So... Really... What is the Problem?

I was reading about this organization called KickStart.  I think they are doing an amazing job being social entrepreneur.  What makes them amazing in my opinion is that they are working smart.  What they are doing right now is helping millions of people in Africa out of poverty, by promoting sustainable economic growth and employment creation in Kenya and other countries. They develop and promote technologies that can be used by dynamic entrepreneurs to establish and run profitable small scale enterprises.

However, their 5 steps process is what I think make them stand out.
They started with Identifying Opportunities (I know I called it Problem in the title, but that's just to get your attention...).  They did not just go ahead and decide what's the best for the people in Africa, thinking that they have the best solution in mind right away.  They went to Africa and identified the opportunities.  They created a business model where poor people in Kenya can start a business and sustain it.  They found that it is easiest to start a business that initially sells products or services to neighbors or in the local village with low initial investment and recoverable within 6 months.  They also recognized that most people in the community are farmers.

The second step is Design Products.  In designing technologies for the world’s poor, there is too often a focus on developing things that "we" think "they" need. Or worse, an organization develops a technology to address a problem that they have defined, without fully understanding local culture.  They recognized that poor people often time has lots of time and effort too, therefore designing tools that will save them time and effort will devalue the tools and make them poorer.  So they look for tools that will allow a person to turn their time and labor into cash.  A design criteria was created for the tools to better meet the needs.  The tools have to be income generating, quick return in investment, affordable, energy-efficient, ergonomic and safe to use, portable, easy to install and to use, strong and durable, designed for ease for manufacturing and culturally acceptable in order to make it to production.  One example of their product is the MoneyMaker hip pump.  The pump sells for about $30, is very light (less than 10 pounds), and can irrigate an acre. A great deal of work went into designing a super efficient valve box, but the genius of the design is a simple pivot hinge.  By attaching a “Hand Pump” to a hinged platform, they’ve changed the body mechanics, allowing users to use their leg, body weight, and momentum, rather than the small muscles of the upper back and shoulders. This allows the pump be easily used to irrigate an acre or more.  KickStart sold about 23,200 pumps as of the beginning of this year to increase net farm income by 1000% on average.

Next step is Establish a Supply Chain.  They chose to use a high volume (mass quantity) and centralized manufacturing to establish a profitable supply chain where everyone, including KickStart, makes money on each tool sold.  Then they recruit the existing local wholesalers, distributors and retail shops selling seeds, fertilizer and other farm inputs that already part of the community and know the local customers.  KickStart also chose not to giveaway their tools to the poor for sustainability.  As long as there is demand for the tools, the factory, the wholesalers and retailers will have an interest in ensuring the tools stay available.

Now, after they found the people that could make and sell the tools, they need to Develop the Market to generate demands.  Any great product without good marketing to generate product awareness to show its use and value is useless.  The pump is priced at $30 which is a lot of money for the poor so this generate risk for initial acceptance, a carefully crafted marketing strategy has to be developed.  They chose the brand name “MoneyMaker” because that is a poor person’s greatest need, which is a way to make money.KickStart works very hard to ensure that their products live up the name.  Next, they change the perception about farming, that it is no longer just a dirty, literally, work anymore, but farming can actually be a successful business. They launched a comprehensive marketing campaign built on the message, “Farming is My Business,” to link farming with success.  They have many sales force to do products demonstration, let potential customers try the products before they buy them and they did pumping competition to generate buzz of excitement for the products.  All these hard work is necessary in order to gain product acceptance in the community.  Once they are accepted buy the community, like in bicycles, KickStart can ease the marketing effort.

The last step is Measure and Move Along.  KickStart’s model is based on the Diffusion of Innovation theory which when a new product is first introduced into any new market, sales are few and the costs per sale are high. In fact, as the market is building, items are sold at a loss until the market reaches a “tipping point” then the cost will drop to zero.  The more radically new the product is, the more expensive it is to make these early sales. In the private sector, these early losses are subsidized by investors, similarly KickStart uses donor funds the same way a for-profit would use venture capital.  They took the time and effort to measure success and monitor the entrepreneurs progress.  Once KickStart reached the tipping point, KickStart will make a profit on every sale. They will reinvest these to develop new technologies and enter new markets so that they will get millions of people out of poverty.

I hope we can learn from KickStart, their heart for the poor, their ingenuity, their willingness to listen to the existing culture and to use it as part of the solution to poverty. 

So... Really... What is the Problem?  I mean the opportunity.