A Lean Approach to Poverty

Karen Wilhelm over at Lean Reflections had a great post on Saturday discussing Paul Polak’s book Out of Poverty.  I always enjoy Karen’s thoughts as she is very cognizant of the people side of lean, and this post does not disappoint.  In fact, I’ve already ordered the book.  I hope she’ll forgive me for quoting a significant portion of her post, but it’s important.  Definitely visit her blog to read the rest of her analysis.

If you only read the first chapter, your understanding of how to help people in extreme poverty will change forever.

Most people’s first reaction when we learn of disaster or poverty is to want to send money or food. That’s the opposite of what Polak proposes.

Polak has spent decades at the gemba of world poverty and has talked to
poor families and walked their plots of land with them, listening to
their understanding of their own problems. Large wells, more expensive
seeds and fertilizer end up helping larger farmers, not those most in
need of help.

What Polak has learned is the simplicity of the lean approach, though
he probably doesn’t know a word of the lean lingo. He’s listened to
thousands of people explain what is keeping them poor. Yes, there are
ways to bring new ideas, but they have to fit what the local family
needs, and be something the local farmer can do himself or invest very
small sums in.

What’s intriguing is that he’s getting engineers from universities and private industry to design tools, equipment, and processes that are "right-sized" for the small farmer… and then arranges to have them manufactured by the same population that needs them.

The idea wasn’t to give these things to those in need. It was to keep
designing and trying until you had something that could be manufactured
at a profit to meet a price point poor people could afford. Does that
sound like determining value to the customer and working out the means
of manufacturing to achieve costs that allow profitability? Does it
sound like right-sized equipment?

Why does Polak expect the manufacturer of the new product to profit?
Because that creates work and prosperity for local people too. These
are products that initially take minimal skill and minimum materials.
Building little donkey carts, for example, if food can be produced but
not transported to markets, by giving local people simple designs,
attainable manufacturing skills and easy-to-find materials.

It still boils down to money, but very small sums of money. How do the
formerly dollar-a-day people use their greater income? For new
investment, but also for clothes and school fees so their children can
be educate, or medicine when someone is sick, or a cellphone that can
connect a isolated people with the rest of the world. It’s not too
different from the method Mohammed Yunus developed for microlending.
The two approaches can be used together.

And they are.  We’ve discussed Yunus before, and last month we told you about an organization called Kiva, which lets each of us participate in microlending.  We even put our money where our mouth was and created our own investment account.  The manufacturers we support are tiny… one-person operations that create metal products, bricks, even pastries.  Some of the people we’ve help lend to are already paying back the loans.

As the author points out, and as we’ve mentioned before while discussing Hernando de Soto, there are alternatives to using big money to create big solutions to a constellation of small problems.  As Karen puts it, go to the gemba and see what the customer really needs.