During spring quarter 2008, I had the opportunity to take the student-initiated course MS&E 75SI: “Brainstorming India.” Student-initiated courses are planned and taught by Stanford students. Brainstorming India explores social entrepreneurship projects and philosophies. Social entrepreneurship consists of business ventures, both for-profit and non-profit, that aim to bring about social change.
In Brainstorming India, we listened to a presentation by Embrace, the non-profit organization that designed a low-cost baby incubator that could help the 20 million low birth weight babies born each year. Embrace designed the incubator in Stanford’s School of Design (d.school) in the course “Entrepreneurial Design For Extreme Affordability.” Additionally, Embrace received funding in 2007 when it won the Social E-Challenge that the Businesses Association of Stanford Entrepreneurial Students (BASES) hosts each year.
D.light is another organization that presented at Brainstorming India. D.light’s goal is to provide high quality, inexpensive, solar-rechargeable LED lights to reduce dependence on kerosene lanterns, which both use expensive fuel source and are fire hazards. Also a product of the d.school’s Entrepreneurial Design for Extreme Affordability, d.light aims to reach those who do not have access to electricity, and thus electric lights.
Also in this same class, we read excerpts from David Bornstein’s How to Change the World, which shares stories of social entrepreneurs with projects ranging from solar energy in Brazil to a helpline for children in Bombay. However, the readings that stuck with me the most were from C.K. Prahalad’s book The Fortune at the Bottom of the Pyramid. In this book, Prahalad maintains that we need to cease thinking about the poor as victims or burdens, and that we ought to shift to thinking of the poor as capable entrepreneurs and conscientious consumers. Furthermore, he argues that the four billion people who live on less than $2 per day actually have significant buying power and that businesses ought to collaborate with the poor to learn how to design and market to their needs.
Prahalad’s ideas conjure images of projects such as Embrace and d.light, and these ideas are appealing initially because they aim to fulfill the needs and wants of the poor. One idea that Prahalad emphasizes is that organizations must “create the capacity to consume” by designing products to fit the poor’s purchasing power. One example he shares is that of single-use products such as sugar packets and travel-sized shampoo. When I first read and discussed this idea in spring 2008, it was immensely appealing. I pictured the tiny shampoo bottles that Target and Walgreens sell and thought it was wonderful that the poor could access these inexpensive products as their funds allowed. While they may only rarely be able to purchase a full-size bottle, the poor can more frequently pay for a tiny sample and thus enjoy its benefits more often.
I did not critically re-assess Prahalad’s argument until the end of this summer while speaking with a microloan recipient in the Dominican Republic. She told me about how she was learning how to budget and how she used to buy sugar, flour, and soap on a daily basis. She would call the closest colmado, a corner store that sells durable food items, and one of the employees would bring her daily orders in tiny bags. However, as she learned how to budget, she learned that she could ultimately save money by buying in bulk. I then thought back to the baskets at Target that are filled with single-use shampoos and soaps. Each one costs $1; however, a full-sized bottle costs about $3. On a dollar per ounce basis, the small bottle is significantly more expensive.
I understand that the poorest of the poor have constraints such that savings and budgets do not seem feasible. However, this discussion re-framed my thoughts with respect to Prahalad’s single-use products. Ultimately, I do not want people to buy the single-use products on a regular basis. Rather, I want them to buy the mega, Costco-sized bottles that last for months and cost less per ounce.
My concern with organizations’ marketing to the poor with single-use products is that rather than fostering opportunities that will help the poor see beyond their current situations, these products will keep them thinking and living day-to-day. I do recognize that the development of single-use products will potentially create more jobs, which is certainly desirable. However, if a company’s goal is partially social in that it wants to alleviate poverty, then a company that starts selling single-use products, for example, will be selling products for which there will ideally be less demand in the future. My concern is that the single-use market will create a “buying trap” that constrains the poor rather than helping them to develop economically.