PowerMundo: Bridging the Supply Chain Gap at the Base of the Pyramid
Like Rob mentioned in his post yesterday, I do think this is the year of ANDE. More precisely, I believe that thanks to forums like ANDE this will be a year in which companies and intermediaries serving low income markets will start to work in a more collaborative and coherent way, leveraging each other’s innovations, successes and failures, and finding effective distribution mechanisms so that a more effective “knowledge brokerage” across boundaries is possible.
This may be the first step in building global supply chains for products aimed at low income markets, connecting the dots between existing supply (known to work at addressing specific needs) and existing demand. As far as the supply side is concerned, it is easy to see that most of the business models highlighted in BoP/ social enterprise literature, conferences and forums like this one are usually concerned with the design and commercialization of products and services that address very specific needs of the poor. Kickstart or IDE are examples in the case of irrigation. They have both developed products that work and serve their purpose in the context of small scale agriculture.
The quality and effectiveness of their products have been commented time and again; stats and success stories of their use abound. However, neither KickStart nor IDE have reached a truly global scale, the way, say, iPods have. Lack of demand for their products is not the reason, of course — whether The Next 4 Billion or Aneel Karnani is right about the size of the markets at the base of the pyramid. Demand exists. The reason is that the marketing and distribution infrastructure to make a global reach and scale possible is not (yet) in place for the markets at the base of the pyramid. In other words there isn’t someone that, like a retail outlet, aggregates products of several manufacturers (those that address needs like water management or energy or health), markets and makes them available and accessible to local communities.
This is the opportunity that PowerMundo identified. Mike Callahan, its founder, traveled extensively through the poorest regions of Peru after learning that a vast portion of the population lacked electricity and/or used expensive, dirty and unhealthy fossil fuels for cooking and lighting. He did so to get a close feeling of what the needs of the communities actually were and how he could bring to those markets the products that were being used successfully in other parts of the world to address those needs in a cheaper, cleaner and more sustainable way. The following video illustrates PowerMundo’s work:
Envirofit and D.light are only two companies whose products are proving to work, providing affordable and dignifying solutions to the cooking and lighting needs of the poor. Having a close understanding of the local needs and context of Peruvian local markets, and awareness of the existence of solutions like the ones just mentioned, PowerMundo distributes Envirofit’s stoves, D.Light’s lamps and other “Appropriate Technology” products locally, taking care of marketing and sales activities with a vision that marries social benefit and environmental sustainability. To make the products financially sustainable, they are planning to partner with local Microfinance institutions, whose credit officers could even potentially serve as sales force and social marketers for the company.
PowerMundo was a refreshing discovery late last year. It is a simple and crisp business model based on connecting dots between local needs and available solutions. Its focus on building a platform for existing products to reach scale is addressing probably the most challenging gap in fostering and deepening sustainable, affordable and useful solutions for the needs of the BoP.
I had a conversation with Mike while waiting for my plane to arrive at the airport last December. I enjoyed learning about his diverse background and the resulting passion to make PowerMundo a thriving reality. He has developed the project being part of the Global Social and Sustainable Enterprise Program at Colorado State University, where NextBillion ally Paul Hudnut serves as faculty.
In the words of IDE’s Paul Polak, “Revolutionary change in markets is usually based on breakthroughs in affordability and miniaturization, married to innovations in marketing and distribution”.
This may well be one of those, and I’ll keep a close eye on how PowerMundo goes around the challenges of scaling and replication of its model. For instance, if expansion to other countries is being considered, which skills will be the backbone of PowerMundo’s model? How can social marketing skills be replicated? Will MFIs be a key player in the model? These are all interesting questions and they are surely in Mike’s mind all day every day.
Finally, I encourage you to watch Mike talking about his background here and also to learn more about CSU’s interesting program on sustainable enterprise. If you are looking for something practical with a lot of green and a lot of BoP, it may be just right for you.