NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, June 9, 2008

By Paul Hudnut

OUT OF POVERTY:
What Works When Traditional Approaches Fail
Paul Polak
240 pages (Berrett-Koehler, 2008)

Until now, the social enterprise bookshelf contained mostly two types of books?studies of what works, and studies of what?s broken. David Bornstein?s How to Change the World, which chronicles the inspiring work of Ashoka Fellows, best represents the first type. The writings of Jeffrey Sachs, Hernando De Soto, and William Easterly fall into the second group, though each of these economists has a markedly different perspective on what?s broken and what should be done.

Paul Polak is helping to create a third genre by writing one of the first how-to social enterprise books: Out of Poverty, which draws on Polak?s 25 years of using entrepreneurial approaches to increase the income of the rural poor in Asia and Africa.

Polak has long believed that to have a major impact, global poverty alleviation efforts must focus on small-plot farmers. A recent World Bank report backs him up, noting that ?three of every four poor people in developing countries live in rural areas ? and most depend on agriculture for their livelihoods.? As Polak states in the book, ?most of these extremely poor people ? can earn much more money by finding ways to grow and sell high-value, labor-intensive crops??and that by doing so, they can lift themselves out of poverty.

He also believes that to grow and sell higher-value fruits and vegetables, these farmers need cheap irrigation, good seeds and fertilizer, and better access to markets. Polak and the organization he founded, International Development Enterprises (IDE), are best known for their work helping farmers obtain these basics, particularly treadle pumps and drip irrigation systems. Treadle pumps, powered with a StairMaster-like device, brought low-cost irrigation to smallplot farmers in Bangladesh, Cambodia, India, and Zambia. The pumps cost $25 and increased farmers? incomes by an average of $100 a year, Polak reports. IDE?s success was not just pump design, but the development of a manufacturing and distribution network through which IDE sold more than 2 million units. Polak estimates that in Bangladesh alone, these pumps have irrigated more than 750,000 acres.

IDE?s success is impressive also in the context of international development circles, where many talk of ?scaling up? solutions, but few have real success stories?particularly for manufactured goods such as grain mills, cook stoves, and water filters. In other words, when the person who could put a ?millions served? sign in his front yard writes a book, we should pay attention to what he has to say.

For one, Polak has little patience for the international development community and their top-down approaches to poverty. He prefers to design and sell products that help the poor make more money. Designing for this ?other 90 percent? of the world?s population takes a different approach from designing for the next iPod or SUV. For Polak, it comes down to prioritizing ?extreme affordability,? his shorthand for customerfocused products that are cheap, pay back the customer?s investment in months, and can reach at least a million customers. ?Don?t bother? with anything else, Polak advises.

Polak also shares a number of opportunities he hopes other designers and entrepreneurs will jump at: $1 eyeglasses, $10 solar lanterns, $15 harvesting tools, and $100 houses and diesel engines. The technology exists; the design challenge, as he sees it, is hitting these price points, developing the distribution channels, establishing high-volume manufacturing, and constructing the business models.

The book is most compelling when offering clever approaches to solving problems in the field and ideas for new products for the poor. It loses steam where Polak tries to provide more detailed data analysis. This isn?t surprising, of course, since he is an entrepreneur, not a policy wonk. He works in fields and villages, not the wood-paneled offices of the United Nations or development banks.

This experience in the fields and villages, and Polak?s knack for writing entertaining and instructive stories, are the book?s greatest strengths; and they?re a good reason why entrepreneurs, designers, and students working on water filters, laptops, solar lanterns, and other products designed to help the poor increase their income or reduce the drudgery of their lives should read this book. As for investors, teachers, policymakers, and others intrigued by alternatives to traditional approaches to international development?the book will surely provide inspiring examples of enterprise?s great power to lift people ?out of poverty.?