Singin’ Be-BOP

One of my interests (or distractions) is the idea of appropriate technology, that is, technology, usually in the form of a device or tool, that that is low cost and easy to use, yet is a powerful economic multiplier for an individual or group.  Here in the US, appropriate technology emerged in the heady 1960s and still is a big part of the alternative mainstream culture (c.f., the National Center for Appropriate Technology for “local solutions for a sustainable future,” NCAT).  Internationally, appropriate technology comprises a wide range of solutions (but not necessarily products and that’s a problem) for citizens of the less “industrialized” countries to provide clean lighting and cooking (without burning stuff), clean water, waste disposal, and technologies to improve agriculture like irrigation, crop processing and storage.  Unlike the solutions delivered on a large scale by international aid programs or NGOs, appropriate technology solutions are small-scale and are based on an individual user’s needs, are culturally compatible, affordable, and provide a clear benefit including generating income (c.f., International Development Enterprises, IDE).  In my thinking, these solutions could be delivered as high volume, low margin products, that is, the user understands and is willing to pay for the value provided, that are designed for customers in the bottom-of-the-(economic)-pyramid (BOP) market.

Of course, designing, manufacturing, and distributing such products is a challenge, but in February of this year a group of enterprising young people (mostly) launched an on-line marketplace for appropriate technologies.  This site is called the Kopernik (The Kopernik), which I learned is the non-Latinized version of name of the astronomer, Copernicus, and its goal is to help local organizations in developing countries find and purchase appropriate technology products (Kopernik About).  The mechanics are simple:  technology acquirers submit a proposal for funding the purchase of one of the products listed on the website, the proposal and needed funding is posted, individual donors make contributions until the total is met (the “crowd-funding” model, like Kiva), and the purchase is made.  The product originators also submit their products for approval and are responsible for shipping (Kopernik estimates the cost).  Revenue is through a 10% deduction from donations and a 10% share of the price of purchases (Kopernik FAQ).  To track customer satisfaction (and to generate advertising content), Kopernick requires successful applicants to submit regular reports with photos or videos and a description of the “overall improvement in people’s lives” achieved by the technology.

While I found on the site a list of the impressive media coverage Kopernik has received (more than 30 stories), I could not find the source of their start-up capital or their business plan.  I assume the founders intend their venture to be sustainable, that is, for revenue to cover costs.  I am guessing that their costs are about $300K per annum (salaries for the six staff, although they may be unpaid, but should be at least $40K each, server fees, website maintenance, travel, office).  As for revenue, I counted about $72K in pending and funded proposals which, if all are funded the first year, yields about $14K revenue.  Most start-ups are unprofitable for the first few years, but one can figure out what kind of growth is needed to achieve breakeven in a reasonable time frame.  I guessimate Kopernik needs a 200% annual increase in business to reach breakeven in three years, which seems extreme to me but then I don’t have the management consulting experience of the Kopernik team (Kopernik Team).  I also wondering if the team worked out several other points that their business model relies on:

-the number of providers of appropriate technology and whether they believe they need to use Kopernick in addition to the distribution channels in their original business plans;

-the number of purchasers and extent they can understand and articulate their needs, complete the proposals, and submit the post-purchase reports; and

-the willingness of individuals to donate given the many competing groups “helping” citizens of developing countries (I like the Heifer International model better).

Skepticism aside, Kopernick is a creative approach to the distribution of appropriate technology and made me think about adopting the model to medical technologies that are either not needed or unmarketable in the US where prices are kept artificially high by our warped reimbursement system and lack of incentives for cost control.  This on-line marketplace would be a MOD (middle of the pyramid) rather than a BOP play.  The purchasers would be regional or national non-for or for-profit health care providers (like hospitals, clinics, or medical mission NGOs) and the products would need to be low-cost, effective, and non-regulated (not drugs and vaccines).  Some products that come to mind are:

-Wadsworth Medical’s wound closure system (Wadsworth);

-any of the 20 or so devices listed by Maternova as maternal and neonatal health aids (Maternova);

-rapid diagnostic tests for which there are several hundred suppliers (e.g., listed on Alibaba, Alibaba RDT);

-prosthetic limbs designed by the Prosthetics Outreach Foundation and made in four countries (POF Programs); and

-self-adjusting glasses (as seen on Kopernik and from the Center for Vision in the Developing World, VDW).

One advantage to the purchasers could be to aggregate orders for better pricing or lower shipping costs. One advantage to the providers would be world-wide exposure and a channel for commercialization.  Hmm.. not a bad idea, now to write the business plan.

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