ColaLife and frugal innovation 18-Sep-13


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Presentation at the Institution of Mechanical Engineers - Appropriate Healthcare Technologies for Developing Countries - 18 September 2013

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  • When I was asked to speak about frugal innovation in relation to our work on ColaLife, I accepted as I couldn’t resist anything with the word frugal in it.But I only had the vaguest of notions of what frugal technology or frugal innovation was.So, two weeks ago, it was with some trepidation that I went to Wikipedia to find a definition and establish what I’d let myself in for.
  • I was delighted by what I found.Developing countries – that’s our focusWe are using unconventional distribution channels – checkWe are concerned about overlooked customers who face very serious health challengesWe have designed a solution with them that is desirable and top qualityBut we are very aware of their ability – or lack of ability to pay very much – we know our solution must be cheapAnd moving forward we have to drive down costs to make our mission of saving children’s lives sustainableSo let’s look at each of these features of frugal innovation in the context of the ColaLife
  • Let’s look at why our focus is on developing countries. In sub-Saharan Africa child mortality is unacceptably high. If you happen to be born there you are 16 times more likely to die before your fifth birthday than someone born in Europe.
  • What are the biggest challenges to your survival?Alarmingly, diarrhoea is the 2nd biggest killer of children. Note that it kills more children than HIV/AIDS, Malaria and Measles combined.Mothers tell us that their immediate worry when their child gets diarrhoea is that their child might die. It’s not just a minor inconvenience.Fortunately, we know what to do in these circumstances. There is a highly effective treatment for diarrhoea that the WHO has recommended for a decade. This treatment involves very simple, safe ‘over the counter’ medicines that are stable at normal ambient temperatures. The trouble is most people don’t know about this treatment and cannot get hold of it.
  • The conventional way to distribute medicines is to take them to the people who need them. And this is the only practical approach for some medicines such as vaccines, for example, that need to be kept cold or that need medical personnel to diagnose and administer. This is a SUPPLY DRIVEN or PUSH system.However, there are many challenges with this conventional approach:Maintaining such distribution chain is expensive and complicatedThere is no “duty of care” built in – personnel get paid whether the drugs arrive on time or not – there are no penalties for stock-outs for those running the systemAnd as a result of these factors stock-outs are frequent.However, next door to these poorly stocked public sector store rooms you will find very well-stocked retail shops.Why the contrast?Well the key differences are:That the retail sector is not driven by NEED but by DEMANDProfits are made by everyone involved from manufacture, through distribution, wholesale and retailThere is a “duty of care” throughout the system with the person manufacturing or carrying the goods owning them when they are in his/her possessionIf the retailer’s shelves are empty, this has a direct effect on their income
  • In the jargon this is called a ‘Value Chain”In our work we have created a new product and its value chain from end-to-end.In a value chain the value (demand and ability to pay) is generated by the customer. This provides the incentive for the retailer to stock the product. This put pressure on the wholesaler to order from the distributor and on the manufacturer to manufacture.This results in the product moving down the distribution chain.Note how this differs from a public sector PUSH system where the beneficiaries are passive participants in the process.
  • Key to the creation of a value chain is the product itself.If the product isn’t ‘valued’ there will be no demand for it and it won’t be PULLED through the distribution system.We knew we wanted to distribute ORS and Zinc because that is the proven ‘gold standard’ treatment for diarrhoea as recommended by WHOBut before we finalised the product design, branding and price we spent time with our customers – some of the poorest people on the planet. We don’t think this had ever been done before and we learnt a lot
  • We included sachets that make 200ml of ORS, not one litre
  • We included pediatric Zinc – imported from Tanzania
  • There are eight sachets in all
  • There is a tray on the top that doubles up as a lid
  • And separates the soap from the medicines
  • A finally, the instruction leaflet which also carries the product branding
  • And we call it Kit Yamoyo – ‘Kit of Life’
  • The key features are:It’s attractiveIt’s affordable (but subsidised at this point)The packaging is an integral part of the kit:It’s a measuring device for the waterIt’s a mixing deviceIt’s a storage deviceAnd a cupIt can also be re-used
  • The Kit Yamoyo has received many awards this year
  • But as we move to scale we have to get the cost of production down if to achieve sustainability. No one is interested in endless subsidy.Cost is everything and nothing is sacred in this cost reduction mission:ORS – reduce the number of sachetsZinc – produce it locally and reduce associated packagingSoap – produce it locally (our current soap is imported from India as there was no local manufacturer of 20g bars of soap)Packaging – using the unused space in Coca-Cola crates has not been the key enabler that we thought it was. Only 8% of our retailers put the kits in crates so we can go for cheaper packaging that maintains of the key features – measuring device, mixing device, storage device and cup – but is cheaper
  • So here we our award-winning Kit Yamoyo. It’s won Product Design of the Year 2013. It’s won Ethical Product of the Year 2013. It won the top (Diamond) award for packaging in the States.But fitting in the crates is a feature, not a benefit to our customers. The overriding concern for them is cost, so he have to reconsider the packaging.
  • And this one one of the options we are looking at
  • A locally produced screw-top jar blown into a mould designed specifically for us.It’s 40% cheaper, easier to assemble and turns out to be a better measuring device, a better mixing device, a better storage device and a better cup!That’s frugal innovation for you.Thank you very much.
  • ColaLife and frugal innovation 18-Sep-13

    1. 1. ColaLife and Frugal Innovation Simon Berry co-founder Appropriate Healthcare Technology for Developing Countries 23 Sep 2013
    2. 2. Frugal innovation From Wikipedia, the free encyclopedia Frugal innovation or frugal engineering is the process of reducing the complexity and cost of a good and its production. Usually this refers to removing nonessential features from a durable good, such as a car or phone, in order to sell it in developing countries. Designing products for such countries may also call for an increase in durability[1] and selling them, reliance on unconventional distribution channels.[2] Sold to so-called "overlooked consumers", firms hope volume will offset razor-thin profit margins.[2] Globalization[3] and rising incomes in developing countries may also drive frugal innovation.[4] Such services and products need not be of inferior quality but must be provided cheaply.[5]
    3. 3. Remote rural retail shop, Kalomo District, Zambia Drug store room, Tiriri Health Centre, Katine, Uganda
    4. 4. Customer K5.00 Wholesale K3.10 Distribution Assembly Manufacture Retail K3.70
    5. 5. • The difficulties they faced mixing ORS • The inadequacies of 1 litre sachets • Their willingness and ability to pay
    6. 6. Kit Yamoyo • Attractive • Affordable • Packaging is also: • A measuring device for the water • A mixing device • A storage device (the soap tray is a lid) • A cup • And can be re-used
    7. 7. Nothing is sacred! • • • • ORS Zinc Soap Packaging!