Originally posted on the Business Civic Leadership Center Blog
From a business standpoint, poverty has been a lousy investment. But one of the most resourceful businessmen of our time has set out to prove that when you know what you’re doing, there’s a multi-trillion dollar marketplace waiting to be had.
Paul Polak is the root cause of 20 million people’s transition from poverty to the middle class. He is the founder of iDE, author of “The Business Solution to Poverty” and “Out of Poverty,” and creator of “Design for the other 90%.” At heart, Paul is just a savvy businessman who sees opportunities to bring business where nobody else dares to go.
When you talk to Paul, it takes about 15 seconds for him to dive into the pragmatic details of his six or so latest business ventures. It’s what I imagine it must have been like to talk to Sam Walton in the early days of Walmart – someone for whom sweating the details and making every little thing work was the enormity of the idea. When Paul talks about poor people, he can floor you with self-evident truths so practical, and from a point of view so knowing, experienced and clear-eyed that it becomes a wholly new way of seeing. This is important because when your target audience is every one of the 2.6 billion people in the world who live on $2 a day, you have to keep your eyes open, and work with very tight margins.
Paul’s theories for how business can bring people out of poverty, proven by a lifetime of action and results, should be an inspiration for businesses big and small around the world looking to make an impact.
Paul is a marketer of the most creative kind, from commissioning Bollywood films to screen on the sides of trucks to going door-to-door with demos showing people the bacteria in their own drinking water to get them to buy pure water. And not least, understanding that an aspirational brand – part of every one of his businesses – plays the same role with poor people that it does with the fashionistas of the world.
Go for the market disruptors – in poverty as in business.
When looking to create systemic transformation, identify the keystone, transformational products or services. They have a cascading effect, creating ripples of change and growth in other areas. For example, the chain reaction of Paul’s torrefaction business: Raise $10k to put up a torrefaction plant in a village, which creates products worth $600 a day, $180k a year. The plant represents jobs, but also so much more. While the plant creates seven jobs for every village, it also creates a wealthy enterprise and prestige for the town, which attracts more business. The torrefaction plant makes energy cheaper, helps all the businesses that use it to reduce costs, raise profits, and positively impacts climate change, while also creating jobs where there were previously none. All that transformation for a $10k investment.
Never take your eye off the bottom line.
Whether you’re dealing with millions or pennies, the discipline is the same: the numbers have to add up and the model has to make sense. With Paul’s torrefaction business, by shortening the collection radius of biomass from 50 kilometers to 4 kilometers and switching from big machines to carts or tractors, a 40% reduction in cost is the basis of what can become a huge business that scales well beyond the village.
When people move from $2 a day to $3 or $4, they become consumers; that makes a huge impact on the global economy.
When people move from $2 a day to $3 or $4, they become consumers; that makes a huge impact on the global economy. They start to pay taxes, they have smaller families. Raising the income level of farmers has been proven to raise the economies of entire countries, like China, South Korea and Taiwan.
Think huge, and don’t be a victim of your emotions.
Paul’s rule is that a business has to have the potential to reach 100 million people and generate at least $10 billion in sales in order to be worthwhile. Seeing that potential will make it real.
While passion and empathy draw people to help others, they are anything but the secret to success. Hard-headed business strategy will go much further to change lives. Caring deeply about helping people should spur pragmatism, not romanticism.
[Editor’s Note: Join Cheryl Heller during BCLC’s October Conference Innovation Blitz. During this session, top social entrepreneurs and business innovators will share their work to inspire fresh ideas and foster collaboration. Register today.]
At MFA Design for Social Innovation at SVA NYC, where Paul Polak is Faculty at Large, we train leaders to use the power of design to solve human and business problems. Through experience-based learning, students from diverse backgrounds are immersed in the context, tools and skills of design for social innovation, fostering transformation at a systems level to create a resilient future for organizations and communities.