The future corporation | Paul Polak | TEDxMileHigh

This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at http://ted.com/tedx

What is the future of the corporation? Paul Polak's vision will likely transform your view of what's possible through capitalism and may change the way current organizations view their business models. His talk details the tremendous shared value that lies within product and system designs for the bottom 90% of the income pyramid.

I feel a little bit
like an 18-year-old virgin

in a 77-year-old body.

(Laughter)

(Applause)

[The Future Corporation]

Many people tell me I'm a contrarian,
but I take the opposite view.

(Laughter)

Three years ago,

General Motors, the biggest,
most powerful corporation in the world,

was brought to its knees

by failing to react
quickly and effectively

to competition from Japanese imports,

which were smaller,
more fuel-efficient, and cheaper.

I believe that companies like Walmart,
Coca Cola, and Microsoft

will share the fate
that awaited General Motors

if they don't react
quickly and effectively

to learn how to operate successfully
in emerging economies.

But this will require
nothing less than a revolution

in how they currently design, price,
market, and distribute their products.

I'm going to spend the rest of my life
trying to help foment that revolution.

Thirty million people shop
at Walmart every day,

but there are 3 billion people

who will never set foot
inside a Walmart store.

They're people like this farmer
who earns a living with his family

of about a dollar a day
on his one-acre farm.

I've had long, personal conversations

with more than 3,000 of these customers

who are not served by existing markets,

and they've become over the last 30 years
my teachers and my friends.

Coca Cola sells what amounts

to an aspirationally branded,
fizzy sugar water

(Laughter)

for 25 cents a bottle
in villages all over India.

In those same villages,
50% of the children are malnourished.

What would happen to Coca Cola

if a well-financed Chinese company
started selling a nutritious soft drink

at a nickel a pop in millions
of villages around the world?

They’d be in the same shape
fairly quickly, I think, as GM was.

The Gates Foundation has helped
millions of people move out of poverty,

and millions of other people
had their illnesses treated effectively

as a result of the Gates Foundation.

But Microsoft, the parent company,

as far as I know,

not a single Microsoft product sells
to the 2.6 billion people in the world

who live on less than two dollars a day.

The opportunities to create
profitable businesses

serving 3 billion bypassed customers
are almost limitless.

For example, there are
a billion people in the world

who will never connect to electricity.

That's about the same
as the total population

of the United States and Europe combined.

There are another billion people

who don't have access
to safe drinking water.

Many of them get sick,
and some of them die as a result of it.

Why don't existing businesses

get to involve successfully
in emerging markets?

There are three main reasons.

First, they don't see a profit in it.

Second, they don't have a clue

how to design
radically affordable products

which are what's needed and desirable

for people who live on less
than three dollars a day.

Products like this low-cost
drip irrigation system that costs $20

for about an eight of acre.

Or this $25 prosthetic knee

that another organization
that I started, D-Rev, has designed,

and is being happily used
by some 2,500 people right now.

Or this $25 treadle pump.

It's not a treedle, it's a treadle,
sort of like a StairMaster.

IDE, the organization
based in Colorado that I started

has sold more than two million of them,

and there are 3 million people
using treadle pumps in the world today.

(Applause)

Affordable devices like treadle pumps
and drip irrigation

combined with the last mile supply chain

has helped 20 million people
move out of poverty

as a result of IDEs work alone.

Finally, existing corporations don't know

how to run profitable
last mile supply chains.

Maybe it really should be
the last 500 feet.

Many poor people live in small villages,

and getting goods in and out of
those villages has proved very difficult.

I believe there are three keys
to profitable business serving the poor.

The first is simply
big volume - low margin.

It's the Walmart principal times three,

or times 300, or times 1,000.

The second is designed
for radical affordability.

There's a whole movement
that is gaining a lot of momentum,

learning to design things
that are affordable enough

for people who live
on less than three dollars a day,

and that are also income generating.

And finally, implement
profitable last mile supply chains.

I'm going to be talking
a little bit later on

about the Spring Health Model

which is an example of that.

To demonstrate that this
is feasible and practical,

I’ve started in the last 3 years
a private company,

Windhorse International,

and their related company
operating in India, called Spring Health.

The mission of that company
is to sell safe drinking water at scale

to people who don't have access to it now.

This is a picture I took
as part of a video

in state of Orissa,
in Eastern India recently.

This gentleman is taking a ritual bath

in the village's
main cooking water source.

There are some 300 million people
in Eastern India alone

who don't have access
to safe drinking water.

Most of them live in small villages
with 100 to 300 families.

And those villages have
little in the way of markets.

But they do have -
every one of these small villages has

3 or more mom and pop shops
like this one.

They sell everything,
from cigarettes to soap,

to candy, to cookies, and all kinds
of consumable household items.

What Spring Health has done
is build a 300-liter cement tank

for about 100 bucks beside each shop,

and then purified the water in it

using a radically affordable
water purifier

manufactured by Spring Health.

The shopkeeper then sells that water

at a cost of less than half a cent a liter

to people in the village,

and they're experiencing
a major drop in illnesses

and expenses to pay
for the medicines and treatments

that they receive for those illnesses.

(Applause)

The mission of Spring Health
is to provide safe drinking water

to 5 million people within 3 years
through 10,000 village shops,

and within 10 years,

to provide safe drinking water
to more than a hundred million people

through shops in 400,000 villages
around the world.

I want to show you a little bit
what this looks like in a two-minute video

that I took recently at this work.

[Selling safe drinking water
to small villages in East India]

(Video) Narrator: The opening
of the water shop is an important ceremony

in a life of the village.

More and more customers in rural Orissa
are buying safe water

from their local small shop
for four cents a day.

They are buying it
from small village shopkeepers.

Windhorse and Spring Health India
partner with the shopkeepers

and install a 3,000-liter cement tank
next to the shop,

which the shopkeeper fills with water
from his shallow open well,

which is usually contaminated
with vehicle pathogens.

A company staff member
purifies the water in the tank

by adding chlorine
and other water purifiers.

A central part
of the Spring Health roll-up strategy

is creating a strong,
dependable brand identity

in small, remote rural villages.

A bicycle home delivery service
carries jerrycans

filled with safe drinking water
to customers homes,

up to 3 kilometers from the kiosk

at a cost of 8 cents for 10 liters
compared with 4 cents at the kiosk.

[Up to 3 kilometers delivery for 4 cents]

The people in rural villages in Orissa
report a rapid drop in diarrhea,

and they are very happy with the result.

Over the next 3 years, we will partner
with 10,000 village shops,

and sell safe drinking water
to 5 million people.

Over 10 years,

that number will increase
to 400,000 shops in 20 countries,

and with new access
to safe drinking water,

200 million rural people will lead
more prosperous and healthy lives.

(Applause)

(On stage) Paul Polak: Thank you.

So you can probably tell

I think that there
are thousands of opportunities

for creating new markets
and creating new companies,

serving the three billion
customers in the world

who are bypassed by current markets.

I believe that, as I've said before,

it will take nothing less
than a revolution

in current business practice,

a revolution in how products are designed,
priced, marketed, and delivered.

But that revolution will create
millions of new jobs.

It will help more than a billion people
move out of poverty,

and it will take a giant step

towards ending environmental
imbalance on the planet.

You've been a very attentive audience,

and I must say that now I feel
more like a 77-year-old virgin

in an 18-year-old body.

Thank you very much.

(Applause)