Does Charity Put the Customer First?

Why is it that most organizations in the social sector ignore the very customers that they are trying to serve? Often times this critical business oversight is compounded by the fact that many organizations work in a vacuum, oblivious to other initiatives that may be partly of fully serving the very same need. I recently heard the story of a homeless person who actually gained weight after moving to the street. Most of us assume that food and shelter are the most critical services that the homeless need. Well in fact, they have other needs, such as access to laundry services, that may be even more important than food if enough good Samaritans have stepped forward to meet the market demand. Laundry Love Project (www.just4one.org/laundrylove.html) is one such initiative that was founded because someone actually sat down with the customer and realized that there was an unmet need that should be addressed.

Unfortunately, this lack of focus on the customer is not only a US-centric epidemic. In fact, it is one of the main reasons why billions of dollars of traditional aid to the developing world have simply disappeared. Too often aid agencies have looked at the governing elite as their customers instead of the poor, who are the ultimate recipients of the service. The poor are perceived not as customers, but rather as charity recipients.

Recently, I returned from spending nine months in Pakistan, where I worked for a drip irrigation company that targeted small farmers. As a for-profit start-up, we soon realized that our product offerings were not gaining the traction that we desired. As we dug deeper into the problem, we recognized that we were not doing a good job of putting the customer’s needs at the forefront of our business. Of course we would spend time in the field with customers listening to their concerns, but customer service was not a strategic part of our business. We found ourselves discussing our customers’ needs as if we knew exactly what they were when in fact we did not. The turn around came when we began to deploy IDEOs Human Centered Design approach in the field. We began to conduct in-depth interviews with customers to discern what influenced them and how they made decisions. We finally were really listening to the customer. Soon, we began to change our focus from more expensive systems to a cheaper system that only cost $12.

Social Entrepreneurship is different than traditional aid because it treats the poor as customers who have a choice, often for the first time. By selling a product or service to the poor instead of giving it away for free, social enterprises have the ability to use the market as a feedback loop to tell which goods and services are working and which are not. Just recently, D.Light Design, a for-profit company who is serving people without access to reliable electricity, listened to its customers and heard that their product offerings were still too expensive at a $15 price point. They went back to the drawing board and came up with an even cheaper solar light that is more user friendly for only $10.

When the poor pay for critical goods and services they become empowered. They can vote with their limited discretionary funds and demand a level of service that charity is hard pressed to replicate.

Joel Montgomery

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A Storm to Remember

It’s ironic how a lightning-filled storm can knock out the electricity to millions of people. Yesterday, I was on my way back from Hyderabad headed to Karachi, when I noticed a strange phenomenon. Suddenly, this strange liquid began to pelt our car in large drops as big as a grape. SPLAT… SPLAT… SPLAT SPLAT SPLAT SPLAT SPLAT. Now for those of you who are used to rain, this probably seems quite standard, but for those of us who live in Karachi, rain is an irregular event. I have lived here in Pakistan for 7 months and only seen raindrops twice. As we barreled forward undeterred by Mother Nature, the clouds grew dark and the wind whipped up the desert sands to obscure our view. Lightning danced all around us. Thankfully, we made it through unscathed. Outside my house in Karachi, I exited the car that had shielded me from the torrent and heard the familiar hum of the generator. Load shedding is a daily reality, so I didn’t think much of it. One hour, two, three… now this was not normal. Usually, the power stays off for only one hour. Four, five, six, seven… thank goodness that our generator runs on natural gas, because something major must have happened.

Well, we were not alone. 70% of the southernmost province of Sindh, including most of Karachi (16 million strong) was in the dark due to the very storm that we had passed through on the way home. Those who are not so lucky to have a generator of UPS suffered for 20 hours or more. Those that could afford a generator of UPS suffered for 15 hours or more depending upon how much gasoline they purchased to run those precious fans. Most of the city ground to a halt. Finally at about 1:30pm the following day, all of Karachi let out a joyous exaltation. The electricity was finally back.

Joel Montgomery

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The Wind

For many years the vessel sailed in gentle seas, a light breeze guiding the way. The sailors enjoyed nice ports in the Americas but seldom ventured further. One day, a great storm approached, accompanied by strong winds that the vessels’ sails had never seen in these warm Atlantic waters. The captain pondered if he should stow the sail and ride out the storm or run downwind at the mercy of the gale. The lines grew taut, the knots shrank, but the tackle held. Never had anyone on the boat traveled at such speeds. Fear filled their minds but soon fear was replaced by amusement and amusement replaced by joy. The strange winds took the sailors to far off places few ever imagined. The mysterious force would stop as quickly as it started, usually not far from a harbor in which to rest. After disembarking the crew would explore the new locale, taste exotic foods, and befriend the locals. Inevitably in each port of call, the crew would find some way to use the skills from their country to help the local inhabitants. In return, they would gain new insights into the world and hone their own abilities, constantly learning from their new friends. As quickly as it had stopped, the mysterious wind would pick up and the sailors would know that it was time to return to their beckoning ship. Once on board, the force would whisk them away to another land. Now in every journey, they would pass by deserted islands and crystal blue waters. Some of the sailors would ask, “Why don’t we explore that ile, for it seems a perfect spot to rest our souls.” But the captain knew that though he had a hold of the rudder, the wind guided his path.

Joel Montgomery

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Update from Pakistan

Mohammed Shafi is an eight-acre farmer who must support fifty members of his family by farming, raising a few water buffalo, and working as a day laborer. He cannot afford to cover his expenses and as such, must take loans from local money lenders at rates in excess of 10% per month. It is farmers like Mohammed Shafi, that I am trying to help through my work with Micro Drip. Micro Drip is not a non-profit, but rather a social business. We sell low-cost drip irrigation systems to poor farmers at a reasonable price so that the farmer has access to this incredible technology, and we can serve him without asking for handouts.

Incredibly, it has been six months since I first arrived in Pakistan and God has been faithful in keeping me safe in spite of the violence that has plagued parts of the country. Thankfully, I've found that the reports on the news are scarier than the ground reality. The assignment has been the most challenging of my life, but I've also learned more here than anywhere else.

1) No plan will work unless it includes on-the-ground knowledge
The typical aid model of the past 50 years has been for smart people from the developed world to decide what people in the developing world need. This strategy is doomed to failure from the beginning. Poor people aren't dumb. They understand their ground reality better than you or I.

2) Innovation does not only come from the developed world
When working with poor farmers with little-to-no education, I have been amazed by some of the human ingenuity that I've witnessed. For more details, check out my blog (see link below).

3) I am now more aware of my own basic assumptions
When explaining how to calculate a farmer's net profit to a room of Masters-level sales people, I was shocked to learn that they did not understand basic percentages.

4) Human Resources is THE strategic function
You can have the greatest strategy in the world, but if you don't have the right people, then the strategy is worthless.

5) You and I are spoiled
I have had the opportunity to live with an incredible Pakistani family. I have access to a car, internet, AC, a TV, etc. The electricity goes out some five or six times daily and yet we have a generator to power the fans in the extreme heat. Most of this country is not so lucky. When in America, we don't even think about the electricity, water, or internet not working.

In three months, I will return to the USA and complete my fellowship with Acumen Fund in New York City. Acumen Fund is an innovative organization that uses the power of business to tackle some of the most critical social issues in the world such as clean water, affordable healthcare, renewable energy, and low-cost housing. Post Acumen Fund, I am considering several different career options, including potentially starting my own business or consulting with private companies that are seeking to enter developing markets. If you have any job leads that you believe would fit well with my skill set and interests, please do email me.

Thank you for your interest and support of my work around the world. While I believe my next job will be based in the US for at least a few years, I am sure that I will head abroad again soon.

Sincerely,

Joel Montgomery

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Innovations from the Field: Onion Lottery

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Mohammed Ishmail is an eleven-acre farmer who doesn’t need a broker to diversify his portfolio. Like his counterparts in the developed world who invest in various types of stocks and bonds in order to spread the risk on their portfolios, Mohammed does not put all his eggs in one basket. During the summer season, he plants 10 acres of cotton, a crop with minimal price volatility, and one acre of onion, a crop that is notorious for huge price fluctuations. The price of onion can fluctuate between PKR 10,000 to 300,000. Mohammed sees this as an opportunity to hit the jackpot. According to him, during a 10-year period, he will hit the jackpot five to six times. Not bad odds. An onion lottery… that is innovation.

Joel Montgomery

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Innovations from the Field: Wheat ATM

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Zulfiqar Ali, a four-acre farmer in the small village of Dabri, Pakistan, doesn’t travel to his nearest bank branch when he needs some cash. All he has to do is open the door to a room where he stores his wheat crop and travel to the market. Unlike most farmers in Pakistan, Zulfiqar does not sell his wheat crop upon harvest. He realized that harvest season was the worst time to sell his crops due to a glut in supply. Zulfiqar stores his wheat crop and sells it one bag at a time, based upon when he needs cash. With each passing week, the value of his remaining wheat increases. A wheat ATM… that is innovation.

Joel Montgomery

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Innovations from the Field: Natural Life Insurance

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Agriculture is extremely risky. There are so many things that can go wrong: bad seed, no water, pest attack, fake fertilizer, bad weather, no transportation to market, etc. Price fluctuations are also quite common. This means that a farmer may spend Rs. 25,000 (USD $315) or more on inputs (seed, fertilizer, pesticide, etc.) and land preparation (tractor rental, laborer wages, etc.) just to find out at the end of the season that the price of his crop is so low that he will make a loss. He borrowed money at the beginning of the season from an arti (money lender) at a rate of 120% annual interest and now is even farther in debt.

In Pakistan, most farmers grow two crops: cotton (summer) and wheat (winter). We always wondered why both crops were so prevalent and finally realized upon completing our interviews. Firstly, most farmers grow cotton and wheat because the prices are stable. It takes a lot of the guess work (and risk) from other types of crops that have more volatile prices. Secondly, farmers grow cotton and wheat because they don't spoil. If you grow vegetables, then you must transport them to the market quickly before they rot. Cotton and wheat, on the other hand, can be stored for a long time and won't go bad. Probably the most interesting reason for the traditional cotton-wheat rotation is that wheat is a natural life insurance policy. Farmers grow wheat and keep 50-100 munds (1 mund = 40kg) back to ensure that their families have food to eat during the coming year. Usually an average family needs around 50 munds per year, but they keep extra for festivals, weddings, and unforeseen circumstances. No matter what happens in the coming year, the farmer knows that he can provide for his family. A natural insurance policy... that is innovation.

Joel Montgomery

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