There is no shortage of good ideas for products that serve communities with limited resources. What separates the ones that succeed from those that do not is the approach to product development. It sounds obvious, but many product-based start-ups struggle unnecessarily (and fail) simply because they do not account for the critical elements to building a successful commercial enterprise.
There are four key elements to affordable product-based ventures: technology, commercialization, dissemination and funding. All of these functions must be clearly established to develop robust, scalable and sustainable products. Sure, bursts of entrepreneurial energy can lead to short-term success, but sustainability requires this framework.
Technology. Product development happens in two ways: one is to develop a technology, then search for an application; the other—most common for social enterprises—is to identify a need, then develop a technology to meet it. To ensure that their solutions can effectively address targeted problems, social entrepreneurs need a clear understanding of the technical competency required. Whether they build their solution in-house or through a technology partner, it is important that they be able to quickly identify failures and incorporate user feedback to converge on designs.
Too often, product-based entrepreneurs are unclear as to whether their solution is at the prototype phase, final version or somewhere in-between.
Commercialization. Scalability and affordability are inextricably linked: a critical mass of demand is necessary for products to be produced and priced affordably. Entrepreneurs therefore need a dedicated role or partner to focus on a commercialization strategy for their product. Since many affordable products are mission-driven, this role or partner must maintain a high level of objectivity about the product and the need it fills—for instance, in assessing the product's level of maturity. Too often, product-based entrepreneurs are unclear as to whether their solution is at the prototype phase, final version or somewhere in-between.
Dissemination. Technology is just the beginning—a solution is only complete when it reaches its target customers and is readily adopted. For example, many ideas for helping the visually-impaired employ hi-tech solutions that require significant behavior change and training, which is challenging to do among a population where 90 percent depend on a cane and where new ideas must be introduced through close, trusted sources.
To succeed, product-based entrepreneurs need resources or partners committed to marketing their product—ones that understand their intended communities well enough to ensure adoption and know the appropriate channels for effective dissemination. If this function is internal, it must be rooted in deep understanding of the product’s intended users. If it is external, entrepreneurs should know their partners’ long-term motivations to promote their product and the consequences of not having these partners' support.
Funding. Often discussed as the make-or-break element for product-based ventures, funding always seems to be in short supply. Ideally, ventures could identify one financial partner to carry them from product development to commercialization. This rarely happens; instead, most survive by cobbling together a string of grants and small seed investments until their reach a point of scalability.
Technology is just the beginning—a solution is only complete when it reaches its target customers and is readily adopted.
Finding the right kind of funding is important, and sometimes this means waiting for a suitable partner, rather than accepting the first source that comes along. Many grant sources for healthcare products, for example, insist on randomized control trials before approving a grant. But RCTs are not always feasible or appropriate for affordable products and would not be a wise endeavor for early-stage ventures. Identifying a funding partner who can also proactively guide is the Holy Grail.
For entrepreneurs working on affordable solutions, thinking out of the box is the right start; working within this functional framework will ensure that their ideas can serve the people they are meant to sustainably.
Arun Venkatesan is an independent consultant who works with small and medium-sized businesses to develop innovative, affordable and sustainable products into tangible ventures. He is a member of Demand’s Editorial Advisory Board. Arun holds a Ph.D. in chemical engineering. He is based in Chennai, India.