V K Madhavan

Managing Director, A4e India Pvt Ltd


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Mere transfer of approaches and processes from successful enterprises to poverty eradication will not work, and could set back efforts too

Increasingly, with entrepreneurs turning their attention to poverty eradication - rarely to address the root causes of injustice or inequality- approaches and processes used successfully in enterprises are being used for social development and poverty eradication. There is a belief that (a) profit - the greatest incentive - is the crucial differentiator to solve problems that have hitherto remained and (b) that a simple solution or product exists or can be created, for every problem - a solution or product that can be made available on a large scale with the accompanying economies.
The process of finding simple solutions is leading to an over-simplification of why poverty exists and persists. The belief that 'a product' exists for every need - it only needs to be invented if it doesn't exist - doesn't recognise the inherent complexity of human life and motivations.
The emphasis on 'products' rather than in 'processes' and 'people' is leading to the root causes for poor governance and the persistence of poverty being swept aside.
We need to pause and apply tools that make for successful enterprises selectively without losing sight of the fact that the reasons for poverty are not just complex but intrinsically linked to human emotions - fear, love, hatred, desire, ambition, shame, insecurity, joy ....
The need for the hour is for a hybrid approach to social development - in other words a new path and not a blind belief that the 'market' offers solution to all our problems.

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    Feb 15 2011: many people treats poverty as something unfair and something that is caused by some behavior or event. this is not the case. poverty is the natural state of men. our great ancestors had to experience cold, lack of food, multitude of illnesses, child mortality, predators and other natural hardships. great human effort has been put to alleviate these conditions, and we call that effort "economy". if we ask why the life expectancy is 40 years in some regions, we often forget that USA has the same value in 1800, a mere 200 years ago.

    why there is poverty in some regions? because they not yet developed further. the real question is: how can we promote economic development in these regions? what hinders their development? what hindered in the past? how can we shorten the path from 200 years to 50? or to 20?
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      Feb 16 2011: That is not necessarily true: Huge profits have been made when China and India (although there is still a substantial amount of poverty left) have started to develop. In fact, isn't it quite the opposite: As regions develop (ie. poverty decreases) this increases the potential for non-zero-sum games, as these regions are integrated in a web of dependencies, specializations and sharing of labor. So there is clearly a profit to be made from eradicating poverty. However, this is an effort that requires long-term investment and patience, whereas there are other investment opportunities which yield more short-term profit.
      The "problem" isn't that there's no profit in investing in poverty regions, but that there's more profit in other regions like emerging economies.
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        Feb 16 2011: I believe this will change. D.Light and others are breaking barriers to change our minds about the profitability of serving those who earn less then $2 a day. Paul Polak is building a new company to prove that there is respectable profit to be made. I look forward to seeing billions being served by sustainable, scalable, social enterprises.
      • Feb 16 2011: Hi Phillip,
        I think you have missed the point being made by Mark Meijer & V.K. Madhavan. Everything you mentioned above speaks to the typical top down Economic & Business models that is pervasive in the Poverty realm, however, we are saying that these approaches limit and stunts success when applied in a bottom-up approach by social entrepreneurs. Further; we are advocating a new way to think about profit, what it is, how to achieve it and what it means to our clients. Expanding the definition of 'profit' leads additional success. A bottom-up approach requires that we think of the client first, even before creating a business plan or economic model. Putting our own training and perceptions aside so that we can really see what is in front of us without our parabolic screen. Whilst your argument makes complete sense if you are a government agency or an enterprise not focused on poverty, success by Kiva.org and others didn't come from starting with those models. -Cheers
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      Feb 16 2011: Mark.
      Is it really that there is no profit to be made or have we been ignorant of one billion potential customers?
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    Feb 17 2011: True talk ! What i woould like to know is; is there a definite suggestion or approach we can take to deal with this problem of poverty? I am from Africa, where unless you have a heart of stone, you will be moved to tears everyday seeing others suffer around you. even the Presidents can not deny seeing people suffer. They drive on bad roads, they watch televisions. How do we apply this "hybrid approach" to help our people?
  • Feb 17 2011: In the simplest of terms, unless there is a basic change in indivdual thought and agenda, this self-centred, consumer-driven fever that has taken hold of the world will not allow' a better path' to flourish. We need to 'educate' 'social responsibility' back into our society and change our priorities.
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    Feb 17 2011: Very good point.

    To give the wrong man a Ferrari could spell his doom, as he may quickly be killed for what he possesses. For an american to win the lottery, they may fall back into the financial ruin they began in before the end of the decade.

    It can be detrimental to just throw a product at someone, and expect it to change a culture. You are missing the humanity in the situation when you do this. I would appeal to psychologists and sociologists. We are talking about social engineering here. We are talking about eradicating poverty, changing everything about the way a person lives day to day. Without realizing the propensity of greed, the draw of power, the desire of wealth, you are announcing a diamond mine find in the middle of a country in turmoil.

    A Ferrari is an end goal type of item. Lets be clear I do not hope to see a Ferrari in every individuals hands in the world. But it is transportation, and it requires maintenance, it requires infrastructure.

    Eradicating poverty requires a step by step program. It requires covering the basics in something like Maslow's hierarchy of needs.

    Someone needs to develop a community specific Hierarchy of Needs. A step by step process, that requires the community buy in, and understand, be educated about the process. They need incentive. They need protection.

    Step one to me, is clean water and basic sanitary education.

    Education is also a difficult topic. How do you raise the standard of living of a culture, without destroying what makes that culture, a culture.

    Wealthy regions should adopt the poorest regions and provide protection, a stable habitat where culture can define. It should be as hands off a process as possible. Let these people, with gentle prods, walk themselves out of poverty. Thats real ownership.


    There is a great potential in the world today.
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    Feb 16 2011: Totally agree. The Industrial Era is a top down command and control approach that thrives on secrecy and force of arms to cheat the public, rape the commons, and enrich the few. I have reviewed a number of books on poverty, and what I drew from the aggregate wisdom of those authors is this:

    1) Poverty is the number one high-level threat to humanity. Eradicating poverty unleashes the brainpower of the five billion poor and that in turn can create infinite wealth.

    2) Corruption is wasting fifty percent or more of the resources on the planet.

    3) Public intelligence and collective intelligence are the means by which we enforce transparency (to include wiping out most of the intermediaries that steal or misdirect 75% of what is donated (I specifically include the Red Cross and the Clinton-Bush Foundations--what we have not done for Haiti is a crime against humanity and the eternal shame of the USA.

    4) Giving a cell phone and free cell service to a poor person is the single best thing we can do. Period.

    5) Call centers to answer their questions and educate them one cell call at a time is the next big step forward.

    6) A solar powered Internet mesh that cannot be shut down by governments and corporations, and that can offer the Internet free to most, is a badly needed initiative everywhere.
  • Feb 15 2011: very true indeed. The art of understanding the actual needs of your client (be it a person, enterprise, non-profit or a community) has been lost because colleges and universities are now focused elsewhere. applying the same template(s) to every challenge will always limit your success. 'Starting with a blank page' (and mind) has never been more important than it is nowadays, and yes, I know some will argue that this leads to too much complexity, but that complexity is only horizontal. Vertically you will be able to manage quite successfully because you already have the tools needed and know how to acquire them if you don't. What works well for me has been to focus on just listening, without thinking while I'm listening, and letting the client lead the approach. In a sense, I'm seeing myself more as a facilitator than an agent of change-I'm there to help not to lead. Once the best solution has been determined then I get aggressive in applying templates, processes and products that have proven successful. I think a similar approach initially will always lead to the best solutions.
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    Feb 15 2011: While I agree with you, I also feel that the poverty is the 'here and now' while the underlying causes are more intangible, and also more difficult to address. Also, there is probably a feeling that if the symptom can be taken care of then the malaise itself would be treated in due course. Maybe we need more initiatives like Gramin Bank - where the women getting loans also take a oath not to give or take dowry for their children. Also, the symptom - malaise thing may have something in it. When you empower people by meeting their very basic needs, then maybe they are in a better position to take on the underlying causes. Wishful thinking? maybe.
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    Feb 27 2011: Here is the first part of the problem: Communication malfunction.

    The word "Poverty" describes a lack of resources for the flourishing of human life. Poverty in one part of the U.S. is very different from another part of the U.S. South African poverty different from the Sudan, China, India, Poland.

    First part of the solution: Define a thing called "minimal prosperity" and assign to this definition the entire array of resources, opportunities, protections, connections, etc., that it takes to sustain a viable human life. Not an easy thing to define, I admit, but this is not an easy set of problems.

    Once we have this picture of Minimal Prosperity, then wherever these paramters are not met, we can identify and quantify each specific lacking need. With the list of needs, priorities should become evident as the environment we're talking about is assessed for those needs. Then, instead of saying we need to eliminate "poverty in Bolivia," we can look at a list that shows that the government functions, but say, the water system has been corrupted by profiteers who prevent people from getting at the water and want to sell it at high price. Then we can communicate the real problem that Bolivia has an infestation of human water parasites and address that problem before looking at food supply, education, whatever.

    Without the breakdown and analysis, we don't have an understanding of what we're talking about.
  • Feb 19 2011: One main reason is because the "root causes of injustice and inequality" are the most difficult to rectify. These cures may not even be realistically possible, even in a democratic society, due to negative costs for the majority associated with the cure outweighing positives. We do not live in an uniformly altruistic society, and must navigate reality.
    In the meantime, this "product-based" system attempts to limit the negatives associated with the "root causes". I think this is an admirable goal that should not be discouraged. We must not let perfect be the enemy of good.
    The "profit motives" are a hallmark of capitalism. Capitalism (of which I am a fan), harnesses the immutable human characteristic of greed to create jobs, economies, and wealth. If no one was greedy, Marxism would be an ideal and popular form of government (excepting religious issues). The "American Dream" of a white picket fence is at its heart a dream of socio-economic mobility.
    In conclusion, should we focus more on the causes rather than easing the symptoms? Yes. In a world of limited resources, a lack of altruism, and resistance to change will it do the most good per input (time, $, etc.)? Probably not.
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      Feb 27 2011: This set of thoughts that you present are the root of the problem. Capitalism is a bad religion.

      The cure is most definitely possible.

      The characteristic of greed is not immutable. Jobs are not an end. Marx's Communist Manifesto is 153 years old, no straw-man should live so long.

      The white picket fence surrounding the American Dream has become too unobtainable to retain credibility.

      We can wait for the system to break, collapse, fall over, whatever, or we can start fixing it.

      Without the help of what could be called socialist systems, capitalism is going to continue maintaining and increasing misery. Unchecked greed will break it.
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    Feb 18 2011: I can't agree more. You have put the argument beautifully. I believe consumerism has also hit this cause. If we want to propose processes, we will also need ways to devise opportunities for engagement and inclusion.
  • Feb 17 2011: WOW! really complex theme! a my approach is:
    a) let us try and evaluate and try and evaluate and so on, until we succeed!
    b) most probably can exist diversal ways to eradicate poverty or, say, get social and individual wealth. then, let us try diversal ways to get that wealth, let us do an array of experiments, and let us evaluate with an open and free mind.
    c) when a neibour progresses, i think that i too can progress, why not? we prefer imitate than create.
    d) poverty is not only lack of money, it is overall a style of social relationships and individual manners and skills. poverty is in the mind of the poor, overall in their mind.
    e) very simple healthy customs can make a big difference (health is the number one priority).
    f) confidence in oneself and confidence in the others, that is a mine of wealth.
    g) money is the poorest kind of wealth, of course, and while a population is developing, we cannot forget the wealth they already have, as a gift from life and tradition.

    well, good luck to this wonderful world :)
  • Feb 17 2011: Namaste- Yes, the "market" as the solution for all problems over simplifies the basic endeavor of being human. Let us look at this idea of "poverty" and how we define it and see how we believe in eradicating this. Two days ago, the President of the US presented his budget and the deficit. How do we define wealth? More "debt"?

    In an industrial world, material resources and products were defined and measured and then a price tag attached to the said "product" with energy and labor costs added. In the past 2 centuries, in our haste to produce cheap products we totally ignored the ecological repercussions.

    Since the turn of this century we are maturing into a "knowledge" economy where computer software produced on a cheap plastic CD costs more for the "idea" than the actual material. We have gone a step further by having open source (making the "idea" free) but offer "technical support" to ensure a job and an income.

    The above design of a "market" stands on the premise that "data systems" are of paramount importance and that digital storage, retrieval and manipulation is essential for human development.

    Now, let us get to our idea of "poverty"- most of these "poor" people are disfranchised from many modes of data storage and manipulation. However, with the possible access to a cell phone or a rural network that gives them access to urban market rates to sell their produce etc., a part of this digital world becomes accessible to them.

    While all this fantastic technological stuff is happening, we are finding more problems (especially in highly populous countries like India) where water, soil and air quality have deteriorated at an alarming rate. Villages and cities fight over water. Political parties become active over water disputes. Industrial infrastructure fights with rural groups on land use and water share.

    Which way would we want to move ahead- at the expense of our health or wealth? All the Hiranyakashipus and Midas did meet their end.
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    Feb 16 2011: Very important point. Poverty is extremely complex and there is no simple catch all solution. There are many reasons for this complex issue especially as you define it in terms of large groups of people. Many complex strategies have been developed and failed. Micro Finance is not "the solution" or any other market solution for that matter. Schools, health care, environment, population growth, peace and security are all extremely important. How many of these issues are greatly influenced by a lack of income?

    I have never heard anyone propose that there is a market solution for every problem but when your starving a couple times a year and you find a product that will double your income, allow you to send your kids to school have resources to go to the clinic wouldn't you say that would help human emotions. Most complex solutions just cover the effects of the root issue. How many people loose hope every year because they see no way out of their poverty?

    I would like to hear more about what a hybrid approach would look like.

    Income gives the individual the opportunities to make choices for their lives. While agree with what your saying I don't think anyone should minimize the impacts of raising the income individuals and families.

    Thank you for sharing your views.