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Paul Polak: How to End Poverty Through Profits

3p Contributor | Wednesday September 18th, 2013 | 0 Comments
paul polak

Paul Polak

By Auren Kaplan

When entrepreneur Paul Polak sets out to change the world, he has bold intentions. Boldness. It’s one of those qualities that people sometimes shake their head at in disapproval. We are encouraged to stay in line. Know our place. Paul knows nothing of these qualities, rejecting them for the far superior task of taking persistent, values-aligned action to bring to life the world of his dreams, at a global scale. That world is one of using the power of business – big business – to end the poverty of 2.7 billion human beings earning under $2 per day, and make a substantial profit doing so.

So who exactly is Paul Polak? He’s an entrepreneur whose market methods lifted more than 17 million people out of $1-a-day poverty so far. Why don’t we know about him? Because he’s at the front end of the curve. For the sake of those billions, his story is one that needs to be told – though if he had his way, he would just want the message to get out there. In fact, he encourages capitalists to directly compete with the life-changing businesses that Paul and his team have founded thus far.

As Paul says himself, “There’s nothing mysterious here. Poor people tell us they’re poor because they don’t have enough money – and who knows more about making money than businesspeople?” This is the simple and yet revolutionary premise that Paul has introduced to the world. Paul insists that the world look at those 2.7 billion human beings surviving on less than $2 a day in earnings as customers. Here’s why:

You may have the noblest intentions in the world, and even be selflessly dedicating your time and talent as a volunteer, but you won’t get very far by treating poor people as recipients of charity.

This is a controversial stance. Indeed, there are thousands of global organizations, with tens of thousands of hard-working human beings, attempting to lift these 2.7 billion people out of poverty. But absent some notable success stories, the nonprofit sector has failed to solve the issue of poverty in a measurable, scalable way. If they had, Paul wouldn’t need to be working on ending poverty.

The reason why is that without the market mechanism of profit driving the intentions of individuals at every level of the supply chain – down to the last 500 feet -  things break down. But when people are motivated by the opportunity to earn profit, they stay in the game. The numbers speak for themselves.

For example: take a water well, subsidized by the government and installed by a nonprofit. Once that water well breaks, who fixes it? Unfortunately, the answer is usually no one. However, if that well was operated by a small local business in one of the nearly 650,000 villages in India, and it made a small profit by selling that water to the homes of villagers – a service the villagers have asked for and are willing to pay – then that well will be maintained ongoing.

But that is only part of the point. We need big business to tackle the extraordinary challenge of ending poverty. How do we do that? Paul Polak and Mal Warwick, co-authors of the book, The Business Solution to Poverty, have a field-tested and proven system for creating enterprises that will serve the needs of 100 million $2-a-day customers. That includes earning the types of profits that will attract mainstream investors – $10 billion or more. As Paul says, big business is running out of opportunities to increase revenues and profits with its current customer base. The 1.5 billion or so individuals living in the “Global North” (including the U.S., Canada, Europe, Japan and Australia) are a saturated market. We just don’t need more stuff. Even in the emerging economies, these businesses only cater to the new middle classes – ignoring billions of potential customers who could increase sales by hundreds of billions of dollars.

Paul is a quiet revolutionary. I say this because he wants to radically transform the way the world works, on a day-to-day basis. He wants to change how we live our lives. How business gets done. Thankfully for us, he knows exactly what the next generation of big business needs to do: develop market-ready products that appeal directly to the needs and aspirations of the world’s poorest, serve them and all stakeholders along the way, and generate healthy profits at every stage of the business model.

The catch is that if you want to succeed in this enormous, essentially untapped market of nearly three billion people, you must throw everything you know about designing and selling products out the window. Paul and Mal call this “Zero Based Design.” Rather than a mildly altered product, Zero Based Design demands that you start at square one. A clean slate. Want to market your product? Try advertising in print or TV to an illiterate audience without access to electricity. Want to sell a product that a person making only $2 a day will actually buy? Try selling it to them without spending serious quality time with them understanding their needs, and goals, and aspirations.

When a person’s disposable income is essentially $0, they will only buy something if you can show them that it will dramatically improve their lives. And Paul’s methods dictate that the poor person increase his or her earning capacity by 200 to 300 percent within a year of making the purchase of, say, a treadle pump, or drip irrigation, or photovoltaic energy designed to replace expensive and carbon-polluting diesel engines for pumping water out of the Earth.

To be truly successful, you have to design with scale in mind, from the very beginning. What kind of scale are we talking about? If you want to have 100 million customers over 10 years and revenues of $10 billion, then you have to target problems that affect more than a billion people.

Having any trouble coming up with some? Try a billion people without electricity. Or toilets. Or access to quality education. Or health care. Or clean cooking methods that don’t cause respiratory illnesses. Or a house that won’t leak. Or access to nutrition. Or crop insurance for small farmers in the event of drought. Are you starting to see the opportunity?

The point is this: There are a plethora of problems out there that affect a billion people. And if the spread of cellphones throughout the poor is any indication (an example of a business model dramatically improving the lives of poor customers while making substantial profits), you can see that business solutions allow for stubborn and talented entrepreneurs to design with scale in mind, so all stakeholders succeed and so the entrepreneurs make the kinds of profits that will entice mainstream investors. In fact, business solutions seem to be the only way to improve the lives of any meaningful number of poor people.

I know entrepreneurs. I am one myself. And we are the most dogged and self-determined people in the world. We live for a challenge where the odds are stacked stubbornly against them. Especially when the upside is literally billions of dollars in profits.

If you are an entrepreneur, a social entrepreneur, or an executive of a multinational corporation, then I dare you to attempt this approach. Paul doesn’t care if he’s attached to it. He doesn’t want the glory. He just wants to see his revolutionary idea succeed. So that billions can benefit. So grab the glory for yourself. Let the world build statues in your honor. We need you. We are waiting. And we require your boldness.

[image credit: Pop!Tech 2008: Flickr cc]


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