I was not expecting, however, to encounter cows wearing necklaces (and blankets) in Bihar.  Not just one or two, but rather a lot of cows with brightly colored strands of beads.  Not gold but necklaces nevertheless!

The obvious hypothesis is that cows, being considered somewhat akin to holy, should thus be adorned as gestures of divine reverence.  I don’t think that is the explanation, however.

The real answer begins in the field of the smallholder farmer and owner of this cow.  My picture here shows a treadle pump in a field of vegetables being grown in the post-monsoon season.  Cauliflower, carrots, beets, potatoes, etc – all fetch a good price in this season.  The simple treadle pump combined with some sensible agronomic practice has resulted in a significant increase in productivity, that is, a lot more food grown and a lot more income produced.  Not just one or two farmers.  Lots.

These Bihari farmers often invest next in a cow or water buffalo.  A bunch of reasons to do this:  milk production, animal traction, farm saving and dung production.  So the smallplot farmer with his/her treadle pump can capitalize his/her farm operation through the investment in a cow.    Adult cows in Bihar are worth as much as $400 or more if healthy.

It is winter in Bihar at present (January) and the nights get a bit chilly.  I don’t know if this is truly necessary but I saw a lot of cows wearing “coats” for warmth, in addition to their necklaces.  From the farmers’ perspectives, these animals are so important that one should make the effort in treating them with respect and consideration.

Now, I don’t actually own a cow, and if I did, I doubt that it would actually wear a necklace.  Nevertheless, if I walk a little in the footsteps of the smallholder farmers using treadle pumps to increase their incomes and household asset base, I can begin to appreciate just how valuable the opportunity get ahead a little is.  And if putting a necklace on a valuable farm animal which it was thus possible to acquire with the earnings, then I am fully on side!

Al Doerksen

Talk about defecation, taking a crap, or taking a shit is not polite dinner-time conversation.  It may not even be polite for a blog seeking readers who appreciate a measure of respectability.  But that is part of the problem.  Even though most of us hope for the regularity which allows for a daily movement of our bowels, it is not usual to discuss it.  And the fact that we don’t talk about or even acknowledge that we did or didn’t crap today has contributed to not addressing the problem of one billion people who still defecate in the open every day!  We are going to have to start talking about this so we can get on to addressing the issue. 

iDE has been involved in sanitation marketing in Vietnam and Cambodia for several years, and successfully so, but I wasn’t always been convinced that iDE with its income creation mission should be involved in water & sanitation programs.  I have changed my mind.  I’ll tell you why.

It’s a health issue.  Open defecation and unsanitary latrines are a huge source of fecal matter in food which then leads to diarrheal disease.  Never mind the inconvenience this causes adults, diarrheal disease kills more than 1.5 million children a year!  It’s incredibly sad to lose a little person in this way!  The grandfather in me can easily identify with this pain.

It’s a women’s issue.  Women should not have to suffer the indignity, the inconvenience and the personal safety risks associated with open (field) defecation.  They should also not have to wait until nightfall to deal with their daily physical routines.

It’s a children’s issue.  Chronic diarrhea can hinder child development by impeding the uptake of essential nutrients that are critical to the development of children’s minds, bodies, and immune systems.   Reduced incidence of diarrhea has the effect of increasing school attendance, especially for girls.

It’s an economic issue.  In a recent policy statement, the Gates Foundation estimated that the economic benefits of improved sanitation can reach $9 for every dollar invested by increasing people’s productivity, reducing healthcare costs, and preventing illness, disability, and early death. For an organization like iDE with a focus on creating income opportunities, this is huge.

It’s a market opportunity.  Several years ago, iDE Vietnam engaged in a project to help local suppliers construct and supply low cost latrines through the local market place.  A post-project evaluation conducted 3 years after the close of the project showed that high latrine sales rates continued even though the project was long over.  More recently, iDE Cambodia working with an IDEO product designer developed a simple, award winning “easy latrine.”  In the first year after this was introduced to local producers and marketers, more than 10,000 units were sold and installed (and are now in daily use).  These units sell because they align with the value structure of our customers.

iDE is gratified to report that the Bill & Melinda Gates Foundation,  the Stone Family Foundation, and the World Bank Water and Sanitation Program have recognized iDE’s leadership and proficiency in sanitation marketing with $6 million in grant funding to  expand our work in Southeast Asia.  We are poised to also move into Nepal, Bangladesh, and several African markets.

One of iDE’s historical heroes is Archimedes.  He said “give me a lever long enough, and a place to stand, and I will move the earth.”  We think a good variation of this might be “give me a place to squat (in dignified privacy, safety, and convenience), and I will move my bowels to change the world.”

I am a big believer in Amartya Sen’s analysis (in his essay “Poverty and Famines”) that by far the largest cause of hunger and starvation in a famine event is not because of inadequate food supply – people become hungry and starve when they cannot access the food which is available.   Sen analyzed food supplies in some of most famous famines including the Irish potato famine in 1845/51, or the Bengal famine in India in 1942, or the
Bangladesh in 1973.  Each of these famines had different underlying causes, but most importantly, in all cases, there was enough food to supply everyone.  No one had to starve.

What then are the factors which deny access to food to hungry people?  Well, in the first case, there are nasty civil conflicts as is the case in Somalia – starvation of people is being used as a weapon.  Hoarding by merchants or by wealthier households is a factor too.

By far and away, however, the biggest reason people cannot access the food they need is because they are too poor.  In plain English, they do not have enough money to buy the food they need.

This last week I was in Burkina Faso.  I had the chance to “get lost” in a village community with my camera, and when this happens, I look for examples of market activity, ie, local buying and selling.   Simple stands where someone is selling few vegetables, or salt, or litre bottles of cooking oil are common.  Oil is daily necessity – I was quoted 1000 Cfa (just over $2 USD) for a one litre bottle.

This is probably a fair price for palm oil, but if you are a $1 – 2/day household, you simply may not have the free cash (working capital) to buy an entire litre at a time.   Local traders’ response to this situation to repackage oil (and many other commodities) into smaller, affordable quantities.  You can buy a small packet for just today.  This is useful.

But here’s the rub. If you buy oil in smaller packets (out of necessity), you end up paying
20% more for your cooking oil as compared to the 1 litre bottle.  So not only are you poor, but now your food bill for oil is 20% more expensive. Ouch.  This is the pain of food
insecurity.

[On the other hand, middle class North American consumers without real cash constraints, can secure 10% case discounts at Costco or Whole Foods.]

What I also saw in Burkina Faso last week, was a woman with an infant strapped to her back drawing water with a rope and bucket from an open well to fill sprinkler cans with water, then walk two cans at a time to irrigate her
vegetables.  This is hard work.

I saw another woman tilling her garden with a pick axe – try cultivating even a quarter acre in this way. I also saw a lot of women bent over weeding their gardens.  These are women working incredibly hard to grow a little food and earn a little income.  What they really need are opportunities to be more productive – to farm larger areas with less effort and with better yields.

Drip systems, suction pumps, diesel pumps, two wheeled tractors, animal traction, better seeds, affordable fertilizers, better agronomic practice – all of these can help subsistence farmers become more productive.  iDE is committed to making all of these available.  iDE believes that the way the subsistence households can escape this penalty of higher food prices is to put more income into the pockets of these consumers through opportunities for improved productivity – so they don’t need to pay 20% more for their cooking oil than
you and I.

Al Doerksen – October 2011

Ashley came to iDE from MIT in mid-2008.  She was looking for some international work
experience.  So off to Ethiopia she went to become part of iDE’s technology development team.  She said that getting a job with iDE was her dream job.  [And she explained that her fingernails were dirty because she was finishing a charcoal project].

It wasn’t always easy but Ashley was determined to fit in culturally. No foreign enclave for her.  She lived across town and took local buses to work.  She was robbed or scammed several times, but not only did she survive, she bounced back.  She enjoyed enjera, and learned traditional Ethiopia shoulder-jogging dancing.

In January 2009, I visited her in Ethiopia, and then wrote back to her parents (and now to all of you) that “You should know that Ashley is doing (has done) terrific work in Ethiopia. On the technical side, her determined drive to create a rope pump which will be affordable and viable and effective for smallholder families / farmers to help them  irrigate their crops, increase their food production and ultimately their income, will make a huge significant difference in the lives of thousands of families in the future (and already is).  On the organizational side, Ashley’s infectious laugh, her willing spirit and her cooperative helping ways, and her coordination responsibilities (as in our recent global technology meeting) is an inspiration to all of us.  On the cultural side, Ashley’s openness, curiosity, willingness to learn Amharic and respect take her a long way into fitting in and functioning effectively.  Yesterday, a bunch of us bought “coffee necklaces” from her which she was “peddling” as a fundraiser for HIV victims.  Also great.”

During her time in Ethiopia, Ashley adapted the rope pump to allow smallholder farmers (who could not use suction pumps) to have a source of irrigation water.  She created a local supply chain which would ensure that farmers in the future would continue to have access to these income-rich water devices.

In her 2½ years in Ethiopia, her rope pump project went from a standing start (no pumps available) to at least 2000 purchased by small plot farmers.  The irrigation impact of each of these is an additional $300 to $500 in food production annually.  That’s as much as $1 million annually.  That’s huge.

One farm family was so excited with the “Ashley rope pump” and treadle pump they had
received that they named their baby girl, Banchi Gizae (“in her time”).   (Her name commemorates that her birth coincided with the arrival of the pumps).

Not being quite through with Africa, Ashley moved on to Zambia and Mozambique to continue the spread of the technology.

The last time I saw her in Africa, she was engaged in a low cost well drilling exercise.  As you can see, it was dirty sludge coming out of that well drilling unit.  That didn’t matter to Ashley.  She already had dirty hands.  It was what qualified her to make an impact.

Ashley is only one of many qualified employees and volunteers who work with iDE.  They
come from around the world, many of them from the countries in which we operate.  Not all of them have dirty fingernails, but all of them are determined to make the world a better place for the smallplot farmers who are our clients.

The distinctly colored lower case “i” represents a lot of ideas we want to be known for:  innovation, integrity, international, intentional, income, irrigation, impact, imagination, and the list could goes on to include investment.

We have developed a little graphic with multiple “i’s”.  An “i” alone represents me; it starts with what I believe is necessary and possible and what I am prepared to accept responsibility for.  This is not an individualistic organization, however, the multiple “i’s” become “we”.  We share a common belief system, a common philosophy of development, a common commitment to action … and we understand that when we believe and act together, things happen.

To take it further, we understand that we are a community of investors.  You can see us in the graphic – some diversity to be sure, but there we are lined up shoulder-to-shoulder in common cause.   

Each of us are investors.

Our donors invest in our mission because they believe and desire that we will create a social return on that investment which results in income and livelihood opportunities for the rural poor.

Our staff invest their careers and time in pursuit of a mission which is driven by the same desire for a social return.  We believe that the efforts we invest in innovative product development and rural marketing programs will pay off.

Our interns and volunteers invest their time and passion to join us; the leverage they bring is not inconsiderable.

Our supply chain partners invest working capital to source and/or manufacture treadle pumps, drip systems and sanitary latrines because they believe in the underlying value of those products; that value to include the margins to keep the supply chain profitable and sustainable.

And most importantly, our small plot farmer clients invest their meager resources to acquire and put to work technologies which will increase their productivity and production, and their disposable income.  We have learned a long time ago that small plot $1/day farmers require a payback which, in most cases, is less than a year.  Generating this return is primary for us.

So we are a community of investors.  We partner to achieve common purpose.  Each of us has something at risk; each of us has a particular desired return on that investment.  When we recognize that we are a community of investors, thoughts of paternalism disappear.  So do characterizations of our small plot farmers as beneficiaries. 

All of us in iDE are investors.  We stand together, and together we achieve a considerable return on those investments.  Some call it ROI.    And that is good for all of us.

Al Doerksen

It is many months past the monsoon season in India, and the season for rain fed agriculture is also long past.  By far, the majority of fields are laying fallow waiting for the next monsoon, still some time away.  In Phulbani, however, there are more than a few enterprising smallplot farmers who have dug open wells on their own one acre farm sites.  The next thing is to add a surface treadle pump, a simple and inexpensive device which lifts the water out of the well – water which is a key ingredient for irrigation, and also the miraculous transformation to wine.

The results are dramatic:  Aubergines, potatoes, beans, chilies, cabbages, cauliflours, tomatoes, okra – we saw them all.  No grapes but we will get to that.  These horticultural crops are carefully tended with local organic fertilizer applied.  Weeding is manual.  The result is three crops annually in place of the usual single rain fed crop.  Annual farm income goes from $200 per family member to $600 per person; for the family of five approaching $4000 from one acre of land.  In nominal terms, that makes these farmer almost $2/day; still poor but no longer at the subsistence level.  Children are going to school.  Family nutrition has become a lot more adequate.  There is no longer the need to migrate in search of day labor opportunities in the dry season.  There is even a little money left over for jewelry and cosmetics – witness the feet of the female farmer on her treadle pump.  These are great indicators.

Now to the wine dimension.  Also cultivated to a small extent around the edges of the field is a small fruit which is ideal for a local fermentation process.  The result is somewhat akin to wine.  iDE is not promoting home brewing per se, but we do realize that people around the world like to celebrate their farm successes, and doing so with a little wine, homebrew or local hooch is rather common.

It starts with water.  In so many part of the world, providing access to irrigation water and accompanying technologies for lifting and distribution is the single greatest point of income leverage for small plot farmers.  iDE develops these technologies, and arranges for their distribution through local market channels.  Local farmers assess the opportunities, invest and harvest the results.  Worth celebrating?

May I offer you a glass of wine to celebrate World Water Day?

So here’s a few thoughts about value.  I start with the dead sofa on the boulevard of a Fort Collins neighbourhood – not that far from Colorado State University.  I had occasion to visit Fort Collins several times over the space of a week or so.  The sofa did not move; it was just there.  No, it wasn’t a bus stop.  It was just discarded.  There was even a sign which said FREE.  Still, there wasn’t even a university student on a limited budget who laid claim to it. 

Since I spent half a dozen years in the upholstery business, I am sensitive to discarded sofas.  In this case, the frame looked more or less intact, the fabric a bit dirty but not visibly torn.  The cushions probably required replacing and a face plate on one of the arms was missing.  To build a new sofa of that style would cost a few hundred dollars, at least; in the factory, we would go through a series of steps which we would consider to be value added, and end up with a product which would retail for a modest profit.  The sofas we built had value, and yet, this one sits here free, discarded, unclaimed – apparently it has no value to anyone.

So here is the first observation.  It is not the cost build up which determines the value of a product.  It is customers who do their own mental assessment of what the perceived features and benefits are worth to them.  In this case, there was no one around who perceived anything which seemed remotely attractive or interesting.  Worthless in other words.

The definition of value is the ratio of perceived features and benefits relative to price.  New HighDefinition television sets and new cars and countless other products are now available in a wide range of pricing.  Yes, you can simply choose the lowest price product, and some people do, but many more consumers are do the value calculation – which features and benefits appeal to them within their ability or willingness to purchase.

These features and benefits may be warrantee, color, functionality, status, versatility, reputation, power consumption and a bunch of other factors.  Each customer has her or own value paradigm.  Successful companies, for example, Apple, understand a lot about customer values in how they put together and market their iProducts – iPads, iPhones, iMacs and iPods.

iDE’s customers are small plot farmers.  The better we understand the value framework and farm economies of those customers, the more likely it is that we will offer products and services which align with those values.  We can discover these value frameworks by simply observing the market response to our offerings, or we can undertake formal voice of customer exercises.  Apple does it.  Why shouldn’t iDE?

One of the things which iDE has learned from the 3.8 million small plot farmers we have served so far is that each and every one of those farmers is “sitting” in the middle of a value stream.   Costs flow into the farmsite from upstream sources.  Revenue opportunities for farm production are found in downstream markets.

We have not tried very hard to sell upholstered sofas to small plot farmers.  Not only is it not our business, we doubt that the value proposition embedded in sofas would rate very high for subsistence farmers.  I am sure we would fail.  What does rate much higher are irrigation products and other agricultural products and services which dramatically increase family income.

In terms of water lifting, farmers have more and more choices:  treadle pumps, photovoltaic pumps, solar thermal pumps, electric pumps or diesel pumps.  Each has its own set of features and benefits.  Our farmer customers make their own assessments.  They each also review what their farm economy can afford.  Then they make their own value choice.

It was the late C.K.Pralahad who first popularized the notion of a fortune at the bottom of the pyramid.  For him it was a business proposition.  His key observation was that there were a lot of poor of customers who had not been served by major corporations with goods for sale.  His contention was that if businesses were to develop products and sales methods targeted for the poor, they (the corporations) could reap major fortunes.  Conceptually interesting, but not much evidence so far.

According to that inscrutable source, Wikipedia , “the phrase “bottom of the pyramid” was used by U.S. president Roosevelt in his April 7, 1932 radio address, The Forgotten Man, in which he said ‘These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power…that build from the bottom up and not from the top down, that put their faith once more in the forgotten man at the bottom of the economic pyramid.’”

For those tending to hold negative view of capitalism, the space of the bottom of the pyramid has always been crowded, with the weight of all those above truly crushing in terms of impact.  In this illustration from the “Industrial Worker”, it is those at the bottom who “work for all” and who “feed all”.

The more current usage refers to those people living on less than $1 – 2 per day.  An estimated 1 billion (plus or minus) occupy this space at the base of the pyramid.  Yes, it is crowded, and more than a little discouraging.  At less than $1 per day, life is mostly about subsistence poverty.  It is about barely having enough food to eat.  It is about inadequate health care.  It is about inadequate shelter for one’s family.  It was about not being able to educate some or all of the children in the household.  It is about having no savings.  It is about no fallback or cushion if crops fail.  It is about having no contingency funds for emergencies.  It is about having almost no ability for any kind of discretionary spending.  There are no fortunes down at the bottom of the pyramid.  It is hand to mouth.

IDE works with households and individuals who are poorest of the economically active segments of rural society in developing countries.   IDE does work at the bottom of the pyramid.  For farmers, it is about transforming the economics from scarcity to opportunity; and the mindset from object of charity to producer of value.  We do agree with Pralahad on the point that we should treat the people at the base as customers.  As customers, our intent is to offer them affordable income opportunities which allow them to sustainably move beyond the subsistence space to that first level of prosperity.  An annual income increase of $300 to $500 makes a world of difference.  No, they are not rich yet and they are not amassing fortunes, but now there is ability to get ahead a little and gain a measure of economic security.

IDE’s low cost irrigation technologies – low cost pumps, drip systems, water storage systems – have dramatic impacts on agricultural productivity hence household income.  If we include other value stream opportunities relating to better or lower cost inputs (eg. seeds) and/or improved market access for horticultural produce, the results get even better.

As already noted, IDE’s goal is move these base of the pyramid producers / consumers sustainably up to at least that first level of prosperity in the economic pyramid.  In a perfect world, we would end up with an empty space in that $1/day space at the bottom of the pyramid.

A phrase we often use to describe our work is “Enabling Rural Prosperity.”  We do not mean exactly that these poor rural households have become rich.  What we mean is that our farmer investor friends are moving away from subsistence grinding poverty in the direction of the entry levels of economic security.

And why do we insist on treating very poor people as customers?  It is not to generate any fortune for ourselves.  When we treat poor people as customers, we commit ourselves to listening and responding to what they need to become more productive and earn more income.  Anybody can give stuff away free.  It is when we can create investment opportunities with quick returns that we can take the first steps to creating those illusive fortunes at the base of the pyramid.  Once we achieve that, we will move to rainbows.

I have always enjoyed little kids, and somewhere along the way, people started to call me “Uncle Al, the kiddies’ pal.”  Now, I’m not so big on my nephews and nieces (and I have about 30 of these) calling me “uncle”, but I do like the warmth and friendship dimension of this.  (I’m glad that a bunch of them are now my Facebook friends). 

These days I have two little grandsons who mean the world to me, and I am proud to be called their “grandpa”.  I love their curiosity, their lack of pretension, their love of running, their hugs and smiles, and their enjoyment of good books.  On my bucket list was the desire to take a grandchild to the zoo; they have allowed me to realize the fulfillment of this dream.  Although they are challenging at times, fundamentally I do not see Matias and Lucas as problem cases which their great white grandfather needs to solve.  What I resonate with is their own potential, hopes, dreams, energies & curiosities.  Good health, literacy, a secure & peaceful environment and enough of the right food to eat would certainly be helpful.

Fundamentally, these are the same thoughts I have about the “gang” to whom I became an unwitting Pied Piper in Bangladesh.  Their standard of living was basic to be sure, but it was not hard to see that they were also interested in books, in having enough to eat, in being able to run and in being safe & secure.  In other words, their interests (whether explicitly addressed or not) were essentially the same as those of my little Canadian grandsons. 

Neither my colleague nor I are interested in a paternalistic view of development.  Both of us enjoy kids, however, and if IDE’s income generating programs create opportunities for regular delicious meals, for reading, for running, for fun and for friendship, that turns us on.  It’s not about being uncles or grandfathers or Pied Pipers – it is just about friendship and generosity.

So now we’re getting to the end of the year, and some of us are started to review just how well we did with our personal investments in the past year.  How much of the lost ground from the financial meltdown have we managed to recover?  What’s been my return on investment (ROI) this year?  How many years do I have to work before I can retire?

Investment considerations are also important for IDE.  No, we aren’t taking any risks with our donor funds, but at a certain profound level, we have come to realize that IDE is smack dab in the middle of a community of investors.  If the first case, the farmer customers who purchase our irrigation technologies are fundamentally investors in their farms, families and futures.  If they invest $100 in a drip system, they are calculating that they will receive a ROI several factors greater than their purchase. 

Likewise our donors, for example, the Gates Foundation, is very interested in the social return on their investment with IDE.  They calculate their cost per customer as donors, and are strongly interested in seeing a substantial return.  We are happy to report that many of our projects generate a return of 8 to 10 times when taken over a three year period.

So this adds a dimension to my personal portfolio management.  Without a doubt, I want to be saving and investing for my personal future.  At another level, however, I also have a profound sense that I live in a global community.  In this global community, we are all more secure if all members of that community are doing well.  An “investment” in Zambian and Ethiopian farm families, and a host of other places simply makes the world a more secure place for all of us.  An improving ROI for Indian smallholders is good for all of us.

In the past year, IDE developed five social innovation funds to be used as donor vehicles for those interested in unbundled investing.  Our Bottom of the Pyramid Enterprise Fund is designed to stimulate the sustainable creation of supply chains which use market mechanisms to distribute value rich irrigation technologies.  Our Innovation Fund will invest in the development of new productive technologies to increase food production, hence income.  Our Women in Agriculture Fund recognizes that in many parts of the world female farmers are really the group that does the majority of the work.  Our Rural Finance Fund is designed to provide the credit necessary to make those investments in irrigation and other productive technologies.  Finally, our Leadership Fund is based on the common sense idea that organizations and field programs like IDE are only as good as the quality of the leadership and management behind them. 

The contention of this blog comment is that if my investments are restricted only to my personal future, that is an unbalanced approach to investment.  On the other hand, if I invest in both my future and the future of dollar a day farmers in developing countries, that is balanced.  I am interested in both.

We offer you no advice about your personal savings investments, but we do urge you to consider the five social innovation funds outlined above.  We believe you will like the SROI (social return on investment). Consider it an enlightened approach to balanced investment.

Al Doerksen – December 2010