Companies that really want to help the poor get unpoor should help the poor make more money

Ok, I’m going to start by saying this post may get me in trouble here at Intel because I’m going to speak heresy. I’m going to suggest we should allocate some portion of our investments in education into a different arena.

One that has much more immediate and longer lasting impacts for poor people. In an attempt to be fair and balanced though, I’m going to also laud Intel for its work. But my contention is many corporations, Intel included, could do a lot more in the cause of making the poor unpoor simply by helping the poor become rich – relatively speaking.

There’s enough evidence out there already supporting my contention. The quickest way to make the poor unpoor is by helping them become rich. By rich, I’m speaking relatively, and it’s this relativism that makes it “simple” and economical for companies to do. But first, let’s look at two bits of evidence.

The first is the explosion of microfinance. It seems everyone has gotten on this bandwagon and everyone is talking about it. Microfinance’s beautiful cousin, microphilanthropy also is getting its share of the limelight. It helps that she wears the white gown of altruism. But that’s another story.

Why is microfinance getting such positive attention and why is the method spreading so far and wide? Maybe because it works.

The second bit of evidence is innovation used to create business models that work in emerging markets. Intel is working at this, but I think we’re having a hard time of it. CK Pralahad was one of the first (I think) who argued that radical innovation would allow MNCs to compete successfully at the bottom of the pyramid. Today, some have achieved modicums of success in doing so. But rather than rehashing the tired examples we often see, I want to offer a compelling story (and if you have 20 minutes, you should listen to the piece) about a psychiatrist turned innovator, Paul Polak, MD, who is getting a lot of attention lately. Google his name and you’ll find out all about him, but my reason for citing his work is this: his highly successful method of making poor farmers wealthy began with a simple truth and a bit of innovation. He learned that farmers didn’t need more education. What they needed was more money. So, he worked with the farmers to adapt western drip irrigation systems to emerging markets by replacing the hardware (piping, drip dispensers, filters, etc.) with very low cost, but durable alternatives.

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For example, in the Fresh Air interview cited above, Polak describes how simply reducing the thickness of the plastics used in the system’s piping was a major factor in making the systems affordable. There are many innovations Polak describes in his Fresh Air interview that worked and he also makes strong points that our corporations could benefit from when conducting on-the-ground CSR projects in emerging markets.

One that he makes most poignantly clear is that poor people are capable of making decisions for themselves on how to prepare for their futures. All they need is the money to do it. What they don’t need is outsiders telling them that they need education, or social systems and the like. All they need is cash.

Which brings me to the point of this post. I’m not saying MNCs should hand out cash. What I’m saying is we should mobilize what made our companies major players, to help poor people find innovative ways to make more money. Our corporations do a lot that presumably generates a lot of good around the world, but we hardly ever mobilize the skill we apparently are the best at: making money and innovating.

Intel is no exception. In addition to working hard to conserve environmental resources, training millions of teachers, empowering minorities and women and giving to worthy causes, Intel also spends a lot of ergs investing in education around the world. And, today, in a bit of late breaking news, Craig Barrett, our corporate chairman, announced an agreement between Intel Capital and Yunus’ organization that will integrate technology and Grameen’s “social business” model to create self-sustaining ICT solutions for impoverished communities. I actually drafted this post Friday, not knowing about this announcement. It will be interesting to see how far we go at embracing it and I’m encouraged by this late-breaking news. Sheesh, we’re pretty progressive!

And yet, our focus in doing our part to help poor people and emerging markets is still overwhelmingly focused on bringing educational opportunities. I wonder if that very large focus misses the near-term immediate results that could have much greater value to the people who our education programs are meant to serve. An elaboration:

Polack argues, and I agree with him, that people, once empowered with freed up capital, naturally make decisions that serve their best interest now and in the future. After all, these people aren’t stupid, they’re poor. They invest in housing, they seek education for themselves and their families, and they use their new wealth as influence to effect change in government. Yunus discovered this too in his work. So, instead, or rather, in addition to providing educational opportunities for future generations, what are we doing to help the immediate generation? After all, this is the generation who currently is raising the future generations Intel education programs are meant to empower, aren’t they? Our announcement today I think is a step in the right direction. Indeed, it’s a good start. But can we do more?

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For example, last week, while talking with a colleague who’s leading our CSR efforts in Africa, I suggested and he agreed that we could quickly create an Intel subsidiary designed specifically to generate wealth among individuals in Africa. This subsidiary could be designed consistent with the principles of Yunus’ social business model. As a social business, the entity may be as beneficial tax-wise as a foundation or NGO (I’m no lawyer so I’m emphasizing the may in this sentence). The purpose of this enterprise would be to collaborate with external partners such as NetHope, Opportunity International, Kiva, maybe even Polak – orgs that already are doing great work to help generate prosperity opportunities through innovation and investment. This social enterprise could be staffed by rotating series of MBAs, finance people, and legal folks, who would work together to vet then fund projects (or develop projects from scratch) that, like Polak’s work would generate wealth creation through innovation.

What’s great about this is the relativity factor: Since many of these people we’d be helping currently live on $2/day, the investment necessary to raise their income would be relatively insubstantial in northern terms. My friend Mark Grimes from NED.com suggests that one problem with international aid is that they bring too much money to the problem-solving table and that that funding often corrupts outcomes. Polak says as much in his Fresh Air interview. Grimes suggests that to start, anything more than about $10 per person is overkill. So given this scale of dollars, such an enterprise could be financially lean. And once projects are proven, scaling would be equally as inexpensive, especially if the scaling made maximum use of the local citizenry.

What would be the benefit to any corporation that whould do this? Well, in our case, people won’t buy a computer if they can’t afford it. Even if the four pillars of our World Ahead Program: content, accessibility, technology and education are all met, if the guy or girl hasn’t the wealth to make the purchase decision, the decision ain’t happening. So the benefit for MNCs is generating additional increments of the middle classes who would eventually buy products. Oh, they’d also invest in all those education programs for their children that we’re creating around the world.

When I’m out giving speeches on Intel’s behalf, occasionally, I’m approached by an individual who chides me for Intel’s work in the emerging markets. This person asserts that people need food and clean water, not PCs. There are good arguments on both sides of the issue. But I wonder if the social business model could go a long way to address this concern.

I can think of some potential drawbacks of this proposal, but rather than going on any longer, tell me: Am I out to lunch here? Or should we corporate entities leverage our core competence (making money) to help make the poor unpoor?

2 Responses to Companies that really want to help the poor get unpoor should help the poor make more money

  1. Dave Stangis says:

    Hi Perry, I love the fact that Intel culture promotes diversity of thought and dialog. So let me be the first to say, you just might be a little out to lunch on this one. :)
    I think the company for years has invested where it knows it can make a difference. The work you do in Community Solutions, the announcements like the Intel/Grameen Joint venture and the work we do in education such as the Tech Entrepreneurship program – http://www.intel.com/education/highered/entrepreneur/ do exactly that.
    The company has other programs that build on our strengths in Education but are focused on “teaching fishing” vs. “giving a fish.” Some things like Intel Learn and the Small Business Academies come to mind.
    I know there are many more too – we do so much in this space even I have a hard time keeping it straight.
    We believe that education is the key ingredient to economic success. We’ve seen it play out. So I agree with you on working to make the poor less poor. I just disagree with the premise that we aren’t doing that today.

  2. Perry Gruber says:

    Yeah, I know. I was pushing the edge here. One of the reasons I love working at Intel is that, from the beginning, it (we?) has considered being socially conscious as part and parcel of its genetics (to mix metaphors). The tech entreprenuership is a good example that flies in the face of my post. So is a project in India that I may post about soon. That one holds great promise. So I get your point and agree. We are doing well in this space.