The $300 House: One Year Later
Category Archives: 300 house
Editor’s note: This post was written with Christian Sarkar, a marketing consultant who also works on environmental issues.
Last week, the Tata Group, producers of the Tata Nano car, announced the launch of an ultra low-cost, flat-pack house designed for rural India. The basic model will be available as a 20 square meter pre-fabricated kit designed for onsite installation at the price of 500 Euros ($700 U.S. dollars). A larger model will also be available at 700 euros ($980). (There are also plans for a house that comes with a solar panel on the roof.) The pilot house is being tested in 30 locations spread across India, with detailed feedback expected at the end of the year from the Panchayats, or village governments.
Just last month, a self-organized team from another Indian company, Mahindra and Mahindra, (M&M) won the corporate award for our own $300 House Open Design Challenge (with the help of Jovoto.com and prize sponsor Ingersoll Rand, we hosted a global online contest to raise interest in design for the poor. We received exactly 300 entries!) Working in their spare time, the M&M team designed a $300 House for the rural sector in India as well. The team, encouraged by senior management, is now working on a pilot of their design.
Bill Gross, the founder and CEO of Idealab, who described the design challenges faced byWorldhaus, a $1,000 house for the poor that his team has been working on. In a blog post written specifically for our series on the $300 house, he wrote that “the lack of quality affordable housing to almost 1.5 billion people has always called out to me as a problem needing new and innovative solutions. We need to think big and deploy disruptive technologies and financing mechanisms to house 100 million people by the end of the decade.”
We’re overjoyed to see businesses take up the challenge and enter this giant-but-latent market with their proverbial eyes wide open. We have maintained all along that business is crucial to taking on this wicked problem because businesses know how to scale, and fixing this problem requires scale.
We also believe cooperation is necessary. In that spirit, we want to share some of what we’re hearing as we continue on the path to building not only $300 Houses, but communities of them. For businesses entering this space, here’s what we’re thinking about:
Think Services: This isn’t just building houses. Ask: Can we design a $300 House Village which provides the poor a chance to live safely with access to an inclusive ecosystem of services which includes electricity, clean water, sanitation, health services, family planning, education transportation, and micro enterprise? Refer to the “whole village” model as described by Bob Freling, executive director of the Solar Electric Light Fund.
Think Global: This isn’t just an India project. The market at the base of the pyramid is approximately $5 trillion, according to the World Resources Institute. With communities around the world looking to better their lives, we’re receiving queries from all over the world. Here’s one from thePhilippines, and another from Mozambique.
Think Sustainability: This isn’t a build-it-and-leave challenge. Embrace both meanings of the word. Use green and renewable materials where possible, and think of long term project sustainability. Will the community have the skills and know-how and means to operate and maintain their houses and the services provided a year, 3 years, 10 years? How will they pay for it?
Think Affordability: This isn’t for the middle class. The whole point of calling our challenge the $300 House was to force businesses to focus on radical affordability. If it isn’t affordable, it isn’t sustainable.
Think Collaboratively: This isn’t the rich giving to the poor. There are ways to improve adoption by involving the community in the design of your prototypes and in the implementation and maintenance of your offerings. Find ways to partner with governments, NGOs, and community members at all levels. David Edelstein, director of the Grameen Foundation’s Tech Center, acknowledges that Grameen Foundation’s mobile phone-related work, which leverages the 4 billion phones in the hands of individuals in the developing world, would not be possible without the ability to partner with private mobile phone companies.
Think Distribution: This isn’t reinventing the wheel. Piggy back on top of existing supply chains to reach the base of the pyramid. The local community worker (think “employee of the future”) is your village sales channel.
Think Reverse Innovation: This isn’t just for developing economies. The lessons learned by building a $300 house in India, Haiti, or Indonesia could be translated back to build a $3000 or even $30,000 house in the U.S. The materials, design, layout, will all be informed by the decisions made in the design of the $300 house. This recent article in the Wall Street Journal tells us that the market is there, all across the US.
As businesses get into this field, we all want to see their initiatives achieve two levels of success that we believe go hand-in-hand: making a profit and improving the human condition.
Finally, we ask that you join us at www.300house.com.
The $300 House: Go, Go, Go!
9:53 AM Wednesday April 20, 2011
Editor’s note: This post was written with Christian Sarkar, a marketing consultant who also works on environmental issues. It is the last in a series on conceiving and building a $300 house.
Today, we’re launching anOpen Social Co-creation Contest, sponsored byIngersoll Rand and hosted byJovoto, asking everyone, from designers and architects, students and professionals, to submit their designs in an effort to find affordable housing solutions for the poorest of the poor.
The mission? Design a simple dwelling that can be constructed for under $300 which keeps a family safe, allows them to sleep at night, and gives them both a home and a sense of dignity.
Winners will be selected by the community and a panel of judges and will receive a scholarship to a June “prototyping workshop” led by COMMON, a social business incubator. These scholarships are also being funded by Ingersoll Rand.
At the end of the prototyping workshop, we hope to have a model or two to test in the field, as part of a pilot project.
We’d like you to spread the word, and of course, participate!
The overwhelming response to our $300 House challenge has been a pleasant surprise for us, one which we did not foresee. We’ve now started down the road of making our initial blog post a reality, and we’d like to thank you for all your comments and suggestions. We’re still trying catch up on the emails! But there are two questions in particular that arise in almost every email, discussion or phone call, and we decided we better answer them publicly, so we can all get on the same page.
The first question: Why does the house cost $300?
We started this challenge inspired by the story of the Tata Nano, and decided we needed a price target which was an inseparable part of the product. Initially, we even considered a $100 house, but then decided on $300 as a target to encourage lean design.
Secondly, we envisioned the $300 House as a tiny shelter — a shed — replacing the existing structures we had seen in Haiti. We imagined a durable, sustainable replacement for the poorest of the poor. Following an old “rule of thumb” we decided that if it costs $3,000 in the US, we should be able to get it built for $300 in India.
Thirdly, we looked at Grameen’s poverty metrics in Muhammad Yunus’ book Creating a World Without Poverty: Social Business and the Future of Capitalism. In it, the average house value for a Grameen member who had escaped poverty was $370. So we rounded that number downwards for someone who was still living in poverty and came up with $300 yet again.
And that’s how we settled on $300. Of course, the number is a target, not set in stone. And that’s what makes it a challenge.
Our second question was more technical: How does reverse innovation work with the $300 House?
We agree that $300 might be too low a price point in the U.S. Perhaps we need $3,000 or $30,000 as tiers of affordable housing in rich countries. Despite the political challenges in the US, our point is that innovations required to create the $300 house can be scaled up to the benefit of the $3,000 or the $30,000 house.
Imagine a group of businesses, NGOs, and aid agencies working with their government agency counterparts to build a scalable model for housing development across an entire village of $300 houses.
The lessons learned by building a $300 house in India, Haiti, or Indonesia could be translated back to build a $3000 or even $30,000 house in the U.S. The materials, design, layout, will all be informed by the decisions made in the design of the $300 house.
The opportunities for reverse innovation grow beyond the house itself, to include the ecosystem of products and services initially targeted for the residents of the $300 house, but then scaled up to meet the needs for residents of a $3000 house, and then brought back to the rich countries to serve the affordable housing sector with innovations for a theoretical $30,000 house. In rich countries we’ve seen all manner of “master-planned” real estate communities. Surely we can build communities which help the poor achieve a higher quality of life.
Thus businesses that decide to get involved in creating sustainable solutions to serve the poor will end up learning what it takes to compete across the globe. We see the $300 House as a laboratory for reverse innovation.
We’ll also see the emergence of new business models like collaborative consumption. In fact, many of the services that are available in our village of $300 houses may well be shared services, from shared micro-grids (see Bob Freling’s post) to shared transportation, shared water, shared Internet and telecom services, and of course, shared education. We’re talking about building a public, shared infrastructure where the lack of one today condemns so many innocent people to the vicious cycle of poverty.
And again we ask, will you join us?
- The $300 House: Go, Go, Go! (blogs.hbr.org)
Thursday February 24, 2011
by Sunil Suri
Editor’s note: This post is one in an occasional series on Vijay Govindarajan‘s and Christian Sarkar’s idea to create a scalable housing solution for the world’s poor. Each post will examine the challenge from a different perspective, including design, technology, urban planning and more. Today, Sunil Suri offers a way to scale Class-A housing in densely populated areas.
At this point, the commercial viability of a market-based approach to providing good quality housing in urban areas at prices affordable to low income customers is beyond question. But at the very bottom of the pyramid, the poorest of the poor are still not on the radar, or they weren’t until the concept of the $300 House was introduced.
One challenge not yet addressed in this blog series is that the urban challenge. Slums by their nature are located where land and space are limited. I suggest that rather than leading with “how do we build this house” it’s better to come up with “how can we create an affordable means of acquiring property” and only then deciding what that property looks and acts like.
In India, our proposition is to offer low entry costs (we could, in the extreme case, offer homes free up-front), and realize our investment from the annuity of captive consumption. The key is not in clever house designs — though, to be sure, a good design will be critical — but rather in creating an ecosystem that fosters permanent residency. The value of the annuity derived from the “margin” produced from consumption of utilities (produced on-site and off-grid using all green, carbon-neutral systems) and the daily needs for goods and services is so powerful that, properly modulated, it can be used as a subsidy to deliver very-low cost or “free” homes.
Achieving Global, Low-Cost, Class-A Construction Building off US-inspired steel-based technology, we believe that it’s possible to design, build, deliver, and erect affordable multi-tier tower housing, addressed squarely to lower class sections of the Indian demographic. Nominally Class-A construction that costs us $200 per square foot here in the US, we can “build” for $25 per square foot in India. Cost compression comes from:
- sheer scale of the number of units being produced (the US just does not have the population density, whereas India, China, Mexico, Brazil, do).
- building first in a factory, which is highly automated.
- using standardized components.
- inverting the design scheme .
What does that last point mean? Traditionally an architect designs something that’s then built. We start with a template, an optimized structure — in our case a 14-floor tower with a 16,800 square foot footprint that would include two kinds of dwellings, an 800 square foot, 2-Bedroom unit and a 1,100 square foot, 3-Bedroom unit, with an ideal mix of 85% floor efficiency — around which an architectural solution is added as a second step.
By reversing the normal process, we can build standardized systems on a factory-floor with rapid on-site erection. Because of that, we can finish a Class-A structure inside of 10-days per floor for a 14-floor building, versus the traditional scheme of consuming 36-months using cast-in-place concrete or masonry.
The economics work: Trading the $25 per square foot upfront cost (plus a cost for the land and the infrastructure) for the annuitization of the “margin” gained (in many cases this is an EBITDA of about 40%) from daily consumption (which may well be $300/year and per capita), is an easily fundable proposition, especially if it can be harnessed from a 40- to 100-year tenured residency.
This development plan can be scaled to build 3 million or 30 million units per year, if needed. A 60,000 square foot factory floor, employing about 200 reasonably skilled and trained people, equipped with many automated CNC machines, turners and robotic-welders can produce about 3,000 home units per month in a one-shift work modulus. The basic input for all systems is rolled-steel, tubes and flanges, nominally available from almost any steel-manufacturer at a very competitive price.
The Use of Available Technology The technology for this urban “design-build” structural approach has already been proven. It has been successfully used in over 20 projects throughout Northern California including two residential projects currently under development. The picture reproduced below is one example of a completed development using this system.
Steel HSS (hollow structural sections) columns, wide flange beams and connectors for this steel frame system are manufactured in factories, as are all of the components that make up a finished “building,” which are completed as “pods” complete with plumbing, electrical, fixtures and even woodwork included. These pods are then erected in the field in order to minimize structural deficiencies and significantly accelerate the development timeline.
In the field, the design uses unique connectors that allow “snap-on” construction between a male-end and a female-end, drastically reducing bolting and welding time. The three dimensional structural grid that results from this assembly method creates a highly redundant, seismically-sound and blast-resistant structure. The finished pods also snap-on to the structure, and then are interconnected with each other to yield a finished floor. Exterior cladding can be almost any light-weight material. In India we propose using synthetically derived granite.
If all this sounds complicated or technical, think of it this way. The entire thing isn’t unlike putting together giant Legos.
Alternative Energy as the Standard The technology to power these developments is also now available on a global basis. Sustainable design components like the US LEED standards should be incorporated into these affordable housing developments. Photovoltaic cells will be used to power the majority of the lighting and unit appliances throughout the residential towers. An array of copper pipes or tubes contained within a curved metal housing will be applied to the rooftops and used to heat water. For structures in a hot climate, solar systems provide an incredibly efficient heating, cooling, and power solution at a very low cost, especially when applied to new construction.
A network of small size (micro wattage) wind turbines will also be installed (pictured below), on the roofs of each tower, and these are used to complement the energy produced from photovoltaic’s and wide angle PV collectors, creating a hybrid energy system that covers opposite extremes of the climate spectrum.
Solid Waste Treatment centers at each development site (located in a on-site “utility park”) will lead composting efforts and remove contaminants from household sewage from which the reusable elements will be converted into biomass, greatly minimizing the amount of waste that is actually discarded. The biomass created will be burned as a biofuel and serve as a renewable energy and heating source for the development.
Innovative wastewater technologies will be used in several forms to create a fully recyclable, near zero water system at each development. Rainwater harvesting and wastewater treatment systems will be implemented to catch, store, treat and reuse water.
The Preservation of Community In addition to building residential housing, we’re looking at building a self-sustaining community which includes township amenities such as shopping and retail areas, commercial office space, a community center, an ambulatory-care, full-service medical clinic, educational centers & schools, and a transportation hub for access to the heart of the city using pooled transportation. The proposed development (illustrated in a site-plan below) is about 55-acres, and is located some 60Km from the heart of a major city. It will house approximately 5,600 residents. About 600 people will be employed on site, and at prevailing wage. The nearness and the distance from core, in India, provide the most optimal cost attribute for land, and yet allows the developer not to be materially impacted by incumbent development norms, which may be a) restrictive and b) suited to the single asset-development scheme.
Of course, the political and cultural issues are key to successful implementation. In developing countries like Brazil, for example, we are seeing the resounding positive effects of Bolsa Familia, a social program which has changed the economic demographic of the country. Poverty has fallen from 22 percent of the population to 7 percent between 2003 and 2009.
This effort must be replicated in other developing countries as well. We must see a stronger emphasis on joint public-private solutions if the real human needs at the bottom of the pyramid are to be addressed.
Let’s start with affordable housing.
Sunil Suri is the founding principal of Menlo Capital Group, a developer, owner, and manager of real estate in Northern California. Among his early projects are some of the first high-rise buildings ever to be constructed in Silicon Valley.
10:53 AM Wednesday February 2, 2011
by David Sands
Editor’s note: This post is one in an occasional series on Vijay Govindarajan‘s and Christian Sarkar’s idea to create a scalable housing solution for the world’s poor. Each post will examine the challenge from a different perspective, including design, technology, urban planning and more. Today, David Sands explores how to make affordable housing scale sustainably.
I was pleased to discover the$300 House challenge and I applaud the efforts of Vijay Govindarajan and Christian Sarkar. My passion for a sustainable future led me to quickly say yes when asked to collaborate on this important project.
It’s easy to say a $300 House for the poor should be designed a sustainable solution, but it’s no easy feat. To be sustainable, all the elements must be good for the user, good for the environment and good for those who made them. Where do the materials come from? Of what are they composed? Are they nontoxic? Or better yet, are they biophilic: Is life on earth improved for everyone and all creatures because this product is being made? Also, if it is not affordable, it is not sustainable! With their reduced economic means, fewer choices are available to the poor and cost precludes many otherwise sustainable options.
The Case for Bamboo
I was first drawn to bamboo as a construction material seventeen years ago for many reasons:
Hardiness: Bamboo can be annually cropped for many decades without replanting. It’s a pioneering plant that will grow on marginal land not good for food production (such as steep hillsides or eroded land) and it shows promise for watershed regeneration.
Strength: One square inch of bamboo can hold up to 7 tons of weight before failure. In 1992, 95% of all homes were built with softwoods like Douglas fir. University studies show softwoods can’t match bamboo’s compression and tensile strength.
Hurricane-resistant: Properly constructed bamboo homes surpass the toughest hurricane codes in the U.S. In 1995, bamboo homes withstood three back-to-back hurricanes in which winds maxed out at 173 mph. Recent tests show that conventionally built wood homes can’t stand up 100 mph winds. (Watch the video.)
Earthquake-resilient: In April 1991, twenty bamboo houses built for the National Bamboo Foundation in Costa Rica suffered no structural damage from an earthquake that measured 7.5 on the Richter scale. These homes were located in the epicenter. The same earthquake leveled scores of conventionally built homes, hotels and resorts. (Read the article in Washington’s Observer Reporter)
Bamboo is only one of a number of promising materials for the $300 House. But whatever materials are used, they must share certain qualities. First, they will need to be less expensive than current building materials. The source material will need to be readily available locally and cheap to obtain and process.
Ideally, the source material also solves some other environmental problem such as providing long term storage of carbon from the atmosphere, as in the case of bamboo. Large scale sustainable bamboo projects, like homes and eco-developments, serve as carbon sinks, and have a zero or less than zero carbon footprint.
To be a sustainable solution the material must be highly durable itself or have a highly durable finish, otherwise the structures will need to be replaced regularly. One very promising option with which I am involved is a bamboo-silica composite panel. Through a process of molecular surface modification the silica material develops high strength and fire resistance properties and the durability of glass without the brittleness. The durability of this material and the high strength of the bamboo have proven to be an excellent combination for creating structural panels. These panels also provide a high level of thermal comfort in a thin cross section.
Considerations for a $300 House
Given my experience with bamboo, I’ve also started to envision how a $300 House might work using it as a base material. I envision a cube structure 2.2 meters on a side as the basic unit made up of 12 panels all the same size: two panels for the floor, two for each wall and two for the roof. Wall panels have a door, a window or are solid. Each 1.1m x 2.2m panel is light enough for one person to carry by hand and is easily connected with other panels to form a weather tight structure.
The size of the structure is dictated by the length required for two people to sleep comfortably side-by-side. Sleeping mats can be rolled up and put away during the day and all other activities such as food preparation and cooking can be adapted to the size of the space available. In tropical areas, a covered porch is needed for outside cooking. The flat roof is designed to support rainwater collection. The essential module can be added onto over time by installing adjoining modules or adapted by attaching site built structures.
Due to issues with land ownership in most slums, the buildings are permanent temporary structures, that is, built to last but designed to be disassembled quickly and then easily reassembled elsewhere. The foundation system needs to be moved as quickly as the structure itself. I envisioned long pegs with auger tips that anchor each corner of the building and resist the uplift of hurricane winds keeping the building firmly planted in the unstable soil of slopes where slums are often built. The pegs are installed and removed by hand and attached to the building through a clip at each corner that allows for leveling of the floor.
The technology we have developed can be used to create local production facilities that process bamboo harvested from nearby farms. With some initial investment into the panel production facility and bamboo farms, inexpensive and sustainable bamboo housing becomes an enduring and versatile option for a community in need. The carbon offset credits also become an asset in that emerging market, providing additional streams of revenue for the local production facility and farmers.
Finally, this system not only addresses the housing issues of the impoverished, but creates local jobs and stimulates the economy. We have first-hand evidence of this with our work in Vietnam. We think this idea could scale, and that it could scale sustainably.
David Sands is the co-founder and architect of Bamboo Living, which makes bamboo prefab homes meeting U.S. building code standards. He served on the INBAR (International Network for Bamboo and Rattan) committee to develop the International Standards Organization (ISO) standard for structural bamboo.
- The $300 House: The Sustainability Challenge (blogs.hbr.org)
Editor’s note: This post is one in an occasional series on Vijay Govindarajan‘s and Christian Sarkar’s idea to create a scalable housing solution for the world’s poor. Each post will examine the challenge from a different perspective, including design, technology, urban planning and more. Today, Stephanie A. Burns shares insights from her company’s forays into bringing business into social challenges.
With the $300 House initiative, it’s easy to see the potential to spark innovation that, with a single stroke, could ameliorate several quality-of-life-concerns at once: shelter, water purification, alternative energy, cooking fuel and information access.
As Robert Freling (another contributor to this series) has so elegantly demonstrated with Solar Electric Light Fund projects, it’s possible to create a simple solution that simultaneously takes on multiple fundamental issues. By delivering affordable solar panels to the most under served regions of our planet, SELF captures the sun’s free and abundant energy to power pumps that provide distant water for households and irrigation. That, in turn, frees women and girls from long walks with buckets, giving them time to learn in school and do work that adds to family income. The panels also supply electricity to extend the workdays of health clinics by providing light and powering equipment, thus improving public health, which also improves education and productivity by keeping citizens healthy.
The $300 House could create the same kind of virtuous cycle. Opportunities like the challenge by Vijay Govindarajan and Christian Sarkar can inspire companies and their employees to ask: What could we bring to contribute to the improvement of housing for the people who live at the “base of the pyramid?”
Dow Corning is asking this question.
Earlier this year we sent a 10-employee team of Dow Corning volunteers from around the globe — our Citizen Service Corps — to Bangalore, India, to serve, discover and innovate with NGOs and other social enterprises, while searching for new thinking about how we could apply our business strategy and processes in emerging markets. We learned quite a bit.
We consulted with Stuart Hart , the best-selling author of Capitalism at the Crossroads: Next Generation Business Strategies for a Post-Crisis World and an advocate of immersion in unfamiliar circumstances, and with CDC Development Solutions in order to gain insight into how we could make the projects a success.
In one of the projects, we worked with Ashoka Change Leader Vishnu Swaminathan and his “Housing for All” project. Ashoka, a global association of social entrepreneurs that focuses on urgent social problems, is working in Bangalore to promote innovative, socially acceptable, more environmentally friendly and financially sustainable improvements in the dwellings of urban shanty towns. Our team put Six-Sigma thinking to work. With Ashoka, we created standards for including renewable energy and other environmentally sound practices in the production of affordable dwellings that also accommodate the preferences of customers.
For our employees, the learning was extremely valuable. Immersing themselves in the Bangalore environment — even for just one month — stimulated understanding I doubt we could have obtained any other way. This intimate contact with the realities of the developing world generated sensitivity to the challenges and produced ideas for further examination in arenas important to Dow Corning’s business, including sustainable housing construction, energy, transportation and personal care.
The exercise also was a journey of personal and professional discovery for our employees that became a path to appreciation of the impressive resilience and entrepreneurship of the men and women they encountered. We’ve gained a new appreciation for a whole new world of innovation for us to explore.
The attention that the $300 House effort, and similar approaches, has generated is encouraging evidence that the world’s business leaders, along with government and academic leaders, are taking seriously the search for answers for the billions of our global neighbors living with miserably inadequate shelter, limited energy alternatives and in desperate need of water pure enough to drink.
The $300 House challenge is precisely the kind of opportunity all sectors of our global community, especially corporations, need to explore for satisfying social engagement and promising business prospects.
Stephanie A. Burns, Ph.D., is CEO and Chairman of Dow Corning Corporation. Dr. Burns’ career has spanned scientific research; issues management; science and technology leadership and business management.