Tuesday, November 6, 2012

Kiva Innovations: How do you design for maximum impact?

iPhone 5 versus Galaxy s3?

The news is filled with stories about the design battle between Samsung and Apple -- taking place mostly in the form of patent lawsuits. In recent years, the word "design" has come to evoke images of slimmer and sleeker tech gadgets. But design reaches far beyond iThings and IKEA furniture. 

At Kiva, we believe that design plays an important role in the development of products and services for the “bottom of the pyramid” (BoP) -- the people around the world living on less than US$2 to $5 per day. This concept, known as “designing for impact,” finally got some buzz as the theme of the latest Clinton Global Initiative (CGI) Annual Meeting this September.

A solar desk lamp made by Kiva Field Partner Barefoot Power, one of Kiva's many Field Partners that design for impact.

During CGI's opening session, Tim Brown, CEO of prestigious design firm IDEO, elaborated on this idea. As you'll see in the video below, he spoke about how design -- at its core -- is really about intentionally reaching desired outcomes. He also described how things that work well are usually developed with a lot of thought to the “how” factor and with a deep understanding of the communities being served.

Brown closed with two points that are crucial when thinking about design. First, design doesn’t end with a product or service -- design opportunities continue throughout an entire business or organizational model. Second, it’s all about getting it done. Rather than siting in a conference room and spending endless amounts of time in discussion, good design comes from getting right to building your first prototype and learning from and iterating on it.

It’s very important to get a product right. But even when there's an amazing product out there that can bring great economic/health/social benefits to the poor, it won't necessarily reach its target population. In the developing country context, design needs to reach beyond the creation of a product to be present throughout the whole business model.

One case in point: mosquito nets.

It’s common knowledge that insecticide-treated mosquito nets are critical for malaria prevention. They're designed to repel or kill mosquitoes that come in contact with the net, and health experts say that they can reduce child mortality by 20% in regions with high rates of malaria. However, despite the development of a great product, there’s still a great deal of confusion about mosquito net pricing and distribution.

In the book "The White Man’s Burden," William Easterly argues that just because mosquito nets are being handed out for free by aid agencies, they aren't necessarily reaching the people who needed them most. He describes how nets are often diverted to the black market or used as fishing nets or wedding veils. As an alternative, Easterly presents an example of an organization in Malawi that sells the nets at a reasonable price, ensuring that they'll be owned by people who actually need and want them.

Of course, there are also some counter-arguments from researchers who found that pregnant women who received free nets were just as likely to use them for their intended purpose as women who paid for them, and that charging a small fee for the nets significantly lowered demand. Debate over how mosquito nets should be priced and distributed is ongoing and increasingly complex. This example just goes to show that design is crucial in all aspects of the business model, including pricing and distribution strategies.

So how do we design for impact in a holistic fashion? 

According to Kevin Starr of the Mulago Foundation, key design ingredients for products targeting the poor include: a thorough understanding of the setting and the customer, a clear price point, a strategy for distribution, use of applicable emerging technologies, an understanding of the competition, knowledge of the history of other efforts, and the right specifications.

Like IDEO's Brown, Starr emphasizes the importance of knowing customers and their contexts. It’s important that products are actually needed and going to be used by customers. Additionally, prices are very important when your target population is making less than $2 to $5 a day. Finally, distribution strategies have been found to be very challenging, given that the products are often designed for rural or slum populations that face high barriers to entry.

Mulago Foundation uses a simple yet effective framework to encourage entrepreneurs to design for lasting impact. This framework urges them to design a systematic impact model that can be scaled up, starting with pinpointing the exact impact you want make to formulating the interventions that will drive behavior.

At Kiva, we’re excited to highlight the work of our Field Partners that bring the concept of “designing for impact” to life.

One prime example is recent partner Sanergy, a social enterprise that's working in Kenyan slums to install innovative, sanitary toilets. In its early stages, Sanergy's staff invested a great deal of time and effort in developing prototypes for high-quality toilets that collect waste cleanly and enable it to be converted into energy and fertilizer.

Today, the company sells its affordable toilets to local operators, who they also train and provide with ongoing support. These operators manage their toilets and collect the waste on a daily basis to take to a local processing facility. They also generate additional income by charging customers nominal pay-per-use fees.

You can watch this short video to learn more about Sanergy's unique approach to design:

Sanergy’s model is based on a great product, but the whole system has been designed to be useful and sustainable for both customers and distributors. Kiva is working with Sanergy to provide loans to its operators to purchase sanitation systems. We're thrilled about its potential to make a real difference in Kenyan slums.

Sistema Biobolsa is another Kiva Field Partner has designed for impact with its biodigester systems. Biodigesters transform livestock and human waste into organic fertilizer and/or biogas for cooking. This idea has been around for a while, but previous models were often abandoned because they were poorly constructed from flimsy materials and farmers weren’t able to repair them.

Sistema Biobolsa CEO Alex Eaton went on a quest to create a model that would actually be used by farmers, developing a biodigester that’s made up of low-density, linear, polypropylene or polyethylene material. This "space age" material, as described by Eaton, has a useful life of over 20 years in direct sun. To support farmers, Sistema Biobolsa not only sells its equipment, but also trains rural families to use their biodigesters to process waste and make repairs.

People watch a Sistema Biobolsa biodigester in action.

These biodigesters have high upfront costs, but they end up saving farmers money in the long run by replacing costs of energy and fertilizer. Kiva is working with Sistema Biobolsa to offer a loan program to help farmers spread out their payments over a period of six or more months, allowing the system to “pay for itself” during the repayment period.

We’re also seeing the “design for impact” concept being applied in the creation and distribution of solar energy products by several of our partners, including Barefoot Power.

Kiva is so excited to see social entrepreneurs taking ideas and translating them into products and services that are really making a difference in the lives of the poor. From the initial design of products to the development of creative distribution strategies, it’s amazing to see what's possible.

One of Kiva's primary goals going forward is to make products and services that have been designed for impact accessible and affordable for everyone who could benefit.

Rebekah Chang is an intern for Kiva’s Strategic Initiatives team, looking for new partners and loan products to extend opportunities and access to more people around the world. Rebekah has an M.A. in Development Economics and Conflict Management from Johns Hopkins University School of Advanced International Studies. Send her your feedback on this blog series at blog@kiva.org.

This is part of a larger series on Kiva’s strategic initiatives and innovative loan products, which are designed to expand opportunities for more borrowers across the globe.