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The $300 House: Businesses Take Up the Challenge

The $300 House: Businesses Take Up the Challenge – Vijay Govindarajan – Harvard Business Review.

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.

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The $300 House: The Corporate Challenge

by Stephanie A. Burns

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.

 

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