Entrepreneur calls for innovation in developing markets

“Multinational business corporations will go the same way as General Motors if they don’t learn how to make money,” said Paul Polak, social entrepreneur and founder of the nonprofit organization International Development Enterprises, during his talk titled “The Future of the Corporation” on Monday afternoon in Whig Hall.

In order to make money, companies like Wal-Mart, Coca-Cola and Microsoft need to “quickly and effectively earn profit and scale,” Polak explained.

He used the example of General Motors to show how the corporation “dropped to its knees” after failing to match Japanese exports that were “smaller, cheaper and more fuel-efficient.”

Conventional belief has been that it is impossible to make profits in emerging markets, so many large multinational corporations have not bothered to promote their products to low-earning populations living in developing countries.

“Not a single representative of the 2.6 billion people who live on less than $2 a day shop at a Wal-Mart store,” Polak said.

But, he noted, Coca-Cola would find that it had missed a brilliant opportunity if another company developed a nutritious beverage to sell cheaply to the millions of villagers in India, where it is often the case that 50 percent of the children are underweight and malnourished.

Polak, who has worked for the past 25 years with farmers from around the world to develop inexpensive and innovative products such as drip irrigation systems and treadle pumps, recognizes the value — and the profit — that can be found in emerging markets.

Most of IDE’s ideas for products have come from the conversations that Polak has had with the people in developing countries living on a dollar a day, particularly farmers.

Before he founded IDE, Polak said, “I started by talking to farmers and asking what they needed, asking them why they were poor, and they said they were poor because they didn’t have enough money.”

In addition to making affordable products, Polak saw that he also needed to market them to a wide audience. When IDE began to produce and promote a $25 treadle water pump, the company recruited local troubadours to sing songs about the pump at farmers market and hand out leaflets. Polak said that the pump even appeared in a movie as the miracle product that helped a poor father save enough money to pay his daughter’s dowry so she could marry the boy of her dreams.

Learning what the people want, and developing an inexpensive, innovative and scalable product, continue to be two important themes guiding Polak’s other initiatives. These include the nonprofit technology incubator D-Rev and the private company Windhorse International, both which he started in 2007.

But there are still challenges to be met, Polak admitted. While IDE has reached 20 million farmers and doubled their income, “when you compare it to 2.6 billion people who live on less than two dollars a day, it’s a drop in the bucket,” he said.

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However, innovation is not complicated, Polak said, adding that “it’s seeing and doing the obvious.”

He concluded by asking a question of the students in the audience. “Three billion customers are waiting for a revolution in how global business designs, prices and markets its products,” Polak said. “Will you lead the revolution?”

Polak spoke in the Whig Hall Senate Chamber on Monday afternoon in a lecture co-sponsored by The Princeton Social Entrepreneurship Initiative, The American Whig Cliosophic Society, the Office of the Dean of Undergraduate Students and PEI/Grand Challenges.