Te dx antananarivo adriaan mol v-5
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Read more about Adriaan Mol intervention during TEDxAntananarivo at http://www.madafan.com/2010/adriaan-mol-less-charity-more-business/
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Te dx antananarivo adriaan mol v-5
- 1. Less Charity: More Business Why making money from the poor can be good thing
- 2. How a gun battle opened my eyes to business
- 3. How a gun battle opened my eyes to business
- 4. How a gun battle opened my eyes to business
- 5. Trying to learn: Kenya Water Filter Business
- 6. Trying to learn: Kenya Water Filter Business
- 7. Trying to learn: Kenya Water Filter Business
- 8. Trying to learn: Kenya Water Filter Business
- 9. Trying to learn: Kenya Water Filter Business
- 10. Aid that never worked…
- 11. Aid that never worked…
- 12. Aid that never worked…
- 13. Aid that never worked…
- 14. So why doesn’t development work? Me & what’s Mine always come first
- 15. Trying it out: BushProof
- 16. Trying it out: BushProof
- 17. Trying it out: BushProof
- 18. Bee Sting Theory
- 19. So what’s great about social-enterprise? • Aid is limited, SE is not.
- 20. So what’s great about social-enterprise? • Aid is limited, SE is not. • SE naturally gravitates towards efficiency.
- 21. So what’s great about social-enterprise? • Aid is limited, SE is not. • SE naturally gravitates towards efficiency. • If successful, SE scales automatically.
- 22. A changed outlook The poor are active & critical consumers!
- 23. A changed outlook The poor are active & critical consumers! Development problems are nothing but huge market opportunities in disguise!
Notas do Editor
- This talk is about my transition from aid worker to social-entrepreneur. From giving away stuff for free, frequently without lasting effects, to making money from the poor – but to their benefit. It all started in Somalia, many years ago: a crazy and dangerous place. We were building a village water system that was state of the art and cost an absolute fortune. It was supposed to be a community development project, but in the end there was a shootout in town between the various clans over who would own (and probably plunder) the system after we would have left. The situation became quite dangerous and we had to evacuate. We started packing up our stuff, including a few small water filters. A guard who had been looking after them, then asked if he could have one for free. Fed up with Somalis I told him: No way! Unless you pay me 10 dollars! To my surprise he came back a little later, with the 10 dollars – quite an amount for a guard in Somalia. Later that afternoon I passed by his house, and to my surprise I found his wife filtering dirty river water, and selling it to their neighbours. I couldn’t believe it! Hundreds of thousands of dollars of free donor money were going down the drain for this community system, and here is this guy paying me real hard cash for a personal filter, that he owns himself...! And then his wife starts a business with it!? The scales fell from my eyes, and I though: surely as NGOs we’re really doing something wrong! We’re missing a vital point here! (1:30)
- This talk is about my transition from aid worker to social-entrepreneur. From giving away stuff for free, frequently without lasting effects, to making money from the poor – but to their benefit. It all started in Somalia, many years ago: a crazy and dangerous place. We were building a village water system that was state of the art and cost an absolute fortune. It was supposed to be a community development project, but in the end there was a shootout in town between the various clans over who would own (and probably plunder) the system after we would have left. The situation became quite dangerous and we had to evacuate. We started packing up our stuff, including a few small water filters. A guard who had been looking after them, then asked if he could have one for free. Fed up with Somalis I told him: No way! Unless you pay me 10 dollars! To my surprise he came back a little later, with the 10 dollars – quite an amount for a guard in Somalia. Later that afternoon I passed by his house, and to my surprise I found his wife filtering dirty river water, and selling it to their neighbours. I couldn’t believe it! Hundreds of thousands of dollars of free donor money were going down the drain for this community system, and here is this guy paying me real hard cash for a personal filter, that he owns himself...! And then his wife starts a business with it!? The scales fell from my eyes, and I though: surely as NGOs we’re really doing something wrong! We’re missing a vital point here! (1:30)
- This talk is about my transition from aid worker to social-entrepreneur. From giving away stuff for free, frequently without lasting effects, to making money from the poor – but to their benefit. It all started in Somalia, many years ago: a crazy and dangerous place. We were building a village water system that was state of the art and cost an absolute fortune. It was supposed to be a community development project, but in the end there was a shootout in town between the various clans over who would own (and probably plunder) the system after we would have left. The situation became quite dangerous and we had to evacuate. We started packing up our stuff, including a few small water filters. A guard who had been looking after them, then asked if he could have one for free. Fed up with Somalis I told him: No way! Unless you pay me 10 dollars! To my surprise he came back a little later, with the 10 dollars – quite an amount for a guard in Somalia. Later that afternoon I passed by his house, and to my surprise I found his wife filtering dirty river water, and selling it to their neighbours. I couldn’t believe it! Hundreds of thousands of dollars of free donor money were going down the drain for this community system, and here is this guy paying me real hard cash for a personal filter, that he owns himself...! And then his wife starts a business with it!? The scales fell from my eyes, and I though: surely as NGOs we’re really doing something wrong! We’re missing a vital point here! (1:30)
- Not long after, I had the opportunity to apply these insights. I started a small water filter business in Kenya. I trained two guys, who went on to produce and sell filters to thousands of families, using creative marketing. Their business still exists, but it has lost momentum after they saturated their market. Because the filters are made from concrete, the business cannot spread geographically. Instead of local production, I wondered, would it be possible to mass-produce products that can be sold through retail outlets? (0:30)
- Not long after, I had the opportunity to apply these insights. I started a small water filter business in Kenya. I trained two guys, who went on to produce and sell filters to thousands of families, using creative marketing. Their business still exists, but it has lost momentum after they saturated their market. Because the filters are made from concrete, the business cannot spread geographically. Instead of local production, I wondered, would it be possible to mass-produce products that can be sold through retail outlets? (0:30)
- Not long after, I had the opportunity to apply these insights. I started a small water filter business in Kenya. I trained two guys, who went on to produce and sell filters to thousands of families, using creative marketing. Their business still exists, but it has lost momentum after they saturated their market. Because the filters are made from concrete, the business cannot spread geographically. Instead of local production, I wondered, would it be possible to mass-produce products that can be sold through retail outlets? (0:30)
- Not long after, I had the opportunity to apply these insights. I started a small water filter business in Kenya. I trained two guys, who went on to produce and sell filters to thousands of families, using creative marketing. Their business still exists, but it has lost momentum after they saturated their market. Because the filters are made from concrete, the business cannot spread geographically. Instead of local production, I wondered, would it be possible to mass-produce products that can be sold through retail outlets? (0:30)
- Not long after, I had the opportunity to apply these insights. I started a small water filter business in Kenya. I trained two guys, who went on to produce and sell filters to thousands of families, using creative marketing. Their business still exists, but it has lost momentum after they saturated their market. Because the filters are made from concrete, the business cannot spread geographically. Instead of local production, I wondered, would it be possible to mass-produce products that can be sold through retail outlets? (0:30)
- Before I could put those ideas in practice, I moved to Madagascar, to run a development program. During that period, I became more and more disillusioned with aid. Almost without fail, I saw few lasting results from projects implemented a few years previously. Here’s a few examples: A large donor-funded project repairs roads. They spent millions, but 3 years later the road is impassable. Why? The road maintenance system, paid for by toll, failed when a local mayor pocketed the funds. I wondered: if a company would have bought the right to exploit that road commercially, in return for levying a reasonable toll – would the system also have collapsed..? Or would they have had an interest in keeping the road open..? Here’s another one. A project spent 1 million USD on constructing safe drinking water points, that were supposed to be maintained by the communities. Five years later, the pumps are breaking down. Recently, that same NGO was asked to repair them at a cost of only 1% of the original investment costs (10,000 USD). The offer was rejected because they are now busy implementing a new water project in another region, and the old pumps “are now the responsibility of the beneficiaries”. So, clearly the community management system they worked so hard to establish isn’t working, and I agree a quick repair won’t change that. But on the other hand, writing off a million dollars after only 5 years, seems quite a destruction of capital..! Just two random examples, but such stories abound! The great majority of donor funded aid projects fail to show significant lasting impact. There are positive examples, but they are rare. Non-sustainability is a common theme to most aid programs. It is symptomatic – despite the good intentions. (1:40)
- Before I could put those ideas in practice, I moved to Madagascar, to run a development program. During that period, I became more and more disillusioned with aid. Almost without fail, I saw few lasting results from projects implemented a few years previously. Here’s a few examples: A large donor-funded project repairs roads. They spent millions, but 3 years later the road is impassable. Why? The road maintenance system, paid for by toll, failed when a local mayor pocketed the funds. I wondered: if a company would have bought the right to exploit that road commercially, in return for levying a reasonable toll – would the system also have collapsed..? Or would they have had an interest in keeping the road open..? Here’s another one. A project spent 1 million USD on constructing safe drinking water points, that were supposed to be maintained by the communities. Five years later, the pumps are breaking down. Recently, that same NGO was asked to repair them at a cost of only 1% of the original investment costs (10,000 USD). The offer was rejected because they are now busy implementing a new water project in another region, and the old pumps “are now the responsibility of the beneficiaries”. So, clearly the community management system they worked so hard to establish isn’t working, and I agree a quick repair won’t change that. But on the other hand, writing off a million dollars after only 5 years, seems quite a destruction of capital..! Just two random examples, but such stories abound! The great majority of donor funded aid projects fail to show significant lasting impact. There are positive examples, but they are rare. Non-sustainability is a common theme to most aid programs. It is symptomatic – despite the good intentions. (1:40)
- Before I could put those ideas in practice, I moved to Madagascar, to run a development program. During that period, I became more and more disillusioned with aid. Almost without fail, I saw few lasting results from projects implemented a few years previously. Here’s a few examples: A large donor-funded project repairs roads. They spent millions, but 3 years later the road is impassable. Why? The road maintenance system, paid for by toll, failed when a local mayor pocketed the funds. I wondered: if a company would have bought the right to exploit that road commercially, in return for levying a reasonable toll – would the system also have collapsed..? Or would they have had an interest in keeping the road open..? Here’s another one. A project spent 1 million USD on constructing safe drinking water points, that were supposed to be maintained by the communities. Five years later, the pumps are breaking down. Recently, that same NGO was asked to repair them at a cost of only 1% of the original investment costs (10,000 USD). The offer was rejected because they are now busy implementing a new water project in another region, and the old pumps “are now the responsibility of the beneficiaries”. So, clearly the community management system they worked so hard to establish isn’t working, and I agree a quick repair won’t change that. But on the other hand, writing off a million dollars after only 5 years, seems quite a destruction of capital..! Just two random examples, but such stories abound! The great majority of donor funded aid projects fail to show significant lasting impact. There are positive examples, but they are rare. Non-sustainability is a common theme to most aid programs. It is symptomatic – despite the good intentions. (1:40)
- Before I could put those ideas in practice, I moved to Madagascar, to run a development program. During that period, I became more and more disillusioned with aid. Almost without fail, I saw few lasting results from projects implemented a few years previously. Here’s a few examples: A large donor-funded project repairs roads. They spent millions, but 3 years later the road is impassable. Why? The road maintenance system, paid for by toll, failed when a local mayor pocketed the funds. I wondered: if a company would have bought the right to exploit that road commercially, in return for levying a reasonable toll – would the system also have collapsed..? Or would they have had an interest in keeping the road open..? Here’s another one. A project spent 1 million USD on constructing safe drinking water points, that were supposed to be maintained by the communities. Five years later, the pumps are breaking down. Recently, that same NGO was asked to repair them at a cost of only 1% of the original investment costs (10,000 USD). The offer was rejected because they are now busy implementing a new water project in another region, and the old pumps “are now the responsibility of the beneficiaries”. So, clearly the community management system they worked so hard to establish isn’t working, and I agree a quick repair won’t change that. But on the other hand, writing off a million dollars after only 5 years, seems quite a destruction of capital..! Just two random examples, but such stories abound! The great majority of donor funded aid projects fail to show significant lasting impact. There are positive examples, but they are rare. Non-sustainability is a common theme to most aid programs. It is symptomatic – despite the good intentions. (1:40)
- So why is development work so often unsuccessful? In my opinion, because it relies on the concept of “community participation”, which I find fundamentally flawed. In a village where life is hard, and feuds go back generations, community ownership all too often means: nobody is responsible. But most aid has no viable alternative but to work in this way… Yet it misses a vital human insight: self interest. “I care more about myself and my family, than about my neighbors, let alone the whole village.” Here is an example. I once went to a small town, to work with a local NGO. Their project was in trouble, because the local villagers were not showing much interest. When I arrived, I found the project director filling a pothole in his own yard. Outside his gate however, the public road was deeply rutted: but those holes – which belonged to the community in general – he left for what they were. Behaving exactly as the villagers he was complaining about, he failed to see the irony of the situation! (1:00)
- In 2005, I left NGOs, and co-founded BushProof, a social-enterprise here in Madagascar. Knowing zilch about business, my partner and I naively figured that clean water saves poor people lots of money and untold misery, so let’s try and sell 1 million water filters, at a dollar profit each. That would save 6 million people from disease and make us millionaires! Of course it didn’t work like that, and from a company that intended to sell mass-produced products to a huge consumer market, we ironically evolved into a contractor to donor-funded programs! Not really what we had intended, but a worthwhile thing nevertheless, because in 5 years we impacted 1 million people, and by virtue of cheaper technologies, multiplied the impact of aid money. Great results, even if it wasn’t the original plan! Why though, I wondered, did it prove so hard to develop a mass-market for water filters, cheap and life-saving as they are? (1:00)
- In 2005, I left NGOs, and co-founded BushProof, a social-enterprise here in Madagascar. Knowing zilch about business, my partner and I naively figured that clean water saves poor people lots of money and untold misery, so let’s try and sell 1 million water filters, at a dollar profit each. That would save 6 million people from disease and make us millionaires! Of course it didn’t work like that, and from a company that intended to sell mass-produced products to a huge consumer market, we ironically evolved into a contractor to donor-funded programs! Not really what we had intended, but a worthwhile thing nevertheless, because in 5 years we impacted 1 million people, and by virtue of cheaper technologies, multiplied the impact of aid money. Great results, even if it wasn’t the original plan! Why though, I wondered, did it prove so hard to develop a mass-market for water filters, cheap and life-saving as they are? (1:00)
- In 2005, I left NGOs, and co-founded BushProof, a social-enterprise here in Madagascar. Knowing zilch about business, my partner and I naively figured that clean water saves poor people lots of money and untold misery, so let’s try and sell 1 million water filters, at a dollar profit each. That would save 6 million people from disease and make us millionaires! Of course it didn’t work like that, and from a company that intended to sell mass-produced products to a huge consumer market, we ironically evolved into a contractor to donor-funded programs! Not really what we had intended, but a worthwhile thing nevertheless, because in 5 years we impacted 1 million people, and by virtue of cheaper technologies, multiplied the impact of aid money. Great results, even if it wasn’t the original plan! Why though, I wondered, did it prove so hard to develop a mass-market for water filters, cheap and life-saving as they are? (1:00)
- One day, I found the answer, written in the Economist: the Bee Sting Theory. Have you ever wondered why poor people seem to spend their money on TV's, radios, drink or other ‘useless’ stuff, instead of sending their kids to school, etc? It all seems so illogical, right? Well, maybe being poor is really like being stung by a bee: it hurts! So you run to a doctor and with your last money buy an ointment to sooth the pain. Now imagine you’re stung by a whole swarm of bees, but still, you only have enough money to treat one sting. What’s the point in doing that, then the others still hurt? What you really want, is to forget your misery. You want to be entertained and distracted. So if your kids are ill, your harvest is poor, you’re out of work and your roof leaks - would you think about spending your last few cents on a water filter..? These are very valuable consumer insights, and they have helped BushProof to figure out clever business models that bring it back to it’s original vision. It also provided inspiration for ToughStuff, a renewable energy company I co-founded – but that’s the topic of a next talk. (1:00)
- So, why do I think social-enterprise is a great thing? Because, if conditions are right, social-enterprise will outperform charity. Firstly, there just isn’t enough donor money to solve all the world’s problems. But there is always plenty cash for great business ventures. Charity is designed to transfer value, but a business creates and multiplies value. That’s a huge difference. Secondly, aid is not consumer focused, but driven by donor and program priorities. Non-profits regularly develop programs that people are not interested in. In contrast, a business must avoid developing products that lack customers: else it goes under. Finally, when donor money stops, aid stops. But a business that delivers profits can grow organically, or attract more investment to grow even faster. Thus, social-enterprise succeeds by aligning the self-interest of two parties: the business owners (for the profit they earn), and consumers (for the value they get). (1:00)
- So, why do I think social-enterprise is a great thing? Because, if conditions are right, social-enterprise will outperform charity. Firstly, there just isn’t enough donor money to solve all the world’s problems. But there is always plenty cash for great business ventures. Charity is designed to transfer value, but a business creates and multiplies value. That’s a huge difference. Secondly, aid is not consumer focused, but driven by donor and program priorities. Non-profits regularly develop programs that people are not interested in. In contrast, a business must avoid developing products that lack customers: else it goes under. Finally, when donor money stops, aid stops. But a business that delivers profits can grow organically, or attract more investment to grow even faster. Thus, social-enterprise succeeds by aligning the self-interest of two parties: the business owners (for the profit they earn), and consumers (for the value they get). (1:00)
- So, why do I think social-enterprise is a great thing? Because, if conditions are right, social-enterprise will outperform charity. Firstly, there just isn’t enough donor money to solve all the world’s problems. But there is always plenty cash for great business ventures. Charity is designed to transfer value, but a business creates and multiplies value. That’s a huge difference. Secondly, aid is not consumer focused, but driven by donor and program priorities. Non-profits regularly develop programs that people are not interested in. In contrast, a business must avoid developing products that lack customers: else it goes under. Finally, when donor money stops, aid stops. But a business that delivers profits can grow organically, or attract more investment to grow even faster. Thus, social-enterprise succeeds by aligning the self-interest of two parties: the business owners (for the profit they earn), and consumers (for the value they get). (1:00)
- So, my story has taken me, from being a rather ineffective do-gooder with NGOs, to launching a drinking water business and a renewable energy company. During that time, I have impacted more lives than in a decade of aid work. Moreover, my attitude towards poverty and the poor has fundamentally changed : I no longer work in an unequal relationship with passive, poor beneficiaries, but engage on a level of equality with active and critical consumers. Hugely uplifting! Secondly, I no longer see development problems: I see market opportunities. Hugely exciting! Entrepreneurship is the coolest thing I’ve ever done, and in many ways I feel I’ve only just started: every day I live and work in a developing country I spot a social-business opportunity. To me, there’s nothing more fulfilling than building a profitable business that makes this world a better place. My challenge to you all is to start looking at Africa in this way: a continent that’s just seething with opportunities for those with the right attitude. (1:00)
- So, my story has taken me, from being a rather ineffective do-gooder with NGOs, to launching a drinking water business and a renewable energy company. During that time, I have impacted more lives than in a decade of aid work. Moreover, my attitude towards poverty and the poor has fundamentally changed : I no longer work in an unequal relationship with passive, poor beneficiaries, but engage on a level of equality with active and critical consumers. Hugely uplifting! Secondly, I no longer see development problems: I see market opportunities. Hugely exciting! Entrepreneurship is the coolest thing I’ve ever done, and in many ways I feel I’ve only just started: every day I live and work in a developing country I spot a social-business opportunity. To me, there’s nothing more fulfilling than building a profitable business that makes this world a better place. My challenge to you all is to start looking at Africa in this way: a continent that’s just seething with opportunities for those with the right attitude. (1:00)