design for the base of the pyramid

A R T I C L E R E P R I N T

DesignManagementReview

Designing for the Base of thePyramid

Patrick Whitney, Steelcase & Robert C. Pew Professor and Director, Institute ofDesign, IIT

Anjali Kelkar, Research Associate, Institute of Design, IIT

Reprint #04154WHI41This article was first published in Design Management Review Vol. 15 No. 4

Design & Economic Development

D M ID E S I G N M A N A G E M E N T I N S T I T U T E

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In the January 2002 issue ofStrategy+Business, C. K. Prahalad andStuart Hart made a powerful case forcompanies to recognize the existenceof a huge untapped customer base inthe worlds poor areas, where peoplemake less than $2 a day. In Septemberof the same year, in the HarvardBusiness Review, Prahalad and AllenHammond reiterated the concept.1

Poor people are not averse to buyingproducts that can change their livesdramatically. The low-cost, high-value,well-distributed and indigenously pro-duced Indian detergent Nirma, intro-duced in the 1990s to poor consumers,is a case in point; today, Nirmaaccounts for 34 percent of the volumeshare in the detergent market.2

At the Institute of Design, we areextending this idea by focusing specifi-

cally on wealth creation in urban slums inthe developing world. The goal is to makethe local economies more sustainable,encourage the growth of small businesses,and in the long term to help transitionresidents toward improved living condi-tions. At all phases, our approach is todevelop solutions that harness the entre-preneurial spirit of local citizens and thefinancial development alone.

The design for the base of the pyramidproject was initiated by Sam Pitroda, whois currently a telecom entrepreneur andadvisor to the government of India. In1987, he became chief technology advisor

For companies in the developed world,design, if not the norm, is at least anoption for enhancing business strategies.Going beyond these traditional venues,Patrick Whitney and Anjali Kelkar boldlyexplore the contributions design canmake to businesses in developing coun-tries, specifically businesses in the slums of India. Their findings convey designs universalvalue and offer a beacon of hope in an otherwise grim reality.

Patrick Whitney, Steelcase& Robert C. Pew Professorand Director, Institute ofDesign, IIT

Anjali Kelkar, ResearchAssociate, Institute ofDesign, IIT

Designing for the Baseof the Pyramidby Patrick Whitney and Anjali Kelkar

S T R AT E G Y

Design Management Review Fall 2004 41

1. C.K. Prahalad and Stuart Hart, Fortune at theBottom of the Pyramid, Strategy & Business, no. 26,2002; C.K. Prahalad and Allen Hammond, Servingthe Worlds Poor, Profitably, Harvard BusinessReview, Sept. 2002.2. The Economic Times, Times News Network, India,December 29, 2003.

Dharavi is Asias largest slum, with more than 70,000 slum dwellings occupying about 0.671square miles of land. Image courtesy Times of India, Times News Network, Jan. 22, 2004.

to the Prime Minister of India. A few years later,as the chairman of Indias Telecom Commission,he was responsible for all aspects of telecommu-nications development in the country. Beginningin the late 1980s, Pitrodas vision and technologyhelped to provide phone access to a billionIndians, and in revolutionizing the state of tele-com in India, he also created a model for otherdeveloping nations. Pitroda, familiar withInstitute of Design methods that are normallyapplied to corporate problems at the top of thepyramid, invited us to apply them to urbanslums.

Our initial focus was to develop ways toimprove housing. This made sense because slumdwellings are terrible and the most obvious wayof improving daily life is to make their homesbetter.

Research FrameworkA slum household is defined by UN-Habitat as agroup of individuals living under the same roofwho lack one or more of the following: securityof tenure, structural quality and durability ofdwellings, access to safe water, access to sanita-tion facilities, or sufficient living area. To get abroad framework for understanding slums, aswell as to understand the overall scope of oppor-tunity, we initiated both secondary and primaryresearch. Our secondary research focused onexisting worldwide initiatives sponsored byinternational organiza-tions and corporate phi-lanthropy, and on localNGOs working in Indiaand other developingcountries.

We then conductedprimary ethnographicresearch in slums in threecities of IndiaMumbai,Ahmedabad, and Baroda.To ensure a consistentcontent format, we used amodified version of thePOEMS framework,which we discuss further.We also used a user-expe-rience framework thathelps analyze physical,cognitive, social, and cul-tural aspects of daily lifein these households. Thisresearch was remote, inthat it was planned and managed from Chicagoand conducted by local teams we hired on theground in India. We prepared research packagesthat were couriered to the teams in the threeIndian cities. These included disposable camerasand notebooks to be used with the researchframework we call POEMS.

POEMS (people, objects, environments, mes-sages, and services) was developed at theInstitute of Design to help document how peo-ple interact with the designed world.3 Thisframework helped provide our researchers withparameters within which information was to be


42 Design Management Review Fall 2004

3. Vijay Kumar and Patrick Whitney, Faster, Cheaper,Deeper User Research, Design Management Review,Spring 2003.

Slum Dwelling: ExteriorLack of space within the house leads residents to use allavailable space outside for storage, leaving little room for pathways.

Slum dwelling: InteriorThis is a laundry entrepreneurs house; it operates as a resi-dence for his family, as well as his workspace. During the day, kitchen items arecleared and moved to the ground near the ironing table and the rest of the spacebecomes a receptacle for piles of ironed and unironed clothes.

Pappadum maker. This woman works from 7 am to 4pm daily, rolling out about 30 pounds of flour tomake pappadums. These are placed in the basket byher side to dry as she rolls them out. At the end ofthe day she will sell them to a pappadum wholesaler.This is as much as she can physically produce eachday, and she is without the financial means to diversi-fy or grow her business.

gathered. Depending upon the situation, weused different types of observers, including anarchitecture student, social workers, and MBAstudents. The use of common frameworksenabled us to compare the findings from thisdiverse group of people.

As observations helped us to identify patternsaround the daily life of slum dwellers, it becameapparent that while our initial goal of fixing

housing was still a primeissue, it could not be targeted independentlybecause it was inextrica-bly connected to issuesof water quality andaccess, sanitation,finance, healthcare, andrelated problems ofemployment, communi-cation, education, andso on. It was clear that if any solution were tobe effective, viable, andsustainable, it must

have a systemic approach. Furthermore, whileour research indicated enormous amounts ofentrepreneurial business activity, interviews with residents taught us that these businesseswere incapable of growing further or diversify-ing. The reasons for this are complex, but worthdiscussing.

Slums grow due to a constant influx of poormigrants, generally arriving from rural areas,who come to the city seeking employment andbetter living standards. Slums are most oftenlocated near areas of primary activity, as this iswhere migrants are most likely to find work.

Slums are almost always illegal dwellings thatgrow over the years to form cities within them-selves. They are hubs of activity where, on anaverage day, one can see a range of entrepreneur-ial activities taking place, including seasonal,transient, and mobile businesses, large and small-scale industries, and services such as domestic,manual, or construction labor. The pictures inthis article describe some of the people we inter-viewed through our user research who form partof Indias large informal economy.

Despite this seemingly thriving economy,slum dwellers continue to live in abject poverty.The main reason is that 92 percent of workers inIndia represent the informal economy, inwhich financial transactions are cash-based andundocumented.4 Since there are no records ofthese transactions, the informal economyremains largely invisible and unregulated. Asunrecognized members of society, slum dwellershave no security of earnings or means to buildcollateral. Lack of access to credit creates a hugeobstacle to their chances of planning for thefuture. Therefore even earlier migrants, despitehaving moved to the city years before and

Designing for the Base of the Pyramid


4. National Sample Survey (NSS), India, 1999-2000.

This man has been a shoe repairman for more than 25 years. But because heforms part of the invisible business force, he works wherever he can findspacein this case, under a tree by a sidewalk. This is not a fixed place ofwork, since he is periodically evicted by the municipal authorities and so mustoften move from location to location. His profits are based on the quality ofthe location he can find on a daily basis and not on customer loyalty, becausehis customers often cant find him more than once.

This man is a sculptor whose work involves carving intricate floral patterns on marbleslabs. The fine marble dust that forms a cloud around him settles in the lungs over timecausing microscopic perforations, which bleed and make the worker susceptible to ahost of infectious diseases. Since he is paid daily and not on contract, and the cost oflabor in India is so low, his services are expendable. He is not compensated by thecompany he works for, and he has no health insurance; typically workers with debilitat-ing diseases continue to work their jobs, because they have no other way to survive.

Slum dwellers line buckets, utensils, and other assortedwater containers at a community tap and wait their turnto fill water. This process often starts as early as 4 amand can go on for up to three hours. Often children missschool because they have to stand in line for hours, whiletheir parents leave for jobs in the city.

increased their income, continue to live indeplorable conditions. They dont own theirhomes, and this exacerbates transient living andlowers living standards. While slum redevelop-ment initiatives are constantly being introduced,very little addresses the issue of new migrantsthat flood the city daily and squat illegally wher-ever they find space. Not addressing this prob-lem drains government budgets, increases

municipal expenditures, and puts pressure on acitys resources, while creating pockets of unval-ued real estate.5

A problem this complex requires a systems-oriented approach, with interconnected solu-tions that address a multitude of problems atonce. This kind of work has a long history at theInstitute of Design. For more than threedecades, through the work of Professor CharlesOwen and others, teams of students and facultyhave taken on large-scale problems. Topics haveincluded the home of the future, space stationdesign for NASA, harvesting energy and foodfrom the ocean, improving healthcare, andimproving public schoolsall examples of

problems that cannot be addressed using stan-dard design methods alone.

To address the problem of slums in India,we developed frameworks that helped link bothdesign and business innovations to a social context.

To begin generating a system of concepts, wefirst identified high-level design criteria, such asaccess to credit, economic opportunities, andsecure earnings. These were mapped to a list ofneeds for basic living standards, such as employ-ment, safety, shelter, water, and so on to ensurethat each of the design criteria addressed asmany needs for basic living as possible.

As weve already pointed out, a problem thiscomplex requires a systems-oriented approach,with interconnected solutions that address amultitude of problems at once. The conceptswere then mapped to design criteria to ensureno concept existed independently but rather thateach was intrinsic to the system as a whole. As aresult, each concept addresses at least two ormore of the listed criteria .

We will discuss two concepts to provide anexample of how they work as a system.

Mobile H2OOne of the overwhelming problems in slums isaccess to fresh, clean water. Currently, water ispaid for by slum dwellers and delivered to themat a central location in the slum area by watertankers. The other alternative is to walk the long distance to a public water source; these areusually outside the neighborhood. In either case,the water is untreated and from unreliablesources, such as ponds and lakes at the outskirtsof the city. Hence it is often the chief cause forthe spread of disease, epidemics, and chronic illnesses.

Mobile H2O would be a new business thatcould provide a reliable supply of fresh andclean water to slum homes. Water purificationplants would seal their product into bags madefrom recycled plastic. Water trucks would deliverthese daily to individual water delivery vendorson the outskirts of slum areas. (Slums usuallyhave unnavigable dirt paths, and as a result themode of transport varies from slum to slum,from handcarts to small motorized vehicles.)



Dhobhis are laundry men who collect soiled clothes from residents around the city.Clothes are stacked in bundles on a cart and wheeled long distances before arriving atthe laundry facility. They are then washed through a step-by-step process in a varietyof tubssoak, rinse, wash, wringand then starched and laid out to dry. Sunshineis ample but space is lacking; clothes are often left to dry on pavements, railings, andother roadside spaces. The clothes are then ironed and delivered back to the customer.Not only is the process time-consumingcustomers usually get their clothes backwithin a weekit is not particularly profitable either. The price per clean article is solow that it barely covers the cost of detergent, and labor costs for pickup and deliveryare not considered at all.

5. Hernando de Soto, The Mystery of Capital: WhyCapitalism Triumphs in the West and Fails Everywhere Else(New York: Basic Books, 2000).



Water vendors will each service a specific areaand number of customers. Customers will begiven a smart card and will receive water bagsbased on the type of subscription they bought.The water vendor will use a PDA to swipe thesmart card and to document water deliverytransactions. This will provide details about pay-ment and delivery by removing the risk of cashtransactions for both parties while reliably docu-menting each transaction and creating a recordfor the vendor, as well as the customer.

The goal would be to create an incentive forboth parties to build a credit history, so thateventually a transaction record is built thataddresses credibility issues regarding the users,as well as provide access to financial services.

Mobile H20 is actually based on a model of

mobile food vending. It would mean better dis-tribution of safe and affordable drinking water,as well as an incentive for companies to invest inthe concept and create new jobs, while simulta-neously addressing issues of health, education,and economic sustainability. The subscription-based model would be facilitated by technologycompanies and service providers and would helpaddress issues of transaction transparency, aswell as reduce interference from middlemen.

As pointed out earlier, each of these conceptsneeded to address at least two design issues.Mobile H2O would directly target issues ofhealth, transparency of transactions, andimproved living, and it would indirectly addressissues of access to credit, security of earnings,and creation of viable enterprises.

MEENA DEVDAS

MH2O ID#

VALID:

Dec2003

MEENA DEVDASCANCEL

INFO

Valid

5673465234

Mobile H2O: Scenario of Use

1. Meena pours water into a utensil to preparebreakfast, she is pleased because she doesnt haveto boil water anymore.

2. Half an hour later, the Mobile H2O water ven-dor is at her door with a fresh delivery of water.

3. He takes the Mobile H2O subscription card fromher and inserts into his PDA.

4. Her subscription allots her five bags per day for six months.

5. This helps document the transaction, as well asconfirm she has paid for the delivery.

6. He then hands her a fresh bag of water andtakes the used bag from her. At the end of hisdeliveries, he will sell the used bags to a MobileH2O used-bag collection agent.

GuildNetScores of urban poor continue to live in impov-erished conditions because they have no accessto financial services. The cash-based, informaleconomy further exacerbates this problembecause of issues around the lack of transactionrecords and security of savings, which hindersprofessionalism and limits business growth.

GuildNet is a service facilitated by a bank thatwould encourage individuals in similar profes-sions to form business alliances called GuildNetgroups. GuildNet hopes to leverage existing cul-tural factors in South Asia that encourage work-ing in groups. Some of the more successfulrecent initiatives in India have involved SHGs(self-help groups), which are composed ofmembers of an area or village and work as a col-lective to better their opportunities for loans,credit, and other living needs.

Each GuildNet group would function as asmall firm. A small percentage of the groupsearnings will be saved in the group account;what remains would be transferred into individ-ual worker accounts within the group. Groupmembers will be able to view the group account

but will not be able to make any transactionswithin it. The group account will be facilitatedby the bank and could only be used for businesspurposes with the agreement of all group mem-bers. Expenditures and transactions for individ-ual accounts would, of course, be at thediscretion of the guild member and not accessi-ble to anyone else. This would create an incen-tive for the accumulation of financial assets andalso provide access to financial services.

GuildNet members will be given smart cardsand shown how to operate their bank accounts.The wide availability of ATMs in urban areasallows them to access their accounts anytimeand anywhere, and reduces the frequency of cashtransactions while providing greater security fortheir earnings. It will also address issues of credi-bility for the workers and, as savings grow forthe group, as well as the individual, provide col-lateral for making investments and taking loansfor housing and other social needs.

GuildNet addresses financial issues and thecreation of sustainable enterprises directly, whileindirectly addressing issues of professionalismand the means to land ownership.



GuildNet: Scenario of Use

1. Bhola Ram, a plumber, decides to join GuildNet.For a small sum of money, he can open a GuildNetbank account.

2. He is given his bank card and shown how toaccess his account.

3. A few days later, he is introduced to theGuildNet Plumber group. They begin to worktogether as a team of professionals.

4. Over the next few months, Bhola periodicallychecks his account balance using an ATM.

5. Ten months later, he decides to send somemoney back to his parents in the village so thatthey can repair their house.

6. Bhola Ram is elated that his hard work haspaid off, his savings have grown. Now he can helphis parents, as well as plan for his own future.

Down the RoadThe base of the pyramid project currently focus-es on communities in India, showing ways thatdesign can help create innovations that improvepeoples lives and create sustainable economies.Through activity-based research, we were able toidentify opportunities for innovation that forma system of solutions that together help to sup-port and encourage a sustainable economy, aswell as lead residents toward improved livingconditions. The next phase is to create workingprototypes of these products and services inIndia. We expect these prototypes to catalyzeadditional projects in India, and we hope thegroups we are working with will create newinnovations we have not yet imagined.

In addition to growing the projects in India,we envision doing similar projects in Brazil,Mexico, and other countries in which urbanslums are a serious problem. There are types ofproblems in slums that cross national bound-aries and, of course, some problems that areunique to particular countries and cities.However, in essentially all major areas withurban slums, it is clear the problems are too bigand growing too fast to be solved by charity andgovernment programs alone. The larger goal isto create approaches that, using the energy thatalready exists in many of these slums, lead to anew type of social program that is economicallysustainable.

Reprint #04154WHI41



The POEMs framework helped researchers do rapid ethnography and work within research parameters pertaining to the topic. This is part of a day in the life study of women who sort through garbageeach morning for plastic products. They stuff the found plastic into large jute bags and carry it on foot to a plastic wholesaler, who will buy it from them. Through our research, we came across many suchexamples, in which either the physical exertion nor the meager monetary gain justifies the activity.

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