Category Archives: 300 house

The $300 House: A Hands-On Approach to a Wicked Problem

1:02 PM Tuesday June 7, 2011

Editor’s note: This post was co-written with Christian Sarkar.

When the New York Times printed “Hands Off Our Houses,” an op-ed about our idea for a $300 House for the poor, we were both delighted and dismayed — delighted because the $300 House was being discussed, and dismayed because authors Matias Echanove and Rahul Srivastava, co-founders of the Institute of Urbanology, didn’t seemed to have read the series of blog posts about our idea.

Nearly every criticism the authors levy in their op-ed is answered in 12 blog posts, a magazine article from January/February 2011, a video interview, and a slideshow that integrated community and commentary, which were published between last October and this May.

In critiquing our vision, the authors cite Micro Homes Solutions as “a better approach.” In fact, the leaders of that venture were invited several months ago to contribute a blog post to our series as a way of joining the discussion and helping us understand what they’ve seen on the ground there. They declined to be part of the conversation.

The authors also write that students who tried to write a business plan to serve the poor and who visited poor urban areas of India found “the reality here is far more complex than their business plan suggested.”

Yet a fundamental tenet of our project and the blog series about it is that slums present complex challenges that can’t be fixed with a clever shack alone. Rather than creating an echo chamber of rah-rah rhetoric, we told blog authors to focus on one of the many knotty issues that Echanove and Srivastava cite in their critique. From the start we asked: What are the complexities of financing these homes? How do you get energy and infrastructure into such dwellings? How do you get corporations to invest in a significant way? We acknowledged that we didn’t have the answers. “Just because it is going to take longer than it should doesn’t mean we should walk away,” wrote Seth Godin in one of the posts. “It’s going to take some time, but it’s worth it.”

The op-ed suggests that the $300 House doesn’t acknowledge that “space is scarce” in urban poor areas. Yet, Sunil Suri wrote in a post on the urban challenge that “slums by their nature are located where land and space are limited.” Suri proposed potential solutions, including innovative materials, new ways of thinking of the construction process, and building up.

The authors also say that “one expert has been left out of the challenge…the person who is supposed to live in it.” But a post in the series on the co-creation challenge from Gaurav Bhalla addressed this squarely. “It will be unfortunate if the house were to be designed by those who will never live in it,” wrote Bhalla. “Investments need to be made understanding the daily habits and practices of people for whom the house is being designed.” Bhalla used the case study of the chulha stove, co-created by businesses, NGOs, and slum dwellers, to make his point. We are also bringing students to India and Haiti to do ethnographic research that will inform development of a $300 House, and when prototypes are developed, they will be deployed and tested with those who will live in them.

Echanove and Srivastava also state that a $300 House “would have to be as standardized as possible to keep costs low. No number of add-ons would be able to match the flexibility of need-based construction.” While we agree that a one-size-fits-all approach will not work, we disagree that a $300 House would be inflexible. Core tenets from a blog post about the overall design challenge of creating a $300 House by Bill Gross include “give your customers options” and “make it aspirational.” And David Smith’s entry on the financial challenge shows that flexibility can be born out of financing options as well. A need-based approach alone also ignores the scale of the problem we are facing. “Triple the U.S. population by three. That’s how many people around the world live on about a dollar a day,” Godin writes. “Triple it again and now you have the number that lives on $2. About 40% of the world lives on $2 or less a day.” In any situation where scale is required, so is some level of standardization.

The most puzzling critique in the op-ed was that “construction is an important industry in neighborhoods like Dharavi. Much of the economy consists of hardware shops, carpenters, plumbers, concrete makers, masons, even real-estate agents. Importing pre-fabricated homes would put many people out of business, undercutting the very population the $300 house is intended to help.”

In fact, our contest’s design briefing said these dwellings should be “self built and/or self-improvable.” It also stated that the design should rely as much as possible on local materials, which of course would be harvested and crafted by local workers. Our goal is to increase demand for local trades, not drive them away. And the idea that jobs would disappear belies the fact that with progress comes new jobs &38212; teachers for the kids who can now go to school; health care professionals for the families that can now afford check-ups; technology professionals who could service solar panels or internet access devices; farmers who could manage shared crop spaces in the neighborhoods. The $300 House project is a housing ecosystem project.

Finally, Echanove and Srivastava state that “The $300 house could potentially be a success story, if it was understood as a straightforward business proposal instead of a social solution.”

We disagree completely. We do support other applications for low-cost housing — bringing these dwellings back to the industrialized world for hurricane relief, for example, would be a reverse innovation success story. However, trying to pigeonhole ideas as either “for good” or “for profit” is an outmoded way of thinking.

The authors have an implicit negative view on business. For them, profit seems to be a dirty word. For us, good business and social innovation are one and the same. The rising tide of New Capitalism, what Michael Porter calls “shared value” and what Umair Haque calls “thick value,” is perhaps the most important reaction to the corruption and greed that spurred the most recent global economic crisis. The Economist was right when they suggest that this is a “can do” moment in history.

Our goal is neither to start yet another charity — one of our advisers, Paul Polak, tells us that “you can’t donate your way out of poverty” — nor to start just another business. Rather we must encourage existing businesses to find ways to create new, scalable markets; to get NGOs to share their on-the-ground expertise; and to force governments to make it as simple as possible to work across the hybrid value chain in order to make such a project a reality and begin the process of instilling dignity in and creating options for individuals who now don’t have either.

We are happy that Echanove and Srivastava share our passion for the problem of affordable housing, which is a wicked problem. We simply disagree with the idea that if it’s a market, it can’t also be a socially progressive solution. Trying to categorize the regeneration of slums as either a business problem or social problem is like trying to categorize a flame as either heat or light. It is both, always.

The authors acknowledge the support, encouragement, and critical advice of Harvard Business Review senior associate editor Scott Berinato on this blog and during our $300 house journey. 

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The $300 House: Go, Go, Go!

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.

300housescale.pngImagine 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?

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