Novy-Hildesley
25 The Capital Curve for a Better World
Matthew Bishop and Michael Green
Cases Authored by Innovators

Invention Education
35 Playing Catch-Up in German Early Science Education
with Science-Lab
Heike Schettler
51 Discussion: David H. Eddy Spicer
Design for Development
61 Rickshaw Bank: Empowering the Poor through Asset Ownership
Pradip Kumar Sarmah
83 Pumping Life into Marginalized Communities:
ETV’s Technology Model
Gustavo Gennuso
95 The Tuki: Lighting Up Nepal
Anil Chitrakar and Babu Raj Shrestha
105 Discussion: Timothy Prestero
121 Discussion: Christopher Bull, Barrett Hazeltine, and Nick Stoker
Pathways to Scale
127 The MicroConsignment Model: Bridging the “Last Mile”
of Access to Products and Services for the Rural Poor
Greg Van Kirk
155 Discussion: Brett R. Smith
Special Edition for Tech4Society: A Celebration of Ashoka-Lemelson Fellows

Analysis
163 2.4 Billion Customers: How Business Can Scale
Solutions to Poverty
Paul Polak, Peggy Reid and Amy Schefer
179 Enabling Innovation: Technology- and System-Level
Approaches that Capitalize on Complexity
Boru Douthwaite
Organization of the Journal

Each issue of Innovations consists of four sections:
1. Lead essay. An authoritative figure addresses an issue relating to innovation, empha-
sizing interactions between technology and governance in a global context.
2. Cases authored by innovators. Case narratives of innovations are authored either by,
or in collaboration with, the innovators themselves. Each includes discussion of moti-
vations, challenges, strategies, outcomes, and unintended consequences. Following
each case narrative, we present commentary by an academic discussant. The discussant
highlights the aspects of the innovation that are analytically most interesting, have the
most significant implications for policy, and/or best illustrate reciprocal relationships
between technology and governance.
3. Analysis. Accessible, policy-relevant research articles emphasize links between prac-
tice and policy—alternately, micro and macro scales of analysis. The development of
meaningful indicators of the impact of innovations is an area of editorial emphasis.
4. Perspectives on policy. Analyses of innovations by large-scale public actors—
national governments and transnational organizations—address both success and fail-
ure of policy, informed by both empirical evidence and the experience of policy inno-
vators. The development of improved modes of governance to facilitate and support
innovations is an area of editorial focus.
mitpressjournals.org/innovations
editors@innovationsjournal.net
The Backbone of a New Rwanda

Entrepreneurship Is the Surest Way
Recently, I spoke to a young person on the streets of Kigali. I asked him, “What do
you want to be when you grow up?” He said he wanted to start his own business
and move into the private sector. This is wonderful news. I felt as if I knew this
young man by the height of his ambitions. It is very exciting and interesting that
people are beginning to think like that young man; indeed, it shows the shifting in
mindset away from when people thought the only jobs they could do were with the
government.
In the old Rwanda, everyone looked for a job in government because of the
benefits and the security. But nowadays they are thinking that the private sector
holds the promise of a better life for their families and themselves. More meaning-
fully, I think that it is better if they join the private sector because there are more
opportunities, opportunities that have a higher payback than simply working for
the public sector. I believe that this is a huge step forward for Rwandans, given our
history, given the whole history of Africa.
Rwanda is a nation with high goals and a sense of purpose. Our vision is to cre-
ate prosperity for the average Rwandan citizen. We are attempting to increase our
gross domestic product (GDP) by seven times over a generation, which increases
per capita incomes by almost four times. This, in turn, will create the basis for fur-
ther innovation, creative thinking, and a host of progressive human values: inter-
personal trust, tolerance, and civic-mindedness. All this together will strengthen
our society.
We know that this is a tremendous challenge given our status as a landlocked
nation, emerging from conflict, with few natural resources, little specialized infra-
structure, and low historic investment in education. But, in fact, we have reasons
to be optimistic: we have made a clear and explicit strategy to export based on sus-
tainable competitive advantages. We sell coffee now to the most demanding pur-
chasers in the world for very high price points; our tourism industry attracts the
best customers in the world, and Dubai World invested $230 million to participate
H.E. Paul Kagame is president of the Republic of Rwanda.

This essay first appeared in Michael Fairbanks et al. eds., In the River They Swim:
Essays from Around the World on Enterprise Solutions to Poverty (2009).
© 2009 OTF Group and Michael Fairbanks
innovations / Tech4Society 2010 3
in our tourism vision; and market research reveals that perceptions of Rwanda tea
are improving at a rapid rate. In all three cases, we have learned to integrate a com-
plex customer experience with product development. This has resulted in wages in
key sectors rising at more than 20 percent on a compounded annual basis. While
these developments are encouraging, we believe the road to prosperity is a long
one.
We understand that achiev-
Rwanda is a nation with high ing prosperity requires a meta-
morphosis of our economy. We
goals and a sense of purpose. are fundamentally changing our
Our vision is to create economy to move away from a
dependence on agriculture
prosperity for the average toward a knowledge economy.
The Rwanda of tomorrow will
Rwandan citizen. We are be a regional hub for Eastern
attempting to increase our and Central Africa.
Rwanda must become a
gross domestic product world-class competitor in infor-
(GDP) by seven times over a mation and communication
technology (ICT), logistics,
generation . . . This, in turn, financial services, and educa-
will create the basis for further tion. This metamorphosis will
significantly increase average
innovation, creative thinking, wages and help us graduate into
a middle-income nation.
and a host of progressive How can Rwanda join the
human values: interpersonal ranks of the more successful
developing countries, those that
trust, tolerance, and civic- have transformed themselves in
mindedness. a single generation?
It is increasingly clear to us
that entrepreneurship is the
surest way for a nation to meet those goals and to develop prosperity for the great-
est number of people. In fact, government activities should focus on supporting
entrepreneurship not just to meet these measurable targets, but to unlock people’s
minds, to allow innovation to take place, and to enable people to exercise their tal-
ents.
In all people, you find different kinds of talents, and entrepreneurship is about
harnessing those talents and making sure that it takes people to another level in
their personal development. So, for us in government, it is essential to develop the
private sector and to create an environment that enables entrepreneurs to flourish.
We have much more to do, and it will take time. We are focused on lowering the
costs of electricity, providing access to finance, building roads, and training man-
agers.
4 innovations / Ashoka-Lemelson
The Backbone of a New Rwanda
We decided after our liberation struggle that if we could develop economical-

ly, then there might not be the basis for conflict. To achieve this goal, we needed to
create our own strategy. Many leaders are overly influenced by the multilateral
institutions and by bilateral donors. We have had the strange benefit that, early on,
not a lot of nations wanted to give us foreign aid, and we turned that into an
advantage.
We insisted that Rwandans
would create their own strategic
vision. We began by seeking to It is increasingly clear to us
change some of the thinking
that is common with many of that entrepreneurship is the
our people. And that is the surest way for a nation ... to
belief that aid will come and
solve everything or that people develop prosperity for the
will come from somewhere else greatest number of people. In
and do what we ought to be
doing for ourselves. fact, government activities
It is very simple: nobody
owes Rwandans anything. Why
should focus on supporting
should anyone in Rwanda sit entrepreneurship not just to
back and feel comfortable that
taxpayers in other countries are meet ... measurable targets,
contributing money for our but to unlock people’s minds,
own well-being or develop-
ment? Why should we not be to allow innovation to take
doing what we are able to do place, and to enable people to
and raise ourselves up to higher
standards and achieve more and exercise their talents.
better and get out of this pov-
erty that we find ourselves in.
Change has to start in the mind. And that is what we have been working on over
time. Once the mind gets correct, the rest becomes simple.
This is the reason that we are focusing on creating an entrepreneurial mindset
in every Rwandan. This mindset begins with a sense that one’s life, choices, and
actions matter to the whole country. It begins with a clear understanding that busi-
ness as usual is not acceptable. Every day, every Rwandan from all walks of life has
a unique opportunity to change our country for the better.
The Rwandese entrepreneurial mindset must be characterized by ambition,
moral purpose, respect, openness to new ideas, and self-determination. This entre-
preneurial mindset must inform our actions whether we are in the private sector,
government, or civil society. This mindset must inspire our entrepreneurs to aim
ever higher. It must compel our civil servants to reinvent government. It must
encourage our civil society to work for the greater good.

Ultimately, this mindset holds the key to our prosperity, our development, and
our future.
We do appreciate support from the outside, but it should be support for what
we intend to achieve ourselves. And no one can assume that he or she knows bet-
ter than we what is good for us. Our supporters should also start to value the fact
that we really want to be the ones to decide where we go and what we do and that
we are capable of defining what we want to achieve.
One thing we have decided is that competition in an economy is good for poor
people. I think competition is good everywhere. Competition is compelling
because it stimulates people and unleashes people’s capacities and potential.
The most interesting part I see in competition is that it gives people a feeling
that they are valued and have meaning, that they are as capable, as competent, as
gifted, and as talented as anyone else. Asking our citizens to compete is the same as
asking them to go out there into the world on behalf of Rwanda and play their
part.
On the other hand, shielding them is something that travels deep in the mind.
If you allow a process where some people are shielded from the forces of competi-
tion, then it is like saying they are disabled.
Our job in leadership is to provide opportunities. We must use all the means
available institutionally to do the things that will help people develop their capac-
ities, their potential, and their talents and then allow them to compete.
I consider entrepreneurship to be, simply, the backbone of a new Rwanda. It is,
indeed, my hope that others will come to know Rwanda, as I came to know that
young person on a Kigali street, by the height of our ambition for the private sec-
tor and our commitment to achieve it.
By the Grace of Invention

How Individuals Power Development
We live only by the grace of invention: not merely by such invention as

has already been made, but by our hope of new and as yet non-existing
inventions for the future.
—Norbert Wiener, Invention: The Care and Feeding of Ideas
Invention and innovation are critical drivers of prosperity. They hold the potential
to eradicate poverty and support sustainable development, yet their importance is
often overlooked. Currently, we are failing to engage the global community sys-
tematically and inclusively in innovation, and thus are likely missing opportunities
for breakthroughs that could address the most pressing issues facing humankind.
Start with global development. There, the center of gravity of the debate
among experts has been on the effectiveness of international aid, or lack thereof.
Thought leaders such as Jeffrey Sachs of Columbia argue that meeting the chal-
lenge of inclusion in global development will only be possible through dramatic
increases in direct foreign assistance. Aid skeptics such as William Easterly of New
York University and Dambisa Moyo, a Zambian economist, point out that there is
virtually no correlation between aid and GDP growth. Nicholas Kristof of the New
York Times recently moved the debate in the right direction when he argued that
we should discuss how best to achieve development, rather than debate whether or
not international aid works.1
In fact, the process of development is not as mysterious as it is often made out
to be. Human development happens whenever people have the skills to invent, the
resources to innovate, and the opportunity to grow their ventures. Unleashing the
creative potential of individuals, in turn, is also not a fundamentally complicated
matter. Give most people some empty space, rudimentary tools of expression, and
the permission to create something new, and they will waste little time filling in the
blank canvas. Inventiveness is an essential human characteristic—fully realized in
few, but available to all.
Julia Novy-Hildesley is executive director of the Lemelson Foundation.
© 2010 Julia Novy-Hildesley

Human ingenuity is not only our most valuable natural resource, it is also our
most abundant. People are entrepreneurial by nature, particularly when it comes
to helping themselves and their families overcome difficult situations. The entre-
preneurial model of development, driven by humanity’s nearly limitless capacity
for invention and innovation, is the only one that is proven, and it is the only one
that can be scaled to meet the challenge of economic inclusion at a global scale.
Even if aid can be made effective, it cannot be made to scale. The levels advocated
for by Sachs in The End to Poverty, and by others since, are both inadequate and
fundamentally unsustainable. Instead, we must turn our attention to discovering
what government, the private sector, and civil society can do to create an enabling
environment where individual creativ-
ity and entrepreneurship can thrive,
Human ingenuity is not where people are empowered to lift
themselves out of poverty.2
only our most valuable This new approach is not just
natural resource, it is also about growth in developing countries;
it is relevant to the challenge of devel-
our most abundant. opment everywhere. All countries
struggle with social injustice and eco-
nomic volatility. As globalization pro-
ceeds, development challenges become
more interconnected, with difficulties in one region creating instability in anoth-
er. Conversely, creating an environment conducive to invention, innovation, and
entrepreneurship in one location can create positive ripple effects elsewhere, lead-
ing to a virtuous cycle of global development. Recent discussions about global
security have built on this logic, with many arguing that clean energy innovations
will increase energy independence and reduce conflict, or that supporting innova-
tion and opportunities for self-determination in poor countries can lessen the
effects of fundamentalist extremism.
In this essay, I advocate for an approach to development that derives from five
fundamental tenets:
• Shifting our focus to individuals and their potential—thinking of all people as
inventors, innovators, and entrepreneurs
• Embracing a bottom-up, demand-driven view of the world, where people
design solutions, and government’s role is to create an enabling environment
for them to do so
• Emphasizing business principles, recognizing that the best ideas must reach
enormous scale in order to combat global poverty and achieve sustainable
development
• Insisting upon linking evaluation criteria with evidence of effectiveness—will a
program or investment enable a larger pool of people to more fully unlock
their potential? And is the focus of their innovation directed toward advancing
sustainable development in a scalable way?
Figure 1. Driving Development by Enabling Invention, Innovation, and

Entrepreneurship
• Taking a forward-looking approach, focusing less on bailouts and much more

on start-ups
For the past 15 years, the Lemelson Foundation has experimented with strate-
gies and programs to implement this approach with its partners. The organization
promotes a focus on two dimensions: (1) building an innovation engine—a
diverse pipeline of future inventors, and (2) creating pathways to scale (see Figure
1).
This essay introduces both concepts and shares what we’ve learned. The essay
is organized into four parts. Following this introduction, I discuss ways to increase
the number and diversity of inventors. I then explore pathways to scale, emphasiz-
ing the importance of business model innovation and social enterprise investment
to extend the benefits of the innovation engine. I conclude with some thoughts on
the roles that governments, philanthropists, NGOs, and the private sector play in
implementing this new approach to development.
THE INNOVATION ENGINE

At its core, the innovation engine is about harnessing the full potential of human
creativity. To be effective, the engine must be large, diverse, and highly efficient. We
need large numbers of innovators to guide us in the 21st century. We must also rec-
ognize that good ideas may come from anywhere and from anyone, not just cor-
porate labs or Silicon Valley. Finally, the engine should be designed to generate as
many breakthroughs as possible.
The Lemelson Foundation’s approach to creating and nurturing a global inno-
vation engine has three pillars:
• Engaging youth in science and engineering education programs, which help

nurture a large pool of future innovators
• Working to ensure that education programs attract and retain a diverse popula-
tion of young people so that the innovation engine will generate much richer
and more relevant ideas, and
• Focusing on collaboration to improve the engine’s efficiency
Engaging Youth in Science and Engineering

Many countries are seeing participation rates in technical fields decline. In the
United States, for example, among the more than 1.1 million seniors in the class of
2009 who took the ACT Assessment college entrance and placement exam, fewer
than 6% planned to study engineering in college, down from nearly 9% in 1992.
In addition, these students are less certain of their major than those in the past,
with more than 40% indicating they need help deciding on their educational and
career plans.3 As President Obama noted on The Jay Leno Show in 2009, we want
our brightest students coming out of university to want to become scientists and
engineers, not investment bankers.
Research indicates that in order to expand the pool of tomorrow’s inventors,
we must focus on early intervention, out-of-school programs, and generating per-
ceptions of engineering as fun, collaborative, and relevant to making a difference
in the world. A study of Nobel laureates in the sciences documents that 75% were
inspired by early experiences outside of school, while other studies report that
teaching invention to young children generates tangible results, including new
technologies and increased interest in technical fields.4
The Lemelson Foundation has launched and supported a variety of programs
that seek to inspire and mentor youth in invention and technical fields. The
Lemelson-MIT Program awards the world’s largest cash prize for invention, as well
as mid-career and student prizes. It hosts an online resource guide for inventors
and supports high school InvenTeams that work to tackle problems in their com-
munities. Similarly, Ashoka’s Youth Venture program engages teenagers from
developed and developing countries in invention and entrepreneurship projects
and team challenges, offering prizes to reward and showcase the most creative
ideas.
Public television, media and government initiatives also have significant influ-
ence. WGBH-Boston developed a public television show called Design Squad that
inspires teenagers to invent, by showcasing real-time invention challenges tackled
by teams of fun-loving, creative youth. Design Squad is hosted by a peer role
model, the charismatic Nate Ball, a former Lemelson-MIT student prize winner.
Hands-on exhibits at museums can also inspire young people. For example, the
Lemelson Center for the Study of Invention and Innovation at the Smithsonian
Institution5 attracts hundreds of thousands of visitors each year to Spark!Lab,
where children do hands-on invention experiments. President Obama’s Educate to
Innovate program, including a national science fair and laboratory day, has helped
elevate the stature of this issue and has increased investment by private corpora-
tions in science and engineering education.
Finally, in-school programs that support science, technology, engineering, and
math (STEM) are essential. The Gates Foundation and many other organizations
are striving to improve the quality of, and diversity represented in, STEM fields by
focusing on education strategies validated by research.6 National governments
must complement private-sector efforts by highlighting the importance of STEM
and strengthening education. Consider the impact that Jawaharal Nehru, India’s
first prime minister, had with his vision that the Indian engineer would drive the
development of the newly independent nation, through the design of communica-
tions infrastructure, power systems, roads, dams, and drinking water facilities. In
the decades following his announcement, the government established a national
network of Indian Institutes of Technology (IITs), now some of the most respect-
ed engineering universities in the world. These IITs, and a host of other regional
engineering universities, collectively graduate over 500,000 new engineers each
year.7
Increasing the Diversity of Innovators

The innovation engine is most effective when it taps into everyone’s potential. We
need strategies to attract and nurture girls, minorities, and developing-country
innovators in science and technology fields. Without an explicit focus on this, we
will continue to miss out on the creative potential of well over half the population.8
Encouraging Female and Minority Participation
Research indicates that children of both genders and diverse backgrounds respond
to invention education by demonstrating increased inventiveness.9 Studies confirm
that programs designed specifically to engage women and non-majority individu-
als are effective in spurring inventive capacity.10 In order to increase participation
rates of girls and minorities, the Lemelson Foundation has designed and support-
ed longer-term mentoring programs that deepen students’ exposure and proficien-
cy in STEM fields.
One partner, MESA (Math Engineering Science Achievement), engages girls
and minorities by creating collaborative student teams that tackle multiple inven-
tion challenges over a period of several years. This creates a supportive and inten-
sive opportunity to build technical skills. Shay Schlafle, a13-year-old African
American girl, illustrates the impact of MESA. Shay was born with brittle bone dis-
ease, is sometimes confined to a wheelchair, and can easily break a bone by walk-
ing too much. After two years as a MESA student, Shay competed with three female
teammates in an 8th grade MESA competition to design a trebuchet, a catapult-like
device. Despite coming from an underperforming school, Shay's team won the
state competition based on the distance and accuracy with which their trebuchet
could hurl objects through the air. This success changed Shay's vision for the
future. While her mother did not attend college and Shay did not intend to pursue
higher education, she now plans to go to college and study engineering.

Relative to their peers in public schools, MESA students demonstrate higher

high school and college graduation rates, as well as greater rates of participation in
STEM studies at the postsecondary level.11 Another partner, the Saturday Academy,
offers summer internships at local science and engineering firms and provides a
stipend (greater than the pay from a minimum-wage job) to remove barriers to
participation by underserved minority students.12 To test a new mentoring strate-
gy, the Lemelson Foundation launched Mentors for Young Inventors, with WGBH-
Boston. The program pairs minority engineers in high schools with college student
and professional engineers of the same ethnic background to support them
through a multiyear, out-of-school engineering program.
Many programs have emerged at the international level. For example, the
Institute of Electrical and Electronics Engineers (IEEE), which has more than
365,000 members in approximately 150 countries, brings together students, pro-
fessionals, academics, and industry leaders to share ideas and present research
findings. The organization also offers prizes to the best engineers and houses an
exhibition for student and professional inventions.
So that programs can be improved continuously, governments should contin-
ue to fund research that helps us understand the key reasons why girls and minori-
ties do not participate fully in science and technology. In the United States, the
American Association for the Advancement of Science (AAAS), the National
Science Foundation (NSF), and the National Academies of Engineering (NAE) are
supporting such research.
Inventor Initiatives in Developing Countries

There is also a tremendous opportunity to benefit from the creativity of innova-
tors in developing countries. Providing tailored and catalytic support to individu-
als engaged in technological innovation in developing countries could both
increase the level of innovation globally and improve the relevance of technologies
for poor people. Imagine how many Einsteins are born in Africa, but lack access to
the education, tools, and resources they need to realize their full potential. Because
the ideas developed by innovators in developing countries are more likely to focus
on pressing local issues, engaging these inventors is a way to make sure that the full
range and complexity of global challenges is addressed.
In developing countries, educated and uneducated innovators alike have
demonstrated their innovative capacity. In Malawi, 14-year-old William
Kamkwamba had to quit school because his parents could not afford $80/year to
send him. But poor farm yields and a food crisis inspired him to invent his way out
of poverty. Using an old textbook from a local library and parts from bicycles and
tractors, William built a 16-foot-tall, 12-watt windmill to generate electricity and
pump water on his family’s farm. He has since published a book and become a
spokesperson for the importance of supporting local innovators in developing
countries.
Dr. Sathya Jeganathan, a doctor from the Chengalpattu hospital in rural India,
provides another example. She invented a low-cost baby warmer and had it built
by local craftsmen. The invention has cut the neonatal mortality rate at her hospi-
tal in half. With help from the Lemelson Recognition and Mentoring Program
(RAMP) in Chennai,13 Dr. Jeganathan intends to refine the design and apply for the
certification she needs to distribute it throughout the Indian government’s health
system and perhaps beyond.
As Mukesh Ambani, CEO of Reliance Industries, India’s largest company, stat-
ed recently, “I am quite clear that 20 years from now, we would not talk about
garages in Silicon Valley. We will talk about projects in the villages and rural areas
in India, which are then scaled all over the world.”14 The Honey Bee Network has
documented over 100,000 grassroots innovations in India alone. The Ashoka-
Lemelson Fellows Program has identified and supported over 100 inventor-entre-
preneurs, largely from developing countries, who have launched successful social
enterprises in the areas of clean energy, mobile technology, and water and sanita-
tion, among others.
While the literature is thin, there is an ever-growing body of evidence on how
to nurture local innovators in developing countries. The Appropriate
Infrastructure Development Group (AIDG) provides workshop space and busi-
ness support to rural, uneducated engineers and entrepreneurs in Central
America. In contrast, Stanford-India BioDesign targets professional doctors in
India, leveraging international universities and intensive training to spur the
invention of biomedical technologies that serve Indians. The Lemelson RAMPs in
India, Indonesia and Peru work with national universities and local non-profits to
design mentoring and financing plans for competitively selected local innovators
working on sustainable development. The university partners offer prototyping
facilities, technology validation and access to networks. Non-profit partners pro-
vide business development support and help negotiate intellectual property and
licensing agreements.
A group of these organizations meets annually with incubators from industri-
alized countries to share best practices and replicate successful approaches.
Examples are the Santa Clara University Global Social Benefit Incubator Program,
the Design that Matters Program of MIT, and the National Collegiate Inventors
and Innovators Alliance.
Companies based in developing countries are also working to harness the
potential of in-country engineers to develop new products highly adapted to local
conditions. A recent Wall Street Journal article describes a shift in focus among
Indian firms, from serving Western companies to providing meaningful products
to India’s 1.1 billion people.15 Mumbai’s Godrej & Boyce Manufacturing Company
(known for a range of products from padlocks to pest management) developed a
low-cost refrigerator called the Little Cool. It sells for $70 and runs on a cooling
chip rather than a noisy, breakable compressor. The unit uses high-end insulation
to stay cool for hours without power, is portable for use by migrant workers, con-

sumes half the power of rival low-end refrigerators, and has only 20 parts (as com-
pared to the usual 200).
The article also notes that the growing awareness of this new market has
sparked new business divisions within established Indian companies. To develop
its tiny $2,200 Nano car, for example, Tata Motors employed a division of nearly
300 engineers over four years. The group rethought all aspects of the development
process, from design, to manufacturing, to distribution and financing.
Fueling New Discoveries Through Multi-Disciplinary and Cross-Cultural

Collaboration
Engaging a large and diverse pool of innovators is necessary, but insufficient, to
create a highly efficient innovation engine. Evidence suggests that fostering collab-
oration can accelerate invention and innovation outcomes.16
The Lemelson Foundation has created several programs to experiment with
this approach. In 1995, Jerome Lemelson created the National Collegiate Inventors
and Innovators Alliance (NCIIA), modeled after the successful National Inventors
Council (NIC) that was launched in 1940 during World War II.17 The NCIIA funds
courses and multidisciplinary student teams in the fields of technological innova-
tion and entrepreneurship. It has yielded 48 patents and 55 start-up companies
through its $5.1 million investment in 347 student collaborations. This appears to
be more efficient than most angel investors and university tech transfer offices,
although it is difficult to do direct comparisons.18
An evaluation of the NCIIA grants program for the years 1997 to 2005 report-
ed that 17 “high-impact” grants produced the following outcomes:
• $40 million in new investment for student start-ups
• Creation of at least 700 jobs locally, and
• An estimated $35 million annually in regional economic impact19
The Lemelson Foundation has helped launch new programs at the NCIIA and
the Massachusetts Institute of Technology to foster cross-cultural teams of stu-
dents and faculty. These programs and others have demonstrated exciting results
when diaspora students and faculty, and their colleagues, partner with communi-
ties in the developing world. NCIIA’s Sustainable Vision program has resulted in a
new device to test for counterfeit pharmaceuticals in developing countries. MIT’s
International Development Initiative has yielded a soy milk maker for an orphan-
age in Peru, a chlorinator for community water systems in Honduras, and a
portable solar cooker for the Himalayas.20 Local innovators have a deep under-
standing of local needs and of the sociocultural context. University experts can
offer new perspectives on engineering, materials, and design principles, as well as
connections to investors and distribution systems.
The Ashoka-Lemelson Fellows Program also enhances innovation through
cross-cultural collaboration. The program identifies early- to mid-career innova-
tors from industrialized and developing countries, offers a stipend, and connects
fellows to professional networks, including other fellows. Joseph Adelegan, an
Ashoka-Lemelson Fellow from Nigeria, collaborated with researchers at the Biogas

Technology Research Centre in Bangkok, Thailand, as he designed a fixed-filter
anaerobic biogas converter that could remove slaughterhouse effluents from air
and water. David Kuria, a Fellow in Kenya, is working with the University of
Colorado to refine his business model. David has launched technology-enabled
sanitation “kiosks,” transforming run-down toilet stations in Kenya into mini
shopping malls where customers can even get their shoes shined. Customers can
use mobile phone technology to pay for using the toilets and other services.
Beyond civil society collaborations, there is a growing movement to partner
with the private sector to spur innovation for global development. To increase the
momentum of this movement, the Lemelson Foundation funded the “Design for
the Other 90%” exhibit in 2007,21 initiated by Paul Polak of IDE and developed by
the Smithsonian’s Cooper-Hewitt National Design Museum. The exhibit chal-
lenges us to reverse the current situation in which most of the world’s cleverest
designers cater to the richest 10% of consumers, designing haute couture clothing,
Maseratis, and elegant cell phone cases—while people around the world are wait-
ing for $2 eyeglasses, $10 solar lanterns, and $100 houses. The exhibit offers a
glimpse of what could be achieved if the industrialized world’s professional design
community focused on the challenges of eradicating poverty and conserving the
environment.
Many designers are responding to this challenge. Idealab, a solar technology
innovator in San Francisco, designed a low-cost solar home-lighting system for
families living off the grid. Idealab reached out to the Lemelson Foundation’s net-
work of clean energy entrepreneurs in developing countries—such as SELCO,
IDEAAS, and Emergence Bioenergy. After collaborating to learn about local mar-
kets, customer preferences, and their ability to pay, Idealab dramatically changed
its technology design and began field-testing with India-based SELCO, drawing on
SELCO’s in-country experience.
Transnational firms are also beginning to engage their design teams in cross-
cultural collaboration. Recently,some of the best designers at Philips,the multina-
tional electronics company, worked in rural India with local nongovernmental
organizations, self-help groups, and local industrial entrepreneurs. Together, they
developed an affordable,low-smoke solution for healthy and safe cooking that fit
the sociocultural and infrastructural conditions. The intellectual property and
design was donated to local stakeholders and the company is working with Indian
partners to establish a self-sustaining distribution model for the stove.22 The Leap
Frog Fund, a joint initiative of the Schwab and Lemelson foundations, has shown
that these exchanges are particularly effective when the “exporting” innovators
work with “importing” entrepreneurs to support the integration of the technolo-
gy or innovation in the new setting.23
After a recent visit to Asia, Jeffrey Immelt, chairman and CEO of General
Electric, brought attention to another dimension of cross-cultural collaboration:
reverse innovation. “Most American multinationals go through stages of globaliza-
tion where you export, start to localize, and ultimately get to the point where you

build local capability. And then you can start transporting ideas back to the devel-
oped world.”24 Many ideas have already been successfully transferred. For example,
bus rapid transit systems developed in Curitiba, Brazil, were transferred first to
Bogota, Colombia, and more recently to cities in the United States, including Los
Angeles, Cleveland, Boston, and Eugene. Treatments derived from medicinal
plants have been identified in developing countries, and then developed into phar-
maceuticals in the industrialized world.
While these types of experiments are gaining momentum, we must work to
make these collaborations more systematic and scalable. Technology Development
Centers, such as those designed by KickStart in Kenya, and IDE and SELCO in
India, root innovation in local contexts and make use of developing-country facil-
ities and engineers, while providing national and international connections. These
centers are logical hubs for cross-cultural collaboration and hold the potential to
accelerate technological innovation for development. By failing small but learning
big and tapping the “wisdom of the hive,” we can generate the collective learning
necessary to rapidly evolve a range of viable strategies and models.25
PATHWAYS TO SCALE
A robust pipeline of future inventors will take us part way, but in order to eradi-
cate poverty and build sustainable economies, we must create pathways to scale for
key innovations. The innovation engine’s greatest technologies will have the poten-
tial to improve lives and help individuals reach their full potential. They will gen-
erate income by serving as tools that enable people to lift themselves out of pover-
ty, thus increasing self-determination and global participation. Finally, the greatest
innovations will enhance, rather than deplete, the environment and natural
resource base on which we depend.
Twenty-first century sustainable products are needed in both industrialized
and developing countries. Bringing such technologies to scale requires three ele-
ments: (1) creating an enabling environment for their production and adoption;
(2) building appropriate business models for their dissemination; and (3) driving
large-scale investment to those social enterprises. In rich countries, because the
business and investment environment is generally strong, the focus should be on
creating incentives for the design, mass manufacturing, and purchasing of sustain-
able technologies. Where there is political will, scaling such technologies is relative-
ly straightforward. Consider Germany’s success creating jobs and generating clean
energy on a vast scale as a direct result of strategic and consistent investments in
solar technology.
In contrast, in developing countries, all three elements require attention.
Peruvian economist Hernando de Soto and MIT economist Daron Acemoglu doc-
ument the primary importance of building the rule of law, formalizing land tenure
and intellectual property rights, and creating a “governing system that offers
opportunities to achieve and innovate.”26 In addition to political will and a strong
enabling environment, we need radically different business models to reach the
five billion people living on less than $10 a day. As these innovative enterprises
emerge and become proven, we must then drive greater investment to them.
Because the literature on strengthening enabling environments is quite rich, this
section describes business model innovations and investment strategies that help
launch and grow successful enterprises.
Business Model Innovation

The most innovative businesses will engage customers and help build a middle
class from the bottom up by innovating across four dimensions: design, market-
ing, distribution, and finance. But we don’t yet know which approaches will scale
up most effectively. As with seeding collaboration to improve the innovation
engine’s efficiency, we must increase the number of business model experiments
and the speed with which knowledge is transferred between them in order to reach
scale. To do this, the Lemelson Foundation and many others are investing in for-
profit and nonprofit social enterprises working in developing countries across
these four dimensions.
Design
The Lemelson Foundation has invested in and learned from several pioneers in the
field of affordable design. International Development Enterprises (IDE), a non-
profit working in Asia, Africa, and Latin America, focuses on ways to design
around various cost drivers. IDE makes two trade-offs: exchanging capital for
labor (as labor is abundant in most poor countries) and quality for affordability.
For example, during the design process for its drip irrigation kits, IDE reduced the
amount of plastics needed by thinning the pipe. This reduced system pressure by
80%, requiring hands-on management from farmers to run the systems.27
Nonetheless, it brought the IDE product within the price range of farmers with less
than one-sixteenth of an acre of land. IDE’s approach allows customers to “get on
the technology ladder,” make money, and then move on to a superior model once
they can afford it.
In regions with dispersed populations and few shops to provide service and
spare parts, products must be designed with minimal maintenance requirements.
Because of such conditions, Kenya-based KickStart28 has invented a range of irri-
gation pumps that are highly robust. KickStart’s pumps are stronger, but more
expensive, than IDE pumps.
Like the agriculture sector, the health sector tends to generate products that are
beyond the reach of poor consumers. Conversion Sound (CS), a U.S.-based for-
profit social enterprise, worked to rethink hearing aid design. Its prototype costs
one-tenth the industry standard ($77 vs. $800). By drawing on lessons from the
consumer electronics industry, CS has also reduced—by 96%—the cost of equip-
ment for fitting hearing devices. CS employs simple hand-held wireless systems to
measure hearing capabilities, enabling village-trained health workers, who are
much more cost effective than doctors, to provide testing services. CS has also

designed a low-cost device that fits hearing aid molds on the spot, obviating the
need for multiple visits.
Marketing
Once design challenges are overcome, social entrepreneurs must convince cus-
tomers with severely limited resources to invest in their 21st-century sustainable
products. Lemelson Foundation partners have had particular success using prod-
uct demonstrations and public media to engage customers.
In Kenya, KickStart attends agricultural fairs where it sponsors water-pumping
contests among farmers to build awareness of its products. Winning farmers
return home with new treadle pumps. Retailers and distributors use the fairs to
create customer awareness through local language flyers, and potential customers
can provide contact information, enabling retailers to follow up with them after
the event. In rural India, IDE broadcasts local music from traveling vans to attract
potential customers. Staff members then set up demonstrations of IDE’s agricul-
tural technologies, such as micro-drip systems, sprinklers, and treadle pumps.
The most creative organizations use radio, film, and music to promote new
technologies. In India, for example, IDE developed a feature-length Bollywood
film of a couple whose marriage was saved by the income generated from a treadle
pump. Millions of rural Bangladeshis viewed this film, leading to the sale of over
one million treadle pumps in the region.29 In Kenya, the Maasai rap artist, Mr.
Ebbo, recorded a song and video for KickStart to tell the story of treadle pumps
ending the poverty of African farmers. It was broadcast throughout East Africa and
helped KickStart reach hundreds of thousands of new potential customers.30
Distribution
Design and marketing are parts of the puzzle, but distribution is also a major chal-
lenge. The Lemelson Foundation’s partners have developed creative strategies to
diffuse their innovations through community-based partners, the local private sec-
tor, and government.
Distribution through community partners accelerates the diffusion of prod-
ucts, because it enables social enterprises to operate in a highly decentralized way,
informed by local knowledge. Conversion Sound plans to use thousands of com-
munity-based health entrepreneurs to distribute its low-cost hearing aids. This will
enable CS to expand distribution rapidly because it will not be limited by the
shortage of government-run health clinics in remote areas. As CS founder David
Green says, “Our distribution concept is disruptive since the product can be dis-
tributed outside the existing exclusive hearing aid distribution channels, which
have a pricing system and mentality that is often the primary bottleneck for reach-
ing the hard of hearing client in an accessible and affordable manner.”31
SELCO has decentralized distribution by engaging unemployed youth in
Indian villages to market and sell its solar home-lighting systems on commission.
To expand SELCO’s distribution, the Lemelson Foundation supported a partner-
ship between SELCO and SEWA (the Self-Employed Women’s Association), an

established community-based organization in India. SELCO trains SEWA mem-
bers to become “clean energy entrepreneurs.” In turn, these entrepreneurs sell
SELCO’s clean energy technologies to SEWA’s 700,000 members. Similarly,
Grameen Phone (GP) relies on the Grameen Bank, a community-based micro-
finance institution in Bangladesh, to select entrepreneurs for GP’s “village phone”
model. Grameen Bank identifies women with strong loan repayment histories who
then purchase a cell phone (often using a loan from Grameen Bank) and provide
a shared phone service to fellow villagers for a small fee.
Interestingly, transnational corporations are also forming partnerships with
community-based organizations. In India, Hindustan Unilever has leveraged over
one million village women through self-help groups to become low-cost distribu-
tors of Unilever products.32
The local private sector is another powerful distribution resource. Across the
developing world, millions of village shops provide customers with basic foods,
paint, building materials, seeds, and more. Social enterprises partner with shop
owners, adding their products to the shelves. KickStart and IDE, for example, dis-
tribute most of their products through such shops, which can also provide access
to replacement parts and repair services. They also provide a method of capturing
customer feedback, which enables social enterprises to address design, marketing,
maintenance, or financing concerns quickly.
Finally, some organizations piggyback on government distribution channels.
This can be particularly relevant for health technologies. After designing a low-cost
single-injection device called Uniject, PATH (the Program for Appropriate
Technologies in Health) partnered with the Indonesian government. The national
health system trained 60,000 village midwives (one for every village in the nation)
who then administered over 40 million doses of Hepatitis B vaccine to newborns.33
PATH is now working with several countries to test the viability of using Uniject
to administer oxytocin to women in the third stage of labor, thus minimizing post-
partum hemorrhage, a leading cause of death for women in developing countries.34
Finance
For-profit and nonprofit social enterprises must bring their products within reach
of poor customers. Sometimes this requires helping customers access finance.
Other times, it calls for leasing arrangements or innovative pricing strategies.
SELCO brought its $400 solar home lighting solutions within reach of cus-
tomers by working with banks and microfinance institutions. SELCO encouraged
them to lend to poor customers by working with bank loan officers to help them
understand the productivity that often follows the adoption of solar products. The
training helped unlock loans, but interest rates were still high. To jumpstart the
market, SELCO bought down the rates and covered a portion of the downpay-
ments for early adopters.

IDEAAS, a nonprofit provider of solar energy in Brazil, took another

approach. The organization offers leasing arrangements to compensate for the lack
of microfinance in regions where it works. This enables customers in remote
Amazonia to afford solar home-lighting systems by paying a low monthly fee.35
Other organizations have innovated tiered pricing models to increase access to
technologies. This approach enables the poorest customers to get products and
services for free, while the enterprise as a whole earns a healthy profit. David
Green, the founder of Conversion Sound, has coined this “compassionate capital-
ism.” Conversion Sound employs tiered pricing to complement its many other
cost-cutting measures. Cross subsidies from profits derived from well-to-do clients
lower the prices for the poorest customers. Similarly, the Aravind Eye Hospital in
India performs 70% of its cataract surgeries for free or below cost, and 30% at
market rates.36 It offers the same doctors, procedures, and equipment to all
patients, but higher-paying customers have access to a more comfortable and quiet
waiting room and to private overnight rooms. This seems to be sufficient to drive
self-selection to the different pricing options.
Finally, organizations may employ a hybrid structure, where a for-profit arm
supports the mission of a nonprofit social enterprise. The nonprofit World Bike
manufactures and sells cargo-carrying bicycles in East Africa at a very low cost,
while its for-profit arm generates a surplus by selling similar bicycles as “sports
utility bikes” (SUBs) to bicycle tourists at a higher price.
Driving Investments in Social Enterprises

All of these innovations help poor customers access life-changing technologies.
Technology entrepreneurs serving these “base of the pyramid” customers also need
financing to launch and grow their businesses. Currently, many such enterprises
are stuck in a “missing middle” where they cannot access capital. The loans avail-
able from the microfinance institutions that serve their customers are far too small,
and the scale of private equity investments available to large firms exceeds the
absorptive capacity of these businesses.
The Aspen Network of Development Entrepreneurs (ANDE) was created to fill
this gap. Collectively, ANDE members represent over $750 million in investment
capital directed toward small and growing enterprises in developing countries,
which need investments in the range of $25,000 to $2 million.37
ANDE members provide loans, equity investments, and technical assistance to
businesses that are not being served by local banks because they are perceived to
be too risky. One ANDE member, E+Co,38 finances new solar energy enterprises
serving rural Tanzanians. Local banks are not interested in such start-ups. E+Co
also provides business development training, making the new entrepreneurs more
likely to succeed. On a larger scale, the Gates Foundation awarded a $10 million
loan and $5 million grant to Root Capital,39 another ANDE member, will extend
financing and training to 500,000 farmers and producers in Sub-Saharan Africa as
a result of a new $10 million loan and $5 million grant from the Gates Foundation.
These businesses also need funds for inventory and capital equipment. In
tough economic climates, banks are particularly hesitant to offer credit lines to
new businesses or small companies. The United States Agency for International
Development (USAID) and the International Finance Corporation (IFC) have
successfully used loan guarantees to create incentives for local banks to make such
funds available.
The Lemelson Foundation employs a similar technique: “first-loss” capital. It
used this tool to facilitate access to inventory financing for D.light Design, a pro-
ducer of affordable, solar-powered LED lanterns. While D.light had raised signifi-
cant equity and had orders on its books, it couldn’t access a credit line because it
was perceived as a high-risk start-up. After the Lemelson Foundation provided a
first-loss loan to the Calvert Social Investment Fund (CSIF), CSIF financed D.light,
offering twice the amount of the Foundation’s loan because of the risk reduction
provided by the Foundation. The relationship with Calvert enables D.light to
establish a credit history with a lender (rather than a foundation), potentially
enabling the company to secure a larger line of credit from banks in the future.
With continued efforts from governments, foundations, and nonprofit organ-
izations to “buy down” the risk for banks, private capital flows to start-ups and
small businesses are likely to increase. There is a new world on the horizon, in
which local banks open dialogue with small enterprises and individual loan offi-
cers become less risk averse. We are seeing the emergence of local financial inter-
mediaries in developing countries that are helping small businesses develop the
financial controls and systems required by the banks, so they are more likely to
qualify for loans and other investments. Eventually, we may even see a new, more
patient form of venture capital emerge. This will be necessary to reach the kind of
scale we need to support social enterprise models. Government and foundation
investment will be dwarfed by the resources of the private sector, should we be able
to harness it in the direction of small business experiments.
CONCLUSION
We find ourselves at a turning point in human history. We know that development
is driven by technological progress. Rich countries have experienced substantial
benefits since the Industrial Revolution—electricity and vaccines, computers and
the Internet, to name a few. But we are also living with unsustainable practices. Five
billion people are not participating in the global economy. Some of the technolo-
gies that drove development in the rich world have had negative environmental
and social consequences.
Two primary obstacles impede our progress. We have failed to build an effi-
cient and inclusive innovation engine focused on the triple bottom line. And we
have failed to create pathways to scale for the sustainable breakthroughs that are
generated. All sectors must play their part in overcoming these barriers.
Governments must invest in education and build enabling environments that fos-
ter invention, innovation, and entrepreneurship. Social enterprises must increase

their efforts to innovate ways to serve the more than five billion people excluded
from participation in the global economy. The private sector must harness its
design, marketing, distribution, and financing capacity toward this same end. And
foundations must continue to take risks, backing new ideas with great potential.
We have had a glimpse of this opportunity through leapfrogging mobile tech-
nologies, clean energy innovations, and child and maternal health products. Now
we must extend this vision globally, and to every individual. Thomas Friedman of
the New York Times recently described the need to incubate 10,000 inventors in
10,000 garages to fuel American economic recovery. Stuart Hart of Cornell
University echoes Friedman in his article “The Green Leap.” He advocates incubat-
ing “thousands of small-scale, yet radical business experiments aimed at leapfrog-
ging today’s unsustainable practices, each with the opportunity to grow and
become one of tomorrow’s sustainable corporations.” 40 By focusing explicitly on
cultivating human ingenuity, we have an opportunity to transform development.
With a strong innovation engine and all actors focused on enabling and support-
ing pathways to scale, we will unleash the power of invention and entrepreneurship
to create sustainable solutions to the great challenges ahead.
Acknowledgments
This essay stems from the wisdom of Jerome Lemelson, founder of the Lemelson Foundation and
one of the most prolific inventors in U.S. history (with over 600 patents). Jerome Lemelson articu-
lated the need to focus on invention and entrepreneurship to advance development more than thir-
ty years ago, long before the global community embraced such ideas. It also emerges from the lead-
ership of Dorothy, Eric, and Robert Lemelson, Susan Morse and Jennifer Bruml, the family of
Jerome Lemelson and the Board members of the Lemelson Foundation. Their clear vision and
whole-hearted embrace of creativity has given life to the many experiments I have described here. I
am grateful to my bright, creative, and committed colleagues at the Foundation. Without them and
the brilliant and inspiring funded partners (“grantees”) with whom we have the privilege to work
and learn from, I would not have written this essay.
Peggy Reid served as a great brainstorming partner as the article was taking shape. She helped
frame different outlines, developed content and brought her gift of strategic clarity to the various
ideas. Bob Kennedy was very generous with his time and exceptional writing skills, reviewing sever-
al drafts and providing cogent feedback at each opportunity. Phil Auerswald offered ways to frame
the article to strengthen its message. Helen Snively was a great editor.
I am grateful to Art Molella, Phil Weilerstein, David Coronado and Thea Sahr who crunched
numbers, provided content, and found references. I thank many wonderful colleagues who also con-
tributed: Jill Tucker, Patrick Maloney, Anand Krishnaswamy, Rosa Wang, Joshua Schuler, Timothy
Prestero, Geoff Groesbeck, Paul Polak, Matthew Bishop, Angela Shartrand, Tricia Edwards, Jane
Wales, Teofilo Tijerina, Tom Kalil, Gordon Conway, Stu Hart, and Michael Free. Thanks to Abby
Sarmac and Roswitha Swensen for keeping me on track. Will Novy-Hildesley reviewed drafts and
offered great feedback. Many thanks especially to Will, who was very supportive as I escaped family
duties to work on this essay.
1. Nicholas Kristof, “How can we help.” The New York Times Book Review, November 22, 2009, p. BR-
27. http://www.nytimes.com/2009/11/22/books/review/Kristof-t.html
2. Paul Polak, Out of Poverty. San Francisco: Berrett-Koehler, 2008. Julia Novy-Hildesley, “Funding
Invention for Sustainability,” Innovations, Winter 2006, 31–42.
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http://www.nsf.gov/statistics/ ACT, http://www.act.org/aap/index.html
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Science Vol. 312, no. 5777, 26 May 2006, 1143–1144. DOI: 10.1126
5. Lemelson Center website, http://invention.smithsonian.org/home/.
6. http://localtechwire.com/business/local_tech_wire/opinion/blogpost/5861012/
Jacquelyn F. Sullivan, Lawrence E. Carlson and Denise W. Carlson, “Developing Aspiring
Engineers into Budding Entrepreneurs: An Invention and Innovation Course.” Journal of
Engineering Education, Oct 2001, 571–576. Jacob Blickenstaff, “Women and science careers: Leaky
pipeline or gender filter?” Gender and Education, vol. 17, no. 4, October 2005, 369–386.
7. Lav R. Varshney, Private Engineering Education in India: Market Failures and Regulatory
Solutions. Cambridge, MA: Massachusetts Institute of Technology, November, 2006.
http://www.scribd.com/doc/20418543/Private-Engineering-Education-in-India
8. In the United States, women represent approximately 20% of the students at engineering schools.
Minority women represent approximately 5% of those employed in a science and engineering
occupation. Asians, African Americans, Latinos, and American Indians together make up only
18%.
9. Allison Druin and Carina Fast, “The Child as Learner, Critic, Inventor, and Technology Design
Partner: An Analysis of Three Years of Swedish Student Journals.” International Journal of
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11. Personal communication with David Coronado, Director, MESA Oregon. Statistics from:
http://www.nchems.org,
http://www.higheredinfo.org/dbrowser/index.php?submeasure=63&year=2006&level=nation&
mode=data&state=0
http://www.pathwaystocollege.net/StateLibraries/ListArticlesByCategory.aspx?cat=IN&key-
word=Access%20and%20Participation
http://www.nsf.gov/statistics/wmpd/enroll.cfm
http://www.act.org/news/releases/2002/11-15-02.html
http://nces.ed.gov/programs/digest/d07/tables/dt07_318.asp
12. The Strategy Symposium, held in December, 2007, included thought leaders in science, technol-
ogy and invention education from around the United States. For a symposium report, please
visit www.lemelson.org.
13. www.l-ramp.org
14. Jeffrey Immelt and Mukesh Ambani, “An Indian Cure for Global Ills.” Dialogue in New Delhi,
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STEM Education.” Chapter 2 (pp. 19-32) in Climate for Undergraduate Teaching and Learning in
STEM Fields. New York: Wiley Periodicals, 2009. No. 117 in series New Directions for Teaching
and Learning. DOI: 10.1002/tl.341.
17. The NIC illustrated the potential of amateur and independent inventors by “crowd sourcing”
ideas from the general public to solve pressing war challenges. By 1957, scientists and inventors
on the NIC board had reviewed more than 250,000 inventions from amateur and independent
inventors. Many solutions were adopted by the US armed services, including the tropical cell
battery, the signal mirror, and the mine detector by Charles Heddon. Science News-Letter, April
6, 1957, p. 218.
18. For example, data from the Association of University and Technology Transfer Officers (AUTM)

indicates that in 2007, $48.8 billion was invested in university research, yielding 3,622 patents
and 555 start-up companies. Hence, each patent cost $13 million on average and each start-up
$88 million, as compared to the NCIIA results of $106,000 and $92,000, respectively. This huge
discrepancy is somewhat misleading, however, as not all research dollars were intended directly
for innovations with commercial application, whereas the NCIIA grants were specifically for
this purpose. Nonetheless, it indicates what could be achieved by an explicit focus on translat-
ing research into commercial application.
19. D. Roessner, J. McCullough, M. E. Mogee, J. Park, M. Hancock, and A. Tyler, Effectiveness of
NCIIA Grant Programs, Annual Conferences, and Invention to Venture Workshops in Realizing
NCIIA Goals. Washington, DC: SRI International, 2006.
20. http://web.mit.edu/idi/ and http://www.nciia.org
21. Donald McNeil, “Design that Solves Problems for the World’s Poor.” The New York Times, May
29, 2007. http://www.nytimes.com/2007/05/29/science/29cheap.html
22. Chulha: Healthy indoor cooking. Brochure produced by Philips, in collaboration with
Philanthropy by Design.
23. Rick Aubry and, Patrick Arippol, “IDEAAS and PSA: Replication in the Amazon Academic Case
Study.” Stanford, CA: Stanford Graduate School of Business, 2007.
24. Immelt and Ambani, “Indian Cure for Global Ills.”
25. Stuart Hart, The Green Leap.
http://coyneclients.com/cornell/global_forum_smpr/Taking_the_Green%20Leap.pdf
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2009, pp. 124-126. http://www.esquire.com/features/best-and-brightest-2009/world-poverty-
map-1209
27. Polak, Out of Poverty, Chapter 2.
28. www.KickStart.org
29. http://www.ideorg.org/OurMethod/RuralMarketing.aspx
30. http://www.youtube.com/watch?v=zIDzBQ6meYY
31. David Green, update to the Lemelson Foundation, January 2009.
32. M. Porter and M. Kramer, “Creating Shared Value: The role of corporations in reducing malnu-
trition and poverty through rural development. Talk at Creating Shared Value Forum,” New
York, April 28, 2009. http://www.nestle.com/Resource.axd?Id=8D9A063B-3C17-42CC-808E-
86D2BFDCEEA0
33. Burness Communications, Indonesia launches nationwide program to protect newborns
against hepatitis B: New injection device hailed as breakthrough in global effort to improve
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site)
37. Founding members of ANDE include intermediaries who work directly with small enterprises
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38. www.eandco.net/
39. www.rootcapital.org/
40. Stuart Hart, The Green Leap.
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on p. 2 of pdf.
The Capital Curve

for a Better World
The world isn’t short of good ideas. The challenge that confronts every nation on
earth is how to weed out the good from the bad, and then exploit the full poten-
tial of the good ideas and turn them into social innovations that can change the
world for the better. For too long we have relied on the bluster of political debate
and the logic of the pork barrel to decide on the best way to run our schools, stop
killer diseases like malaria, or figure out how to avoid a climate change catastro-
phe. Given what is at stake, something has to change. Fortunately that is starting to
happen.
The world is in the middle of a fundamental rethinking of this process of social
innovation, with the goal of making it far more efficient and effective than ever
before, through a movement that we call “philanthrocapitalism.” The best business
brains of our age are turning their attention to doing good, using not just their
business skills but, in some cases, their businesses. One of the most important tasks
they face is figuring out how to finance the growth of a good idea into a world-
changing social innovation.
The “capital curve” for commercial businesses as they move from start-up
finance to venture capital and, finally in some cases, the public debt and equity
markets, is now well understood. Overall, the finance sector does a good job of
matching the right kind of capital to the best prospects for profitability. The social
sector needs an explosion of innovation and new thinking to follow suit, including
developing its own well-functioning capital curve. This process, in which the phil-
anthrocapitalists have a crucial role to play, will require a wide-ranging debate
about the respective roles of for-profit, government, non-profit and philanthropic
capital, so that these sectors work together more effectively in ways that play to
their strengths and minimize their weaknesses.
Philanthrocapitalism is behind the growth of mission-related and impact
investing that could lever hundreds of billions of dollars of new financing for social
environmental projects. It is in the efforts of traditional non-profits, such as
Matthew Bishop and Michael Green are the authors of Philanthrocapitalism: How
Giving Can Save the World. Bishop is American Business Editor of The Economist.
On Twitter he is @mattbish. Green is a writer and consultant.
© 2010 Matthew Bishop and Michael Green

microfinance lenders, to tap the for-profit capital markets. It is in the emergence of

inspiring conferences about social capital markets, such as SoCap. It is in the inno-
vative partnerships developing around strategies for sustainable profits between
for-profit businesses, such as Wal-Mart and Kohlberg, Kravis and Roberts, and
non-profits, such as the Environmental Defense Fund (and not just as public-rela-
tions window-dressing but as a part of their core money-making strategy). It has
even crept into government, with the Obama administration’s establishment of a
White House Office of Social Innovation to find successful ideas for social servic-
es from the non-profit sector and scale them up. And so on, and on.
The growing importance of social entrepreneurs, barely heard of a decade ago,
is one of the leading indicators of this emerging new approach. These are people
who specialize in the start-up phase of the execution of socially innovative ideas,
the counterparts of the entrepreneurs who form the early-stage for-profit busi-
nesses backed by angel investors and venture capitalists. The challenges they face
are arguably far harder than those confronting commercial entrepreneurs, not least
because the primary goal of a social entrepreneur is not to generate revenue and
profit, but to generate less financially tangible but socially more valuable returns
on capital. That increases both the difficulty and the importance of creating an
effectively functioning social capital curve.
The term “social entrepreneur” reflects a movement away from the traditional
bifurcated view that business and business methods are for the for-profit world,
whilst donations and government drive social innovation. It is about combining
the business person’s focus on efficiency with the social crusader’s desire for a bet-
ter world. It is the emergence of these social entrepreneurs that, according to Bill
Drayton, the founder of Ashoka, holds out the promise of a productivity miracle
in the social/citizen sector, which has long lagged behind the productivity of the
for-profit business sector (even allowing for the recent economic crisis).
Ashoka, a network dedicated to supporting social entrepreneurs, has played a
crucial role in improving society’s understanding of the four-stage social entrepre-
neurial life cycle: apprenticeship, launch, take-off (“an extended period in which
entrepreneurs consolidate their organizations and continue to refine and spread
their ideas until they become widely adopted”), and maturity (when “entrepre-
neurs have had demonstrable impact on their fields”).
The management challenges presented by each stage have been increasingly
well-understood in recent years, not least by Ashoka. Drayton thinks that “the
moment of “greatest magic and maximum vulnerability”, is at the take-off point,
when, without the right help, so many good ideas either wither and die or get stuck
as isolated “islands of excellence”. More recently, the management challenges of
more mature social organizations, such as leadership succession and remaining
innovative, have also been better understood. Specialized consulting firms such as
Bridgespan and non-profit arms of mainstream consultancies such as McKinsey
and Monitor have emerged in recent years to tackle these new problems of success-
ful, but not successful enough, organizations.
The Capital Curve for a Better World
Yet improving management and nonprofit governance is only part of the rev-
olution that is needed. The next frontier in raising the efficiency of social innova-
tion has to be the capital markets for good.
WHERE THE MONEY IS

Over the past few decades, our understanding of how to finance the growth of a
good business idea into a world-beating company—say, Google—has improved
massively. The efficiency of the capital curve that goes from angel funding via ven-
ture and mezzanine to publicly traded corporate debt and equity, though still not
perfect, has improved considerably. By contrast, our understanding of how to
finance the growth of a good idea into a world-changing social innovation, though
better than it was 25 years ago, lags far behind. There is no easy fix. The for-profit
capital markets are based on thousands of innovations that have helped bring the
right investors together with the right investees. A concerted effort is now needed
to design an effective and efficient capital curve for social innovation.
For a regular entrepreneur, the financing question is essentially about extract-
ing money from for-profit investors and from customers who will pay for the
products and services that the start-up produces—after the initial seed help from
what Amar Bhidé, author of The Venturesome Economy, calls the “three Fs”
(friends, family, and fools), and perhaps some extra pennies from government
enterprise grants. The social entrepreneur with a good idea, by contrast, is often
likely to focus on raising money from philanthropic investors who do not expect a
profit. The social entrepreneur may also look ultimately to government to be her
biggest paying customer.
Yet in recent years, the social sector has seen a growing and increasingly impor-
tant role for for-profit investors and paying customers for social entrepreneurial
businesses that also needs to be incorporated into the social innovation capital
curve.
The challenge in driving more efficient social innovation is to figure out which
forms of money—grants, debt, equity, government funds, for-profit funds, paying
customer—are most effective at which stage along the journey from good idea to
having massive social impact. The systems then need to be put in place to ensure
that the resources that exist are available to the most promising ventures at differ-
ent critical junctures. (In commercial technology entrepreneurship, a lot of atten-
tion has focused on the early “funding gap” between invention and market-ready
innovation. Alas, we suspect, there are currently funding gaps all along the social
capital curve.)
The new social innovation capital curve requires an up to date understanding
of the strengths and weaknesses of each of the different sectors with money and
resources—for-profit, government, non-profit, and philanthropic. This will then
allow us to focus on how to get these sectors to work together more effectively in
ways that play to their strengths and minimize their weaknesses.

Specifically, private for-profit capital has proved extremely effective at taking

some kinds of innovative ideas to scale; in allocating capital to promising ideas,
testing them quickly, sorting out the good from the bad; and in shifting capital
from where it is underused to where it can be better used. However, as the recent
global economic crisis has demonstrated, too often for-profit capital has been uti-
lized in ways that focus on short-term gains at the expense of long-term goals. And
it has frequently pursued private gains at the expense of, rather than for the
increase of, the benefits to society as a whole.
Government—from the local council level to multilateral agencies—has huge
advantages in driving large-scale change, through some combination of legal
authority, democratic legitimacy, and the ability to raise taxes and borrow cheap-
ly. Even in developing countries, where the quality of political leadership and
administrative competence is (sometimes much) lower, despite a great deal of
socially entrepreneurial innovation in these activities, only governments have the
potential to provide universal access to a more limited list of basic services, such as
primary education.
However, government often struggles to be innovative and take risks.
(Politicians have to be re-elected every few years, which makes them wary of any-
thing that costs money but could fail, or only pays out when it benefits their suc-
cessors.) Government can also be extremely ineffective, especially when compared
with the for-profit capital markets, in shifting funds from existing uses to new uses
with a higher value. (Political processes tend to give a stronger voice to those who
benefit from how government funds are currently spent than to those who might
benefit one day from a risky new idea.) When it works with outside organizations,
government often prefers shorter-term funding rather than long-term capitaliza-
tion of new initiatives.
The non-profit/philanthropic sector has a decent record of funding innovative
ideas in the early stages of putting them into practice. However, non-profits have
tended to remain small and inefficient, especially by comparison with for-profit
companies. They often have little choice but to rely overwhelmingly on short-term
funding, which tends to be extremely expensive to raise (especially when it is in
small amounts from the general public). Large-scale philanthropy has the poten-
tial to provide the long-term, high-risk capital that social innovation often needs,
but too often is risk-averse and uses short-term project financing rather than pro-
viding innovative start-ups with philanthropic equity. Online crowd-sourced
donations channelled through websites such as GlobalGiving also have an increas-
ing role to play.
Each of these sectors has great strengths to bring to the capital curve needed to
build a better world. Yet often there are significant barriers in the way of these sec-
tors collaborating effectively with each other to bring a good idea to fruition. Laws,
tax and fiscal policies, and organizational and societal cultures currently all too
often work together to emphasize the differences between non-profit, for-profit,
philanthropy, and government. This tends to keep them in their silos rather than
to encourage the smooth and timely transition between different sorts of money
that is the essence of a well-functioning capital curve. These barriers urgently need
to be broken down.
Describing the capital curve for social innovation can help, not least by
addressing the widespread misunderstandings that the different sectors have of
each other. Government, for example, often tends to view the philanthropic/non-
profit sector more as a source of cheap funds and other resources than a source of
socially entrepreneurial innovation. For-profit companies often look at partner-
ships with non-profits as a public relations activity rather than as an opportunity
to improve their long-term profits through win-win collaborations that combine
the financial clout and organizational reach of the corporation with the deep
insight into social change of the non-profit. Non-profits are too often happy to
take the money from either or both and chug along.
The result is so many missed opportunities for the sectors to work together
and add value to each other. Cultural norms and legal restrictions have often held
back institutional investors (including philanthropic endowments) from urging
the companies they invest in to focus more on long-term value creation and prof-
it maximization. Philanthropic endowments have only slowly started to see the
potential to achieve their missions by investing in securities that help the organi-
zations they back to achieve social goals while offering below market but above
zero financial returns. Governments have often denied the private sector, both for-
profit and philanthropic/non-profit, a meaningful seat at the table at high-level
discussions of how to solve the biggest problems facing the world (while often
allowing the for-profit sector to “buy” access to governmental processes through
lobbyists and campaign finance).
RISKS AND RETURNS

The for-profit world didn’t crack the capital curve question because it is innately
smarter; the for-profit capital curve is just easier because it involves a fairly
straightforward combination of financial risk and financial return. At one end of
the curve is the high-risk, high-return combination provided by angel investors
and venture capitalists; at the other is the low-risk, low-return mixture of the
investment-grade bond investor.
The social innovation capital curve is far more complex because of the diffi-
culty of measuring the social return on investment. Philanthropists and govern-
ments are both looking for social returns, with governments, it is widely under-
stood, having much less appetite for risk than philanthropists. So far, so straight-
forward. That would suggest a capital curve in which philanthropists take on the
role of venture capitalists (hence the term “venture philanthropy”), funding ideas
with high risks but potentially high social returns, while governments focus on
scaling up social innovations that have been proven.
However, the difficulty in measuring social returns means it is hard to say with
much confidence whether that is what either philanthropic foundations or govern-
ments actually do. Indeed, there are plenty of reasons to suspect that they do not,

due to the personal risk-aversion of foundation trustees and elected politicians and
the fact that a lack of data makes it easy to settle for business as usual rather than
the hurly-burly of innovation.
There has been much work done over the years to try to measure more rigor-
ously social impact and social returns on investment, through triple bottom lines,
blended value etc, much of it pioneered by Jed Emerson (who has given valuable
intellectual input to this article). It may never be possible to design data for social
investment that are even as rigorous as profit is as a measure of success for the
business world (nor, indeed, is profit the perfect measure of successful capitalism,
as the financial crisis demonstrated). Yet there are plenty of reasons to believe that
considerable improvement can be made on what passes today for measuring social
impact to turn it into a genuinely useful tool for allocating social capital.
The most important first step will be to get agreement, as far as is possible,
among those who are already committed to social innovation to start using some
common definitions. At the moment, relatively trivial differences in, say, the meas-
urement of environmental impact are frustrating any meaningful comparative
analysis.
It may only be a baby step but there was an extremely encouraging develop-
ment in September 2009, when a group of prominent investors committed to
social innovation launched the Global Impact Investment Network (GIIN).
Among GIIN’s founding members were giant philanthropies such as the Bill and
Melinda Gates Foundation and the Rockefeller Foundation, mainstream financial
firms such as J. P. Morgan, Citigroup and Deutsche Bank, Generation Investment
Management (a green-tinged fund management firm co-founded by Al Gore) and
innovative philanthrocapitalistic hybrids such as Acumen Fund, which invests
philanthropic dollars in for-profit firms in developing countries. The GIIN’s goals
include sharing information on what works and what does not, and agreeing on
common language and measures of performance. One way it will do this is
through the PULSE performance measurement system developed by Acumen,
Rockefeller and the philanthropic arm of Google.
If GIIN can build a consensus among some of the big hitters in the social
investment world about how to measure what works, we can hope that this will
help to dispel much of the muddle and confusion that holds back social impact
measurement today.
GETTING AHEAD OF THE CURVE

Better measurement of social impact should lead to a better fit of capital to social
innovation, as money naturally flows more easily to where the demonstrably best
ideas are. But there are several other ways in which the functioning of the capital
curve can be improved—ways that are already starting to be put to work.
The first is the rise of what we call “virtue’s intermediaries”, which play an
equivalent role in the world of social innovation to that of the financial interme-
diaries of the for-profit world. This idea has been attacked superficially in the after-
math of the financial meltdown of September 2008, characterized as arguing that

the social sector needs “Lehman Brothers to the rescue”. But although the main-
stream financial sector can certainly do better, it is hard to fault the efforts of their
counterparts in the social sector. These range from the likes of Echoing Green,
which provides seed capital to social entrepreneurs, and the Non-Profit Finance
Fund, which provides loans and growth capital, to Sea Change Capital, which rais-
es equity-like capital for non-profits, and New Philanthropy Capital, which does
research on which non-profits offer the greatest social bang for the buck. (It would
also be desirable to see the emergence of the equivalent of mergers and acquisi-
tions advisors to broker the sort of organizational combinations that rarely occur
in the non-profit world.)
The greatest weakness of these “good-brokers” is that they are underfunded,
not least because philanthropists and indeed governments too often regard invest-
ing in infrastructure as inferior to funding programs that have a direct impact on
the needy. However, the infrastructure of virtue’s intermediaries may actually
ensure that those direct programs deliver a far higher social return on invest-
ment—in which case they would be a high impact social investment.
The second area is to accelerate the ability of some ideas to move from relying
on philanthropic capital and government grants into a for-profit activity that can
be taken to large scale by the for-profit capital markets. Here, microfinance
demonstrates the possibilities. Over 30 years it has transitioned from pure charity
into an industry that now includes many for-profit financial institutions, which
serve millions of people who were previously denied access to basic financial serv-
ices. True, this evolution has not appealed to some microfinance pioneers, most
notably Nobel Peace Prize-winner Muhammad Yunus. Yet there is little doubt that
tapping the for-profit capital markets has enabled this good idea to reach a far
greater scale far more quickly than would have been possible by relying on chari-
table funds or foreign government aid.
A more efficient capital curve could potentially achieve similar results in other
bottom of the pyramid services for the poor, in areas such as basic education, clean
water supply, and health care, but far faster. Philanthropic funds could be used
deliberately to design and test business models that could be scaled up by for-prof-
it capital, instead of chancing upon such a model, as happened with microfinance.
Ignia, a new investment fund started by Alvaro Rodriguez Arregui and Michael
Chu, and backed by philanthropists such as Pierre Omidyar, is attempting to pio-
neer in several bottom of the pyramid sectors this accelerated movement along the
capital curve from philanthropy to for-profit.
The third area is to improve the transition along the curve from high-risk,
high-return philanthropic capital to large scale, less risk-tolerant government
funding. One important initiative is the establishment of the White House Office
of Social Innovation and its associated Social Investment Fund. The goal is to
explicitly search out social innovations that currently work on a small scale and to
grow them rapidly with government funds to maximize their social impact. This
will not be easy—New York City, under its philanthropist mayor, Michael

Bloomberg, is probably the best example so far of putting this idea into practice—
and the eyes of the world will be on this promising American experiment to see if
it can be replicated elsewhere.
Another useful development is the rapid increase in the number of “partner-
ship offices” to work with at all levels of government—from multilaterals such as
the United Nations, which established an Office of Partnerships in 1999, to the
national level, such as the office created by the President of Liberia to coordinate
NGO activities in the country, to local mayors such as Cory Booker in Newark,
New Jersey, who established a philanthropy office in City Hall. Maybe politicians
and bureaucrats are starting to see the potential in partnerships.
Another opportunity is the use of financial innovation to provide market
incentives for social innovation using government capital. Measuring social impact
better allows those who care about social impact to put their money where their-
mouth is, creating an incentive for innovators to deliver novel solutions by paying
them when they deliver. Traditionally, governments have been the main source of
this sort of funding for social outcomes, but often they have spent their money
inefficiently, delivering services themselves in ways that are closed to innovation—
a tendency that has only somewhat been reduced by the global privatization wave
of the past 30 years. For government, how much it spends on a problem has too
often taken precedence over what the money achieves.
More recently, however, governments and multilaterals have started to offer
forms of financing that incentivize innovation. One example is the advance mar-
ket commitments made by governments to buy certain drugs for the poor in the
event that pharmaceutical companies develop them. This greatly reduces the risk
to drugs firms of doing research with a high potential social impact but, before the
advance market commitment, a potentially low or uncertain financial return.
Another interesting new idea is the social impact bond being developed by
Britain’s Social Finance, another new social investment bank. The idea is to attract
private capital into solving a deep-rooted problem that is soaking up public
money. Take, for example, re-offending by released prisoners, which costs the
British government millions of pounds a year. A social-impact bond could raise
money to pay for the expansion of organizations with the expertise to reduce re-
offense rates. The more money the organizations save the government, the higher
the return the bond would pay investors. This goes beyond a standard public-pri-
vate partnership, which is expected to provide the same service as the state, but
more cheaply. The social-impact bond would reward better social outcomes and
not merely cut costs.
Social Finance thinks that the social-impact bond could be tried out in sever-
al public services. Besides being used to tackle reoffending, it could reduce the need
for children to be put in residential care or improve community-based health care,
easing the strain on hospitals. The key is to measure performance clearly, so that
contracts can be enforced.
A fourth need is to improve the legal and fiscal context in which social inno-
vation takes place. This agenda ranges from the tax treatment of charitable giving
to the legal treatment of different types of activity. There is growing interest in

making it easier for activities to transition from non-profit to for-profit, and to
stay in hybrid organizations that can make some money but are not obligated to
profit maximize.
Other countries should follow the example of Britain, which in 2000 created a
Social Investment Taskforce, made up of financiers, non-profits, and government
officials, to examine how to improve the social investment process. It came up with
some good ideas, not all of which have been implemented and some of which can
be improved on. Nonetheless, every country could benefit from its own social
investment taskforce to work across the old sectoral boundaries and find new solu-
tions.
Indeed, it would be great if countries competed with each other to create the
best environment in which social innovation can happen. Many of the ideas in this
article were mulled over in November 2009 by members of the World Economic
Forum Global Agenda Council on Philanthropy and Social Investment. This group
proposed that the World Economic Forum (WEF) should publish an annual Social
Competitiveness Report. This would rank countries according to the effectiveness
of their legal, fiscal, and cultural environment with regard to social innovation.
This would resemble the Global Competitiveness Report that the WEF has
published for decades, which ranks countries according to how favorable a place
they are to do business. This report, it is widely agreed, has encouraged countries
to compete to raise their ranking by improving their tax, legal, and cultural frame-
works for business. Similarly, a Social Competitiveness Report would drive the cre-
ation of a systematic body of knowledge about the current structure of legal, tax,
and other policies toward social innovation, and about what works best.
We live in a rapidly-changing global economy where innovation has lifted mil-
lions of people and whole countries out of poverty. Imagine if we could translate
that ability to take new ideas to scale in the markets for profit to the markets for
social value. Competition has to be the key. The World Economic Forum’s Social
Competitivevness Report could drive social innovation higher up the political
agenda as countries compete to be better place to do good.

Heike Schettler
Playing Catch-Up in German

Early Science Education with
Science-Lab
Innovations Case Narrative:
Science-Lab
The poor results shown for German students in international studies that com-
pared student achievement in various fields came as a shock to the different con-
stituent groups in Germany, such as parents, educational professionals, and politi-
cians. The German government has generally considered its education system
superior to those of other countries, but German students’ results in the 2000
Program for International Student Assessment, or PISA, were significantly lower
than the mean of all participating countries in all three areas that were tested: lit-
eracy, mathematics, and science (Weiss et al., 2001). Immediately afterward,
lengthy and emotional discussions started about the reasons for the poor results.
One problem was the late start of science teaching in the German education sys-
tem. In 2002, there was no science program in German preschools or kinder-
gartens (henceforth referred to as kindergartens, since in Germany almost all chil-
dren attend kindergarten from age three to six). In primary schools, science was
only a small part of the curriculum and focused mainly on biological topics, like
plants and animals, but also touched briefly on subjects like water, air, tempera-
ture, and even electricity. However, even countries with science programs and cur-
ricula in place for this age group face the challenge that science teaching for young
children must be different from the higher education approach. It should be far
Dr. Heike Schettler is Founder and Managing Partner of Science-Lab, and a social
entrepreneur focused on natural science education for children aged 4 to 10. After
studying Chemistry and receiving her Ph.D. in Science, she moved to Texas (UTA) for
her postdoc. After returning to Germany, Schettler worked for BMW, Kabel New
Media, and her own enterprise, Highserve, a technology consulting firm. Inspired by
her own children, she went back to her scientific roots in 2002 and founded Science-
Lab. She is currently pursuing a Master’s degree in education at the University of Bath.
© 2010 Heike Schettler

Heike Schettler
more phenomena driven in order to help children understand their world and life
experiences. This means, for instance, that the chosen topics connect with every-
day life situations of children, that phenomena are looked at from different angles
and not pressed into one science field (like physics or chemistry or biology), that
the children are the owners of the learning process, and that the teacher takes the
role of the facilitator in this process rather than being the source of knowledge and
information. To be successful, professionals delivering science education to the
young need a particular set of skills. Germany had neither an explicit science pro-
gram nor the skilled professionals available when my partner Sonja and I started
Science-Lab in spring 2002.
THE ACTORS
I was born and raised in East Germany and had a solid science education in the
East German school system. Biology started in fifth grade, physics in sixth grade,
and chemistry in seventh. The East German education system had many short-
comings, but when it came to science education its approach was very good.
Teaching science to students in fifth grade for two hours per week, gradually
increasing it to six hours for those in seventh through tenth grade and through
twelfth grade for those who were university bound, gave students enough time to
acquire science content and lab skills. At the same time, West Germany had a sys-
tem in which students could select their subjects and thus could get away in the
extreme with as little as two years of science education.
After finishing high school and working at a chemical company, I earned my
master’s and doctoral degrees in physical chemistry. After one year as a postdoc-
toral student at the University of Texas at Arlington, I started my industrial career
at BMW in Munich. Before I founded Science-Lab, I had started a successful high-
tech consulting company. Through my two children I got to know Sonja Stuchtey,
who also had two children at that time and now has five. As we became friends, we
shared many discussions about the education of children within this ever-chang-
ing and technology-driven time. Her background was in strategic management,
and she had her own customer relations management company. When we started
Science-Lab, we had a mutual understanding about quality and professionalism,
and that everything we would do had to fulfill one purpose: it had to be for the
benefit and the well-being of children. We agreed that our goal would be to do any-
thing we could to support children in understanding their world, to broaden their
horizons, and to offer them opportunities they might otherwise not have. Now,
seven years later, our aim is as true as it was in 2002.
THE FIRST STEPS

The early steps of Science-Lab were inspired by our own oldest children, who were
four years old at that time. Everybody who has children knows how many “why”
questions they come up with each day and how curious they are to discover their
Playing Catch-Up in German Early Science Education with Science-Lab
world. Our own children were no exception. As attentive parents, we wanted to

support their process of discovery but also to leave it in the children’s hands as
much as possible. At the beginning, we randomly chose questions from those our
children had posed and tried to help them find answers by letting them experi-
ment with household materials and guiding them by asking questions. Our chil-
dren were delighted, and soon we didn’t have only our own children but also the
children of friends and relatives joining our “science kitchen and garden lab.” All
of them expressed a lot of interest and were enthusiastic about our activities. At
this time we already realized, however, that all of their parents had a higher educa-
tion background, many of them in engineering or science. Therefore we were curi-
ous to see if the children’s interest came from already having a somewhat informed
lifestyle, or if at that early age the parents’ occupation was basically irrelevant. We
asked one of the local kindergartens with a mixed clientele if we could work with
their students on one scientific phenomenon from their world in a 30-minute ses-
sion. Our wish was granted, and we prepared a session about “the air around us.”
Our afternoon session included 30 children. They were given the choice to play
with any of the indoor or outdoor toys and games the kindergarten offered, or to
attend our session. One child wanted to play in the sandpit, but everyone else
wanted to join us. When we let the children use simple experiments to help them
understand the phenomenon of air being there even when not visible, the children
were totally engaged, and the time went by much more quickly than anyone antic-
ipated. It didn’t make any difference what background the children came from—
they were all eagerly engaged in learning and exploring. This was most encourag-
ing to us, and we hypothesized that children at this age are genuinely interested in
science in the sense that they want to explore the world around them, no matter
what cultural or family background they come from.
We noticed one interesting tendency even back then: the teachers of that par-
ticular kindergarten were extremely shy and went on to do other business rather
than watching us working with their children. Only toward the end, when they
realized how engaged their children were, did they start to come closer and have a
more or less reluctant peek. I will come to the reasons for that later.
DEVELOPING THE CONCEPT

After those initial findings, we thought that every child should have the chance to
experience science at an early age, and to do so in a way that suits their age and
broadens their horizons. Ideally this should take place in kindergartens and pri-
mary schools, and what struck us most was that it just didn’t happen. But what
were the reasons it didn’t happen? What was keeping science out of the classroom?
Why were teachers in German kindergartens and primary schools reluctant to step
into the fascinating world of science? In our eyes and with our background and
experience, it was fascinating and rewarding to help children understand their
world and to learn about their life in a fun and meaningful way.
We found this experience so compelling that we wanted to change the situa-

Heike Schettler
tion in Germany and expose children at a fairly young age to science phenomena
that they could grasp and think about according to their own level of understand-
ing. But who were we, two women with science and economic backgrounds and
four young children, that we could tell professionals how they should do their job?
Nevertheless, we immersed ourselves in the literature on education in general and
science education in particular and started to develop a concept for how to explore
a variety of science phenomena with kindergarten children. Through our previous
professional work, we knew from the beginning what our most important criteria
would be: the highest quality in science teaching, sustainability for the children
involved, and for all the people who lived and worked with them. A one-time visit
to a kindergarten wouldn’t be enough; in order to change children’s thinking and
understanding, we would need to offer regular sessions to explore science phe-
nomena that the children experienced in their worlds. That led us to develop our
first science course for children four to six years old.
PROVING THE CONCEPT

After putting together a science course for kindergarten children, Sonja and I
wanted to find out if what we were doing made any sense—if children would like
to come to our class and whether they would benefit from a science course that
wasn’t just a one-time event. But how should we go about that? The only chance
we had was to find children who would come voluntarily to a club once a week and
explore their world with us. So, we rented a room and prepared our first series of
science sessions. We also found a local newspaper that agreed to write five lines
about the fact that Science-Lab was starting soon and that it would help children
find answers to questions like, How is a rainbow formed? Our goal was to get a
group of approximately 10 children together; we would ask their parents to pay a
fee so we could cover the cost of the room and the babysitters who took care of our
younger children while we were teaching. The effect was overwhelming. Our
phones didn’t stop ringing after the notice was published, and within a few days we
had 24 children who wanted to join Science-Lab. So, instead of starting with one
group of children, we immediately started with three. This gave us the chance to
climb the learning curve even faster. In order to do so, we reflected on each lesson
and looked for ways to improve our approach. The children were very enthusias-
tic and counted down the number of nights they had to sleep before they could
come back. Several mothers told us that their children didn’t want to go to birth-
day parties or even weddings if they were on a Science-Lab day. Indeed, all the chil-
dren attended the 14 sessions we offered over the course of five months. Even more
exciting was the fact that once the course was over, they wanted to come to the next
one. Half-way into the first course, Sonja and I knew we had tapped into some-
thing that didn’t exist in Germany before, and that it was something children and
parents were equally enthusiastic about.
Clearly there was a demand for an academically sound, child-centered
approach to give children the science-based “brain food” they needed. Many
German parents were dissatisfied with the programs kindergartens offered, which
banned children from learning to read or write, even when the children were ready
for it. Furthermore, the kindergarten teachers were not trained or ready to explore
the children’s world through a scientist’s glasses, thus only a few teachers were able
to support the children adequately. By now this has changed in many kinder-
gartens, and we can proudly say that our work certainly provided the spark to
bring about this change. However, many German kindergarten teachers still think
the same as the one who told me back in 2002, “Don’t make the kids get their high
school degree in kindergarten. Let them have their freedom. They will experience
the seriousness of life early enough when they go into first grade.” This attitude
makes me sad, since it implies that learning only starts at school and that learning
is no fun. What we experience with the children is so different: they are hungry to
get to know and understand their world, and they have such joy in learning. They
feel so proud when they figure out something themselves and they come to the
classes eagerly, since they sense the high respect we have for them and for their
learning process. The children brought us such great rewards that we wanted to
give up our careers and concentrate 100 percent on science education for young
children.
During our initial research, we had looked into other science programs avail-
able for young children. We found a variety of smaller and very local initiatives,
and international initiatives like Hands-On Science in the U.S. or La Main à la Pâte
in France. However, none of those initiatives was suitable for broader implemen-
tation in Germany, since they either lacked the quality standards we wanted or they
were clearly linked to a specific state education or cultural background. In spring
2003, we had successfully completed a number of Science-Lab courses for a small
number of children. We knew that the way we were doing it was different from
anything that had been done in Germany and other countries before, and we saw
rising demand from parents in other areas in Germany who had heard about
Science-Lab through friends or articles in German newspapers and journals (e.g.,
Der Spiegel). We realized that we had to make a decision on how to proceed.
EXPANDING REACH AND CONTENT

In April 2003, two things happened at the same time. First, parents of children
attending our kindergarten courses asked us to develop courses for children of pri-
mary school age—that is, for the older siblings of our young students. We proceed-
ed to expand our concept for an older age group and planned to start trial sessions
in the summer. Second, we started to receive phone calls from parents in cities far
away from our base near Munich who wanted Science-Lab courses for their chil-
dren in their area. Since there was no chance for us to travel around teaching sci-
ence, we had to find people teaching science in the way we thought most success-
ful and meaningful for the kids. In order to find such people, we turned to the par-
ents calling us and asked them if they wanted to become science teachers for their
children, especially since most of them had a university degree, many of them in

Heike Schettler
engineering or science. That is how we recruited our first three Science-Lab teach-
ers. Using the knowledge and skills of highly qualified parents proved to be a very
successful idea. Only later we found out that other models use that resource as well;
for instance, the Parents as Teachers program in the U.S.
After consulting with a lawyer and a tax consultant, we realized that German
law would make it difficult and risky for us to employ people far away, so we decid-
ed to license the Science-Lab concept and make it a franchise; we learned only
much later that we were probably the first social franchise in Germany. We want-
ed to reach people who committed themselves for a certain period of time, who
had the fire burning inside them to do this kind of work with children, who were
able to contribute to the training cost but whose priority was not to make money
off this work. Since being selected as an Ashoka Fellow in 2006, I have shared our
approach in multiple public discussions and with other German fellows, like
Meinrad Armbruster (Eltern-AG), Rose Volz-Schmidt (wellcome), or Judy Korn
(Violence Prevention Network), since they faced challenges similar to ours. By
using a social franchise approach, we reached the most committed people who
were able to work independently, while giving us the chance to ensure the quality
and sustainability we consider most important for that kind of work. What start-
ed out with three people in spring 2003 has now become a group of more than 60
highly dedicated and committed science teachers for kindergarten and primary
school children. All the teachers have a strong relationship with us, which goes far
beyond the realm of contracts. We have a process in place that helps us find and
retain these important agents for our children. If someone is interested in becom-
ing a teacher with us, we usually talk to them on the phone to explain what we are
doing and how we are doing it. To get a personal impression, we encourage the
candidate to visit a session with one of our teachers close to where the candidate
lives. If the candidate and the teacher both have a positive impression, we engage
in more specific talks and, if successful, greet her or him as a new member of our
Science-Lab community.
The candidate chooses the first science course she or he will train for and meets
with other teachers at one of the training weekends. We have no more than four
training weekends per year in order to get as many people together as possible.
Because we are all working on a local basis, we need to provide opportunities to
exchange experiences and ideas and for personal contact. Therefore we teach sev-
eral of our courses on one weekend. Those weekend trainings are extremely
intense and at the same time stimulating, motivating, and fun. We always have a
mixed group of beginning teachers and teachers who are attending in order to
expand their repertoire to include other age groups or topics. One of our teaching
techniques is to use role-play to emulate real-life situations with the children. Each
teacher has to present a trial session that simulates parts of a lesson with the chil-
dren, which is treated like an exam. Every participant receives feedback and coach-
ing from the trainer and from the other participants, and they leave the session
with clear knowledge about their strengths and challenges. Even after the training,
nobody is left alone. Regular contact with the teachers identifies challenges and
Figure 1. Map of Germany, Indicating Locations of Science-Lab Teachers.
opportunities and gives them the chance to get better every day. In the beginning,
Sonja and I were coaching all of our teachers ourselves. As the organization grew,
we identified teachers with the necessary skills to take care of the teachers in their
local region. We currently have leaders in six German regions: in Berlin, and in
northern, western, central, eastern, and southern Germany. We also have one per-
son responsible for Austria, one for Switzerland, and one for non-German-speak-
ing countries, with Spain being our main focus at present. The number of Science-
Lab teachers has grown steadily since we started to license our program, especial-
ly in highly populated areas such as Berlin, Frankfurt, and the Rhein-Main area,
Munich, and the Ruhr valley. We are currently working on reaching other areas in
Germany while maintaining our high quality standards.
We have established a variety of important tools that help us monitor the qual-
ity of and support for our teachers. Every teacher has to give feedback about each
session taught. The regional leaders look at this feedback and take action if neces-
sary. For example, if a teacher reports having difficulty taking the children’s ques-
tions in a particular session and developing a meaningful learning experience out
of it, the regional leader calls the teacher to discuss how we can assist them.
Sometimes we have to strengthen content skills, sometimes a different method-
ological focus is needed, and sometimes a teacher needs help in understanding the
children better. By supporting Science-Lab teachers in their daily work, all of them
grow in experience and the quality of our work improves constantly.

Heike Schettler
The feedback is also used to update every course we have developed once a
year. That gives us the chance to incorporate comments, ideas, new experiments,
and educational games that our teachers and their children have developed into
the Science-Lab curriculum and make them available to all of our teachers. Every
teacher receives a yearly update so that she or he can implement all the other teach-
ers’ ideas and improvements. The next pillar of our quality system is parents’ and
children’s feedback. After a teacher runs a course, parents and children are asked
for their feedback on a short questionnaire, which gives us important information
about how to make our courses and activities better. The third pillar of our quali-
ty system is that we see every teacher personally at least once a year. If they don’t
attend a training weekend, they are required to participate in one of the seminars
we offer about twice a year. This allows us to ensure that all Science-Lab teachers
maintain the highest standards in teaching science to young children.
Over the last seven years, we have reached about 17,000 children through these
extracurricular science courses. This seems to be an impressive figure, looking at it
as a program started from scratch. But do we reach all kids? By no means. We are
not even able to fulfill the current demand, as we don’t have enough Science-Lab
teachers to cover all of Germany, as the map shows. Parents will not drive a child
longer than 30 minutes to attend a 45- to 90-minute class. Therefore, in order to
reach children where they are educated, we need to train kindergarten and primary
school teachers how to teach science to young children in a fun yet sustainable way.
In doing so, we can give our children a foundation of basic science knowledge
through kindergartens and primary schools. Ideally, children who discover their
interest in science through their school or kindergarten would be offered extracur-
ricular courses. Science-Lab teachers giving these courses could identify young sci-
ence talents and give them the chance to pursue their interest even further, togeth-
er with other children that were selected because of their special interest in natu-
ral science. Basically, this early vision is what we have been working on for the last
five years, and still are.
REACHING OUT TO ALL CHILDREN

By the end of 2004, we had proven that our concept of science teaching for young
children worked. We also proved that it wasn’t solely dependent on Sonja and me
and could be transferred to other people and regions. Newspaper and journal arti-
cles about Science-Lab helped us become known to a wider group of interested
people. It also helped us tackle the next step and gain access to professionals in
kindergartens and primary schools. In order to establish science teaching in other
areas, we needed to include science in the curriculum and at the same time quali-
fy the teachers to implement the science content in the classroom. As a result of
discussions held in the aftermath of the PISA studies, the 16 German states one by
one integrated science into their kindergarten and primary school curricula. Even
though Science-Lab was very young back in 2004, the Bavarian Institute for Early
Childhood Pedagogy asked us to contribute the science section of the Bavarian
Figure 2. For a holistic approach, we envisioned a pyramid-like structure to sci-

ence teaching for young children in Germany.
kindergarten curriculum. Today, all German states have a written science curricu-
lum for both kindergarten and primary schools. I mention both institutions
because they are quite different in Germany. While primary schools are adminis-
tered by state education ministries, kindergartens are usually administered by the
state ministries of family, health, and seniors. This means that the transition from
kindergarten to primary school often isn’t as smooth as it should be. Furthermore,
merely putting a science curriculum in place is not sufficient; if we want to imple-
ment this curriculum in the classroom, we need to support the teachers in doing
so.
BACK TO THE ROOTS: THE TEACHER PERCEPTION PROBLEM

As I mentioned earlier, many German teachers at the kindergarten and primary
school level seemed reluctant to engage in science topics. This is likely due to their
own (perceived or real) lack of scientific knowledge due to their experience with
natural science at school. Many kindergarten teachers told us that they chose their
career in part because they didn’t like science at school and didn’t want to be
involved in natural science. Many of those teachers experienced science as a for-

Heike Schettler
Figure 3. Quality system for Science-Lab teachers.
mula-driven applied mathematics course and had hardly any understanding of the
phenomena that were the basis for the mathematical interpretation. When we
asked them about their science experience and associations, we got far more neg-
ative than positive comments. Therefore, one of our main goals was to change the
teachers’ perception of natural science into something exciting, fun, and worth
exploring. Moreover, rather than pushing our experiences and knowledge into
kindergartens and primary schools, we wanted teachers to ask us for support. We
also knew that the amount of time and commitment we expected from our
Science-Lab teachers was far too much to expect from teachers in kindergartens
and schools, as they had other engagements and targets to meet. Therefore, we
developed a specific teacher training, first for kindergarten teachers and later for
primary school teachers. We focused on phenomena that were as close as possible
to the work of kindergarten teachers that they used almost every day, such as col-
ors. Another example is sound, since music plays such a vital role in every kinder-
garten child’s life. Although teachers and children make a lot of music in kinder-
gartens, they didn’t look at it from a scientific point of view. Starting with just a
few phenomena, we helped them little by little to put on their “science glasses” and
look at (feel, hear, and smell) their world with a young scientist’s eye (hand, ear,
and nose). We worked with kindergarten teachers in our vicinity and were able to
monitor their implementation of our activities on a day-to-day basis. This helped
us refine our offerings and convince other kindergartens to send their staff to our
training sessions.
At first there were only a few, but we treated every teacher as a valuable
resource and someone who could influence the life of children significantly. We
were happy about every child who was inspired by his or her teacher to explore
science even further. Amazingly, we were able to turn around teachers’ attitude
toward science with only one day of training. Kindergarten teachers in particular
were enthusiastic and thankful after the training. One said, “Had I learned science
that way, my life would have unfolded quite differently.” One age 50+ teacher com-
mented, “That was the very first time I thoroughly enjoyed a training day.” We have
now trained close to 8,000 kindergarten teachers in our one-day basic session, and
almost all of them left our training convinced that science isn’t as difficult as they
always thought it to be. Furthermore, they find fun in exploring science phenom-
ena through the eyes of the children and are keen to try their new knowledge and
skills with their students. Many of the teachers come back after 12 or 18 months to
reflect on their work and explore new topics. Many of them also use our training
as a starting point for exploring the world of science phenomena with their chil-
dren, even in areas previously unknown to them. Those results are the most
rewarding for us, since we reach the children and their teachers, and are able to
change their attitude toward science and their understanding of it.
We maintain contact with the teachers attending our trainings to make sure
they have what they need to put on the “science glasses” in their daily work. It is
also essential for our quality assurance. All participants are asked for feedback
immediately after the training and are sent a questionnaire approximately 18
months later to find out how well the implementation of science content went in
their kindergarten classes.
The Science-Lab teachers who train other professionals have to qualify for the
job by having extensive experience working with children of the relevant age
group. They also have to be able to work with adults. We train them specifically for
that kind of work, again followed by an exam and a coaching process while they
first attend teacher-training sessions and gradually lead one themselves. They are
monitored and required to give feedback after each teacher training, and they meet
with all other teacher trainers ones a year to discuss new developments, challenges,
and ideas.
Basically everything I described for kindergarten teacher training is true for
the training of primary school teachers. However, primary school teachers are
much more restricted by their state curricula. Primary schools in Germany have
educational targets to meet or certain areas to cover in their teaching, including
science. Even though Germany is a small country, it has 16 states. All schools are
under the control of the state governments rather than the central German gov-
ernment, which leads to 13 different primary school curricula (some northern
German states have a joint curriculum). When we looked at those primary school
curricula, we found that all demand teaching of more or less the same science phe-
nomena. Therefore, we developed our primary school teacher program with a
focus on the phenomena rather than the 13 different curricular demands.
However, when we teach teachers in a particular German state, we have to consid-
er where the teachers come from and specify our training to the curriculum they
know in order to offer them optimal support. Apart from that, the situation in a

Heike Schettler
primary school classroom in Germany is considerably different from the kinder-

garten classroom. In German kindergarten, one class has no more than 25 chil-
dren, with one teacher and one assistant present at all times. In primary schools, a
teacher quite often works with 28-30 children without an assistant, and in many
schools classrooms are crowded. Traditionally, parents rarely come to the school
for help during the day. This meant that we had to build organizational measures
and ideas into our training to cater to this situation. Just as with the kindergarten
teachers, a minority of primary school teachers had the solid science background
knowledge that gave them confidence to try out new, modern, or different teach-
ing approaches in the field. That’s why our training has to deliver both content
knowledge and understanding, as well as science teaching methodology.
THE RECIPE FOR SUCCESS

What are the reasons that children, parents, and teachers alike are inspired by our
approach to science teaching? There are eight main factors we see as crucial to this
process:
• We look at the world through children’s eyes. We take their interest seriously
and connect with them.
• We look at a phenomenon and come up with questions about it. It doesn’t
matter if the phenomenon belongs to the field of biology, chemistry, or
physics. The phenomenon itself is the focal point and we try to understand as
much of it as children in that particular age are able to.
• We explore and accept various venues to find answers to our questions. Often
there is more than one venue and even more than one answer.
• We treat every comment and idea with respect and create positive learning
experiences.
• We use a scientific approach to investigate a phenomenon or topic—from
question to hypothesis to proof and communication.
• We come back to a topic several times and look at a phenomenon from a dif-
ferent angle or at another level. In pedagogy, that is called a spiral-type cur-
riculum.
• We give children time to explore and investigate at their own pace.
• We talk about the process, findings, and results with the children. That way we
simultaneously enhance their communication skills.
These are the factors that make all of our programs so meaningful for partici-
pants, be it the extracurricular courses or the teacher trainings. The success of
Science-Lab as an enterprise is due to a great extent to the high standard. But it is
also true that starting this venture with my friend and partner Sonja was crucial
for its ongoing success. Sharing the same understanding and values gives us the
chance to stand in for each other whenever needed. However, we find it easier to
be in there together, especially in times of crisis, and to help each other master
challenges.
Figure 4. Starting at the top, the talent support is 100 percent financed through
private donors.
OVERCOMING OBSTACLES
Naturally we had and always have obstacles to overcome in building up a venture
like Science-Lab. There are basically three major challenges we have faced or are
still facing. One comes from some professionals in the field of education.
Educating the young is a task that a society has to fulfill. In Germany, however, the
explosive number of private schools being founded recently (Oelkers, 2007) and
the PISA results show that parents are not completely satisfied with the way this
task is being carried out, particular as Germany’s test results fall behind those of
other countries. The fact that education issues are the responsibility of 16 different
state education ministries causes many institutions to work on the same tasks in
each state. This requires more financial and personnel resources than would a
national education policy and fewer institutions. By dispersing these resources, less
money and manpower is available to transfer good ideas and research results into
practice. Furthermore, entrepreneurial solutions like ours are often looked at sus-
piciously by people working in the state system because it didn’t come out of that
system. For example, state decision-makers sometimes reject our approach
because they didn’t invent it, even if we partner with someone who would fully

Heike Schettler
finance the project within a school district. The only way we can overcome such
prejudice is to work with people in the state education system who are more open
to new approaches and prove to them, through our high-quality work with teach-
ers, that their decision to trust us was right. In our experience, the pull comes from
teachers who know our work, thus we are changing the system from the bottom
up.
Our second major challenge is the constant fight to get our work paid for in
order to keep Science-Lab up and running. Coming back to the pyramid I
described earlier, we have three ways to finance our work. The middle part of
extracurricular courses is financed by the parents who send their children to our
afterschool program. In some cases, companies pay for courses for their employ-
ees’ children, or schools spend some of the money the state allocates to them for
afterschool activities for a Science-Lab course. We would like to achieve a financ-
ing model in which a child’s participation in an extracurricular Science-Lab course
depends on the child’s interest and not on the parents’ financial situation.
The greatest financial resources are needed for the teacher-training program.
This is a real struggle for us, as we lack access to influential decision-makers in the
16 German states and the federal government. Developing our venture in an entre-
preneurial way, we turned to businesspeople for help. We especially approached
companies that produce technology-driven products and that are searching the job
market for well-trained graduates in the fields of engineering and science. Those
graduates are hard to find in Germany these days (Reinberg & Hummel, 2003). We
were able to convince some of the managers to take a rather long-term perspective
and donate some of their revenues to the educational development of kinder-
gartens and primary schools within their vicinity. By now, about 90 percent of our
teacher trainings are financed by companies or their spin-off foundations. It may
sometimes be tedious, but this grassroots approach, in conjunction with our
exceeding expectations, has brought us the respect and the pull of people working
with us. Eventually we will have a strong enough anchor within the educational
practice so that the state system cannot ignore us.
The third challenge is the most severe and it has to do with copying our work.
Any successful concept will be copied; there is no doubt about it. A successful con-
cept should be copied in order to improve or overhaul the system. However, the
copying that has occurred so far in Germany has not met the appropriate stan-
dards and thus undermines both the reputation of the original and the wider goal.
We already addressed the reluctance and fear professionals have with regard to the
natural sciences. If teachers attend trainings that reinforce all the stereotypes of sci-
ence teaching, they will turn their backs on science and feel confirmed in their
sense that they never understood anything in that field, that they don’t understand
it now, and that they will never understand it. At that point a person is lost. The
problem is that we most often have only one chance to reach these teachers. If a
person has a bad training experience, they won’t likely give it another try. However,
if someone can adopt our approach successfully without plagiarizing it, we are
more than happy to join forces with them in the quest to change science education
in Germany—and wherever it is needed. To accomplish this we are working to

describe our standards and benchmarks clearly and to form strategic alliances.
MAKING IT PART OF POLICY

Our main goal is to implement high-quality science teaching in all preschools,
kindergartens, and primary schools in Germany in order to give children a sound
science foundation before they enter higher schooling. Discussions over the last
few years have led to changes in the written curricula for kindergartens and
schools. To transform the written curricula into action is the greater challenge
right now. Science-Lab aims to set the quality standards and benchmarks for that
implementation process.
FUTURE VENUES
The last seven years were extraordinarily eventful and busy. Science-Lab is current-
ly in a consolidation phase, working to ensure that the method and the quality of
science teaching for young children become established throughout the German
education system. We are regularly developing new formats as demand arises, such
as joint workshops for parents and children or teacher trainings for special needs
teachers. We also started to go international and trained teachers from German
schools in Italy and Spain, as well as teachers from international schools in
Germany. The lack of implementation of science teaching in the way we do it is not
a problem unique to Germany. As we have learned at international conferences,
other countries encounter the same difficulties. Therefore, we believe that we can
contribute to the process of establishing science curricula for kindergartners and
preschoolers on an international level as well.
References
Oelkers, J. (2007). Schule und Wettbewerb: Neue Perspektiven für Leistung und Qualität. In Vortrag
vor den Arbeitskreisen Schule-Wirtschaft Südhessen. Biblis, accessed at
http://www.elternlobby.ch/deutsch/argumente/pdf/oelkers_schule_wettbewerb.pdf on
September, 3rd 2009
Reinberg, A., & Hummel, M. (2003). Steuert Deutschland langfristig auf einen Fachkräftemangel zu?
IAB Kurzbericht, 9, 1-8.
Weiss, M., et al. (2001). PISA 2000 Zusammenfassung zentraler Befunde. Berlin: Max-Planck-Institut
für Bildungsforschung.

David H. Eddy Spicer
The Ingenuity Gap Revisited

Innovations Case Discussion:
Science-Lab
Collective intelligence involves a transformation in the way we think

about human capability. It suggests that all are capable rather than a few;
that intelligence is multiple rather than a matter of solving puzzles with
only one right answer; and that our human qualities for imagination and
emotional engagement are as important as our ability to become techni-
cal experts.
—Philip Brown and Hugh Lauder, Capitalism and Social Progress
Who would not want their young child to be in a Science-Lab afterschool program
with Dr. Heike Schettler and her colleagues? The vision offered is a compelling one
that we crave for all children—a program that sparks deep curiosity in the natural
world through the encouragement of skilled teachers, cheered on by a chorus of
engaged parents. The flourishing of Science-Lab over a short number of years tes-
tifies to the original designers’ alchemy, converting the zeitgeist of anxiety around
globalization and its consequences into a positive force for educational change on
a potentially broad scale within and beyond Germany. The effort is earnest and the
response enthusiastic, converting skeptical educators, inspiring anxious parents,
and attracting a swath of support from teachers and corporate sponsors.
Of greatest interest to me is what this case says about building knowledge for
educational change. My comments elaborate three spheres of such knowledge-
building. The first is the most obvious and has to do with what Dr. Schettler por-
trays as Science-Lab’s “recipe for success.” The ingredients of that recipe comprise
what Richard Elmore, a scholar of school reform, has called the “core” of teaching
and learning: the reciprocal relationships among student, teacher, and subject mat-
ter.1 The second sphere embraces this core, but adds an encompassing shell—the
David H. Eddy Spicer is a Lecturer in Education at the University of Bath in Bath,

U.K. His research interests are in the leadership of educational change, collaborative
inquiry in professional settings, organizational learning, and the role of new technolo-
gies in these areas.
© 2010 David H. Eddy Spicer

relationship between the innovation’s designers and those who would carry for-
ward their design. This comes in two parts with Science-Lab: the relationship with
the parents who started the Science-Lab afterschool activities, and that with the
teachers in state primary schools with whom Science-Lab sought to work to reach
more diverse students. The third sphere is yet more encompassing, enveloping the
first two. It concerns knowledge-building around change in the broader system of
schooling, touching on the recent engagement Science-Lab has had with state deci-
sion-makers and corporate sponsors.
THE KNOWLEDGE-BUILDING “PLANET”

The image of a planet captures the three spheres of knowledge-building and their
interdependent relationships. Imagine the fiery core of teaching and learning, con-
tained by a fertile and breathing mantle, which in turn is encompassed within a
sustaining atmosphere. Of course the opposite image also holds: of a spent core, a
desolate mantle devoid of life, and a thin or poisoned enveloping atmosphere. As
with living systems, the three spheres are interdependent; what happens within one
affects all. These three spheres of knowledge-building are not unique to Science-
Lab; they pertain to any intervention that aims to have broad and enduring influ-
ence on the core of teaching and learning. Studies of educational innovations that
have sought to shift the dynamics within that core make clear the mutually
dependent relationships among core, mantle, and atmosphere.2
These relationships of mutual influence point toward a fundamental question
about the rationale for Science-Lab and the purpose of knowledge-building. To
provide a shorthand answer, I turn to political scientist Thomas Homer-Dixon,
whose notion of an “ingenuity gap” seems well-tuned to one aspect of what knowl-
edge-building at the broadest level needs to address.3 The ingenuity gap refers to
the critical distance between what makes us smarter and what makes us wiser, both
as individuals and as a society. The readers of this publication know all too well
that despite cascades of information, solutions to the ill-structured problems that
beset us, such as climate change and persistent poverty, elude our grasp. The well-
structured disciplinary domains of our inheritance are necessary but not adequate.
The knowledge that we acquire from the past is but the prelude to new and useful
forms of practical, technical, and social knowledge that are urgently needed.
I want to add another dimension to ingenuity that goes back to the early roots
of the word in English. “Ingenuity” in the 16th century meant the quality of being
ingenious, of having a capacity for invention, but it also could mean being ingenu-
ous, open and frank.4 And the latter meaning was not just a personal characteris-
tic; it was an indicator of social status, of being “free-born” and having full access
to all that society might offer. This lost meaning of ingenuity as being open to all
is a leitmotif throughout the following. It is what I mean by “social franchise,” in
contrast with Dr. Schettler’s use of the term as an innovative solution to a vexing
contractual issue.
With the connotation of ingenuity as social franchise in mind, I want to take a
closer look at the Programme for International Student Assessment, or PISA, the
assessment sponsored by the Organization for Economic Cooperation and
Development (OECD) that initially inspired Dr. Schettler and her colleague Sonja
Stuchtey to launch Science-Lab. PISA provides a basis for cross-national compar-
isons of education systems in economically developed countries, based on data
collected every three years from a random sample of 15-year-olds within a repre-
sentative selection of schools. PISA has several characteristics that distinguish it
from other kinds of large-scale summative assessments of students’ capabilities.
Foremost is that sampled students complete performance assessments in reading,
mathematics, and problem-solving, as well as in science. In the terms I have used
above, performance assessments are meant to provide some indication of the
capacity for Homer-Dixon’s notion of ingenuity, in that they require students to
use what they know, not just to demonstrate the knowledge they have acquired. In
addition to measuring students’ performance, PISA collects a wide range of socio-
logical data about socioeconomic status, family structure, and the organization of
schooling.
A recent working paper analyzing 2006 PISA results for Germany, the admin-
istration of the assessment most recently analyzed, showed achievement in science
above the OECD average, placing Germany eighth highest among OECD coun-
tries.5 On that scale, Germany appears to be doing well on its prospects for address-
ing at least the original definition of the ingenuity gap, just ahead of the United
Kingdom (9th) and far ahead of the United States (21st).
This hardly means that Science-Lab should pack up its kits and head home.
Parsing these results reveals wide variation within the country. Students with
immigrant parents have much lower science scores than students with at least one
parent born in Germany. The disparity in achievement between students who are
the children of immigrants and those with German roots is among the largest
across the OECD countries. Moreover, the analysis shows the gap widening for
more recent immigrants who, unlike the post-1989 wave of immigrants from
countries in the former Eastern Bloc, are not exposed to German at home from
older family members likely to be fluent. The children of more recent immigrants,
largely from Turkey, enter a radically different linguistic and cultural environment
at school than what they are accustomed to at home. Moreover, these students and
their families confront greater social and economic disparities than earlier immi-
grants.6 Thus, the achievement gap revealed in assessment results reveals an equi-
ty gap when analyzed in more detail. The combination of gaps in achievement and
equity are what I mean to evoke with the term “ingenuity gap” in its fullest sense.
Early childhood education is crucial for redressing the ingenuity gap, a point
highlighted in the recent OECD report and a vital premise of the work of Science-
Lab. While the details of waves of immigration may be unique to Germany, dispar-
ities in achievement and equity and the role of early childhood education are cer-
tainly not. A wide range of studies from the United States and other countries
shows how early achievement gaps in science have consequences for enrollment in
science courses, decisions about college majors, and pursuit of career choices.7

Achievement and equity are inextricable aspects of ingenuity. Initiatives like

Science-Lab are of increasing importance, but they also risk privileging the already
privileged unless keenly attentive to those for whom full social franchise has yet to
be attained.
THE CORE
Up to this point, I have been talking about the ingenuity gap at its broadest sweep.
Now I want to zoom in on where building knowledge to redress that gap first takes
shape. In the core of teaching and learning, knowledge-building has to do with the
everyday interactions of teacher, student, and subject matter. Just as at the broad-
est level, knowledge-building about such interactions concerns both the social and
the substantive. We often take for granted the social and underestimate the sub-
stantive. Children, even very young children, do not lack the ability to reason; they
lack knowledge and experience. Developing the ability to assemble and examine
evidence and to test propositions is central to the eight factors that comprise
Science-Lab’s “recipe for success.” The ingredients of that recipe comprise knowl-
edge-seeking inquiry—an approach to teaching and learning science that has
gained broad acceptance as best practice. One scholar characterizes the shift in a
manner reminiscent of the “ingenious” side of the ingenuity gap. The shift toward
inquiry is a movement from the traditional approach that asks “what do we want
students to know?” to one that asks “what do we want students to be able to do and
what do they need to do it?”8 The National Research Council’s National Scientific
Education Standards and the Benchmarks for Science Literacy of the American
Association for the Advancement of Science have been lauded as vision statements
for promoting broad shifts in the “core” toward inquiry in the United States.9
Articulation of exemplary science education in many countries has taken similar
aim.10 The National Research Council summarizes the main tenets:11
• Learner engages in scientifically oriented questions.
• Learner gives priority to evidence in responding to questions.
• Learner formulates explanations from evidence.
• Learner connects explanations to scientific knowledge.
• Learner communicates and justifies explanations.
The shorthand list above masks a crucial ingredient of classroom inquiry that
Science-Lab’s “recipe” highlights. Science-Lab’s recipe is written in the first-person
plural, an important acknowledgement of the role that peers and adults have in the
process of learning. The relationship with adults in particular is where the social
and substantive come together, at least initially. As John Bransford and colleagues
write in their synthesis of contemporary research, How People Learn, “Children’s
curiosity and persistence are supported by adults who direct their attention, struc-
ture their experiences, support their learning attempts, and regulate the complex-
ity and difficulty levels of information for them.”12 Such systematic inquiry facili-
tated by knowledgeable adults, referred to as guided inquiry, is well-established
through research and in policy as best practice for sustaining interest in science
and cultivating deep and flexible understanding.

David Perkins, a respected scholar of teaching and learning, uses the extended
metaphor of “playing the whole game” to help convey the complex interplay of
social and substantive that the best environments for learning entail, for adults as
well as children. Playing the whole game does not mean getting thrown onto the
varsity squad from the start; it means engaging an “accessible version of the whole
game early and often.”13 Creating conditions through which the whole game can be
accessible is the role for professional players and coaches (i.e., teachers and other
adults in school and preschool settings) with their deep knowledge and experience.
What results, according to Perkins, is a “threshold experience, a learning experi-
ence that gets us past initial disorientation and into the game. From there it’s eas-
ier to move forward in a meaningful, motivated way.”14 Important to highlight here
is that the “whole game” is not just about being child-centered or solely attentive
to the social. It is about creating experiences that engage conceptual relations
through social interaction. Moreover, that mutual engagement aims at producing
knowledge—playing the whole game—not simply reproducing solitary parts of
it—batting practice.15
Science-Lab appears to be a good bet for the kind of “whole game” learning
that Perkins describes. The core of inquiry teaching and learning it espouses aligns
solidly with best practice in both the social and substantive aspects of inquiry by
offering a carefully tailored, accessible version of the whole game of science for
young children.
What about the social franchise side of the “ingenuity gap”? Research tells us
that the linguistic, social, and cultural classroom environments of economically
developed countries are most closely aligned with the home environment of pro-
fessional, middle-class, non-immigrant parents.16 It is no wonder that just these
kinds of parents were the ones who responded so enthusiastically when Science-
Lab first got underway. The same research also implies that igniting and keeping
alive the fiery core of inquiry for children who experience great disparity between
their home and school environments requires approaches that might not fall neat-
ly into a single “recipe” and might entail considerable adaptation to particular cir-
cumstances, all of which hinges on knowledge-building to bridge the ingenuity gap
at the next level up.
THE MANTLE
Knowledge-building in this sphere has to do with the dynamics of scaling-up, tak-
ing an innovation such as the Science-Lab afterschool program out of the hot-
house (or the backyard and kitchen, in this case) in which it was developed and
training others in its use. To do so requires enveloping a solid “core” with a vibrant
mantle. Dr. Schettler describes a two-stage process for Science-Lab in this realm.
The first had to do with developing a network of science and engineering profes-
sionals who, like Dr. Schettler and her colleague, were committed to active engage-
ment with their children’s education. When Dr. Schettler discovered that Science-

Lab was not reaching out to all, she and her colleague adapted the original design
and began working with teachers in state primary schools to ignite their interest in
science.
Scaling-up educational innovation entails a fundamental contradiction
between fidelity and adaptability. Fidelity requires the articulation of essence; how-
ever, essence does not appear on command, like a genie from a lamp. Essential ele-
ments emerge as the innovation comes into contact with the real world. Joseph P.
McDonald, an acclaimed scholar of innovative educational change, and his col-
leagues point to the importance of clarifying “distinguishers” in their study of a
groundbreaking effort to re-envision schooling through social entrepreneurship
known as Big Picture Learning.17 Distinguishers are what the staff of Big Picture
Learning came to see as aspects that set their initiative apart from all others.
Science-Lab has clarified its distinguishers in relation to the core—a focus on early
childhood, close attention to inquiry. At the mantle, the program appears to be in
the midst of identifying its distinguishers.
The key to clarifying distinguishers at the level of the mantle lies in organiza-
tional knowledge building around teacher learning. This entails both developing
an approach to teacher development that remains true to the distinguishers of the
core and continuously learning from teachers’ efforts to implement desired
change. Research into teacher learning in the midst of their work broadly points to
the components of substance, process, and context as fundamental to ensuring
fidelity and nurturing adaptability. Science-Lab appears to have solid foundations
in the first two areas. Its work with teachers integrates two important areas of con-
tent—the substance of science and the substance of teaching science. Teachers
learn science as they learn to teach it. The process of teacher learning models the
same inquiry process teachers are expected to carry out in their classrooms.
In relation to the three aspects of content, process, and context, Science-Lab
does not yet appear to have tackled context, and this aspect is the key to adaptabil-
ity. Studies of sustained change in teaching practice point to the need to develop
supports for innovative practice within and across schools, and to provide ongo-
ing feedback around teacher and student learning over long periods of time. Shifts
in individual teaching practice may entail years of trial and error. Success is far
more likely when school leaders and staff are involved and most of the learning
takes place in the midst of ongoing work, building local capacity to sustain sys-
temwide improvement.18 The kind of workshops that Dr. Schettler describes may
well energize and engage teachers initially, but, at least based on others’ experi-
ences, workshops organized externally have had only limited long-term success.
In the United States, research into teacher learning and the enactment of
inquiry has a long history. The comments of education researcher Fouad Abd-El-
Khalick in an international review of inquiry science education tersely sum up
what has been learned:
The history of science education reforms in the United States has taught
us that when envisioned conceptions of inquiry meet the reality of
schools and classroom teaching, and the associated social, political, eco-
nomic, and cultural spheres, these more philosophical conceptions [of
inquiry] are often transformed into incommensurate (practical) curric-
ula and then translated into incongruent enactments or classroom prac-
tices.19
Both fidelity and adaptability are crucial to the vitality of the mantle, the orga-
nizational knowledge required to flourish. For Science-Lab, adaptability may
require reexamining assumptions about its distinguishers, especially as it becomes
more entwined with the existing system of schooling, which it must necessarily do.
Building knowledge about mutually beneficial adaptation will come from the
experiences of the teachers who try to put into practice the distinguishers that
Science-Lab preaches, which may require change. Such cycles of refinement and
adaptation are particularly needed to create learning conditions for students who
face large disparities between their school and home environments. Igniting teach-
ers’ enthusiasm for science and science teaching is an important place to start, but
on its own it will not reveal effective approaches that engage all students, especial-
ly those on the social margins.
THE ATMOSPHERE
As intimated above, larger forces are at play that are well beyond the control of
individual teachers, their schools, or Science-Lab as an organization. The
researchers who studied the scaling-up of Big Picture Learning in the United States
point to an overarching challenge that brings us to the outermost layers of our
spheres of knowledge-building for educational innovation. This is what they call
“the mindset challenge,” which consists of confronting our built-in assumptions
about schools and schooling.20 Science-Lab has confronted the mindset challenge
through decision-makers in state education ministries who have rebuffed their
approach because of its lack of alignment with the existing system. On the other
hand, Science-Lab has made inroads in one German state, gaining influence that
has begun to shift that alignment.
I set out two dimensions to the ingenuity gap at the start, that of creativity
built atop deep understanding, and that of expanding the social franchise by open-
ing up what society has to offer to those excluded. If the full dimensions of the
ingenuity gap are to be grasped, Science-Lab and innovations like it that are
attempting to improve teaching and learning need to confront the mindset chal-
lenge. Avoiding the challenge risks becoming either an outlier, a “boutique” pro-
gram that privileges those already privileged, or an insider absorbed by the very
system the innovation sought to change. Franchise must come to mean more than
just an entrepreneurial arrangement among the like-minded. In the words of
Ciaran Sugrue, in summing up an account of the future of educational change, the
search for true social franchise entails “new forms of engagement that are populat-
ed by ‘coalitions of the willing’ rather than the serried phalanx of the coerced.”21
Science-Lab has had a remarkable run over the past several years, assembling

“coalitions of the willing” through the network of professionals it has built as a

part of its expanding afterschool activities and through the preschool and primary
years teachers it has trained. What may be required now as it begins to engage the
third sphere of knowledge-building around systems of schooling is to clarify its
own vision for education in a technologically advanced, globalizing, and increas-
ingly diverse society. Is it one of individual achievement toward technical expert-
ise, or is it one that sets a broader compass, pointing toward what sociologists
Philip Brown and Hugh Lauder, in the quote that began these comments, call “col-
lective intelligence”?
1. Richard F. Elmore, Penelope L. Peterson, and Sarah J. McCarthey, Restructuring in the Classroom:
Teaching, Learning, and School Organization, 1st ed. (San Francisco: Jossey-Bass, 1996).
2. Some examples include Lea Hubbard, Hugh Mehan, and Mary Kay Stein, Reform as Learning:
School Reform, Organizational Culture, and Community Politics in San Diego (New York:
Routledge, 2006); Joseph P. McDonald, Emily J. Klein, and Meg Riordan, Going to Scale with New
School Designs: Reinventing High School (New York: Teachers College Press, 2009); Mike Wallace
and Keith Pocklington, Managing Complex Educational Change: Large-Scale Reorganisation of
Schools (London: RoutledgeFalmer, 2002).
3. Thomas F. Homer-Dixon, The Ingenuity Gap (New York: Knopf, 2000).
4. “Ingenuity,” in The Oxford English Dictionary, 2nd ed., OED Online (Oxford: Oxford University
Press, 1989). 2 Sep. 2009 http://dictionary.oed.com/cgi/display/50116722
5. David Carey, “Improving Education Outcomes in Germany,” in Economics Department Working
Paper No. 611 (Paris: OECD, 2008).
6. Ibid., 6.
7. Susan T. Hill and Jean M. Johnson, Science and Engineering Degrees, by Race/Ethnicity of
Recipients: 1992-2001 (Arlington, VA: National Science Foundation, 2004).
8. Richard Grandy and Richard Duschl, “Reconsidering the Character and Role of Inquiry in School
Science: Analysis of a Conference,” Science & Education 16, no. 2 (2007): 143.
9. National Research Council, National Science Education Standards (Washington, DC: National
Academy of Sciences, 1996); American Association for the Advancement of Science, Benchmarks
for Science Literacy, ed. Project 2061 (New York: Oxford University Press, 1993).
10. Fouad Abd-El-Khalick et al., “Inquiry in Science Education: International Perspectives,” Science
Education 88, no. 3 (2004).
11 National Research Council, Inquiry and the National Science Education Standards: A Guide for
Teaching and Learning (Washington, DC: National Acadamies Press, 2000), 29.
12. National Research Council, How People Learn: Brain, Mind, Experience, and School (Washington,
DC: National Academies Press, 2000), 112.
13. David N. Perkins, Making Learning Whole: How Seven Principles of Teaching Can Transform
Education (San Francisco: Jossey-Bass, 2009), 9.
14. Ibid.
15. See also Seth Chaiklin, “A Developmental Teaching Approach to Schooling,” in Learning for Life
in the 21st Century, ed. Gordon Wells and Guy Claxton (Malden, MA: Blackwell Publishers,
2002); Carl Bereiter, “Liberal Education in a Knowledge Society,” in Liberal Education in a
Knowledge Society, ed. Barry Smith and Carl Bereiter (Chicago: Open Court, 2002).
16. Ruqaiya Hasan, “Semiotic Mediation and Mental Development in Pluralistic Societies: Some
Implications for Tomorrow’s Schooling,” in Wells and Claxton, Learning for Life in the 21st
Century; Shirley B. Heath, Ways with Words Language, Life, and Work in Communities and
Classrooms (Cambridge, England: Cambridge University Press, 1987).
17. McDonald, Klein, and Riordan, Going to Scale with New School Designs.
18. Richard F. Elmore, “Bridging the Gap between Standards and Achievement: The Imperative for
Professional Development in Education,” Albert Shanker Institute,
http://www.ashankerinst.org/Downloads/Bridging_Gap.pdf; Philip Adey, The Professional
Development of Teachers: Practice and Theory (Boston: Kluwer Academic, 2004); Laura
Desimone et al., “Improving Teachers’ In-Service Professional Development in Mathematics and
Science: The Role of Postsecondary Institutions,” Educational Policy 17, no. 5 (2003); Eleanor
Drago-Severson, “Helping Teachers Learn: Principals as Professional Development Leaders,”
Teachers College Record 107, no. 1 (2007); David Eddy Spicer, “Collective Inquiry in the Context
of School-Wide Reform: Exploring Science Curriculum and Instruction through Team-Based
Professional Development,” unpublished doctoral dissertation, Harvard University, 2006;
Thomas R. Guskey, “Professional Development and Teacher Change,” Teachers and Teaching:
Theory and Practice 8, nos. 3/4 (2002); Ann Lieberman and Lynne Miller, eds., Teachers Caught
in the Action: Professional Development That Matters, The Series on School Reform (New York:
Teachers College Press, 2001).
19. Abd-El-Khalick et al., “Inquiry in Science Education: International Perspectives.”
20. McDonald, Klein, and Riordan, Going to Scale with New School Designs, 94-119.
21. Ciaran Sugrue, The Future of Educational Change: International Perspectives (New York:
Routledge, 2008), 223.

Pradip Kumar Sarmah
Rickshaw Bank: Empowering the

Poor through Asset Ownership
Rickshaw Bank
Seven years ago, a simple incident not only impacted me personally, but also led
me to completely change my profession. I am trained as a veterinary doctor, and
have a well-established practice in the city of Guwahati, Assam, in northeastern
India. As an outcome of my deep interest in animal husbandry and agribusiness, I
established and ran the Centre for Rural Development (CRD), a not–for-profit
organization.
To attend to work outside the office, I usually took a cycle rickshaw, a tricycle
commonly used on Indian roads to carry people or goods for short distances; this
transport would cost me five rupees one way. I often wondered how much the rick-
shaw “pullers” were earning. One day, while taking a ride, I asked one of them
“Who owns your rickshaw?” He gave a name that was clearly not his own. He said
he had been working for 16 years as a puller and was paying 25 rupees a day in
rental, about 65 U.S. cents. As he talked, I began to understand more about the
overall suffering and precarious living conditions of the rickshaw-pulling commu-
nity. As I got out of the rickshaw and moved on to my own work, I forgot about it,
but when I went to bed that evening, his words came back to me. So, I got up and
took out my calculator. I could quickly see that the driver paid nearly half his earn-
ings to rent his vehicle and had paid out, many times over, the cost of a rickshaw,
roughly6,500 rupees. For me this was a call to action.
After doing some research among pullers, I founded the Rickshaw Bank (RB)
as one of the flagship programs of CRD on the philosophy that income-producing
assets are critical if individuals are to break the vicious cycle of poverty. The pro-
gram is designed to provide a means of self-employment for members of the poor
and marginalized rickshaw community who live in urban slums. The central idea
A veterinarian by profession, Pradip Kumar Sarmah is founder of the Centre for Rural
Development (CRD) in Assam, in the northeastern region of India. He is currently
focused on scaling up the Rickshaw Bank Project, one of CRD’s flagship programs. Dr.
Sarmah became an Ashoka Fellow in 2001.
© 2010 Pradip Kumar Sarmah

Pradip Kumar Sarmah
The Rickshaw in Action

Photo by Enrico Mochi.
is to issue an asset-based loan to the rickshaw puller, who can repay the debt in
daily installments over 18 months. Full and timely repayment leads to ownership
of the rickshaw being handed over to the puller.
This concept contradicts the existing practice, in which a puller pays an equiv-
alent daily fee to rent the vehicle, possibly for a lifetime, with no possibility of own-
ership. The innovation lies in its unique style of service delivery and a design that
addresses underlying causes of poverty through asset-based entrepreneurship
development. To comprehensively meet the needs of the rickshaw puller and his
family, the daily repayment is a “one-window repayment,” a simple transaction at
the same place each day. This system provides convenient and efficient service and
creates the opportunity for the pullers to gain security through more of our loan
products. The repayment goes towards their eventual ownership of the rickshaw,
and the program provides accident insurance, a uniform and shoes, licenses, a
photo identity card, and related training. All these forms of “social security” help
protect the driver from the various threats connected with poverty, old age, disabil-
ity, and unemployment.
The Rickshaw Bank provides pullers with a technologically superior income-
generating asset: a vehicle we have dubbed the Dip-Bahan. Dip means light and
bahan means vehicle; thus this improved rickshaw gives light to the people. The
bank also provides allied services that promote micro-entrepreneurship among
urban poor and rural migrants. The bank has started programs in many parts of
Empowering the Poor through Asset Ownership
India: Guwahati (Assam), Agartala (Tripura), Chennai (Tamil Nadu), Surat

(Gujarat), Lucknow, Varanasi and Allahabad (Uttar Pradesh), and Chandni Chowk
(Delhi). It will soon add Noida (Uttar Pradesh) to the growing list.
MY ROAD TO THE RICKSHAW BANK

I was born in 1963 in Guwahati. My father worked at a university. When I was
about 10 years old, I worked as a sales agent, using my mother’s name, to distrib-
ute The Assam Tribune, a leading daily newspaper. I even hired two other boys
when the demand grew. In 1978, when the Students’ Movement was established to
deport illegal foreigners from Assam, I could not stop myself from becoming
involved in the movement. I also served as General Secretary of the Students’
Union at the Assam Agricultural University. To get students interested in science, a
few of us formed the Students’ Science Society.
After completing my degree in Veterinary Science, I became an assistant veteri-
nary surgeon in Assam’s Department of Animal Husbandry and Veterinary. I was
posted to the village of Hahim, about 90 kilometers from Guwahati. Transport to
the village was by a public bus, over muddy roads in hilly areas. My first “official
patient” was an elephant with a big, “matured” boil on its back. Theoretically, the
vet should operate and remove the pus, but the elephant was trumpeting in pain
and thrashing around. Many people came to see “the new veterinarian” in action.
There lay my prestige: between an elephant, with which I had no experience, and
the crowd. Finally, I sat on the back of the elephant just behind the boil, while the
mahout, the elephant driver, sat just in front of it, and I was able to make the inci-
sion and remove the pus. After continuous dressing and administration of antibi-
otics it was cured. My life as a veterinarian included many such stories. However,
I found it difficult to work within the constraints of the government machinery,
and resigned my job. For my parents, this was a moment of panic. For me, it was
the opening of a new chapter in my career as veterinarian.
Northeastern India is a land of blue mountains, green valleys, and red rivers.
Nestled in the eastern Himalayas, this region is abundant in natural beauty,
wildlife, flora and fauna, and different ethnic groups. As a veterinarian, I could
help the veterinary services reach out to the farmers at their doorsteps. I started my
journey by training some “para-vets,” who could provide artificial insemination
services to improve the unremarkable local cattle. I also started a business venture
in Guwahati, PET & VET, which provided new and innovative services for pet
lovers. Even today, it stands as the best veterinary clinic in the region. Among my
innovations were facilities for boarding pets and grooming services for dogs.
My professional experiences inspired me to reach the common people and
understand their social causes. To achieve my dreams, I established the Centre for
Rural Development (CRD), a registered society that has engaged in a range of pro-
grams and projects to promote rural development. It focuses especially on animal
husbandry and dairying, and concentrated on increasing livestock production.
Rashtriya Gramin Vikas Nidhi, a national-level organization that provides funding

Pradip Kumar Sarmah
and support, agreed to sponsor a project called the Vet-Aid Center, which CRD
operated in Guwahati and Mirza in the Kamrup district, and in Jagiroad in the
Morigaon district. The center focuses on providing artificial insemination for cat-
tle, deworming calves, vaccinating domestic animals and poultry, and insuring a
timely supply of quality feeds.
The CRD began humbly in 1994, aiming to create social entrepreneurs who
could reach the thousands of poor people in the region. On the basis of this work,
in 2001, Ashoka Innovators for the Public identified and selected me as one of their
Fellows. The three-year stipend that came with the recognition greatly helped me
to concentrate on my work.
November 20, 2004 was an important and happy night for me: the opening of
the Rickshaw Bank at Guwahati, the turning point of the project and also one of
the biggest challenges I faced with this innovative idea. As a vet I had very limited
knowledge about the mechanical and technical aspects of the rickshaw, so I
approached the Indian Institute of Technology (IIT) in Guwahati. I needed not
only to understand the mechanics of the rickshaw but also to have a better design
for the vehicle, including adequate space for advertisements that could help defray
the project’s costs. The prototype was manufactured, and 80 rickshaws were
assembled according to the same dimensions.
To inaugurate the project, the rickshaws were distributed to 80 pullers, but the
next day—November 21, 2004—they came to our office and created chaos. Their
major complaint was that the chain constantly fell off in spite of multiple repairs.
My team started to lose hope; with everyone staring at me, even I became
depressed—I had not expected this outcome on the first day of my dream project.
But I did find a way through this challenge; I motivated my team and assured the
pullers that all the rickshaws would be rectified based on their feedback. Then I
contacted the IIT Guwahati people, and the technical team came to our workshop.
But even after several examinations the solution was not apparent.
We then invited in a group of rickshaw pullers to get their feedback. One sug-
gested that the problem was occurring because the rickshaw chassis had been made
of hollow pipe to reduce the overall weight of the vehicle. After a puller took on
passengers, the pipe tended to bend slightly on the bumpy roads, leading the chain
to constantly fall off. The whole team saw his logic immediately and the hollow
pipe chassis was replaced with one made of solid iron bars; this increased the over-
all strength of the rickshaw and eliminated the problem with the chain. Within 10
days, all the rickshaws had been reconstructed, to the delight of the pullers.
RICKSHAW PULLERS AND THEIR SITUATION

Cycle rickshaws are modified tricycles used extensively as a cost-effective means of
transportation in urban areas. Cycle rickshaw drivers carry passengers or transport
goods, such as building materials or produce.
There are currently an estimated eight million rickshaw pullers in India. These
pullers, or drivers, are among the poorest of employed urban dwellers, with typi-
cal incomes of 50 to 80 rupees per day (US$1 to US$1.60), well within the target
demographic of the first UN Millennium Development Goal. Many have migrat-
ed to the cities, where they have no support networks and limited options for shel-
ter. They regularly spend the night on the pavement, or on their vehicles. Some
migrants drive rickshaws seasonally, during the off season for agriculture, to help
sustain their families, for example, but a large proportion are year-round drivers.
The work is extremely taxing physically, but requires no formal education.
Thus many pullers are attracted to the prospect of earnings slightly above those of
their unskilled peers. Such an income, however, rarely provides a driver with com-
pensation for an injury, or allows him to save for his family’s current needs, let
alone for the future, when he no longer has the physical ability to move passengers
or goods.
The millions of Indian rickshaw pullers are providing critical last-mile trans-
portation services to people in many cities. But, like me, riders rarely realize that
the pullers actually do not own their vehicles. They do not even lease them. They
hire them, one day at a time, paying high rents and bearing all the risks of doing
such work, including the need for repairs and the pain and loss from accidents.
The decision whether to rent or buy would be a no-brainer for any of us. Daily
rental costs Rs. 25; most pullers stay at the work for over 10 years. A quick back-
of-the-envelope calculation shows that they spend over Rs. 90,000 on rental over
10 years, a little less if the calculation involves net present value. Since a new rick-
shaw costs about Rs. 6,500, the average driver could have bought over 15 of them
in his 10 working years. There is something amiss in this picture, isn’t there?
A key issue is that the rickshaw-pulling community is one of the most margin-
alized sectors of Indian society. Because they have usually migrated from rural
areas to search for work, they lack identity cards or an official residential address.
Earning the equivalent of just over a dollar a day, they are not considered worthy
of credit and would not dream of approaching a bank for credit. Informal money-
lenders charge usurious rates that put them in cycles of debt. Hiring the vehicle for
Rs. 25 per day (20% of their earnings) for a lifetime of activity seems the most fea-
sible option.
With my colleagues at the Centre for Rural Development (CRD), I conducted
sample surveys that highlighted the problems this community faces. In addition to
lack of financing, we heard about the harassment they face in obtaining licenses,
the high costs for repairs and maintenance, the social exclusion they face and the
daily health hazards from pulling over 200 kilograms of weight, in all kinds of
urban terrains.
As migrants, these drivers usually cannot dream of owning a rickshaw in their
lifetimes, since they cannot access credit schemes through the formal banking sys-
tem. With little disposable income, they cannot access basic utilities for themselves
or their families, nor do they have a safe way to save their daily earnings.
Limited savings leave them vulnerable to even minor setbacks, a problem com-
pounded by a lack of insurance and access to fairly-priced emergency loans.
Without any property insurance, they must bear the cost of any accidental damage

Pradip Kumar Sarmah
to their vehicles. If they get sick and cannot drive, they generate no income to pro-
vide for their own care, nor do they have health insurance. When family members
encounter emergencies, they have no savings upon which to fall back. With no
access to formal sources of credit, they are forced to rely on informal moneylend-
ers, who charge usurious interest. Those who get into serious debt are often
harassed to the point that they have no choice but to flee to another locality.
THE INNOVATION: RICKSHAW BANK

Curious why rickshaw design had not been changed or improved in over 60 years,
I asked a friend at the premier Indian Institute of Technology (IIT) in Guwahati
about his views on the design elements of the rickshaws. I wanted to see if we could
reduce the vehicle weight, which was then around 95 to 105 kilograms. IIT took up
the initiative and formed a student team that worked out the technology. We inter-
acted with the IIT engineers, gave them feedback from the pullers, and even took
test drives. Six months later, the result was a rickshaw design that was 25 percent
lighter and had several improved features, including a sun/rain roof and more
storage space, providing more comfort to both pullers and passengers.
The next level of innovation came after my experience in raising funds for our
pilot. Banks were unwilling to give me a line of credit to manufacture the rick-
shaws. After being turned down by every major public or national bank, I finally
decided to tap the corporate social responsibility funding of three large Indian cor-
porations. The result was a win-win solution: each company would support a 100-
rickshaw pilot, and in return we would give them an exclusive 3-year agreement to
advertise on the back of the vehicle at an 86 percent discount. So we sold our pilot
on the basis of the advertisement space.
A complimentary innovation was inspired in late 2003, when I visited
Grameen Bank, met Professor Yunus, and saw the strength of his community
group model in carrying out microfinance activities. Working on a similar model,
I developed the garage system: the pullers have to come to us in groups of five to
request rickshaws. Once they have provided their basic information and we have
done the due diligence, we give each man a rickshaw on a lease-purchase basis.
They have to make payments of 25 rupees per day over a period of 18 months;
once we have recovered our investment and covered our financing costs, we trans-
fer the rickshaw ownership to them. In only 18 months, and usually less, they
become owners of a superior product.
Once the pilot succeeded, the banks offered us financial backing. This was a
bottom-of-the-pyramid opportunity for them: they could continue to earn com-
mercial rates of return while we provided the guarantee and carried out the on-
lending.1
Thus, the rickshaw pullers not only enjoyed access to a rickshaw and the
chance to own it for a lifetime; our program also covered their licensing fee, a uni-
form, and life insurance. They gained a common identity and dignity as a result of
the effort, which also facilitates their inclusion in the social fabric of the cities.
Subsidizing our Pilot with Advertisements.

Core Business Strategies

Five basic strategies drive our project, along with three core social-business princi-
ples. First, the strategies.
1. Provide technologically superior rickshaws to increase customer demand.
Designed by the Indian Institute of Technology in Guwahati and assembled by
CRD’s production center, our rickshaw is lighter and more aerodynamic than the
traditional vehicle, and the seating is safer. This makes it easier on the puller and
more comfortable for the passenger, thus raising the level of consumer demand for
Rickshaw Bank vehicles.
2. Provide rickshaws to pullers in groups of five. In our system, five pullers vol-
untarily form a group and five groups operate from one garage or meeting point.
The pullers, who are members of the Rickshaw Bank, form garages in different
parts of the city to manage their savings, repair the rickshaws, update their busi-
ness records, and collect rent.
3. Collect repayment on a daily basis. Since the puller earns money each day, the
repayment is collected on a daily basis. The Rickshaw Bank applies this revenue to
the cost of the vehicle, plus insurance premiums, drivers’ licenses, uniforms, and
operating costs.
4. Raise funds using a combination of loans and advertisements. Formal finan-
cial institutions provide us with loans at commercial rates; we use grant money to

Pradip Kumar Sarmah
Collecting repayments the Rickshaw Bank way.

leverage greater financial access to bank loans and to build internal capacity.
Meanwhile, we sell the ad space on the back of the vehicles to generate additional
revenue. The ad revenue also helps to reduce risk in case pullers cannot manage
their repayments on time.
5. Provide additional loans to the puller community to address other community
needs. Pullers own their rickshaws after a maximum of 15 to 18 months; most
manage to buy them within 10 to 12 months. Their links with the Rickshaw Bank
continue as they seek further loans, negotiate better advertisement rates with busi-
nesses, and access insurance services.
The RB’s innovative response follows three core social-business principles.
First, remove the constraints that prevent drivers from accessing capital and insur-
ance and owning their rickshaws. The RB works to release drivers from the con-
straints that restrict their access to basic financial services, including providing
proof of identify and licensing to protect them from harassment and associated
social stigmas. The RB has negotiated low-cost insurance, covering damage to the
rickshaw, as well as injury to the driver and his passengers. Finally, the RB provides
cash loans to drivers who have established a credit history with it.
Second, increase the community’s capacity to earn and save. The RB’s unique
rickshaw design is more comfortable for passengers and less taxing on drivers,
allowing a single driver to carry more passengers in a single day. Furthermore, after
he owns his vehicle, a driver may gain access to a stream of advertising revenues
negotiated by the Rickshaw Bank. By collaborating with local institutions, the
Rickshaw Bank has been able to reduce the costs of basic necessities: it arranges
free health care and affordable clothing, and procures cooking gas licenses.
The roughly 25 drivers who are assigned to a given garage or meeting point use
it as a place to make payments, keep records, manage their savings, repair their
rickshaws, etc. Sometimes the meeting point is a pan shop or tea shop. When it is,
the owner of the meeting point provides another point of entrepreneurship and
benefits from the increased earning potential of the driver community. Frequently,
loans from the RB support these entrepreneurs. After a driver gains ownership of
his rickshaw, all future income goes into his own pocket, to his family, and eventu-
ally back into the local economy.
Third, ensure that the program is sustainable and scalable. In the four and a half
years it has been operating, the RB has benefited 4696 rickshaw drivers directly and
23,480 people (dependent family members) indirectly. The project is now ready to
move forward on a much greater scale. The RB sees the driver community as an
underserved market and believes that offering market-oriented solutions will
enable it to reach the most drivers, while preserving the dignity of the population
it seeks to serve.
The Rickshaw Package

As the bank has evolved, we have been able to offer an expanding package of prod-
ucts and services.
Access to Asset Ownership

The Rickshaw Bank primarily provides financing so that rickshaw drivers can own
their vehicles. Rather than providing cash loans to drivers, the bank directly lends
newly manufactured rickshaws. The asset remains under the RB’s legal ownership,
providing security for the loan. Legal title is transferred after full repayment.
A Fairly-Priced, Technologically-Superior Cycle Rickshaw

The RB provides technologically superior rickshaws at fair-market prices, close to
cost. The current model is assembled at the RB’s production center. These lighter,
safer vehicles ease the job of the driver, increase consumer demand for Rickshaw
Bank vehicles, and allow drivers to carry more fares in the same day.
Licenses and Training on Rules and Regulations

The RB believes that formally-established legal status for drivers will reduce
harassment and increase the dignity of the community. Therefore, in each locality,
the RB forms a partnership with the municipal corporation and police to provide
licenses to rickshaw drivers in exchange for training them about local traffic rules
and regulations.

Pradip Kumar Sarmah
Madhab Kalita and his family.

Uniforms
The RB provides two uniforms to each driver along with his new vehicle. The bank
believes that attractive uniforms help passengers to identify drivers affiliated with
the Rickshaw Bank; they also reduce harassment and further increase the dignity
of the rickshaw-driver community.
Property and Casualty Insurance

Traditionally, rickshaw drivers had no access to property insurance; to cover the
cost of significant accidental damage to their vehicles, they often turned to infor-
mal money-lenders, who lend at extremely high rates of interest. Thus drivers
risked falling deeply into debt. To protect against this vicious cycle, the RB
arranged with insurance companies to provide property and casualty coverage for
drivers. Each rickshaw is insured for Rs. 9,000; the driver is insured against injury
or death for Rs. 50,000, and passengers are insured for Rs. 10,000 each. Realizing
that our vehicles are insured, passengers are more likely to hire them.
The Rickshaw Bank does not provide direct coverage, but it collects the premi-
ums and files claims on behalf of the drivers. Currently, the bank has formed part-
nerships with four leading national insurance companies: Oriental Insurance, New
India Assurance, United Insurance, and Royal Sundaram Insurance Company.
Determination Shapes Destiny
A dignified livelihood was his dream. He hankered after work that could provide
him a handsome income and respect. Twenty years earlier, when he first migrat-
ed to Guwahati city in search of a job from a flood-affected village in Nalbari
District, Madhab Kalita, then at age 56, tried to earn money as a daily laborer.
But uncertainty dogged him, and his earnings could not support his family of
five. After a year, he started pulling a rickshaw, which he leased from a trader for
Rs. 20 per day. After paying the owner, he was left with around Rs. 30 to Rs. 50,
hardly enough to buy food. In his 18 years pulling a rickshaw, he could not think
of having one of his own. Instead, he got trapped in loans at usurious interest
rates when he borrowed from the rickshaw owner. He and his family live in a
dilapidated house on a hillock in the outskirts of city. Naturally, they all require
food and clothing. His wife worked as a domestic helper in the city, but still they
could not meet their family’s needs.
Finally, in 2005, he saw a ray of hope. The field-level workers of the Rickshaw
Bank project told Mr. Kalita about the different facilities the project provided. At
first, he couldn’t believe his ears: a poor man could be a sole owner of a rickshaw
after a year of paying Rs. 25 to 30 each day. On July 21, he grabbed the opportu-
nity to join the project. Wearing a neat, clean uniform and pulling an innovative
model of rickshaw, Mr. Kalita was determined to shape his own destiny. “The
rickshaw was comfortable for the passengers as well as the driver and that
enabled me to earn at least Rs. 200 a day,” he stated. Eventually, he became a full
member of the Rickshaw Bank and even started promoting the project in the
city. He encouraged many youths to join the project instead of searching for a
meager income elsewhere. Now, having secured ownership of his first rickshaw,
he has bought a second one through the project and he leases it out to a neigh-
bor. Meanwhile, his wife is close to owning a bhogjan, a fast-food cart. Together,
they now earn at least Rs. 8,000 per month. Six months ago, the Rickshaw Bank
also released a loan of Rs. 40,000 to renovate their house, which let them make
great improvements. Their sons and daughter are being educated, and their
neighbors respect them. Thus, Mr. Kalita and his wife shaped their destiny with
determination under the aegis of the Rickshaw Bank. What inspired him so
much? No one knows, but at age 76, he still goes out with his rickshaw, wearing
a uniform and smiling. He is an asset to the Rickshaw Bank, a source of inspira-
tion to the whole rickshaw-puller community, and a living example of earning a
dignified livelihood in an unorganized sector.
Advertising
A rickshaw provides a mobile billboard for private advertising. Attractive rick-
shaws designed to accommodate large ads can serve as an appealing and cost-effec-
tive means of advertising for both local and national businesses. To provide such
advertising, the RB has formed partnerships with four large firms: Oil & Natural
Gas Corporation, Indian Oil Corporation, Hindustan Leaver Limited and Punjab
National Bank. The Rickshaw Bank keeps 100 percent of advertising revenue to

Pradip Kumar Sarmah
subsidize operating expenditures until the driver achieves ownership. After this
point, the bank turns over 65 percent of the advertising revenue to the driver,
retaining the other 35 percent in exchange for arranging and producing the adver-
tisements. This gives drivers significant potential to enhance their income streams.
LPG Connectivity
During discussions with the driver community, RB staff identified a priority con-
cern: access to cooking gas. Because many drivers are migrants, and do not have
proof of address or investment capital, they cannot access connections to LPG
(Liquefied Petroleum Gas). Instead, drivers and their families typically use
kerosene and wood as cooking fuel. This issue was brought to the attention of the
Indian Oil Corporation, and after a series of discussions, the IOC agreed to con-
sider an identity card issued by the Rickshaw Bank as sufficient proof of address to
authorize an LPG connection. Loans from the RB provide partial support for the
investment.
Cash Loans
Once a driver has fully repaid his loan, and on time, he may apply for a cash loan
to provide for a range of family needs: children’s education, health emergencies,
the LPG connectivity mentioned above, land or housing purchases, etc. Cash loans
are typically under Rs. 15,000 and must be repaid in less than a year. Loans carry
1.5 percent monthly interest rates, and 0.5 percent monthly service fee. Pullers
with a good repayment history may be eligible for larger loans. The RB is current-
ly in discussions with the National Housing Bank of India to expand the housing
loan program.
Health Care Services

The Rickshaw Bank has also arranged for low-cost access to medical benefits for
drivers and their families, including their parents, at various hospitals.
Arrangements have been made for free eye treatment (including surgery) at
Shankaradeva Netralaya, a leading eye hospital in Guwahati. The RB has also start-
ed a health unit to help the community with daily problems. And, through con-
tracts with pharmaceutical companies, it purchases generic medicines and makes
them available at affordable prices.
Clothing Distribution, AIDS Awareness, and Job Opportunities

In collaboration with GOONJ, a Delhi-based NGO, the RB has initiated a scheme
to distribute free and reduced-price clothing to the drivers and their families. With
support from the AIDS Control Society of Assam, the bank has made free con-
doms available to the drivers to promote family planning and safer sex. Finally, the
bank encourages selected drivers to apply to be field collectors, who collect other
drivers’ daily repayments. This system improves the Rickshaw Bank’s relationships
and familiarity with the driver community, and gives drivers an opportunity to
move into alternate avenues of employment.
The Rickshaw Bank Business Model

The Rickshaw Bank’s business model is based on revenue from loan repayments,
advertising revenues, and a growing portfolio of other services and fees. This
income covers our manufacturing, management, and finance costs.
The Revenue Drivers

Repayments from rickshaw pullers. The daily payments from pullers are a great
source of liquidity for the organization and the project. The mechanism of a com-
mon liability group ensures that approximately 85 percent of payments are made
on time.
Advertisement revenue. The space on the back of each rickshaw is as large as a
typical billboard along a street, but costs only a fraction as much to rent. This
makes it attractive both for large businesses and for small businesses that want to
post an ad for only a week or month.
Additional loan repayments. Many members with good credit history are eligi-
ble for other types of loans, and they make their repayments on a pre-agreed cycle.
Once the puller becomes the owner of his rickshaw, he has access to the second
phase of loans to clear his debts with the money lenders (at interest rates that range
from 10 percent to 15 percent per month). After he repays the second loan, he can
avail himself of those in the third and later phases to pay for household goods, his
children’s education, a marriage, or house repairs or renovation.
Member deposits and membership fees. The organization also obtains revenue
through a non-refundable deposit on the rickshaw, paid in one or two install-
ments, and a refundable membership deposit.
Revenue from franchises in return for capacity-building support. The RB believes
that the franchise model will make it possible to reach millions of poor people, and
quickly, through relationships with credible partners. For its technical support, RB
would derive a small percentage service fee, which would decline over the period
of business volume. As we scale up, we expect that the revenue from this stream
will grow.
Support from international donor organizations. Donors play a key role in pro-
viding funds that support initial set-up, capacity-building, and knowledge assimi-
lation and transfer. They are also supporting us with funds to deposit in commer-
cial banks and thus providing the leverage we need to engage in further outreach
with rickshaws. Donors are also investing in pilot models, such as testing of the
franchise model.
The Cost Drivers

The other half of the equation is our costs, for manufacturing, administration, and
finance.

Pradip Kumar Sarmah
Manufacturing vehicles. Currently, we produce rickshaws in-house so we can

influence the design. So far, we have produced them on a fairly small scale; howev-
er, our manufacturing costs are likely to increase when we outsource the produc-
tion, though it may fall as we increase our outreach. In some cities in the north-
east, production costs are higher because of higher charges for freight and cross-
border VAT payments. In comparison, in cities such as Uttar Pradesh, access to
materials is easier and cheaper.
Administrative and operational expenses. We believe that 1,200 is the maximum
number of pullers who can be served by one branch coordinator, but we have not
been able to reach this number because we need better software to reduce overhead
and paperwork. Over the past year we have decided to invest in such software, as
we have consolidated our progress, and we are now poised to expand.
Finance and insurance. The Rickshaw Bank’s access to finance has become sig-
nificantly easier, as many national banks have offered to extend loans at their com-
mercial interest rate. The RB pays premiums to insurance companies for the
pullers. It has not integrated an in-house product for this insurance, but instead
negotiates a competitive group rate with the companies.
Our Emerging Franchising Model

The Rickshaw Bank project has taken a new turn in a partnership with the
American India Foundation (AIF). AIF has provided capacity building and sup-
port in the form of a first loss deposit guarantee (FLDG) to leverage loans from
various banks. The CRD organized a meeting in Guwahati with AIF and various
organizations to share the experiences of the RB project. Out of the 16 NGOs we
invited, five came forward to start RB projects under a partnership model with
CRD in various locations in India. I introduced AIF to the Punjab National Bank,
whose chairman and managing director, Dr. K. C. Chakrabarty, was very respon-
sive. The PNB, AIF and CRD made a three-way agreement to expand the RB in
three cities in Uttar Pradesh, where CRD provided hands-on support to the new
NGOs to establish the assembly unit and to start up other related activities. In
2008, we launched the RB project in three cities in Uttar Pradesh: Varanasi
(February 2), Allahabad (June 1), and Lucknow (June 4). Ultimately, we handed
the projects over to Jan Mitra Nyas, Arthik Anusandhan Kendra, and Bharatiya
Micro Credit respectively.
Based on this experience, CRD plans to replicate the franchise model by creat-
ing and promoting new entrepreneurs. By becoming a franchisee, an entrepreneur
can save much of the time and resources needed to evolve a successful business
model. Thus franchises drastically reduce the chances of failure and save valuable
time and resources. Statistics reveal that the failure rate in business ventures is
much lower among franchises than among individual start-ups.2
Location of Rickshaw bank operations.
SCALING UP: EXPANDING GEOGRAPHICALLY AND ADAPTING

PRODUCTS AND SERVICES
Although we have now proven our model and are well into the growth phase, the
last four and half years have not been without challenges. But the initial skepticism
has evaporated, as the pullers’ repayments proved that they are creditworthy, and
as governments, commercial banks, and grant makers came to see the value of our
business model.
As we scale up, however, and especially as we do so in different cities and across
cultures, we see the need for a more standardized product and a structure that can
support the growth. Moving out of our home base of Assam put us in new territo-
ry, where we needed to get acquainted with different cultures and practices.
Realizing that we do not have the internal capacity to undertake the expansion
ourselves also pushed us to search for partnerships.
The project can be scaled within a given city, in response to the demand that
arises as drivers see how satisfied their peers are with the Rickshaw Bank projects.
The project in Guwahati, for example, has now established satellite offices in its
suburbs to meet the need there. The project can also be scaled across cities, as
NGOs, led by the bank, replicate the project in new cities.
The issue of scaling up has been much on my mind recently. Given our limit-
ed resources and internal capacity, we were reaching out to only a small propor-

Pradip Kumar Sarmah
Figure 1. Daily Operations of CRD and Its Branches and Franchisees.
tion of India’s eight million rickshaw pullers. Not satisfied to reach such a small
fraction of people, the RB developed a unique partnership/franchise model. Under
the franchise system, CRD shares its vision, arranges financing, and provides
expertise to a local microfinance partner, which in turn provides a local network
of field and branch coordinators. The franchisee branches developed in Lucknow,
Allahabad, and Varanasi are examples of this arrangement.
To expand nationwide, we provide hand-holding support to interested NGOs
or entrepreneurs who want to begin working with pullers at their local level.
However, as we start our new expansion, we want to develop an operational sys-
tem, so either we identify an entrepreneur and provide him full support to carry
out the production and assembly for us, or we support our partner organization in
setting up its own production unit with all necessary facilities.
The day-to-day activities operate with a team, as shown in Figure 1.
How far can we scale the model? No official records state the number of rick-
shaw pullers in India, but people frequently mention a rough estimate of eight mil-
lion. On average, about five others depend on each puller, so 40 million people may
be directly related to this source of income. Similar figures apply to others who use
carts, including vendors of fruits and vegetables, sugarcane juices, fish, drinking
water, and other foods and goods.
THE IMPACT OF OUR WORK

Despite the challenges I have discussed here, what motivates me to continue is the
daily impact that I witness on the rickshaw-puller community. Although the pride
of ownership reflected on the faces of the pullers provides me with great satisfac-
tion, we have had other kinds of satisfying influence on both the community and
other stakeholders. Our impact can be seen in several ways.
Economic Mobility
The services that the RB offers were designed to have a positive impact on all
aspects of the triple bottom line. First, we have enabled pullers to own a rickshaw
in a reasonable timeframe. Before we launched this program, few could do so
because of the high daily fees and interest rates charged by corrupt businessmen.
Second, pullers can now make more money because they pay less each day for the
vehicle, and because the newer vehicles let them carry more passengers each day.
Third, pullers now have access to a sound financial organization where they can
borrow money for other ventures.
Social Status
The RB has also had a positive impact on the social conditions of pullers. It has
offered eye care for them and their families and driving insurance for him, and has
made the business more respectable. Through a combination of uniforms and
monthly discussion forums and peer groups, it has instilled a sense of pride among
pullers regarding their line of work. And passengers, especially the elderly and
those with children, prefer Dip-Bahan rickshaws because of their unique design
and the organizational identity attached to it.
We now have a total of nearly 5,000 clients throughout India, 1,700 of whom
have become owners, and many others are on their way to achieving that status in
coming months. The six cities of Agartala, Chennai, Surat, Varanasi, Allahabad,
and Lucknow all have 150 to 450 clients.
Governance
The project has improved law and order within the community in several ways.
First, by making licenses available to pullers, the RB has enabled the government
to better monitor its citizens and gain tax revenues. Second, it has reduced corrup-
tion because fewer policemen can now extract bribes from pullers for not having
proper registration. Third, it has created safer roads by offering driving tips to
pullers.
As a result of its comprehensive interventions, the RB is enabling pullers to
increase their standard of living and become more financially independent. Thus
it is a prime example of how an NGO can have a tremendous impact on the local
population by nurturing a native capability that already exists in the community
and making it financially sustainable.

Pradip Kumar Sarmah
Figure 2. Rickshaw Bank’s Social, Environmental, and Economic Impact.
I feel proud that a little change in the design of rickshaws and delivery systems
made a large and visible impact within the rickshaw puller-community. Various
educational, financial, technical, and social institutes are now showing deep inter-
est in the overall growth of both the rickshaw and the puller. I envision that simi-
lar changes can be made in the lives of other people who depend on slow-moving
vehicles, including those who sell vegetables, fruit, fish, and fast food from carts.
We have already taken a further step in this direction by providing hath lorries, or
hand-pulled carts, to textile vendors at Surat in Gujarat. At Guwahati, Assam, we
have also introduced better-designed carts for selling fish and other food, and dis-
posing of garbage. A newly-designed cart for selling vegetables and fruits will soon
be rolling on Indian streets.
COLLABORATION WITH THE INDIAN GOVERNMENT

The government’s Department of Science and Technology has joined hands with
the Rickshaw Bank as part of the Science Technology and Entrepreneurship
Development (STED) project. It recognizes that the newly-designed rickshaw,
combined with the service delivery mechanism, is a successful tool for creating a
new generation of entrepreneurs. Within this project we envisage generating 80
entrepreneurs in 16 states of India within a four-year timeframe. A dedicated pro-
fessional team is already in action. We plan to identify potential entrepreneurs in
80 districts and cities and to support them in three ways—technically, financially,
and socially—as they replicate RB activities. Table 1 shows the support the STED
project will provide entrepreneurs.
Table 1. Examples of Technical, Financial and Social Support through STED.
STRATEGY FOR THE FUTURE

In the next three to five years, I intend to focus on three initiatives. As an organi-
zation we need to tap equity capital to fund our scale-up efforts. Some immediate
issues in the Indian legal context suggest we will need to incorporate as a private
company and transition away from our non-profit, non-government status.
Simultaneously, we will be building internal capacity (human capital, a new set of
advisors, responsive systems and processes) to manage this change, as we bring in
a new set of stakeholders to participate in our growth.
Our second focus will be on making the Soleckshaw, our solar rickshaw, com-
mercially viable. We would like to be ready once we have overcome its technologi-
cal problems. We will be thinking of ways to lower its cost through partnerships
with local governments and banks.
As a team we have been extremely open to innovation; we’ve also been sensi-
tive to how the local demand has differed from city to city. In the story I tell here,
the Indian government showed an interest in piloting a solar-powered rickshaw in
Delhi.
The recently-launched initiative, partnering with the Central Mechanical
Engineering Research Institute and the Council of Scientific and Industrial
Research, was another important milestone for the Centre for Rural Development.
Soleckshaw, a pedicab, is a vehicle for urban transport that is operated by pedaling,
but has an assistive motor that emits zero carbon. It was launched on October 2,
2008 at Chandni Chowk, Delhi. Among those gracing the program at the launch
were the honorable Chief Minister of NCT (Delhi, or National Capital Territory)

Pradip Kumar Sarmah
The author in a Soleckshaw.

Ms. Sheila Dikshit, and Sri Kapil Sibbal, then the Minister of Science and
Technology and Earth Sciences.
Soleckshaw is now in its pilot phase. At present, seven Soleckshaws, in three
models, are in use. CRD regularly reports their daily progress to the concerned
authorities. Their cost has not been finalized as commercial production has not
begun, but passengers and drivers both believe it will be revolutionary. The design
provides shade and comfort for passengers, and the motor relieves some of the
pullers’ drudgery. However, there is some way to go before this reaches commer-
cial scale.
A third, and integral, part of our organization strategy is to improve the over-
all lives and livelihoods of the pullers. We are working with an external group of
architects and social developers to offer low-cost housing.
WE’RE DOING OUR PART, NOW SOCIETY MUST JOIN US

In the technology-driven world of India’s most populous city, the sight of a prim-
itive caravan being pulled by a weary man is certainly surprising but not uncom-
mon. Around 1880, rickshaws appeared in India, first in Simla and then, 20 years
later, in Calcutta (now Kolkata). One would have expected rickshaws to disappear
with the fast growth of modern motorized transportation. Instead, their numbers
have increased phenomenally in the last couple of decades. In the absence of any
alternative mode of transportation for short distances, the rickshaws emerged as a
vital public service. But their pullers still have to bear the burden of low wages and
subhuman living conditions.
Cycle rickshaws provide a much-needed and valuable public service. In the old
city area and in some congested areas meant for the poor where the roads are too
small for motorized vehicles, cycle rickshaws are the only available means of trans-
portation. In addition, they are convenient and available at virtually anyone’s
doorstep. They meet the need for urban mobility in middle- and lower-middle
income neighborhoods, and provide a low-cost way to transport household goods
and furniture. Even today, a kilometer-long ride in a cycle rickshaw costs no more
than five rupees, compared to 10 to 15 rupees for the same distance in an auto rick-
shaw. And cycle rickshaws reduce air pollution and climate change by avoiding
emissions.
Rickshaws can play a positive role in modern transport systems when mobili-
ty and a clean environment are the basic concern of policy makers. But when their
requirements are poorly understood and facilities are not built for them, the result
is congestion and inconvenience for all vehicles. Designing and building appropri-
ate roads and parking facilities for them in cities will also facilitate the movement
of other vehicles—and will enhance the positive role that rickshaws and other
non-motorized vehicles can play in a city’s transport system.
But pullers still have to bear the burden of low wages and subhuman living
conditions. Our pullers will probably get a better deal when our planners and gov-
erning authorities recognize that rickshaws are a non-polluting, cheap, and effi-
cient mode of public transport that provides employment for millions of people.
APPENDIX. RECOGNITION FOR RICKSHAW BANK

Rickshaw Bank has attracted the attention of organizations worldwide for its innovation and its
impact. In November 2003, it won the Citizen Base Investment Award 2003 for its concept at the
National Stock Exchange Building in Mumbai. In November and December of 2005, IIM Bangalore
selected us for its Microfinance Incubation Program. On April 5, 2006, it was celebrated at the
National Press Club in Washington D.C. as part of the Changemakers Innovation Award
Competition: Market-Based Strategies that Benefit Low-Income Communities. On April 7, 2006, in
New Delhi, it received the Micro Finance Process Excellency Award from Planet Finance and the
ABN Amro Bank. On November 13, 2006, in Singapore, it won an Asian Innovation Award. On April
25, 2007, at Hyderabad, RB won third prize in the Srijan 2007 Microfinance Business Plan
Competition. On July 27, again in Hyderabad, RB was a finalist for the Micro Insurance Awards. On
August 15, 2008, it won the Assam Chief Minister's Best Community Action Development Award
for 2008. On March 30, 2009 RB won India NGO Award, 2008 for the medium category from the
Eastern Region by the Resource Alliance and Nand & Jeet Khemka Foundation. Rickshaw Bank was
also awarded as Best Innovative Project of the year, 2008.
1. Onlending is when an organization lends money that they have borrowed from another
organization or person.
2. http://articles.directorym.com/Franchise_System_Failure_New_York_NY-r852283-
New_York_NY.html.

Gustavo Gennuso
Pumping Life into

Marginalized Communities
ETV’s Technology Model
Emprendimientos de Tecnologías para la Vida
Emprendimientos de Tecnologías para la Vida (ETV) is a social enterprise whose

development was based on the principles and activities of Fundación Gente Nueva
(FGN).1 Both ETV and FGN are headquartered in the city of Bariloche, located in
a mountainous area of Patagonia, in Argentina. ETV produces and sells appropri-
ate technologies throughout the country, specifically targeting underprivileged
communities, primarily in rural and suburban areas. The organization’s work
strategy, described in this case, is based on networking with public and private
organizations to reach potential customers.
ETV is currently marketing a product called a rope pump, which allows peo-
ple to draw water from as deep as 50 meters and raise it up to 8 meters above
ground level. Highly efficient, the pump can replace other manual extraction sys-
tems. ETV also produces motor-driven versions of the rope pump, and spinning
wheels that local artisans use to spin wool.
ETV came into being to resolve a range of social issues, based on the under-
standing that most of the developments intended to improve the quality of life for
people in isolated or impoverished communities never reach those people. They
are left in the drawers of the technology experts, and at best win a prize for inno-
vation. ETV’s aim is to develop a sustainable system that will allow technologies to
reach those communities more easily.
This concept was one of the primary motivations for developing ETV,
although certainly not the only one. In fact, several factors converged to form the
project.
A nuclear engineer by training, Gustavo Gennuso is a social entrepreneur. He is the

Founder and Director of Fundación Gente Nueva (FGN) and of Emprendimientos de
Tecnologías para la Vida. Through FGN he has co-founded ten schools in poor com-
munities and initiated many social programs.
© 2010 Gustavo Gennuso

Gustavo Gennuso
Let me begin this story by describing the ETV concept more fully and identi-
fying four of the main reasons why appropriate technologies do not get to the peo-
ple who need them.
Designers of technologies are often located far from those who will benefit from
them. Designers often fail to consider the culture of the users. Technologies are
designed primarily to achieve the best technical performance, and we tend to for-
get the relationship between person and product—or, more precisely, between cul-
ture and product. ETV seeks to change that dynamic. For example, our spinning
wheels are made of wood, which honors the tradition in the region where the
wheels are made and used. Although a metal spinning wheel would be easier to
make and consequently cheaper, ETV still cannot gain wide acceptance for such a
change.
People and groups are motivated to choose certain products. Knowing the inter-
ests and motivations of different cultural groups can help producers provide them
with the technologies that will benefit them the most. Some groups’ interest in
improving their own quality of life is mediated by production (agricultural or arti-
sanal, for example) and thus favors production-related technologies, however
much the producers may believe they need other technologies. These groups rea-
son that improving production will improve other aspects of their lives, and that
therefore they need to start there. Some groups consider ETV’s rope pump an
improvement for the home, while others believe its primary benefit is for irriga-
tion. Because of such differences in reasoning, ETV needs to know how to interact
with the people it wants to reach in order to determine how to design its products.
Knowledge of the groups and their contexts determines design guidelines.
Although this is a fundamental concept in technological production, too often it is
not taken into account. Designers often lack information about the contexts of the
people for whom they design their products. Consider a community that has no
source of spare parts for the products its people buy. These people need products
that do not break easily or that can be repaired easily. For example, FTV’s rope
pump stands on two wooden braces; based on our experience in the part of
Patagonia where we are located, these braces can easily be replaced by anyone who
has two pieces of wood appropriate for the purpose. But when we were installing
rope pumps in the La Puna region, we were surprised to discover that wooden
braces are rare because the only wood locals use is the wood of the prickly pear (a
type of cactus), which cannot be used for a brace. Because of this oversight, the
manufacturer had to travel hundreds of kilometers in search of braces. This taught
us that even if a product seems to be universal, every community will add its
unique characteristics. For instance, in certain areas in Africa, the structure around
the rope pump must be covered up because of a local rivalry that leads people to
cut the rope of their neighbor’s pump as an act of provocation.
Developing a technology doesn’t mean it is ready to be distributed or marketed.
Innovators of appropriate technologies often feel that their prototype or initial
design will serve as the final product. But this is a mistaken assumption, as a new
design has a long way to go before it becomes a product ready for distribution. It
Pumping Life into Marginalized Communities
takes considerable effort to advance an idea from a prototype to a product ready

for distribution, complete with interchangeable parts, spare parts, the possibility of
compact packaging, etc.
THE DISTRIBUTION OF APPROPRIATE TECHNOLOGIES

The key issue with appropriate technologies is distribution. ETV has identified
several distribution strategies emanating from wider concepts. Without invalidat-
ing any of them, ETV evaluated the characteristics of each of these concepts and
then determined its own strategy. Some of the strategies include:
Do it yourself. There are technologies whose simplicity encourages organiza-
tions or individuals to “distribute” them by actually teaching local people, groups,
or communities to make them on their own. In ETV’s experience, however, few
people actually manufacture the products in question, and when they do they are
usually of very poor quality. For example, these local people tend to be agricultur-
al producers, so that is what they know how to do; they are not pump manufactur-
ers. The poor quality of the products they produce results in people spreading a
negative image of the pumps by word of mouth.
Continuing with the rope-pump example, each person who makes one is in
fact making a prototype. Because they do not have the interchangeable parts, they
use whatever materials they can find and may replace parts with bottle caps or
pieces of rubber, etc. This creates the idea that the product can be made at very low
cost; even those who promote this type of distribution say so. But this is a fallacy:
this type of “distribution” has a very low impact in terms of the number of bene-
ficiaries and the quality of the product. Furthermore, other people are discouraged
from acquiring our pumps because they feel they are being ripped off when asked
to pay the price of items produced on a real production line.
Local production. Some people promote production in small community
workshops, an improved variant of the do-it-yourself model. Although this may
seem to be a good idea because it develops local production capacity, few of these
shops are really successful. The main problem is that people fail to consider that
demand will be limited to the area of production, thus these workshops will not be
financially sustainable. This approach does take into account the fact that people
need training, not only for production but also for sales and distribution. However,
training is not enough. Moreover, locally produced products don’t just sell them-
selves; they need to be marketed, which takes money.
Several other factors help explain why appropriate technology does not reach
people. They have to do with work philosophies that lead to errors or misinterpre-
tations, which in turn hinder the adequate distribution of appropriate technolo-
gies. Two of the most important factors are lack of knowledge and mistrust.
Lack of knowledge about what it means to produce and distribute a product.
Technology experts—and even some NGOs—often do not realize how vital cost
structure is to those taking on the production and distribution of an appropriate

Gustavo Gennuso
Opportunties for Employment, and Pride. Manuel had problems with addiction
a few years ago and even landed in prison briefly. Today he is the chief operator in
the manufacture of rope pumps. He is able to support his family, thanks to this work,
but in addition—and this is key—he is proud of his work. He feels that he has some-
thing to give to others, and he can see the fruits of his labor. At ETV we know that
it is workers like Manuel who make the difference.
technology. They often fail to consider basic issues such as marketing, operational
structure, taxes, packaging, etc.—and then they underestimate their costs.
Consequently, the product is discredited because of its apparently high price while
its true cost remains unknown.
Those who criticize ETV for putting high prices on its products include peo-
ple at public institutions that have developed similar products. They think ETV’s
prices could be lower, but they forget that ETV must pay salaries; meanwhile, their
own salaries are paid by the state. They also ignore other costs that the state pays
for at public institutions, including the use of facilities and services.
Mistrust of those who sell technology in underprivileged communities. Here, let
me provide an example. Many who buy rope pumps or spinning wheels are small
agricultural producers, so it is striking that some are suspicious about the idea of
“selling” technology to these people. Meanwhile, the consumers see it as simply
another part of their economic activity and they understand it well, perhaps even
better than those who advise them.
The analysis described above has helped shape ETV, which has often learned
from the mistakes in these examples. As I said at the start, ETV is a social enter-
prise. Although this definition creates some ambiguity, as the category can include
organizations with various characteristics, the company can still make three
claims:
• The products and services ETV offers are directed at families in underprivi-
leged communities in an attempt to improve their quality of life.
• ETV’s workers are mostly young people who are at risk socially, and the com-
pany aims to gradually build a participatory structure that includes them.
• ETV has committed the company’s earnings, after making necessary reinvest-
ments, to the Fundación Gente Nueva’s educational projects.
These ideas are embedded in ETV’s vision and mission, which can be summa-
rized as follows:
ETV’s mission is to develop, produce, and disseminate technologies that
will enhance the development of those living in underprivileged situa-
tions and provide access to the basic services that are indispensable to a
decent quality of life, and to do so by operating a company that is social-
ly, financially, and environmentally sustainable.
WHAT IS ETV DOING TO CARRY OUT ITS MISSION?

ETV set out to develop a product that would improve the quality of life for those
whom society has neglected and generally forgotten. A critical component was that
the product had to allow for the development of a sustainable business model. The
resulting product was the rope pump. The pump can also be motorized, using
clean energy such as solar or wind. Estimates from census data indicate that
270,000 families in Argentina draw water by hand; 27,000 of these are located in
rural areas and the remainder in suburban areas.
ETV believed it was important to identify its target customers at an early stage
in order to work with them most effectively. Our most challenging target was the
rural sector, which was dispersed across the country and included geographical
areas that are difficult to access. ETV took on this challenge, which it saw as reflect-
ing both its mission and its principles, and because it offered an opportunity to
provide solutions to a neglected market.
Reaching these small rural communities and families imposed conditions on
ETV’s products, and on our production, marketing, sales, and distribution chan-
nels. I cannot overemphasize how essential it was to ETV’s decision-making to
know the characteristics of our potential customers in the greatest possible detail.
THE ROPE PUMP

As shown in Figure 1, the rope pump is a system for drawing water manually from
hand-drilled wells, reservoirs, streams, and all types of water sources. It can reach
a depth of 50 meters and can draw water 6 to 8 meters above ground level. It is a

Gustavo Gennuso
Figure 1. The Rope Pump
very old technology, adapted in the 1960s for use in Central America. ETV modi-
fied it for production and marketing in Argentina according to strict guidelines:
relatively low cost, excellent quality, low maintenance. Rope pumps come in sever-
al types. The petiza (little one) pump has a water outlet 0.90 meters above ground
level. The jirafa (giraffe) pump has a water outlet 6 meters above ground level.
Both the petiza and the jirafa can be driven by a motor using either wind energy
or batteries connected to a solar panel.
In developing and producing the rope pumps, ETV had to meet six standards:
Good quality. ETV’s products had to be designed to last a long time and offer
excellent performance, and they had to provide quality-control systems. These
considerations were important not only to ensure that products would perform
well, but also because the company respects its customers, who all too often had
been sold poor-quality products because their main concern was low cost.
Low cost. Balancing low cost with good quality was a major challenge, but not
an impossible one. It involved seeking out suppliers and developing production
systems that could minimize the amounts of labor and wasted materials.
Ease of repair. Most of our customers do not have easy access to spare parts, nor
do they know how to operate complex repair tools. Therefore we designed the rope
Doña Clementina’s New Pump. Doña Clementina lives in a place called Gualjaina
on the plains of Patagonia, in a precariously built house many kilometers away from
any other. She lives by raising sheep and a cow or two, and from the produce of her
small farm, where, at great sacrifice, she raised her five children. She had been draw-
ing water with a bucket and a rope for over 60 years. That’s why she looks so happy
now with her rope pump, which allows her to water the farm crops and have water
inside the house. She complains because the water tank has been exposed to the sun
so much that the water comes out warm, as she’s used to “really cold” water. We
showed her how she can have a direct water outlet without the water going through
the tank, and she tells us that relatives have come from far away to see what this rope
pump is all about.
pump so that it can be repaired with very few tools, and the spare parts that users
may eventually need are provided with the new pump.
Ease of installation. Ideally, products designed for people in remote areas can
be installed by the users themselves. This requires providing handbooks geared
specifically to them. All ETV rope pumps are delivered with an appropriate user
handbook, which includes a telephone number that customers can call if any prob-
lems arise. Moreover, to be sure that help is available in all the regions where the
product is sold, ETV trains local people—generally former customers—how to
install the pumps.

Gustavo Gennuso
Design that includes distribution. The product design must take into account
that it will be shipped hundreds or thousands of kilometers via various modes of
transportation. Therefore, designing a product that can be packaged compactly is
as important as the packaging system itself.
Partnering with technology institutions. ETV believes it is important to partner
with institutions that can bring specialized knowledge to its products. It must also
persuade those partner institutions—generally government agencies—to devote
part of their activity to technological developments that fulfill people’s basic needs.
The design of ETV’s rope pump and spinning wheel, for example, involved tech-
nology experts from Argentina’s technology institutes, which added great value to
the designs.
MARKETING, SALES, AND DISTRIBUTION CHANNELS

Determining a strategy for marketing, sales, and distribution requires knowledge
of our potential beneficiaries or customers, and the ability to infer general trends
that will guide our actions and thus let us take full advantage of our potential activ-
ities. ETV is trying to reach people who are dispersed across a large territory, in a
range of living conditions determined by where they live. ETV’s approach has been
to promote partnerships with public and private organizations. Most families or
small communities have a relationship with some type of organization. In the vast
area it aims to serve, ETV has encountered various types of NGOs, sales coopera-
tives, and public institutions; some are nationwide and others are regional or local
(see Table 1). Before starting, it’s important to be committed to the idea of these
channels as the means for disseminating products. The next two steps are being
responsible for sales, and being a distribution hub.
At ETV we have found that word of mouth is the most successful driver of dis-
semination, so we encourage our partners to use the marketing materials we have
prepared. However, our primary focus is on getting our products operating in the
public places where our partners are located so that potential customers can see
them at work—for example, installing a rope pump in a school, community cen-
ter, or some other highly visible spot. Initially we sent our partners free samples for
this purpose, but we found that partner organizations were more likely to make a
firm commitment if they shared the costs. In most cases, someone from ETV is
present at the installation of the sample product to demonstrate how it is used,
which creates enthusiasm among those who are watching.
Also, the organizations that sponsor these demonstrations usually process the
purchases made by local families, so they become the sales channel for us.
Although ETV proposes that the organizations keep a percentage of the sales and
the organizations accept this arrangement, they also consider it a form of payment
just to know they are providing a service to their contact families. Often the organ-
izations that process the purchases also provide credit or otherwise subsidize their
beneficiaries. ETV has sought out other financing options through microcredit
Table 1. Clients and the Channels to Reach Them
organizations working in the target areas; we put our partner organizations in

touch with the microcredit organizations in order to strengthen their position.
Distribution is the major obstacle to reaching people with appropriate tech-
nologies. Therefore, ETV seeks to open two-way channels: to reach people with the
technology, and to become “receivers” of their needs. ETV proposes to use as dis-
tribution hubs the same local organizations it uses for marketing and sales. From
where it is located, ETV can reach Argentinean cities of over 10,000 inhabitants rel-
atively easily. But the logistics and costs of distribution become more complex for
the “final shipment”—from those cities to the final destinations in the field or in
small communities. Still, we commonly find that the local organizations have fluid
channels in operation for reaching customers. In fact, ETV has been able to add
new products since it activated this two-way distribution channel, including the
solar-driven rope pumps and the spinning wheel.
LEARNING
The strategy of developing partnerships with local organizations has turned out to
be very powerful for ETV: it would be impossible for us to duplicate the logistics
and marketing possibilities that each organization offers. For example, ETV has
installed rope pumps in the province of Salta near a place called Embarcación,
which is home to native Wichie communities. These communities are in the mid-
dle of inaccessible forests some 2,400 kilometers from where the rope pump is pro-

Gustavo Gennuso
duced. ETV could not have reached them without its partner organization,
Fundapaz.
We have also distributed pumps to several communities in the northern high-
lands of the Argentine Puna, which borders Bolivia and is 3,500 meters above sea
level. We could reach these places only through the efforts of a women’s organiza-
tion called Warmis, which made the logistics and microcredit possible. In another
area of the Puna, the rope pumps arrived through the work of a public institution,
Instituto Nacional de Tecnología Agropecuaria. It mounted a rope pump on a
small truck and visited local communities to demonstrate it and stimulate sales.
Although this type of partnership has great potential, ETV did discover certain
issues in this strategy that made it more difficult to operate, and we feared it might
extend to other situations. For example, the pump is directly linked to the issue of
water. Although all of our partner or potential partner organizations recognize
that water issues are a priority for their beneficiaries, few are directly involved in
solving water problems; at most they deal with water-related issues such as agricul-
tural production. Consequently, they direct the bulk of their time and effort
toward their primary mission, while water and pumps run a distant second. As a
result, ETV is seeing a slowdown in the rate of sales and their distribution is below
expectations.
Faced with this reality, ETV has revised its strategy to help improve its market-
ing. Through our partnerships, we have gotten to know local communities and
their people, which has allowed us to develop microfranchises. In agreement with
our partner organizations, we selected people from the communities we serve to
distribute and sell ETV products in their area. We train these people and provide
them the materials they need. This approach allows us to reach more customers
and stimulate demand. For example, families that were unfamiliar with ETV’s
products now request them from the partner organizations, which in turn help
customers with the credit or subsidies they need to buy them. ETV has put togeth-
er a catalog of products for these microfranchisees, which includes products from
a couple of companies similar to ETV that produce farm tools.
In order to continue and increase their activities, ETV and companies like it
need investors. No system of investors has yet been developed for social enterpris-
es with ETV’s characteristics. Although our company has been well received at
investment meetings, our proposals are rarely a match with the investors’ inten-
tions, which are strongly based on direct profitability, including selling a company
relatively quickly. Social enterprises like ETV can offer indirect profitability, but
that requires creating a system of investors. Social enterprises like ETV may have
low direct profitability, but it is vital to consider indirect profitability: the
improved quality of life for the people being served. ETV and other social enter-
prises must find a way to calculate this indirect profitability so we can gradually
build up a system of investors who will see indirect profitability as a direct contri-
bution to society, one they would otherwise make through foundations or chari-
ties. This will enable them to make donations through their main area of interest,
investment.
Diversifying our products remains a major challenge for ETV. To achieve this,
ETV must intensify our partnerships with institutions of technological develop-
ment, which will enable us to develop more quickly. In fact, the solutions to most
problems mentioned in this essay have been developed; the challenge for ETV is to
find those solutions and adapt them to our operation.
LOOKING TO THE FUTURE

ETV is still in its final stages as a start-up. About 300 families have benefited from
its products, and over 20 public and private organizations are part of its network.
Now we need to see the structure we have built facilitate a commensurate level of
sales so we can achieve financial sustainability. ETV knows it needs to clarify the
concept of social enterprise and to find a common language with other similar
organizations so they can unite to promote a new sector, one that is moved by a
different logic and needs different types of responses.
At this point, one of ETV’s biggest challenges in expanding is to search for
investors so it can reach out and diversify its products. The search for investors is
an important activity for social enterprises. On the one hand it forces us to under-
stand a new way of thinking. On the other hand it is opening us up to an investor
market to which we are proposing a form of investment different from that of a
traditional firm. This forces us to find points in common and to develop new
investment concepts.
Beyond these considerations, the most gratifying thing about our work at ETV
is to look straight into the eyes of someone who, after three turns of the wheel, sees
water flowing through a pipe and into their home for the very first time. That look
is proof that our efforts are worthwhile.
1. Literally, Emprendimientos de Tecnologías para la Vida means “technology entrepreneurship for

life.” Its more subtle meaning in Spanish is “entrepreneurial activities that use technologies to
improve lives.” Its parent foundation, Fundación Gente Nueva, which means “new people foun-
dation,” is involved in education through its own schools and through community projects in
impoverished communities.

The Tuki: Lighting Up Nepal

Solar-Powered Tuki
The effort to provide the world’s poor with affordable, safe, and sustainable solu-
tions to the problem of energy poverty has yielded myriad solutions. Current
methods of providing light, heat, and energy for cooking pose major health and
safety risks to users, often the same people who struggle every day with poverty
and its resultant problems. Our work in conservation awareness and sustainable
resource use in Nepal has led us, among other projects, to promoting the Solar
Tuki, a white LED lamp powered by batteries that are recharged with a small solar
panel. Each unit has additional functionality that extends to charging mobile
phones and powering small radios. The Solar Tuki provides a clean, affordable, and
safe alternative to the more prevalent, dangerous, and expensive kerosene tukis
(lanterns). In addition, the light and power it provides acts as a platform for other
development drivers related to education, communication, and income-generat-
ing activity that will, down the road, improve the quality of life for all those who
adopt the Solar Tuki technology.
Anil Chitrakar trained as an engineer and energy planner, and for the past 25 years
he has worked to bring technology to rural communities. Through his work, Chitrakar
seeks to enable communities to manage local natural resources, and he has assisted in
crafting national and international policies that affect natural resource management.
He directs Environmental Camps for Conservation Awareness in Nepal, an organiza-
tion he founded.
Babu Raj Shrestha has worked as an aeronautics engineer, having earned his degree
in mechanical engineering. He currently serves as president of the Centre for
Renewable Energy, a Nepali organization that promotes sustainable technology, such
as solar driers, wind-driven pumps, and solar stoves, to help local communities make
the best use of their resources.
Chitrakar and Shrestha and their respective organizations joined in a partnership to
manufacture, distribute, and promote the Solar Tuki, a solar-powered white LED
light, to replace kerosene-fueled lanterns as the dominant form of lighting tool used in
Nepal’s poorest communities.
© 2010 Anil Chitrakar and Babu Raj Shrestha

A student at work using the Solar Tuki.
Users of the Solar Tuki, a simple device for which spare parts are easily avail-
able, can leave the lamp in the sun all day long, which will power it to work for up
to 10 hours during the evening. In Nepal, an average of 300 sunny days a year pro-
vides a ready supply of power without incurring continuous costs for fuels like
kerosene. We continue to train local entrepreneurs to manufacture, repair, and sell
the device on their own, and have begun to expand both the supply chain and the
marketing networks to further weave the Solar Tuki into the Nepali social fabric.
At present, we can report that 300,000 units are in use in over 150,000 house-
holds across Nepal. Six private enterprises play roles in manufacturing the device;
an additional three companies help to produce the inputs needed to assemble the
tuki. In addition, over 40 nongovernmental organizations operating savings and
credit programs have helped us to create a cost-effective mechanism through
which our target population can purchase the product. Creating a business model
that operates self-sufficiently and still reaches the poorest groups has required
inventive solutions, as well as a clear vision for future projects that will speed the
tuki’s adoption throughout Nepal and other areas that experience similar condi-
tions. However, the breadth and depth of energy poverty throughout the region, in
addition to a bleak outlook for improvements to the conventional energy infra-

structure, adds to the urgency of developing workable solutions.
NEPAL’S ENERGY LANDSCAPE

Nepal’s terrain reaches across geographical extremes. Its special setting poses
unique challenges to those committed to improving the quality of life and the eco-
nomic opportunities available to its residents. Development professionals must
understand these conditions if they intend to succeed at designing and distribut-
ing technological innovations that meet the needs of the people they seek to assist.
With an average annual per-capita income of US$300, the roughly 28 million
Nepalis rank among the lowest in the world in terms of purchasing power, making
their energy problems all the more severe.
The type of electrical power available and access to it varies from region to
region. The country’s elevation varies from around 100 meters above sea level to
about 8,000 meters within a range of just 150 kilometers. This makes Nepal look
like an ideal place to generate hydropower. Despite this potential, however, power
plants in Nepal currently produce only 600 megawatts (MW) of power per day. (In
the United States, 500 MW typically powers a city of 300,000, about the size of
Seattle or Milwaukee.) Efforts to create small hydropower plants that are owned
and managed by local communities have led to the construction of over 1,000 of
these generators, each of which produces between 5 and 500 kilowatt hours (kWh).
In addition, about 200,000 biogas or methane gas–powered plants operate in
Nepal today, lighting about 9,000 homes. The simple technology of these genera-
tors uses methane gas, mostly from animal manure, to produce energy. An addi-
tional 96,000 homes use other sources to supply energy, such as animal fat, veg-
etable butter, and strips of resin-laden pine. Many homes simply use light from a
fireplace that is also used for cooking and heating, or rely on tools powered by con-
ventional dry-cell batteries.
Despite these numbers and the advances made in biogas and micro-
hydropower plants, only 1.6 million Nepalese homes have access to an uninter-
rupted supply of electricity. Very few of the nearly 28 million Nepalis have access
to electricity and the grid. In the midwestern region of Nepal, only 18 percent of
the 65,000 homes have access to electricity. This year, the situation became much
worse due to scant rainfall, an important source of water for reserve inputs at
plants generating energy. Subsequently, even the few who have a connection to the
grid had to bear with as many as 16 hours of daily power outages during the dry
spell. This meant there was no power for homes and offices, which then had to
invest in diesel generators. The Nepal Electricity Authority has lost millions in rev-
enue due to these outages. Worse still, about 96,000 of the country’s total 4.1 mil-
lion households live in total darkness during the night without any source of ener-
gy to produce light; among them are some families who do not even have access to
kerosene-powered lamps.

For 2.4 million households, 2.3 million of them in rural areas, kerosene lamps
serve as the primary source of light. The government imports the country’s entire
supply of petroleum products, including kerosene, using its very limited foreign
currency reserves. Frequent strikes and highway blockages constantly interrupt the
stream of these materials into Nepal. Furthermore, day-to-day increases in inter-
national petroleum rates only exacerbate the difficulties of supplying kerosene. In
fact, this problem is so severe that the G8 countries have introduced a plan to cre-
ate an antishock fund to protect developing countries against the rapid rise in fos-
sil-fuel prices. The government has raised the prices of petroleum commodities
many times over the past few years, as many as three times in a five-month period.
One such increase raised the price of gasoline and diesel by 10.71% and 17.14%,
respectively. The price of liquefied petroleum gas went up by 13.33%, and the price
of kerosene rose still higher, increasing by 28.57% and leaving subsidized kerosene
up 25% per liter. Taxes bring the amount paid by consumers to even greater
heights relative to national income, and these prices only continue to go up.
As a result of these high prices and the pressing need for fuel, Nepalis go to
great lengths to obtain kerosene and other petroleum commodities. Along the
Mahakali River, which forms Nepal’s natural border with India, villagers walk an
average of three days to the markets in India to buy kerosene. In India, consumers
pay half as much as in Nepal, due to a better distribution infrastructure and sub-
sidies from the Indian government. However, the limited supply of subsidized
kerosene makes it difficult to acquire in large quantities. On any given day at the
Dharchula suspension bridge that spans the Mahakali, one can see 150 to 200
Nepalis crossing over to get kerosene, bringing back a combined amount of 1,000
to 2,000 liters.
The use of kerosene-powered tukis presents major health and safety risks as
well. Lamps cause fatal accidents and fires, as tragically illustrated by the recent
destruction of an entire village in Bhojpur. Small-scale fires occur on an unfortu-
nately frequent basis, and the fumes and smoke from the lamps damage people’s
eyes and lungs. Those who lack access to electricity face these risks every day, just
to obtain weak light of inferior quality.
SOLUTIONS: MAKING A SUSTAINABLY POWERED LIGHT

AVAILABLE TO THE POOREST MILLIONS
We have been working to provide technological solutions to rural Nepal for over
two decades. During this time we separately introduced many solutions, including
the methane gas plant, the small hydropower plant, solar cookers and driers, some
wind technology for lifting water, and cooling and refrigeration for vegetables and
fruits.
Eventually, like minds met, and we began to work on the Solar Tuki together.
We also both became Ashoka Fellows (although at different times). For both of us,
it has been a lifelong undertaking to make technological and other kinds of solu-
tions available to people who live in impoverished conditions that simply need not
be that way. The first time Anil set up a solar light was in the mid-1980s, when it
was too expensive to be practical. However, the light, battery, and panels have since
become much better and more affordable. We did not wake up one fine day and
decide to build and sell the tuki. Developing the radio, the mobile charger, and now
a chlorinator has been a natural evolution involving not only our individual efforts
but the combined efforts of our respective organizations: Babu’s CRE (Centre for
Renewable Energy) and Anil’s ECCA (Environmental Camps for Conservation
Awareness). ECCA is now about 20 years old; since its founding it has mobilized
young people to be the first adopters of new ideas and solutions aimed at resource
management. CRE has also been dedicated to transferring renewable and clean
technologies to rural Nepal.
Through the partnership, Babu and CRE focus on the technology while Anil
and ECCA focus on distribution. Together we entered the tuki in a local competi-
tion in Nepal. We won $25,000, followed by another $50,000 from the Global
Environmental Facility of the UN. We then took the tuki to the World Bank’s
Development Marketplace, where we won an additional $92,000. Then we got
$100,000 from the carbon fund of a U.K.-based company called ERM. The money
helps us develop new products, such as the chlorinator mentioned above, which is
powered by the same solar panel as the Solar Tuki.
Our primary goal is to create a self-sustaining system to produce the Solar Tuki
that is paid for with revenues generated by sales. Meanwhile, we must sell the tuki
at an affordable price point and create as many mechanisms as possible to make it
easy to pay for. The Solar Tuki producers receive no subsidy, and the price—which
pays for one three-watt solar panel, two tukis, and a cord to attach a radio—reflects
the real cost of manufacture, overhead, and distribution. Moreover, we do not
want to sell a Solar Tuki and then leave the buyer with a damaged or nonfunction-
al unit. Therefore, the price of the tuki also pays for a five-year warranty on the
entire set. We train local individuals to provide repair and maintenance and keep
spare tukis available for immediate replacement in case one is damaged. Although
the initial cost of the set shocks those used to the cheap lights imported from
China, they begin to prefer our tuki when they understand that the price includes
a five-year warranty and after-sales service. These people cannot afford the luxury
of throwing something away as soon as it stops working, but that is inevitable with
cheap Chinese products.
As most of the targeted beneficiaries of our tuki live below the poverty line,
most of them cannot afford the up-front cost. Therefore, we have implemented a
microfinancing system that enables customers to purchase our tuki on an install-
ment basis, paying the equivalent of US$2.30 each month for two years. This
approximately equals the amount they now pay for kerosene or dry-cell batteries.
At the end of the two years, the users continue to get clean light and access to the
radio at no cost, until they need to replace the rechargeable batteries, usually after
an additional three years. We can reach even the most difficult markets using this
program. For example, for the Mushahars of Nepal’s eastern plains, probably the

We aim to make training hands-on and accessible.
poorest section of Nepali society, we have set up a revolving fund that charges for
the tuki at only 4 percent interest.
One key way we disseminate the tuki is through training and orientation.
ECCA has a training center in Kathmandu and CRE has one in eastern Nepal.
Basically anyone who says he or she wants to launch an enterprise can sign up for
a three-day training program on the basics of launching an energy enterprise.
Training covers ways to deal with issues of natural resources management and
explains the workings of saving and credit groups. We also train participants on
the basics of building a Solar Tuki and encourage them to share many past experi-
ences—both mistakes and successes. We keep it very informal.
A key challenge of getting the tuki to the most remote areas with high demand
is proper distribution. The primary strategy allows local entrepreneurs to make
over 36% of the total cost of the Solar Tuki by assembling and marketing it them-
selves. This network of local entrepreneurs throughout Nepal provides the best
and probably most effective model we have developed. The huge market for our
tuki requires this kind of decentralized assembly and transport in order to succeed.
Moreover, with local assembly, 36% of the tuki’s cost enters the local economy as
wages. We support this network through centralized strategic advertising. We
already have a model entrepreneur in Biratnagar in eastern Nepal who is produc-
ing 300 sets, and another is producing 200 in Kathmandu.

MOVING FORWARD: GROWING IN A CHALLENGING ENVIRONMENT

Ever since we started working with the Solar Tuki we have faced significant chal-
lenges; some of them have more to do with attitudes than with technology.
Generally, we knew that there are people, in the charity world especially, who raise
money by presenting a good victim. Their focus is not on the solutions but on pre-
senting the problem in the most articulate manner in order to raise money. The
biggest challenges for us have always come from these people, who ask questions
like, How will the poor pay for this when they do not even have enough to eat? Is
this a priority? But we are thick skinned and never ask for anyone’s permission or
money to do the things we believe are important; when some people caught on to
what we are doing, they came to help. Another challenge arises when the govern-
ment steps in and wants to distribute the tuki free of cost. That destroys the mar-
ket for a long time and creates a dependency that is hard for people to escape. Also,
donors tend to prefer to subsidize the consumer rather than the technology and
the people who make it happen. These are all challenges we have faced and contin-
ue to face.
The savings and credit groups have provided the principal financing for the
tuki’s spread throughout Nepal, and the grants and prize money, like that award-
ed to us by the World Bank’s Development Marketplace, have helped us build our
capacity to develop and distribute our tuki and provided the finances we needed
to start initial production. In addition, two years ago we lobbied the Nepali gov-
ernment to help pay for the tuki as part of a plan to go to scale. However, the funds
the government allocated for 60,000 units went toward distributing the Solar Tuki
free of charge, instead of through savings and credit groups or subsidies, as we had
proposed. Although this helped spread the technology to remote parts of Nepal, it
also created a new dependency and a huge distortion in the market. Many of the
tukis found their way back into urban markets, as some recipients sold their
devices, seeing that as an easy way to make money. We must remain cautious as we
move forward and grow, avoiding this sort of philanthropy and remaining true to
our business-driven model.
Our growth becomes all the more critical when one takes into account the
increasingly difficult energy landscape in Nepal. The government made its last big
investment in a major hydropower project, the 70-MW Marsyangdi plant, five
years ago, and only the 30-MW Chamelia and 14-MW Kulekhani are planned for
construction. Nepal continues to recover from a ten-year armed conflict, and for
at least the next five years the government will have little capacity to build and
deliver large-scale energy projects. Therefore, the Nepal Electricity Authority
(NEA) has no funding to pay for anything larger than these plants, and the ongo-
ing political uncertainty and threat of new conflicts makes it nearly impossible,
even to field exploratory teams. The NEA predicts that the demand on the current
grid will grow by 75 MW each year for the next 20 years, which will only increase
the current power deficit of 400 MW. With conventional electrical power unavail-
able, tools like the Solar Tuki will become ever more important.

It will require some innovative changes on our part to produce and distribute
the number of Solar Tukis necessary to fill the gaps left by a failing energy infra-
structure. We do not doubt that there is a huge market for our tuki, but it is a chal-
lenge to find manufacturers who will help us meet this demand. In addressing this
challenge, we plan to maximize the backward and forward economic links between
creating jobs and eradicating poverty. We also believe that those previously exclud-
ed from the mainstream economy could do this job best. These target groups
include local entrepreneurs, single-women’s groups, and even kerosene-tuki burn
victims, who know better than anybody the pain that the Solar Tuki helps its users
avoid. Assembling tukis near the end users through groups like these will benefit
everybody, and we continue to develop these programs. Environmental Resources
Management, a U.K.-based company, has helped us build a central warehouse for
parts so we can develop our decentralized manufacturing model.
In terms of marketing, we intend to grow by developing new partnerships,
novel forms of purchase and payment, and additional appropriate products. For
example, the diverse Nepali market has the unique feature of being almost cash-
less. People in the most remote areas of the country trade primarily through barter,
and Nepal is one of the few remaining places on earth where most people grow or
gather what they need. In a region so rich in natural resources, villagers can weave
baskets and mats from local fibers, make paper from local shrubs, extract oil and
herbs from the local forest, and engage in a variety of other activities. The produc-
tion of these items gives us a variety of options, as finding a larger market for these
products could enable people to pay for household appliances, the Solar Tuki
among them, that would improve their quality of life. In the hill district of eastern
Nepal, Madan Rai of the Khotang Development Committee (and also an Ashoka
Fellow) has initiated a program to promote raising goats among the Brahmans and
Chettris and pig raising among the Rai villagers. Dealers weigh the livestock, and
when they meet the Solar Tuki’s price point, we can make a trade. If this model
begins to work, we can replicate it with other easily saleable commodities, such as
fruit, coffee, and bamboo.
In terms of manufacturing, we tried to do it with two private companies, one
each in Kathmandu and Biratnagar. Both failed. We then began to train local entre-
preneurs. Today, more than 13 local manufacturers are involved in assembling and
distributing the Solar Tuki, and we have the resources for a central warehouse to
support many more.
We have always believed that we have to focus not on the cost of a technology
but on how much people can pay. If it were not for the many groups setting up sav-
ings and credit programs in Nepal, we would not be able to sell the tuki. Initially
we thought we could offer the design to local workshops—Maharjan Electric in
Kathmandu and Krishna Grill in Biratnagar—to see if they wanted to manufacture
the lights. It did not happen. Then we began to have conversations with the Karnali
Savings Cooperative, which gave us many helpful insights. Pati Bhara Solar
Industries became the first group to assemble the tuki and sell it according to the
savings and credit model. Shree Savings Cooperative was the second. The Bhojpur

Charging up the Solar Tuki with a rooftop base station.
and Khotang districts in remote areas of eastern Nepal then followed.

To further reduce the per-household cost of the Solar Tuki and reach the poor-
est of the poor, we have developed and begun to promote a community-based
charging model, as opposed to the present model, where each house owns one 2.5-
watt solar panel and two lamp units. In this new model, the villagers set up a large
solar panel (36 watt or 50 watt), together with a charger that has many (20-40) out-
lets, in a community building (e.g., school or ward office), and people who have
Solar Tuki lamps will charge them there. This way, people will have to buy only the
Solar Tuki lamp, which costs US$11, eliminating the need for each consumer to
buy the more expensive solar panel at US$28. Poor people will have to invest less
money, which will bring more of them within reach of the tuki. Villagers could
extract extra value from the solar panel by using it to charge the local battery sys-
tem and light the community building itself. In Nepal’s remote western district of
Myagdi, Ashoka Fellow Mahabir Pun runs a number of schools. The children have
no access to electricity and therefore can only study by day. In order to change this
situation and give the children access to solar light and radio, Mahabir has given
each student one of our tukis. They use them at night and must bring them to
school the next day to be recharged at a collective solar panel charging station. The
users repeat this process each day. This model eliminates the cost of the solar panel
and enables each family with a school-going child to pay for only one Solar Tuki,
rather than for two tukis and a solar panel.

Finally, we have initiated a series of pilot programs to both extend our vendor
reach and make the tuki available through partnerships with other organizations.
We already have begun to leverage the existing network of kerosene dealers as a
resource for distributing the Solar Tuki. If these successful salesmen can grasp its
powerful potential benefits, they will play a vital role in distributing the tuki.
Industries and businesses can make the Solar Tuki available to their workers and
primary producers, and also create a financing mechanism that allows workers or
vendors to use part of the price of the product purchased, or part of their wages,
to pay for the Solar Tuki. We have begun to implement such a scheme in partner-
ship with ITC Nepal/Surya Nepal for the Simra area of south Nepal.
Worldwide, 1.6 billion people go to bed after blowing out a kerosene lamp—
this, at the beginning of the 21st century. We cannot accept this reality, given the
fact that simple, clean, and affordable lights can easily replace the kerosene lamp.
We must commit ourselves to change this state of affairs and apply the lessons we
have gathered through promoting the Solar Tuki. The relatively low capital cost of
the device allows for its mass dissemination, provided that certain support mech-
anisms are in place. Most important, we must mobilize every community and
instill in their vision for development an awareness of environmental conservation
and applying clean technology. A change in these attitudes, more than anything
else, will lead to real development among the Nepalis.

Timothy Prestero
Better by Design
How Empathy Can Lead to More Successful
Technologies and Services for the Poor
Discussion of Design Case Narratives:
Rickshaw Bank
Solar-Powered Tuki
FGN Pump
Professional training becomes a lens through which we see the world. You can
imagine a dentist who finds it impossible to concentrate on an opera because the
singer has bad teeth. The writer Annie Dillard imagined that the happiest people
are constantly surrounded by opportunities to apply their expertise—for example,
those who study rocks or clouds. Designers are a pretty happy bunch because
opportunities to improve the human condition through design are everywhere. It
becomes an obsession. For example, after 10,000 years of post-Ice Age develop-
ment as a tool-using species, I find it amazing that human beings are still creating
uncomfortable chairs (such as the succession of airplane seats where I wrote this
article).
My goal in this article is to discuss the accompanying case studies: the
Rickshaw Bank of Pradip Sarmah, the Solar Tuki of Anil Chitrakar and Babu Raj
Shrestha, and the FGN pump of Gustavo Gennuso. I look at them in the context
of design for developing countries, and from my perspective as the founder of
Design that Matters (DtM), a nonprofit design consultancy for social enterprise.
“Design” is a term used so broadly as to be almost meaningless. In this article, I will
Timothy Prestero is the founder and CEO of Design that Matters (DtM), a nonprofit
based in Cambridge, Massachusetts. DtM collaborates with leading social entrepre-
neurs and hundreds of volunteers to design new products and services for the poor in
developing countries. A former Peace Corps volunteer and MIT graduate, Tim has
worked in West Africa, Latin America, and Asia. He is a Martin Fellow at the MIT
Laboratory for Energy and the Environment, a Draper Richards Fellow, and was
named an Ashoka Affiliate in 2004. His awards include the 2007 Social Venture
Network Innovation Award and the 2009 World Technology Award.
© 2010 Timothy Prestero

Timothy Prestero
Figure 1. Product Development Processes.
discuss design in terms of a problem-solving methodology that uses empathy to

identify and contextualize needs, and then translates those needs into a set of spec-
ifications to guide the development of new products and services.
DESIGN AND INVENTION: TWO APPROACHES TO SOLVING PROBLEMS

Every problem-solving effort begins by defining a general problem and a general
approach to solving that problem. In the context of the developing world, the gen-
eral problem could be summarized as “One billion people need X,” where X could
be defined as access to clean water, electricity, education, and health care. One
example of a general problem-solving approach is the development of new tech-
nology. In my work, I see two distinct approaches to problem-solving with techni-
cal innovation: the invention approach and the design approach. Figure 1 summa-
rizes and compares the two.
In the invention-centric approach, the inventor begins by specifying the technolo-
gy that they think will solve the problem. The inventor then attempts to fit the
technology to the problem through an iterative series of design refinements.
Finally, having tweaked and changed the product into what the inventor hopes will
be a useful tool, they then go in search of a specific user group or market segment
for which the product is a match. This approach is also described as a technology
“push.”
It is not uncommon for product development efforts targeting the poor to
begin with the technology, for example by setting the goal of adapting light-emit-
ting diodes (LEDs) to rural lighting, or vapor-phase water purification to provid-
ing clean water in rural communities. With the technology approach in hand, the
tinkering and refinement process begins—often without the inventor ever having
visited the places where the final product is intended to be used.
Our experience and the history of international development suggest that
invention—specifying the technology before identifying the market—is a very
risky approach to product development. An analogy is the tailor who makes a clos-

Better by Design
et full of lime-green size 56 swallow-tail tuxedos. When customers with that pref-
erence walk in the door the tailor is going to make money—but what if they never
arrive?
To anyone surveying the landscape of new products and services, “survivor
bias”can create the impression that product development is simply a matter of
having a great idea.1 It is possible to look at the success of the Solar Tuki and con-
clude that there is a tremendous market for LED-based, solar-powered lanterns.
The reality is that there have been many solar lantern projects, even in Nepal, and
most have failed to achieve significant scale. Similarly, consider the many unsuc-
cessful attempts to scale technologies like the solar cooker and the improved wood-
burning stove.
Despite enormous budgets for R&D and marketing, most new products and
new technologies created for the commercial market in the industrialized world
fail to achieve scale.2 In poor countries, the statistics are even worse: we find very
few examples of successful appropriate technologies.
The design approach is an alternative to invention. The most basic difference
is that where invention often leads to a technology in search of a user (or a solu-
tion in search of someone who has that problem), design starts with the user and
then goes in search of the technology. In design, specifying the user involves con-
ducting direct and indirect research to define who the user is and what they
want—sometimes described as “consumer pull.” A combination of the user’s state-
ment of need and the constraints imposed by their environment creates the prod-
uct requirements, statements, and metrics that define the “victory conditions” for
product features and performance. Developing the product also involves design
iterations, but the direction of the refinements is dictated by the user require-
ments.
Tolstoy wrote that “happy families are all alike; every unhappy family is unhap-
py in its own way.”3 Successful products are all alike in that they represent a happy
marriage between product function and the user’s needs and circumstances.
Products that fail do so for a million different reasons.
A common failure of defining the technology before we have defined the user
is that the approach puts the burden of adaptation on the user. Who is to blame if
they refuse?
In the case of the Rickshaw Bank, the initial production run of the improved
rickshaw had a problem with the bicycle chain repeatedly falling off the cog. The
team could have satisfied themselves by blaming the problem on user behavior—
perhaps the rickshaw-pullers were riding over too many bumps and that was caus-
ing the rickshaw frame to flex and the chain to fall off. They could have argued that
the rickshaw pullers simply needed to adapt to the technology: ride more slowly,
take fewer passengers, or avoid bumps. Instead, the project succeeded because the
team listened to the user and adapted their design.
Another common failure is that many inventors attempt to create a “one-size-
fits-all” solution to a general global problem: a new product that will solve the
problem in any context. First, the “all-in-one” technology often requires that every

Timothy Prestero
single user pay for features they don’t need and will never use. Second, given that
context is so important, “one-size-fits-all” rarely works. In the case of the FGN
pump, based on their experience in Patagonia, the team assumed that a wooden
frame was a universal solution to the problem. In Patagonia, this was certainly
true—wood parts are easy to find and inexpensive. But when the team installed the
pump in La Puna, where wood is scarce and the local building material is made
from cactus, their assumptions did not hold.
Product development is a relatively straightforward process if the inventor is
the only customer. This helps to explain the success of the open source software
movement and the Linux operating system. Every volunteer programmer is also a
system user, so in a sense they are all simply solving their own problems. The slow
adoption of Linux outside of the developer community is in part a consequence of
non-programmers finding the system to be anything but intuitive.4
EMPATHY IN DESIGN,
OR WHY KIDS HATE GETTING CLOTHES FOR THEIR BIRTHDAY
The principal difference between the examples of design and invention described
above is the demand for empathy: the ability to imagine the world from someone
else’s perspective. If we want to make a child happy at their birthday party, the
approach may not be to give them what we think they need (a new sweater), but
rather what they think they want (a new toy).
The first component of empathy is the understanding that there are no “dumb
users,” only dumb products. For example, my cell phone, which was clearly devel-
oped by a bunch of engineers, contains dozens of amazing features that after two
years I have yet to figure out. Hearing this, the cell phone engineer might reply that
I am merely lazy—that all of the clever features buried in multiple sub-menus and
behind cryptic key combinations would be intuitive if only I would bother to read
and memorize the 45-page product manual. In great design, the burden is on the
innovator, not the user, to justify every quality and feature of a product.
The second component of empathy in design is the appreciation of context.
Again, an engineer might complain when a user shorts out his cell phone in the
rain, arguing that the device was only intended for use in dry weather (however
absurd that claim). The qualities that define a product or service become either
virtues or liabilities as a function of context. Many products are developed with
embedded cultural assumptions that prove to be crippling liabilities in the context
of a developing country. Examples include general assumptions about the avail-
ability of spare parts and trained maintenance, or very specific assumptions about
a user’s familiarity with the standard iconography of consumer electronics.
The Rickshaw Bank case presents a series of excellent examples of applied
design. Although a veterinarian, Pradip Sarmah was not moved by the plight of
rickshaw-pullers to offer them free veterinarian services. His approach was dictat-
ed by empathy rather than the resources he had at hand. The bank’s business
model is based on the insight that the rickshaw-puller’s lack of access to capital

Better by Design
kept him from owning the tools of his trade. Several of the bank’s practices—the
daily loan payments that match the puller’s cash flow, the provision of a uniform
to increase dignity and brand identification, and the identity card that allows bank
customers to secure gas connections to their homes—are based on direct observa-
tions of, and empathy for, the rickshaw-puller’s point of view.
The Rickshaw Bank also illustrates how good design includes non-technolog-
ical considerations, such as matching loan payments to cash flow. The same is true
for the Solar Tuki. The Solar Tuki may be technologically superior to kerosene
lanterns, but Chitrakar and Shrestha understood that the kerosene lantern was a
better match for consumer budgets. A key innovation was the design of a financial
product: a loan for the Solar Tuki whose payment schedule and terms were rough-
ly equivalent to the intended user’s daily expense of kerosene for home lighting. By
including a five-year warranty for after-sales service on the two-year loan, they
could effectively market the Solar Tuki as offering three years of “free” lighting.
DESIGN CAN’T SAVE THE WORLD (ON ITS OWN)

Like financial planning and weight loss, the principles of good design are much
easier to describe than to follow. Furthermore, having illustrated the virtues of the
design approach, I must now report the bad news: slavish attention to the details
of user and context does not guarantee success. Even in the industrialized market,
most new products fail. What makes good design so difficult?
In reality, a bewildering number of variables affect product success. The cost of
developing an understanding of user behavior and context follows the 80/20 rule:5
although it is possible to uncover critical insights very early on in the research
process, full knowledge of the constraints imposed by the user, setting, product
supply chain, and product lifecycle would require an infinite and therefore impos-
sible investment. From the perspective of design research, the hard part of the
80/20 rule is that we can’t control the 20 percent of the insights that we miss. In the
worst case, these missing insights, a combination of what Donald Rumsfeld called
the “known unknowns” and “unknown unknowns,” are the most important ones.
In my experience, the following four user and context constraints have proven
particularly difficult to characterize.
Alignment of Incentives
One of DtM’s most important and painful lessons is that needs do not necessarily
equal markets. We have learned the hard way that altruism is an excellent motiva-
tion for someone to do something once. What allows a program to scale is its abil-
ity to repeat success over and over again; if that is to happen, all the stakeholders
must be motivated as much by self-interest as by the desire to do good. It must be
clear from the beginning who will make money selling and/or maintaining the
intervention, and how everyone else involved in development and implementation
will benefit from the product’s success.

Timothy Prestero
Figure 2. Stakeholders in Product Development and Implementation.
Furthermore, user enthusiasm for a great design does not necessarily guaran-
tee that it will be possible to solve the problems of product financing, manufacture,
and distribution. As Michael Free at the global health nonprofit PATH says, it is
necessary to identify, as early as possible, who will “choose, use, and pay the dues.”
Figure 2 shows all of the stakeholders involved in the development, distribu-
tion, and use of a medical device targeting infant and maternal health. Notice that
the designer is the stakeholder in the top-left corner. Given the huge scope of prod-
uct development, manufacture, and implementation, design may be the “least
hard” part of the process. The challenge is that any one stakeholder in the process
can say no and effectively kill the project. In other words, every stakeholder is nec-
essary; no single stakeholder is sufficient.
In the Rickshaw Bank case, after many unsuccessful attempts to raise project
financing through bank loans, the team hit on the innovation of raising capital by
selling advertising space on the backs of their improved rickshaws. Similarly, the
bank realized that the individual rickshaw puller’s financial success depended on
their ability to attract more business, which led to key innovations like the rick-
shaw puller’s uniform and the redesigned rickshaw’s improved ergonomics, safety,
and aesthetics.
The Solar Tuki program faced stiff competition from the existing supply chain

Better by Design
for kerosene lanterns and fuel. Rather than competing with kerosene, the team
convinced existing kerosene vendors to sell the Solar Tuki as well. This gave ven-
dors a home lighting product to sell during the frequent interruptions of the coun-
try’s kerosene supply. Because the Solar Tuki diversified and strengthened their
business, kerosene vendors—potentially their biggest competitors—became their
marketing ally.
Another excellent example of design elements informed by stakeholder context
is the way Solar Tuki is distributed to students through the program developed by
Ashoka Fellow Mahabir Pun. The team changed the distribution pattern so that
each student received a light of their own, but the school owned the collective
solar-powered charging station. This created a natural alignment of incentives
between the goal of Solar Tuki, to distribute lights, and the goal of the school, to
increase student attendance. The key was that students had to return to school
every day to charge their lights for the evening.
In the FGN case, Gennuso describes the challenge of partnering with NGOs to
distribute his products in regions far from the FGN production centers. Although
the partnership had many advantages on paper, providing water was not central to
the mission of these partner NGOs. This led to disappointing performance in
terms of product marketing, sales, and distribution.
Cultural Expectations: We See a Problem, but Do They?

A product or intervention intended to improve a user’s quality of life will not nec-
essarily change a culture’s view of what’s “normal.” For example, people in poor
countries have adapted in many ways to high infant mortality rates: hospital staff
in rural Indonesia have developed low expectations for the survival rates of at-risk
newborns, and many parents do not name their infants until their first birthday. It
is not that doctors and parents in Indonesia care less about newborns, but rather
that within the constraints of the local context they perceive few opportunities to
improve infant survival rates. In the FGN case, Gennuso describes the risk of
focusing on the extraction of clean drinking water for the home when their cus-
tomers are more concerned about irrigating their crops.
Sometimes “No Change” Looks Pretty Good

A common misconception in appropriate technology development is that any
intervention will automatically be an improvement on existing conditions. In
some cases, products intended to generate better health outcomes in clinical care
require already overworked hospital staff to take on more responsibilities without
any improvement in resources or rewards. Similarly, elaborate water-purification
processes can be a hassle when it’s hot and we’re thirsty—especially if we don’t
have a clear understanding of the connection between dirty water and disease. In
the case of the FGN pump, compelling technical arguments favored a metal frame
for the device, but conservative user expectations forced FGN to use a wooden
frame.

Timothy Prestero
The Challenge of Understanding Real Costs: What to do When “Free” Isn’t
There is an important distinction between a product’s “cost to buy” and “cost to
own.” If I won the Formula One Ferrari in the Changi Airport raffle (free car!), I’d
probably have one absolutely wonderful day tearing around the streets of
Singapore—but then, when it came time to pay the thousands of dollars necessary
to refill the gas tank and replace the worn tires, joy would turn to sadness and the
car would go up on blocks. To extend the metaphor, after the raffle committee
delivered the Ferrari to my house, I might not even be able to figure out how to
start the motor, let alone drive it safely. International development efforts are full
of free “Ferrari giveaways.”
Technology donations are rarely accompanied by grants for ongoing product
maintenance and effective user training. As a result, after the ribbon-cutting cere-
mony, the donor, in Schopenhauer’s words, “hastens to let the curtain fall.”6 All too
often, organizations misinterpret their delivery of free equipment as the finish line,
rather than the starting point, of an aid program.
Meulaboh, a city of 120,000 in West Aceh, Indonesia, was among the areas
hardest hit by the 2004 Indian Ocean tsunami. By November 2005, the local refer-
ral hospital had received eight high-tech infant incubators, donated by various
international donors. By the time I visited this hospital in late 2008, all eight incu-
bators were broken—primarily for want of simple maintenance and inexpensive
spare parts, and in part as a consequence of Meulaboh’s high humidity, frequent
power surges, and limited support staff. During the same visit, I found in the hos-
pital maintenance office a brand new, unopened incubator diagnostic and calibra-
tion tool. The staff explained that they had never received training on how to use
the repair device, nor could they read the English-language manual. This situation
is common—according to a study conducted by the Engineering World Health
group at Duke University, up to 98 percent of donated medical equipment in
developing countries is broken within five years.7
Lack of maintenance and training is not the only high cost of “free.” The devel-
opers of Solar Tuki and the FGN pump both found that competition with donat-
ed equipment led to market distortions. “Free” products created unrealistic expec-
tations for product pricing and undermined incentives for change. In many cases,
customers in a region receiving donations have no interest in credit schemes, pre-
ferring instead to wait for the next round of handouts.
DESIGN LESSONS LEARNED

At DtM we have learned that in product design, unlike academia, there is no such
thing as partial credit. To paraphrase Paul Hudnut, social entrepreneurship isn’t
Olympic gymnastics—there are no points for difficulty.8 Regardless of whether the
project we’ve chosen is extremely challenging, like addressing the 1.8 million
annual preventable newborn deaths from hypothermia, or relatively “easy,” like
maintaining the rural cold chain for tuberculosis drugs in a single country—in the
end, the social impact is the only thing that matters. A good designer is an existen-

Better by Design
Ashoka fellow Souleymane Sarr (L), the author, DtM volunteer Martin Tolliver and
literacy teacher Amadou Traore during early user testing with the Kinkajou Microfilm
Projector. The beta prototype is in pieces on the table.
Photo by Design that Matters.
tialist: either the design is a match for the user need and people use it, or they don’t,
and the design effort has had no positive effect.
The good news is that our experience with the 80/20 rule tells us that even a
relatively small up-front investment in researching user needs and product context
can pay enormous dividends in the development of appropriate product require-
ments and the alignment of stakeholder incentives. Below are some lessons learned
from the three cases and from DtM’s work.
Marry in Haste, Repent at Your Leisure

“Marrying” the wrong set of assumptions early in the product design process can
lead to expensive course-corrections at later stages. Assumptions are risky and
don’t travel well between countries and cultures. New data has a tendency to
demolish old assumptions, but only if we’re paying attention. We have learned to
ignore our fear of asking dumb questions in the pursuit of a solid understanding
of user needs.
In 2004, we were in the prototyping stage of developing the Kinkajou
Microfilm Projector, a portable tool for nighttime adult literacy education in rural
Africa. After we received the client’s approval of the basic design, our engineering

Timothy Prestero
DtM Fellow Matt Eckelman interviewing NICU nurses at the Kanti Children’s
Hospital, Kathmandu. Having already conducted research at American hospitals, our
goal here was to compare standards and practices in the context of extreme financial
constraints..
team produced a concept for a beautiful, rounded projector housing that used an
aluminum extrusion. At a design review, MIT Professor Woodie Flowers was
unimpressed. “Why don’t you just put the Kinkajou in a lunch box?” he asked.
Imagining life from the perspective of a poorly-equipped teacher in rural Africa,
he assumed that aesthetic appeal was far less important than product cost—and
subsequent user testing proved him right. The final design is very much like a
lunchbox, at a significant cost savings in production.
Alternatives to the Direct Approach

The process of collecting user feedback more resembles psychotherapy than
administering a multiple-choice exam. We have learned that the direct approach,
asking specific questions based on a survey form, is rarely reliable. In response, we
have developed techniques to more fully understand the user and the context.
For example, in our observations and interviews, we have learned to “trust but
verify.” We listen carefully to what people say and watch very carefully what they
do. We ask the same question many times, in different ways and in different con-
texts, and with different people at different levels within the organization. We look
for variance, disagreement, inconsistency. For example, during early user inter-

Better by Design
views on our infant incubator project, Nepali nurses in a Kathmandu NICU

claimed that they weighed the newborns every 12 to 24 hours, exactly according to
protocol. When we asked one nurse to demonstrate the weighing procedure with
a doll, she struggled for a couple minutes with an apparatus that resembled a gro-
cery scale combined with a baby hammock before admitting, “Actually, this scale is
a hassle and we never use it.” Until this conversation, we never considered adding
a scale to the mattress of the incubator.
We have also established some general rules in the process of conducting stake-
holder interviews:
• Ask open-ended questions, nothing that could be answered with a yes or no.
For example, “Tell me what you think about X.” Rather than interrupting to
clarify a question, we will wait and let the interview subject finish. Often peo-
ple who veer off-topic are answering the question they wish we asked—a great
source of unexpected insights.
• People in general are polite, and no one wants to insult us or our product. We
try to frame interview questions so that there are no obvious “right” answers.
• Rather than asking directly if a user is having a good experience, we prefer to
take an indirect approach: “Could your friends figure this out?” The individual
user is, of course, a genius, but most are willing to detail the failings of people
in general: “I wouldn’t have any trouble using this, but the other nurses here
would never figure it out.”
• Create opportunities for serendipity. We’ve used questions like, “What’s the
coolest thing in this hospital?” or “What did I forget to ask?” The answers may
provide unexpected insights into local values and constraints.
These are only a few methods for generating insights into the user’s needs and con-
text. The commercial design firm IDEO has developed a Human-Centered Design
Toolkit, available on-line,which provides a framework for applying design specifi-
cally to the needs of social enterprise.9
The Customer Isn’t Always Right

When asked directly what they want, users will typically suggest incremental
improvements to what they already have: more of this, less of that. This kind of
evolutionary approach to the development of new products and services often rep-
resents a failure of imagination.
We have found that in order to create revolutionary product ideas, we have to
carefully interpret the user feedback and identify the underlying needs. If a user
says they wish a button were red, they could be saying that they wish it was more
visible, or that the current color is somehow offensive or inappropriate. In initial
interviews for our Kinkajou Microfilm Projector, our client focused on the limita-
tions of their program financing. Although fundraising is not a DtM service, in
observing the nighttime adult literacy classrooms in rural Mali we realized that
there were significant opportunities to improve the effectiveness of the client’s use
of funds. The two most significant obstacles to education in the rural classrooms

Timothy Prestero
DtM Fellow Tom Weis user-testing our infant incubator prototype with Childrens
Hospital NICU nurses Maria Davila and Lori Boa. Seeing them accidentally launch
a baby doll out of the bassinet and onto the floor gave us the idea to incorporate an
infant seatbelt for hand-transport.
were access to books and lighting. Limiting ourselves to only these two constraints
during brainstorming, we came up with the idea for the portable, battery-powered
microfilm projector, a design that overcame the problems of a shortage of books
and a lack of classroom lighting in a single product.
Avoiding “Mission: Impossible”

The best products are designed to do one or two things very well, rather than many
things poorly. Given that the cost of maximization—finding the optimal compro-
mise between the various requirements—is high in both time and capital, we are
typically forced to employ “satisficing,” an approach that attempts to identify the
best fit in the least time.10
At the same time, in early user interviews, it is easy to generate a list of impos-
sible requirements: works perfectly, costs nothing, and lasts forever. Attempting to
satisfy every user demand easily leads to “feature creep,” and it becomes exponen-
tially more difficult to optimize the product. This is the real reason for my uncom-
fortable airplane seat: the airline demands a seat that weighs as little as possible and
allows them to pack many passengers into a small space, while the designer aims

Better by Design
to provide a comfortable chair. All three of the cases here serve as good examples
of first doing one thing well—providing pumps or solar lights or credit to rickshaw
peddlers—before adding complexity.
Failure Is, in Fact, an Option

At DtM, our goal in every product development process is the contrarian mantra:
“Fail as fast as possible.” Product development is an expensive process and fraught
with risk. It is critical to get products in front of users at the earliest possible stages
of design. As Diego Rodriguez wrote, “Prototype as if you are right. Listen as if you
are wrong.”11 Frequent user course corrections increase the efficiency of the prod-
uct optimization process.
I have already mentioned the Rickshaw Bank’s problem with the falling bicycle
chain. The solution to the problem eluded the bank staff and their partners at IIT
Guwahati, until a perceptive rickshaw puller suggested that they replace a section
of the rickshaw chassis with a solid iron bar to keep the frame from bending.
Fortunately, the bank could quickly implement this change on the first 100 rick-
shaws in its pilot program. But imagine their difficulties if they had waited to start
user testing until they had built thousands of rickshaws using the flawed design.
DtM’s strength as a product design company is not that we have amazing ideas
for products. In fact, most of our ideas are terrible. Our strength comes through
our collaboration with hundreds of volunteers who provide us with lots and lots
of ideas, and the efficient process we have created for vetting our ideas with users
and experts to find and develop the winners.
Doing good is no reason to run a bad business.

We have learned to be wary of any project assumptions that depend on the “spe-
cial case” of social benefit. Product design is an expensive and risky process, and
should be considered an intervention of last resort. In the end, the most important
question to ask in our due diligence research on new projects is not “Can we do it?”
but “Should we?”
One common example of special-case thinking relates to donor-subsidized
research and development. The social sector lacks a universal performance metric
to serve as the equivalent to profit in the commercial sector. Many social enterprise
programs are small, and it is possible that the most cost-effective solution to a spe-
cific problem involves the use of existing, off-the-shelf technologies, even if they
aren’t perfectly suited to the context. In evaluating a recent program to develop
vaccine coolers for a cold chain application in Cambodia, we realized that we could
buy each of the 40 clinics a thermo-electric cooler from Wal-Mart, along with a
Chinese gas-powered electric generator and a supply of fuel for less than it would
cost us to design a prototype cooler that was perfectly suited to the client’s needs,
context, and budget.
Another example is the choice of production strategy. As in all design efforts,
the trade-off is typically between doing one thing well and a few things poorly. In

Timothy Prestero
other words, local production is often assumed to be the best manufacturing strat-
egy for appropriate technologies, in that it creates local jobs—but this approach
also introduces significant constraints on product cost and performance, and ulti-
mately limits the potential social impact. Had local production or user assembly
been required initially, I doubt that cell phones would have ever become a global
technology. The challenge for each product is to identify the appropriate point on
the continuum between the high efficiency of a capital-intensive mass production
process and the ultimate local production methodology of having every user build
for themselves what Gennuso, thinking about pumps, very appropriately describes
as a prototype.
Conclusion
An invention approach to problem-solving is, and will remain, popular among
those developing new technologies for the poor. The challenge is that good design
is neither necessary nor sufficient for a product to succeed. The oft-cited example
is the enormous difference in usability between the Microsoft and Apple
Macintosh operating systems of the 1990s. Apple’s superior user interface design
was not enough to guarantee commercial success in the face of competition from
Microsoft’s marketing savvy and existing user base.
Saying that we don’t need great design insights to launch a successful product
or service is similar to saying that we don’t need great market insights to make
money trading on the stock market. Great success requires luck, and in advocating
for the design methodology, I side with those like the authors of the three cases,
who clearly define luck as “opportunity meets preparation.”
Neil Postman wrote that the early success of “Sesame Street,” which is now a
global phenomenon, was based on children’s familiarity with television commer-
cials, “which they intuitively knew were the most carefully crafted entertainments
on television.”12 The same observation applies to product design. We live in a world
where luxury goods and consumer electronics represent some of the most careful-
ly crafted products available. It is exciting to have the opportunity to address real
human needs as opposed to simply creating consumer desire, and to take the same
skills and insights that make a product like the iPod so irresistible and apply them
to the creation of new and useful tools for the poor.
Acknowledgements
Thanks to Ben Spiess, Elizabeth Johansen, Elizabeth Bruce, and the editors for
shaping up a crummy first draft.
1. Survivor bias: the tendency to draw conclusions from a sample set that includes only successes.
Although the oldest woman in the world reportedly eats sweets and drinks a glass of sherry every
day, it does not follow that those same dietary habits will lead to the same results for everyone.
2. “Among history-making innovations, those based on new knowledge—whether scientific, techni-
cal, or social—rank high. . . . Knowledge-based innovations differ from all others in the time they
take, in their casualty rates, and in their predictability, as well as in the challenges they pose to

Better by Design
entrepreneurs. Like most superstars, they can be temperamental, capricious, and hard to direct.
They have, for instance, the longest lead time of all innovations.”from Drucker, P., “The Discipline
of Innovation,” Peter Drucker on the Profession of Management, Boston, MA: Harvard Business
School Publishing, 2003. 60.
3. Tolstoy, L., Anna Karenina, Constance Garnett trans., New York: P.F. Collier & Son, 1917. 1.
4. A popular joke in the early days of the open source movement was, “Why do in ten minutes with
Windows what you can do in four hours with Linux?” Ubuntu Linux’s success outside the devel-
oper community has much to do with their focus on user experience.
5. Also called the Pareto principle, this a rule of thumb that states that, with a given initiative, it is
possible to achieve 80% of the benefits with the first 20% of the investment, and, conversely, that
realizing the last 20% of the benefits requires the remaining 80% of the effort.
6. Schopenhauer, A., The World as Will and Idea, R.B. Haldane trans., Boston: Ticknor and Co., 1888,
1:413.
7. Malkin, R.A, “Technologies for clinically relevant physiological measurements in developing
countries.” Physiological Measurement 28 (2007): R57-R63.
8. Hudnut, P., “Radical, Transformative, Unreasonable, Extreme, Leap Frog, Super-Bad Social
Entrepreneur.” Next Billion blog, 04 June 2008.
<http://www.nextbillion.net/blog/2008/06/04/guest-post-radical-transformative-unreasonable-
extreme-leap-frog>.
9. <http:// www.ideo.com/work/item/human-centered-design-toolkit/>.
10. A portmanteau of “satisfy” and “suffice” coined by economist and psychologist Herbert Simon.
See also Bordley R. and Kirkwood C., “Multiattribute Preference Analysis with Multiattribute
Performance Targets.” Operations Research 52 (6), (2004): 823–835.
11. Garcia, D., “Prototype as if you are right, listen as if you are wrong.” Metacool blog, April 14,
2009. <http://metacool.typepad.com/metacool/2009/04/4-prototype-as-if-you-are-right-listen-
as-if-you-are-wrong.html>.
12. Postman, N., Amusing Ourselves to Death, New York: Penguin, 1985. 142.

Christopher Bull, Barrett Hazeltine, and Nicholas Stoker
A Difficult Balancing Act

Employment, Technology, Context, and Change

ETV Pumps
Solar Tuki
Rickshaw Bank
We applaud the efforts of ETV, Tuki, and the Rickshaw Bank (RB). Each, in its
own way, provides vital products or services to the people. Without their work, the
relevant users would certainly be less well off. ETV offers a reliable way to get safe
water. Tuki creates jobs in rural areas and sells lamps that meet owners’ needs in a
sustainable way. RB began by giving marginalized rickshaw pullers access to own-
ership of their rickshaws and went on to create a variety of social services. These
organizations and others like them are making a difference. We are particularly
impressed by the cogent arguments about technology choice in the beginning of
the ETV paper. We admire the positive values and motives of the three entrepre-
neurial organizations.
Yet we struggle with whether the efforts—and in Tuki’s case, the money—are
being used in the most effective and efficient way. What problems do we see? We
will explore five different aspects of the ventures: project scope, design process,
financial model, distribution strategy, and scaling and implications for future
Christopher Bull, Senior Lecturer and Senior Engineer at Brown University, pursues
teaching and research in renewable energy, appropriate technology, social entrepre-
neurship, and the pedagogy of classroom-community partnerships.
Barrett Hazeltine is Professor of Engineering Emeritus at Brown University, but con-
tinues to teach full time. He has worked in six African countries and is co-author of a
textbook and a field guide on appropriate technology.
Nicholas Stoker is a recent graduate of Brown University. His honors thesis,
Appropriate Technology in Practice: Understanding Project Failure and a Model
for Proper Implementation, examines why appropriate technology development
projects fail and how they can be more successful.
© 2010 Christopher Bull, Barrett Hazeltine, and Nicholas Stoker

development.
We wonder further if, in the cases of the Solar Tuki and ETV, the scope of what
the projects hope to accomplish has been clearly defined and limited to an achiev-
able level. In many appropriate technology development projects, leaders set out
both to produce an affordable, useful product and to create good, sustainable
employment opportunities in the community. The Solar Tuki demonstrates both
of these goals: it aims to alleviate the energy/lighting problems that many Nepalis
face, and it is fabricated locally, creating new jobs in manufacturing, as well as in
service, repair, marketing, distribution, etc. These goals are laudable but a project
model trying to meet both goals faces significant obstacles.
Appropriate technology products are generally targeted at bottom-of-the-
pyramid consumers with little, if any, disposable income. It can be very difficult to
design a useful product that is cheap enough for impoverished consumers to pur-
chase but still creates a large enough profit margin to provide the equally impov-
erished producers with a living wage. Nearly all development organizations have
limited time, resources, and expertise. In order to succeed, most project leaders
have to make a trade-off: is their primary mission to create local jobs, thus justify-
ing the use of more costly, labor-intensive production and distribution methods?
Or is it to get as many pieces of technology into the community as possible, even
if that means centralized production abroad? In other words, is the Solar Tuki a
means for creating workplaces, or is it a solution to rural Nepal’s illumination
problem? Is ETV’s primary purpose helping “young people at social risk” or is it
distributing water pumps? Determining, even deciding, project priorities at the
outset is vital to strategic decision-making and can be essential to a project’s long-
term success. Success, in fact, cannot be determined without prior knowledge of
alternatives.
DESIGN PROCESS
It is crucial that the end user be actively involved in the design of any development
project. For technology-based ventures, this means involvement in both the design
of the final product and the project organization. Too often, well-meaning engi-
neers and development professionals come at a problem with preconceived
notions about how to solve to it. For example, RB’s light weight hollow-tube rick-
shaw chassis was evidently an innovative design, but proved non-functional on the
streets. Significantly, it was the rickshaw pullers—not the IIT engineers or the RB
employees—who were able to identify the flaw in the design.
Similarly, solutions that are technically viable may be culturally inappropriate.
ETV’s choice of a rope pump, a technology long known in the region, may reflect
a desire for user acceptance. Working closely with local clients is often the only way
for project leaders to recognize and design for these cultural complexities.
Involving end-users has the added benefits of building trust with the community
and promoting the adoption of a new device. Employing end-users may create
long-term jobs. Of the three cases, we only know details about how the RB rick-

shaw project was implemented. The implementation did involve end-users and did
succeed. As the ETV paper points out, successful implementation depends on
many factors besides technology. We know of no better way for designers to learn
about these factors than by involving end-users.
PROJECT SCOPE
When we consider the three case studies, we are unsure of the extent to which the
users were involved in the design process. Did Tuki work with village groups to
come up with appropriate ways to assemble the solar lamps, or even to determine
whether such lamps would be worthwhile? Did they offer rural people alternative
designs and heed the advice they received? We know rickshaw pullers gave signifi-
cant advice after the first RB model broke, but we could not tell from the RB arti-
cle how or to what extent they interacted with the IIT engineers in the early stages
of the design—often the most crucial time for determining the scope of the final
product. The ETV article does not describe their design process: Is the rope pump
a standard and traditional design in parts of Argentina but not known in this par-
ticular village? There is a delicate balance in the design process, between the
expertise of an external designer and the needs of users. This balance is even more
delicate when the designers and the users are separated geographically or cultural-
ly.
Project leaders have another important question to ask themselves: What is
being promoted? Is it a technology that appears relatively benign but may have
adverse long-term consequences, such as discarded fluorescent tubes in Nepal? Or
is it a technology that traps human beings in an obsolete technology, such as rick-
shaw pulling? (One could also argue that human-powered rickshaws are environ-
mentally benign, easy to maintain, and create employment, and that they may have
been phased out in places because of a prejudice toward “modern” technology.)
Project leaders risk promoting a particular technology rather than solving a prob-
lem: “If the only tool you have is a hammer, everything looks like a nail.” We see a
hint of this approach in the ETV rope pump story: in order to make their pump
work in La Puna, ETV workers had to travel “hundreds of kilometers” away to find
appropriate wood for the pump. Later on, the ETV project leaders explain that it
is difficult to partner with local organizations because “few of them are directly
involved in solving water problems.” Perhaps this suggests that retrieving water is
less of a concern for the local population than ETV believes?
FINANCIAL MODEL
Without a sustainable financial plan, it is difficult for an organization to have a
long-term influence. RB has a viable financial model and we will not comment on
it further, but we do have several concerns about the Tuki financial model. First,
the motivation for a customer considering buying a solar lamp is based on the dif-
ference between the cost of conventional fuel (kerosene) and the monthly install-
ment for the Tuki. The price of kerosene is tied to both the price of oil and distri-

bution cost. Either cost could drop, if, for example, supplies in the market
increased or the roads that facilitate distribution were improved, and that drop
could make the product unattractive to the customer.
Second, a business model based on importing components and assembling
them locally will require a good deal of working capital. We presume the investor
supplying the capital funds will want her money back in a reasonable time, which
will affect the cash flow. A capital investment in tools and assembly space will also
have to be made, although this will probably be less than that required for work-
in-progress inventory. It would seem prudent when working in emerging
economies to try to minimize capital expenditures. A third issue is the trade-off
between creating employment and adding cost to the consumer, as we mentioned
above; this is the same issue at the heart of the “Buy American” exhortations. It
sounds like 36 percent of the cost to the consumer is allocated to manufacturing
in the local area. Could the price be materially reduced if production was central-
ized, even by importing assembled lamps? How important is it to the organization
to create local manufacturing jobs? As decisions are made on how to allocate costs
among different stakeholders, the trade-offs become obvious.
We have different concerns about the ETV financial model, perhaps because
we do not understand it in detail. Is it selling rope pumps produced by wayward
urban boys for the benefit of the rural poor? Selling pumps to the poor has a low
potential to pay the producers a living wage, and also pay for materials and sup-
port the organization.
DISTRIBUTION STRATEGY
Making a new product available to customers is often the most difficult aspect of
technology innovation—a concern we have about ETV rope pumps. For Tuki, per-
haps its biggest contribution will simply be having lamps available for purchase in
villages; distribution may provide the needed competitive advantage if the quality
of the Chinese imports improves or if the manufacturer adds a five-year warranty.
At the same time, we are not sure that the current kerosene vendors can be mobi-
lized to sell solar lamps. Proper training may be difficult, but it is important to pay
attention to those who will actually be dealing with customers. We applaud RB for
not only distributing rickshaws conveniently but also bringing other social servic-
es—health care and microfinance—directly to users. Once again we see a trade-off:
between giving attention to the actual device and to other forms of support,
whether or not they are directly tied to the product. Much of the support RB offers
is only loosely related to rickshaws.
SCALING
Scaling is the capacity for an organization to grow efficiently. RB can scale by
bringing to market the various carts described at the end of the article. If Tuki
establishes a distribution network, it can add other products to its line, perhaps
other devices powered by the solar panels. For ETV it seems that scaling simply

means finding a more effective way to distribute rope pumps.

Scaling-up brings new implications for development. Does the project lead to
further improvements, beyond those created by the device itself? RB seems to be
making this happen, with health care and microfinance. Another direction for RB
might be to start employing some of the pullers as fabricators (“employ,” not
“train”). That approach would address the issue of a possibly shrinking market as
scooters, auto rickshaws, and now the Tata Nano take over. Can the people who sell
and service Tuki lamps leverage their new skills and cash into other businesses?
Whatever the intervention, it should improve people’s livelihoods.
A major concern as service organizations grow is mission creep: the tendency
for organizations to lose sight of their original mission as their projects grow and
develop. Mission creep can occur in appropriate technology projects when project
leaders lose sight of their stakeholders and focus on improving the technology
rather than people’s lives. It is an easy trap to fall into—funders are enamored of
recent technological developments, writers glamorize and report on exciting new
products, and end-users tend to prefer what is new and glitzy. But leaders of organ-
izations must take care to ensure that the adoption of advanced technology also
advances the project mission.
Rickshaw Bank’s Soleckshaw is an instructive example: Is the organization
being drawn into a technology (the solar piece) that will have only marginal ben-
efits to the pullers? Who benefits from a solar rickshaw? Who bears the cost?
The Soleckshaw will have a much higher cost and the benefit to the user, from an
engineering perspective, is negligible: it will take more energy to move the weight
added by the panel, motor and batteries than the vehicle-mounted collector will be
able to capture. Furthermore, the article seems to suggest that there is no shortage
of people willing to pull rickshaws in India. So, if the benefits of the Soleckshaw
appear to be marginal, why would an organization like RB or IIT invest time and
capacity in developing such a technology? Perhaps because solar energy appeals to
technologists—the colleagues at the engineering school. It also appeals to funders
who appreciate pitches about renewable energy, green jobs, the triple bottom line,
etc. But it does not benefit the client. The Tuki article does not detail the features
of the Tuki solar lamp, but we hope that they are all genuinely needed by the end-
users.
FINAL WORDS
These three projects approach the problem of improving people’s lives in different
ways. Tuki focuses on distributing an existing technology. RB focuses on a new
financial model, albeit with a significant technological contribution, and ETV on
a philosophy for development. Tuki asks how to make the technology available,
and RB asks how to make ownership possible. ETV asks how we can leverage our
assets and network to build user capacity. All identify dimensions in which appro-
priate technology and development projects can fail, and each, in its own way, tries
to overcome these potential failures. Some themes reoccur in each approach.

One theme is the imperative to engage the end user from the beginning and to
recognize that the outsider has an incomplete knowledge of the context. From
product design to marketing channels to distribution mechanisms, the client must
be consulted every step of the way. Further, if the goal is to provide a technology,
it must be one that users can adapt to fit their particular needs. The technology
must be designed with a recognition of the user’s capacity to make changes to it.
Project leaders also cannot be wedded to one solution: as the understanding of the
problem evolves, so must the project.
Another theme is development of the organization. How can an organization
grow without losing its sense of mission? How can it adapt to a changing set of
needs and resources? For example, can the RB model be extended to motorized
rickshaws? Of course the financial constraints—initial cost and available capi-
tal—would be significant, but the real issue is how rickshaw pullers would be
affected. A related problem is multiple missions: is ETV primarily a distributor of
products, an employer of marginalized youth, or something else? Their expressed
concern about their partners’ focus on things other than water is relevant here. The
history of RB shows, however, that an organization can accomplish much good by
enlarging the strategy for accomplishing its mission.
These articles were, at once, inspiring, humbling, and thought-provoking.

Greg Van Kirk
The MicroConsignment Model

Bridging the “Last Mile” of Access to
Products and Services for the Rural Poor
Until recently, Carolina Amesquita, the principal at La Escuela Ramona Jil primary
school in Chimaltenango, Guatemala, lamented daily that her students were drink-
ing contaminated water directly from the tap, often contracting gastrointestinal ill-
nesses that kept them out of school. Others in the community were suffering too.
Juana Ramirez, an expert weaver in the village of San Mateo, could no longer see
well enough to sort her threads by color. Her productivity had plummeted, further
stressing her already struggling family. While preparing meals over an open-pit fire
in her home, as Guatemalan women have done for generations, Alva Rios was
inhaling harmful smoke for hours each day. Julia Garcia was spending more and
more of her family income on electricity bills, while Benito Ramirez had no elec-
tricity in his home and at night had to study by candlelight.
These and similar problems confronting thousands of rural Guatemalans have
now been solved through the hard work of two Guatemalan women. Yoly Acajabon
and Clara Luz de Montezuma, local homemakers in their mid-40s, started their
own enterprises in 2004 with no entrepreneurial experience or start-up capital.
Working within the MicroConsignment Model (MCM), these extraordinary
women are providing low-income villagers with essential products and services
that help improve their health, nutrition, and economic situations—and they are
earning incomes for their own families while doing so.
La Escuela Ramona now owns a water-purification device. Juana Ramirez got
a free eye exam and bought low-cost reading glasses. Alva Rios now cooks on a
fuel-efficient stove with a chimney. Julia Garcia has installed energy-efficient light
Greg Van Kirk, an Ashoka Lemelson Fellow, is the Co-Founder and Executive Director
of Community Enterprise Solutions and the Co-Founder and President of Social
Entrepreneur Corps. He is a former investment banker and Guatemala Peace Corps
volunteer. He lives in New York City, where he also dedicates time as an “Entrepreneur
in Residence”at Columbia University.
© 2010 Greg Van Kirk

Greg Van Kirk
Shifting Work Paradigm. Soluciones Comunitarias MCM Entrepreneur Maria

Vail administering an eye exam during a village health campaign.
While the hourly wage for most Guatemalan men is 50 cents U.S., these women
(who typically earn less in Guatemala) earn an average of $1.50 to $2 per hour.
Working within the MCM allows women to work part-time to boost the family
income while continuing to attend to their household responsibilities.
bulbs in her home, and Benito Ramirez owns a solar panel and LED light that
brightens an entire room.
By providing access to needed but previously unavailable products, Yoly and
Clara are “bridging the last mile” in the supply chain of products needed by the
rural poor in an appropriate and sustainable way. In the beginning they simply
sold reading glasses, but over time their “basket of solutions” has become a grow-
ing enterprise. Known in our system as “Community Advisors,” these two women
travel on buses to villages that often lack even a small tienda (store), let alone pro-
fessional services accompanied by life-changing products. They work with local
mayors and community leaders first to market to villagers’ needs, and then to offer
products and services that will help meet them. These women are seen not as sales-
people but as problem-solvers because what they offer has never before been avail-
able to these villagers, except in sporadic donations. Those who benefit often say
“Gracias a Dios” (thank God) when Yoly and Clara find solutions to their needs.
Today Yoly and Clara are not only MCM entrepreneurs; they have also become
regional coordinators in charge of training and supporting 10 other women,

including other new regional coordinators. They are leaders and shareholders in a
newly formed social enterprise, Soluciones Comunitarias (SolCom). They have
control over their economic lives and are helping others as well. They increase their
income by selling products that help rural families solve healthcare needs, increase
productivity and/or lower their cost of living, proving that sustainable, replicable
access to critically needed services and products can be created through the MCM.
THE MICROCONSIGNMENT MODEL
The MicroConsignment Model emerged from my experience as a Peace Corps

volunteer and social entrepreneur in Guatemala, as I will describe later in this
case study. But first it’s important to understand the MCM model, what makes it
tick, and how it’s different from other mechanisms such as micro-credit and
micro-franchising.
What Is the Problem?

Poverty is only a symptom of a wider problem: lack of access to services and prod-
ucts. The microcredit revolution has offered one solution to this problem: access
to capital for entrepreneurs in the developing world. Other innovations are provid-
ing access to education and medical care, including medicines to treat AIDS and
TB. But so far no one has implemented—at scale—a model that creates access to
economic solutions to a wide spectrum of issues, including chronic conditions
such as pulmonary and gastrointestinal illnesses, vision problems, malnutrition,
water scarcity, and lack of energy. Access can only be created if the product, place,
price, and people work in concert to serve those in need in a way that takes into
account their cultural, social, and geographic conditions.
The pieces for solving this access problem already exist. Stoves, water filters,
reading glasses, solar panels, and hundreds of other products abound. All that is
needed is a way to get them to the rural communities that most need them. There
is no lack of human capital or local entrepreneurial spirit. Local transportation
networks already reach vulnerable communities. Infrastructures, including those
set up by micro-credit organizations, have been established by international and
local organizations throughout the developing world. But what has been missing
is a model that puts the pieces of the puzzle together, one that starts by asking what
villagers need and then works to create an effective system to address those needs.
What Is the Solution?

The MicroConsignment Model solves this puzzle by delivering essential products
and services at affordable prices to the rural poor in the developing world. MCM
entrepreneurs, primarily young women and homemakers, provide solutions to
health problems, save families money, help individuals increase their productivity,
and help protect the environment. MCM entrepreneurs offer solutions to the pop-
ulation at the “base of the pyramid”—in this case, the most vulnerable rural com-

Greg Van Kirk
munities—by addressing the “what” (essential products and services), the “who”
(rural villagers), and the “where” (rural villages). They do so by creating a “how”:
a highly scalable local distribution network that works to diagnose and address the
myriad obstacles confronting these communities in a sustainable way.
What Makes the MCM Tick?

The key is to introduce and deliver high value-added products such as near-vision
glasses, water filters, energy-efficient stoves, and solar lamps, products that
demand customer awareness and a service approach, into rural villages in the
developing world effectively and efficiently. NGOs could donate them, but donat-
ing is not sustainable and often not effective in the long term. These items must be
sold. And the only way to sell them in a scaleable and accessible way is through
local entrepreneurs. So why not have local entrepreneurs use their savings to buy
them and sell them? For two reasons: many have no savings, and they rarely have
access to a local distributor who could provide them. Then why not use a typical
micro-credit structure where entrepreneurs take out a loan? This solves the financ-
ing problem but fails to address the issue of access to local distributors. Then what
about a micro-franchising mechanism? To help entrepreneurs get started and
grow, organizations (microfranchisors) seeking to create access to products can
empower local entrepreneurs (microfranchisees) to use or promote a micro-cred-
it mechanism to provide financing. In Uganda, for example, Living Goods does a
fantastic job empowering women micro-franchisees to sell health solutions and
the like. It sources the products and sells them to women entrepreneurs who buy
the products, with borrowed money, and then go door to door solving their neigh-
bors’ needs. Thus they become “Avon ladies for the poor.” HealthStores does great
micro-franchising in Kenya, helping individuals set up village pharmacies that sell
medicines to the poor. BRAC, a very well resourced organization, has helped mil-
lions in Bangladesh. This approach works well for the products that Living Goods,
HealthStores, and other micro-franchisors like them are promoting.
If microfranchising works so well to introduce new products in new markets,
why introduce the MicroConsignment model? Is it actually different? Do we need
a new approach?
The key difference has to do with the timing of the purchase. In a microcred-
it-financed model like microfranchising, the entrepreneur first buys the products
on credit and then sells them. She then uses her sales revenue to pay back the loan,
and ideally buys more products to sell after taking out her profit. When she sells,
everyone is happy: the financing/distributing organization achieves its mission
and earns revenues, villagers get what they need, and the woman can help support
her family. But when she doesn’t sell, the villagers are in the same place, the organ-
ization does not achieve its mission, and the woman is stuck with both inventory
and debt.
A consignment model works in reverse. The entrepreneur is first provided with
products at no cost. Then she sells them, pays the supporting organization, and

Scaling Access to Testing and Intervention for the Hearing Impaired

The World Health Organization estimates that 7.0 percent of the world’s popu-
lation is hearing impaired. That’s a total of 312 million people, of whom two-
thirds are living in developing countries. Yet only 12 percent of hearing aids are
sold into these countries. The principle reason hearing impairment is so preva-
lent is the lack of any prevention as well as dearth of trained professionals to
offer any treatment or therapy. It becomes rapidly evident that new methods of
hearing testing and access must be used. The problem in developing countries is
not the problem of ineffective intervention but unavailable intervention. The
MCM will enable us to provide much-needed access to hearing testing in devel-
oping countries. Setting up MCM entrepreneurs will also enable us to scale and
replicate our program on a global scale and will provide a vehicle to make our
program sustainable.
—Howard Weinstein, Solar Ear
pockets her profits—but only after she completes a sale. At that point she gets her
inventory restocked and the cycle begins again. Just as in a credit scheme, when she
sells, everyone is happy. But when she doesn’t sell, the repercussions for the organ-
ization and the entrepreneur are very different from those of microfranchising.
Just as in a credit-financed scheme, when the woman doesn’t sell, organizational
capital is tied up out in the field. But this capital is tied up in the organization’s
products that the entrepreneur is simply holding for sale and not in a loan that the
entrepreneur must find some way to pay back. The woman can go out and sell the
next day, or the next week or next month. She lives to sell another day without the
burden of a debt payment that is pushing her further into poverty.
Of course not every woman will be a successful entrepreneur. The
MicroConsignment Model takes this into account and aims to “do no harm.” In
this model, save the sunk training costs that are needed in both models, the orga-
nization’s capital is not lost if the woman stops selling briefly or even entirely; the
organization can simply take back the products and consign them to a new entre-
preneur. A key component is that individuals can “test drive” an entrepreneurial
opportunity. They get classroom and field training that enables them to make
informed decisions and gain the skills they need. Thus, the consignment structure
empowers women who have little education and no business experience to invest
their time and “sweat equity” in a venture in which they can earn a profit from
their first sale. If it doesn’t work out, a woman is not left with burdensome debt
and product inventory; ideally she will leave with new skills and knowledge but not
a loan obligation.
A final difference between MCM and models such as microcredit and
microfranchising is the way entrepreneurs reinvest their earnings. When credit is
used as the enabling mechanism, entrepreneurs often use all or much of their earn-
ings for personal or family consumption needs before they have time to restock

Greg Van Kirk
their inventories. That stunts their growth. Remember that they are usually low-
income women who often live a hand-to-mouth existence, so they are easily
tempted to consume their revenues. In contrast, MCM entrepreneurs reinvest effi-
ciently in their ventures. Because they buy their goods after they make a sale, they
do not see as theirs the portion of their revenues that goes to restocking their
inventory. So they don’t consume what isn’t theirs. Of course they have to learn not
to spend the revenues they need to reinvest. We have found that they never do
spend them. We have trained and equipped nearly 200 entrepreneurs over the past
five years, and not one has run off with the money. This is mostly because the
MCM is not just a financing mechanism, but in fact creates a mutually respectful
relationship between the organization and entrepreneur. The women entrepre-
neurs are offered a compelling opportunity that is empathetic to their situation.
They respond in kind. This is human nature.
Certainly one school of thought considers debt necessary to give entrepreneurs
a sense of ownership and to motivate them. I agree with this on some level: having
a loan obligation can definitely focus the mind on one’s work. But both our own
experience and broader evidence contradict this idea. First, MCM entrepreneurs
working in our infrastructure in Guatemala and Ecuador have already sold over
35,000 products, and we have only scratched the surface from a geographic scale
perspective. And VisionSpring, which adopted the MCM in 2004, has sold thou-
sands of pairs of glasses using the model. So clearly, an upfront debt obligation is
not the sole motivator. Second, this belief contradicts the very premise behind the
origins of the micro-credit: before it was implemented, the idea was that women
entrepreneurs had ongoing concerns, and simply needed access to capital through
credit to grow their businesses. They needed to be able to buy more stuff to sell
more stuff. Therefore, it makes no sense to state that the loan obligation is what
creates a sense of ownership and drives entrepreneurship. If it did, these women
would never have been entrepreneurs in need of micro credit in the first place.
What successful entrepreneur would say that debt created a sense of ownership
and was a primary motivator? Steve Jobs and Steve Wozniak didn’t start Apple in
a garage because they had a loan. Apple exists because they believed in themselves
and in what they were doing. The MCM has empowered Yoly and Clara to believe
in themselves and in what they are doing.
Perception Versus Reality

One of the most compelling differences between credit and consignment is relat-
ed to risk and uncertainty. Credit works in risky markets; the MCM works in
uncertain markets. The MCM’s power lies in its ability to create first-time sustain-
able access for new products in new markets through new entrepreneurs. As James
Surowiecki writes in his New Yorker article “Hanging Tough,” referring to econo-
mist Frank Knight, “Risk describes a situation where you have a sense of the range
and likelihood of possible outcomes. Uncertainty describes a situation where it’s
not even clear what might happen, let alone how likely the possible outcomes are.”1

Marketing Must Adapt to Local

Circumstances. One lesson we
have learned in marketing is that
when MCM entrepreneurs post
flyers in villages, people rip them
down. We decided to work with
this habit, not fight it, so we put
calendars on the flyers.
Guatemalans love to hang calen-
dars in their homes. If they are
going to rip them down, let's
make it work for us.
But one person’s risk may be another person’s uncertainty. Perception, not neces-
sarily reality, defines this distinction. Although almost any endeavor involves some
risk, actors in high-risk situations may feel so much discomfort that they cross the
line from risk into uncertainty.
Credit-driven structures work when the entrepreneur perceives risk. An entre-
preneur whose inventory is funded 100 percent up front through credit has little
time for learning and a slim margin of error. She must sell immediately and sell
consistently without fail, or she will likely fall further into poverty. Therefore, she
must understand and feel comfortable with her risk before she takes out a loan to
buy her inventory. So she first has to know her supply-and-demand equation and
predict that she will likely be able to sell her products.
However, when potential entrepreneurs perceive the market as not just risky
but uncertain, the MCM has proven to be an optimal solution. With new products
for new markets, primarily high-value-added products, sometimes an entrepre-
neur simply cannot calculate risk. There is no knowledge on which to base a risk
assessment. An entrepreneur who is highly skeptical of a new product, her ability
to effectively sell that product, and market demand will not want to take out a loan
and bear all the up-front risk. And even if she wants to, she probably shouldn’t.

Greg Van Kirk
Conversely, the implementing organization with a different, more informed per-

spective, such as Community Enterprise Solutions, simply sees risk, not uncertain-
ty. So it utilizes the MicroConsignment model.
Thus, the MCM was designed to fill the gap for previously unknown and/or
inaccessible products from the perspective of both the entrepreneurs and the vil-
lagers—their potential customers. MCM entrepreneurs engage in businesses
where supplies never existed, perceived demand is highly unpredictable, and thus
the environment is uncertain. Where the MCM is most effective, many of the client
beneficiaries never realized they needed those particular products and services. For
example, MCM entrepreneurs have instantly helped thousands of village weavers
who thought they were going blind by giving them a free eye exam and then sell-
ing them a simple $5 pair of reading glasses. The weavers would never have
thought to seek out this solution because they did not even understand their prob-
lem. And the MCM entrepreneurs would have never thought they could offer such
a service. They are homemakers, often with limited education, and thought only
“doctors” could provide these services. This is a highly uncertain situation for an
entrepreneur. I cannot count the times a woman has given me a “What are you
smoking, gringo?!” look when I said she could start a business giving eye exams
and selling reading glasses. “Who me?” she responds. “Impossible!” “Yes, you,” I
reply. “It’s totally possible!” Therefore, on-the-job learning must be a part of this
enterprise and is inherent in the MCM—potential entrepreneurs can learn by
doing. They must be empowered through a mechanism that provides the support
and time needed to overcome the barrier of high uncertainty and turn obstacles
into opportunities.
New Products to Grow Entrepreneurs’ “Basket of Solutions”

The MicroConsignment Model intervenes at all levels by creating an ecosystem
with symbiotic relationships in which needs are diagnosed and solutions are iden-
tified and implemented. High-quality products and services are assured, as the
beneficiaries are paying clients who are “voting” by using their scarce resources to
buy what they want. Both the organization implementing the MCM and the entre-
preneurs continually encounter incentives to solve community problems by selling
the appropriate products. Both parties can only succeed by achieving greater geo-
graphic and product scale. The entrepreneurs have an incentive because only by
selling more products to more people can they make more money while also help-
ing more of their neighbors. The organization implementing the MCM is motivat-
ed to increase scale for various reasons: to achieve its mission, to attract funding to
continue operations, and/or to cover costs and possibly earn a profit. The MCM
empowers and teaches everyone involved—customers, entrepreneurs, NGOs, and
social enterprises, and donors and investors—how to address poverty effectively
and efficiently in a sustainable, scalable way.
With the MCM, the first indication of success comes not when an entrepre-
neur pays back a loan, as with microcredit, but rather when she creates access in a

village. Impact is measured in sales to villagers, not sales to entrepreneurs.

Metaphorically speaking, this means that the entrepreneur and implementing
organization are sitting on the same side of the table and are motivated to build a
mutually beneficial relationship. In this way, the organization is more like a ven-
ture capital investor than a bank: it sells products not to the entrepreneur but
through her. Therefore, everyone involved looks first at the villagers’ needs and the
sale of the products.
The MCM uses both a bottom-up and a top-down approach to push new
products out into the communities. From the bottom up, an entrepreneur discov-
ers a need and looks to the implementing organization for a product solution.
From the top down, the organization first finds a new product and then looks to
the entrepreneurs to assess the need for it, as they are a continuous, reliable source
of real-time market knowledge. To succeed, the entrepreneurs must be responsive
to villagers’ needs—and the organization must be responsive to the entrepreneurs’
need to serve those villagers.
As an example of the bottom-up approach, in 2005, two of the first MCM
entrepreneurs, Esperanza and Margarita, identified a need to treat pyterigium, a
noncancerous growth of the thin tissue over the white part of the eye (conjuncti-
va). There is no cure for this condition and the precise cause is not known, but it
is aggravated by exposure to sun, dust, and smoke, all of which affect individuals
living in the rural developing world. These two women identified the need for
treatment and asked us for a solution. Now, working within our model, these
entrepreneurs have sold over 5,500 pairs of UV protection glasses to address this
problem in Guatemala—part of the tens of thousands sold through VisionSpring
worldwide.
When approached from the top down, MCM entrepreneurs are an unbeatable
initial vetting resource for new technologies and marketing strategies. They have a
vested interest in responding quickly about what will and will not work. For exam-
ple, in June of this year we presented one-watt solar panels with LED lights to the
MCM entrepreneurs as a potential new product. As a true test we discussed the
benefits and then offered to sell the lights to them outright at a price only slightly
discounted from the projected village price. They bought them all on the spot. For
further confirmation, we then worked with them to conduct surveys in the field.
The word came back that they would “sell like hotcakes.” We have now ordered
1,000 units as an initial pilot. We had an idea for a solution, and they confirmed a
perceived need for it by “voting” with their purchase; together, through the surveys,
we have confirmed a perceived need throughout Guatemala. Now we both have
“buy in”; together we can confidently pilot a new solution.
Leveraging Existing Infrastructures

In Guatemala, we have created an MCM entrepreneur-owned social enterprise,
Soluciones Comunitarias (SolCom) as our implementing mechanism. But creating
a new entity is only one way to implement the MCM and grow it sustainably. Any

Greg Van Kirk
organization in a developing country that focuses on serving rural constituents

can start an MCM venture. If an infrastructure already exists, the training and ini-
tial product purchases are the only up-front costs. From then on, costs are associ-
ated with revenues and are variable. An organization can identify, train, equip, and
support five entrepreneurs or fifty. It can conduct village campaigns three times a
month or once every three months. It spends money only when it offers activities.
But these organizations do have to watch out for mission creep as they adopt the
MCM system and services, and be sure whatever they take on is compatible with
their own organizational mission.
National and regional microcredit organizations can add the MCM to their
existing initiatives, which creates powerful leverage. For example, as an MCM
implementation platform, a microcredit organization can create effective new
income-generating opportunities for its borrowers. An example is the microcredit
institution Fundación Paraguaya; my partner and I trained them to implement the
MCM for VisionSpring’s reading glasses initiative. A group of the Fundación’s bor-
rowers are now earning money and serving their communities by selling reading
glasses through the MCM—and the Fundación now has both a new revenue
source and another way to serve its clients. Although an MCM always requires
some modification, it can be started and implemented without creating a whole
new organizational infrastructure. It can be an “add on” implemented at the scale
the organization desires to achieve.
Another way to implement MCM is on the local level, as we have proven in
Guatemala. In 2008, our leadership team identified a new opportunity to increase
scale efficiently. In the past we worked almost exclusively with local organizations
and associations to help us identify potential women entrepreneurs in new regions,
but now we have developed a full-service approach: the organizations themselves
act as entrepreneurs and sell products at kiosks in locales where foot traffic is high-
est and in local village campaigns. Just as the women MCM entrepreneurs are
known as asesoras comunitarias (community advisors), the organizations are
known as socios comunitarios (community partners). This structure can create
great leverage because these organizations already work with rural beneficiaries
who can buy the MCM solutions. The local groups benefit as they earn revenue
and are seen as contributing in their communities. Often they train their own
entrepreneurs, or we do.
SolCom members have especially succeeded as MCM entrepreneurs with some
rural libraries that the Reicken Foundation has created in Guatemala. The libraries
use the income generated from product sales to pay for their Internet signal. From
June to September of 2009, three such libraries, acting as socios comunitarios, sold
a combined 174 pairs of eyeglasses, 85 bottles of eye drops, 16 water filters, 105
energy-efficient lightbulbs, and 63 packets of vegetable seeds. This not only helped
the libraries’ constituents and enhanced their own reputation, it also earned the
libraries a combined profit of $525, with no up-front investment, so the libraries
are less dependent on donations. SolCom earned revenues of $2,100, which it used

to pay expenses and invest in new products. This is a great example of the “win-
win-win” solution this model can create.
Finally, the MCM can be implemented through micro-franchisors, in one of
two ways. First, some microfranchisors currently use a credit scheme to enable
their microfranchisees to buy their products. Those using this credit scheme can
offer their microfranchisees new value-added products and services through the
MCM. The franchisees can add products that are initially “uncertain” to comple-
ment their “risky” mix. Instead of the MCM replacing existing, functional, micro-
credit-based strategies, it can be added as an effective complement. Second, new
product innovators and manufacturers can promote the MCM as a way for organ-
izations to get new technologies out the door. Nick Swoden of ToughStuffOnline,
an innovator in solar energy and lighting solutions, recently said to me:
ToughStuff ’s microfranchising effort, the Business-in-a-Box program,
has partners that love the MicroConsignment Model. The partners pre-
fer this model to microcredit because it greatly limits the risk an entre-
preneur must bear. This is especially critical when launching new tech-
nology, like solar products. The other benefit we hear is that the MCM is
much simpler and easier to manage and scale. Whereas microcredit, with
its scheduled loan repayments, is actually quite a complicated model with
high transaction costs, our partners who aren’t financial institutions are
able to launch and scale a MicroConsignment Model program without
taking years to learn this business.
HOW DID THIS ALL GET STARTED?

I first learned about the problems of access that face rural people in the develop-
ing world in April of 2001, while I was working as a Peace Corps volunteer in
Nebaj, Guatemala, a town of approximately 10,000 located in the remote Western
Highlands. Nebaj is the main entry point for the Ixil region, home to a primarily
Ixil-speaking Mayan population of approximately 120,000 people. The region
includes two other towns, Chajul and Cotzal; the three towns are the commercial
hubs for hundreds of outlying villages. The villagers face myriad problems: high
rates of illiteracy, few employment opportunities, poor health care, language bar-
riers, sporadic transportation, and an almost total lack of access to essential prod-
ucts, except those provided intermittently by donor organizations.
I arrived in Nebaj with no development experience. I had taught at and man-
aged a language school in Japan for over two years and worked in investment bank-
ing in the U.S. for more than four. I had just turned 30 and knew I wanted to work
in economic development, but I knew nothing about the field. I joined the Peace
Corps to gain grassroots experience. At the time, I had no notion that my work
would lead me to create the MicroConsignment Model, but I had quickly sensed a
profound need, assessed whether current models could address that need, and

Greg Van Kirk
found them inadequate. That led me to develop a new model based on the old con-
cept of consignment.
In my role as a small-business Peace Corps volunteer, I was tasked with sup-
porting two organizations: a microcredit institution and the local Chamber of
Commerce, which was in charge of an Internet center financed by USAID. After
living in Nebaj for eight months, I also received permission from the Peace Corps
to open a restaurant, though all I knew about restaurants was how to eat in them.
My personal mission was to learn about best practices while having a positive
impact. In retrospect, the lessons I learned working in these three initiatives—a
microcredit institution, the Internet center, and a small business—have proven
fundamental to the approach we took with MCM. Unfortunately, I learned most
of these lessons the hard way.
Learning from the Micro-credit Experience
FAFIDESS (Fundación de Asesoría Financiera a Instituciones de Desarrollo y
Servicio Social), the microcredit organization I worked with, was implementing a
village banking strategy. I was delighted to discover this, as I had specifically
requested a placement where I could work in microcredit. In fact, I had finally quit
my investment banking job as a direct consequence of reading David Bornstein’s
book about Muhammad Yunus, The Price of a Dream, which made me a true
believer in the power of microcredit. But my inspiration quickly turned to doubt
and frustration—for several reasons.
In Nebaj, the micro-credit manager met twice a month with village banks,
informal groups of 20 to 30 members who receive individual loans and are pre-
dominantly female heads of household. One monthly meeting focused on disburs-
ing loans or collecting principal, interest, and savings from the women, and the
other was designated for small business training, for which I was responsible. Each
meeting was to last one hour.
Soon after I began teaching, it became evident that no one valued the train-
ing—neither the women borrowers nor the institution. Managers were evaluated
on the number of banks they developed, the number of borrowers, and the size of
their loan portfolio and delinquencies, and were often hard pressed to spend ade-
quate time with borrowers in any capacity, let alone a support capacity. With the
emphasis on increasing numbers, training—my job—took a back seat. Moreover,
the women borrowers often had very different businesses, were in different cycles
of those businesses, and had varying levels of education, literacy, and Spanish lan-
guage ability. And they had little time. So the trainings I designed and gave had to
be thematically universal and very basic—broadly applicable to all of them, but
specifically helpful to few. Most participants viewed training as more of a burden
than an opportunity. In fact, looking back, my most successful training day was the
one when I leaned against the house door of the woman who was hosting the
training, ripped the door off its hinges, and fell backwards onto the bed in her
daughter’s room. I couldn’t stop apologizing, and the women couldn’t stop laugh-
ing. That day, they listened to me.

Later, as a consultant in Senegal and Paraguay, I saw microcredit being imple-

mented successfully, but it was the hard lessons from my Guatemalan experience
that have most helped me develop the MCM. First, I learned that an organization
must determine its desired outcomes from the start and use appropriate tech-
niques to measure those outcomes. The MCM’s desired outcome has always been
to increase sustainable access to products that will improve villagers’ standard of
living. We first aim to identify the real and perceived needs of villagers and then
provide solutions that address those needs. By nature, the MCM gauges success by
the number of buyers and where they live. At monthly meetings we discuss the
optimal village targets, restock the inventories—and divide up the revenues.
Entrepreneurs determine their profits and we calculate the economic impact on
buyers. We also talk about the health benefits embedded in most of services and
products: eyeglasses improve vision, water filters provide purified water.
Second, an organization is simply a mechanism used to execute a model that
serves a desired outcome. Achieving that outcome cannot be subservient to sus-
tainability. Because the MCM only works if villagers purchase the products, the
organization cannot have a sustainability strategy that would supersede the desired
outcome. The only way an implementing organization can succeed is if the prod-
uct, price, place, promotion, and people facilitate more access. The MCM only
works if villagers buy what the entrepreneurs are selling. There is no shortcut.
Third, training and outreach must be relevant, offered in the local language
whenever possible, and embedded in the model as an integral activity, not as a sep-
arate obligation. People should seek training because they believe it will improve
their chances of succeeding. Within MCM, entrepreneurs and regional leaders are
forced to meet monthly. Because the entrepreneurs are not buying anything, no
one is succeeding unless the end users buy products. Interdependence and the
sharing of best practices are in the DNA of the model.
Finally, I prefer an approach that provides high-quality, targeted support to a
relative few, who, in turn, help many others, rather than trying to help many at the
same time and failing with all but a relative few. Looking at it through the lens of
the Pareto Principle (the 80/20 rule), in my micro-credit trainings I tried to reach
100 percent of the women and was only reaching 20 percent at best. The other 80
percent were not benefiting—so I was using my time very inefficiently. Within the
MCM the approach is to reach 100% of people by focusing direct support on 20%,
who then support the other 80%. When inputs and activities are focused on ben-
efiting a core group of people, they can benefit exponentially more people through
their work. For us, the 20% are the entrepreneurs and the 80% are the villagers.
My “Field of Dreams” at the Nebaj Chamber of Commerce

In 2001, USAID opened the first Internet center in Nebaj and helped establish a
local Chamber of Commerce to operate the center as a nonprofit organization. The
Chamber’s board of directors hired personnel to run the day-to-day operations.
USAID provided all of the equipment, negotiated contacts with an ISP, and, to get

Greg Van Kirk
Empowerment through Opportunity. Entrepreneurs from three distinct regions of

Guatemala share ideas for effective marketing techniques at the Soluciones
Comunitarias 2007 National Conference.
the center into a position where it could be financially self-sustainable, agreed to

pay most of the bills for the first few years. This subsidy was designated to allow
the center to set aside revenues from user fees, which would be used for operations
and reinvestment once USAID’s support ended. My leadership role was to support
the board of directors and center personnel to create a successful Internet center
that would serve the community. Problems arose, as they unfortunately often do,
from unintended consequences.
When USAID formed the Chamber, it chose board members who were busi-
ness leaders. They had not necessarily diagnosed a need for an Internet center.
Without a common vision or history of working together as a team, they brought
disparate views to the task. USAID had expected that Chamber members would
work to make the center succeed, but because they worked voluntarily they had no
“skin in the game.” The center was essentially a business being run by quickly
assembled volunteers. Businesses can’t be run by volunteers.
Moreover, the reality on the ground was out of line with the expectations, from
both USAID and the Chamber, about demand and technical performance. Both
had expected that, as in the movie Field of Dreams, “If you build it, he (they) will
come.” People did come, but not for the reasons or to the extent expected.
Furthermore, the Internet signal was slow and erratic, and the clients who did
show up, many using the Internet for the first time, often left in frustration and saw

little value in the experience. The key to a successful Internet center is high usage,
but because usage didn’t meet expectations, management raised prices in a coun-
terproductive effort to increase revenues, which reduced usage even further. All of
these factors led to conflict and mistrust between stakeholders and the Chamber
and the clients it sought to serve. The Nebaj Internet center closed after just four
years.
I learned many lessons in my work with the Chamber and the Internet center.
Above all: opportunity must be earned. There had been no vetting process; the
Chamber members were simply given an opportunity they did not earn, and they
had not proven through their efforts that they merited the opportunity.
By contrast, MCM entrepreneurs put in sweat equity to earn the opportunity
they are given; that ongoing process begins with the training, a course of roughly
eight weeks. Four “classroom” sessions are followed by three field-training sessions.
When training new entrepreneurs in a new territory, we begin with up to eight
women, knowing that fewer will attend each subsequent meeting. Attrition is actu-
ally desirable and is built in. By the time the women who remain are consigned
their products and begin their field work, they have proven they are willing to put
in the necessary effort and that they share our vision. In effect, the training works
as a mutual vetting process.
Second, when the goal is creating access, the pricing structure must allow for
the highest possible usage while also compensating the service providers appropri-
ately. This is a continuous balancing act. A volunteer-driven model is unsustain-
able because no one is compensated, and volunteers’ motivation will wane as other
priorities take over. Conversely, pricing products or services too high may boost
income in the short run, but it cannot create broad access.
With the MCM, prices are established by the implementing organizations after
they test how end users perceive the value of products. If prices are too low people
see the product as cheap; if prices are too high no one can buy it. The entrepre-
neurs’ needs for compensation are also key. Prices must maintain a balance
between providing broad access for villagers and sufficient earnings for sellers. We
have found that establishing a price point at the start and stating it on the adver-
tising materials is a better strategy than allowing entrepreneurs to set their own
prices. Because revenues must be divided at monthly meetings, MCM entrepre-
neurs cannot charge less than the stated price for the products. Admittedly, they
may sometimes charge more for their products without our knowledge, but
because we set goals for sales volume, these altered prices do not hinder usage, for
two reasons. If a woman is charging a higher price but is reaching her volume
goals, then there is no actual problem: she earns more and all the goals are met. But
if she is charging more than people will pay, she will not meet her volume goals.
Then she will lower her price to achieve the volume goals and start earning prof-
its! In either scenario the outcome is positive.
I learned a third lesson at the Internet center. A “push strategy” with a service
approach is essential in marketing new and high-value-added products. If you
build it, they won’t come. You must look at potential users and consider how the

Greg Van Kirk
product will benefit them. The Chamber failed to attract potential users because it
failed to demonstrate how the Internet would benefit them. Within the MCM,
entrepreneurs “push” to remote communities and are called community advisors
because they are seen as such. As service providers who are trained to market and
sell health and economic benefits at an appropriate price in the appropriate place,
entrepreneurs with little experience quickly come to be seen as experts. So, villagers
not only purchase their products but also ask them for new solutions to other
problems. The entrepreneurs then share this information with their field leaders,
who respond by seeking appropriate new solutions to the problems that have been
learned about from the villagers.
You too Can Learn Quickly! My Tourism Businesses Start up

After six months in Nebaj, I realized that tourists were visiting and leaving quick-
ly without spending any money. I identified the problem as a lack of tourism infra-
structure: no tourist center, no attractive restaurants, and only one guiding service.
The Peace Corps gave me permission to use my own funds to start several tourism
businesses with some local residents. The first business was a restaurant; we soon
added a Spanish language school, a hiking and trekking service, an artisan store,
and an Internet café (unrelated to the Chamber of Commerce venture). I wanted
to bring new money into Nebaj by tempting tourists to stay an extra day or two.
The long-term vision was to have local entrepreneurs gain ownership of the ven-
tures through sweat equity and to take over fully when we had become self-sustain-
able, both financially and administratively. This hand-off took place in early 2004,
and these ventures are still operating profitably. My $2,000 investment, supple-
mented with approximately $15,000 from CE Solutions, resulted in a group of
businesses that have earned over $600,000 to date and have been a catalyst for
tourism growth in the region.
Starting and running businesses that I knew nothing about proved to be my
most instructive experience. I learned that lack of knowledge was no hindrance to
starting new ventures and that basic information could be learned quickly. For
example, the local Ixil women quickly learned how to cook beef stroganoff in the
restaurant, high school–age youth learned how to operate administrative systems,
and former farmers learned how to serve as guides for tourists. In the beginning, I
admit, the stroganoff was sometimes a bit of a “mystery dish.” After all, they
learned how to cook it from me, a vegetarian with no cooking experience whose
only guide was a book called How to Cook Everything. But the stroganoff soon
improved.
Similarly, using the MCM, we can teach semiliterate women how to give an eye
exam, demonstrate a water filter, and describe the benefits of a solar-powered
lamp—and quickly. In two days, a mason can learn how to build a stove.
Individuals with only the most basic education can learn new skills if they are
motivated and receive appropriate training. Through what Geoff Colvin calls
“deliberate practice” in Talent Is Overrated, entrepreneurs are stretched beyond

their existing abilities and continually increase both their knowledge and their
level of business sophistication.
Another lesson I learned is that people will only do better work if they see
value in it. If the goal is for individuals to take ownership—which it should be for
any development project—they must truly feel the need to do high-quality work
or their enterprise will fail. Odd as it may seem, to achieve this, entrepreneurs must
be allowed to fail. While running the restaurant, for example, I found that staff
would not keep careful records. They began keeping precise systems in place only
after I left them in charge and they ran into problems. When they failed they saw
the need to improve, which enabled them to move from dependence to independ-
ence. Ownership must be felt; people often value something only when they feel
the negative consequences of potentially losing it.
With the MCM, we achieve this transition to a sense of ownership through
field trainings that teach budding entrepreneurs how to conduct a village cam-
paign. The first campaign is led by regional coordinators with support from the
budding entrepreneurs, the second is co-led, and the third is led by the entrepre-
neurs with much diminished support from the coordinators. As training progress-
es, the entrepreneurs learn through both their successes and failures. When they
are allowed to make mistakes, they also see the need to improve. When first train-
ing entrepreneurs, I often went on village campaigns where they set up their prod-
uct display tables inside a town hall or school. In theory these were natural places
to set up, especially because the space had been offered. But they were invisible.
The familiar real estate mantra also applies in developing countries: location, loca-
tion, location. The best place to set up, of course, is outside, where everyone walks
by. So for the first hour few people would come and I would stay quiet. I could see
the worry and anxiety on the women’s faces. Then I asked them why no one was
coming. They nearly always replied that no one knew they were there and then
decided to move their tables outside. Invariably more people came. It was painful
to do but necessary to help them take ownership of their learning and see that they
needed to make their own decisions to succeed.
The most important lesson I learned was that even with limited financial
resources, people can achieve the seemingly impossible through a model based on
teamwork. I had established the tourism businesses with very little investment and
with people who knew nothing about how to run these businesses—including me.
But we did well. We worked as a team with a common goal, thus proving the whole
to be greater than the sum of our parts. This team approach is at the core of the
MCM and empowers everyone involved to overcome seemingly insurmountable
obstacles. Every product or service offered through the MCM is the first of its kind.
In effect, no other organizations in Guatemala are selling eyeglasses, wood-burn-
ing stoves, water filters, solar lights, seeds, or energy-efficient lightbulbs in remote
villages. The model empowers everyone, especially the women, to see a lack of
access to products and services as an opportunity, not as an insurmountable prob-
lem. They start out timid and intimidated but soon become confident self-starters,

Greg Van Kirk
An Incubator for Development. The original team of waiters and cooks at El

Descanso Restaurant in 2002. Benito (third from left at top) and Silvia (second
from left at bottom), then 17, are now teachers at our Centro Explorativo rural edu-
cation center. Rosa (third from left at bottom) and Nila (fourth from left at bottom),
then 17 and 20, respectively, are now professional staff members at Soluciones
Comunitarias. Miguel Brito, then age 23 who took the picture, is now the president
of Soluciones Comunitarias.
seeking out more and better ways to provide solutions to other problems, and
repeatedly converting the impossible into possibilities.
THE MODEL EMERGES: THE STOVE

The MCM first emerged when I donated profits from the tourism businesses to a
wood-burning stove project in La Pista, a village 40 minutes’ walk from Nebaj. This
donation supplied stoves to 10 families in the village. Like millions of
Guatemalans, these families had always cooked campfire-style on their dirt floors.
Cooking this way is extremely energy inefficient, it harms the health of family
members, and destroys the local environment. Pulmonary illness is a top cause of
death in Guatemala and deforestation is ubiquitous. Relief agencies had deter-
mined that locally manufactured concrete stoves could immediately and dramati-
cally reduce energy costs and improve the health and safety of Guatemalan fami-
lies. But once that money was spent, no one else would get a stove. I realized that
many more people could obtain a stove if distribution was built on a sustainable

Yoly Acajabon: Our Guiding Light

Yoly Acajabon is among the Guatemalans who have contributed the most to
developing the MicroConsignment Model. Yoly, a mother of three, lives in Santo
Tomas, Sacatepequez. In November 2004, we asked her to join us. She had no
business experience and she was highly skeptical, but as an MCM entrepreneur
she has helped increase the standard of living of thousands of Guatemalans.
Through her leadership as a regional coordinator, she has trained other women
who have helped thousands more. She is now training other regional coordina-
tors, but her contributions go much further.
Yoly was a driving force behind our village campaign strategy. When she first
started, she often went door to door, offering her services and products to the
people in her town. No one bought anything, but she didn't quit. In fact, she
taught us how to improve. She told us "Nadie es profeta en su propio pueblo" (No
one is a prophet in his own town). But what she really meant was that no one
would buy sophisticated products and services from a woman who was known
as a simple homemaker. She taught us, somewhat ironically, that MCM entrepre-
neurs had to go to places, often remote villages, where they have no history. Only
after word of their success got around could they slowly gain credibility in their
own communities.
In November 2007, Yoly confirmed for me what this work is really all about.
I visited Yoly in her home, where I found her in bed and somewhat depressed.
She had just had a hysterectomy and was in pain, physically and emotionally. She
did not have that Yoly smile and “we will prevail” spirit I had gotten used to.
Honestly, I didn’t know what to say or do to make her feel better. I asked her how
she felt, told her I was thinking of her, offered to help if I could, and tried to reas-
sure her that she would be better soon. But none of this seemed to lift her spir-
its much. So I started to talk about our work together. As she began talking about
the needs in her town for water filters and how we could best help meet them,
she was transformed. She said, “Gregorio, I want to get out of bed as soon as pos-
sible and get out there and see if people will buy these. There is such a need!”
After leaving Yoly’s house, I thought about what had happened and realized
something that drives me now on a daily basis when work gets difficult. Yes, the
MCM gives people access to things they need to improve their health and save
money. It also creates income for women. But it is about much more than that.
It gives women like Yoly a sense of purpose. It inspires hope. These are benefits
we cannot measure, and they will far outlive any of our measurable achieve-
ments.
model. In response, I developed what I then called “the stove model,” which would
later become the MicroConsignment Model.
Ignoring the widespread opinion that no one would buy a stove, I decided to
find a way to make stoves continuously available and affordable. My first thought

Greg Van Kirk
Beneficiaries Waiting in Line. Villagers feel a sense of urgency to attend cam-

paigns, where they are being offered products and services they have never had
access to before. They are asked to “vote” for what they truly need and want by pur-
chasing products with their limited resources, thereby ensuring quality products and
services. They feel a sense of dignity by purchasing solutions rather than receiving
handouts.
was to pay someone to build them, but the few hundred dollars I had wouldn’t pay
anyone for more than a few months. I then met with Augustín Corrio, the mason
who had built the original stoves, and offered to lend him money to buy the mate-
rials to make and sell stoves. His reaction mirrored that of others: he perceived
uncertainty, not risk. “No one will buy a stove, Gregorio”: villagers simply would-
n’t buy stoves because they were used to getting them for free or they cost too
much. At the time, materials to make stoves like those Augustín had built in La
Pista cost roughly $75, plus labor. Putting the donation issue aside, I first decided
to tackle cost.
To find a less expensive stove, I conducted extensive research on stoves being
built throughout Guatemala, but could not find another compelling option. So I
asked Augustín to help me modify the $75 model to bring down the cost. After a
few weeks, we got the cost down to approximately $50 without hurting the integri-
ty of the design and function. But this still seemed prohibitively high for families
earning $120 a month. To lower costs further, I proposed that we make the legs of
the stove out of wood rather than cinder blocks. Although Augustín protested that

The First Stove Model. A family purchases the first stove in La Pista, Guatemala.
wood would rot and no one would buy a stove with wooden legs, he agreed to
build a pilot model in the home of one of the restaurant’s cooks. The stove per-
formed as intended. We had it! In fact, that stove is still in use six years later.
Though this design succeeded, I ultimately had to abandon the wooden legs.
This experience taught me that even in rural villages, form is just as important as
function, and sometimes more so. Moreover, I realized, perceived need trumps real
need and desire drives sales. A family cooking on the floor has a real need for a
stove. One might think that any stove would do, but no. Just because someone is
poor doesn’t mean they want a “poor” solution. People make purchases based on
their perceived needs and their desire for a particular solution to that need. The
wooden-legged stove passed the first two tests: it addressed the real need and it
addressed the perceived need. But it didn’t address the desire. Nobody desired a
wooden-legged stove. This lesson was reinforced in our work with VisionSpring,
when cofounder Jordan Kassalow concluded that people want high-quality glasses
and are willing to pay for them. Even poor people want what we want, not donat-
ed used glasses that look like they should be worn with a polyester disco suit.
Development initiatives fail when they base their strategies only on real needs
described in a report or on perceived needs, without gaining a true understanding
of actual desires.
Given that the wooden-leg solution was unworkable, I decided to go with the
$50 model. But I still had two problems: how could I get people to buy the stoves

Greg Van Kirk
at that price, and who would sell them? To solve the first problem, Augustín and I
concluded that villagers needed a payment plan. To solve the second problem, I
came up with the idea of consignment. In fact, consignment seemed to solve a
number of problems. I would consign to Augustin the construction materials up
front; to cover his profits and administrative expenses, I would add a margin onto
the price. This meant Augustín would not have to bear the up-front risk. I was con-
fident we could make it work and took the risk. My risk-taking allowed him to
work with uncertainty. We devised a six-month payment schedule for our cus-
tomers: the stoves saved so much on energy that they could pay for themselves.
This is a critical element of the MCM. Customers either save money, as with the
stoves and water filters, or they create the ability to make money, as with the eye-
glasses. Buying the products creates equity, essentially putting money in cus-
tomers’ pockets.
Augustín needed to invest his time to find buyers. He was willing to bear this
risk because the opportunity cost of his time was effectively zero. I would purchase
the materials for him at a local hardware store, and as people made payments on
their stoves, Augustín would earn a profit. Meanwhile, as he repaid me for the
materials, I could reinvest that money for more material to make more stoves—a
rotating capital mechanism. Augustín would be motivated to sell and would have
a long-term opportunity: providing stoves to more and more families. Because he
wasn’t a businessman by training and was only compensated if he succeeded, we
had built-in business training. If something didn’t work, he would tell me and we
could make modifications. He had incentives to get training. And, this method
assured me that the funds I was providing went directly to the intended purpose.
For argument’s sake, if I had simply loaned Augustín the money for his stove busi-
ness and he took the risk, he could have spent the money on other things, as tends
to happen at times with microcredit. A microcredit lender doesn’t stipulate, much
less direct, the credit recipient’s business investment. But using the consignment
process assured me that Augustín would build stoves.
No one had done this before. In fact, I was anxious that people wouldn’t pay
him back for their stoves because they were accustomed to handouts. But I need-
n’t have worried: to date, Augustín and other entrepreneurs in the Ixil region have
sold over 1,600 stoves, and everyone has paid back their loans. People will buy what
they need and want with their very limited resources if a quality product is provid-
ed through an approach that responds to their needs, desires, and limitations.
Realizing the Potential
After finishing my stint in the Peace Corps, I decided to stay in Nebaj to continue
the work I had started and to work as a consultant for USAID. At this point, CE
Solutions and Social Entrepreneur Corps cofounder George Glickley joined me.
George had been a Peace Corps volunteer in another part of the country and
became my partner in all my initiatives from then on.
In March 2004, the Scojo Foundation (now VisionSpring) contracted with us
to help them find an effective way to distribute reading glasses to low-income vil-

lagers in El Salvador. They estimated that over 90 percent of people over age 40 will
need reading glasses to see up close. Of course, “reading glasses” is a misnomer in
countries like Guatemala, where many who buy them cannot actually read. The
glasses simply help them see up close.
Although we were originally hired to address what VisionSpring saw as a mar-
keting issue, while working with their programs leader, Neil Blumenthal, we con-
cluded that the overall implementation model needed to be changed. VisionSpring
was using a microcredit model to give local women the means to give basic eye
exams and distribute glasses door to door, but it wasn’t working effectively.
We noted that lending the women money to buy the glasses created problems
at three distinct points in time. At inception, we faced the same problem I had
encountered with Augustín. When women were presented with the opportunity to
give eye exams and sell glasses, many would decide not to take it. It was an entire-
ly new business and appeared impossible at first glance. Perceived uncertainty was
an obstacle. Later, some women did take the plunge, and they initially experienced
an enthusiastic response. But many then saw a downturn in sales but still had to
both repay their loans and buy a predetermined number of glasses. Many of them
came to meetings without money and asked for an extension, which led others to
do the same, essentially creating a domino effect. After a few months, many simply
stopped coming to meetings and the VisionSpring staff had to go to their homes
and reclaim the glasses. In many cases, what was intended to be a collaborative
relationship instead became antagonistic. Moreover, the project did not achieve its
aim of creating access; instead the women were left with debts. All of this was total-
ly contrary to the VisionSpring mission.
Finally, because the sales were made to the women and they simply had to pay
back the loan and buy more glasses, VisionSpring wasn’t continuously learning
about the market. Moreover, the training was separated from administration, just
as it had been in my microcredit experience. VisionSpring and the entrepreneurs
were essentially sitting on opposite sides of the table, not on the same side looking
in the same direction.
After considerable analysis, we concluded that the “stove model” could miti-
gate the challenges VisionSpring was confronting with its microcredit model.
VisionSpring decided to adopt a modified stove model as its mechanism for imple-
mentation. Although I didn’t name it until a year or so later, this is effectively when
the stove model became the MicroConsignment Model. For George and me, this
was the “Aha!” moment. We realized that the MCM could provide a unique way to
deliver myriad products and services that addressed health, economic, environ-
mental, and educational needs to villagers in remote areas.
Soluciones Comunitarias: The Mechanism for Local Self-Sustainability
This realization led us to establish CE Solutions as the engine to develop, test,
implement, and expand the MCM in Guatemala, and ideally in other countries in
the future. VisionSpring offered funding for our start-up in Guatemala. To create
national scale and local self-sustainability, we saw that the key was to train an

Greg Van Kirk
Why Didn’t I Think of That?

Some business ideas are so straightforward and make so much sense that you
wonder, “Why didn’t I think of that?” This is definitely the case with the
MicroConsignment Model. When our students heard Greg Van Kirk present the
model, it made perfect sense to them; the idea in itself was entrepreneurial and
encouraged entrepreneurial activity in rural communities. The model provides
the training and tools for micro-entrepreneurs to sustain their businesses, as well
as purchasing power, which can then be used to spur economic development in
their own communities. Our students keep mentioning the model because it just
makes sense.
—Melissa A. Paulsen,
Social/MicroVenturing Programs Manager
Gigot Center for Entrepreneurial Studies
Mendoza College of Business, University of Notre Dame
increasing number of entrepreneurs, primarily women, to offer a growing list of

essential products and services to ever more rural villages. We wanted to solve as
many problems as possible, leveraging one delivery mechanism. We also wanted to
create a local social enterprise that could achieve financial and administrative self-
sustainability, could access its own equity capital or loan financing, and was owned
and run by leaders who would emerge naturally through their work. This led to
SolCom, which is owned and run by entrepreneurs who have risen through the
ranks.
Social Entrepreneur Corps: The Mechanism for Continuous Growth
MCM’s successful growth in Guatemala through CE Solutions support led us to
challenges typically associated with expansion: we need additional capital, both
human and financial. During our first phase, we depended solely on donations for
financial capital. But donations can be sporadic. Sustainability in the field was a
primary driver and we were slowly achieving it through SolCom’s income from
sales, so we wanted to create a sustainable mechanism from an overall organiza-
tional perspective. So, in 2005, we established Social Entrepreneur Corps (SEC) as
a sister organization to CE Solutions. SEC offers students and recent university
graduates, primarily from the U.S., the opportunity for a paid internship in
Guatemala supporting the entrepreneurs and the MCM’s innovations and growth.
This was an elegant solution to our financial and human resource constraints.
Training students who would in turn support and fund the MCM work was a
much more efficient and effective use of time than splitting our work between
fundraising and implementation. Fundraising remains an important financing
mechanism, but it is hardly our only source of support and growth. Social
Entrepreneur Corps now covers over half of the expenses we once covered through
donations, and everyone benefits greatly from the experience.

Volunteers Can Make a Difference. Social Entrepreneur Corps interns preparing

to give a talk to a group of women about strategic planning. MCM regional coordi-
nators have learned how to use SWOT (Strengths-Weaknesses/ Opportunities /
Threats) planning analysis from the Social Entrepreneur Corps.
WHERE ARE WE NOW?

Since George and I trained the first two entrepreneurs in Nebaj in the summer of
2004, we have focused on growth in Guatemala as our innovation incubator; we
are expanding to other select countries to test the concept and create scale. During
the first three years, we focused on geographic expansion only within Guatemala.
Since then we have prioritized sustainability and expanded our product line. We
saw that we first needed to build an infrastructure, learn from and train a critical
mass of entrepreneurs to sell a few products, and then work with those entrepre-
neurs to add on additional products and services.
With this strategy in mind, the MCM entrepreneurs offered only glasses and
eye drops until December 2007. We began in Nebaj and then expanded to the
towns of Antigua, Quetzaltenango, Sololá, and Cobán. We opened up a new hub in
Huehuetenango in September 2009. Each town has a regional coordinator who can
work with 15 to 20 entrepreneurs.
After growing the number of entrepreneurs to 75 and conducting feasibility
studies, and then developing and piloting an integration strategy, we began offer-
ing additional products through the MCM entrepreneurs at the end of 2007. These
included water-purification buckets, energy-efficient lightbulbs, and an assort-
ment of vegetable seeds that come with planting and harvesting guides. Solar-pow-
ered lamps are being introduced as I write this.
Building a “basket” of products has been challenging at times on several levels,
but it ultimately has proven the fundamental strength of the model and benefited
all of the key stakeholders. Villagers have increased access to useful products and
services, MCM entrepreneurs earn more and are happier with their living standard

Greg Van Kirk
and more satisfied with their work, and SolCom earns more while reducing any
negative effects of short-term regional saturation and/or competition from donors
for any one product.
The lightbulbs and seeds are generally what we call piggy-back products;
Miguel Brito, the president of SolCom, calls them propinas (tips). Because both
entrepreneurs and villagers already appreciate the benefits of these products and
because they are relatively inexpensive, they fit more into the risk than the uncer-
tainty paradigm. From SolCom’s economic perspective they are in many ways “free
riders”: they benefit from being in the product mix but contribute little to the bot-
tom line. However, these propinas are important for other reasons.
First, they benefit the users tremendously; the fact that they turn over fairly
quickly is already enough reason to include them. Second, they provide an easy
way for an MCM entrepreneur to earn extra money with relatively little effort—
they simply place the propinas on their tables and offer them along with other
products and services. And third, in the eyes of community leaders, villagers, and
the MCM entrepreneurs themselves, offering these other products reinforces the
fact that the women are visiting communities not as sellers, but as service
providers. So we continually seek more propinas.
In June 2008, we piloted and launched our initiative to train and equip local
organizations as MCM entrepreneurs. Social Entrepreneur Corps interns led this
effort under our guidance, and two months after we identified and spoke to organ-
izations, we had set up five of these socios comunitarios. This effort helps us to scale
up in regions where we currently have regional coordinators and to expand into
new regions to establish a footprint.
As of September 2009, through the combined support of CE Solutions and
Social Entrepreneur Corps, SolCom has trained over 200 local entrepreneurs who
have executed approximately 1,800 village campaigns and sold over 35,000 prod-
ucts. After subtracting the purchase price and using conservative assumptions
about savings—for example, $12 per month with a wood-burning stove, $16 per
month with a water-purification bucket—we project a total savings (equity) for
product purchasers in excess of $1,000,000. Though this figure is not exact, it still
represents a whole lot more money in the pockets of rural villagers to spend on
health care, education, food, and developing their own businesses—money that in
the past was ill spent.
Gross revenues from the sales of the products total approximately $330,000,
and MCM entrepreneurs have earned profits of approximately $60,000. Using the
official Guatemalan daily minimum wage of $6.75—though few rural people,
especially women, can earn anything close to this—these earnings equate to
approximately 8,888 days of work. At present there are 65 MCM women entrepre-
neurs and 10 socios comunitarios. Some women drop out after a month of “test
driving,” while others, like Yoly and Clara, have been working as entrepreneurs for
up to five years. SolCom now earns revenues of approximately $6,200 per month
and has 11 staff members, who earn a combined $2,400 per month. SolCom cur-

rently has losses of about $1,500 a month after accounting for the cost of goods
sold. CE Solutions subsidizes this loss.
We have been able to achieve all this with a relatively small donor base. Total
donations to CE Solutions, including those targeted for the tourism initiatives and
education center we created in Nebaj, were $20,000 in 2004 and have never exceed-
ed $135,000 in any one year. Increased scale and impact are now simply a function
of increased financial resources. The model works, so it is time to scale it up.
George and I have been able to do this work drawing very small salaries/stipends
while earning a living as consultants. Social Entrepreneur Corps has also proven
instrumental in this process. In 2006 we started with seven interns and no univer-
sity relationships; by the summer of 2009 we had 74 interns from a broad range of
universities including, Notre Dame, Columbia, Duke, the University of
Connecticut, William and Mary, Miami University (Ohio), and Franklin and
Marshall, all schools with which we now have forged strategic partnerships. In
2009, revenues of over $100,000 from Social Entrepreneur Corps went directly to
our development work. Financial self-sustainability is being created at the field
level in Guatemala through SolCom’s rotating capital mechanism (no income goes
to CE Solutions or Social Entrepreneur Corps), and increasingly through Social
Entrepreneur Corps at the operational level. And we are expanding.
WHERE ARE WE GOING?

We are at a point of inflection. In March 2008, I had the good fortune to be award-
ed an Ashoka Fellowship, based on my work with the MCM. This has been an
incredible blessing. Recently I was also honored to be selected as one of 25 inaugu-
ral Ashoka Fellows for the new Ashoka Globalizer program. Ashoka created this
initiative to identify the most effective international social entrepreneurs within
the Ashoka network in order to expand their impact on a truly global scale through
enhanced marketing and dissemination.
We will continue to grow and consolidate our work in Guatemala in the com-
ing years. In the summer of 2009, we expanded to Ecuador, with great initial suc-
cess, and we will now expand to Nicaragua. We are offering the MCM solution to
organizations across the globe through our online guide in development,
www.microconsignment.com, and through direct collaboration. VisionSpring
continues to use the model. ToughStuff is using it as an implementation mecha-
nism. Howard Weinstein of Solar Ear sees it as a mechanism to solve hearing prob-
lems throughout the world. Several Ashoka Fellows in Latin America are interest-
ed in using the MCM. All this shows that it works and it is gaining traction. Our
greatest challenge now is how to grow most effectively while supporting adoption
of the model. We are already a bit exhausted, to be honest, but I believe and hope
that our work has just begun.
1. James Surowiecki, “Hanging Tough”. The Financial Page, The New Yorker. April 20, 2009. Can be
accessed at:
http://www.newyorker.com/talk/financial/2009/04/20/090420ta_talk_surowiecki#ixzz0Z5z28GW6

Brett R. Smith

Reconsidered
Invention-Led Development by Shifting Risk,
Transferring Knowledge, and Scaling Capabilities
There is a great deal of debate about the definition of social entrepreneurship. I use
an emerging definition: “Innovative and effective activities that focus strategically
on resolving social market failures and creating opportunities to add social value
systematically by using a range of organizational formats to maximize social
impact and bring about change.”1 This definition acknowledges three key aspects
of social entrepreneurship: an innovative element, a primary focus on the creation
of social value, and a diverse set of approaches that employ creativity to deliver
social value. Thus it paves the way for a greater understanding of “invention-led
development,” which, according to the Lemelson Foundation, focuses on how new
ideas, products, or services can be converted to widely accessible or adopted forms
in the creation of social value.
When the language of invention-led development is used, it conjures up
images of novel products and services used in development activities. On the prod-
uct side, for example, a treadle pump—such as those designed by KickStart—
offers significant advantages over other alternatives in improving irrigation for
subsistence farmers in Africa. Similarly, on the service side, the creation of micro-
finance by organizations such as Grameen Bank makes credit available to popula-
tions that previously had been denied such access.
Brett R. Smith, Ph.D., is Assistant Professor of Entrepreneurship and Founding

Director, Center for Social Entrepreneurship at Miami University (Oxford, Ohio). He
focuses his research on social entrepreneurship, with specific emphasis on scaling of
social impact and new development models. His work has been used at places such as
the United Nations Executive Committee and the Nelson Mandela Foundation, and
has been highlighted in or on Time, Business Week, Financial Times, CNN, MSNBC
and more than 100 other media outlets.
© 2010 Brett R. Smith

Brett R. Smith
However, innovative development activities need not be limited to a product

or service. The case of Community Enterprise Solutions offers a compelling inven-
tion-led development that is neither a product nor a service but a distribution
model, termed the MicroConsignment Model (MCM). After several conversations,
phone calls, and meetings with Greg Van Kirk over the last year, I took the oppor-
tunity to understand the MCM model more fully through my own firsthand expe-
rience in Guatemala and through the secondhand experiences of my students.
These experiences, coupled with the social impact to date of Community
Enterprise Solutions, suggest that the MCM model has substantial potential as an
invention-led development that can leverage an operating system to promote
opportunities for shifting risk, for transferring knowledge, and for scaling capabil-
ities.
INNOVATION AS A DISTRIBUTION MODEL

The MCM model is one of the most intriguing aspects of the invention-led devel-
opment of Community Enterprise Solutions, which was developed by Greg Van
Kirk and Bucky Glickley. As Joseph Schumpeter suggests, an entrepreneurial solu-
tion may include any of the following: a new product or service, a new market, a
new source of raw materials, or a new organizing method.2 Rather than focusing
on a specific product or service, microconsignment is an innovation method of
organizing that, like a business model, identifies how all the elements of a system
fit into a working whole. As Van Kirk suggests in his case study, “There are prod-
ucts in existence. There is no lack of technology solutions. . . . There is no lack of
local and foreign human capital looking for solutions. Local individuals with
entrepreneurial spirit are in no short order.”
Building on a range of development experiences, the MCM was created by
assembling the pieces of an integrative model. The MCM borrows from the tradi-
tion of consignment in the retailing industry, where the ownership of goods is
retained by the supplier, price is set by the supplier, goods are sold by the retailer
for a percentage of the sales price, and money is exchanged only after the sale has
been made. Drawing on the consignment model, Community Enterprise Solutions
is able to avoid many of the challenges of other development approaches, includ-
ing lack of training, antagonistic relationships, and substantial financial risk.
Research suggests that the decision to become an entrepreneur is a function of
both feasibility and desirability.3 Assuming such factors are relevant for microen-
trepreneurs, the MCM creates an opportunity to expand the number of microen-
trepreneurs in the developing world; from a feasibility perspective, the MCM offers
microentrepreneurs increased training and a proven opportunity using previous-
ly vetted products/services to increase the likelihood of success.4 In this way, the
MCM allows microentrepreneurs to envision themselves as entrepreneurs more
easily and to gain confidence in their business skills through their early success.
From a desirability perspective, the MCM offers microentrepreneurs a lower level
of risk and reduced antagonism because the microentrepreneur and the microcon-

The MicroConsignment Model Reconsidered
signment organization sit on the same side of the table. As a result, the microen-
trepreneur may see the opportunity as more desirable and be motivated to “test
drive” the model.
The MCM model also offers an operating system platform that allows other
products and services to be easily integrated. Like Microsoft’s Windows, the MCM
offers an opportunity to piggyback new products or services onto the existing
infrastructure and therefore to expand the offering of both the microentrepre-
neurs and the system as a whole. However, as a social rather than a commercial
innovation, the MCM is available as an open-source model for other organizations
to replicate and adapt for the creation of social value. As a result, the MCM holds
great promise as a new platform for invention-led development.
SHIFTING RISK
One primary advantage of the MCM is its ability to shift risk from those who can
least afford to take it (microentrepreneurs) to those who are more able to bear it
(microconsignment organizations). Several established models (e.g., microfi-
nance) and emerging models (e.g., microfranchise) of social entrepreneurship
require the microentrepreneur to bear substantial financial risk. The argument in
favor of this is accountability: proponents suggest that if the microentrepreneur
takes a financial risk they will have to have skin in the game, as angel investors and
venture capitalists typically require. However, in the developing world, such an
approach may not be appropriate because the financial risk associated with failure
may put not only the microentrepreneur but also their family members in debt for
an extended period of time.
Community Enterprise Solutions, in contrast, does not require the microen-
trepreneur to take such risks. Instead, the MCM allows the microentrepreneur to
test drive the model and to invest sweat equity rather than borrowed financial cap-
ital. This shift of risk from the microentrepreneur to the microconsignment organ-
ization allows microentrepreneurs to realize a profit within one month of startup,
and makes the opportunity available to a greater number of potential microentre-
preneurs by shifting the risk from a financial to a time risk—the opportunity cost
of investing time without realizing benefits.
One outcome of shifting risk is the avoidance of systemic failure. In many
development approaches, the economic condition for the majority of microentre-
preneurs is improved. However, what happens to the unsuccessful microentrepre-
neurs? While some development approaches leave unsuccessful microentrepre-
neurs mired in debt, the MCM—through the elimination of startup costs and
loans—avoids the systemic failure of any microentrepreneurs who simply incur
the opportunity cost of investing their time. As such, the MCM adheres to the
principle of prinum non nocere by ensuring that no harm is done to even unsuc-
cessful microentrepreneurs.
Shifting risk also provides a “real options” opportunity for the microentrepre-
neur in which smaller initial investments can be made, thereby limiting the down-

Brett R. Smith
side of a negative outcome without constraining the upside of a positive outcome.

That is, the microentrepreneur can invest a small amount (of time) to test drive the
model before making additional investments of time. The limited investment of
time does not limit the potential financial upside of becoming a microentrepre-
neur, and such additional investments can be made after assessing some level of
performance. In this way, the real option available for the microentrepreneur
allows them to assess risk (with some understanding of probabilities and out-
comes) rather than uncertainty (with essentially unknown probabilities and out-
comes) before making additional investments.
As risk is shifted from the microentrepreneur to the organization, it aligns the
interests of both parties in a way that gives the microconsignment organization
incentives to remain focused on the desired outcome rather than the input. As Van
Kirk recounts from his personal experience, some microfinance organizations have
used metrics such as the number of loans and payback rate, which do not neces-
sarily equate with social impact. By comparison, the MCM encourages the micro-
consignment organization to measure outcomes based on the success of the
microentrepreneurs, which in turn benefits the organization as well.
KNOWLEDGE TRANSFER THROUGH EXPERIENCE

Another important benefit of the MCM is the ability to affect education at multi-
ple levels through experiential learning.5 First, the MCM offers the opportunity for
individuals with very little education to become very successful entrepreneurs. As
described above, the microentrepreneur is trained and supported by the micro-
consignment organization in all aspects of the business. While such training
increases the microentrepreneur’s chance of success, it also adds to their stock of
knowledge. In this way, the microentrepreneur experiences hands-on learning by
participating in the MCM. Second, the MCM also provides experiential learning
for the microconsignment organization. Rather than being affixed to a certain
product or service, the MCM relies on the microentrepreneur to interact with
potential consumers to identify and evaluate new products and services, which
may create value for consumers and be distributed by the MCM. As such, the
MCM provides a platform for the ongoing creation of organizational knowledge
about development interventions that create social and economic value.
Another form of knowledge is generated through the education of a new
group of potential social entrepreneurs. As Community Enterprise Solutions has
considered funding alternatives, one recent innovation is the creation of a Social
Entrepreneur (SE) Corps, in which students go to the developing world to learn,
question, and experiment with the MCM and other development programs.
Building on the founders’ own grassroots experiences in the Peace Corps, SE Corps
offers an opportunity to bring new people into the field and to equip them with
knowledge gained through hands-on experience in the developing countries of
Guatemala and Ecuador. This approach allows students to gain a realistic preview

of development work and to understand some of the unique challenges of being a

social entrepreneur.6
While university programs at the undergraduate and graduate level continue
to offer coursework in social entrepreneurship, relatively few co-curricular and
hands-on experiential learning options are available. As the field of social entrepre-
neurship continues to develop, we need to provide new educational and pedagog-
ical tools that enable our students to realize their potential in acting as change
agents for themselves and their communities, thereby allowing them to invent
profitable and sustainable approaches that create solutions to change society for
the better.7 In this way, Community Enterprise Solutions contributes to the educa-
tion of future generations of social entrepreneurs.
SCALING OPPORTUNITIES
A final benefit of the MCM is the myriad of mechanisms through which the scal-
ing of social impact can occur. Scaling refers to the increase of social value that can
occur through an invention-led development. It can occur first through the addi-
tion of products or services for Community Enterprise Solutions. Whether they
are identified through microentrepreneurs or foreign development workers, effec-
tively vetted products and services can be added to the MCM’s infrastructure to
provide access to the growing number of products and services available to the
rural poor and to increase income opportunities for the microentrepreneurs.
Second, scaling can be realized by expanding the model to include other geo-
graphic markets. The recent expansion of Community Enterprise Solutions to
Ecuador is an important step in understanding the MCM’s ability to be replicated
in other geographic regions where common problems of access to basic products
and services exist. Third, the MCM offers scaling possibilities through replication
by other organizations. In microfinance, replication and adaptation accounted for
significantly increased access to microcredit. In the same way, the MCM offers a
platform for other organizations to scale social impact.
Finally, the MCM provides a mechanism for the scaling of education. Having
personally met Yoly Acajabon and Clara Luz de Montezuma, the microentrepre-
neurs described in the opening vignette of Greg Van Kirk’s case study, I have wit-
nessed the scaling of education. These two women have increased their knowledge
and skills, resulting in their being promoted from community advisors to region-
al coordinators, the latter position being one that trains prospective community
advisors. The MCM has provided the same sort of scaling for students of social
entrepreneurship. The growth of the SE Corps to additional universities and the
growth of individual students—such as Mary Claire Sullivan from the University
of Notre Dame and Mike Duchen from Miami University (Ohio), who have taken
coursework in social entrepreneurship, participated in the summer internship pro-
gram, and joined Community Enterprise Solutions with full-time commitments—
illustrate the scaling of social impact through education.

Brett R. Smith
THE FUTURE OF MCM: CHALLENGES AND PROSPECTS

Under the leadership of Greg Van Kirk and Bucky Glickley, Community Enterprise
Solutions has created an extraordinary invention-led development in the MCM.
Looking beyond the benefits, a few important challenges remain for the growth
and development of the organization and the model.
While one benefit of the MCM is that capital is not required of microentrepre-
neurs, it is also one of the constraints of the MCM’s growth. By reducing the bar-
riers to entry for microentrepreneurs, Community Enterprise Solutions has also
tied up valuable and scarce financial capital in the inventory of products and serv-
ices. As identified, this approach results in shifting risks from the microentrepre-
neur to the organization and is therefore desirable, especially in the short run.
However, in the long run, other approaches may need to be considered. One pos-
sible approach is to shift risks back to the microentrepreneur over time. For exam-
ple, in the first year as a microentrepreneur, an individual may have access to all
products and services on a consignment basis. If successful, the microentrepreneur
may increase both their confidence and their income. In the second year, the
microentrepreneur might pay for 50 percent of the inventory before they sell it,
and over time may move toward a retailer relationship where they purchase and
then resell the inventory. Alternatively, such a hybrid approach could be used for
different products or services. As such, microentrepreneurs may buy proven prod-
ucts but receive on consignment new products or services that are being intro-
duced into Community Enterprise Solutions.
While the details and challenges to such an approach would need to be tested,
there are at least two benefits to making the transition from a consignment model
to retailer model. First, from an organizational level, Community Enterprise
Solutions is able to free up valuable working capital that can be used to expand the
model by introducing other products/services or by expanding to other geograph-
ic areas. Second, from a microentrepreneur’s perspective, this approach encourages
the growth and development of individual knowledge and skills by fostering per-
sonal savings, autonomy, and business acumen that may be useful within or out-
side of the role as a community advisor. It is consistent with other development
approaches that encourage personal responsibility, but it also recognizes that such
responsibility and risk should only be taken when successful training, education,
and experience have been realized.
A second challenge for the continued growth of the MCM is identifying
microentrepreneurs in developing countries. While the concept of self-employ-
ment is gaining recognition through several different social innovation approach-
es, potential microentrepreneurs, who generally pursue self-employment out of
necessity, are still risk averse. To encourage more participation by a growing num-
ber of microentrepreneurs, the MCM lowers the barriers and reduces the negative
outcomes of microentrepreneurship.
In sum, the MCM is one of the most promising platforms for invention-led
development in the field of social entrepreneurship. As such, Community

Enterprise Solutions and its founders, Greg Van Kirk and Bucky Glickley, are to be
applauded. Community Enterprise Solutions offers better access to essential prod-
ucts and services in developing countries and an opportunity for microentrepre-
neurs to develop new skills and increase their income. It provides a unique oper-
ating system as a distribution model that encourages shifting risk, knowledge
transfer, and scaling capabilities. The Lemelson Foundation suggests that an inven-
tion-led development should be widely accessible and adopted. Additional
resources in various forms of capital are needed to increase the accessibility and
adoption of the promising MCM: Financial capital needs to be added in stages for
further replication and expansion of the model. Human capital is needed in the
form of additional microentrepreneurs and aspiring social entrepreneurial stu-
dents. Social capital is needed to increase the products and services available, and
to integrate the MCM with other forms of invention-led development. Such
investments of financial, human, and social capital in this most promising inven-
tion-led development are needed—and warranted—to maximize social impact
and build the bridge to the last mile.
Acknowledgments
I thank Greg Van Kirk and Bucky Glickley for their ongoing collaboration and
education on different development approaches. I also thank the many members
of Soluciones Comunitarias, including Miguel Brito Ramirez, Yoly Acajabon, Clara
Luz de Montezuma, and Mary Claire Sullivan for their knowledge and hospitality
during my time in Guatemala. Finally, I thank the students, donors, and adminis-
trators of Miami University who have made this work a reality.
1. Nicholls, A. Social Entrepreneurship: New Models of Sustainable Social Change. Oxford, England:
Oxford University Press, 2006.
2. Schumpeter, J. Theory of Economic Development. Cambridge, MA: Harvard University Press, 1934.
3. McMullen, J., and D. Shepherd. “Entrepreneurial Action and the Role of Uncertainty in the
Theory of the Entrepreneur.” Academy of Management Review 31 (2006): 132–152.
4. Smith, B., C. Matthews, and M. Schenkel. “Differences in Entrepreneurial Opportunities: The Role
of Tacitness and Codification in Opportunity Identification.” Journal of Small Business
Management, 47 (2009): 38-57.
5. Kolb, D. Experiential Learning: Experience as the Source of Learning and Development. Englewood
Cliffs, NJ: Prentice Hall, 1984.
6. Tracey, P., and N. Phillips. “The Distinctive Challenge of Educating Social Entrepreneurs: A
Postscript and Rejoinder to the Special Issue on Entrepreneurship Education.” Academy of
Management Learning and Education 6 (2007): 264–271.
7. Smith, B., T. Barr, S. Barbosa, and J. Kickul. “Social Entrepreneurship: A Grounded Learning
Approach to Social Value Creation.” Journal of Enterprising Culture 16 (2008): 339–362.

Paul Polak, Peggy Reid, and Amy Schefer
2.4 Billion Customers

How Business Can Scale Solutions to Poverty
Grameen Bank has loaned US$6.38 billion to 7.4 million very poor borrowers, and
International Development Enterprises (IDE) has helped three million very poor
small-holder families increase their net income by $288 million per year by creat-
ing affordable irrigation tools and markets. In light of growing evidence that most
development projects fail to produce measurable positive results, what these pro-
grams have achieved seems, at first blush, extraordinary. But approximately one
billion people in the world survive on less than $1 a day, and over 2.4 billion live
on less than $2.1 So, what Grameen Bank and IDE have done to improve the lives
of some 10 million very poor families amounts to nothing more than a drop in the
bucket. Achieving positive, measurable change at significant scale remains the sin-
gle biggest challenge in development.
Many reasons have been offered to explain why the appropriate technology
movement, in particular, failed to fulfill its promise of alleviating poverty; the most
important among them are the failure to build technology that meets users’ needs,
lack of local ownership, and complicated and expensive replacement parts. But
these explanations, while true, bypass the underlying reality that the movement
Dr. Paul Polak is the founder of International Development Enterprises (IDE) and D-
REV, both non-profits, along with for-profit Windhorse International, all of which
develop products to serve poor customers. For the past 25 years, Paul has worked with
thousands of farmers around the world to help design and produce low-cost income-
generating products which have already moved 17 million people out of poverty.
Peggy Reid joined the Lemelson Foundation as Program Director in 2008. From 2001
to 2008, she served as Director of the Public Management Program at Stanford’s
Graduate School of Business. Her private-sector experience spans product develop-
ment, management consulting, and mergers and acquisitions. She holds graduate
degrees in Business and Theology from Dartmouth and Harvard, respectively, and a
B.A. from Wellesley College.
Amy Schefer, Paul Polak’s daughter, provided extensive editorial support for this arti-
cle. She has also been collaborating with Dr. Polak on a blog that will appear on
PaulPolak.com.
Paul Polak’s first-hand narrative is presented in italics.
© 2010 Paul Polak, Peggy Reid, and Amy Schefer

was led by well-intentioned, creative tinkerers designing solutions to technical

problems, instead of hard-nosed entrepreneurs designing scalable business models
around a technology.
Paul: On a plane 20 years ago, I sat next to a young man who was very excited about
a tool carrier he was designing. If a farmer had a plow, a cultivator, and a cart pulled
by a draft animal, this tool carrier would let him combine all three in a single plat-
form, to which he could bolt various implements. I liked his idea and asked him how
much it would cost. “That’s a very interesting question,” he said, “I suppose we should
start thinking about that quite soon.”
Right away, I knew his project was doomed to fail. If his focus was poor farmers,
how could he not build price into the design from the very beginning? A tool that costs
too much for poor customers has to be heavily subsidized; that severely limits the num-
ber of poor people who gain access to it and profoundly disrupts the market forces that
usually provide the most effective channel for its mass dissemination. The failure of the
much-publicized African tool-carrier project, which cost millions of dollars and
required heavy subsidies, has now been fully documented. Very few technologies devel-
oped by the appropriate technology movement ever ended up in the hands of more
than a thousand people.
Similarly, this past July I was at the International Development Design Summit
conference in Ghana. A woman who listened to my talk came up to me afterwards and
took me to task for insisting on selling a million of anything. “Are you against small?”
she asked. “What’s wrong with doing a project that helps 20 people in a village? Isn’t
that important too?” “Yes,” I said, “it is. But if you talk to the people in any village of
let’s say 150 families, you will quickly identify at least 20 or 30 problems that are very
important for the people in that village. It takes time and money to come up with a
practical solution to any of these 20 or 30 problems and make it happen—time and
money not only on your part, but on the part of the village people who apply the solu-
tion. Why not pick, out of those 20 or 30 problems, the three or four that have appli-
cations to 1,000 villages? Or 100,000 villages?”
Many efforts to bring life-changing technologies to poor people are destined to
have limited impact, because those projects aren’t grounded in poor people’s real
life needs, aren’t financially sustainable, and don’t address the biggest, most impor-
tant issues that poor people struggle with every day. Most importantly, a strategy
to reach millions of poor people is rarely if ever built into the project from the very
beginning. In response, Paul Polak has developed a mantra that he repeats inces-
santly to students and development enthusiasts around the world who aspire to be
social entrepreneurs. He calls it the “Don’t Bother Trilogy”:
• If you haven’t talked to at least 25 poor people before you start, don’t bother.
• If it doesn’t pay for itself three times over in the first year, don’t bother.
• If you can’t sell a million of them, don’t bother.

THE TREADLE PUMP: BUILDING SCALE INTO

DESIGN AND DISSEMINATION
Paul: I first met Abdul Rahman, a farmer in the Noakhali district of Bangladesh, in
1981. On his three-quarter acre rain-fed rice fields, he could grow only 60 percent of
the rice the average person in Bangladesh needs to survive. During the three months
before the October rice harvest came in, Abdul and his wife had to watch silently while
their three children survived on one meal a day. As I walked with him through his
scattered fields, I asked what he needed to move out of poverty. “Control of water for
my crops,” Abdul responded, “at a price I can afford.” Like most smallholders, Abdul
was totally dependent on the rain to water his crops. During the rainy season, he got
plenty of water, but everybody else did too, so prices in the market dropped so low he
couldn’t earn much from selling his produce. However, if he could provide water for
crops during the dry season by drilling a well or storing monsoon rainwater, he could
grow off-season fruits and vegetables and earn three times as much for them in the
market because prices are much higher in the dry season.
In 1981, Abdul heard about the treadle pump, a human-powered pump sold by
International Development Enterprises (IDE).2 He became one of the first farmers in
Bangladesh to buy one, with $25 he borrowed from an uncle. During the five-month
dry season that followed, when Bangladeshis typically farm very little, Abdul used the
treadle pump to grow a quarter-acre of chili peppers, tomatoes, cabbage, and egg-
plants. He also used it to improve the yield of one of his rice plots. His family ate some
of the vegetables and sold the rest at the village market, earning a net profit of $100.
He repaid the loan easily within four months. With his new income, Abdul was able
to keep his family fed all year, keep his two sons in school until they were 16 instead of
pulling them out at age 12 to work on the farm, and set aside a little money for his
daughter’s dowry. When I visited him again in 1984, he had doubled the size of his
vegetable plot and replaced the thatched roof on his house with corrugated tin. His
family was raising a calf and some chickens. He told me that the treadle pump was a
gift from God.
In the 12 years after IDE began its mass dissemination of the treadle pump in 1981,
2.1 million very poor farming families in Asia and Africa invested more than $50
million of their own money to buy the pumps and increased their net income by
$210 million a year. Another wave followed this initial explosive demand, when
like-minded organizations, like Kickstart, the Food and Agriculture Organization
(FAO), and Enterprise Works Worldwide, began to market their own versions of
treadle pumps, with the happy result that more than 2.5 million are in the hands
of small-holder farmers around the world. Although this total is tiny compared to
the hundreds of millions who could benefit from this technology, the treadle
pump still serves as a good example of how to scale-up a pilot development proj-
ect.
Three points are key here. First, as technologies go, the pump itself is a gem:
simple, easily maintained and repaired, affordable, and income-generating, all fac-
tors that correlate strongly with the ability to grow the project. Developed in the

late 1970s by Norwegian engineer Gunnar Barnes and the Rangpur Dinajpur Rural
Service (RDRS), the pump works like a modern stairmaster. The operator walks in
place on a pair of bamboo foot pedals, pumping water from a shallow well dug just
for this purpose. Poor farmers most often irrigate their fields with buckets of water
they carry from a local water source; that work is inefficient and back-breaking. In
areas where the water table is high, the ability to irrigate by treadle pump not only
increases the size of the plot that can be irrigated, but adds another planting and
harvest cycle during the dry
season when no water is
In the third year after it accessible on the surface. The
pump is designed to do just
introduced the pump in what a farmer needs and no
Bangladesh, IDE added a full- more—no unnecessary bells
and whistles that might add
length Bollywood movie to its to the cost or require expen-
sive or troublesome upkeep.
rural mass-marketing This leads us to the next cru-
campaign. This movie, in which cial design element: cost. At a
total cost of only $25—
the treadle pump saved the day, including the expense of
played to open-air audiences of drilling a tube well down to
the groundwater—the pump
a million a year. The pump’s was an investment that farm-
impact was profound for the ers could easily pay off with
increased profits from crop
few who had access to it, but it sales in an average of four
months.
would never have reached the And, finally, although
scale it did without that movie. design and affordability are
critical, equally crucial is a
plan to replicate the results
on a larger scale as the initial pilot project succeeds. In the case of the treadle
pump, some 75 percent of IDE staff time and project funds were focused on rural
mass marketing and on engaging and strengthening the local private sector. IDE
convinced 75 small, private-sector workshops with welders to manufacture treadle
pumps; recruited more than 2,000 village dealers to sell the pumps at an attractive
profit margin; and trained and employed some 3,000 well drillers to manufacture,
sell, and install treadle pumps. In the third year after it introduced the pump in
Bangladesh, IDE added a full-length Bollywood movie to its rural mass-marketing
campaign. This movie, in which the treadle pump saved the day, played to open-
air audiences of a million a year. The pump’s impact was profound for the few who
had access to it, but it would never have reached the scale it did without that movie.
But how, specifically, does one build scale into the design, pricing and distribution
of a technology from the very beginning? The process involves three steps.

Figure 1. Light Plastic, Not Heavy Metal—The IDE Drum Kit.

The “drum kit” in this schematic illustrates a typical low-cost drip system used for
plot sizes of 1/8 to 1/2 an acre. This version has a 200-liter drum, which serves as a
flow-through gravity tank. The tank is raised one meter off the ground to provide the
pressure needed to drive water through the system and to the drip points, called
emitters, next to each plant.
To illustrate, let’s consider another IDE project: a low-cost drip irrigation sys-
tem. In many dry areas of the world, drip irrigation represents the stingiest and
most efficient way of delivering water to crops, and has the added benefits of
improving crop yield and quality. Yet because drip irrigation requires a compara-
tively high capital investment, only one percent of irrigated acreage around the
world uses it. To the 75 percent of the world’s farmers who cultivate less than five
acres, conventional drip irrigation systems are far too expensive, and far too big to
fit their typical quarter-acre plots.
Stage 1: Develop the Right Solution

IDE created a prototype for a small drip-irrigation system in Nepal that could
address these affordability and size barriers faced by small-holder farmers. The sys-
tem cost less than $20, an affordable amount for Nepali farmers who earn less than
a dollar a day; it would more than pay for itself in a single growing season.

Figure 2. The Gravity-Assisted IDE Low-Cost Drip Irrigation System.

In hillside environments such as in Nepal, water can flow by force of gravity from
the stream into the drum and from the drum to the field by adding a cheap pipe in
the stream above a field. This version uses shiftable lateral lines and baffle-covered
holes as emitters.
Recognizing that even at $20, the system might not be within reach of everyone
who could benefit from it, IDE created an even smaller, cheaper system: a 20 square
meter kitchen garden drip kit that cost $3. Women who used it earned $10 in the
first year, allowing them to “move up” to a more expensive system.
The key to developing an extremely affordable product was decreasing the cost
of materials. IDE started by reducing the water pressure required to move water
through the system; it used a bucket or drum to collect water a meter or two above
the field, instead of the 10-meter head used by conventional drip systems. This
allowed the team to dramatically decrease the thickness of the tubes carrying water
to each row of crops. Then they replaced expensive filters with flour sifters lined
with cloth that could be washed every day, and they replaced expensive emitters
with holes in the pipe, in which they placed microtubes. These modifications cut
the cost of the system in half. In addition, they designed the ongoing maintenance
to be both affordable and locally available. The systems could be easily installed
and repaired by the farmers who bought them, and a whole range of simple

replacement parts was made available through the same village dealers who sold
the drip systems.
The IDE team then went to ten Nepali farmers. They asked the farmers what
problems they experienced using the prototype, so they could quickly re-think, re-
design, and re-test it. This process of repetitive field trials was and remains critical
to building scale. But early on, IDE learned another key lesson: by itself, a well-
designed and affordable product wouldn’t solve the problem. You must talk to the
customers, again and again and again. In the case of small-scale drip systems, we
found that in the first year after they bought a system, farmers didn’t use it as much
as they could or would find beneficial, as few had much experience growing the
more lucrative off-season vegetables that this system made possible. Using drip
systems to grow vegetables in the dry season demanded a different way of farm-
ing—intensive horticulture—that was unfamiliar to the farmers of subsistence
crops like rice, wheat, or corn. To get millions of people to adopt this technology,
IDE needed to dispatch agronomists on bicycles to train the farmers. Many an
excellent project has died on the vine because we fall in love with the technology
and forget to pay sufficient attention to how that technology is being used—or not
used—in the real world.
Finally, the decision about where to place the prototype was critical to the field
testing. In this case, IDE tested it with farmers in visible locations close to Pokhara
and on the outskirts of Kathmandu, where its use could spread quickly as other
farmers, leaders of development organizations, and government officials could
easily hear about it and see it in action. This was “viral marketing” for the develop-
ing world. Exposing the beta product to a larger base of potential customers also
elicits even more feedback on product design and user specifications. It also helps
build a groundswell of excitement about the product and a strong base of future
customers.
Stage 2: Reach the First 1,000 Customers

After a one-year process of adapting the first drip irrigation prototypes based on
the Nepali hill farmers’ feedback and experience with it, the team was ready to
expand sales to reach the first 1,000 customers. They hoped to find that the expe-
rience of Krishna Bahadur Thapa would be typical: he bought a system for $26 and
was rewarded with a net return of $150 from the cucumbers and cauliflower he
grew. The team also knew that farmers who reaped rewards from investing in these
systems would continue to buy larger and larger systems, which would function as
great marketing for the products among their family and friends. Therefore, the
design team made an array of kits that could be affordably linked to each other to
cover larger and larger plots of land.
When the IDE design team was satisfied that it had created a range of success-
ful prototypes, they helped local Nepali village entrepreneurs set up two plastics
extrusion plants making drip irrigation tubing and several more assembly enter-
prises. Simultaneously, they turned their Nepali staff members loose to talk to

A Nepali Farmer Irrigating Vegetables with her Low-Cost Drip System.

A Nepali woman uses an IDE kitchen garden system with a 40-liter plastic gravity
tank. IDE’s smallest system makes drip irrigation practical and affordable. Systems
such as this one can be affordably linked to each other to cover larger and larger plots
of land. In contrast, systems such as those used in large-scale California grape pro-
duction are available only in massive sizes, and use long plastic tubes (called “later-
als”), which require high water pressure driven by a diesel or electric pump and
thick-walled plastic tubing to avoid bursting. These and other requirements are too
costly for use on smaller plots. IDE’s systems use much shorter lateral lines (plastic
pipes) and require one-tenth the water pressure that conventional systems do. A
diesel pump used to provide pressure for a conventional drip system in India costs
$250,compared to $10 for a 55-gallon drum or even a $1.50 double-walled plastic
bag sitting on a simple bamboo table.
rural farmers and support local dealers in selling drip irrigation systems. It took
two years to sell the first 1,000 systems that truly met farmers’ needs, were reliable
and affordable, and could earn the farmers three times their investment in the first
year. Once the product and business model were on solid footing, and the enthu-
siasm, awareness, and demand for it were growing, IDE was ready to expand again.
Stage 3: Reach at Least 1,000,000

States like Maharastra and Rajasthan in the Deccan plateau in Eastern India were
prime areas for expansion. There, in the dry season, farmers had little water—only
what they could collect each morning in a multitude of large open wells. And they

could grow only a few of the vegetables and fruits that afforded them a healthy
margin and livelihood. Similarly, in peri-urban areas in sub-Saharan Africa, mil-
lions of farmers’ yields were limited by their practice of using sprinkling cans to
carry water from ditches, streams, and rivers to irrigate their vegetables. IDE
expected that its drip system would meet with great demand in both places.
The first approach IDE took to bring low-cost drip irrigation to at least one
million dollar-a-day farmers was to try to persuade large international drip irriga-
tion companies to introduce and mass market small, low-cost systems. Partnering
with large corporations has traditionally run counter to the beliefs of many devel-
opment organizations, but in IDE’s view it was simply expeditious because corpo-
rate producers already had manufacturing facilities, raw material sources, the abil-
ity to produce large volumes, and marketing and sales capacity.
Paul: Despite our enthusiasm for commercial paths to scale, we encountered skepti-
cism from irrigation producers. I met with the leaders of Netafim, the world’s largest
drip irrigation company, but came away empty-handed. Netafim was interested in
partnering with us only if we could get World Bank subsidies to deliver its more expen-
sive drip systems to African farmers. Netafim executives were concerned that manu-
facturing lower-cost systems would negatively affect the company’s brand by associat-
ing it with low-cost systems. We faced a similar reaction from Jain Irrigation, India’s
largest drip irrigation company. We had no choice but to introduce low-cost drip irri-
gation to the market ourselves, through IDE India, which was established in 1987 to
improve the livelihoods of small farmers by providing access to affordable irrigation
tools and is now an autonomous development organization. Taking advantage of the
dissemination strategies we had honed as we mass marketed treadle pumps in Eastern
India, IDE India recruited and licensed several manufacturers and many rural deal-
ers, and launched a rural marketing campaign to popularize low-cost drip irrigation.
Fortunately, most poor farmers were already familiar with drip irrigation technol-
ogy, since their richer neighbors were already using higher-cost versions of it. And, as
a result of our high-visibility prototype development approach, many were also aware
of IDE’s low-cost version. Sales in India rapidly grew to several hundred thousand sys-
tems, and wealthier farmers began to prefer IDE’s low-cost systems to conventional
drip systems for their smaller crops, like 30-acre banana farms. Ironically, today, both
Netafim and Jain Irrigation have introduced their own smaller, lower-cost systems.
And IDE has now introduced low-cost systems in Myanmar, Zambia, Ethiopia,
Nicaragua, and Zimbabwe, working with a variety of local partners. At present, the
global market for these irrigation technologies far exceeds 10 million customers.
. . . BUT WE MUST DO BETTER

Over the past 25 years, more than three million one-acre farmers in developing
countries who live on less than a dollar a day have invested $139 million of their
own money in extremely affordable, income-generating irrigation tools from
IDE—and have thus doubled their incomes. And in selling 2.1 million treadle
pumps through rural small enterprises, IDE encouraged the emergence of a move-

ment to help small farmers around the world improve their livelihoods from farm-
ing; in this movement organizations like One Acre Fund, KickStart, and Enterprise
Works Worldwide now play leadership roles. Nevertheless, it has taken Paul Polak
decades to realize that the efforts of IDE and others did not, and still do not, rep-
resent a model that can or will be scaled at the level we need to move the needle on
global poverty.
Similarly, Muhammad Yunus had a revolutionary dream: lend small sums of
money to poor people and enable them to create and grow small enterprises to lift
themselves out of poverty. His leadership has galvanized a global microcredit
movement. By July 2008, his brainchild, Grameen Bank, had issued US$6.38 bil-
lion to 7.4 million very poor borrowers. Grameen’s efforts have galvanized others,
like Acción International, MEDA, and even commercial banks to, offer micro-
loans around the world, making capital more readily available to poor people and
at better rates than ever before. While recent studies, using randomly assigned con-
trols, have raised interesting questions about the impact of microcredit, no one
questions that microcredit services are now being delivered to poor customers at
scale. This is a remarkable achievement. And yet, in the global context of extreme
poverty, 1.1 billion people still live on less than a dollar a day and 2.4 billion live
on less than $2 a day: that is 40 percent of the world’s population. Relative to the
need, our collective best efforts are but a drop in the bucket. We must do better.
The single biggest challenge in development is to replicate success stories from
those like IDE and Grameen Bank to achieve far greater scale than we can today.
Many have pointed to the private sector and commercialization strategies as a
promising way to get there. But the fact that corporations are increasingly interest-
ed in social causes should not be cause for premature celebration. Unfortunately,
with few exceptions, this growing interest has led to very little measurable change
at the kind of scale we need. Why? Because, to date, most corporate involvement
has taken the form of either charitable efforts or “socially responsible” commercial
ventures that fail to target poor customers. And only a scant few of those develop-
ing products and services for the poor have bothered to structure their businesses
to offer real market rate returns that would attract large numbers of traditional
investors.
The Promise of Corporate Philanthropy

In the last two decades, many multi-nationals have developed corporate philan-
thropic arms to address the most pressing social and environmental needs in the
communities where they operate. Some see the rise of corporate involvement in
philanthropic activities as reason to hope that corporations can lead the way in
addressing global poverty and inequities. But corporate giving constitutes an
inconsequential percentage of total annual charitable giving: nowhere near enough
to improve the lives of 2.4 billion people.
Another distressing reality is pointed out by Jed Emerson, a leading thinker on
social return on investment, in his article, “Horse Manure and Grantmaking.” All

too often, philanthropies—including corporate foundations—use grantmaking

dollars (the 5 percent of funds generated by the foundation’s corpus or income-
generating assets) to pursue their social missions, meanwhile ignoring the fact that
95 percent of their assets are judged solely on financial performance. That is, they
have 95 percent of their money invested in companies that may be destroying the
very social or environmental value the foundation seeks to create.
The Promise of Corporate Social Responsibility and Social Businesses

Many companies are seeking ways to improve their human resource, labor, and
environmental practices or to make their manufacturing practices greener. But the
primary beneficiaries of these activities are the company’s employees and the com-
munities in which they operate. A more ambitious subset of enterprises has set out
to achieve both measurable social impact alongside profitability. While laudable,
these corporate activities rarely aim to earn profits by selling products and servic-
es that address basic human needs and generate income for the poorest of the
poor. So, the lives of the poor have remained largely untouched by them.
In The Fortune at the Bottom of the Pyramid, C. K. Pralahad popularized the
potential of commercialization to generate real and sustainable wealth for the very
poor. Unfortunately, the promise of the book is not realized in practical implemen-
tation. Most of the examples Prahalad describes are of admirable businesses serv-
ing middle-class customers, with products like color TV sets and refrigerators that
are totally out of reach for people living on less than $2 a day. And, in his upcom-
ing book, Building Social Business: The New Kind of Capitalism That Serves
Humanity’s Most Pressing Needs, Muhammad Yunus puts forward the concept that
“social businesses”—for-profit enterprises with a core social purpose—will be the
engine of social change. He describes, for example, Grameen Danone Foods in
Bangladesh, which daily improves the health of low-income, nutritionally deprived
populations with a tasty form of yogurt. This concept is likely to have a significant
impact in some markets serving extremely poor customers, but investors in social
businesses like Grameen Danone Foods simply get their money back, with no
interest or dividends, so such projects are likely to have very limited appeal to
mainstream investors. And those are precisely the investors we need in order to
launch the large-scale businesses that can help hundreds of millions of the world’s
poorest move out of poverty.
To have any hope of making a meaningful impact on the epidemic of global
poverty, we must be able to design and implement development programs that can
end the poverty of a hundred million people at a time. Unfortunately, over the past
50 years, we have invested trillions of dollars in large and small initiatives to erad-
icate poverty, with very little to show for it. But, a few encouraging approaches have
achieved measurable results at significant scale.

IT CAN BE DONE: THE CASE OF MOBILE TECHNOLOGY

The recent and rapid mass marketing of cell phones in developing countries pro-
vides one encouraging model. There’s no question that cell phones have very
quickly reached a remarkable level of global adoption. By the end of 2008, mobile
cellular subscriptions totaled approximately 4.1 billion worldwide. Global growth
in developing regions has been fastest in Africa, where mobile penetration has sky-
rocketed from 2 percent in 2000 to almost 30 percent today.3 While it is estimated
that only 3 percent of tje bottom billion customers worldwide now own phones,4
many times more have informal access to the cell phones of relatives or friends, or
can rent one at a modest fee from a cell phone entrepreneur.5
Before the introduction of mobile technologies into poor farming communi-
ties, most poor smallholders in developing countries had to take their crops to
market and accept whatever price was on offer, which usually meant 10 to 40 per-
cent less than what they could get if armed with timely market price information.
In addition to cash and opportunity cost savings to farmers, in places like Niger,
mobile technologies have contributed to narrowing differences in grain prices
across markets by 20 percent with the biggest impact on price dispersion found in
the most remote markets and in those with limited road access.6 Text messaging,
and SMS in particular, has proven to be an affordable way for poor people to gain
access to critical income-generating information.
What has allowed mobile technologies, micro-credit, and basic agricultural
technologies to be adopted so widely, even among the poor? These are products
and services that poor people themselves are willing and able to invest their own
meager funds to acquire. Nokia sells mobile phone services and earns healthy prof-
its doing it, and poor farmers who rent cell phones expect to get at least three times
their money back by taking advantage of the information they get by doing so.
Grameen Bank doesn’t give grants to poor people, no matter how badly they may
need the money. Instead, it provides loans at varying interest rates, and expects
people to pay them back; a surprisingly high percentage do. Farmers who live on
less than a dollar a day invest their own money to rent phones, take out loans (or
purchase treadle pumps or low-cost drip irrigation systems) at the full fair-market
price because they see clearly that the purchase will soon generate significant
income. Everyone wins.
THE ROAD TO SCALE IS PAVED WITH PROFITS

The world is just now beginning to emerge from a severe recession, one in which,
ironically, thousands of small and large businesses struggle to survive by compet-
ing with each other to serve only the richest 10 percent of the world’s population.
But plentiful opportunities exist to create Henry Ford sized new markets that serve
the needs of the most neglected group of customers in the world: the 2.4 billion
people who live on less than $2 a day. One billion people who regularly get sick
from drinking contaminated water are waiting for the large multi-national com-

pany that will deliver safe drinking water in their villages at a cost lower than what
they pay to treat the dysentery and other illnesses they now get from their water.
The one billion or more customers who will never connect to the electric grid are
waiting for the company that finds a way to deliver electricity to their homes for
less than the $5 to $10 a month they now pay for flashlight batteries, kerosene, and
candles.
And just as there are plentiful
opportunities to create tremendous
new markets that serve poor cus-
The one billion or more
tomers, there is a vast reservoir of customers who will never
untapped entrepreneurial energy in
hundreds of millions of poor peo- connect to the electric grid
ple themselves, who have, by neces- are waiting for the company
sity, learned survival entrepreneur-
ial skills at an early age. This is a tal- that finds a way to deliver
ent pool that corporations can tap electricity to their homes
to build local, cost-efficient supply
chains, ensuring even greater for less than the $5 to $10 a
wealth creation for the poor.
What’s keeping current corpo-
month they now pay for
rations from creating these new flashlight batteries,
markets?
They don’t see a profit in it.
kerosene, and candles.
They don’t know how to design
products and services at the radical
level of affordability required to meet the pocketbooks of poor customers.
They don’t know how to design the decentralized supply chains required to
serve the billions of very poor people who live in rural villages.
It’s hard to believe that nobody saw a profit in personal computers either, until
Apple created a much cheaper computer that was so small it could sit on some-
body’s desk. Poor people are more than willing to spend their meager amounts of
money on things they value and that will make them more money: things that are
simple, reliable, affordable, and offer a better alternative to their current options.
But three major challenges must be overcome. The first is to design products and
services that are radically more affordable than those sold to the richest 10 percent
of the world’s customers; this requires a total rethinking of conventional design
processes. Most current design teams in big businesses don’t know much about the
characteristics and preference of poor customers, and many have a track record of
earning the most attractive profits by designing high-end, high-margin products.
The second is to focus on earning profits from very large volumes of low-margin
products. This is a comparable but more bracing challenge than the one that
supermarket chains faced when they began to use “value” pricing to compete with
mom-and-pop grocery stores. The third challenge is to create hundreds of thou-

sands of kiosks and small stores in rural villages that can bring these high volumes
of products and services to poor customers at volume, and make money doing it.
What is most urgently needed now is a practical working model of a multina-
tional business that achieves both a measurable positive impact and scale by serv-
ing the needs of at least 50 million of the world’s poorest customers, and generates
commercial rates of return for its investors by doing it.
WINDHORSE INTERNATIONAL: SERVING THE WORLD’S POOREST

CUSTOMERS AND MAKING A PROFIT
The most direct way to end poverty is to create a model that gives companies a real
financial incentive—in the form of substantial profits—to invest serious money in
serving the world’s poorest 2.4 billion customers. With the exception of cell
phones, this model has yet to be demonstrated.
Paul: The mission of Windhorse International is to prove that investors and entrepre-
neurs who deliver goods and services to poor people can earn attractive profits. They
can do so by designing and selling radically affordable tools and services through high-
ly decentralized supply chains serving customers who earn $1 to $2 a day. We’ll start
by demonstrating that we can make money providing safe drinking water to the more
than a billion poor people in the world who don’t have it.
Some 400 million people live in rural areas in Eastern Indian states like Uttar
Pradesh, West Bengal, Bihar, and Orissa. Fewer than five percent of them use latrines;
most people simply defecate in the fields. During the four-month monsoon season end-
ing in October, when much of the rural landscape becomes a continuous pond, the soil
and subsoil become permeated with disease-causing fecal pathogens. Most commonly,
people collect drinking water from shallow open wells, using a bucket on the end of a
rope. But since this well includes surface water, it is filled with these disease-causing
pathogens. The same is true of the shallow ponds that others use for drinking water,
and most shallow tube wells operated with hand pumps are also contaminated.
Villagers typically spend US 75 cents to visit a clinic that can treat the dysentery and
other illnesses they contract from the water they drink; they spend an equal amount
for medicines, and if they can’t work for a week, they lose another $5 or more. Often,
they are well aware that the water is causing their maladies, but they feel they have no
other affordable options.
To address this need, Windhorse International has identified new breakthroughs,
developed by companies like Miox and Cascade Design, and development organiza-
tions like Antenna and D-Rev, in generating chlorine from brine through electrolysis
,as the most cost-effective way to purify drinking water in villages. Windhorse has now
formed a joint venture partnership with IDE India to sell safe drinking water at an
affordable price to some 30 million poor rural families in Eastern India—and to make
money at it.
The partnership will use a $250 electrochlorinator made by Antenna that can gen-
erate enough chlorine solution to produce 80,000 liters of safe drinking water a day,

and will deliver it to poor customers at a price they can afford. The water will be pro-
vided through village micro-kiosks, each capable of delivering as little as 500 liters of
water a day to women coming to fill their 20-liter containers. To enhance margins, a
home delivery service will be available at double the kiosk price, and the business will
also sell a variety of higher-end, higher-status water products to middle-class cus-
tomers. The first step is talking to many, many potential customers and testing a pro-
totype with them, getting feedback, and refining the system based on that feedback. We
plan to begin with a six-month test period setting up at least 10 micro-kiosks selling
safe drinking water to 3,000 poor rural households a day in three separate multi-vil-
lage regions in rural Orissa. During this beta test phase, we will collect systematic
information on how both the technology and the business strategy work in practice
and will adapt our approach accordingly. At the end of the beta test phase, we will hire
a management team capable of implementing a rapid scale-up program. By the end
of the third year, we expect the 1,100 regional systems to be delivering more than 10
million liters of safe water to one million poor rural households each day.
But the end of year three will represent just the beginning. We expect the exponen-
tial process of expansion to continue in Eastern India over the next five years, deliver-
ing approximately 100 million liters of safe drinking water to 10 million rural house-
holds by the year 2020. We plan to roll out a similar initiative delivering safe drinking
water to poor households in sub-Saharan Africa and in Asia. And by the year 2011,
we expect to be a global company providing safe water products. I know that many
people will find this to be a wildly optimistic plan. But I believe that that the only way
to create wealth at the scale our world’s population requires is to make poverty allevi-
ation a profitable business.
THE PEACE AND PROSPERITY OF NATIONS

It seems self-evident that we should care about helping 2.4 billion people raise
themselves out of poverty. But really, why should we? Most of us working in the
field of development fall into that fortunate few: the richest 10 percent of people
in the world. Is it altruism alone that motivates us to care about the fates of billions
of individuals whose lives we know relatively little about? For some of us, perhaps.
But for most, recent history has made it painfully evident that the fates of all
nations are connected. As economic institutions and markets have become ever
more globally linked, the peace and security of our nation and of all nations are
inextricably interwoven. And the widening gaps between the “haves” and the “have
nots”7 are not simply morally questionable—they also lead to greater violence and
instability and further economic stagnation. As President Barack Obama cau-
tioned the world in his Nobel Peace Prize speech in Oslo, Norway, “Security does
not exist where human beings do not have access to enough food, or clean water,
or the medicine they need to survive.” As we slowly recover from the worst eco-
nomic downturn in nearly a century, we would be wise not to ignore the spectac-
ular opportunities to create jobs and profits and to spur more rapid economic
growth by giving birth to dozens of Henry Ford sized new markets that serve 90

percent of the world’s customers. By investing in income-generating enterprises

that provide access to basic human needs, we are investing not only in prosperity
but also in education, health, and greater global security.
The strategies to get there are surprisingly simple. We need to start by recog-
nizing the enormous market opportunity to create products and services that 90
percent of the world will pay for instead of limiting ourselves to 10 percent of the
world’s customers. We need to start treating the poorest of the poor as customers,
not as charity cases. We need to listen to those customers to understand their
biggest, most pressing needs and build simple, affordable solutions; ones that can
be easily maintained and which create profitable businesses for local entrepre-
neurs. And we need to do so by relying on business models that offer attractive
profits to companies and commercial rates of return to investors. Most important-
ly, we need to galvanize and embrace the self-interest and enterprising spirit inher-
ent in all of us—companies, investors, and poor people. The most effective way to
reach the world’s poorest people and to give them the chance to generate wealth
and lift themselves out of poverty is to energize market forces, those same forces
that have fueled enormous wealth creation in developed nations for generations.
The time to begin is now.
1. 2008 World Bank Development Indicators and World Bank’s 2007 report Understanding Poverty
indicate that the number of people living on less than $2 a day is as high as 2.6 to 2.7 billion.
2. Founded in 1981 by Paul Polak, IDE has relied on a market-oriented development model to
increase the income of the rural poor. IDE’s projects aim to increase income for those living on
less than a dollar a day in the most efficient and viable manner possible, according to each region’s
unique opportunities. To date, throughout the world, IDE staff has helped more than three mil-
lion entrepreneurial farm families and their 19 million family members lift themselves out of
poverty, permanently.
3. International Telecommunication Union (ITU), 2009 ICT Development Index, Measuring the
Information Society p. 2. Geneva.
<http://www.itu.int/ITUD/ict/publications/idi/2009/material/IDI2009_w5.pdf>.
4. International Telecommunication Union (ITU), 2009 ICT Development Index, Geneva
.<http://www.itu.int/ITU-D/icteye/Indicators/Indicators.aspx>.
5. R. Heeks. “ICTs and the World’s Bottom Billion.” Development Informatics Short Paper no.10.
Manchester, UK: Centre for Development Informatics, IDPM, SED, University of Manchester,
2009. <http://www.sed.manchester.ac.uk/idpm/research/publications/wp/di/short/di_sp10.pdf>.
6. Jenny C. Aker, “Does Digital Divide or Provide? The Impact of Cell Phones on Grain Markets in
Niger.” BREAD Working Paper No. 177, 2008.
<http://ipl.econ.duke.edu/bread/abstract.php?paper=177>.
7. According to the United Nations Development Program’s 2007 Human Development Report,
more than 80 percent of the world population lives in countries where income differentials are
widening.

Boru Douthwaite
Enabling Innovation
Technology- and System-Level Approaches
That Capitalize on Complexity
Making innovation happen is central to what many engineers do. However, when
we finish our training, most of us believe that it is our job to conceptualize designs,
develop products, and worry little about what happens after they have been intro-
duced. Our courses are generally too practical to bother with theories about how
innovation occurs, who it affects, and how we might better manage the process.
Diesel, inventor of the diesel engine, distinguished between two phases in techno-
logical progress: the conception and carrying out of the idea, which is a happy
period of creative mental work in which technical challenges are overcome, and the
introduction of the innovation, which is a “struggle against stupidity and envy,
apathy and evil, secret opposition and open conflict of interests, a horrible period
of struggle with man, a martyrdom even if success ensues.”1 Diesel is perhaps over-
stating the difficulties of managing innovation, but nevertheless, as engineers we
are still taught to prefer technical “invention” and leave dealing with people and the
“innovation” side to others. However, engineers ignore the innovation process at
their peril. Enabling innovation means building on peoples’ ingenuity and motiva-
tions, rather than working against them.
In this paper, I describe the learning selection approach to enabling innovation
that capitalizes on the complexity of social systems at different scales of analysis.
In the first part of the paper, I describe the approach and how it can be used to
guide the early stages of setting up a “grassroots” innovation process. In the second
part of the paper I look at how the learning selection model can be used “top-
down” to guide research investments to trigger large-scale systemic change.
Boru Douthwaite is a Technology Policy Analyst working for the International Center
for Tropical Agriculture (CIAT) in Cali, Colombia. He previously worked for eight
years in the Philippines as an agricultural engineer at the International Rice Research
Institute.
This essay draws heavily on his book Enabling Innovation: A Practical Guide to
Understanding and Fostering Technological Change (London: Zed Books) pub-
lished in 2002. The essay originally appeared in Innovations, Vol. 1, No. 4, Fall 2006.
© 2006 by Boru Douthwaite
Boru Douthwaite
WHY INNOVATION APPROACHES MATTER
In 1995, the Burmese military junta, the State Law and Order Restoration Council
(SLORC) (now the State Peace and Development Council) decided that, to boost
production, the country’s rice farmers should grow two crops of rice each year
instead of one. There was a good reason why most Burmese rice farmers grew only
one crop, however: growing two meant harvesting the second in the middle of the
monsoon and, without very fast harvesting and drying, the grain would go moldy
and spoil. The traditional single crop meant that the grain could be dried in the
field after the rainy season and that there was far less rush. SLORC realized this, of
course, and had asked the director of the Agricultural Mechanisation Department
(AMD), part of the Ministry of Agriculture, to come up with a rice harvester, with-
in six months that could save the first crop by working in wet conditions.
By July 1995, when AMD’s search had become frantic, somebody, and I still
don’t know who, gave the department the drawings of a rice harvester. These draw-
ings were the fruit of five years of research and development I’d carried out with a
team I’d led at the International Rice Research Institute (IRRI) in the Philippines,
with help from local manufacturers and the Philippine Rice Research Institute. The
harvester my team had designed and built is known as a stripper-gatherer because,
rather than cutting the rice so that it can be carried elsewhere for threshing to
extract the grain, it moves through the field gathering the grain by stripping it
from the standing stalks.
Desperate for a solution, AMD set about building one immediately from the
drawings. When it seemed to work, they videotaped it in action, and AMD’s
Director showed the footage to the Minister of Agriculture and then to the whole
of SLORC. Four weeks after the drawings arrived, and without anyone using the
machine more than twice, SLORC decided to build 2,000 units, 1,000 of which
were to be ready within three months to then be distributed to the country’s trac-
tor stations. I did not find out about what was happening until production had
already begun, and I traveled to Burma soon afterward.
Hardly any of the machines were ever used. Thankfully, only the first 1,000
machines were made, but all of these ended up dumped in sheds or in the bush to
rust away. In the rush to build the machines quickly, quality control had been
scrapped and substandard materials had been used, making the machines inoper-
able without significant modification.
The few harvesters that were used were rejected by the farmers, because the
machines did not cut the straw, but rather left it in the field, making it unavailable
for animal fodder and making subsequent land preparation much harder.
Why had this happened? When I asked the factory manager why there was no
quality control, he admitted that he knew that there were problems with the
machines but fixing them would mean he would not reach his quota. He was wor-
ried that any delays or negative reports from him would cost him his job, and he
was relying on the tractor station managers to keep quiet as well. When I visited a
few tractor stations, I quickly realized that this was the way things were done in

Enabling Innovation
Burma. I found that the stripper harvesters had been abandoned next to foot-oper-
ated rice threshers, rice-hull stoves, and other equipment that had been manufac-
tured by AMD in previous years. Neither farmers nor the tractor stations had been
asked if they wanted the equipment. It had just been assumed that the AMD engi-
neers knew best and could develop what was needed with little consultation.
When I left Burma for the last time, I learned that AMD was starting to build
7,000 mechanical rice-reaper harvesters, which were much more complicated that
the stripper harvester, and so even less likely to work. Nothing had been learned. I
realized that the Burmese Ministry of Agriculture, AMD, and the tractor stations
were all locked into a top-down model of technology transfer that people said was
working when it wasn’t, because they were too afraid of the consequences of feed-
ing back stories of failure.
It would be easy to dismiss what happened in Burma as the inevitable outcome
of having a military junta running a centrally controlled government through fear.
This, however, would be a mistake, because the only way this story differs from
others I came across in the eight years I worked in Asia is that it is more extreme
and its lessons are consequently clearer to see. The fact is that similar centrally
made decisions about what is “good” for farmers have led to even greater waste of
resources in other countries.
My Burma experience, as well as the realization that it was not isolated, led me
to two conclusions: first, the way people think about and plan for innovation is
vitally important; and second, an adequate model of the early innovation process,
where products move from concept to initial manufacturing, did not exist. I dis-
covered that most people thought little about how innovation would happen, and
when they did, they tended to assume a model that had worked well for distribut-
ing the high-yielding plant varieties responsible for the Green Revolution.
This is a top-down model, very much like that used by SLORC on the stripper
harvester, which sees formal research and development (R&D) laboratories as the
source of an innovation, which is then passed on to others to implement. The key
stakeholders—the people who will reproduce and use the technology—are not
seen as sources of innovations or ideas in their own right. I also found out that a
similar model is also mistakenly used in the developed world. As Von Hippel com-
ments:
It has long been assumed that product innovations are typically devel-
oped by product manufacturers. Because this assumption deals with the
basic matter of who the innovator is, it has inevitably had a major impact
on innovation-related research, on firms’ management of research and
development, and on government innovation policy. However, it now
appears that this basic assumption is often wrong.2
These realizations motivated me to learn from other successful and unsuccess-
ful attempts to introduce harvesting and drying equipment into Asia. I researched
13 cases in all and as a result developed a model of the early innovation process,
called the learning selection model.

Boru Douthwaite
LEARNING SELECTION
The main finding from the research, and the most striking, was that the successful
technologies were the ones which manufacturers and users had modified the most.
The research showed that engineers and designers were often singularly unable to
develop machine designs that people adopted without a great deal of further co-
development with the manufacturers, who would build the machine and the peo-
ple who would use it.
This co-development occurred when manufacturers and users believed that
the first commercial prototype made a “plausible promise” of being of benefit to
them, thus motivating them to become co-developers. In the co-development
process the key stakeholders learned about the equipment and developed their
own procedures and protocols, that often increased the performance of the equip-
ment in ways that the engineers had not envisaged. In short, the successful equip-
ment evolved after launch through adaptations made by the key stakeholders and
increased in fitness as a result, while unsuccessful equipment did not evolve.
I developed the learning selection model to describe this process.3 As the name
suggests, the learning selection model is based on an analogy with natural selec-
tion, which is the algorithm that drives biological evolution. Natural selection con-
sists of three mechanisms. These are:
y Novelty generation. As a result of random genetic mutations and the sexual
recombination of differing genetic material, differences between individual
members of a species crop up from time to time.
y Selection. This is the mechanism that retains random changes that turn out to be
beneficial to the species because they enable those possessing the trait to achieve
better survival and breeding rates. It also rejects detrimental changes.
y Diffusion and promulgation. These are the mechanisms by which the beneficial
differences are spread to other areas.
The learning selection model is depicted graphically in Figure 1. It shows a
technology, represented by a cogwheel, beginning as a “plausible promise” that
motivates the key stakeholders to co-develop it. The technology then increases in
fitness by gaining knowledge and becoming “meshed in” to existing systems
through the adaptation and learning that takes place. Here, fitness is taken in the
biological sense to mean improvements in the likelihood that the technology will
be adopted and promulgated. The “meshing in” of the technology, or its “social
construction” as it might also be termed, is represented by the move from a single
cogwheel to three interlocked ones. The increase in knowledge is represented by
the increase in size of the cogwheels.
Learning selection is shown inside the black box in Figure 1 and is responsible
for the evolution. Learning selection is a process built on Kolb’s four-stage experi-
ential learning cycle,4 and is perhaps best explained using an example.
y Experience. Suppose a farmer finds that the rice miller pays her a low price for
the grain dried in her dryer because some of it is not properly dried.

Key stakeholder knowledge
Researcher knowledge
Technology good enough
for widespread adoption
Many
Other replications
participants
Experience of cycle
Technology at beginning
innovations / Tech4Society 2010

Action of widespread adoption
Experience Making
sense
Figure 1. The Learning Selection Model.

Action
Making Drawing
sense conclusions
Drawing
conclusions
Enabling Innovation
Fitness of technology
Participant i Participant j
Technology good enough

Plausible promise to be adopted by
innovative farmers
Adaptation Phase Time
183
Boru Douthwaite
y Making Sense. She reflects and makes sense of the experience. She realizes that
uneven drying is losing her money and that it might be sensible to try and
improve the dryer’s performance.
y Drawing Conclusions. She then develops personal explanations of what hap-
pened from her own or others’ previous experience or theories. She hypotheses
that if she reduces the amount of rice she loads into the dryer, then drying will
be more uniform.
y Action. She then decides to test her hypothesis, and in so doing generates a nov-
elty.
Testing the novelty begins another learning cycle. Her selection decision to
adopt or reject the novelty will depend on whether the rice miller pays her more
for her product. The miller will make this price decision after going through his
own learning cycle when he tests a sample of her rice for milling quality. If the
farmer is participant i in Figure 1, then the miller represents participant j.
So far, the third component of the evolutionary system—the promulgation
and diffusion mechanism—is missing. In the example, promulgation of the novel-
ty occurs when the farmer tells people in her social network, represented in Figure
1 by the “other participants” box, about the benefits of her novelty and they choose
to experiment with it themselves.
The farmer, the miller, and the people that are connected to them through
their social networks will be going through their own learning cycles creating the
conditions for the recombination of differing observations and experiences that
can lead to novelties that have “hybrid vigor.” In the process, the technology
evolves, and with it the participants’ opinions and knowledge of it and the way they
organize themselves to use and promote it. These processes are all involved in
learning selection.
The learning selection model is most useful when key stakeholder “learning by
using” and “learning by doing” are important in the early adoption phase, which is
the case for technologies that open up new markets. The learning selection process
works best when users are able to modify the technology, and if there are ways of
evaluating changes.
Wind Turbines
The wind turbine industry is a good one for describing the applicability of the
learning selection model. Excitingly, it shows that learning-selection-type innova-
tion processes are able to harness the innovative potential of the people who are
directly affected by technology. A grassroots development process in Denmark was
able to produce a wind turbine industry that had a 55 percent share of a billion
dollar a year world market in 2000, beating the U.S. which spent over $300 million
funding a top-down development program led by the National Aeronautics and
Space Administration (NASA). The origins of the Danish industry were a few agri-
cultural machinery manufacturers and ideologically motivated “hobbyists” who
began building, owning, and tinkering with wind turbines (generating novelty).

Enabling Innovation
There were many early “teething” problems but the owners organized themselves
into a group who lobbied successfully for design improvements (selection), work-
ing closely with manufacturers to solve the problems. The owners’ group devel-
oped a co-operative ownership model and pressured politicians to support the sale
of their electricity to the national grid at a fair price (promulgation and diffusion).
In contrast, NASA led a top-down science development approach that implicitly
assumed that scientists could develop the “perfect” wind turbine with little input
from the owners and users. NASA’s approach failed.
Computer Software
Another example, now very well-known, of the power that a grassroots innovation
model can harness is the computer operating system Linux. Linux is a “a world-
class operating system” that has coalesced “as if by magic out of part-time hacking
by several thousand developers all over the planet connected only by the tenuous
strands of the Internet.”5
Linux started life when a Finnish computer science student, named Linus
Torvalds, started to write a UNIX-like operating system that he could run on his
PC; he had become tired of having to queue for hours to gain access to UNIX on
the University’s main frame. When he finally got the core of an operating system
working, he posted it on the Internet so that others could try it out. Importantly,
he released the source-code so other people could understand the program and
modify it if they wanted. Just like the first Danish wind turbines, early versions of
Linux were not technically sophisticated or elegant, but they were simple, under-
standable, and touched a chord with “hackers”—people like Torvalds himself—
who got a kick out of generating novelty for the sake of being creative, not for
money.
Torvalds’s main role in the development of Linux after the first release was not
to write code for features people wanted, but to select and propagate improve-
ments to the system from the ideas that streamed in. Ten people downloaded ver-
sion 0.02 and five of these sent him bug fixes, code improvements, and new fea-
tures. Torvalds added the best of these to the existing program, along with others
he had written himself, and released the composite as version 0.12. The rate of
learning selection accelerated as the number of Linux users increased and, to cope
with the volume of hacks (novelties) coming in, Torvalds began choosing and rely-
ing on a type of peer review. Rather than evaluate every modification himself, he
based his decisions on the recommendation of people he trusted and on whether
people were already using the patch (modification) successfully. He in fact played
a similar role to that of an editor of an academic journal who makes sure submit-
ted articles are reviewed but retains final control over what is published and what
is not. This approach allowed Torvalds to keep the program on track as it grew.6
The Learning Selection Approach to Co-Developing Innovations with Users

The wind turbine and Linux examples show that the learning selection model can

Boru Douthwaite
provide a powerful way of understanding the research, development, and early

adoption process and of managing it. Figure 2 shows an innovation process that
begins with a bright idea that individuals or small teams of researchers then devel-
op in relative isolation. While the R&D team may ask the key stakeholders—the
people who will ultimately take ownership of their idea, replicate it, and make it
work—for some advice, they are driving the process.
Mokyr argues it has to be this way because the process of inventing “plausible
promises” is by its nature something that “occurs at the level of the individual.” He
says creating a plausible promise is “an attack by an individual on a constraint that
everyone else has taken for granted.” It is not something that lends itself to a broad
consensus approach.7
At some point the R&D team crystallizes the knowledge they have generated
into a prototype: their “best bet” of what the key stakeholders want. Then, in what
marks the beginning of the start-up phase, they begin to demonstrate their best-
bet to the key stakeholders. It may take several prototype iterations before the R&D
team has received and incorporated sufficient feedback for at least a few innova-
tors to adopt it.
It is this adoption, based on the belief that the new technology makes a “plau-
sible promise” of bringing benefit, that marks the beginning of the adaptation
phase. It also marks the beginning of a period of co-development and learning
selection in which the technology evolves and its fitness improves, through the
process shown in Figure 1.
Learning selection works when people make changes to a technology and then
select and promulgate the ones that they find beneficial. This improves the fitness
of the technology—its suitability to the environment in which it is used—and
hence its market appeal. At a certain point the attributes of the technology are
good enough for the second category of adopters, Rogers’s early adopters, to start
to show an interest.8 This marks the point at which the key stakeholders begin to
take over ownership of the technology.
However, the analogy between natural selection and learning selection is not
perfect. One important difference is that natural selection is blind and learning
selection is not—genetic mutations occur randomly but technology and system
change can be directed. Hence, learning selection does not necessarily happen. It
only comes about if the key stakeholders are sufficiently motivated to adopt and
modify a technology and carry out sensible learning selection on it. They must also
understand the technology well enough to do so themselves. Consequently, at least
one stakeholder, often from the R&D team, must champion it and fill knowledge
gaps until the other stakeholders have learned enough to take over. This takeover
marks the end of the early adoption process and is the point at which market selec-
tion begins to work.
The takeover also marks the beginning of the expansion phase when the tech-
nology becomes mainstream. As this happens, the people adopting the technology
change from hackers (innovators) and early adopters to people who want the tech-
nology to work reliably and profitably. Increasingly, the market becomes the main

Enabling Innovation
selection mechanism. Manufacturers and researchers are able to gather and codify
more and more information that can be used to build predictive models. This
allows them to move from “learning by using,” which requires adopters to be co-
developers, to “learning by modeling,” where learning comes from virtual tests car-
ried out on computer rather than field experience. In so doing, the learning selec-
tion model of the innovation process becomes less relevant and the conventional
assumption that manufacturers or R&D departments can and do develop finished
technology begins to fit better.
A TEN-STEP APPROACH TO ENABLING INNOVATION
It is possible to derive a ten-step approach to enabling grass-roots innovation

based on the learning selection model.
1. Start with a plausible promise.

The first step to induce change through learning selection is to produce a “plausi-
ble promise”: something that convinces potential stakeholders that it can evolve
into something that they really want. Experience shows that it is difficult to enlist
co-developers if the whole project is abstract and up in the air.
The plausible promise does not need to be refined or polished: it can be imper-
fect and incomplete. In fact, the less finished it is, the more scope there is for the
stakeholders to innovate and thus gain ownership of the technology. On the other
hand the more problems there are then the greater the chances that the key stake-
holders will give up in frustration. A delicate balance must be found.
2. Find a product champion.

The next step is to identify the innovation or product champion. He or she needs
to be highly motivated and have the knowledge and resources to sort problems out.
Someone from the R&D team is likely to be suitable because he or she will
probably have both the necessary technical knowledge and the motivation, as they
already have a stake in the technology. He or she must also have good people and
communication skills as, in order to build a development community, they will
need to attract people, interest them in what they are doing, and keep them happy
working for the common cause. The product champion’s personality is therefore
crucial.
3. Keep it simple.
Don’t attempt to dazzle people with the cleverness and ingenuity of the prototype’s
design. A plausible promise should be simple, flexible enough to allow revision,
and robust enough to work well even when not perfectly optimized. The critical
comments of your colleagues don’t matter. Your potential co-developers’ needs
and knowledge levels do. For example, if you are designing a combine harvester
and you know the manufacturers and farmers you’ll be working with are familiar

Boru Douthwaite
with a certain type of thresher, then use that in your design, even if it is technical-
ly not the most elegant solution. To quote John Gall, “A complex system that works
is invariably found to have evolved from a simple system that worked.”9
4. Work with innovative and motivated partners.

Allow the participants in your learning selection process to select themselves
through the amount of resources they are prepared to commit. Advertise or write
about your plausible promise in the media, by doing field demonstrations, or on
the Internet, and then wait for people to make the effort to contact you. Don’t give
inquirers anything with a resale value for free. For example, if your prototype has
an engine, then charge the market value for it. Otherwise people may be motivat-
ed to adopt it in order to get something for nothing. In addition, people generally
value something more highly if they have paid for it, and they will be more com-
mitted to sort out the problems that emerge.
On the other hand, you must make it clear to the first adopters that they are
adopting an unperfected product and that they are working with you as co-devel-
opers. You need to reassure them that you will be contributing your own resources
to the project and will not abandon them with a lemon. You should be prepared to
offset some, but not all, of the risk they are taking in working with you. Getting the
balance right is very important here too.
5. Work in a pilot site or sites where the need for the innovation is great.
Your co-developers will be influenced by their environment. Their motivation lev-
els will be sustained for longer if they live or operate in an environment where your
innovation promises to provide great benefit. In addition, they are more likely to
receive encouraging feedback from members of their community.
6. Set up open and unbiased selection mechanisms.

(i) The product champion
Once you have the key stakeholders working with you and generating novelties,
you need ways of selecting and promulgating the beneficial changes. Initially, the
product champion usually plays this role. An effective selector must be able and
prepared to recognize good design ideas from others. This means that if he or she
is also the inventor, they must be receptive and able to accept that others might
have better ideas.
Very few people are capable of being effective at both championing their prod-
uct and selecting novelties simultaneously. This is because to be good at the for-
mer, they need to believe deeply in the product’s benefits and be able to defend it
against criticism.
To be effective selectors, on the other hand, they need to keep an open mind
and be able to work with others to question fundamental design decisions.

Enabling Innovation
Figure 2. Stages and Participation in a Learning Selection Innovation Process.

Boru Douthwaite
If a product champion defends the technology too strongly, or shows bias, then
“forking” occurs and the disaffected person or group branches off on its own to do
what they felt prevented from doing by the selector. It is good to have people test
alternative design paths, but if it is done in frustration or spite, then cliques form,
making any comparison and subsequent selection between rival branches difficult.
Creative talent is split and energies can be dissipated in turf wars.
(ii) Alternative selection mechanisms
Even if the product champion can be open-minded and unbiased he or she may
have problems convincing others. One option is to set up a review mechanism that
is well respected by your key stakeholder community. There are a number of ways
of doing this. Three that work are: (i) review by an independent organization; (ii)
peer review; and (iii) providing potential adopters with enough information to
make informed selection decisions themselves.
7. Don’t release the innovation too widely too soon.

For the innovation to evolve satisfactorily, the changes the stakeholders make to it
need to be largely beneficial, and because those generating the novelties will have
gaps in their knowledge, product champions should restrict the number of co-
developers so that they can work with them effectively. When people show enthu-
siasm for a prototype, it is very tempting to release it as widely as possible, but this
should be resisted. The technology will always be less perfect than one initially
thinks.
However promising the technology might appear, there are many things that
can and will go wrong. First adopters need to be aware of this and have ready access
to the product champion. Otherwise, their enthusiasm will quickly turn to frustra-
tion and the product champion will end up defending the technology against their
criticisms. Once the product champion becomes defensive, he or she will be far less
useful at sorting out problems.
8. Don’t patent anything unless it is to stop someone else trying to privatize

the technology.
In learning selection, people co-operate with each other because they believe that
all will gain if they do. The process is, therefore, seriously damaged if one person
or group tries to gain intellectual property rights over what is emerging. First, the
communitarian spirit is damaged. Second, patents are monopolies that immedi-
ately reduce the rate of novelty generation and thus slow down future development
and the flow of ideas.
9. Realize that culture makes a difference.

Culture can influence the degree to which knowledge is guarded within a particu-
lar group, or is spread around. Learning selection is going to be greatly impeded in
cultures where new knowledge is carefully guarded, either through secrecy or the

Enabling Innovation
taking out and enforcement of intellectual property rights.
10. Know when to let go.

Product champions need to become personally involved and emotionally attached
to their projects to do their jobs properly. This makes it easy for them to go on flog-
ging dead horses long after it has become clear to everyone else that the technolo-
gy is not going to succeed. Equally, project champions can continue trying to nur-
ture their babies long after they have grown up and market selection has begun. It
is, therefore, a good idea to put a time limit on the product champion’s activities.
In the following section I describe how ideas from learning selection can help
trigger systemic change.
BEYOND LEARNING SELECTION:

RESEARCH TO TRIGGER A “BLUE REVOLUTION” IN AGRICULTURE
I work for one of the 15 international agricultural research centers based in Africa,
Asia, Latin America, Europe, and the United States that constitute the Consultative
Group on International Agricultural Research (CGIAR). In the 1960s and 1970s,
research in CGIAR centers helped spark the Green Revolution by breeding
improved higher yielding crop varieties that were then disseminated to farmers by
national agricultural research and extension systems. This “pipeline” approach is
effective for developing certain types of technology, like seed and vaccines—tech-
nologies that have some characteristics of magic bullets. In the case of seed and the
Green Revolution, farmers planted improved seed, harvested more grain, sold it
for more, decided to plant it again, and gave some seed to their neighbors.
Adoption of new varieties and improved yields spread like a virus. The role of
research was clear—keep breeding improved varieties to replace those in the field
when inherent resistance to pests and diseases breaks down. But the pipeline
approach does not work for more complex technologies than seed, as the Burma
story at the beginning of the article showed.
Today the CGIAR is confronting a new challenge: catalyzing a “Blue
Revolution” to contend with the global challenge of water scarcity. Unless water
use patterns change substantially, within 25 years agriculture can be expected to be
using an additional 500 cubic kilometers (km3) of water if the world is to feed the
additional billions who will live on the planet by then. This is more water than
flows down the Mekong River in one year. This water would have to come from the
world’s major rivers, aquifers, wetlands, and lakes which are already under pres-
sure. Already many large rivers now run dry or clog up before they reach the sea,
and an estimated half of the world’s five million lakes are endangered. Unless there
is “more crop per drop,” many aquatic ecosystems will collapse and conflicts over
water will increase. Climate change only makes the challenge greater.
In contrast to the Green Revolution, there is no magic bullet for a Blue
Revolution. As a consequence, a pipeline approach to research will not be effective.

Boru Douthwaite
What is more, the feedback between innovation and a successful outcome is far less
direct in the case of water conservation than it is in the case of increased agricul-
tural yields. Water flows between groups of people. Most of the time, when farm-
ers save water it is people downstream who benefit, often people they don’t know.
Improving how water is managed often requires technical innovation, but is at
least as much about linking people together, improving social processes of negoti-
ation, and changing norms.
Realizing this, the CGIAR researchers focused on the task of improving global
water management have sought not simply to develop new technologies to push
into target regions, but rather to build the capacity of networks of water and agri-
cultural scientists to develop local solutions with the people who would use them.
The result is the Challenge Program on Water and Food (CPWF), an internation-
al, multi-institutional research initiative with a strong emphasis on “north-south”
and “south-south” partnerships. The initiative brings together research scientists,
development specialists, and river basin communities in Africa, Asia, and Latin
America.
With a budget of $15 million per year, the CPWF is extended over nine of the
world’s largest and most important river basins, including the Nile, Mekong,
Limpopo, Volta, and Yellow River. One way these scarce resources can effect change
at the needed scale is if they motivate large-scale learning-selection-type innova-
tion processes. This is possible, as the case study in Appendix A shows—a story of
adoption of a no-till technology that saved 1.16 km3 of irrigation water in India
and Pakistan.
The learning selection model can also help guide top-down system-level inter-
ventions. The model and complexity theory suggests that rate of innovation in a
system can be changed by three sets of interventions:10 (1) changes in the variation
or novelty of system components (i.e., types of stakeholders involved and the
strategies and technologies they use); (2) changes in interaction patterns between
stakeholders, in particular through changes to social networks; and, (3) changes in
the way selection decisions are made. The research that helped trigger the Green
Revolution focused mainly on developing and introducing novelty. Research for a
Blue Revolution needs to be more balanced, as we now explore.
Many of the solutions to water management problems already exist.
Consequently, part of the CPWF research should be to identify promising local
solutions. Once identified, these “best bets” have the potential to spark similar
improvements in similar systems.
Although many solutions may exist, too much novelty and variation creates
uncertainty in people and can prevent them from adopting and innovating.
Research is needed to reduce this uncertainty by describing the variation that
already exists. People have been managing water for millennia and do not need
more variation so much as they need better understanding of what already exists.
Much more research is also needed on understanding how changing interac-
tion patterns and selection processes can help people manage their water proper-
ly. As already discussed, in some ways the Green Revolution was easy. Farmers

Enabling Innovation
clearly saw the benefit in growing improved seed varieties in terms of higher yields
and incomes. Those making the changes benefited directly. Feedback was strong
and clear and adoption increased quickly. Politicians also understood and adop-
tion was supported by massive state endorsement, subsidies on fertilizers, the
building of irrigation schemes, and numerous policy changes.
Improving how water is managed is a different story. When farmers improve
the way they manage water, the benefits may not accrue to them but to other water
users downstream. Conversely, if farmers use excessive amounts of water the
effects are not felt by them but by people downstream for whom water becomes
unavailable. Feedback is weak or non-existent, so there is almost no incentive to
select and promulgate better water management practices. Learning selection can-
not work. Hence it is research on changing interaction patterns, promulgation
pathways, and selection mechanisms to improve information flow, feedback, nego-
tiation, and decision-making that probably offer the greatest potential for trigger-
ing a Blue Revolution.
Research to trigger a Blue Revolution should further develop a twin strategy of
fostering local “pilot site” changes while looking for opportunities to catalyze
much larger-scale changes. This requires mechanisms, such as innovation funds,
that can support potential winners. It also means using research to improve sys-
temic understanding to become better at spotting early winners, and knowing in
which systems they are likely to first emerge.
At the level of project management, a practical approach to making the most
of complexity is to facilitate a collaborative process in which project staff and
stakeholders come to a common understanding of how they see a project achiev-
ing outcomes and impacts. Doing so can help the project have an impact by map-
ping out promising “impact pathways.” Monitoring and evaluation of projects’
progress along their impact pathways enables early identification of opportunities
and challenges, which if acted on also makes an impact more likely.
Finally, to effect change, research findings further need to be packaged into
plausible promises. Without being packaged as plausible promises, key stakehold-
ers will not engage with the novelty. Without engagement, there will be no behav-
ior change and no impact. Packaging of plausible promises is needed as much for
research outputs such as policy briefs, models, and methodologies as it is for rice
harvesters and wind turbines. Packaging of plausible promises usually involves a
learning selection process with the key stakeholders.
CONCLUSION
The world faces huge challenges in the 21st century, of which triggering a Blue
Revolution to improve water use in agriculture is one. Much of the response to
these challenges will come through innovation. Research can and does enable
innovation, but the way that research and innovation processes are conceptualized
and managed makes a huge difference to the ability of engineers and researchers to
foster change. This paper describes the learning selection model that can guide set-

Boru Douthwaite
ting up and managing grassroots innovation processes that capitalize on complex-

ity by building on peoples’ ingenuity, motivations, and their implicit theories of
how change occurs. Enabling innovation requires fostering change at different
scales. The learning selection model can also help guide “top-down” changes by
identifying three sets of interventions that alter innovation rate in a system: (1)
changes to novelty and variation of actors and technologies in the system; (2)
changes to interaction patterns between actors; and (3) changes to the way selec-
tion decisions are made. Traditionally, agricultural research has attempted to lever-
age change by changing system novelty, through, for example, breeding new crop
varieties. The learning selection model helps us see that bringing about a Blue
Revolution is more about changing how people interact and make decisions, and
less about developing new technology.
Acknowledgments
This paper is based on the author’s book Enabling Innovation: A Practical Guide to
Understanding and Fostering Technological Change, (London: Zed Books), 2002. It
reworks and adds to an article first published in 2002 in the CIGR Journal of
Scientific Research and Development.11 The author would like to thank Larry
Harrington for writing the no-till case study in the Appendix and to Simon Cook
for his contribution to the second part of the paper on the Blue Revolution.
APPENDIX. A GRASSROOTS INNOVATION THAT SAVES WATER12
No-till wheat is currently being planted after rice on over three million hectares of
the Indo-Gangetic Plains, producing net benefits of around US$239 million per
season, along with a 1.18 km3 reduction in the extraction of irrigation water.13
Work on no-till began in the Indian Punjab in about 1970. It was restricted to
hand-sown, small-plot, on-station trials, with little or no scientist-farmer interac-
tion. Trials as designed masked the true advantages of zero-till: earlier sowing,
higher yields, reduced costs, and improved weed control. In the mid-1980s,
researchers in the Pakistan Punjab began a separate program. A key factor was
access to a “best bet”—a no-till implement from New Zealand. These were, how-
ever, expensive, heavy, and few in number. Although appropriate for research, they
were not very well suited for use by farmers. Researchers sponsored the develop-
ment of a local prototype, but this, also being too heavy, was not well received. It
did not make a plausible promise of being useful.
From here, the initiative passed to India. An international scientist, familiar
with the no-till work in Pakistan, donated four imported implements to colleagues
in India. On-farm testing with one of these began in 1990 at Pantnagar University.
Zero-till wheat performed well, with good crop establishment, higher yields, and
lower costs. Nonetheless, progress was slow. The implement was again too heavy,
and openers were prone to breakage and unable slice through rice stubble. In the
following season, one of the scientists took a simple “recombination” step, attach-

Enabling Innovation
ing “inverted-t” cross-slot openers from the imported drill to his own frame
design. This was the original “Pantnagar drill” and the first plausible promise.
As it happened, there was near Pantnagar a dealership for National Agro
Industries, a Ludhiana-based farm implement company. The local dealer became
aware of the Pantnagar drill and in 1992 introduced the researchers to one of the
company’s owners. Subsequently, National learned to forge its own inverted-t
openers, which then were installed on the frame of a National conventional-till
drill. This was the “Pantnagar drill” Mark II. National was soon joined by another
company, Amritsar-based ASS Foundries. Several dozen design changes were pro-
gressively introduced, largely inspired by farmer testing. By 1995, a well-adapted
design was ready for commercial production. And just at this time, an emergency
occurred that sent researchers looking for just such a drill.
In the Indo-Gangetic Plains, continuous rice-wheat rotations favor a weed
called Phalaris minor. For many years this weed caused little damage—farmers had
learned to control it with isoproturon herbicides. But with millions of farmers
using isoproturon for Phalaris control over many years, a herbicide-resistant
Phalaris evolved. It was during the 1992-93 wheat season that a scientist working
at Haryana Agricultural University (HAU) first reported such strains. By the 1995-
1996 season, the weed problem had become a crisis. The affected area in Haryana
continued to expand and began to move into neighboring states. Farmers grew
desperate for a solution.
Some scientists felt that “desperate times call for desperate measures,” with
zero tillage being one of the “desperate measures.” In order to test the effect of zero
tillage and new herbicides on Phalaris populations, researchers needed zero till
drills. The new Pantnagar drill had just become available. The newly-formed Rice-
Wheat Consortium donated to HAU four new National no-till drills. These were
delivered in October of 1996, as the Phalaris crisis peaked. With wheat sowing just
weeks away, researchers moved to organize a research program, but encountered
an unexpected obstacle: farmers placed a high value on tillage and wished to have
nothing to do with “zero tillage.” No-till was an invention that challenged a con-
straint long taken for granted: the need to till the soil to prepare for the next crop.
In the end, however, a combination of new herbicides plus zero tillage worked well.
Phalaris populations fell dramatically, and yields were excellent.
Although the very first zero till trials in Haryana were established by HAU sci-
entists, farmer experimentation with zero tillage soon followed. This happened for
one simple reason: instead of returning the drills to the university campus after
sowing the experiments, scientists decided to leave them in those villages where the
trials were located. Farmers were encouraged to try out the drills on their own, and
were provided with training and technical support. Learning selection began.
Farmer experimenters found that zero till helped control Phalaris—but also very
substantially reduced production costs. With this, adoption of no-till began to
spread through farmers’ networks.
This was spurred by the purchase (by ACIAR and the Rice-Wheat
Consortium) of additional drills for farmer testing. These still-scarce zero till drills

Boru Douthwaite
were shifted from one village to another each wheat season. Farmers interested in
no-till were invited to purchase their own drills—which they began to do in large
numbers. By 1997, 150 drills had been sold to universities, ICAR institutions, and
individual farmers. The Rice-Wheat Consortium, who became one of the product
champions, began to organize study tours, whereby farmers from different dis-
tricts—and even different States—could see for themselves the progress being
made in Haryana on zero till wheat. There were even study tour participants from
Pakistan!
Finally, adoption of zero till wheat in Haryana was further accelerated by an
unexpected event. An agricultural department official was testing zero tillage on
his own farm, with excellent results. In 1998, his daughter got married. The wed-
ding happened during the wheat season and was celebrated in his own home. The
no-till plots were located near the path leading up from the road. As a conse-
quence, hundreds of the most influential farmers and state officials saw for them-
selves the extraordinary performance of zero till. This led to its further adoption.
1. Mokyr J. (1990). The Lever of Riches: Technological Creativity and Economic Progress (Oxford and
New York: Oxford University Press), p. 155.
2. von Hippel, Eric (1988). The Sources of Innovation (Oxford and New York: Oxford University
Press), p. 3.
3. Douthwaite, Boru (2002). Enabling Innovation: A Practical Guide to Understanding and Fostering
Technological Change (London: Zed Books).
4. Kolb, D. A. (1984). Experiential Learning: Experiences as the Source of Learning and Development
(Englewood Cliffs, NJ: Prentice-Hall).
5. Raymond, Eric. (2001). Cathedral and the Bazaar: Musings on Linux and Open Source by an
Accidental Revolutionary (O'Reilly Media; Revised Edition).
5. For an elaboration, see Elliot Maxwell, “Open Standards, Open Source, and Open Innovation:
Harnessing the Benefits of Openness,” Innovations 1(3), Summer 2006.
6. Mokyr (1990), p. 9.
7. Rogers (2003) identifies five types of adopter: (i) innovators, (ii) early adopters, (iii) early major-
ity, (iv) late majority, and (vi) laggards. See Everett M. Rogers (2003), Diffusion of Innovations
(New York: Free Press).
8. Gall, John (1978). Systemantics: How Systems Really Work and How They Fail (New York: Pocket
Books).
9. In particular, Axelrod, Robert and Michael D. Cohen (1999). Harnessing Complexity:
Organizational Implications of a Scientific Frontier (New York: The Free Press).
10. Douthwaite, Boru (2002). “How to Enable Innovation: An Invited Overview Paper.” Agricultural
Engineering International: the CIGR Journal of Scientific Research and Development. Vol. IV.
October.
11. This story is based on an unpublished manuscript by Larry Harrington titled “A Brief History of
Zero and Reduced Tillage Revolution in the Indo-Gangetic Plains.”
12. Gupta, R. (2006). “RCT Induced Impacts in Indo-Gangetic Plains.” RWC Research Highlights
2006 (New Delhi: Rice Wheat Consortium for the Indo-Gangetic Plains).
<www.rwc.cgiar.org/pubs/180/Highlights06.pdf>.

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Fazle Abed
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Challenges Peter Gabriel
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Stuart Hart
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John Holdren
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Hyderabad 2010 A quarterly journal published by MIT Press

Cases Authored by Innovators

ENTREPRENEURIAL SOLUTIONS TO GLOBAL CHALLENGES

3 The Backbone of a New Rwanda:

Cases Authored by Innovators

Special Edition for Tech4Society: A Celebration of Ashoka-Lemelson Fellows

Organization of the Journal

The Backbone of a New Rwanda

H.E. Paul Kagame is president of the Republic of Rwanda.

We decided after our liberation struggle that if we could develop economical-

innovations / Tech4Society 2010 5

By the Grace of Invention

We live only by the grace of invention: not merely by such invention as

Julia Novy-Hildesley is executive director of the Lemelson Foundation.

© 2010 Julia Novy-Hildesley

Figure 1. Driving Development by Enabling Invention, Innovation, and

• Taking a forward-looking approach, focusing less on bailouts and much more

THE INNOVATION ENGINE

• Engaging youth in science and engineering education programs, which help

Engaging Youth in Science and Engineering

Increasing the Diversity of Innovators

innovations / Tech4Society 2010 11

Relative to their peers in public schools, MESA students demonstrate higher

Inventor Initiatives in Developing Countries

innovations / Tech4Society 2010 13

Fueling New Discoveries Through Multi-Disciplinary and Cross-Cultural

Ashoka-Lemelson Fellow from Nigeria, collaborated with researchers at the Biogas

innovations / Tech4Society 2010 15

Business Model Innovation

innovations / Tech4Society 2010 17

ship between SELCO and SEWA (the Self-Employed Women’s Association), an

innovations / Tech4Society 2010 19

IDEAAS, a nonprofit provider of solar energy in Brazil, took another

Driving Investments in Social Enterprises

innovations / Tech4Society 2010 21

innovations / Tech4Society 2010 23

The Capital Curve

© 2010 Matthew Bishop and Michael Green

microfinance lenders, to tap the for-profit capital markets. It is in the emergence of

WHERE THE MONEY IS

innovations / Tech4Society 2010 27

Specifically, private for-profit capital has proved extremely effective at taking

RISKS AND RETURNS

innovations / Tech4Society 2010 29

GETTING AHEAD OF THE CURVE

math of the financial meltdown of September 2008, characterized as arguing that

innovations / Tech4Society 2010 31

to the legal treatment of different types of activity. There is growing interest in

innovations / Tech4Society 2010 33

Playing Catch-Up in German

© 2010 Heike Schettler

THE FIRST STEPS

world. Our own children were no exception. As attentive parents, we wanted to

DEVELOPING THE CONCEPT

innovations / Tech4Society 2010 37

PROVING THE CONCEPT

EXPANDING REACH AND CONTENT

innovations / Tech4Society 2010 39

Figure 1. Map of Germany, Indicating Locations of Science-Lab Teachers.

innovations / Tech4Society 2010 41

REACHING OUT TO ALL CHILDREN

Figure 2. For a holistic approach, we envisioned a pyramid-like structure to sci-

BACK TO THE ROOTS: THE TEACHER PERCEPTION PROBLEM