Innovations Special Edition Annual Meeting 2008

Davos 2008 An MIT Press Journal
innovations
TECHNOLOGY | GOVERNANCE | GLOBALIZATION
Special Edition for the 2008 Annual Meeting of the World Economic Forum
The Power of Positive Doing

Lead Essays
Social Innovators with a Business Case
Klaus Schwab and Pamela Hartigan
Beyond Lending
Fazle Abed and Imran Matin
Cases Authored by Innovators

Income is Development Martin Fisher
commentaries by Paul Polak; Julia Novy-Hildesley; Eric Simanis & Stuart Hart
Making Sight Affordable V. Kasturi Rangan & R.D. Thulasiraj

commentary by Geoffrey Tabin
Seeking a Cure for Inequity in Access to Medicines Victoria Hale

Taking Animal Trafficking Out of the Shadows Dener Giovanini
commentaries by Jerry Mechling; Carter Roberts
Information Technology to Meet Social Needs Jim Fruchterman

Science as Social Enterprise Richard Jefferson
commentaries by Sara Boettiger & Brian D.Wright; Yochai Benkler
FEATURING SCHWAB SOCIAL ENTREPRENEURS

Editors Chairman Editorial Board
Philip Auerswald of the Advisory Board David Audretsch
Iqbal Quadir John Holdren Michael Best
Senior Editor Matthew Bunn
Advisory Board
Winthrop Carty Susan Cozzens
Lewis Branscomb
Maryann Feldman
Associate Editors Susan Davis
Frank Field III
Miriam Avins Bill Drayton
Richard Florida
Elizabeth Dougherty Robert Frosch
Keenan Grenell
John Gibbons
James Levitt
Consulting Editors Anil Gupta
Martin Malin
Christian Duttweiler Daniel Kammen
Peter Mandaville
Helen Snively Don Kash
Julia Novy-Hildesley
David Kellogg
Interns William J. Nuttall
Neal Lane
Ana Agan David Reiner
Eric Lemelson
Justin Lee Huang Kenneth Reinert
Monique Maddy
Jan Rivkin
Granger Morgan
Steve Ruth
Jacqueline Novogratz
Peter Spink
R. K. Pachauri
Francisco Veloso
Gowher Rivzi
Nicholas Vonortas
Roger Stough
Yang Xuedong
Karen Tramontano
James Turner Publisher
Xue Lan Nicholas Sullivan
Innovations: Technology | Governance | Globalization is co-hosted by the Center for Science and
Technology Policy, School of Public Policy, George Mason University (Fairfax VA, USA) and the Belfer
Center for Science and International Affairs, Kennedy School of Government, Harvard University
(Cambridge MA, USA). Support for the journal is provided in part by the Lemelson Foundation; the
Schwab Foundation for Social Entrepreneurship; the Ash Institute for Democratic Governance and
Innovation, Kennedy School of Government, Harvard University; and the Center for Global Studies,
George Mason University.
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© 2007 Tagore LLC.
innovations
Editors’ Introduction
3 Philip Auerswald and Iqbal Quadir
Lead Essays
7 Social Innovators with a Busines Case: Facing 21st
Century Challenges One Market at a Time
13 Beyond Lending: How Microfinance Creates New
Forms of Capital to Fight Poverty
Fazle Abed and Imran Matin
Cases Authored by Innovators

29 Income Is Development: KickStart’s Pumps Help
Kenyan Farmers Transition to a Cash Economy
Martin Fisher
54 Case discussion: KickStart
Paul Polak
Erik Simanis and Stuart Hart
85 The Aravind Eye Care System: Making Sight Affordable

V. Kasturi Rangan and R.D. Thulasiraj
100 Case discussion: Aravind Eye Care System
Geoffrey Tabin
105 Institute for OneWorld Health: Seeking a Cure for Inequity

in Access to Medicines
Victoria Hale
119 Taking Animal Trafficking Out of the Shadows: RENCTAS

Uses the Internet to Combat a Multi-Billion Dollar Trade
Dener Giovanini
World Economic Forum special edition | Davos 2008

130 Case discussion: RENCTAS
Jerry Mechling
138 Case comment: RENCTAS
Carter Roberts
141 Benetech: Developing Information Technology

to Meet Social Needs
Jim Fruchterman
159 Science as Social Enterprise: The CAMBIA BiOS Initiative

Richard Jefferson
191 Case discussion: CAMBIA BiOS
Sara Boettiger and Brian D. Wright
204 Case discussion: CAMBIA BiOS
Yochai Benkler
About Innovations
Innovations is a journal for, and about, people using technology and novel modes of
organization to address global challenges.
The journal was launched in the winter of 2006 as a publication of MIT Press, jointly
hosted at Harvard's Kennedy School of Government (Belfer Center for Science and
International Affairs) and George Mason University's School of Public Policy (Center
for Science and Technology Policy).
The journal’s advisory board is led by John Holdren, and includes two former U.S.
Presidential Science Advisors, a former NASA Administrator, the chief counsel on the
Science Committee of the U.S. House of Representatives, the publisher of Foreign
Affairs, and R.K. Pachauri, co-recipient on behalf of the U.N. Intergovernmental Panel
on Climate Change (IPCC) of the 2007 Nobel Peace Prize.
In its first eighteen months of publication Innovations has established itself as a signif-
icant new journal of high editorial standards, uniquely focused on solutions in the
public interest. Innovations has published twelve original cases authored by innovators,
spanning domains of impact from rural enterprise creation to open-source agricultur-
al biotechnology, the siting of a nuclear waste facility, and the creation of a virtual
world. Six of these cases are included in this special edition for the 2008 Annual
Meeting of the World Economic Forum.
mitpress.mit.edu/innovations
innovationsjournal.net
Philip Auerswald and Iqbal Quadir
If nature has made any one thing less susceptible than all others of
exclusive property, it is the action of the thinking power called an
idea… He who receives an idea from me, receives instruction himself
without lessening mine; as he who lights his taper at mine, receives light
without darkening me. That ideas should freely spread from one to
another over the globe, for the moral and mutual instruction of man,
and improvement of his condition, seems to have been peculiarly and
benevolently designed by nature…
—Thomas Jefferson, Letter to Isaac McPherson, August 13, 18131
An English country doctor by the name of Edward Jenner discovered in 1796 that
inoculation of humans with cowpox conferred immunity to smallpox. To describe
the process Jenner coined the term “vaccination,” derived from vacca, the Latin
word for cow. When the British Royal Society assented to publish Jenner’s findings
in 1798, the work was greeted more with derision than with acclaim. Few believed
that fluid from a diseased animal could confer benefits to human beings. The
doubters were mistaken. Vaccination became a widespread practice. In 1966 the
World Health Organization (WHO) launched an effort to eradicate smallpox on a
global scale. By 1980, almost two centuries after Jenner’s discovery, there was no
longer a single case of smallpox anywhere in the world.
By what process did the invention of the vaccine ultimately lead to the global
eradication of a dread disease? Jenner’s work obviously was only the beginning of
a long story. The eradication effort required leadership and long-term vision,
detailed planning, flexible organization, ingenuity, and hard work on the part of
Philip Auerswald and Iqbal Quadir are the founding co-editors of Innovations.
Auerswald is also Director of the Center for Science and Technology Policy and an
Assistant Professor at the School of Public Policy, George Mason University, and a
Research Associate with the Belfer Center for Science and International Affairs at
Harvard's Kennedy School of Government.
Quadir is also Founder and Executive Director of the Legatum Center for
Development and Entrepreneurship at MIT. Previously Quadir was a Lecturer at the
Kennedy School of Government and a Fellow with the Center for Business and
Government at Harvard University. He founded GrameenPhone in collaboration
with Grameen Bank of Bangladesh and Telenor AS of Norway.
This essay is derived from the editors’ introduction to the inaugural issue of
Innovations that appeared in Winter 2006.
© 2006 Tagore LLC

innovations / Davos 2008 3
Philip Auerswald and Iqbal Quadir
many people. Initially employing a child’s toy construction kit, scientists at the
Lister Institute in London developed a method of freeze-drying the vaccine, aiding
in storage and transport. Benjamin Rubin of Wyeth Laboratories collaborated with
Gus Chakros of the
Reading Textile
By focusing on the particulars of Machine Company to
design the bifurcated
practice, Innovations is intended to needle, aiding in
administration of the
complement existing journals, vaccine.2 To address
providing a common space that cuts problems faced in the
practice of large-scale
across academic disciplines, bridges vaccination, field-
theory and practice, and links workers involved in
the WHO eradication
human action with global impact. effort developed novel
approaches, including
smallpox recognition
cards, watchguards, reward programs, rumor registers, and containment books.3
Managers and supervisors encouraged experimentation by field workers, and facil-
itated communication among them.
Discovering the process of vaccination required insight and ingenuity; ending
smallpox required a series of innovations.4 Other cases exist in which technology
and novel forms of organization have been employed to address public challenges
on a global scale. Yet while problems with major implications for social welfare
may be the first to get attention, those with relatively easy answers usually are the
first to be solved. In part for this reason, the magnitude of present challenges
exceeds that of past successes. In an era in which the secrets of the genetic code
have been unraveled and fundamental processes of life are being newly under-
stood, people everywhere still face a future marred by the stark realities of global
climate change, the proliferation of weapons of mass destruction, and the spread
of infectious disease. And while the beneficial impacts of technological change
have been dramatic, they have not been broadly shared. The majority of people in
the world continue to live in persistently poor places, where the local environment
is deteriorating and sickness is a daily fact of life.
Existing institutions and incentive structures may or may not be adequate to
address these challenges. If the past is any guide, continued progress in addressing
public challenges will require continued innovations—the efforts of individuals,
groups, and communities who creatively employ new organizational forms, and in
many cases new technology, to effect discontinuous change.
This journal is about such innovations and the changes that they bring about.
It is less about what needs to be done, and more about what people are doing. Our
purpose is to capitalize on the fundamental nature of innovations. Innovations can
be copied and possibly scaled up. Innovations open up new possibilities and cre-
4 innovations / World Economic Forum special edition

ate the ground for yet more innovations. By drawing attention to innovations in
the public interest, we intend to encourage critical thinking about them, and to
spur their proliferation.
1. Text from the Electronic Text Center at the University of Virginia Library, <http://etext.vir-
ginia.edu/jefferson/quotations/jeff1550.htm>; archival reference given as ME 13:333. A taper is a
candle.
2. Jack W. Hopkins, The Eradication of Smallpox: Organizational Learning and Innovation in
International Health, (Boulder, CO: Westview Press, 1989).
3. Lawrence B. Brilliant, The Management of Smallpox Eradication in India, (Ann Arbor, MI:
University of Michigan Press, 1985).
4. In preparing this brief description of smallpox eradication we benefited from Chun Wei Choo,
“The World Health Organization Smallpox Eradication Programme,” unpublished manuscript.
<http://choo.fis.utoronto.ca/fis/courses/lis2102/KO.WHO.case.html> last accessed 2/8/2005.


Facing 21st Century Challenges
One Market at a Time
If there is one thing about which public and corporate leaders around the world
today can agree, it is the ever-growing importance of innovation. The search for
innovative solutions to the world’s myriad local, national and global challenges has
become a clarion call rallying people across multiple borders defined by nation,
industry, and academic discipline. Yet policy making reflects deep ambivalence
about innovation. The cheerleading over innovation exists in contrast to the myr-
iad institutional, legal, regulatory, and educational impediments to the work of
innovators.
While not innovation experts, we have been privileged to interact over a span
of decades with the some of the world’s most recognized innovators—from those
working at the grassroots to those at the helm of new industries. This has provid-
ed us with some perspective on the nature of innovation and the hurdles innova-
tors face daily as they search for ways to disseminate their approaches and prod-
ucts.
Education is a good place to start. A society’s capability to innovate arguably
begins, or possibly ends, in school.1 For the vast majority of primary schools,
among the qualities of a “star” pupil are tidiness, adherence to rules and directions,
and good behavior. In the later grades, outstanding achievement is measured in
grades, standardized test scores and sometimes, the number of extracurricular
activities undertaken. These constitute the ticket to acceptance to top schools pro-
ducing the world’s elite. But it is not clear that this is how to develop the talents of
tomorrow’s innovators.
The educational system is reinforced by employment policies in most govern-
ment institutions and corporations. When reviewing candidates, recruiters invari-
ably look for evidence of academic achievement and a steadiness that produces
good exam pass rates and grades rather than for experiences that might suggest a
candidate is innovative and inspired, perhaps even rebellious. This is because most
Professor Klaus Schwab is the Founder and Executive Chairman of the World
Economic Forum and Co-Founder of the Schwab Foundation for Social
Entrepreneurship. Dr. Pamela Hartigan is the Managing Director of the Schwab
Foundation.
This essay originally appeared in volume 1, number 4, of Innovations.
© 2006 Klaus Schwab and Pamela Hartigan

innovations / World Economic Forum special edition 7
organizations have a low tolerance for mistakes. Risk-averse societies and organi-
zations keep people from failing. They also keep them from trying. And the key to
successful innovation is initial failure and persistence.2
It is hardly surprising, then, that among the commonly shared experiences of
successful innovators is the recollection of having been described at some point as
crazy, not just by acquaintances, but by family, friends and close colleagues. Almost
by definition, innovators are mavericks. Most organizational structures and their
corresponding managers and civil servants deal with what is. Innovators do exact-
ly the opposite. They focus on creating things the world has never seen. They sys-
tematically disregard bound-
aries—whether of nation, aca-
demic discipline, or social sta-
While the world clamors for tus—to the predictable annoy-
innovation, it tends to deprive ance of those who consider it
their responsibility to keep
innovators of the resources boundaries in place. An irony
and recognition that would results: While the world clamors
for innovation, it tends to deprive
maximize their potential to innovators of the resources and
transform societies for the recognition that would maximize
their potential to transform soci-
better eties for the better The challenge
of innovation in the 21st century
is therefore also about reshaping
societies to be not only tolerant,
but actually welcoming, of innovators.
In the case of the innovators using technology on which this journal focuses,
past innovation heroes had their impact on business. From the individual bril-
liance of Thomas Edison came the global powerhouse that is GE; from the unique
inspiration of Kiichiro Toyoda came the car company of today that continues to be
a global standard setter. In the coming century, however, the greatest opportunities
for innovation exist in domains of public service heretofore left to governments.
Social innovators who have taken a business perspective today are pioneering new
approaches and helping to map out future markets where most would only see
looming problems and risk. In doing so, they are the harbingers of the biggest mar-
ket opportunities of the century. And history suggests that they have at least as
much chance of shaping the twenty-first century as many of today’s great incum-
bent businesses. On current trends 75% of 2001’s Standard & Poor’s 500 will have
disappeared from the S&P index by 2020. In their stead, companies unheard of
today, using new business models, will be delivering products and services to new
and existing markets, dislodging incumbents who have not been able to innovate
fast enough to keep up with 21st century needs.3
Already today, there are hundreds of such innovators who are reaching new
markets, serving unmet needs, and creating new supply chains. This journal

recently profiled KickStart and its founders, Martin Fisher and Nick Moon.
Kickstart designs, produces and sells appropriate technologies to rural entrepre-
neurs in some of the world’s poorest markets, allowing them to start small-scale
businesses. In 2005, KickStart sold over 8,400 pieces of equipment that helped start
5,964 businesses generating an additional $5.3MM in annual profits and wages for
new businesses. Martin and Nick have ventured into territory no mainstream com-
pany would dream of entering—and in doing so, they have paved the way for a
new group of producers and consumers to emerge.
Dr. Devi Prasad Shetty is meeting unmet needs of a different sort through an
innovative business model in health. An Indian cardiologist, Shetty’s organization,
Narayana Hrudayalaya, strives to make sophisticated healthcare available to all in
India. His network of hospitals is able to provide 60% of treatments below cost or
for free, thanks to drastically reduced costs resulting from high volumes, innova-
tive cost saving methods and donations. A network of 39 telemedicine centers
reaches out to patients in remote rural areas. Two health insurance programs pro-
vide coverage for 2 million farmers at Rs 120 per year (USD 3). Again, innovators
lead the way in coming up with business models to provide quality health care for
the poorest who cannot afford it—while sustaining and growing the enterprise.
In Nigeria, Isaac Durojaiye has both created a new product and tapped into a
new source of labor. His company, Dignified Mobile Toilets (DMT) is the first
manufacturer of mobile toilets in West Africa. DMT makes, installs and maintains
thousands of public toilets in Nigeria through a franchise system providing job
opportunities to members of youth gangs that oversee the daily maintenance of
the facilities and keep 60% of the profits. The toilets are placed in high traffic areas,
such as bus stations and markets, where there is a high demand for sanitation facil-
ities. Thus, DMT offers an alternative to current widespread and unhygienic prac-
tice of using the street as a toilet. It also aims to attack the unemployment situa-
tion, particularly among youth. More than half of the population of Nigeria is
under 35 years of age, and many are unskilled. While Nigerian employment statis-
tics are under debate, it is believed to be in the range of 17%, with an even higher
rate among urban youth. Up to 55% of the unemployed are secondary school
graduates, underlining the fact that education and skills do not guarantee employ-
ment.
Sub-Saharan Africa is not the only region where new solutions are needed to
address emerging models of participation in the work force. Sara Horowitz is
spearheading a form of portable unionism to promote the interests of the growing
number of independent workers in the United States. Unlike traditional trade
unions which are limited by law to employees of workplace-based organizations,
Working Today, founded by Horowitz, provides flexible and portable benefits
applicable to an increasingly mobile and decentralized workforce adjusting to the
changing contours of the U.S. and global economy. It has built a membership of
16,000, including 10,000 independent workers who receive health insurance. Its
model could be expanded to address the needs of the more than 30 million inde-
pendent workers across the U.S.—and beyond.

The more acute the societal challenge, the greater need for an innovation-driv-
en societal transformation. Global climate change is number one on the list in
terms of the magnitude of the challenge and in terms of the scope of the required
response. The climate challenge in this century will not be solved by changing
power plants, designing new automobiles, or reformulating gasoline. It will be
solved, and must be solved in this generation, by people changing their behaviors
and their institutions. National policies, corporate programs, venture financing
and consumer behavior will all contribute. But if they are counted upon to be the
drivers of change, that change sim-
ply will not occur. To catalyze the
shift, the general population must
The more acute the societal be spurred to action, in turn pres-
suring governments.
challenge, the greater need One such catalyst is Yann
for an innovation-driven Arthus-Bertrand, a photographer
who has demonstrated through
societal transformation. creativity and perseverance that
there is no real North-South divide
when it comes to environmental
threats. Bertrand produced a series
of extraordinary books, exhibitions and films introducing us to our planet from
the air. Like most innovators, he is unrelenting. He has taken over 100,000 images
just to put together “Earth from the Air.” As one of his colleagues put it, “With him,
I learned that nothing is impossible. People will tell him ‘No’, and he hears ‘Maybe’.
And herein lies the strength of such innovators—and their common bond. The
word “no” doesn’t exist for them. As Barry Coleman, co-founder of Riders for
Health,4 has quipped, “There is nothing as motivating as when someone tells us ‘It
can’t be done’. It is our call to action.”
What set of incentives will lead to the deep diffusion across society of the capa-
bility to innovate and the inclination to respect and value innovators? The first
place to start is to step beyond paying lip service to the importance of innovation
in the public interest. Acknowledging the role innovation must play in addressing
the challenges of inequity is a prerequisite. But to date, and except in a small num-
ber of wealthy countries, such as the U.S., U.K., and the Scandinavian countries,
governments have played a modest role in financially supporting innovation, par-
ticularly when directed towards social transformation.
The vacuum has been only very partially filled by venture capitalists, private
investment, and philanthropy—individual and corporate. Thus, among the exam-
ples of social innovators highlighted previously, not one of them secured national
public sector support—other than international aid—when launching their initia-
tives. While one might argue it is better not to be financially supported by a gov-
ernment in the early phases of the venture in particular—because it can compro-
mise the ability to be truly innovative—the existing financing vacuum evident as
these social ventures scale up cannot be filled by wealthy individuals or enlightened

business alone. Increasing recognition of the importance of social innovation and

the concomitant growth of “philanthropreneurs” may spur more funding flows to
support early stage innovative hybrids focusing on social transformation.
Many, if not most, of today’s social innovators defy traditional legal pigeonhol-
ing as “not-for-profit” or “for-profit” organizations. Rather, they “intersect” across
both—they are social innovators with a business case, so to speak, hybrids that
straddle between a charity and a profit maximizing company. Consequently, many
find themselves maneuvering through a tangled web of legal regulations to identi-
fy what benefits and obligations exist in relation to their enterprise. The fact is that
to date, no country has developed a specific legal model recognizing the hybrid
nature of such organizations and the social and economic functions they serve.
Our fascination with these pragmatic visionaries and their organizations lies
much less in the goods and services they provide than in the catalytic role they play
in triggering innovations in the social sector. Like the business innovators who
come up with major innovations for the marketplace, social innovators are the
mad scientists as it were—working away in their organizations that act like social
innovation laboratories. They test and perfect different approaches, and when
they come up with the most effective and efficient ones with the greatest impact, it
should be government and the corporate sectors’ respective roles to celebrate the
innovation, take it up, learn from it, and help scale it so that all can benefit.
Ultimately, the innovation lies in the models devised for service and product deliv-
ery all along the supply chain—not in the provision of the good itself. It is those
models that others need to take up and replicate.
Innovators in the public interest are the flame that ignites the fire of social
transformation. That flame must be fanned and nurtured by governments, pub-
licly traded and private companies, academia, media and individuals working
together to achieve its promised impact.
1. We recognize that a vast number of children in poor communities must abandon their formal
education after the primary school years. Yet patterns of learning are developed at the primary
level.
2. Thomas Edison is oft-quoted as saying. “I have not failed. I have found 10,000 ways it won’t work.”
3. Richard Foster and Sarah Kaplan, 2001. Creative Destruction: Why Companies That Are Built to
Last Underperform the Market—And How to Successfully Transform Them (New York: Random
House).
4. Working with Ministries of Health and NGOs in African countries, Riders for Health builds local
capacity to maintain and manage motorcycles and other vehicles, enabling health care workers to
reliably service remote areas. As a result, RfH is able to operate fleets of vehicles in the harshest
conditions with a zero breakdown rate for five years or longer. RfH has demonstrated that a prop-
erly managed vehicle under its system will save more than 50% of costs over a six-year period,
compared to an unmanaged vehicle. RfH has been able to lower infant and maternal mortality in
targeted communities. With each motorcycle it runs, 20,000 receive primary health care every
year.

Fazle Hasan Abed and Imran Matin
Beyond Lending
How Microfinance Creates
New Forms of Capital to Fight Poverty
The very idea of microfinance has changed banking as we knew it. Providing small
loans to the poor, mostly women, replaces physical collateral with collective
responsibility. Today, microfinance is an established way to provide financial serv-
ices to the poor. It can be scaled up in widely different environments around the
world, and can deeply benefit the people it serves. It allows the poor both to take
advantage of opportunities and to manage their vulnerabilities.
The focus of the innovations in microfinance has itself evolved. In the early
days of microfinance, the focus was much more “social:” how to form groups in
ways that would most effectively enforce collective responsibility? How to motivate
women to form their own groups? How to motivate people to save for a period
before lending them money? How to respond to negative responses from the bet-
ter-off and the religious groups in a community? Then, as the focus shifted from
social questions, microfinance began to become more professionalized and was
scaled up. Soon, innovations related to basic loan management followed. Along
with the focus on financial sustainability, innovations in microfinance included
better management information systems, and management systems that could
increase productivity and internal control.
During the middle 1990s, the pendulum began to swing back to the client end,
as criticisms of one-size-fits-all types of microcredit gained ground. The initial
focus on product innovations in the credit domain was soon followed by a call to
expand innovations to a whole range of financial services beyond credit, including
savings, insurance, and money transfers.
In this article, we focus on a different source of innovations in microfinance:
using the process capital of microfinance to design innovations that can address a
far wider range of constraints facing the poor. We will also discuss the strategic
F. H. Abed is the founder and chair of BRAC. Imran Matin directs BRAC’s Research
Division and its Africa Program. Corresponding author Imran Matin can be reached
at <imran.m@brac.net>.
This essay originally appeared in volume 2, number 1/2, of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Fazle Abed as
an Outstanding Social Entrepreneur.
© 2007 Fazle Hasan Abed and Imran Matin

linkages between microfinance and other approaches that innovators must con-
sciously design into the package if microfinance is to be truly inclusive. To illus-
trate our argument we provide some examples from Building Resources Across
Communities (BRAC) in Bangladesh.
The greatest power of microfinance lies in the process through which it is pro-
vided. Women form groups of their own choosing, known as Village Organizations
(VOs) to engage with a formal institution; even this process reflects a significant
redefinition of a traditionally very patriarchal contract.1 Moreover, staff members,
who are of a higher socio-economic status,
engage in a very meaningful act simply by
going to the doorsteps of these women to
The greatest power of do business with them, and seeking their
microfinance lies in the help in solving problems; this practice
process through which it begins to redefine the relationships within
socio-economic hierarchies, and between
is provided. formal institutions and poor women. In
an institutional environment that is gener-
ally exclusionary, uncertain, unpredictable
and at times openly hostile to the poor,
microfinance staff follow a process that goes like clockwork: rule-bound and
almost ritualistic, it opens up the possibility of a new culture of expectation and
keeping promises through engagement between the poor and external institutions.
For their part, institutions create their own strong foundations as they learn
the art and science of managing large-scale microfinance operations. They must
engage with the details of developing systems and procedures, understand incen-
tives and the psychology and motivations of staff and clients, and come to grips
with the details of developing a performance-driven management culture and sys-
tem that requires constant vigilance.
HARNESSING THE PROCESS CAPITAL OF MICROFINANCE:

SOME CASES FROM BRAC
The process of providing microfinance thus creates new forms of engagements,

relationships and capacities—what we term in this paper the “process capital” of
microfinance. Traditionally, innovations in microfinance have focused on its
financial domain: developing new products or new management systems or using
new technology to increase efficiency. We argue that it is possible to better leverage
microfinance structures and processes to facilitate other types of innovations to
develop new services for the poor.
The poor are a diverse group with diverse livelihoods, needs and potentials.
Over time they encounter changes in their personal lifecycles, along with new
opportunities and external shocks. The diverse and dynamic reality of poor peo-
ples” lives and livelihoods forms the canvas against which BRAC conceptualizes
and designs its repertoire of development programs, of which microfinance is a
14 innovations /World Economic Forum special edition

Beyond Lending
BRAC: Summary Statistics
Source: BRAC <www.brac.net.>
core element. More important for the arguments in this paper, BRAC uses the
process capital of microfinance as an entry point to address other constraints and
to open up new opportunities for the poor. We provide some examples in this sec-
tion.

Developing poultry as a viable enterprise for the poor

Traditionally, women in rural Bangladesh have raised poultry, mostly as a subsis-
tence activity and to manage small crises. In 1983, BRAC realized that, in addition
to offering access to microfinance it would need to help poor women make more
money from the activities in which they were already engaged. Poultry seemed a
good place to start and BRAC began a series of consultations with villagers to iden-
tify major constraints. High poultry mortality, which villagers often took as
unavoidable, emerged as a major issue. BRAC assessed the existing government
services and found they were limited in both outreach and effectiveness. At first, it
used its own staff members to provide wider poultry vaccination services, but it
soon realized that much wider outreach was needed to systematically serve the
poultry vaccination needs of a given area. Sustainability was also an issue.
BRAC then developed the community-based volunteer approach. The idea is
simple. In each village, an appropriate member of the village organization (VO) is
trained to vaccinate poultry and treat basic poultry diseases. BRAC bears the costs
of training. Trained vaccinators then get a flask to carry the vaccine, a syringe to
apply the vaccination, and a bag with the BRAC logo. They buy the vaccine from
BRAC or government facilities and sell the service to poultry rearers in the com-
munity. To get them started, BRAC gives each vaccinator a small loan. Today BRAC
has over 20,000 poultry vaccinators working in villages throughout the country,
responding to a very important need of small poultry rearers.
Once these volunteers significantly lowered the mortality rate of poultry,
another bottleneck was identified: yield. The average yield of local varieties of
poultry is 40 to 60 eggs a year, but High Yielding Variety (HYV) poultry yield 250
to 300 eggs a year. The government was the main supplier of HYV chicks, and
BRAC bought up most of its supply to distribute among its VO members on a pilot
basis. Now, another major constraint emerged. Rearing HYV poultry is different
from rearing local varieties; the farmer needs feed, clean water, and basic poultry
hygiene. BRAC started training its VO members about these issues so that they
could get the maximum yield from rearing HYV poultry. To facilitate feed distri-
bution, BRAC used a model very similar to the one for creating poultry vaccina-
tors. It developed a new cadre called “feed sellers” who were trained to prepare
good-quality poultry feed that they could sell to poultry rearers. As HYV poultry
rearing expanded, traditional middlemen started exploiting the women who were
too isolated to get good information about local market prices. BRAC then devel-
oped a cadre of egg collectors, again from its VO membership base. As the women
discussed the local market price of eggs every week at their VO meetings, it became
harder for the middlemen to exploit them.
Milking more
Livestock rearing is another popular activity among poor households in
Bangladesh; here women also play a key role. Many BRAC members were using
their loans to invest in livestock. On average, local breeds can produce 1 to 1.5 liters

Beyond Lending
of milk a day, being milked for 250 days a year, but a 25% improved variety will
typically yield 6 to 8 liters a day with a total of 270 milking days in a year. Clearly,
improvements in livestock breeding could lead to significant opportunities. In
1985 BRAC piloted an approach similar to its poultry worker model to develop a
cadre of workers to artificially inseminate cattle.
The government was the main provider of insemination through its 1,100
Livestock Artificial Insemination Centers. Despite their numbers, however, the
centers were distant from many of the rural households rearing livestock. This led
to two problems: the expense and inconvenience of bringing livestock to these cen-
ters, and the problem of timing. A cow is usually in heat for 24 hours, and the opti-
mal “heat period” only lasts about six hours. Due to lack of outreach, many rural
livestock rearers did not know about the government services. Moreover, the gov-
ernment facilities relied predominantly on liquid livestock semen which required
refrigeration and had to be used within three days. This meant that centers had to
be located in areas with electricity and much semen was wasted. Or, if they used
out-of-date liquid semen, cows did not conceive. This led to a vicious cycle of dis-
satisfaction and lower demand.
After some research, BRAC developed another approach. Through VO
members, it recruited their husbands or male relatives who had a secondary
education, and trained them in modern methods of livestock rearing and arti-
ficial insemination. Its partners were Bangladesh Agricultural University and
Bangladesh Livestock Research Institute, which had excellent technical knowl-
edge in this area. Initially, a few women were trained along with the men, but
the work involved traveling long distances on bicycles, and administering the
semen. It was more suitable for men.
Instead of liquid semen, BRAC used frozen semen which had no expiry date
but did need liquid nitrogen for storage. BRAC currently purchases liquid nitro-
gen from Bangladesh Oxygen Limited and distributes it in cylinders to its 55
Livestock Artificial Insemination Centers across the country. The trained Livestock
Artificial Insemination Workers (LAIWs) come to these centers on fixed days of
the week to buy the frozen semen.
The LAIWs buy a single shot of frozen semen for 70 taka (roughly US $1) and
provide on-farm service to the livestock rearers for 100 taka. BRAC provides them
with regular training and the basic equipment they need. The average LAIW earns
about 2,500 taka a month. The conception rate is over 65% which is higher than
the internationally acceptable standard of 50%. Demand is rapidly increasing for
the LAIWs’ services, so their income is growing.
BRAC used posters, popular theater, and “miking” to publicize the LAIWs’
services and the importance of modern methods of livestock rearing. “Miking” is
a very popular way to spread various types of information in Bangladesh, especial-
ly in rural areas. A rickshaw, bicycle, or scooter is decorated with posters and a
microphone is placed in the front; it is then driven around the villages to make
announcements. The microfinance VO meetings and networks are also used to

inform people about improved breeds and the opportunities they offer.
Initially, to facilitate service delivery at the community level, BRAC used “post
boxes” placed in villages so that people who needed the service could leave a note.
With the massive expansion of cell phones in Bangladesh, BRAC is now providing
the LAIWs with loans to buy phones. The name and number of the relevant village
LAIW is displayed throughout the village and in the BRAC area office, and is pub-
licized through the microfinance VO network.
Getting basic health services to reach the poor

Many of the costly health problems faced by the poor can be reduced if basic infor-
mation and prevention services are available in villages. And illness is a key reason
for increased poverty and defaults on microfinance loans.
The traditional MFI response to this issue has been insurance, which address-
es the demand-side constraint of finance. But the demand side includes other con-
straints besides finance, such as knowledge of ways to prevent disease, or having
the information on services available. Premium payment today for an uncertain
event in the future for the poor when there are many other pressing competing
needs, also makes insurance uptake by the poor a challenge. BRAC approached this
problem by making basic health services available at the community level. Again,
the microfinance VO structure played an important role. Appropriate VO mem-
bers were selected and trained in essential health care. They were then assigned to
work areas covering around 300 households each. Within their area they provide
basic health information and advice, sell non-prescription medicines for basic ill-
nesses, take pregnant mothers for ante-natal checkups, help mothers to immunize
their children at government facilities, and mobilize the community for national
immunization day. BRAC’s annual expenditure on training is 285 takas (about $4)
per volunteer. The volunteers earn money by selling medicines at retail rates, and
by referring people to health facilities. They can average 200 to 250 taka monthly.
Making rights real for the poor: BRAC’s Human Rights and Legal Services
For the poor, especially women, a crucial constraint is lack of knowledge about
their legal rights and difficulties accessing legal services when they need them.
Without such knowledge, poor women can lose the few resources they have and
become even more vulnerable within the society. Often when Bangladeshi women
slide into poverty and dispossession, legal disempowerment is a key element in
that slide.
BRAC sought a cost-effective mechanism to address this constraint. It started
from a promotive perspective, providing human rights and legal education
(HRLE) for its members. It trained group members as cadre legal volunteers to
provide this training to others. With the help of leading national legal experts, it
developed innovative training materials such as flip charts to provide training on
basic rights and essential legal issues in the areas of inheritance, marriage and vio-
lence against women. Each group member pays the legal volunteer about 15 cents

Beyond Lending
(10 taka) for her services and BRAC pays another 15 cents. To maintain continu-
ity, BRAC formed local Law Implementation Committees (LICs) consisting of the
top three learners in an area; they maintain close links with other BRAC members.
During 2006, over 10,000 HRLE classes were held for over 200,000 BRAC mem-
bers.
BRAC was well aware that once it took hold, this basic knowledge about rights
would lead members to call for more direct legal action to support the poor.
Indeed, BRAC soon formed a partnership with two leading legal-aid NGOs in
Bangladesh to help BRAC members and other poor in the community resolve their
conflicts through alternative dispute resolution. If women need to go to court,
BRAC provides legal advice and assistance through a cadre of panel lawyers who
are paid a modest honorarium for their services. They provide assistance with
issues like polygamy, dowry, dower and maintenance payments, divorce, physical
torture, and land-related disputes. As of December 2006, a total of over 42,000
complaints had been made and over 50% were resolved. So far, almost 3,000 cases
have been filed in local courts, and over 35% have been resolved. The program has
succeeded in obtaining about US $1.2 million in monetary compensation for its
members in various cases.
The fact that all these cadres of volunteer workers are recruited from the VO
members helps in many ways. The VOs are the focus of BRAC’s delivery structure,
including microfinance. Typically, a VO consists of 35 to 40 members who are
formed into smaller groups of five. This structure provides a ready market for serv-
ices, arising from the initial access to microfinance. Though most of the volunteers
have little education and low socio-economic standing, they are members of the
VOs and are trained and certified by BRAC, so their fellow VO members trust their
services as they would not trust villagers outside the VOs. Fellow members can also
hold them to account for their services more effectively than outsiders could. As
their services became established within the secure and controlled environment of
the VO, they can then extend them to market beyond the VO membership.
INCLUSIVE MICROFINANCE: NEW GROUPS, NEW SERVICES
Making microfinance inclusive is the new mantra. The focus, however, is not only
on new financial products, but also on designing socio-economic processes that
create strategic linkages with microfinance. Because the various hitherto un-served
groups face different constraints, they may require a wider set of introductory
non-microfinance interventions so they can make the best use of microfinance
itself. The key challenges here involve packaging and sequencing. Another is how
to develop appropriate incentives and management systems that do not distort the
process, but instead create synergies. In this section, we briefly describe several
ways that BRAC is challenging itself to make microfinance truly inclusive.

Building opportunity ladders for the extreme poor
BRAC has long realized how hard it is to address the needs of the extreme poor
using conventional microfinance. In Bangladesh, where outreach to the poor and
the poorest has had the greatest influence in shaping the discourse on microfi-
nance, evidence suggests that about 15% of all microfinance clients are among the
very poorest. This is not an insignificant result for BRAC’s outreach, and occurred
mainly as microfinance expanded
with the support of PKSF (Palli
BRAC has long realized how Karma Sahayak Foundation), the
government-sponsored and
hard it is to address the needs donor-funded wholesale institu-
tion. However, work by BRAC’s
of the extreme poor using Research Division2 shows that a
conventional microfinance. significant portion of these poorest
clients tend to be relatively inactive
as participants. That is, they bor-
row far smaller amounts, and do so
less frequently, and they tend to have long overdue debts that they cannot repay.
Also, unlike most microfinance members, they are more likely to drop out of one
MFI and not join another one. All this suggests that the focus of discussion on
microfinance and the extreme poor should go beyond their simple membership in
MFIs, to examining the quality of their MFI participation and how it can be
improved.
For BRAC the challenge was to develop cost-effective mechanisms to include
the extreme poor in the programs and to move beyond grants.
In 1985, the Vulnerable Group Feeding (VGF) program of the World Food
Program (WFP) was providing time-bound food assistance to the extreme poor
living in vulnerable areas. To implement a new sustainable model for the most vul-
nerable, BRAC approached the WFP and together the two NGOs designed the
Income Generation for Vulnerable Group Development (IGVGD). program to
link extremely vulnerable women to mainstream development activities. This ini-
tiative organized extremely poor women into groups and provided them with skill
development training in sectors, such as poultry, where large-scale self-employ-
ment can be created.
While the program was operating, these extremely poor women were given a
monthly ration of wheat for two years. The program also developed a savings
scheme and later provided small amounts of program credit, so that the women
could use their training to develop more meaningful and secure livelihoods. The
whole program aimed to take systematic advantage of a window of opportunity in
the lives of these extremely poor women: While they were receiving food transfers
and had some short-term security, it provided support so that the women could
stand on more solid ground once the transfer period ended. An independent study
by WFP found that through this strategic linkage, more than three quarters of
20 innovations /World Economic Forum special edition

Beyond Lending
those who received the monthly ration card became regular clients of BRAC’s
microfinance program.
A CGAP (Consultative Group to Assist the Poor) study found that the average
woman in the VGD program received a subsidy of about US $135, which is fairly
small, considering that the overwhelming majority of IGVGD women graduated
out of their need for continuous handouts. As more of the VGD women graduate
to BRAC’s microfinance program and as they improve the quality of their lives,
BRAC will likely be able to recoup these subsidies.
BRAC’s experiences with IGVGD demonstrated that it is possible to create
opportunity ladders out of the safety nets for those who are left behind by conven-
tional microfinance. So BRAC became even bolder, and experimented further with
this concept. BRAC noticed that the IGVGD approach helped the great majority of
its participants to benefit from regular microfinance programs, but a significant
minority still failed to reach this stage. More worryingly, those who failed to “make
it” were among the poorest of the poor.
They also saw several reasons for this situation. Sometimes, the local represen-
tatives selected participants based on political motives and other forms of self-
interest. More importantly, the VGD women often failed to get the full benefits of
the window of opportunity that the food transfer provided, because two or more
of them tried to share one VGD card. Sometimes, the cards had to be “bought’—
which often meant selling the cards, in advance, to wheat dealers to raise the
money for the “payment.’’
BRAC felt the need for a program that would give it more control over these
processes; it also wanted to design a specific window of opportunity in which the
extreme poor (those spending 80% of their income on food, yet not being able to
attain 80% of the calorific requirement) could build solid ground and then move
forward.
In January 2002, to address these challenges, BRAC started a new experimen-
tal program, “Challenging the Frontiers of Poverty Reduction: Targeting the Ultra
Poor,” or TUP. The program seeks to “push down” the reach of development pro-
grams, specifically targeting the ultra poor through a careful methodology that
combines participatory approaches with simple survey-based tools. During the
period 2002-2006, it worked with 100,000 ultra-poor women.
The whole idea behind the CFPR/TUP approach is to enable the ultra poor to
develop better options for creating sustainable livelihoods. This requires a combi-
nation of approaches; some are promotional, such as asset grants and skills train-
ing, and others are protective, such as stipends and health care services. It also
means attacking constraints at various levels: within households and in the wider
environments of institutions, structures and policies. The CFPR/TUP approach
aims to deliver on all these fronts; BRAC hopes that the initial subsidy in this
approach, which will be heavier than the IGVGD, will reap benefits by allowing the
extreme poor to build a more solid and comprehensive base from which to move
ahead.
After two years of intensive grant-based support, the members of the

CFPR/TUP program form their own microfinance groups. As of December 2006,

over 15,000 CFPR/TUP members had formed their own groups as a part of the
graduation package. BRAC has disbursed over US $500,000 to these members;
their average grant is $38 and they have saved close to $366,000.
Microfinance for adolescents: Starting early

The proportion of the population in the 15-29 age group is increasing in South
Asia, including Bangladesh, due to an interplay between declining fertility rates
and population momentum. This segment of the population will constitute the
next generation of workers, parents, citizens and leaders. This “youth bulge” is like-
ly to intensify further over the next two to three decades as fertility rates decline
more markedly and the momentum in population growth slows.
Some see the swelling numbers of young people as a risk. With rising enroll-
ments in primary school, and growing primary completion rates, young people
will create enormous pressure at the higher levels of education. A closely related
risk is high unemployment and the associated vulnerabilities that it creates for
young people and the society at large. Although this is one of the healthiest peri-
ods of a person’s life, it can also be a time of taking on risky behaviors that can
injure one’s health.
Still, these large numbers of young people bring unprecedented opportunities
as agents of growth and social change. Along with the “youth bulge” comes a
declining dependency ratio which presents a unique window of opportunity. The
economic arguments for investing in children and dependent youth have never
been better.
Microfinance has traditionally focused on married women, usually aged over
25, while education programs typically focus on primary school children. Thus
mainstream development efforts generally miss a critical and large part of the life-
cycle, as people make their transition from childhood to adolescence and youth.
But investing in people during this period of their lives can yield significant devel-
opment dividends.
Adolescence is an extremely vulnerable period, especially for girls in a patriar-
chal society like Bangladesh. As they reach puberty, many encounter abrupt phys-
ical restrictions that they will continue to face throughout their lives. Lack of
mobility has far-reaching implications in shaping their mindsets, worldviews, aspi-
rations and confidence levels; these, in turn, adversely affect their decision-making
power throughout their lives.
To address the particular contextual realities that face adolescent girls in
Bangladesh, in 2003 BRAC initiated a special microfinance program for them:
Employment and Livelihood for Adolescents (ELA). It aimed to provide ways that
adolescent girls could begin to become economically self-reliant; eventually, it
hopes to unleash a process of overall empowerment as these adolescents enter
adult and family life. ELA offers its group members different kinds of trainings to
help them earn an income and develop a savings habit, and it provides access to

Beyond Lending
small loans. As of December 2006, over 272,000 adolescent girls had become mem-
bers of ELA and formed over 9,000 ELA groups, each consisting of 15 to 20 mem-
bers. Over 87% of them have taken on a loan averaging US $70. They have saved
in total almost $3 million.
In addition to helping the adolescents begin their journey in becoming eco-
nomically self- reliant, ELA has recently begun to develop a social space called ELA
Centers, where members can expand their social opportunities, become involved
in other groups, and learn to act as social change agents in their home, family and
community.
Reaching the socially excluded: Microfinance for Commercial Sex Workers

For many reasons, commercial sex workers (CSWs) are vulnerable and socially
excluded. Their lives, and their livelihoods, tend to be mediated by multiple layers
of intermediaries who exploit them in many different ways. But they must rely on
these intermediaries to protect them, given that they are so vulnerable, in terms of
income and health, as well as socially
and politically.
Given the global concern over the
spread of HIV and AIDS, various at-
The basic spirit of
risk groups, including CSWs, are microfinance is to search
being targeted for different types of
interventions. Generally these inter- for possibilities based on
ventions aim to increase condom use, knowledge, understanding
raise awareness and provide some
treatment of various sexually trans- and perspectives that start
mitted diseases and infections, at ground level.
though less treatment is available for
those with HIV/AIDS. Despite this
initial support, they remain very vul-
nerable economically.
In 2004, BRAC started a small project to increase condom use among brothel-
based commercial sex workers. BRAC soon recognized much more deeply-rooted
constraints behind the low rages of condom usage. It engaged in extensive consul-
tations, and developed a cadre of health volunteers among the commercial sex
workers who would provide basic health support and sell a range of health prod-
ucts such as essential non-prescription medicines, condoms, and low-cost sanitary
napkins. In addition to these interventions, BRAC also works on the demand side;
its awareness-raising activities include video shows, and quiz and popular theatre
shows, at the community level and among students of schools and madrassas. At
some of the consultation meetings, the CSWs began to mention how much they
needed secure futures for themselves and their children. Among the needs they list-
ed were schooling for their children, and safe places to save and to take out loans.
This prompted BRAC to start microfinance for CSWs, with a key focus on savings.

As of December 2006, BRAC had managed to motivate over 50% of the CSWs
in the six brothels where it is working to form their own groups to save and bor-
row. It has disbursed a total of over US $57,000 in loans to the CSW borrowers,
with the average loan about $190. The members have been able to save over
$16,000 during these years.
Bridging the gap with the basic spirit of microfinance: Financing micro and
small enterprises
The basic spirit of microfinance is to search for possibilities based on knowledge,
understanding and perspectives that start at ground level. It is this keen and
nuanced understanding that allows those involved in microfinance to select clients,
segment markets, enforce loan contracts, manage loan repayment problems, and
make everyday decisions. A good microfinance staff member has to be a barefoot
economist, a sociologist, and a psychologist, all at once. When staff members can
take this incrementally accumulated sense of life on the ground, with all its twists
and turns, and combine it with the arts and sciences of management structures
and incentives, they can facilitate successful scaling-up operations.
This kind of spirit, and the organizational culture that nurtures and sustains it,
is critically important in breaking into new market segments, especially when the
segment is informal and unknown, like the micro and small enterprise market seg-
ment. Most of the micro and small entrepreneurs operate in the market’s informal
segment, and lack the kinds of formal documentation that conventional financial
institutions typically use for appraisals. These entrepreneurs have little or no access
to traditional mechanisms of loan enforcement. Anyone appraising the potential
to grow and repay loans has to take the person’s financial abilities into account
using innovative means, but must also take on social tasks that conventional bank
representatives are often not suited to do well.
BRAC realized that a sizable portion of its existing microfinance clients were
entrepreneurial enough to handle larger loans and grow their businesses; it also
saw a large unserved market consisting of micro and small entrepreneurs. It knew
that growth in this segment of the market was important for generating employ-
ment, which would lead to local economic growth. So, in 1996, it initiated
Microenterprise Lending Assistance (MELA), a special lending program for micro
and small entrepreneurs. As BRAC gained experience with the needs of that mar-
ket and learned to manage its program more efficiently, it divided the MELA pro-
gram into two segments: UNNOTI (meaning development) with loans ranging
from US $215 to $715, and PROGOTI (meaning progress) with loans ranging
from $715 to $4285. Like those in DABI (Daridro Bimochon—“Poverty
Alleviation” in Bangla), BRAC’s core microfinance program, UNNOTI clients
must form groups and attend meetings to take on loans, while PROGOTI clients
are served individually. To receive loans, PROGOTI clients must open a bank
account; however, UNNOTI clients only need a passbook for their transactions
with BRAC.

Beyond Lending
As of December 2006 the UNNOTI program had almost 550,000 members,

who had borrowed over US $180 million in loans averaging $250. Another 343,000
entrepreneurs are borrowing from BRAC’s PROGOTI Program in loans averaging
over $1,000.
Transfer at the doorstep: Remittance partnership

International remittances have been creating a silent revolution in Bangladesh.
According to Bangladesh Bank statistics, in 2005, the country received over $3 bil-
lion in international remittances, which grew by over 14% a year between 2000 and
2005. The importance of such a huge flow of foreign exchange at various levels of
the economy is not difficult to
understand.
People use various methods to
send remittances. A study by
The current discourse on
RMMRU found that 46% of the total microfinance, with its
volume of remittances was chan-
neled through official sources, exclusive focus on
around 40% through hundi or unof- innovations in financial
ficial channels, and 6% through
friends and relatives. The remaining products, is important. But
8% was hand-carried by migrant we see great scope for
workers coming home on visits.
Most of the remittance flow is irreg- further innovations, if we
ular, coming 3 to 4 times a year. On
average, transfers sent through offi-
take a broader perspective
cial channels cost almost $2 at the on microfinance.
receiving end, but those sent unoffi-
cially cost about $1. With official
transactions, people had to wait
12.83 days on average to receive cash after they deposited the draft in the bank,
while it took only 3 days after they got information about the transfer when remit-
ting money through the unofficial channel Clearly, there is great room for
improvement at the receiving end, in terms of cost, convenience and speed of
transfer through official channels. For providers of official remittances, a major
constraint is their lack of an outreach network, especially in the rural areas, home
to a large majority of those who receive the remittances.
This is where microfinance institutions like BRAC, with its network of over
2,000 rural branches, can play a significant role, and it has now partnered with
BRAC Bank, a full-service commercial bank. As Bangladesh has no official identi-
fication system, one key problem is identifying the beneficiary, which increases
transaction costs for both the financial institution and the beneficiary. But BRAC
could use its local knowledge; it carried out a survey to register close to 100,000
beneficiaries, providing them with a registration card, unique registration number,

and remittance passbook. Through an intranet, the BRAC Bank Head Office in
Dhaka is connected with all the branch offices; it can send transfer advice to the
relevant branch office overnight. The registered beneficiary comes to the branch
office with card and passbook, fills in a withdrawal slip, and gets the money with-
in minutes.
For each transaction, BRAC Bank sends BRAC a service charge of 175 taka (a
bit over $2). BRAC Bank processes close to 35,000 remittance transactions every
month, largely through this innovative partnership with BRAC. Although BRAC
Bank is a very new entrant into this market, it already has an overall remittance
market share of 4% and has been able to capture 35% of the remittances to
Bangladesh that had been routed through Western Union.
This partnership is not only about providing convenience, speed and low-cost
transfers. To discourage people from using hundi, (because the money is unac-
counted for, it can be used to finance drug business, terrorism etc.), BRAC Bank is
using the popular theatre program of its Social Development Program, which runs
over 29,000 popular theatre shows every year in the nation’s villages.
A study by International Organization for Migration, having looked into the
patterns of remittance use in Bangladesh, sees several factors that constrain the
further investment of remittances in productive sectors. They are primarily areas
where the country lacks resources. For example, Bangladesh has few resources for
promoting information, advice, training and other services relating to investment
in new and potentially successful sectors. It also has few ideas about investment
opportunities, and those receiving remittances have little expertise in running
businesses. If some of these constraints can be alleviated, conditions will improve
for all parties involved, including the financial institutions involved in the remit-
tance business. Then, larger remittances can flow more regularly and those who
receive them will be more interested in other financial products.
With this in mind, the BRAC Bank, in partnership with BRAC, is developing
new products; one is Probashi DPS, a special deposit pension scheme for
Bangladeshis working abroad. BRAC is also encouraging the registered beneficiar-
ies among its members to open savings accounts and take out loans to start enter-
prises. BRAC Bank is encouraging the beneficiaries to consider taking out SME
loans against the savings from remittances. BRAC Bank is also offering insurance,
against accidents and disability, which pays out up to US $1,400. The policy is sim-
ple: it is valid as long as the remitter commits to making at least one transaction in
65 days.
NEEDED: A BOLDER MICROFINANCE VISION
Globally, given the huge un-served and under-served demand for microfinance
and the lack of solid institutions, another large unfinished agenda exists: to ensure
that the largest number of poor people can have reliable and reasonably priced
access to different kinds of financial services. But we must also find innovative
ways of doing more.

Beyond Lending
What we have argued in this paper is that the process of microfinancing,

through social intermediation, creates valuable forms of capital that remain large-
ly untapped. From BRAC’s experiences, we have provided some examples of how
the process capital of microfinancing can be harnessed to address other constraints
that the poor face in their fight against poverty. New forms of exchanges are creat-
ed, along with new forms of service-based employment, and poor people adopt
new techniques that bring their enterprises larger returns. Decisions on how to
implement these programs—should they be run by one single institution or a
partnership, and how should they be sequenced—will depend on institutional
characteristics, incentive structures and other contextual variables. In this paper,
our purpose is not to prescribe, but rather to draw attention to the possibilities of
using the microfinance structure and processes in bolder and more innovative
ways.
The current discourse on microfinance, with its exclusive focus on innovations
in financial products, is important. But we see great scope for further innovations,
if we take a broader perspective on microfinance, especially with respect to its
process capital. Microfinance is certainly not a silver bullet, but it does have great
power and possibilities. By broadening our current imagining of microfinance, we
can harness it more fully and thus do far more to alleviate poverty.
1. The village organizations are the gateways and nucleus of all BRAC development activities.
Typically, a VO consists of 30 women and is a federation of small 5-member groups. Each small
group has a group leader and the VO members will nominate one of them to be the VO chairper-
son. The VO will also have a treasurer. Currently BRAC has over 170,000 VOs all over Bangladesh.
2. BRAC since its beginning has paid serious attention to evidence leading it to set up its own in-
house Research and Evaluation Division in 1975. This Division has over the years played a signif-
icant role in evaluating BRAC’s development programmes and identifying gaps for improvement.
A number of new BRAC programmes, such as its special Program for the ultra poor, emerged out
of research and evaluation. For more about BRAC’s Research and Evaluation Division, see
<www.bracresearch.org>.

Martin Fisher
Income Is Development
KickStart’s Pumps Help Kenyan Farmers
Transition to a Cash Economy
Innovations Case Narrative: KickStart
Within less than a generation, poor families in Africa have been thrown from
essentially a subsistence lifestyle into a primarily cash-based economy. Ability to
earn an income is suddenly a paramount skill. Yet approaches to encouraging
development continue to be based on the assumption that the primary need of
people in poor places is something other than a way to make money—better
healthcare, education, water, housing, and so forth. This is misguided. Providing
these will not end poverty. In a cash economy, money is the primary means to
securing other vital resources. Except in a few very remote areas of the world, if you
ask a person in a poor place what they need most, they will tell you that it is a way
to make more money. The way to address the challenge of persistent poverty is to
create sustainable income-earning opportunities for millions of people. Income is
development.
I am the co-founder of KickStart, a nonprofit social enterprise that has for the
past fifteen years employed design principles to address the poverty challenge in
Kenya and Tanzania. KickStart designs and markets low-cost pumps and other
capital equipment that have been used by thousands of farmers to establish high-
ly profitable commercial enterprises. This market-based approach to development
“kick-starts” a sustainable cycle of wealth creation, brings poor people into the
middle class, and eradicates the effects of poverty from the ground up.
KickStart’s best-selling tools are foot-powered irrigation pumps that enable
poor farmers to switch from subsistence to commercial irrigated farming. With
Martin Fisher is the co-founder and CEO of KickStart (formerly ApproTEC), an

organization whose mission is to promote sustainable economic growth and employ-
ment creation in Kenya and other countries by developing and promoting technolo-
gies that can be used by dynamic entrepreneurs to establish and run profitable small-
scale enterprises.
This case narrative originally appeared in the inaugural issue of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Martin Fisher
as an Outstanding Social Entrepreneur.
© 2006 Tagore LLC

Martin Fisher
irrigation, entrepreneurial farmers can grow three or four crops of high-value

crops per year, greatly increase their yields, and harvest the crops in the off-season,
when the prices are highest. The average net farm income of farmers who use our
pumps increases by a factor of ten—from $110 to $1,100 per year. In Africa this is
a lot of money. For the first time they can afford to properly feed and educate their
children, pay for healthcare and plan for their futures. To date, over 40,000 small-
scale farmers and entrepreneurs in Africa are using KickStart’s pumps and other
technologies to run profitable small businesses. Between them they generate over
$40 million per year in new profits and wages, and total revenues equivalent to
over 0.5% of the GDP in Kenya, and 0.2% of the GDP in Tanzania.
THE UNFULFILLED PROMISE OF “APPROPRIATE TECHNOLOGY”
As a doctoral student in mechanical engineering in the early 1980s reading E.F.

Schumacher’s 1973 classic, Small is Beautiful, I came to believe—as many others
elsewhere had—that the widespread introduction of small-scale, locally made,
labor-intensive technologies in poor rural villages was going to save the world. In
1985 I applied for, and was awarded, a Fulbright Scholarship to travel to Kenya
with the objective of studying the “appropriate technology” movement, as it was
termed, in action. Much to my dismay, my first finding was that the appropriate
technology movement was essentially dead. Time and again I was told, “We spent
a lot of money on that and it didn’t work.” As an engineer I had a hard time believ-
ing that there was no place for technology in development. But clearly I still had a
lot to learn.
A few months after I arrived I found a small group who were working at the
British charity ActionAid to develop low-cost building materials and train local
artisans to use them to build high-quality local schools. There, I met Nick Moon,
a skilled carpenter and entrepreneur and my future business partner and co-
founder of KickStart. Nick and I worked together at ActionAid for the next five
years.
ActionAid believed in “integrated rural development.” They poured millions of
dollars of assistance into limited geographic areas in the poorest parts of Kenya,
and our efforts were a part of this approach. Among many other projects, we estab-
lished a large rural water scheme that built community-owned wells, dams, and
other innovative water sources in poor villages. We built and ran a rural workshop
to manufacture low-cost ploughs and carts that we donated to poor farmers. I
designed new machines for making low-cost building materials and we donated
them to youth groups to establish small businesses. And we trained dozens of local
carpenters to manufacture their own wooden carpentry tools.
However, Nick and I became increasingly disillusioned about the lack of sus-
tainable impacts that we and other development agencies were having on poverty.
We were spending large amounts of resources on poor communities, donating
infrastructure, tools and equipment, providing training and education and using
state-of-the-art community organizing and planning methods. Nonetheless, the

water sources we built would fall into disrepair after a few years of use; youth
groups we trained to start productive enterprises would fall apart because they
were not cohesive or
entrepreneurial; our
manufacturing work-
shop competed unfairly Of the 1.1 billion people who live
with local businesses, on less than $1 per day worldwide,
and when the project
ended, our improved fully 70% are small-scale rural
farm equipment was no farmers who are trying to scrape
longer available. The car-
penters didn’t use the out an existence on an acre or so
tools we trained them to
make because they pre-
of unproductive land.
ferred modern-day
equipment. While we
built dozens of school classrooms using new low-cost building materials, the new
materials were no longer locally available after we left town. No doubt we were
teaching the local communities how to manage a large amount of development
aid, but it was much less clear if we were having any lasting impacts on poverty—
or if we were simply making the local people less self-sufficient and more depend-
ent on our aid.
After five years of learning by doing, learning from our own mistakes, and
learning from the successes and failures of others, Nick and I decided we were
ready to try to do things differently.
RE-THINKING THE CHALLENGE OF PERSISTENT POVERTY:

FROM ONE MEANING OF “APPROPRIATE” TO ANOTHER
Finding an alternate way forward meant rethinking the poverty problem from its
fundamentals. First, we would not focus on the urban poor. Why? Of the 1.1 bil-
lion people who live on less than $1 per day worldwide, fully 70% are small-scale
rural farmers who are trying to scrape out an existence on an acre or so of unpro-
ductive land. In sub-Saharan Africa—despite the more visible shocking conditions
in the urban slums—over 80% of the poor are rural farmers.
Five years in Kenya had been long enough to make us aware also of the extraor-
dinary physical isolation of these rural farmers. The few roads that exist are pot-
holed dirt tracks that often become un-navigable after a heavy rain. The average
poor farmer does not own a bicycle (much less a motorbike or a car) and lives
miles from the nearest road. Farmers and their families have no addresses, no elec-
tricity, and no telephones. They often only come to their closest marketplace—a
small village with a couple of almost-bare-shelved shops and an empty plot where
farmers can sit on the ground and hawk their produce—a few times a month and
to a bigger town only a few times a year. Their primary contact with the outside

Martin Fisher
world comes when they see a newspaper or listen to a radio—most often owned by
a better-off neighbor. They have limited access to markets or information and very
few distribution and marketing channels can be used to reach them.
Sickness is a constant fact of life. Education is a route out of poverty. So fami-
lies that get beyond subsistence typically seek to educate their children and gain
access to curative healthcare. Wealthier families can purchase basic furniture, light-
ing at night (from a candle or kerosene lamp), soap to wash with, chickens or a cow
to improve their diet, basic cosmetics, and better clothes to wear. The relatively rich
in rural areas of East Africa will have access to transport and communication, a
lead acid battery for lights, a radio for information and entertainment, and poten-
tially a small black and white TV.
All of these things cost money. Farmers can no longer grow enough food for
their family on their small plots of land, and no longer hunt for food and skins, or
gather building materials from a local forest. And despite attempts by governments
to provide education and
healthcare, the poor must
The mantra of “give it away” still pay for school uni-
forms, books, and even
creates completely inappropriate teachers, and for drugs
incentives, leading to patronage and advice at local phar-
macies or clinics. Many
and dependency, instead of self- must buy cooking fuel
sufficiency and entrepreneurship. and all have to pay for
clothing, soap, lighting,
cosmetics, transport, and
communication. In fact—
like other people in poor rural regions elsewhere in the world—they are being
compelled to make the transition from subsistence to a cash economy.
This is a major change—one at least as profound as the fall of the Berlin Wall.
Indeed, the two transitions are related. During the Cold War, African governments
received enough aid to provide free education and healthcare and to highly subsi-
dize the cost of basic commodities such as maize and cooking oil. Farms were big-
ger—populations have grown rapidly and farms have been divided with every new
generation—and poor families could grow enough to eat, collect building materi-
als and fuel in the forest, sell a small portion of their grain to buy subsidized cook-
ing oil and school uniforms for their children, and survive to live another year. But
with the end of the Cold War aid to Africa has decreased ten-fold and subsistence
lifestyles have became virtually impossible. Governments no longer provide free
health care and education, and the prices of essential commodities have been
decontrolled; in Kenya, for example, cooking oil doubled in price when it was
decontrolled in 1992.
In this context we undertook to evaluate the appropriate technology move-
ment, in which millions of dollars had been invested with few notable successes.
In the course of drafting a detailed plan for our new venture, Nick and I came

to the conclusion that, to begin with, the appropriate technology movement placed
too great an emphasis on time- and labor-saving technologies. These are inappro-
priate for the rural poor, who typically have a surplus of both time and labor and
have a very low opportunity cost for their time. They are also unlikely to spend
much money on “money saving” devices such as fuel-efficient charcoal stoves and
solar lighting because they lack the spare cash. As a rule of thumb, unless credit can
be offered, money-saving products for the very poor should cost less than the local
price of a chicken—a luxury that even a very poor family can usually afford to eat
once a year.
We noted that in many cases the appropriate technology movement had pro-
moted to the poor, products designed to address global problems rather than ones
designed to create individual opportunities. Solar cookers are an example. For the
many years these have been promoted in Africa the arguments have always been
the same: we want to save the forests from being cut down by families collecting
firewood or making charcoal, solve global warming, and save poor women from
spending many hours collecting firewood. Instead, we want poor families to buy
an expensive new cooker that does not cook food in the way they like eating it, and
they will have to do all their cooking in the middle of the day, when the sun is shin-
ing, instead of in the evening, when they traditionally eat their biggest meal. It is
not very hard to understand why solar cookers don’t sell. (After all, even wealthy
Americans won’t spend money on fuel-efficient technologies just to save the
world.) Nonetheless millions of dollars continue to be spent on promoting solar
cookers with almost no sustainable impacts.1
We observed that the appropriate technology movement had been imbued
with a socialist philosophy in favor of community ownership and against person-
al property, money, and business. Group ownership—devoid of accountability for
those who don’t contribute and reward for those who do—fails. And when eco-
nomics is ignored people promote technologies that make no economic sense—
such as making cooking oil from peanuts when the peanuts are worth much more
as a food source than they are as cooking oil. Selling things, middlemen, and prof-
it motives were considered crass and inequitable so they were replaced by unsus-
tainable calls to help each other and give things away for the common good.
Women’s and youth groups and other NGO favorites were targeted for technology
training and dissemination. These groups are all too often externally imposed, arti-
ficially built, and not sustainable. While group formation is useful for some collec-
tive activities—such as fixing roads, or getting together to increase marketing
power or access to credit—group ownership and management of a small-scale
productive technology has generally not worked well. “Community ownership” is
an even less likely model. The mantra of “give it away” creates completely inappro-
priate incentives, leading to patronage and dependency, instead of self-sufficiency
and entrepreneurship.
The appropriate technology movement had erred in focusing on self-built
technologies, such as mud stoves. This romantic notion is misplaced. Such an
approach is highly inefficient and results in poor-quality, often worthless products.

Martin Fisher
The readers of this journal are not asked to build their own computers, cars or
watches; why, then, should we try to train poor people to design and build their
own tools? Nor can high-quality machines and tools be produced in very small-
scale, undercapitalized, under-skilled, local workshops. They must be mass-pro-
duced in medium-to large-scale production units, using well-designed production
tooling (jigs and fixtures), efficient production methods, and skilled technicians.
These production units must be highly motivated to keep the quality up and the
prices down. Hence they must be private-sector factories and they have to make a
good margin on manufacturing the new technologies. Sometimes NGO work-
shops and training schools were used to manufacture the new machines and tools
but these are not set up to do high-quality, low-cost manufacturing—and they
rarely ever did.
Finally, appropriate technology efforts followed the wrong dissemination
strategies. At first, appropriate technology ideas were spread by running expensive
training courses for people in the local communities and expecting them to man-
ufacture and use the new technologies. When this didn’t work well NGO and
donor-run appropriate technology centers were established where local people
could see the technologies and learn how to make or use them. When this failed to
produce results the movement published hundreds of books and manuals on how
to build and use appropriate technologies. Almost nobody used private-sector
manufacturing, distribution and marketing channels to produce, market, and sell
the technologies—so even if people saw the technologies at a demo center or in a
book they had no way to actually get hold of them.
The challenge as we saw it was to embrace both meanings of “appropriate”: not
only designing technologies “appropriate” to the poor, but also designing tech-
nologies that people in poor places could themselves appropriate and use to
advance their own ends.
FINDING OPPORTUNITY IN LATRINE PITS: KICKSTART’S ORIGIN
In mid-1991 Nick and I left ActionAid to establish ApproTEC (Appropriate

Technologies for Enterprise Creation), which later became KickStart. We teamed
up with ApT, a British NGO, and were awarded a matching grant from DFID (the
British Department for International Development) to establish ApproTEC as a
Kenyan non profit. We left our jobs at ActionAid and initially worked without
salaries and used our donated time as a match for the British money so that we
could start our operations. But with no other incomes we could not yet claim the
full match.
We decided to use a market-based model in which we would sell our new tech-
nologies directly to local entrepreneurs. We would identify profitable business
models that thousands of people could start; design the tools and equipment need-
ed to make these businesses possible; and most importantly, establish a private-
sector supply chain to manufacture, distribute, and sell the new tools and equip-
ment to the entrepreneurs. We would create awareness of the new business mod-

els and equipment with a mass-marketing campaign and sell them to poor entre-
preneurs, who would use them to start thousands of profitable new businesses.
Finally we would leave in place a fully profitable and sustainable supply chain that
would continue to deliver the tools and equipment even after we left town. We
quickly discovered that having a well-thought-out theory of change and business
model was one thing; establishing a successful social enterprise was quite another
challenge.
A distant crisis created an opportunity. In 1992-1993 the Somali civil war
pushed 350,000 refugees over the border into North Eastern Kenya. The United
Nations High Commission on Refugees (UNHCR) contacted us with a problem:
Sanitation had become a crisis at the refugee camps because, for cultural reasons,
the Somalis refused to use communal toilets. We developed a very low-cost pit
latrine technology that could be mass-produced by unskilled refugees so that each
refugee family would have their own latrine. These latrines had unreinforced
domed concrete slabs with tight-fitting lids, which were more sanitary and much
less costly than the commonly used reinforced concrete latrine slabs. KickStart
became a UNHCR implementing partner and secured a multi-million-dollar con-
tract to manufacture and install over 45,000 of these latrines over a two-year peri-
od. We later trained other relief agencies in the technology and today over 100,000
of our pit latrines have been installed in refugee camps and half a million refugees
have better sanitation and health. But, we had done nothing to help them escape
their poverty. So to continue working on our mission we used the 6.5% overhead
on the UNHCR contract to match our DFID grant and continue to operate
KickStart. We were now on our way.
At first we promoted the low-cost building technologies I had designed while
at ActionAid. Our main products were a block press for making strong building
blocks from soil with a small amount of cement, and a fiber concrete roofing tile
machine for making lightweight and strong roofing tiles. While these two tech-
nologies were bought by local entrepreneurs and used to establish many profitable
businesses, the machinery was fairly expensive and the businesses somewhat com-
plicated. One successful entrepreneur was Mr. Ombati, a small-scale farmer who
bought a block press in the early 1990s and started making blocks on his small plot
in Western Kenya. He expanded his business, bought three more machines,
employed over 40 workers, and today he owns a local shopping mall in Nairobi.
The right technology in the hands of an entrepreneur is a powerful force.
We next turned our attention to a manually operated oilseed press and filter
that extracts nutritious cooking oil and high-quality animal feed from locally
available sunflower seeds. The design was based on an invention by Carl
Bielenberg, an American engineer working in Tanzania. We made modifications to
make the press easier to operate, and manufacture, and increase the yields of oil.
After the Kenyan government decontrolled the price of cooking oil in 1992-3, the
price of the imported palm oil shot up and this innovation became a viable and
profitable business opportunity for local entrepreneurs. Jane Mathendu, for exam-
ple, a single mother and school teacher, bought the press with her savings and a

Martin Fisher
Irrigation for Improved Health

The link between water for irrigation and improved health may seem tenuous
at first. However, the increased incomes enable families to afford better nutri-
tion and more preventative and curative healthcare. In addition small-scale
irrigation has other, less obvious, but equally important impacts on health.
The World Bank and WHO estimate that 4 billion cases of diarrheal dis-
eases kill more than 2 million people each year, the majority of them children.
Having enough water to wash hands after using the latrine may be the single
most important intervention in improving health in developing countries.
Improved hygiene (hand washing) and sanitation (latrines) have more impact
than drinking water quality on health outcomes, specifically reductions in
diarrhea, parasitic infections, morbidity and mortality, and increases in child
growth (Esrey et al. 1991; Hutley et al. 1997). Most endemic diarrhea is not
water-borne, but transmitted from person to person by poor hygiene prac-
tices, so an increase in the quantity of water has a greater health impact than
improved water quality because it makes it possible (or at least more feasible)
for people to adopt safe hygiene behaviors (Esrey et al. 1996).
It is estimated that hand washing alone can save 1 million people a year,
but those who must carry water from a village source do not have enough to
facilitate good hygiene. And even clean water from a source in the village is
easily contaminated by unwashed hands.
Creating a new water source for hygiene alone is too expensive for a poor
farmer, but by using the water for irrigation (which makes them a lot of
money) they can afford to buy a pump and dig a well next to their house, and
this results in much more water for hygiene as well.
loan from her brother. She has now sent her two daughters to university and
bought her own plot of land. She employs three workers, sells oil to a local school
and hospital, and contracts with 20 local farmers to supply her with seeds.
While we were happy with these successes we soon realized that if we were
going to have a major impact on poverty we had to focus on new business oppor-
tunities for poor rural farmers. For them, by far the best business to start was one
that would move them from subsistence rain-fed farming to commercial irrigated
farming.
Irrigation allows farmers to grow three or four crop cycles per year instead of
the one or two possible with rain-fed agriculture. It enables them to grow high-
value crops such as fruits and vegetables and get higher yields per acre. Best of all,
with irrigation, farmers have crops in the off-season when the supply is low and
the prices are high.
Of course in order to use irrigation a farmer needs access to water on his or her
farm. Not surprisingly, throughout history people have settled most heavily in
those areas where surface and ground water is most available. So many millions of

farmers in Africa have access to water on their small plots. Unless they live next to
a pond or river they have to dig a well to reach this water, but many can simply dig
a hole in the ground and find water within the first 10 to 12 feet. Others have to
dig a bit deeper, and they can hire local well diggers who can hand dig wells as deep
as 60 or 70 feet. Even farmers who don’t have water directly on their plots can often
lease close-by land that does, or create catchments to catch rainwater.
Wealthy, large-scale farmers know about the benefits of irrigation, and in
Kenya they use fancy irrigation equipment to make as much as $3,000 profit per
season per acre. But until recently no affordable or practical technologies were
available for poor
subsistence farmers.
Petrol pumps are too
expensive, and the
[W]e have sold over 59,000 irrigation
petrol is unavailable pumps and other money-making
in the rural areas.
Electric pumps are technologies. They have been used to
cheaper, but less than establish over 40,000 profitable new
10% of the popula-
tion in Africa has businesses... [T]he new businesses
access to grid elec- generate over US$40 million per year
tricity, and solar
electricity is still far in new profits and wages.
too costly. For poor
farmers, the only
remaining option
was to tie a bucket to a rope and use it to draw water from a stream or shallow well,
the most primitive form of manual irrigation. This is backbreaking work, and two
people can only irrigate about 1/8 of an acre per day. Clearly a new technology was
required.
In 1985 American engineer Gunnar Barnes invented a treadle-operated micro-
irrigation pump in Bangladesh. Two metal cylinders are fixed above a shallow tube
well and the farmer builds a bamboo structure and attaches a piston to each of two
bamboo treadles. The operator steps back and forth between the treadles, pulling
water from the well and dumping it into an irrigation channel that distributes it to
the crops. Bangladeshis, who live on a flat flood plain and have used channel irri-
gation for generations, could now get a second harvest of rice or wheat in the dry
season. International Development Enterprises (IDE), a U.S. non profit, followed
a market-based approach to manufacture and sell treadle pumps in Bangladesh
and India, with incredible success. In less than twenty years over 2 million pumps
were sold and on average each pump has generated $100 per year in new net
income for the users.
In 1990-91 we designed a new version of the treadle pump for East Africa.
Unlike Bangladesh, Kenya is very hilly, and farmers are not familiar with channel
irrigation, or in fact any other type of irrigation. In addition, pumps cannot be

Martin Fisher
safely left in the field. So we designed a portable pump that could both pull water
from a stream or shallow well and pressurize it through a hose pipe to push it up
a hill or through a sprinkler system. However, the pump was heavy and bulky to
carry, and KickStart had not yet established an efficient supply chain for our tech-
nologies. We only sold a few hundred pumps.
In 1995 Bob Hyde, an American former marketing executive, joined KickStart
and convinced us that while we had identified the right business opportunity, we
had not yet designed the ideal technology. For cost-effective distribution and mass
marketing we needed a much smaller, lighter-weight irrigation pump. Bob also
helped us greatly improve our distribution, sales, and marketing functions. In the
following years we developed and marketed a line of low-cost manually operated
irrigation pumps. Our first pump was a small portable suction-only pump that
could pull water from a shallow well and dump it into a channel for furrow or
flood irrigation. But clearly in Kenya a pressure pump was going to sell much bet-
ter.
So we developed the “Super-MoneyMaker” irrigation pump. Its name gets
right to the point. This small, portable “stair-master-like” machine has both suc-
tion and pressure capabilities. It can pull water from a hand-dug well as deep as 25
feet—or from a pond, lake, or stream—and can pressurize it to a total height of 50
feet above the water inlet. It can push water through a hose pipe as far as 400
meters, spay it through a hand-held nozzle or sprinklers and can be used to irri-
gate as much as 2 acres of land. The pump weighs 45 pounds and is easily carried
to the farm and from one spot to another for irrigating wider areas. It retails in
Kenya for $95. It enables farmers to grow multiple harvests of high-value cash
crops such as fruits, vegetables, and flowers. The economic and social impacts of
this technology have been remarkable. The average net farm income of farmers
using this pump has increased ten-fold from US$110 per year before buying the
pump to US$1,100 per year after buying it.
The pump literally lifts farmers from poverty into the middle class. For exam-
ple, Janet Ondiek was widowed in 1999 and left completely destitute on a two-acre
plot of land in Western Kenya with her 6 young children. With no income, she was
forced to take her children out of school and beg from her relatives just to survive.
But she grew a small plot of cabbages using a bucket to draw water from the stream
running through her property. One day, while selling her cabbages in town, she saw
our pump being demonstrated in a local shop. After working six months to save
money, and taking a small loan from her sister, she bought the pump. Within the
first year, she repaid her loan, employed two young men to help her irrigate, plant-
ed a full two acres with cabbages, kales, and tomatoes, and opened a small shop to
sell her produce in the local town. She made $3,200 profit in her first year and was
able to send her kids to a private school. When we visited her a few years later she
had rented additional land and employed four young men to help her in the fields.
We have since introduced the MoneyMaker-Plus—a single-cylinder version of
the more expensive Super-MoneyMaker—that retails for $55 and can irrigate one
acre. We are test-marketing a very low-cost pump called the MoneyMaker-Hip

Lessons Learned: What Works

Many technology development and promotion projects have gotten a number of
the following lessons right. However, only those that have gotten them all right
have created significant impacts on poverty:
The number one need of the poor is a way to make money. The time of subsistence
economies is over.
To assist people anywhere you have to understand their circumstances. In our busi-
ness as in any other, we need to understand our customers’ circumstances and
what they need to change those circumstances for the better. We need to provide
them with what they need to make their own choices—a way to make money—
not what we think they should have.
There are no jobs. Developing countries have very small private sectors—and
until these countries improve their governance, the private sectors will grow only
slowly.
The solution is in the people’s drive and determination. The rise of the informal
sector shows that poor people in developing countries are willing to start their
own businesses.
People in poor places need money-making business models and technologies. With
little access to information on business models and very few affordable capital
tools, the rural poor lack the opportunity to start profitable businesses.
Technology is important for job creation and economic growth. New technologies
can open up whole new productive and value-adding industries—and growth
on this scale is what is needed to eradicate poverty.
Micro-finance is very useful but is not enough. Small loans—without sound busi-
ness models and the technologies to run them—will not by themselves end
poverty. Pairing credit with business models and capital equipment will increase
the benefits of both.
Entrepreneurs in poor places need high-quality technologies and designs. People are
investing significant money. Products must perform as promised and last a long
time.
People need to know about and be able to access the new business models and tech-
nologies. Marketing to isolated people in poor places is a large challenge—but is
just as important as creating the technologies.
Sell the technologies, don’t give them away. Those who buy tools are more likely
to use them than those who receive them for free. This is true anywhere.
Do high-quality mass production in medium-or large-sized factories. Only these
facilities can provide the economies of scale or the consistent quality needed
Establish a private-sector profit-making supply chain. This is the most efficient
way of delivering goods and services. It endures only when the work is profitable
for all.
Target individuals, not groups and communities. In general, groups don’t do a
good job of sharing and maintaining a productive asset. People in poor places
are like people anywhere else: they will take care of their own families’ needs
before they will commit themselves to efforts to better their communities.
Martin Fisher
Pump, which can irrigate up to 3/4 acre.

But our mission is not to design or sell pumps. Our mission is help people
escape poverty. What sets KickStart apart is that from the beginning we knew that
we wanted to measure the direct impacts we were having on poverty. So we creat-
ed an innovative system to carefully track and quantify the individual and aggre-
gate impacts created by our technologies. That system is described in more detail
below. The impacts have been substantial. To date, we have sold over 59,000 irri-
gation pumps and other money-making technologies. They have been used to
establish over 40,000 profitable new businesses; and currently almost 700 new
businesses are being created every month. On aggregate, the new businesses gen-
erate over US$40 million per year in new profits and wages.
Beyond the immediate income growth there are many other socio-economic
benefits. Pump owners have created over 22,000 new waged jobs and have
increased their expenditure on other farm inputs—such as seeds and fertilizers—
by as much as 2000%. Middlemen buy the produce and sell it to vendors, who
resell it at markets in the city, or to exporters, who clean, pack and label it for
export. Other pump owners grow seedlings that they sell to local farmers. Some
30% of the pumps are lent out by their owners to even poorer family members or
neighbors, who use them on their own small farms.
The new incomes enable the users to afford better nutrition, education, health
care and housing for their families, and for the first time to climb out of poverty
and plan for their futures. More than 50,000 children are either in school for the
first time or in improved schools as a result of our work. And over 5,000 pump
buyers have used their new incomes to build new or improved houses.
In addition, our pumps enable families to improve their hygiene and sanita-
tion. Because they make money by irrigating they can now afford to dig a well on
their plots of land. Thus the pump gives them not only enough water for irrigation
but also plenty of extra for increased home consumption and hygiene.
Between 1995 and 1999 our efforts were gaining traction in Kenya. We were
starting to create significant impacts on poverty while at the same time working to
continually refine both our tools and our model. By 2000 it was time to prove that
our model was replicable in a new location. We decided to start a program in
Tanzania—a country even poorer than Kenya and one with a socialist and much
less entrepreneurial history. With funds from British DFID, we established an irri-
gation pump manufacturing, wholesale, and retail network in Tanzania, and to
date we have sold more than 14,000 pumps there. In 2005 we raised funds from
USAID to start a similar program in Mali in West Africa.
We have proven that our intervention works on the individual level, with
40,000 new businesses generating over $40 million in new profits and wages each
year. We have also shown that it is highly cost-effective and can be replicated suc-
cessfully in other countries. We are now on our way to proving the long-term sus-
tainability of our model.

THE BUSINESS MODEL:
HARNESSING ENTREPRENEURIAL SPIRIT
Nick and I built KickStart based on a set of basic learned truths (see box at right),
learned from which we developed a systematic five-step model:
y identify profitable business opportunities;
y design tools and equipment to make those business opportunities possible;
y establish a profitable supply chain;
y develop the market; and
y end subsidies and leave in place a profitable private-sector supply chain.
Surrounding this model is an ongoing impact-monitoring effort that not only
measures our results against the goal of moving people out of poverty, but also
provides critical market intelligence and feedback for improving each step of the
process.
Step 1: Identify Profitable New Business Opportunities

Selecting the right business model is the most critical factor in determining the
likely success of a new business. We use sub-sector and market studies to examine
a particular sub-sector (horticulture, building materials, animal feeds, transport,
etc.), and we look at the economics of the entire value chain to identify possible
new “technology-based” business opportunities. We look for business opportuni-
ties that many thousands of people can start with initial investments of no more
than a few hundred dollars, and that are so profitable that entrepreneurs will
recover their investment in the first three to six months (“farm time”). Poor farm-
ers are used to putting their money in the ground for short periods while they wait
for the harvest, but a pay-back time of one to two years will be unacceptable.
What types of businesses can a poor person start? It is easiest to start a busi-
ness that initially sells products or services to neighbors or in the local village. So
at least initially, the new businesses must serve the needs of other poor people.
However, it turns out that there are many opportunities because the poor general-
ly pay high per-unit prices for low-quality products and services—food, farm
inputs, fuel, water, clothes, building materials, transport, lighting, cosmetics, elec-
tricity and even entertainment, education, and healthcare. Thus, the new business-
es must supply more affordable goods and services to local poor customers. As the
businesses grow and the entrepreneurs become more experienced they can expand
their market to include the local town and then can start selling to middlemen who
sell in the local city and even to export markets.
Step 2: Design Equipment

KickStart focuses solely on technologies that are directly used to create income.
Designing tools and bringing them to production is our second step.
A prejudice leads many to assume that poor people only need poorly engi-
neered products. Nothing is further from the truth. To start successful businesses

Martin Fisher
Design Criteria for KickStart Pumps

Association with a highly profitable business model. The new tool or equipment
must be associated with a highly profitable business model. To ensure this,
one has to carefully examine the local economics, and determine the required
capacity, scale and throughputs of the new technologies to assure that the new
businesses will be viable and profitable.
Affordability. The new tool must be affordable to our cash-constrained
customers. Poor farmers in Africa can rarely afford anything costing more
than a few hundred dollars, and for most of them even affording as little as
$20 or $30 is a major challenge.
Energy efficiency. Because of the lack of electricity or petrol in the rural
areas our tools are human powered, and they must be extremely energy effi-
cient to make the most of the limited power generated by a human operator.2
Ergonomic design and safety. They must also be ergonomic and safe. They
must efficiently transfer human energy into mechanical energy and be used
for long periods of time without injury. To be effective they have to make use
of the operator’s largest muscles and weight.
Ease of transport and storage. The new technologies must be portable and
easy to transport and store. They must be delivered to and stored in small
rural retail shops and be easily carried home by buyers and stored in their
small houses. They must be transportable on a minibus, the back of a bicycle,
and by hand over rough roads and trails. They must be small and lightweight
or, if need be, easy to disassemble.
Ease of installation. The technologies must be easy to install and maintain
with few tools and minimum spare parts. The poor do not own even the most
basic hand tools, so any required tools, along with spare parts, must be made
available in local shops.
they require high-quality, well-engineered and highly durable equipment with

consistent performance characteristics and interchangeable spare parts—just as
the better-off require when they buy a photocopier, car or computer. This requires
high-quality engineering and mass production.
The design criteria we set for ourselves are daunting. Designing tools that work
is the easy part. Designing tools that incorporate all of these design criteria is a sig-
nificant challenge. The vast majority of this design work is done by a small team of
engineers, designers, and technicians in our workshop in Nairobi, Kenya. They
research raw material properties and ergonomics, use CAD and stress analysis to
develop the designs, incorporate design for manufacturability from the start, and
do many hours of building and testing of prototypes to ensure the performance
and wear characteristics, cultural acceptability and durability. As a result it takes
many months to invent, design and produce each new technology.

Limitation on training required. Our equipment must also be easy to use

with minimal training. Training thousands of customers in remote locations
is very expensive so the technologies should be as intuitive and easy to use as
possible. The poor are not exposed to many new technologies and often can-
not read operation manuals, so we try to make the operation of our tools
implicit through their design.
Strength and durability. Our products must be strong. A poor farmer will
tend to push a new technology to its limits, so we design our tools so that they
won’t break even if two grown men work on them at the same time. They
must also be durable. They are used for many hours each day in the tropical
sun, mud and water. If the tools break or wear out quickly, we’ve not only lost
a customer but have put a family’s survival at risk. We typically offer a one-
year money-back guarantee and design the equipment to have a three-to four-
year lifespan, although in reality many of them last much longer. Clearly,
maintaining quality control during manufacturing is also of utmost impor-
tance.
Potential for local manufacture. We design our equipment to be (at least
initially) locally manufactured in Africa. And although we are using the
largest factories, the choices of raw material and manufacturing technologies
are extremely limited. As a result our tools are all fabricated from welded and
shaped mild-steel sections and plates, with only a few machined parts and a
few simply molded plastic or rubber components.
Cultural acceptability. Our designs must be culturally acceptable. For
example, the treadles on our pumps must be designed for bare foot operation
and must be low enough to the ground so that when women use them, they
do not display provocative hip movements at eye level.
Environmental sustainability. Finally, as much as possible using the tech-
nologies needs to be environmentally sustainable.
Step 3: Establish a Supply Chain

By far the most efficient and effective way to get products (and spare parts) to peo-
ple is to sell them through a private-sector profit-making supply chain. This is
completely sustainable because everyone in the supply chain makes money on
every sale and they are all highly motivated to make it work.
The first link in KickStart’s supply chain is manufacturing. We know that cen-
tralized mass production combined with effective distribution is the most effective
model for getting products to the market. This has been proven time and again
with products ranging from bicycles to computers, and soap to Coca-Cola. We use
this same model for our tools and equipment. They are mass-produced in medi-
um-to large-scale factories, using well-designed production tooling, efficient pro-
duction methods and well-trained technicians. Our engineers design all the tool-

Martin Fisher
ing required for high-quality mass production. This is a major challenge in Africa
because of inconsistencies in the strength and dimensions of local raw materials,
the lack of advanced production machines and the shortage of skilled labor. We
have developed new manufacturing methods to help overcome these challenges
and we out-source the manufacturing to the largest, most experienced and best-
capitalized factories that we can find. However, we still have to train the produc-
tion workers and help to supervise the quality control.
We then buy the equipment from the factory and recruit existing local private-
sector players—wholesalers/distributors and retail shops—to establish a profitable
supply chain where everyone, including KickStart, makes money on every sale. In
many cases existing supply chains have to be strengthened to handle greater cash
flows and credit. In other cases we recruit and train brand-new distributors and
retail shops to reach the villages closest to the farmers. But the good thing is that
these are local business-people, they are motivated by earning money, they are in
the community to stay and they know the local customers. At present over 350
retail shops in Kenya and Tanzania sell our products. Most of them are small-scale
agricultural-veterinary shops that presently sell small packages of seeds, fertilizer
and other farm inputs, and we have shops in every high-potential city, town and
village. Many of these shops are little more than a single room; for most of them
our products are the most expensive items they have ever sold and all of them
require significant training in the operation and marketing of our products.
Finally, since our final customers are very price sensitive, we establish a nation-
al retail price that will be as affordable as possible while ensuring that the whole-
salers’ and retailers’ margins are competitive with their other products. Because
much of our initial marketing is national in scope (radio and newspaper advertise-
ments), the fixed final retail price is an important factor to both us and our cus-
tomers.
Step 4: Develop the Market

We want to get as many people out of poverty as possible so our technologies need
to be as well known and easily available in Africa as are sewing machines and bicy-
cles—everyone knows about them, what they can do and where they can be
bought. While we know our tools can enable people to make a lot of money, they
do not sell themselves, and have no impact if not used. Thus, developing our mar-
ket is by far the most important challenge and this is where KickStart spends the
vast majority of its resources.
We are selling “big ticket” items to extremely risk-averse buyers who buy very
few capital goods, have very little cash and very limited access to information and
marketing channels. This is not an easy sell.
If a poor person spends a large percentage of their annual income on a new
tool and it fails to make them money, they will go hungry for many months. In
addition, when they see these products for the first time they often have no idea
what they are. They sometimes ask what magic is being used to move the water

through a sprinkler or extract cooking oil from sunflower seeds. These are com-
pletely new and foreign technologies—as when people saw the first motor car in
the 1800s. And, just as with buying a car, our customers not only need to see the
new machine in operation, but they also need to “test drive” it themselves. We need
to make this test drive possible and convince them the tools will indeed help them
to escape poverty.
These rural customers are very hard to reach. They live miles from the closest
village and very often miles from the nearest road. They only rarely come to town,
only see a radio or newspaper when a wealthier neighbor or relative facilitates it,
have very limited means of transport and are often less than fully literate.
Word-of-mouth, or “viral marketing,” would seem to be a great technique to
reach our target market, but there are cultural barriers that prevent it from taking
off. East Africans are modest people who are unlikely to boast about their success-
es and this tendency is magnified because in very poor communities people who
succeed are more often envied than admired. In addition, it is common for the
best-off member of a family to assume the financial responsibility for the whole
extended family. People who find financial success often find nieces, nephews, and
widowed in-laws on their doorsteps. So, advertising one’s success is not as com-
mon as a marketer would hope.
We modify standard marketing and sales strategies to adapt to these circum-
stances. We work to build a strong brand—“MoneyMaker”—which speaks to a
poor person’s number one need, and we offer a product guarantee. Our most
important strategy is live demonstrations, but we use radio and newspaper adver-
tisements, billboards, competitions, promotions, and a commissioned sales force
to pull in the customers to see the demonstrations. We also target wealthier rela-
tives in the cities who travel to their rural homes a few times a year and carry news
from the city.
The message is always the same—the buyers can make a lot of money and
escape poverty if they go to their local shop, buy our equipment, and use it to start
a new business. One very important thing is consistency—risk-averse customers
will not buy products from here-today-gone-tomorrow salesmen. And since
demonstrations are so critical, and labor is so plentiful, we use labor-intensive
marketing methods, as they did in the early 1900s in the U.S. and Europe. Sales
agents demonstrate the equipment in front of the retail shops and in the rural
areas from the back of trucks and bicycles. Going forward we will need to convince
even poorer farmers to buy, and to do this we will need to lower both the actual
and the perceived risks even further. This means finding new ways to promote
word-of-mouth sales that get around the cultural barriers. These will include
strategies such as training local pump experts to train others, rewarding people
who recruit new customers, bundling advice and other farm inputs with the
pumps on a service basis, and introducing a financing mechanism. Clearly, market
development for selling new “big ticket” (from the standpoint of rural budgets)
items to the rural poor in Africa is a very challenging and expensive activity.

Martin Fisher
Step 5: End Marketing Subsidies
KickStart uses donor funds to finance the initial market development for the new
tools and equipment. When the sales reach a “tipping point” we will cease the mar-
keting subsidies, and leave in place a fully profitable and sustainable supply chain
that will continue to deliver the new technologies to poor entrepreneurs for many
years to come.
When a new product is first introduced into any new market anywhere in the
world, sales are few and the promotion costs required to make each sale are very
high—so money is lost on every sale. The more radically new the product is, the
more expensive it is to make these early sales. However, with successful products,
the sales eventually take off, the marketing costs per sale drop drastically, and sales
continue to increase without any further marketing subsidy. The introduction of
our pumps to poor farmers in Africa is no different. We initially spend a lot to
develop the market, but eventually we will reach a “tipping point” and KickStart
will start to make a profit on each sale.
Think, for example, of telephones, color TVs, personal computers, the internet,
cell phones, and on-line retail sales. Each of these required many years and many
millions of dollars of investments before reaching their tipping points. To reach
this tipping point requires spending both time and money on market develop-
ment. It is no doubt possible to accelerate this process by investing more in mar-
keting, but a new technology that requires a major cultural shift or expensive new
investments will still take a significant period of time to catch on. In this case, time
cannot be simply replaced with money.
Based on the history of the introduction of new products in Africa and else-
where, we estimate that a tipping point will be reached when sales of a new money-
making technology for the poor reach 15% to 20% of the total market potential in
that particular country.3 In Kenya we have the experience of the Kenya Ceramic
Jiko. This is a fuel-efficient charcoal stove that saves the users money because it
uses 40% less charcoal than the common all-metal stove. It was developed and
heavily promoted using donor funds in Kenya throughout much of the 1980s and
1990s and sales grew slowly. And then suddenly, when it reached 18%-20% of the
market potential, sales took off. Today with no more donor funds it accounts for
over 65% of all charcoal stove sales in Kenya.4 This tipping point behavior and
“hockey stick”—shape sales curves for new technologies are common throughout
history.
We predict that it will take between 6 and 15 years after the introduction of a
new KickStart technology to reach the tipping point. The exact period will depend
on the technology, the country, and the amount of money spent on market devel-
opment.
KickStart uses donor funds as smart subsidies to finance the initial technology
and market development for each new technology. However, once a tipping point
is reached in a given market we will start to make a profit on every sale. We will
then reinvest these profits (along with more donor funds) to develop new tech-

Cell phones: The Exception that Proves the Rule

There are millions of cell phones in developing countries around the world
including in Somalia—a country with very few donors and no operating govern-
ment. Why have private sector companies been able to market cell phones to
both the wealthy and the poor without the need for subsidies? Cell phones have
a number of rare properties that make them excellent technologies for the poor
in developing countries.
First, in developing countries cell phones are money-making and money-saving
devices. Phone calls save people a lot of money—often the only alternative is a
long and expensive bus ride. In addition, phone calls greatly increase the level of
family remittances back to rural areas—so even the very poor are willing to pay
for calls. Thus every cell phone is a potential pay phone as local neighbors will
pay to make calls.
Second, unlike with manual water pumps, wealthy and middle class early
adopters are willing to pay a high price for the convenience of a cell phone. Their
only alternative is to wait for many years to get connected to an unreliable and
poor-quality landline. These high prices help companies recover the costs of the
initial infrastructure and market development, and later enable them to lower
the prices so that poorer customers can afford the phones.
Finally, cell phones are unique because they have a built-in credit facility. Most
money is made not from selling the phones themselves—which can almost be
given away—but from selling the minutes, which are sold in very small and
affordable units.
Very few other money-making technologies for the poor share these charac-
teristics; instead, like our irrigation pumps, they require initial smart subsidies
to overcome the market failures.
nologies and enter new markets so that we can further our mission of getting mil-
lions of people out of poverty.
MEASURING IMPACTS AND COST EFFECTIVENESS
Defining and measuring impacts and cost-effectiveness should be a critical activi-

ty for any social enterprise. If you are not having any impacts, or are spending
more to create them than they are worth, then you may as well go home. But
unfortunately good impact-monitoring is still rare.
Much of impact monitoring is about collecting “market information.” Any
company that sells a product needs to understand how their customers use the
product, and how it can improve the product and the way that it is selling it. So, all
good companies collect some type of market information. The additional infor-
mation that social enterprises need to collect is the answer to the question “Are we
meeting our social mission?” In KickStart’s case, the mission is to get poor people

Martin Fisher
out of poverty, so our most important indicator is how much more money the
people who buy our technologies make. We can then look both at the cost-effec-
tiveness of our program and at other indicators such as: How much labor do they
employ? What do they grow? Do they send their kids to school? Build new hous-
es? Improve their diets and health?
KickStart has developed a systematic, replicable method to measure our
impacts. Every product comes with a guarantee; every buyer (with the help of the
shop keeper) fills out the guarantee form when they buy the product at the retail
shop. These guarantees act as a marketing tool by reducing the perceived risk of
buying the product, and they give KickStart a database of all the buyers.
From this database, we develop a randomized, statistically valid sample of
recent purchasers. The sample represents 50 to 60 customers per year who com-
prise one cohort. To date we have monitored six different cohorts of pump farm-
ers in Kenya and Tanzania as well as users of our oilseed press in Kenya. These cus-
tomers are visited within a month of purchasing the products, before any impacts
have been realized, then visited again eighteen months later and a few of them
again after 3 years. The first visit creates a benchmark at zero impact, and the sub-
sequent visits measure impact.
Data collected during these visits include the status of all farm activities from
the previous year, crops grown, area under cultivation, production costs, income
generated, number of employees, wages paid to employees, who performs what
tasks (family, paid workers, men or women), other sources of income, number of
dependents and number of children in school, physical assets owned, any prob-
lems with the technologies, and the effectiveness of our marketing methods. Based
on these data we calculate the change in income and other social and economic
indicators that result from using the new technologies. In addition, we prepare
detailed case studies, deepening our understanding of the farmers and their new
businesses.
The monitoring team employs culturally appropriate methods, and uses mul-
tiple questions and observations of the individuals, household, and business to
cross-check and evaluate socio-economic conditions. For example, one person will
ask how much land is being irrigated and how many cabbages were sold from that
area. The other, who knows how many cabbages can be grown per acre, paces off
the area. Each team consists of one man and one woman to ensure that interac-
tions with owners and their families are comfortable and appropriate.
By collecting this data we can determine if we are having real impacts on
poverty and how effective our interventions are. Again, our mission is to move
people out of poverty, so measuring increases in net incomes is our primary con-
cern.
As a social enterprise, we also monitor our cost-effectiveness. Our donors are
investing their money and their trust in KickStart and we are very serious about
maximizing the return on their investment. Here we consider two numbers. The
first is an absolute number—how much in donor funds we spend to take a family
out of poverty. The second is a ratio, the Bang-for-the-Buck (BfB) —the sum of

the new net incomes made by the entrepreneurs, and the new wages earned by
their employees during the first 3½ years of using our technology, divided by the
donor funds that we spend to enable them to do this. We pick 3½ years because
although we know the buyers will continue to make new incomes for many more
years (by reinvesting in new equipment) this is the approximate design life of our
technologies. Between them, these two figures give us a useful way to gauge the
cost-effectiveness of our program and a way to compare it to other programs with
similar goals.
To date every donor dollar that we have spent on developing and promoting
our irrigation pumps has resulted in $17 in new profits and wages being generat-
ed by the new farming businesses in their first 3½ years of operation. This is a 17/1
“Bang for the Donor’s Buck.” At present, it costs KickStart $250 in new donor
funds to take a family out of poverty forever, or roughly $40 to $50 per person.
This is an average cost across all of our pump marketing programs including Mali,
where we have been selling pumps for only a few months. The pump marketing
costs in Kenya and Tanzania are coming down every year and are presently less
than $160 per pump.
THE LIMITS OF THE MARKET: WHY KICKSTART IS A NON PROFIT
The KickStart model is based on the power of the market: we use private sector
supply chains to help poor farmers acquire technologies that allow them to begin
highly profitable businesses and escape poverty. Yet KickStart is itself a nonprofit.
At present we spend $250 of donor funds for each family lifted from poverty
through the use of a $95 pump, and we recover only 20% of our costs from earned
income. Why? The reason is that it is not profitable for a private company to devel-
op and mass-market new low-cost money-making technologies to poor rural
farmers in Africa. Simply put, KickStart uses the market because we know that this
is the most cost-effective and sustainable solution, but we are a nonprofit because
we need to spend donor funds to overcome a classic market failure. To understand
this we need to take a closer look at this failure.
The generic challenges of doing business in the world’s poorest countries are
obvious—high political, security, and currency risks and poorly developed roads,
electrical grids, ports, and legal structures. But there are many profitable business-
es in Africa, and considerable potential for starting more. So clearly all these chal-
lenges can be overcome. What is so different about our market sector?
The critical difference is the very high marketing costs required to sell new “big
ticket” items—such as a treadle pump—to the poorest and most risk-adverse cus-
tomers in the world. They are unfamiliar with new technologies, undereducated
and rightfully fearful of making a mistake. In rural Kenya, as in many other places
in Africa, infrastructures for distribution, information provision, credit, and mar-
keting are all highly undeveloped.
The trajectory of adoption for capital goods sold to the rural poor creates an
additional challenge to self-sufficiency in our market. Usually when a new product

Martin Fisher
is introduced in a new market, the early adopters pay a much higher price than
those who buy it later. This initial high price helps the company to recover the ini-
tial technology development and market development costs and then prices can be
lowered to reach less-well-off customers. The first handheld calculator cost hun-
dreds of dollars and all it did was add, subtract, multiply and divide. Likewise, early
cell phones were so expensive that only the very wealthy bought them. Today prices
have come down and these items are affordable to anyone.
However, when products are designed specifically to address the needs of the
rural poor, the early adopters are also poor and they can not afford to pay higher
prices. The wealthy don’t need manually operated irrigation pumps, and if the
margins are too high the poor cannot afford them. So the initial development costs
cannot be recovered by high-priced early sales. In short, there is no “cream” to skim
off the top of this market.
An equally significant challenge is that, although new money-making products
for the poor are not easy to design, they are generally simple to copy. No one will
copy them in the beginning—because the marketing costs are too high—but once
the tipping point has been reached and they become profitable to sell, they will be
widely copied. This is a particular challenge in a developing country. Patent laws
are difficult to enforce and the poor are driven more by low prices than by quality
or brand loyalty. Thus it is difficult to maintain market share and difficult to recov-
er the market development costs through high-volume sales.
Financing of growth via market mechanisms is another challenge. In the devel-
oped world, the market development of brand-new products is most often
financed either by debt or by equity investments. In East Africa equity capital is
scarce—new business ventures typically face high risks and do not have easy exit
strategies. For those who do want to invest in business development, there are
more attractive business opportunities than trying to sell new big-ticket capital
products to the rural poor. These include new products and services targeted to the
middle class and wealthy, and consumer products (soap, cooking oil, beer, soda,
etc.) marketed to the poor. And of course there are even more profitable opportu-
nities investing in real estate, extraction industries or large-scale or contract farm-
ing.
Such is the nature of the market failure, and for all these reasons private sector
companies rarely attempt to introduce new big-ticket items for poor people in
Africa. Unless someone else is willing to pay for the initial market development
costs, the cost-of-sales are simply too high compared to the possible returns and it
is very unlikely to be a profitable venture—though one whose positive economic
impacts far exceed its expenses.
KICKSTART’S NEW CHALLENGES
KickStart has received international recognition and has earned the support of
large companies and major foundations.5 With this support, KickStart has grown.
We currently have offices in Kenya (our African headquarters), Tanzania, Mali, and
the U.S., and employ over 200 people. Our staff includes a small team of engineers,
Income is Development
designers, and technicians based in Kenya; management, impact monitoring, and
more than 125 marketing and sales staff in Africa; and five employees in the US.
Our African headquarters manages African-country sales and marketing, tech-
nology development, and all African-based administration, monitoring and
impact assessment, and fundraising. The U.S. office was established as a 501(c)3
nonprofit in late 2001 to handle overall management, financial control, strategic
planning, and fundraising. Our country offices in Kenya, Tanzania, and Mali are
primarily responsible for sales and marketing, essentially franchising our success-
ful products and marketing practices. They establish the retail and wholesale net-
works in their respective countries, and put in place cost-effective marketing activ-
ities to support and increase sales.
In the next three years we plan to expand into as many as four new African
countries, including Ghana whose government has taken note of our impact on
the GDP of Kenya and Tanzania. We are also implementing a business-to-business
model of sales to other NGOs to expand our impacts to the rest of the developing
world.
Carrying out these plans will require two business decisions. First, we plan to
focus on irrigation pumps, which already represent over 95% of our sales and
impacts. We believe the worldwide market potential for these pumps is as high as
35 to 40 million pumps, which would translate into a major contribution to reduc-
ing poverty in the developing world. Second, we plan to centralize mass produc-
tion and establish a global supply chain for the pumps. Rather than manufacture
pumps in every country, we will produce our best-selling pumps in the lowest-cost
location. We have recently ordered our first batch of Super-MoneyMaker pumps
from China, and we can import them into any African country at a lower cost than
we can produce them locally. Manufacturing in China will also allow us to serve
new markets. Lower prices and higher quality will benefit our tens of thousands of
customers, and global supply means we can sell to other organizations to increase
our impacts and generate income.
In addition, we will develop new technologies. We are market-testing our very-
low-cost “hip-pump,” which retails for $33, and are developing a low-cost deep-
well pump, low-cost well drilling, water harvesting and storage technologies, and
low-cost transport technologies.
KickStart is in the process of developing a financing model for our irrigation
pumps. For poor farmers the initial $120 investment for a pump, hose pipe, and
seeds is difficult to borrow or save—but since the pumps provide a very high
return on investment to the buyer they are an ideal product for a financing mech-
anism. Our goals are to increase sales by lowering the barrier to entry, move us
more quickly to the tipping point, and help KickStart recover more of the market-
ing costs.
To succeed we must examine lessons learned from past technology-specific
financing programs and other micro-financing efforts around the world. Past
efforts to give technology specific loans to the very poor have often failed because
they encouraged people to borrow money for things they don’t want or need—as

Martin Fisher
this is their only option for credit—and so led to many business failures. Micro-
finance programs partially solve this problem, and they have worked well in urban
and peri-urban areas in Africa. However, very few micro-finance programs have
found cost-effective ways to reach the poorest, hardest to reach, and most risk-
averse customers in the world—those in rural Africa.
KickStart will most likely develop its own model for pump financing. We plan
to rapidly roll out our marketing and retail networks, and we need a financing
method that can be rolled out just as quickly. It will likely be based in our retail
shops and may use entrepreneurial agents on bicycles to reach the farmers. It will
require very good vetting of the borrowers, and will have to get all the incentives
right for the loan agents and the borrowers. Among many ideas, we will explore
bundling the pumps with products and services such as fertilizer, seeds, and farm-
ing and marketing advice to increase the chances of the farmers’ success and loan
repayments. It will be a major challenge to develop an effective financing program;
however, we are confident that with enough determination and advice from oth-
ers, we can make it work.
CONCLUSION
ENDING POVERTY IS THE GOAL, CREATING INCOME IS THE MEANS
In poor places just as in rich ones, developing and marketing new technologies is
often too expensive for the private sector to do alone. In these cases governments
provide major subsidies to help overcome the market failures. In fact, every major
new technology from automobiles, to telephones, computers, the internet, solar
panels and biotechnology have received significant government subsidies, and they
continue to receive them today. For example, the sale of hybrid cars in the U.S. has
been greatly boosted by the government giving every buyer a tax credit of as much
as $3,400. It is well demonstrated that smart subsidies for new technology and
market development can help to fuel economic growth. However, the governments
of the poorest developing countries are too cash constrained to provide such sub-
sidies.
In the absence of the subsidies typically found in industrialized economies,
KickStart—whose mission is to get people out of poverty—uses donor funds as
smart subsidies to take over this role. We use them to subsidize the costs of devel-
oping the market for new moneymaking technologies. But once a tipping point is
reached and our products are as commonly known and easily available as sewing
machines or bicycles no further market subsidies will be required. Other compa-
nies will enter the market and compete with us on price, brand, quality, and distri-
bution. Many more money-making products will be sold at zero additional costs
to the donors, and more people will use them to escape from poverty.
However, reaching the tipping point will not happen quickly. The internet
required trillions of dollars of government funding and equity investments (and
losses) over a 15-year period before it created a few dozen profitable new business
models. It took Amazon.com ten years and over $3 billion dollars in investments

Income is Development
before it made its first profitable sale—and this was to sell books to the wealthiest
customers in the world. Similarly, over a 30-year period, hundreds of millions of
donor dollars have been spent on the market development of micro-finance, yet
today only a small percentage of micro-finance institutions have become prof-
itable. It will be years longer before either the internet or micro-finance industries
recover in profits the total money invested in creating them. But these early invest-
ments opened up completely new ways to do business and they are already creat-
ing millions of new jobs and many billions of dollars of new revenues and
wealth—so the total economic impacts greatly exceed the initial investments.
Despite over a trillion dollars in development aid, poverty in Africa has gotten
worse. Over the past four decades the number of people in sub-Saharan Africa liv-
ing on less than a dollar a day has more than doubled and life for the average per-
son has become much more difficult. At the same time, in many places the rural
poor have been catapulted into a cash-based economy; as subsidies have vanished,
they must now fund their own access to housing, food, and education. Most inter-
national development efforts focus on alleviating the adverse consequences of
poverty rather than developing the means to escape poverty: technologies and
business models that increase incomes for the rural poor. I have lived and worked
in Africa for the past 20 years and I remain optimistic that there is a solution. But,
to get there we need to move beyond the failed practices that have guided efforts
to address the poverty challenge for the past four decades and take a very different
approach.
1. See for example comments by Mark Hankins, Energy Alternatives Africa, “Southern realities and
top-down marketing of the solar cooker.”
2. Humans can only generate about 80 watts of power over a sustained period of time. Our oilseed
press, for example, is almost an order of magnitude more energy-efficient than the best motor-pow-
ered oil expellers.
3. E. Rogers, Diffusion of Innovations, (New York: Free Press, 2003). Rogers describes a “critical mass”
or “tipping point” as the point where enough users have adopted an innovation so that the further
rate of adoption becomes self-sustaining, and shows examples where for innovations from cell
phones to hybrid seed corn this point occurs at around 15%-20% of the local market potential. This
market potential has also been discussed in numerous other publications (Wired, etc.)
4. See studies by Mark Hankins and/or Hugh Allen, including M. Hankins, Renewable Energy in
Kenya, (Nairobi, KenyaMotif Creative Arts Ltd., 1987), and M. Hankins, The Kenya Ceramic Jiko: A
manual for stove makers, (Stylus Publishing, 1992),
5. ApproTEC/KickStart have received recognition from the Tech Awards, the Schwab Foundation for
Social Entrepreneurs and the Fast Company and Monitor Group Social Capitalist Award; financial
support from the Skoll Foundation and the Lemelson Foundation; and corporate support from
John Deere and SC Johnson.

Paul Polak
A Practical Path to
Increased Income
Innovations Case Discussion: KickStart
As the founder of International Development Enterprise (IDE), the organization

that started popularizing treadle pumps in Bangladesh twenty-five years ago, I am
delighted to have a chance to comment on Martin Fischer’s paper. I would like to
focus on three things.
I very much agree with Martin that increasing income is the single most
important first step out of poverty for the 1.1 billion people who survive on less
than a dollar a day.
I applaud KickStart’s success in helping thousands of very poor farmers in
Kenya and Tanzania move out of poverty by increasing their income with trea-
dle pumps purchased from private sector supply chains. This provides a much
needed model of success for sub-Saharan Africa.
I would like to examine the remarkable global impacts that more than two
million treadle pumps have made in the hands of dollar-a-day poor rural peo-
ple, and explore what we can be learned from this experience that we can apply
more broadly to poverty eradication initiatives.
The most important point Martin Fischer makes is that “if you ask a per-
son in a poor place what they need most, they will tell you that it is a way to
make more money.” I couldn’t agree more. Over the past twenty-five years, I
have had long conversations with more than three thousand farmers who earn
less than a dollar a day, and walked with them through their fields. When I ask
them what they need most to move out of poverty, virtually all of them say that
the most important thing they need is to find ways to significantly increase
their income.
Martin describes his disappointment when he surveyed the appropriate
technology movement in Kenya in 1985, and had to conclude that the move-
Paul Polak is President and Founder of International Development Enterprises

(IDE).
This discussion originally appeared as a letter in volume 1, number 3 of
Innovations.
© 2006 Paul Polak
A Practical Path to Increased Income
ment was essentially dead. Twenty years ago, I talked to a bright young man
who was part of a team of people developing a tool carrier for farmers in Africa.
He was convinced this new technology would be a major breakthrough,
because it would carry out all of the functions of plows, cultivators, seeders,
harrows, and carts, all with one basic tool. I had already talked to a lot of small
farmers by then, so I asked him a simple question: “How much will it cost?”
He scratched his head, and said he thought that was an interesting question.
He said he would make some calculations and get back to me. Right then I
knew that the tool carrier would never work. If you think like a tinkerer solv-
ing a technical problem, you will likely be able to come up with a technical
solution. But if you don’t design it for poor people as customers, it will likely
never be adopted. The first step in design for the poor is identifying the critical
affordability price point at which poor people become willing to vote with their
feet to buy it. To me, that was the tragedy of the appropriate technology move-
ment. E. F. Schumacher’s book Small is Beautiful inspired thousands of gifted
people around the world. The tragedy is that the appropriate technology move-
ment it inspired was implemented by technical tinkerers rather than hard-
headed entrepreneurs who design for the marketplace.
If you think of the poor as recipients of charity instead of as customers, you
invariably design goods and services that are too expensive to be affordable for
them as customers. Effective tools have to be customer driven and market driv-
en if they are to have any hope of being brought to scale. The key reason that
treadle pumps have had such a remarkably positive impact on poverty in many
countries is that their design was shaped and hardened by disciplined customer
feedback, and their marketing and distribution by the private sector around the
world was shaped by the poor customers who voted with their feet to buy them.
I applaud the success that Martin Fisher, Nick Moon, and KickStart have
had in helping more than 65,000 very poor families in Kenya and Tanzania
move increase their income by purchasing and installing treadle pumps, as well
as increasing the income of enterprises making, distributing and installing
them. Kickstart accomplished this by adapting the treadle pump technology
widely disseminated by IDE in Asia to the specific conditions of Kenya, and
establishing effective local private sector distribution and marketing systems.
As has now been thoroughly demonstrated in many developing countries, the
income-enhancing impact of treadle pumps comes not from the technology
alone. Rather, treadle pumps are effective because small farmers need afford-
able water control for their crops in order to switch from subsistence crops to
labor-intensive high value crops, like fruits and vegetables that they grow for
the market.
The impressive leverage KickStart obtained by using treadle pumps to stim-
ulate increased smallholder income through growing and selling cash crops
mirrors IDE’s earlier experience in Asia. Here is an example of the leverage

Paul Polak
Table 2. Global Treadle Pump Sales

*IDE's TP project ended in Bangladesh in 2003 and in India in 2004, but private
sector sales in these countries continue
**Numbers compiled from EnterpriseWorks' website (www.enterpriseworks.org)
*** Personal communication, Ministry of Agriculture of Malawi, 2005. Another
80,000 pumps on on order.
obtained from donor investments in IDE’s treadle pump program in

Bangladesh, which began in the mid-1980s.
Here is a brief overview of the remarkable global impact that the treadle
pumps, a single affordable irrigation technology, has had on the lives of poor
people worldwide. Since Gunnar Barnes and his colleagues at the Rangpur
Dinajpur Rural Service (RDRS), supported by Lutheran World Service, intro-
duced treadle pumps in Bangladesh in the late 1970s, and IDE launched its
global marketing and dissemination initiative in the 1980s, some 2.2 million
poor rural families in developing countries have purchased and installed trea-

dle pumps. The impact of these treadle pumps on the net annual income of
smallholders exceeds US$220 million a year, not counting the increased income
of private sector supply chain enterprises making, selling, and drilling wells for
treadle pumps.
Because profitable private sector supply chains are designed to be the
instruments for putting the technology in the hands of small farmers, they con-
tinue doing so after formal project funding is terminated. The private sector
continues to sell and install 55,000 treadle pumps a year in Bangladesh and
India after IDE’s and development donors support for the program terminat-
ed. The multiplier impact on the economies of developing countries is already
in the range of $1 billion a year or more. All this is from one single affordable
water lifting technology customized for small farms!
Why has this single affordable small plot irrigation technology been so suc-
cessful? Over the past 15 years, many people have told me that IDE was very
lucky to have stumbled on the treadle pump. They said that this is a unique
technology, and we will never find another one like it.
I totally disagree. I believe that the biggest impact of treadle pumps is not
the increase in income for the 5 to 10 million families in the world who are like-
ly to install one. Instead, it lies in what we can learn from the treadle pump
experience that is applicable to ending the poverty of the 800 million people
who survive on less than a dollar a day, and earn their living from tiny farms.
A fact that has never been effectively incorporated into development theo-
ry and practice is the remarkably small size of the farms where most of the fam-
ilies who earn less than a dollar a day make their living. Farms under two
hectares represent 98 percent of the farms in China, 80 percent in India, 96 per-
cent in Bangladesh, 88 percent in Indonesia, 95 percent in Vietnam, 87 percent
in Ethiopia, 74 percent in Nigeria, 75 percent in Tanzania, 90 percent in Egypt,
98 percent in Russia, and 99 percent in the Ukraine (Nagayets 2005).
More importantly, average farm sizes in developing countries have been
rapidly shrinking. Average farm size in China went from 0.6 ha in 1980 to 0.4
ha in 1990; in India from 2.3 ha to 1.4 ha between 1971 and 1995; and in
Ethiopia from 1.4 to 1.0 ha between 1977 and 2000 (Nagayets 2005). This is
average farm size. The size of farms where dollar-a-day people earn their living
is much smaller—closer to one acre divided into scattered quarter-acre plots.
If increasing the income of poor people is the first step out of poverty, then
the obvious place to start is to increase the income the 800 million or so peo-
ple who now earn less than a dollar a day from one-acre farms. While most
small farmers put a high priority on growing enough food to keep their fami-
lies from being hungry, the notion that they should grow surplus rice, wheat,
and corn for the market suggests that they should compete in the global mar-
ketplace with Western wheat farmers who farm 3,000 acres with combines and
generous government subsidies. This is clearly untenable.

Paul Polak
To take the first step out of poverty, one-acre farmers need to play to their
strength in the global marketplace, and that is the lowest labor rates in the
world. Their path to increased income is to grow marketplace-driven, high-
value, labor-intensive cash crops. This requires two things:
y Access to a whole new range of affordable small plot irrigation devices,
delivered by private sector supply chains.
y Access to markets for diversified high value cash crops, delivered by pri-
vate sector value chains.
The treadle pump is only the first of a whole new range of affordable water
lifting, water storage, and water distribution technologies that need to be devel-
oped to fit the income generating needs of small farmers. For the past ten years,
IDE and others have worked to developed affordable small plot irrigation sys-
tems. Some 200,000 have already been purchased, and I believe there is a glob-
al market for at least 20 million of them. Other affordable small plot water
technologies likely to have very large global demand include affordable sprin-
kler systems, enclosed water storage units, efficient surface delivery systems,
and micro-diesel pumps. The most important thing that we can learn from the
treadle pump experience is how to design affordable, customer driven small
plot irrigation technologies, and how to deliver them in large numbers to small
farm customers through private sector supply chains.
During the late 1980s, when farmers who had installed treadle pumps in
Bangladesh did so well, everybody at IDE believed that all a small farmer need-
ed to move out of poverty was to buy and install a treadle pump. At the height
of the integrated rural development movement I even wrote a paper called
“Segregated Rural Development,” which touted treadle pumps as the answer to
rural poverty. Later on, we found we could apply our intensive rural marketing
techniques to convince small farmers in the hills of Nepal to invest in low cost
drip-irrigation systems. But the farmers ended up not using them much, and
sales went down.
These were maize and millet farmers who had never grown vegetables, and
we had to implement a crash course in intensive horticulture to train them to
switch effectively from growing grain crops to producing off-season cucumbers
and cauliflower for the Kathmandu market. This made them a lot of money,
and sales of low cost drip systems took off. But farmers further away from the
road needed help to link up with traders who would buy their vegetables. This
made it clear to us that the process of generating new income for poor farmers
must start with an evaluation of the markets where they could sell what they
grow, and a recommended list of four or five high-value crops that farmers
could likely grow in their area, and sell in the markets they had access to.
I believe that 500 million of the 800 million dollar-a-day people in the
world who earn their living from farming could move out of poverty by switch-
ing to high-value, labor intensive crops, gaining access to the markets where

they can sell them through private sector value chains, and gaining access to the
affordable irrigation tools, seeds, fertilizer, and credit they need to grow them
through private sector supply chains. This is a far cry from a singular focus on
treadle pumps, but it is the remarkable global success of treadle pumps that has
opened the door to learning about the practical path to increased income for
millions of impoverished rural people.
References
Chapin, R., 1998. “Bucket Kits for Vegetable Gardens.” Chapin Watermatics.
Heierli, U. with Polak, P., 2003. “Poverty Alleviation as a Business.” Swiss Agency for Development
and Development.
Islam, A.S.M. and Barnes, G., 1991. The Treadle pump: Manual Irrigation for Small Farmers in
Bangladesh. Rangpur Dinajpur Rural Service.
Keller, J. et al., 2005. “New Low Cost Irrigation Technologies for Small Farms,” Proceedings of the
International Commission of Irrigation and Drainage (ICID). 19th International Congress on
Irrigation and Drainage. Beijing, September 10-18, Beijing, China.
Nanes, R, Calavito, L and Polak, P., 2003. Report of Feasibility Mission for Smallholder Irrigation in
Bangladesh. International Development Enterprises.
Nagayets, O., 2005. “Small Farms: Current Status and Key Trends,” background paper for the Future
of Small Farms Research Workshop, Wye College, June 26-29 <http://www.ifpri.org/events/sem-
inars/2005/smallfarms/sfbgpaper.pdf>.
Perry, E. and Dotson, B., 1996. “The Treadle Pump—An Irrigation Technology Adapted to the Needs
of Small Farmers,” GRID 8 (March 1996): 6-7.
Polak, P.,2005. “Water and the Other Three Revolutions Needed to End World Poverty,” Water
Science and Technology 51(8):133-143.
Postel, S. et al., 2001. “Drip Irrigation for Small Farmers: A New Initiative to Alleviate Hunger and
Poverty.” Water International 26(1).
Shah. T. et al., 2000. “Pedaling Out of Poverty: Social Impact of a Manual Irrigation Technology in
South Asia.” International Water Management Institute Research Report 45.

From Idea to Impact

Funding Invention for Sustainability
A growing number of non profit and for-profit organizations are implementing a

new approach to international development jointly emphasizing entrepreneurship
and technology. Instead of awarding large grants and loans to national govern-
ments, these institutions are emphasizing smaller awards and contracts made to
entrepreneurs who invent new technologies or adapt existing technologies to meet
the needs of people in the world’s poorest places. Some of these technologies allow
people previously making less than $2/day to undertake new income-generating
activities; others help people meet basic needs. Many do both.
The Lemelson Foundation, created by Jerome Lemelson, one of the U.S.’ most
prolific inventors, is among the philanthropic organizations taking this approach.
Lemelson programs are built on the premise that invention drives prosperity.1 In
this article I describe the Foundation’s international funding strategy, the lessons it
has learned through non profit and for-profit partners, and its efforts to join oth-
ers in advancing an entrepreneurial approach to international development.
One of the Foundation’s earliest international partners was Kenya-based
KickStart (see article by Martin Fisher in this issue). The Foundation funded two
KickStart projects. In 2003, KickStart used a $90,000 Lemelson grant to design and
test-market two new low-cost well-drilling technologies for farmers in Africa.
These new technologies would enable farmers living in regions without surface
water to manually drill small diameter tube-wells up to 70 feet deep . No such tech-
Julia Novy-Hildesley is Executive Director of The Lemelson Foundation, a private

family philanthropy founded by one of the most prolific inventors in U.S. history,
Jerome Lemelson, and his family (See <www.lemelson.org>). Julia conducted research
as a Fulbright Scholar in Madagascar, earned a Master's of Philosophy degree in
International Development from Sussex University funded by a Marshall Scholarship,
and graduated Phi Beta Kappa from Stanford University with a Bachelor's degree in
Human Biology and a minor in African Studies. She serves on the Board of Advisors
to the World Affairs Council of Oregon, the Board of Directors of Grantmaker's of
Oregon and SW Washington, is a Fellow of the Donella Meadows Leadership
Program.
This case discussion originally appeared in the inaugural issue of Innovations.
© 2006 Tagore LLC

From Idea to Impact
nologies were available in East Africa. The first technology was designed to drill
through soft soils, while the second was designed for drilling through hard soils
and even rocks. Both were intended to be used in conjunction with KickStart’s
low-cost shallow-well pump and deep-well irrigation pump.
The soft-soil drill performed well in feasibility tests and has since been pur-
chased by local entrepreneurs who earn money drilling boreholes for farmers.
Because the technology is low-cost relative to its income-generating potential,
well-diggers can recoup their
investment in less than six
months. Increased access to A growing number of non
water has reduced farmers’
burden of carrying water for profit and for-profit
domestic use and increased organizations are implementing
their income—they grow
more crop cycles per year, a new approach to international
plant high value fruits and
vegetables, and sell products
development, jointly
in the off-season when prices emphasizing entrepreneurship
are high.
The hard-soil drill proved
and technology.
more challenging. KickStart’s
prototype could drill wells as
deep as 100 feet through hard
soil and soft rock but could not penetrate the hardest rock formations common in
volcanic Kenya. Hence, the technology was deemed commercially unviable because
the cost of digging many incomplete wells that would be abandoned once boulders
were hit would drive the cost of running a well-digging business too high.
In 2004, The Lemelson Foundation granted $150,000 to KickStart to promote
its soft-soil well drill and other irrigation technologies in Tanzania. This funding
was leveraged by combining funds from other private donors and was matched
with a grant from the U.S. Agency for International Development (USAID) Global
Development Alliance. In three years, KickStart plans to sell over 7,000 pumps and
a smaller number of drills to very poor farming families in Tanzania. The farmers
are expected to make an average of $760 in new profits every year using the tech-
nologies, increasing their net incomes eight-fold. KickStart will also export at least
3,000 pumps from Tanzania to Mali, Mozambique, and Zambia.
Working with KickStart on these two projects helped the Lemelson
Foundation understand where to apply its resources most effectively. The collabo-
ration also shed light on the non-financial requirements of organizations like
KickStart. Finally, it highlighted the importance of partnering with the private sec-
tor and investing in market development to ensure impact by creating self-sustain-
ing change.

KICKSTART AS A POINT OF REFERENCE

As with most non profit organizations, securing philanthropic resources has been
among the greatest challenges for KickStart. The organization secured its first
grant in 1991 from the British government, but to raise a required match Nick
Moon and Martin Fisher, the organization’s founders, had to divert attention from
their mission to implement a large refugee camp project. For the next 10 years,
they raised funds from government aid agencies but were constrained by these
donors’ prescriptions and long delays in awarding grants. They strived to raise
funds from individual donors and foundations in industrialized countries, but
such donors couldn’t take tax deductions for gifts to a Kenyan organization, and
few could witness first-hand KickStart’s impacts, financial management, and
accountability. To overcome these problems, KickStart established itself as a U.S.
charity and opened an office in San Francisco in 2001 to lead and coordinate its
fundraising efforts.
While KickStart’s funding networks have grown, the organization still strug-
gles to obtain certain types of funding. In particular, funding for technology devel-
opment and testing which carries risks such as those revealed by the well-drilling
project, has been more difficult to obtain than funding for technology promotion,
which results in more immediate impacts. “This is one place where technology-
based investors such as the Lemelson Foundation can play a catalytic role,” says
Fisher. Another type of capital that is difficult to acquire is expansion capital to
replicate a proven technology and take it to scale by creating a new market. “Most
donors are still more interested in funding pilot projects than in taking proven
methods to scale,” says Fisher.
Early in the organization’s development, Moon and Fisher lacked access to
non-financial resources, including mentoring and networks that could help their
organization grow efficiently. “When we started in Kenya in 1991,” recounts Fisher,
“almost no one was doing this type of work and it was difficult for us to be in con-
tact with people we could learn from.” For example, documenting the impact of
their technology was critical for fundraising and for creating demand for the new
technology, yet standards and best practices for doing so were not readily available.
Ultimately, Moon and Fisher invented their own approach, which has since pro-
vided inspiration to other organizations. “There were very few resources available
and we basically had to invent everything ourselves and learn by doing,” Fisher
says.
In addition, although they realized the importance of developing a retail net-
work and conducting professional marketing to sell KickStart’s technologies,
Moon and Fisher lacked business expertise. Such skills were not considered useful
for development workers at that time, so there were very few resources available
from which to learn. Serendipitously in 1996 they met Bob Hyde, an American
marketing executive who had worked in India and now wanted to live in Kenya.
Hyde, taken by the organization’s mission, mentored them in marketing. Much
later, Moon obtained an MBA from Durham University and Fisher attended an

From Idea to Impact
Executive Education course at Harvard Business School. KickStart would have

benefited had Moon and Fisher had such opportunities at an earlier stage.
In the Lemelson-funded projects and others, KickStart has had to work close-
ly with Kenya’s and Tanzania’s existing private sector to implement its business
plan. Each new technology has required building local engineering and manufac-
turing capacity. KickStart has had to design entirely new types of production tool-
ing for mass production with poor-quality and poorly dimensioned raw materials,
and train local manufacturers who have never before done high-quality mass pro-
duction. In addition, it was initially very difficult to convince wholesalers and
retailers that it would be profitable to sell KickStart technologies. As a result, ini-
tially KickStart was unable to build upon the reputable farm-supply shop network,
and sold its irrigation pumps through anyone the organization could convince to
take the risk, including local butchers and hairdressers. Eventually, the technolo-
gies were proven and KickStart was able to work with the private sector to create a
reliable retail network and supply chain, ensuring consistent prices and quality,
and the availability of spare parts.
On the demand side, KickStart had to invest considerable resources in devel-
oping the market for its technologies—overcoming poor infrastructure, the risk-
averse behavior of poor farmers, and illiteracy. Demonstrating the income-gener-
ating potential of the technology was critical to convincing people with very lim-
ited resources to make relatively big investments in a new technology; both they
and lenders needed confidence that the initial investment could be recovered. To
overcome these barriers, KickStart employs creative marketing strategies, such as
demonstrating their technologies in front of retail shops, in local market places,
and on the back of pick-up trucks. The organization uses commissioned salespeo-
ple, radio advertisements, and billboards, and conducts “speed-pumping” contests
at local market places and fairs. Because many of these outreach activities require
a physical presence (and travel by personnel), they are more costly than written or
radio media—but generally more effective.
THE LEMELSON FOUNDATION’S INTERNATIONAL FUNDING STRATEGY

The Lemelson Foundation’s international program emerged from an initially U.S.-
focused strategy. Jerome Lemelson, the visionary behind this strategy, was award-
ed over 500 patents for inventions such as one of the first laser-guided robots, the
automated warehouse, and key components of the audio cassette player, the fax
machine, and the VCR. He was concerned that the U.S. was failing to nurture
inventiveness, thereby threatening the country’s economic development and cul-
tural vitality. To tackle this problem, he created the Lemelson Foundation. which
later broadened its vision to foster technological innovation to support economic
and social development in developing countries. Over the past decade, the
Lemelson Foundation has donated or committed more than $100 million to
advance its mission in the U.S. and abroad.
Based on Jerome Lemelson’s vision that invention drives prosperity, and on

Figure 1. The Idea to Impact process.
Figure 2. Lemelson Foundation projects located along the Idea to Impact

process.

From Idea to Impact
advice from developing country experts, the Foundation developed its interna-
tional funding strategy in 2003. The Foundation provides grants and loans to non
profit and for-profit organizations that design and disseminate technologies that
create self-sustaining positive impacts on people’s lives. The Foundation has con-
sidered vital lessons from the “appropriate technology movement” of the 1960s
and 1970s, and only supports projects that are driven by the needs and priorities
of local people.2 It also emphasizes entrepreneurship, favoring projects that help
poor people lift themselves out of poverty by creating income-generating oppor-
tunities.
To organize and analyze its grantmaking activities, the Foundation created a
conceptual framework called “Idea to Impact,” which outlines the process of tak-
ing an idea through the stages of conception, incubation, market development and
dissemination (see Figure 1); this framework draws on an extensive literature.3
Lessons from Lemelson-supported projects over the past three years corrobo-
rate those learned from the Lemelson-KickStart collaboration. The next section
describes four projects funded by the Foundation at different Idea to Impact stages
and draws conclusions regarding the role of philanthropic resources, the signifi-
cance of organizational capacity building, and the importance of private-sector
partnerships and market development in contributing to success. Figure 2 places
the four projects within the Lemelson model: the Benetech project represents the
idea conception phase; the PATH project is an incubation project; the SEWA Bank
and SELCO collaboration occurs at the market development stage; and the IDE
India project is an expansion phase project.
Idea Conception: Benetech Landmine Detector Project
Benetech is a nonprofit organization that combines the impact of technological
solutions with the social entrepreneurship business model to help disadvantaged
communities across the world.4 It has identified an opportunity to create a brand
new technology: an affordable and highly efficient tool to detect landmines.
Benetech will use Lemelson funds to adapt an expensive military landmine detec-
tion technique called quadrupole resonance into a much cheaper and only slight-
ly less efficient technology that can be used by humanitarian demining groups.
Benetech estimates that it will cost $1 million to develop and test 12 prototypes,
and an additional $1 million to reach sustainable production of affordable land-
mine detectors. To proceed with technology design, Benetech must secure licens-
ing agreements from military contractors, including General Electric, to adapt the
demining technique for humanitarian purposes. “Our challenge is to strike a social
license with the companies, ensuring that society benefits without creating a com-
petitive disadvantage for them in other markets,” says Jim Fruchterman, founder
and director of Benetech.
Incubation: PATH Woman’s Condom Project
The Program for Appropriate Technologies in Health (PATH),5 is a nonprofit
organization that creates sustainable, culturally relevant solutions to health chal-

lenges, enabling communities worldwide to break longstanding cycles of poor

health. PATH is designing a woman’s condom to empower women to protect
themselves against HIV/AIDS, other sexually transmitted diseases, and unwanted
pregnancy. Lemelson funds support the project at the incubation stage: PATH has
refined its design to address issues identified during field trials, such as comfort,
effectiveness, and ease of use, and is now engaged in the manufacturing process. In
preparation for product launch, PATH is working to convince major reproductive
health device manufacturers to produce and distribute the woman’s condom.
Market Development: SEWA and SELCO’s Solar Lighting Project
The Self-Employed Women’s Association Bank (SEWA)6 and the Solar Electric
Light Company -India (SELCO)7 are developing a new market for energy services,
including solar lighting and efficient cooking technologies for poor families and
street market vendors in India. Each organization has a distinct role in the partner-
ship. SEWA was founded in 1972 as a trade union of poor, self-employed women
in Gujarat, India. Today it has over 80 cooperatives tackling the varied needs of its
members. The Lemelson Foundation is supporting a project to adapt three alter-
native energy technologies, including solar lighting, to the needs of the poor and
create a system to distribute these to households in Gujarat State, India. SWEA is
using Lemeslon funds to train individuals from its network of nearly 700,000 self-
employed women to become profitable new owners of energy service businesses.
It also provides small loans to allow newly trained women entrepreneurs to launch
their businesses and offers micro-credit to end-users, mostly women, to purchase
the technology. SELCO, on the other hand, is a private sector, for-profit company,
in Bangalore, India, founded in 1995 to market, install, and service solar home
lighting systems throughout South India. To date, the company has installed more
than 20,000 solar home lighting systems through its network of more than 25 serv-
ice centers in Karnataka state. By custom designing and selling solar lighting to
newly trained women entrepreneurs, SELCO is piggy-backing on SEWA’s invest-
ment in capacity building and financing. SELCO uses SEWA’s network activities
and membership meetings to provide information about the new technology.
Impact Expansion: IDE: India’s Drip Irrigation Project
International Development Enterprises India (IDEI) is a non profit enterprise that
provides long-term solutions to poverty, hunger and malnutrition through afford-
able technologies.8 The Lemelson Foundation is supporting IDE-India’s expansion
of its manufacturing, distribution and retail supply chains for its low-cost drip-
irrigation kit, which sells for 60-80% less than comparable irrigation systems. The
support enables IDEI to scale up its successful model from Madhya Pradesh state
to Tamil Nadu state. Like KickStart, IDEI establishes self-sustaining supply chains
by using philanthropic resources to build demand and develop local supply capac-
ity. As with SELCO and KickStart, scaling up to new locations requires investing in
creative marketing schemes to reach dispersed and often illiterate consumers. IDEI
takes traveling vans to villages that attract attention by broadcasting Indian film

From Idea to Impact
music, garnering an audience for demonstrating its drip-irrigation kit. IDEI-

trained field agents distribute local-language flyers and follow up with interested
farmers. After noting a disparity across farmers’ incomes following adoption of
IDEI’s irrigation technology, IDEI began to build private-sector partnerships to
provide training to help farmers determine the most profitable mix and timing of
crops for their location. The organization also builds sales channels to link farm-
ers to local, national, and international markets for their new crops.
The Role of Philanthropic Resources
In each of these projects, philanthropic resources were necessary to correct market
failures, as private sector companies were not designing, manufacturing or distrib-
uting the necessary technologies on their own. Raising such grants can be time-
consuming, distracting key personnel from their core business, particularly
because organizations often must pursue small grants from many sources and find
it difficult to secure funds for high-risk stages of development.
In the case of Benetech, the landmine detection technique developed for mili-
tary purposes is highly proprietary, and private companies do not have an incen-
tive to adapt the technique to suit the small and not very lucrative humanitarian
demining market. Benetech required not only philanthropic resources to address a
general market failure, but high-risk, early-stage grant funds to launch the project.
As Jim Fruchterman, head of Benetech notes, “It is much harder to find the risk
capital [grant] to go from idea to working prototype. Once we have the humani-
tarian landmine detector in production, we’re certain we can find funding to pro-
duce detectors for demining groups.” A $250,000 grant from the Lemelson
Foundation with fund-matching requirements has helped secure additional
resources to propel this high-potential project to later stages of the Idea to Impact
process, where other funding is more likely.
PATH faces similar funding constraints. It was able to secure funds for user
acceptance trials in the research and development stage. However, PATH needed to
design manufacturing processes to attract large-scale manufacturers, and also pro-
duce a product for the clinical trials required for licensing by a regulatory agency.
These milestones are critical to attracting later-stage funding for manufacturing
and distribution, but prior to the Lemelson Foundation grant, PATH was unable
to secure funds for these critical tasks. Michael Free, PATH Vice President, notes
that “new drugs and devices require large investments whether they are for rich or
poor populations. For the latter, risks are high and returns are low, so traditional
sources of investment are not available. We have to rely on public and philanthrop-
ic sources. These sources seldom can invest in the entire project, but are more often
willing to fund up to the next milestone. Some milestones are more appealing than
others. Some funders change their goals or strategies during the five to ten years of
‘idea to impact.’ Blessed are the funders who fill the gaps or support the critical but
less appealing phases.”
For SEWA Bank, philanthropic funds were needed to incentivize the bank to
offer financial services in a new and unproven technology sector—solar lighting.

Lemelson funds allowed the bank to provide larger loans to small-scale manufac-
turers who would build the new high-risk local supply chain for solar lighting,
complementing SEWA’s micro-finance services offered to end-users. In contrast,
SELCO’s founder, Harish Hande, chose to establish SELCO as a for-profit compa-
ny, and did not seek philanthropic resources. Unfortunately, the high cost of mar-
ket development has slowed the company’s growth, because Hande has had to use
valuable equity to cover these expenses. He is now considering whether to diversi-
fy his fundraising strategy to include seeking grant funds for market development.
Like KickStart and SELCO, IDEI faces the long, hard road of creating fully
profitable supply chains for its technologies; this requires significant philanthrop-
ic resources and takes between three to twelve years, depending on market size.
Nonetheless, grant funds provided to IDEI and similar organizations are highly
leveraged. For example, a Foundation contribution to IDEI of $22 yields a net
increase of $500 in annual household income for farmers adopting its drip-irriga-
tion kit. Similarly, every dollar granted to KickStart generates a twenty-fold
increase in new profits and wages for the end-users of its technologies. Such organ-
izations are also exploring alternative financing. To complement grant funding,
KickStart is considering using a loan to finance outsourcing mass production, so
that it can increase marketing and sales to other development and relief agencies
(“B2B” sales). Because the cost of sales is low—they can sell by the containerload—
this is potentially a very profitable business.
Organizational Capacity
The development of internal capacity is critical for maximizing social and eco-
nomic impact. Each organization has faced capacity challenges and often devel-
oped innovative ways to address them. Benetech, for example, has created a net-
work of pro bono lawyers, which it draws upon at little cost to the organization to
secure necessary licensing arrangements, such as those from the multinational
manufacturers of the military landmine detection technology. PATH uses strategic
hiring and staff training to strengthen its capacity to partner with the private sec-
tor, because relationships with large-scale manufacturers are critical to scaling up
production of its global health technologies. SELCO draws upon the resources of
its equity investors to enhance its business model and develop strategies for edu-
cating loan officers about the financial profitability of solar lighting. “Awareness of
the benefits and viability of solar has to be built up for every new geographical
area,” says Hande, “and we need the capacity to do it.” IDEI invests in new partner-
ships with exporters and farm extension workers to deepen its capacity to educate
farmers about what mix of crops to grow depending on their local climate and how
to reach lucrative markets.
Private Sector Partnerships
While many of the organizations discussed are non profit organizations, partner-
ships with the private sector, including those with local, developing country com-
panies and transnational corporations, have been critical to their success. For

From Idea to Impact
example, Benetech had to build a relationship with General Electric to convince

the company that it would not be disadvantageous to allow Benetech access to its
proprietary techniques, as long as Benetech’s application of those techniques was
confined to the humanitarian market.
Similarly, the success of PATH’s project is dependent upon collaboration with
the private sector. It must convince international manufacturers to invest in mass
production of a new, high-risk, and potentially minimally lucrative product.
Because the existing market for the current commercial female condom is small
and largely dependent upon purchases by donor agencies, many companies are
reluctant to make a deal. According to Michael Free, “Because this technology is
largely for use in developing world populations, there is no incentive for invest-
ment and, consequently, no further development of product or market by the pri-
vate sector. The desire for contraceptive barriers that could be controlled by
women has renewed interest in the female condom among the public and philan-
thropic sectors, but the international manufacturing sector, with the means to
scale up and achieve widespread impact, remains to be convinced.”
In contrast, SELCO’s private sector partnerships have been constrained by gov-
ernment interference in the market. During the past couple of years, the German
government’s solar subsidy program has created a shortage of smaller solar panels
around the world. SELCO’s suppliers are all based in India, but are selling most of
their production to the German market. This has increased the time required for
SELCO to obtain parts. Hande is tackling this by investing more intensely with
Indian manufacturers, creating long-term inventory plans and diversifying its
product portfolio. The success of IDE India, like KickStart, has been its ability to
enhance and partner with the local private sector. It has succeeded in convincing
small-scale entrepreneurs to invest the capital required to manufacture small drip-
irrigation kits. Because the capital investment is relatively small and the market is
large, these entrepreneurs have been willing to take the risk.
The Cost of Market Development
The organizations profiled in this article face high market development costs
because they are designing new technologies for use in the relatively high-risk
environment of developing countries. Benetech anticipates that one of its major
challenges will be to generate a shift in perception among humanitarian deminers
regarding when an area can be officially declared “demined.” The new technology
will remove only active mines, leaving shrapnel, tin cans, and other metal objects.
This maximizes the efficiency of clearing but will only work if people have confi-
dence in the technology and change their perception of what constitutes a cleared
field. Currently, areas are declared safe only after all metal has been removed, and
a pass with a metal detector yields no signal. “We must start by integrating the new
technology with existing methods of demining. Only after the deminers have
extensive experience that proves a new tool is both safe and successful, will they
consider modifying their protocols,” explains Fruchterman. “When the price of a
mistake is injury or death, this is a sensible approach.” Thus, developing a market

for this potentially superior technology will require time and investment.
Similarly, PATH anticipates challenges in achieving widespread adoption of
the female condom. Because the female condom cannot be used without the
awareness of a sexual partner, it will require mutual consent. Until the technology
is commonly used, women are likely to feel uncomfortable or unable to ask a male
partner to accept the use of a female condom. PATH is addressing this hurdle by
focusing the design and field trials on ease of use and comfort for both men and
women to maximize the opportunity that both will have a positive first experience
with the condom. In acceptability trials in Mexico, Thailand and South Africa,
good comfort and overall sensation for both female and male participants was
reported in 96-98% of uses. In addition, PATH develops training materials, pro-
motional strategies and other innovative behavior-change approaches to help serv-
ice providers and users employ the products effectively and build skills to broach
the subject with their partners.8
SELCO’s partnership with SEWA Bank has allowed the company to overcome
market development barriers that slowed its business growth over the past several
years. Prior to working with SEWA Bank, SELCO had to invest precious equity in
training 5,000 rural Indian loan officers, providing information that would con-
vince them to lend to poor people interested in acquiring solar lighting and also to
manufacturers and entrepreneurs who would produce and sell the products.
SELCO had to demonstrate the technology’s cost-competitiveness against alterna-
tives and the income streams resulting from access to solar lighting, which would
enable borrowers to pay back loans. Even after trainings, loan officers were not
entirely convinced, and SELCO had to effectively lower interest rates offered by
banks by creating separate long-term, low-interest loan funds. These funds covered
down payments and provided affordable interest rates for borrowers.
SEWA has now taken on financing and technology promotion proving the
profitability of solar lighting. For example, in one distribution scheme, a small
entrepreneur owns and rents a solar battery and lamp unit. She charges the batter-
ies during the day and rents the solar lamps in the evening to night market ven-
dors, collecting the units in the morning for recharging. These vendors previously
rented kerosene lamps for 14 rupees a night; they now pay just 12 rupees for solar
lamps. In addition, solar lamps are easier to maintain, do not present a risk of fire,
produce no noxious fumes and provide a higher-quality light.
Prior to partnering with SEWA, SELCO’s investments in market development
reduced the company’s resources for manufacturing, distribution and sales, slow-
ing SELCO’s growth and profits. As Harish Hande of SELCO explains, “In effect,
SELCO India used its precious and expensive working capital money to develop
the market by creating incentive schemes for the financial institutions and end-
users. Such programs were necessary to create faith and trust in a new technology
like solar. For rural energy services to succeed, such trail-blazing costs need to be
covered through other soft sources, thus not directly affecting the growth of the
company.” Tapping into SEWA’s market and its loan funds provides a new avenue

From Idea to Impact
of growth for SELCO: SELCO markets to SEWA’s membership directly and SEWA
Bank uses its own and Lemelson funds to provide loans for solar lighting.
IGNITING INNOVATION
Leaders of non profit and for-profit enterprises in the developing world are creat-
ing positive change based on the appropriate design and sale of technologies that
generate entrepreneurial opportunity or meet other basic needs of poor people.
The experiences of the organizations described in this article demonstrate the
importance of effective partnerships among the private sector, those financing the
projects, and those implementing them. Organizations require certain types of
capital at particular times; PATH and Benetech taught us that high-risk grants for
new technology design are particularly difficult to obtain. For market development
and expansion, KickStart, SELCO and IDE India illustrated that greater philan-
thropic resources are required for market development and expansion, and that
private-sector financial services must be provided to the end-users and manufac-
turers who are building the supply chains for important new technologies. Donors
and investors must enhance their understanding of the experience of organizations
working through the Idea to Impact process to create a seamless pipeline of
resources for organizations that are generating positive impact on the ground.
To advance this agenda, the Lemelson Foundation recently hosted a meeting of
many of the organizations discussed in this article, as well as foundations, banks,
and venture capital companies.10 Participants identified strategies to address chal-
lenges faced by organizations that advance invention-led development. For exam-
ple, participants suggested hosting investor forums in developing countries to
allow funds to flow more efficiently to implementing organizations, emphasizing
that developing-country entrepreneurs often find it difficult to connect with
donors and investors in industrialized countries. Recognizing the ability of many
organizations to absorb loans and equity investments as well as philanthropic
resources, participants also proposed pooling funds to leverage more investment
and increase efficiencies by allowing donors to share due diligence and monitoring
of funded organizations. In addition, to increase the standardization of informa-
tion shared with investors, participants suggested that funded organizations define
and implement best practices for measuring their social and financial impact.
Mentoring and other non-financial services are also extremely valuable.
Foundations and other organizations must continue to build networks of support
to enhance the impact of organizations pursuing invention-led development.
Many institutions have already made significant contributions to this effort. For
example, the Schwab Foundation for Social Entrepreneurship provides social
entrepreneurs with global recognition and access to its network of investors,
transnational companies, and public figures through Klaus Schwab’s annual Davos
meeting of world leaders. Ashoka, a non profit organization that honors and funds
thousands of social entrepreneurs worldwide, connects its network to pro bono
management, legal and marketing mentoring.
In this vein, the Lemelson Foundation has created incubators called Lemelson

Recognition and Mentoring Programs (L-RAMPs) to provide tailored and catalyt-

ic financial and non-financial support to local inventors and entrepreneurs in
developing countries whose new ideas and businesses address basic human needs
and create sustainable livelihoods for people earning less than two dollars per day.
In Chennai, India, the Lemelson Foundation partnered with the Indian Institute of
Technology, Madras, one of India’s leading institutions in higher technological
education and in basic and applied research,11 and Rural Innovations Network,
which provides comprehensive business services to enable rural entrepreneurs to
take their innovations to market,12 to competitively select grassroots and student
inventors and offer them access to technical and business mentoring that will allow
them to take raw concepts from idea to impact.13
By learning about the challenges confronted by global innovators, donors and
investors can work together to improve their facilitation of invention-led develop-
ment. A growing number of for-profit and non profit organizations in the devel-
oping world are dedicated to improving the lives of the poor, and an increasing
number of investors are interested in making a social impact. With the increased
connectedness of local and global markets, there has never been a greater oppor-
tunity to build a middle class from the bottom up. Bringing interested investors
together with enterprises that create appropriate and affordable technologies
allows the nearly three billion people earning less than two dollars a day to build
profitable and sustainable livelihoods.
Acknowledgments
I thank Martin Fisher, Michael Free, Jim Fruchterman, Harish Hande and Amitabha
Sadangi for their ongoing collaboration; they openly shared their experiences which
formed the basis of the lessons drawn in the paper. Participants of the October 6, 2005
Lemelson Foundation Thought Leaders Strategy Forum contributed ideas for advancing
collaboration between funders and entrepreneurs that are reflected in the papers. Kelly
Kost, Pamela Hartigan, Will Novy-Hildesley and Doug Steinberg reviewed, enhanced, and
edited the draft. Finally Satheesh Namasivayam and Doug Steinberg helped develop the
Foundation’s international funding strategy and Idea to Impact framework.
1. The Lemelson Foundation defines invention as a new idea, product, or service; it defines innova-
tion as a conversion of an original idea, product, or service to a widely accessible and adopted form.
It uses the term invention-led development to refer to development that is driven by both invention
and innovation.
2. For extensive illustrations of the importance of co-developing technological innovations with
end-users, see: Boru Douthwaite. Enabling Innovation: A Practical Guide to Understanding and
Fostering Technological Change. (Zen, Books 2002), and Everett Rogers, Diffusion of Innovation (The
Free Press, 1995). See also Boru Douthwaite, “Enabling Innovation: Technology- and System-Level
Approaches that Capitalize on Complexity.” Innovations 1:4 (Fall 2006), pp. 93-110.
3. See: Lewis M. Branscomb and Philip E. Auerswald, “Between Invention and Innovation: An
Analysis of Funding for Early-Stage Technology Development.” National Institute of Standards and
Technology, 2002; Penrose, Edith, The Theory of the Growth of the Firm (Oxford University Free
Press. 1959); Richard R. Nelson ed., The Rate and Direction of Inventive Activity: Economic and Social
Factors (Princeton University Press, 1962); and, Katherine Catlin, and Jana Matthews, Leading at the

From Idea to Impact
Speed of Growth : Journey from Entrepreneur to CEO (Wiley,. 2001).

4. See <http://www.benetech.org?>.
5. See <http://www.path.org>.
6. See <http://www.sewa.org>.
7. See <http://www.selco-india.com>.
8. See <www.ide-india.org>.
9. Indeed, widescale adoption of the women’s condom will have to overcome stigma attached to
condom use and other social barriers. It will not be suited to all contexts, but in the right setting can
provide an effective tool in the fight against HIV/AIDS. The greatest potential may be among female
sex workers and with committed couples.
10. “Igniting Innovation: A thought leaders’ strategy forum.” October 2005. A final report on the
meeting is available on The Lemelson Foundation’s website.
11. See <http://www.iitm.ac.in/>
12. Rural Innovations Network, <http:// www.rinovations.org>.
13. The Indian Institute of Technology, Madras and Rural Innovations Network are implementing
an L-RAMP pilot program in Tamil Nadu, India; see <www.lramp.org>. See also an article on the
L-RAMP published in The Hindu
<www.lemelson.org/news/articles_of_interest_detail.php?id=678>. Individuals recently selected
for recognition and mentoring include a young woman who designed an improved asthma
inhaler, a middle-class engineer who developed a magnetic fuel efficiency device, and an elderly
man who created a fuel-efficient cooker. Each inventor has received a loan and has been assigned
an advisory team with whom (s)he has developed a mentoring plan. For example, mentors from
the L-RAMP network will guide the inventor of the improved asthma inhaler through validation
of the aerosol spray characteristics, improved manufacturing design, and field trials.

Expanding Possibilities
at the Base of the Pyramid
The last decade has witnessed a seismic shift in our understanding of and approach
to poverty alleviation. Driven in large part by the emergence of empowerment-
based forms of development practice—most notably, Participatory Rural
Appraisal1—and the success of the Grameen Bank and the microfinance move-
ment it catalyzed, it is now well accepted that sustainable poverty alleviation must
recognize the poor as central agents in that process. Indeed, in place of the image
of the poor as helpless dependants waiting on Western largesse to extricate them
from their predicament, the poor are increasingly recognized as highly resourceful
entrepreneurs who possess valuable knowledge, resources and capabilities. In turn,
business development and enterprise creation driven by the poor has emerged as a
powerful philosophy and tool for addressing poverty and marginality.
Significantly, this shift has simultaneously altered the role of the development
practitioner—from that of a “development doctor,” who diagnoses the poor’s
problem and prescribes the solution, to that of “enterprise facilitator”, who assists
the poor in acting on their self-defined aspirations.
KickStart and its founders demonstrate the power of this enterprise-driven
approach to poverty alleviation, as their MoneyMaker™ pump has empowered
Erik Simanis is a Ph.D. candidate in Management at Cornell University's Johnson

Graduate School of Management and co-director of the Base of the Pyramid Protocol®
Project. He has worked to integrate sustainability and Base of the Pyramid concepts
into corporate strategy as a consultant to Dupont, SC Johnson, The Solae Company,
and ECOS Corporation, among others.
Stuart Hart is the Samuel C. Johnson Chair in Sustainable Global Enterprise and
Professor of Management at Cornell University. Before coming to the Johnson School,
he taught strategic management and founded both the Center for Sustainable
Enterprise (CSE) at the University of North Carolina's Kenan-Flagler Business School,
and the Corporate Environmental Management Program (CEMP) at the University
of Michigan.
This case discussion originally appeared in the inaugural issue of Innovations.
© 2006 Tagore LLC
Expanding the Possibilities at the Base of the Pyramid
over 30,000 income-poor people to start or expand their own income-generating

businesses on their own terms. Much as microfinance loans make possible a wide
variety of businesses, so, too, do KickStart technologies. By simply making
KickStart technologies accessible to the poor through local market outlets,
KickStart provides an enabling tool that expands the poor’s opportunity set and,
consequently, their ability to provide for their own needs. Indeed, MoneyMaker
pumps are used in a variety of income-generating activities—from expanding
food crop production, to launching plant nursery business, to washing cars and
even to providing and selling drinking water. As KickStart founder Martin Fisher
observes, the combined impact of these thousands of locally spawned businesses
produces country-level effects
of significant proportion.
The enterprise-driven suc- [T]he massive opportunity for
cess of organizations such as
KickStart and Grameen Bank corporations presented by the
has also contributed to a silent [Base of the Pyramid] is
revolution taking place in cor-
porate boardrooms. Stung by matched by an equally
the dual recognition that their daunting set of challenges.
core market—the highest 20%
of income earners on the
globe—is saturated and offers
limited future growth opportunities and that serving the rich at the exclusion of
the poor will fuel an increasingly global backlash,2 multinational corporations
(MNCs) are turning to the 4 billion poor that comprise the “Base of the Pyramid”
(BoP) as a viable market.3 By learning to create business models and offerings that
serve the needs of those at the BoP, the MNC opens up a market of massive growth
potential while demonstrating a commitment to serving a diversity of needs and
values.
But the massive opportunity for corporations presented by the BoP is matched
by an equally daunting set of challenges. First, the cost structure and material
intensity of MNCs’ current business models preclude their easy extension to BoP
markets. For though MNCs’ customers account for little more than 20% of the
world’s population, these customers account for almost 80% of the resources con-
sumed on the planet. In addition, relative to wealthy consumer markets, BoP mar-
kets are characterized by a completely different set of geographic (e.g., predomi-
nantly rural based), structural (e.g., absence of roads, telecommunications net-
work), institutional (e.g., absence of Western property rights regimes) and cultur-
al (e.g., different life aspirations) factors. Clearly, serving BoP markets sustainably
requires a radical change in how corporations think of and do business.

It is with this in mind that we turn to consider the successes, as well as the
untapped opportunities, that KickStart’s experience provides. For it is from pio-
neering organizations such as KickStart that corporations can gain valuable insight
into alternative business approaches and models for sustainably serving BoP mar-
kets.
WHAT IS “APPROPRIATE TECHNOLOGY”?
How has KickStart succeeded in designing and disseminating a technology (the

MoneyMaker pump) that has manifested such a tremendous impact on the lives of
Kenya’s rural poor? What
can corporations looking
to serve the BoP learn from
In theory, it is [Kickstart’s] KickStart’s experience? At
unique combination of design first blush, and based on
the information in the case,
and marketing characteristics it would seem that the
foundation for KickStart’s
that convert otherwise success is rather straight-
inappropriate technologies and forward: The organization
has created “truly appro-
development strategies into priate” technologies and
potent, poverty-alleviating marketing strategies based
on the needs of the rural
mechanisms. Yet ... the evidence poor. In other words, the
just isn’t there to support it. configuration of their
products and the way those
products are advertised
and disseminated are better
suited to the unique needs of the rural poor, their socio-cultural structure, and
their environmental conditions than other technology-based development offer-
ings. Let’s explore this assumption.
The KickStart case argues that income-generating technologies for the rural
poor need to be simple to use and easy to repair, labor and time intensive in their
use, priced sufficiently low to allow individual ownership, have low energy (non-
human) requirements, and be environmentally sustainable. Ostensibly, such tech-
nologies do not exist and require Western engineering capability to produce. An
appropriate marketing strategy would focus on the individual buyer and not
impose any “arbitrary” ownership forms (e.g., women’s groups, collectives). In the-
ory, it is this unique combination of design and marketing characteristics that con-
vert otherwise inappropriate technologies and development strategies into potent,
poverty-alleviating mechanisms. Yet, as appealing as the simplicity of this answer
might be—for, if correct, global poverty alleviation would entail the application of
a fairly straightforward set of principles—the evidence just isn’t there to support

it.
First, we can point to a number of successful examples of technology-driven
micro-enterprise creation among the rural poor that utilize technology designs
and/or marketing approaches that diverge from those of KickStart. Let’s look in
more detail at the cases of GrameenPhone and n-Logue, as they stand in stark con-
trast to KickStart’s experiences with its MoneyMaker pump.
GrameenPhone, launched in 1997 in Bangladesh, outfits women entrepre-
neurs or “phone ladies” in rural villages with an off-the-shelf mobile phone and a
solar recharger unit, the cost of which (approximately $175) is financed through
microloans from Grameen Bank. The phone ladies retail the phone service to peo-
ple in the villages where they live. The performance of Grameen Phone has been
nothing but astounding. By
August 2004, there were some
75,000 phone ladies with each One of the greatest sources of
operator generating additional
income of approximately $1000 value delivered by the cell
per year. Recall that the per capi- phone and internet access to
ta income in Bangladesh is $286
per year.4 Through the phone the rural poor is time based.
ladies, half of Bangladesh’s rural
population now enjoys access to
telephony. And Grameen
Phone’s revenues are estimated at half a billion dollars.
The India-based company n-Logue, also a privately-owned rural telecommu-
nications company, piloted a locally engineered wireless-in-loop (WLL) voice- and
data-splitting technology in India in 2001 called corDECT. The company relies on
a micro-franchise model to equip rural entrepreneurs with a computer, monitor,
printer, digital camera, back-up battery and application suite, all in local language.
A corDECT wall set connects the franchisee to a central node that provides access
to India’s internet backbone and national telecommunications network. In addi-
tion, the kiosk franchise owners receive six months of unlimited internet access, a
marketing kit and introductory training. The cost of the package is approximately
$1,200. Franchisees generate income by selling a variety of internet-based servic-
es,5 telephony, computer training, digital photographs and video showings. By
2004, n-Logue was operating in seven states and 1,900 villages, and expecting to
enter an additional 4,000 villages in 2005.
How do GrameenPhone’s and n-Logue’s technologies stack up against the cri-
teria outlined in the KickStart case? First, it’s worth stating explicitly that, in both
cases, all or part of the core technology offering is an existing, off-the-shelf tech-
nology (e.g., cell phone, computer) previously utilized only by the wealthiest of
people. It was not necessary to redesign either the cell phone or the computer to
make them appropriate for the rural poor. Although n-Logue’s extension of inter-
net connectivity to rural areas indeed required the development of a “rurally-spe-
cific” technology, the technology is clearly not mechanically simple—nor one eas-

ily repairable by anyone other than a highly trained engineer. The same would go
for the cell phone and computer. And although technophiles would argue that the
cell phone and computer are easy to use relative to a MoneyMaker treadle pump,
they certainly require training..
Contrary to KickStart’s design assumptions, one of the greatest sources of
value delivered by the cell phone and internet access to the rural poor is time
based. Through cell phones and internet, poor rural farmers are able to get timely,
up-to-date information on everything from crop prices to crop insect pests and
even livestock illness, thereby allowing farmers to command higher prices for their
crops and tend to crop disease or livestock illness before incurring heavy econom-
ic losses. In addition, phone and internet access save rural farmers the time (and
expense) of journeying into town. Two days spent in transit are two days away
from the farm, thereby jeopardizing crop yield and income. Impact assessments of
Grameen Phone’s pilot study indicated that each call placed in the rural village
saved the user $2.70 to $10, which translates into 2.5% to 10% of monthly house-
hold income.6 Indeed, the rural poor experience opportunity costs as much as or
even more intensely than wealthy people.
Energy-wise, both the cell phone and the n-Logue computer system are
dependent upon electricity. Cognizant of the unreliability (and even outright
absence) of rural electrical grids, each of the businesses addresses this gap by sim-
ply providing a mobile energy source as part of the technology package. And in
Grameen Phone’s case, the energy source relies on solar power.
From a pricing standpoint, it’s not clear if the $175 cost of the cell phone kit is
a priori “affordable,” given that the annual per capita income in Bangladesh is
$286. Relative to the MoneyMaker pump, which retails at $88 (by virtue of grant
subsidies) in Kenya—a country whose per capita annual income is comparable to
that of Bangladesh—the cost of the phone kit is seemingly pushing the threshold
of affordability. At $1,200, n-Logue’s computer franchise package for India’s rural
poor appears absurd. However, ex post, the cost of the technology packages is
clearly affordable, as the revenues generated by the micro-businesses are sufficient
to pay for the financing cost of the technology while leaving profit. The important
point is that “affordability” is not inherent to a technology—affordability is a func-
tion of the business model within which the technology is embedded.
Let’s briefly turn our attention to the issue of marketing and dissemination
strategy, particularly in the case of Grameen Phone. As stated in the case, KickStart
argues strongly against “arbitrary” segmentation perpetuated by development pro-
fessionals (e.g., women) and “Marxist-based” models of collective ownership. Such
approaches not only fail to reach the right customers, they also create mis-aligned
incentives, inevitably leading to what economists call moral hazard. Yet Grameen
Phone and Grameen Bank, as many are aware, target women for its customers.
They do so in the belief—supported by empirical studies—that women, more so
than men, invest additional income in their children’s health and education.
In addition, Grameen Bank, which finances the phone purchases, utilizes a sol-
idarity lending model in which a group of women collectively become the guaran-

tors of unsecured loans issued to individual women in the group. Conventional

economic wisdom suggests that such a loan scheme—which removes a large part
of the risk associated with an individual’s loan—would be ripe for abuse. However,
Grameen Bank’s loan repayment rate stands above 95%, a rate far better than that
of traditional banks. The success of the solidarity lending model—and Grameen
Bank’s and GrameenPhone’s business model—is dependent upon the communal
ties that exist among women in rural Bangladeshi communities. Indeed, the
assumption of individual self-interest and rent-seeking that underlies traditional
banking approaches raises significantly the cost of doing business (as they require
intensive background screening, paper work, demonstration of collateral, and
credible threat of legal recourse) and, thereby, raises the price of loans beyond the
reach of the poor.
As we’ve seen, if we were to extract a set of “appropriate” technology design
and marketing approaches from the success cases of Grameen Phone and n-Logue,
our list would be practically the reverse of KickStart’s. But there is yet another rea-
son to doubt that any such criteria form the foundation for KickStart’s success—
for there are examples of failed micro-enterprise development interventions that
compare favorably with KickStart’s criteria.
The animal-drawn wheeled toolcarrier—the subject of Paul Starkey’s 1988
study7—was designed as a multipurpose farming tool to boost farming productiv-
ity, primarily in Asia and Africa. The toolcarriers could be used for everything
from plowing, seeding, weeding and transport. As Chambers recounts, the toolcar-
riers “were designed by agricultural engineers, developed and tested in workshops
and on research stations, and then passed on to farmers for trials and to manufac-
turers for production.”8 The resources and brainpower that went into some three
decades of research and development on the toolcarriers are astounding. Starkey
estimates that the development costs (in 1987 prices) were over $40 million,
involving hundreds of senior and junior staff at multilateral institutions such as
the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT).9
By most estimates (prior to Starkey’s 1988 publication), the animal-drawn
wheeled toolcarrier was an “appropriate” technology that blended Western design
capability with local environmental conditions. At the time, it compared favorably
with KickStart’s current criteria. Critically, the toolcarrier’s central purpose was to
boost farming productivity and efficiency and, hence, generate additional income.
Economic forecasts from a research station in Senegal suggested that the wheeled
toolcarriers would “allow cultivated surfaces to double…while at the same time
allowing returns to both area and labour to increase.”10 An ICRISAT analysis
claimed that the additional incremental profits generated by the toolcarriers would
pay for the $1,000-plus costs of the equipment within a year’s time. Given the suc-
cess of n-Logue’s $1,200 computer franchise package, these forecasts certainly
sound plausible.
The design relied on Western engineering capability and research, much of
which took place on agricultural research stations dotted across the developing

world. Even the design principles articulated by Jean Nolle, a French agricultural
engineer and pioneer in the development of toolcarriers for the better part of three
decades, included simplicity of design, multi-purpose use, and standardization of
components.11 Ruggedness and simplicity of use and ease of manufacture and
repair were central concerns. As well, the toolcarriers did not require electricity or
fossil fuels, simply animal power.
Much like KickStart, many dissemination strategies, particular during the
1960s and 1970s, relied on private-sector manufacturing and distribution. Private
sector-led initiatives could be found in India, Botswana, Brazil, Mexico, Senegal
and Cameroon. During the 1980s, a shift toward government and aid-sector dis-
tribution of agricultural implements shifted trading patterns, with manufacturers
of toolcarriers moving out of direct sales to focus on governmental and aid agency
contracts.
In the end, however, the wheeled toolcarriers were flatly rejected by farmers,
who argued that single-purpose implements better suited their needs and that the
toolcarrier’s cost was too high. Once again, ex post, one can easily identify a host
of design flaws that might explain its failure. But the point remains that had
KickStart’s criteria been in place three decades ago, the same outcome would have
resulted: The toolcarrier would have been deemed appropriate and launched into
the market with expectations of success.
Yet, if this example isn’t sufficiently convincing—as we recognize that our and
Starkey’s readings of this technology and its history are but one of many—there is
another organization whose technologies adhere letter for letter to KickStart’s
design and marketing principles but that have failed to catalyze significant rural
micro-enterprise development: KickStart itself. For it is important to remember
that no other KickStart technology—which among others include an oilseed press,
a soil block press, a hay baler, and a pit latrine slab—has had an effect remotely
comparable to the MoneyMaker pump on rural micro-enterprise development
and, consequently, on rural poverty reduction. As its 2003-2004 annual report
indicates, over 98% of the organization’s unit sales (9,007 out of a total 9,189 units
sold) are generated by a single product type: the micro-irrigation technologies.
And the MoneyMaker line of pumps was not KickStart’s first product released into
the market—so success doesn’t stem from longer market exposure. There simply is
no easy way to explain the disparity in impact among KickStart’s own technolo-
gies.
What this brief analysis reveals is that KickStart’s success has little to do with
having hit upon some sacred, infallible set of design and marketing criteria that are
inherently “appropriate” for the rural poor—otherwise, the pump’s success would
extend over to KickStart’s entire suite of technologies. Indeed, the very use of the
moniker “appropriate technology” often relies on a tautological logic: If a success-
ful business incorporates a technology, the technology (and its dissemination
strategy) is deemed appropriate; if no profitable business model can leverage the
technology, it is relegated to the status of “inappropriate.” Yes, all of the factors and
criteria identified in the KickStart case inform a business model and how the end-

user (the rural poor in this case) implements a technology, but they do not a pri-
ori determine business success or failure. They merely establish the context within
which the entrepreneur innovates. Appropriateness, therefore, is not determined
by the technology or the marketing approach but by the imagination of its user.
REAL OPTIONS FOR REACHING THE “BASE OF THE PYRAMID”
Back to our original question: Why has KickStart been successful, and how can
companies learn from their experience? Clearly, KickStart is accomplishing some-
thing that few other organizations—for profit or otherwise—can claim. Boosting
a country’s GDP by 0.5% while serving its poorest sectors is no small feat! But if
the success of the MoneyMaker pump (and all other technologies) in catalyzing
micro-enterprise has little to do with ingenious product design or marketing (or
prescient knowledge of profitable business opportunities for that matter), where
then do we turn?
Before we address this question,
let’s remind ourselves how difficult
it is to build a new business, KickStart’s strategy for
whether you are a multinational alleviating poverty through
corporation entering a new-prod-
uct market or a micro-entrepreneur technology-based micro-
in Kenya. The failure rate of startup enterprise formation
businesses in the U.S. has been esti-
mated to reach 85% in certain sec- provides an excellent
tors, despite the resources people
have available to them relative to
example of this real-options
the rural poor. “Good ideas” are a strategic framework.
dime a dozen—turning an idea into
a profitable business is where the
rubber meets the road. Within such
a context, the linear and highly regimented planning (and design) models that
constitute the heart of much managerial and administrative training—both of
business and development professionals—are likely to fail. It takes a different kind
of organizational strategy, one that accepts and integrates ambiguity and uncer-
tainty, not masks it behind a façade of numeric certainty. KickStart’s success, we
believe, is the result of such an organizational strategy, one which we shall call a
“real options” strategy.12
A strategy is distinct from a “business model.” KickStart’s business model con-
sists of the organization’s particular configuration of resources and assets by which
it manufactures, markets, finances, and distributes its pumps and other technolo-
gies. A strategy, by contrast, outlines how a firm intends to achieve its stated mis-
sion over time. Key strategic processes include defining the scope of the organiza-
tion’s activities, the allocation and targeting of funds, and the choices one makes
regarding organizational size and structure.

The notion of a real-options strategy takes its name and underlying logic from
the “financial option.” A financial option explicitly recognizes the value of uncer-
tainty (volatility) and time and the relationship between the two. Its appeal as a
logic for guiding organizational strategy stems directly from its ability to value
uncertainty. As we’ve argued above, new enterprise creation is a prime candidate
for such an approach, particularly at the BoP. Fundamentally, a real-options strat-
egy responds to uncertainty through a staged process of rapid, low-cost continu-
ous learning supported by a flexible resource allocation and organizational struc-
ture. Small-scale experimentation and low-cost “probes” are the tools that enable
such learning. Within a real-options logic, organizational flexibility is of central
concern. As such, investments are targeted into establishing a core-capabilities
platform from which the organization can respond in multiple directions based on
new information. By extension, in place of a single-product approach, which can
lead to over-commitment, a portfolio of products and technologies would be
developed and tested, thereby spreading risk while increasing the number of
“probes” in the market. Within a real-options framework, product or business fail-
ures are not considered wasted efforts, but valuable sources of information.
Organizational growth and expansion—in people and infrastructure—would
be limited until the experiments and small-scale pilots yield sufficient insight into
the business model to justify scaling up or discontinuing. As the wheeled toolcar-
rier example demonstrates, having the organizational flexibility to terminate a
low-value project is as valuable as the opportunity to scale-up one that shows
promise. And the scale-up process itself follows an incremental approach, avoiding
the all-or-nothing investment decisions which lock the organization into a single
business model from the start.
KickStart’s strategy for alleviating poverty through technology-based micro-
enterprise formation provides an excellent example of this real-options strategic
framework. The trial-and-error approach that the case alludes to conceals a deep-
er strategy that leverages the KickStart’s core competency in producing durable,
culturally-sensitive, mechanically operated technologies within a highly flexible
organizational design that facilitates rapid, low-cost learning. A visit to KickStart’s
corporate headquarters in Nairobi quickly supports the notion that the organiza-
tion’s resources are focused on harnessing and expanding its technology-develop-
ment capability. Most of the organization’s formally trained personnel work in its
Tech-Dev department (as do its ex-patriots), and a significant portion of its office
space goes toward this function. And “cultural capital” clearly resides within Tech-
Dev, as decision-making power flows from Tech-Dev to the field.
KickStart also maintains organizational flexibility and low experimentation
costs by driving most of its operations through a variable-cost model.
Manufacturing is outsourced. Products are sold through independent dealers. The
Marketing/Sales group relies heavily on commission-based employees. The Impact
Monitoring department is a recent phenomenon that has developed as demand for
the pumps has increased, along with donor requests to learn the impact of their
funds.

Unlike many NGOs, KickStart does not invest significant funds, research or
activism into development issues. As the case suggests, KickStart does not believe
in extensive training or skills development (other than operation of its equip-
ment), does not focus on establishing “women’s self help groups,” nor address itself
to a host of other potential domains (e.g., nutrition, health). KickStart believes in
these important issues, but does not feel it possesses the capacity to address them
effectively. In addition, the group’s philosophy focuses on the individual as the
locus of change. Again, the critical implication is that KickStart maintains very low
overhead, giving it the organizational flexibility to experiment and learn.
KickStart maintains a portfolio of products that include an oilseed press, the
soil block press, the treadle pump, and the hay baler, among others. The organiza-
tion continues to develop additional technologies, many of which leverage a com-
mon compression technology. The products share a suite of common characteris-
tics: all are manually operated and require, at most, two people to function; they
are ergonomically designed and easy to operate; and durability and ease of repair
are made possible by designs that require few moving parts. By maintaining a port-
folio of technologies, KickStart gains greater market knowledge through its multi-
ple touch points with the market and increases the likelihood that a successful
match will occur. It’s instructive to recall that KickStart’s first technology was not
the micro-irrigation pump, but the oilseed press (which only sold 49 units in
Kenya in 2004 compared with 9,007 micro-irrigation pumps). Had KickStart bet
the farm on its oilseed press—much as the developers of the wheeled toolcarrier—
KickStart would not be in the position it is today.
The value of a real options strategy for serving BoP markets is that it increas-
es the probability that an organization will develop a product or service that a poor
person or community will successfully embed into a profitable, wealth-generating
local business. And as KickStart and other pioneering social entrepreneurs have
demonstrated, demand for their products and services is ultimately dependent on
the ability of the end-user—the owner of the MoneyMaker pump or the cell
phone—to fashion a wealth-creating micro-enterprise. But, as we’ve suggested,
catalyzing these micro-enterprises is not something amenable to deliberate, deduc-
tive planning, nor a natural outcome from a technology’s design characteristics,
nor based on how we may market them. Yes, these factors comprise the boundary
conditions within which business models are developed, but they do not deter-
mine them. As such, there is no silver bullet technology for dealing with the uncer-
tainty of new enterprise creation. But there are strategies that can help organiza-
tions manage such conditions. KickStart’s real-options strategy is one such model.
1. Robert Chambers, Whose Reality Counts: Putting the First Last, (London: ITDG Publishing: 1997).
2. As demonstrated by the intensification of anti-WTO, WEF, and IMF protests, from Seattle, Davos,
Prague, and Cancun to, most recently, Hong Kong. Furthermore, today’s demonstrators are as like-
ly to include smallholder farmers and Third World women’s coalitions as they are American college
students and European “Greens.”
3. C. K. Prahalad and Stuart Hart (2002), "The fortune at the bottom of the pyramid,"

Strategy+Business 26: 54-67; C. K. Prahalad, The Fortune at the Bottom of the Pyramid (Philadelphia:
Wharton School Publishing, 2004); Stuart Hart, Capitalism at the Crossroads (Philadelphia:
Wharton School Publishing, 2005).
4. Hart, Capitalism at the Crossroads.
5. n-Logue facilitates the provision of various internet-based services, including education and
training, telemedicine and health care, and agricultural and veterinary services.
6. Hart, Capitalism at the Crossroads.
7. Starkey, Animal-Drawn Wheeled Toolcarriers: Perfected yet Rejected (Braunschweig, Germany:
Friedr. Vieweg & Sohn, 1988).
8. Chambers, Whose Reality Counts, p. 12.
9. Ibid.
10.Starkey, Animal-Drawn Wheeled Toolcarriers, p. 122.
11. Ibid, p. 16.
12. See Hart, Capitalism at the Crossroads, pp. 196-198.

Making Sight Affordable

Innovations Case Discussion: The Aravind Eye Care System
About 40 million people in the world are blind. The prevalence of blindness in
most industrialized countries of Europe and North America varies between 0.15%
and 0.25%, compared with blindness rates of nearly 1.5% for the developing coun-
tries in Africa, Asia and Latin America. While agerelated macular degeneration,
diabetic retinopathy, and glaucoma are the dominant causes in developed coun-
tries, cataracts are the major cause of blindness in the developing countries,
accounting for nearly 75% of all cases in Asia.
A cataract forms as the natural lens of the eye clouds over time, and has to be
surgically removed and replaced by an artificial one. The causes of cataracts are
many, but lack of proper nutrition and the effects of tropical weather are certainly
two of the more significant. In 2006, an estimated 20 million people were blind
from cataracts worldwide, more than 80% of them in developing countries.
In 2006, India had nearly 7 million cataract-blind individuals, with roughly 3.8
million new cases occurring annually.1 With a population of over a billion, and a
per-capita income of about $600/year (PPP $3,600), nearly 25% of Indians were
considered to be below the poverty line, but much larger numbers (approximately
50%) were at income levels that would place treatment at private eye clinics
beyond their reach. In theory, anyone who is unable to afford payment is eligible
for free surgery at government-run district hospitals but in practice, a vast num-
V. Kasturi “Kash” Rangan is the Malcolm P. McNair Professor of Marketing at the

Harvard Business School. Until recently the chairman of the Marketing
Department (1998-2002), he is now the co-chairman of the school's Social
Enterprise Initiative.
R. D. Thulasiraj is Executive Director of the Lions Aravind Institute of Community
Ophthalmology (LAICO). Mr Thulasiraj is also the Chairman of International
Agency for Prevention of Blindness-South East Asia Region (IAPB-SEAR). Mr.
Thulasiraj received a MBA in Management from Indian Institute of Management,
Kolkata(Calcutta).
This case narrative appears in volume 2, number 4, of Innovations; A case narrative
describing Aurolab, a subsidiary of Aravind, was published in volume 1, number 3, of
Innovations with the title “Making Sight Affordable (Part I).”
The Schwab Foundation for Social Entrepreneurship has recognized R.D.
Thulasiraj and the late Dr. Govindappa Venkataswamy as Outstanding Social
Entrepreneurs.
© 2007 V. Kasturi Rangan and R.D. Thulasiraj

Figure 1. Aravind Eye Hospital Locations
ber of poor people prefer to pay a small fee to get better quality care at an NGO.
Some government eye hospitals have reputations for offering good service, but
overall the poor consumers prefer private or voluntary eye hospitals because the
services are more reliable and overall outcomes better.2 The country’s capacity to
perform cataract surgeries has surged from about 1.2 million a year in 1991-92 to
nearly 5 million a year by 2006, much of it coming from the catalytic effort of
entrepreneurial organizations such as the Aravind Eye Hospital. Roughly 25% of
the work is done in the government sector, 40% by the NGOs, and 35% by private
clinics.
There are many examples of excellent public health delivery models around
the world, but rarely do we see one that has been able to grow steadily over three
decades, and yet simultaneously maintain, even increase, the excellent quality of its
service. Aravind is an exemplar in this regard. Even more interestingly, it is fueled
by a self-funding model: roughly 40% of its patients, those “paying” for its servic-
es, provide the profit margins to deliver a high-quality service for the rest of the
60%, “non-paying” poor patients.
This paper attempts to dissect what we have learned from Aravind’s success for
the benefit of healthcare professionals managing other similar public health sys-
tems.
The first author, Kash Rangan, started his work with Aravind almost 15 years
ago with the development of the first business case study of its workings. The sec-
ond author, Thulasiraj, the nephew of Aravind’s founder, has been a part of the
hospital group’s senior leadership team from the time of its founding.

Figure 2. Income and Expenditure

Note: The dollar to rupee exchange rate varied over the time period. It was about
Rs 12 = $1 in 1980, about Rs 25 = $1 in 1993, and Rs 45 = $1 in 2006.
THE FOUNDING OF ARAVIND

In 1976, a retired ophthalmologist, Dr. G. Venkataswamy (better known as Dr. V.),
then 58 years old, founded the Aravind Eye Hospital in Madurai (a bustling town
of 3.5 million people in the southern state of Tamil Nadu) to address his mission
of eradicating “needless” blindness in India and indeed all over the world. Starting
with 11 beds in the living room of his home, he recruited his extended family to
join in his mission. Today, with 3,500 beds in five hospitals, it is one of the largest
eye care systems in the world. Figure 1 shows Aravind Eye Hospital locations in
India. In the most recent fiscal year (2006-2007), Aravind screened 2.3 million out-
patients and performed 270,000 surgeries. Over the last 30 years since its found-
ing, Aravind has screened 22.37 million outpatients and performed 2.8 million
surgeries.
One of the truly astounding aspects of this high-performance model has been
the self-sustaining fiscal engine that has driven Aravind’s impressive growth.
Figure 2 shows how its revenues and expenses have evolved since its founding in
1976. Because Aravind was set up as a charitable trust (i.e., as a nonprofit) the sur-
plus has been constantly fed back into the system for improvements and expan-
sion.

Learning-by-Doing
Throughout its first three decades, Aravind’s strategy was very much shaped by
an experimentation model: key ideas floated by one member of the group
would be tried out, though not always with a fully fleshed out implementation
plan. Early results would then be analyzed and a revised strategy readied, and
the process repeated till tangible results emerged.
The hybrid funding model itself was the result of such a strategy molding
process. During the early years, 1976-78, Dr. V. was not very successful in rais-
ing money to support his vision of providing free care for those who would not
be able to afford the fee, so he took a detour and arranged to build the ground
floor of the “fee-for-service” hospital. But even then the senior management
team had the vision to lay the foundation so that the facility could be expanded
upwards. From the surplus of the ground floor operation, the first floor was
built, and so on, till the five-story main hospital was readied. The free hospital
was built following the completion of the main hospital using the cash flow gen-
erated from earned revenues.
After it had served paying customers in its first few years, as a strategic
necessity, Aravind learned the many advantages of the paying customer beyond
merely providing funding sustenance; now the hybrid strategy of combining
specialty clinics with cataract treatment began to gel. This then led Aravind to
structure a unique, cutting-edge clinical practice environment as a way to
attract and retain doctors.
The same spirit of learning by doing has also pervaded many of Aravind’s
other strategic forays. When Aravind formulated its early strategy on eye camps,
the “yield” was below 20%. That is, less than one in five potential patients actu-
ally availed of the offer of free surgery. Through a process of client research its
field personnel discovered the many barriers that poor rural people faced in
making the choice to have the surgery. It added services—food, lodging, and
transportation—to address exactly those constraints. Today the acceptance rates
are over 90%. Through a similar process of trial and error the yield at refractive
camps (those where eye glasses are prescribed and fitted) have surged from less
than 10% in 2000 to over 80% in 2006. Aravind now takes with it a selection of
frames and lenses, including the equipment to make adjustments and fittings to
deliver the prescriptions on the spot. A small amount of custom glasses alone
are mailed to the patient from a central facility.
But trial and error also means that unsuccessful experiments must be termi-
nated. In the 1980s, to make it convenient for rural people to accept the surgery,
Aravind engaged in several surgical camps on-site. That is, the outreach organ-
ization would temporarily convert a facility, such as a school building, into a
surgical facility, and Aravind doctors and support staff would do the surgery.
Soon Aravind realized that the medical outcomes were hard to manage because
of the variable quality of the surgical environment. So Aravind abandoned the
surgical camp model and converted to a screening camp only model.
Figure 3. Virtuous Cycle of Performance at Aravind
SUCCESS DRIVEN BY VISIONARY LEADERSHIP

AND FIVE KEY STRATEGIC CHOICES
Dr. V. died in July 2006, but for most of the 30 years since the hospital’s founding,
he was undoubtedly the system’s visionary and architect. It may be tempting for
writers, especially those who have personally interacted with Dr. V. and experi-
enced the breadth of his vision, his boundless energy, and his enormous will
power, to ascribe Aravind’s success primarily to his leadership qualities. But many
other significant forces also influenced Aravind’s success, including the contribu-
tions of several key family members who were important members of the group’s
core leadership team.3 Moreover, Dr. V. was acutely aware of the importance of
management systems as a way to scale the model. He also knew that Aravind had
to be molded into a learning organization, so that it could grow rapidly to achieve
its audacious ambitions. Above all, he knew that if the organization was to succeed,
it needed a leadership team to assume responsibility for its growth.
The success of Dr. V. and Aravind lay in their masterfully constructing—over
many years—a health care system in which many components were strategically
designed and brought together. Underlying the development of that system were
numerous innovations and strategic choices. Some are based on hard-nosed eco-
nomic reasoning and others have to do with the development of management
processes that consistently align the organization with its mission. Every one of
those elements is tightly interwoven into a virtuous cycle of performance, reinforc-

ing and amplifying their individual contributions. Five key strategic choices are
particularly notable.
The first strategic choice key to Aravind’s success has been the organization’s
unstinting focus on the elimination of cataract blindness. In founding Aravind, Dr.
V. could have gone in many directions to eliminate blindness. He chose cataract
blindness. That first singular choice was the most important in Aravind’s develop-
ment, and the rest of its later
strategy was predicated on it.
[D]uring those early days, one The organization’s second
key strategic choice—to pur-
of Dr. V’s main obsessions was sue a “hybrid” business
model—was initially driven by
to study the principles that necessity. While Aravind’s mis-
enabled retail systems, such as sion from the outset was to
serve the under-served, partic-
McDonald’s and Sears, to ularly the rural poor, Dr. V.and
attain scale... [I]f Aravind was his early core management
team (his brother, Mr. G.
truly to have an impact, it had Srinivasan; his sister, Dr.
to design a system to take care Natchiar and her husband, Dr.
Namperumalsamy; and Dr.
of the millions of rural poor Nam’s sister, Dr. Vijayalaksmi
and her husband Dr. M.
who were cataract blind. Srinivasan) recognized that in
order to achieve this mission
they needed funding. Lacking
other options, they decided to
raise revenue by building a clientele of paying customers seeking specialized serv-
ices. They soon recognized that their improvised, hybrid business model had many
advantages over the alternative of offering only one level of service to patients
unable to pay; earning revenue to cross-subsidize their core mission was only one
of the many benefits. (See the text box above titled “Learning by Doing.”)
The core motivation behind the hybrid operating model was the ambition to
reach a scale of operations that matched the scale of the challenge. Surprising as it
may seem, during those early days, one of Dr. V’s main obsessions was to study the
principles that enabled retail systems, such as McDonald’s and Sears, to attain
scale. Given India’s population demographics and disease incidence, if Aravind
was truly to have an impact, it had to design a system to take care of the millions
of rural poor who were cataract blind. That led Aravind to adopt and refine the
channel of “screening camps” as a way of reaching out to the rural poor, as
described further below.
Having put in place a strategy for gaining volume, the next big challenge lay in
building the capacity to take care of the massive volume of cataract surgery that
was being targeted. This led to Aravind’s third key strategic choice: to design an

operational system that would be low-cost, without compromising on the quality

of care. The design of an “assembly” line system was a direct outcome of this effort.
Clearly a low-cost assembly line system would produce quality outputs at afford-
able cost only if the components going into the assembly were high quality at low
cost. This logic led Aravind to its fourth key strategic choice: vertical integration of
key production inputs.
Ultimately none of these systems would have had staying power without the
fifth key choice: to have doctors and support staff work together as the human
engine to design and run such a system. The healthcare delivery model needed to
be supportive of the highly disciplined and motivated work force. This was the
behind-the-scene crucial fuel that provided the energy to sustain the other four
key elements of strategy. Every one of these strategic elements that we have briefly
alluded to was critical to Aravind’s success, as Figure 3 indicates. If even one ele-
ment failed, the entire system could unravel, but if they all clicked the synergy
would be exponential. We attempt to explain each of these factors in more detail
in the following paragraphs.4
1. A Predominant Focus on Cataract Treatment
In practice, Aravind is a multi-faceted research and clinical institution with many
centers of excellence in ophthalmic specialties, such as Retina and Vitreous
Surgery, and Laser Procedures, but in principle it remains a large scale “focused
factory,” emphasizing cataract surgery. A little over two-thirds of all Aravind sur-
geries are for cataract removal, for good reason: cataracts are by far the leading
cause of blindness in India, and therefore the quickest route to making a dent in
the blindness problem. So even though Dr. V.’s ambition called for the organiza-
tion to take on the elimination of blindness as its overarching “big mission,” in
reality the organization focused on cataract treatment. Nor did the organization
get deflected in making “prevention” a significant piece of its programming.
Because of Aravind’s wide reach into rural communities, it may seem well suited
to carry out the critical functions of education and information dissemination, but
those in its target audience comes to its camps much later in the cycle after they
have incurred the affliction, rather than before. Every year, Aravind conducts sev-
eral studies, as part of its public health research program, that investigate the caus-
es of blindness, including nutrition, lifestyle, culture, and customs, but once again
these activities are not a significant part of its core programs, which are focused on
cataract treatment. In 2000, recognizing that its outreach program could benefit
the huge numbers of those who would need prescription glasses, Aravind started a
Refraction Camp service. In 2006 alone, it ran 1,442 such camps, screening 411,486
people and fitting about 60,000 with prescription glasses.
This kind of laser-like engagement is valuable, especially in the delivery of pub-
lic health. Causes of illnesses are complex, and often one cannot undertake treat-
ment without engaging in prevention. But it may not be possible for any one enti-
ty to cover the full span from prevention to treatment. Many different institutions
and organizations will all have to work in a coordinated fashion to cover the entire

spectrum. Aravind’s focus was “cataract surgery.” In essence, even when Aravind
extended itself through refraction or diabetic retinopathy outreach camps, it
stayed very faithful to its strategy model. Patients identified as needing further
treatment at either of these camps were provided a definitive solution within hours
when fitting glasses or within days in the case of diabetic retinopathy.
More recently Aravind has moved into the treatment of another eye ailment,
diabetic retinopathy, which, like cataract, is widespread in India. As the name indi-
cates, some diabetic patients will develop a condition in the retina that leads to the
bleeding of blood vessels. Unless treated with laser procedures in a timely fashion,
the ailment can result in permanent loss of eyesight. In India, the World Health
Organization (WHO) estimates that currently 3.2% of the general population, or
about 32 million people, have diabetes. Roughly 20% of them would have devel-
oped diabetic retinopathy and among these, 20% would require active treatment
such as a laser procedure. The WHO also estimates that in the next 25 years the
prevalence of diabetes in India will increase to 5.6% of the projected population of
1.4 billion, or about 80 million persons.5 In the 2006-2007 fiscal year, over 70,000
outpatients were screened for this ailment (through mobile screening camps and
patient visits to one of Aravind hospitals), and nearly 3,500 were identified as
needing treatment.
2. Client Segmentation and Quality Assurance
The core mission of the hospital and the primary purpose of its founding was to
address the needs of the vast numbers of poor, who live mainly in rural areas.
Recognizing that surgical centers in urban centers would not be able to attract the
vast masses of the rural poor (about two-thirds of India’s poor), Dr. V. pioneered
the massive use of eye screening camps to reach out to the rural poor and bring
into the base hospital those selected for surgery. Instead of waiting for those in
need to come to its door, Aravind conducts eye camps in rural areas to find
patients. Medical teams work closely with community leaders and service groups
to set up camps that screen hundreds of people in a single day. Free screening
camps are held every day, and while Aravind provides the staff and the medical
equipment, community partners like the Lion’s Club, charitable organizations, or
local philanthropists publicize and organize the camp and provide food and bus-
ing for those selected for surgery. The same afternoon or evening of the camp,
those selected for surgery are then transported by buses to a base hospital for sur-
gery the following day. (Aravind recognized the value of partnerships with local
communities and philanthropic organizations to gain scale, especially in reaching
out to poor patients in far-flung villages.)
In the most recent year, 2006-07, Aravind offered 2,049 outreach screening eye
camps. Of the 270,000 surgeries performed, over 110,000 were admitted through
these outreach activities and received free surgeries. These admissions and anoth-
er 35,000 walk-in patients to the “free section” in the base hospitals accounted for
about 60% of all surgeries performed.6
Paying patients made up approximately 40% of the total pool. These are

patients who walk into one of the five hospitals seeking the high-quality services
they would seek in a private clinic. Such customers are provided a differentiated
service in both the outpatient and inpatient clinics. A dedicated part of the hospi-
tal is devoted to their care and recovery. The paying segment is crucial to Aravind’s
strategy for two reasons. First, patients pay market prices for their eye care because
Aravind is the quality leader in its field, and the income generated subsidizes the
organization’s core mission. Second, paying customers set high demands on qual-
ity care (at least higher than non-paying customers), and those standards are used
as a benchmark for nonpaying customers.
Because the paying patients are so central to its funding model, Aravind pro-
vides them a differentiated service: beds (as opposed to floor mats), optional air
conditioning and semi-private bathrooms. But in spite of such differences in the
pre- and post-operative services, the same team of surgeons provides the surgery.
Doctors rotate between the “free” and “paying” hospitals on a set schedule, so that
whether senior or junior, every doctor treats patients at eye camps and in surgical
procedures.
Because Aravind’s paying patients subsidize its nonpaying patients, it avoids
some of the critical problems of funding sustainability that other nonprofits and
NGOs face on this front. But Aravind’s paying patients play an important quality
assurance role, and an even more crucial professional development role.
Without the earned-income pool of paying patients, market feedback would
be muted. If that occurred, the discipline needed to maintain high-quality stan-
dards would diminish, and so would the treatment of poor patients. Partly to
address the market needs of this funding segment, Aravind offers a comprehensive
variety of non-cataract specialty clinics. Retinal detachment corrections, vitreous
surgery, laser procedures, and other special treatments make up nearly 25% of
Aravind’s services. Aravind’s doctors are challenged to master new skills for these
specialist disciplines, which helps them remain committed to Aravind. Without
such intangible benefits, doctors could well be tempted by the higher salaries at
private clinics. Many surgeons might not consider cataract surgery, alone, to be
professionally challenging and rewarding, even if it provided the spiritual satisfac-
tion of serving the poor and needy.
3. A Laser-Like Focus on Operational Efficiency and Cost Control
During the 1970s and 1980s, India had only about 12,000 ophthalmologists, which
severely handicapped its capacity to treat its blind. It was this “production” bottle-
neck that Dr. V. addressed by his innovative “assembly” line system for surgery.
Patients were readied for surgery in groups, with qualified ophthalmic assistants
doing almost all the preparatory work including the anaesthetizing, so that sur-
geons could focus on the surgery itself. When the procedure is completed, appro-
priate supplies are quickly provided as the next patient is brought in and the treat-
ed patient is escorted to the recovery room. Each operating room, except those
used for complicated surgeries such as retinal detachment, usually had two or three
operating tables as a way of efficiently utilizing the OT supporting staff. At each

Figure 2. Comparison of Costs (U.S. and India)

Sources: Naeim A. 2002. Healthcare Cost-Effectiveness Analysis for Older Patients: Using Cataract
Surgery and Breast Cancer Treatment Data. RAND publication RGSD-168 [top]. Aurolab. 2004
[bottom].
Reproduced from “Making Sight Affordable (Part I): Aurolab Pioneers Production of Low-Cost
Technology for Cataract Surgery,” by Mahad Ibrahim, Aman Bhandari, Jaspal S. Sandhu, and P.
Balakrishnan, Innovations 1:3 (Summer, 2006), pp. 25-41.
operating table, there are multiple sets of instruments and support staff to ensure
that the waiting time between surgeries is almost zero. The same principle is also
applied in the outpatient examinations: trained support staff carry out all the rou-
tine diagnostic procedures, some of which tend to be quite time consuming. The

ophthalmologists perform only those tasks, such as surgery or diagnosis, which

require good clinical judgment based on their medical knowledge. This process not
only enhances the utilization but also improves the quality. Both of these in turn
reduce the cost of care.
Aravind’s process of readying the patient for surgery, performing the surgery,
and getting the patient through recovery is all configured like a modern assembly
line. So while the average ophthalmologist in India performed about 400 cataract
surgeries a year, an Aravind doctor performed about 2,000: an efficiency factor of
about 5. Much of the efficiency can be attributed to the superbly constructed
assembly-line process, even though the Aravind surgeons, because of their training
and long work hours, perform more surgeries compared to their Indian counter-
parts. The factors behind this level of efficiency can be broadly grouped into the
following categories, listed in the order of importance:
• steady flow of patients—keeping patient supply line busy;
• surgical flow, which ensures minimal waiting time between surgeries;
• well-trained surgical assistants and adequate staffing;
• detailed logistics planning ensuring zero downtime for want of supplies or
equipment;
• daily micro-planning to match the surgical load to staffing and supply require-
ments; and
• surgeons’ skill and stamina.
As a result of all these factors, by 2006, Aravind’s cost of providing cataract sur-
gery was about $18 per person—including the intra-ocular lens (IOL). In compar-
ison, the cost of surgery in the U.S. is about $1,800 and the lens alone could cost as
much as $150. Studies of patient outcomes have shown that the quality of care in
Aravind Eye Hospitals is comparable to that in top hospitals, not only in India, but
in the U.S. and other developed countries as well. See Figure 4.
4. Vertical Integration
As shown in Figure 4, two important cost elements are personnel and the critical
components in the surgery: in this case the salaries and wages of the doctors and
nurses and high-tech essentials like the IOL. An essential part of the Aravind
model is to leverage the doctor’s time by providing him/her the support of highly
efficient and trained ophthalmic assistants (nurses). But doing that required hir-
ing and training large numbers of assistants and retaining them. Such a large pool
of talent was not easily available, so Aravind chose to create its own supply.
Similarly, later in its growth phase, as surgical techniques and technologies evolved,
Aravind was caught in a huge quality gap between the paying and the poor,
because it lacked an essential component in the surgery for the poor: the intra-
ocular lens. Again Aravind chose to innovate boldly in order to fulfill its mission.
We briefly discuss those two initiatives as illustrations of its operational excellence.
Nursing Staff: The clinical ophthalmic assistants, often referred to as nurses,
continue to be the backbone of Aravind’s clinical operations. Each year over 300
young women, aged 18 to 23, from nearby villages are selected to undergo two

years of training at Aravind before they are hired there full-time. Since the hospi-
tal is spread across 5 locations, the recruitment pool comes from the service area
of these hospitals. Most of these young women have barely passed high school, and
under normal circumstances would not have found any meaningful employment
in the village. Going to the nearby city to look for a job is a viable option but not
entirely accepted due to cultural and social norms of most village dwellers, partly
because of the real or anticipated fears of working in a large city, especially for
unaccompanied young women. The training is given free and the women also
receive free housing and a stipend.
During the training, the emphasis is placed equally on developing skills in
ophthalmic techniques and learning how to deliver those skills in a compassionate,
patient-centric way. After the first six months of common training, each person is
channeled to develop her skills in a specific area such as outpatient services, wards,
operating room, refraction, patient counseling, housekeeping or medical records.
Once they successfully complete training (over 98% do so), they are all absorbed
into the Aravind system. Many families see Aravind’s structured training program
and supervised living accommodation at the nurses’ hostel as the ultimate solution
to gaining employment, vocational training, and income in a safe environment.
After training, most such qualified women spend several years serving at Aravind,
picking up confidence, skills and money. Their loyalty to the institution is demon-
strated by the relatively low turnover: only 10% annually. Most go back to their
families after three to five years of service at Aravind to marry and settle down.
IOL manufacture: In the early 1990s, the preferred surgical technique for pay-
ing patients and in private clinics in India was ECCE (extra-capsular surgery with
intra-ocular lens). This surgery was inevitably performed with an operating
microscope: the surgeon left the posterior capsule intact and then inserted the IOL.
The outcome for patients was far superior, but Aravind was handicapped by a lack
of resources (operating microscopes, training for surgeons and the availability of
cheap IOLs). But Dr. V., in his drive to provide quality care for the poor, drove an
ambitious vertical integration program.
The primary hurdle to IOL adoption in India at that time was price. IOLs sold
for nearly $150 apiece in the U.S. and Western Europe, making IOL manufactur-
ing among the most profitable segments of medical device manufacturing. In the
early 1980s, strong profits in North America and Europe enabled American IOL
manufacturers to donate some lenses to Aravind and other charitable eye hospi-
tals. As Aravind’s surgical volumes grew, however, the donor organizations could
hardly keep up. Only paying patients were offered the IOL option at a fee.
Although IOL prices were coming down, Aravind and its patients, especially the
poor, could not afford to buy the implants on the open market. Moreover, as the
IOL implant became available, patients in their 40s and 50s came in for surgery,
having heard that they could regain their vision fully and could go back to their
livelihoods.
Dr. V. and his colleagues looked for a way out. IOL manufacturing was con-
sidered extremely high-tech at that time. It required the latest in precision machin-

ing, sterile techniques, and quality control. While a few Indian companies were
specializing in ophthalmic products, even fewer had yet ventured into IOLs.7 In
1992, based on the need for affordable IOLs, Aravind, with help from external sup-
porters (David Green from Seva Foundation in the U.S.), began a process of tech-
nology acquisition that resulted in setting up Aurloab, an internal manufacturing
capacity under the auspices of an independent charitable trust. Today, that facility
produces more than enough quality lenses at an affordable cost to meet all its
needs It sells the excess to other hospitals and NGOs in India, and the margins go
to further support its core mission.8
5. Hardwiring the Spirit for Service
Over the years, as we pointed out earlier, Aravind has constantly reinvested its
operating surplus to acquire the latest technology and equipment, even while
being very innovative in keeping costs to the efficient minimum. But in a highly
service-oriented business such as eye care, especially when the majority of cus-
tomers are from the poorer segments of society, what keeps the system humming
is the people: the vast cadres of doctors and nursing staff that make the strategy
happen. By 2006, the Aravind system had nearly 125 ophthalmologists, 615 clini-
cal nursing staff, 480 people supporting other functions, 70 individuals directly
involved in outreach activities, and 130 people in administration, totaling over
1,400 people engaged in the mission. It is a family business, but only about 35 of
Dr. V.’s family members are part of the operation. How can such a huge system run
on the philosophy of its founder and core management team, when it calls for
extraordinary attention to efficiency and dedication to service quality?
The answer is that throughout the system Aravind has inbuilt institutional
mechanisms to motivate its human resources. For instance, its doctors are encour-
aged and supported in research activities, which can involve training in cutting-
edge techniques. Given its size and reputation, Aravind has been able to attract
doctors from leading academic institutions around the world to visit and spend
some time training its doctors and doing research. The same is true for technolo-
gies from leading equipment suppliers. Aravind is often the lead user for advanced
technologies or treatments. All of this, along with the satisfaction of providing
people the gift of being able to see again, is the source of the doctors’ motivation.
The nursing staff, too, as we pointed out earlier, is treated with care and attention
to their own development. In a service business the welfare of the service provider
is the key antecedent to the welfare of the client, and at Aravind this principle is
thoroughly institutionalized.
GOING TO SCALE
It is important to recognize that Aravind’s strategy model was shaped by trial and
error; it was a classic case of learning by doing. As a consequence, the core man-
agement team was in complete harmony with its direction, with Dr. V. being the
chief architect and keeper of its mission. But even as the strategy was being joint-

ly sculpted, each key member took on primary responsibility for an aspect of the
strategy and its implementation. For example, Dr. Natchiar oversaw the clinical
and service side of the operations, including the crucial task of recruiting and
training the nursing staff. Dr. Namperumalsamy oversaw the clinical specialties
and advanced training for doctors, along with the connections to leading research
and innovations in the field. As the group’s current chairman, he has been invest-
ing in its research capabilities. Mr. G. Srinivasan provided the oversight for the
expansion and maintenance of physical plant. Dr. Vijayalakshmi and her husband
M. Srinivasan provided the leadership with respect to cataract surgery and its
advances. Thulasiraj provided the leadership in organizing outreach activities, and
later for training outside providers who wished to learn from Aravind. Others, too,
were handpicked by Dr. V. for special tasks. For example, Balakrishnan, with a
Ph.D in engineering, was attracted from his U.S. job to take over the leadership of
Aurolab, the manufacturing arm. As new hospitals were added, a second-genera-
tion team from Madurai would be transferred to the new location to get it
launched. Because of their significant experience with the operating procedures
and principles at Madurai, the translation was usually smooth. Interestingly, most
discussions of strategy were informal within the core leadership group, and often
took place outside the work environment. There was a tacit understanding of, and
empathy for, each other’s perspective, so much so that strategy formulation was a
group affair. There was harmony and coherence at the top.
A key requirement for scaling is standardizing core activities. The nature of the
screening activity at eye camps, or for that matter the surgical procedures for
cataracts, are highly amenable to such value-engineering techniques. But that
alone would not ensure a smooth scaling of the system. The surrounding activities
that comprise the end-to-end system have to be standardized as well. Here is where
Aravind has been innovative in its design of its healthcare delivery model. It is all
boiled down into a routine: First, through word of mouth, and then through the
discipline of formal analysis and written documentation, every activity is orches-
trated, starting with how the eye camp is promoted, how the patients are brought
in, and how the logistics is organized, all the way to how the medical screening
occurs, and how patients are selected and readied for the trip to the main hospital.
The same applies to the actual surgical procedure, and the pre- and post- surgical
processes at the main hospital.
LAICO (Lion’s Aravind Institute for Community Ophthalmology) came into
existence in 1992, essentially to promote best practices in the running of an eye
hospital. Internally, with ambitious plans to expand to other major sites like
Coimbatore, the senior management felt the need to formalize the lessons it had
learned. Even then, those in the center realized that much of the hospital’s cost
leverage came from its systems perspective, not just the routinization and stan-
dardization of its treatment protocol. And the knowledge gained could not only
readily be applied to Aravind, but perhaps could be transferred to other like-mind-
ed institutions as well. Over the last 15 years this direction has translated into a
number of structured training programs, consulting and capacity building activi-

ties, research and publications. LAICO has been in the forefront in promoting best
practices, especially in the area of management. Its most significant work and con-
tribution has been in the area of capacity building in other eye hospitals. This came
out of the realization that most eye hospitals in the voluntary and the government
sector were under-performing when benchmarked against their own capacity and
the unmet eye-care needs in their own service area. LAICO has worked with over
225 eye hospitals to enhance their capacity, essentially in cataract services. While
most of these hospitals are in India, about 40 are in other countries, including
Tanzania, Sri Lanka, Nepal, China, Indonesia, Bolivia, and Sub-Saharan African
nations. Studies have shown that on an average, the participant hospital’s produc-
tivity has jumped by 50% on most factors a year after the appropriate lessons have
been implemented in each of these hospitals.
In 2006, not satisfied with its reach and expansion, Aravind set a goal of per-
forming one million surgeries a year by the year 2015. The senior leadership group
has put together a strategy to achieve this through the concept of “Managed
Hospitals,” which involves staffing and managing the day-to-day operations of an
eye hospital that is not owned by Aravind. In this partnership model, the partner
manages the investments and creates an enabling interface for the hospital’s effec-
tive functioning. A core team from Aravind Eye Hospital would manage the
staffing through local recruitment, selection and training at Aravind Eye Hospital.
The hospital would be run as if it were an integral part of Aravind’s own network
of hospitals. In the pilot phase, three hospitals in India (at Kolkata in West Bengal,
Amethi in Uttar Pradesh, and Amreli in Gujarat) are functioning in this mode. The
next great “learning-by-doing” experiment has thus been launched. If successful,
an exemplar system will achieve another level of scale, with millions more cured of
blindness.
1 Krisnan, Pavithra. Infinite Vision. Aravind Eye Care System; Br J Ophthalmol. 1990; 74 (6):341-3.
2. The Lancet • Vol 355 • January 15, 2000: 180-4
3. Dr. V’s sister, Dr. Natchiar; her husband, Dr. Namperumalsamy (Nam), now the hospital group’s
chairman; Dr. V’s brother, Mr. G. Srinivasan; Dr. Nam’s sister Dr. Vijayalkshmi; and her husband Dr.
M. Srinivasan, along with Dr. V’s nephew, R.D. Thulasiraj, have all played important roles in build-
ing the institution. The second- generation team is now very active in the development and imple-
mentation of its strategies; among them are Dr. Aravind, Dr. Prajna, Dr. Kim and his wife Dr. Usha,
Dr. Kalpana, Dr. Ravindran, Dr. Balakrishnan, and R.D. Sriram.
4. For a more conceptual explication of the Aravind strategy model, also see V.K. Rangan, “Lofty
Missions, Down-to-Earth Plans.” Harvard Business Review 82, no. 3 (March 2004).
5. Source: Global Prevalence of Diabetes—Estimates for the Year 2000 and Projections for 2030;
Sarah Wild, MB, BCHIR, Ph.D, Gojka Roglic, MD, et. al; Diabetes Care, Vol. 27, No. 5, May 5, 2004:
http://www.who.int/diabetes/facts/en/diabcare0504.pdf
6. Roughly a third of the 60% “free” patients paid a small amount, equivalent to $10, and the rest
paid nothing.
7. Ibid.
8. For more on Aurolab, Mahad Ibrahim, Aman Bhandari, Jaspal S. Sandhu, and P. Balakrishnan,
“Making Sight Affordable (Part I): Aurolab Pioneers Production of Low-Cost Technology for
Cataract Surgery,”Innovations 1:3 (Summer, 2006), pp. 25-41.

Geoffrey Tabin
The Cataract Blindness Challenge

Innovations Case Discussion: Aravind Eye Care System
The first Champilimaud Award for the “contribution to vision in the developing
world,” accompanied by a prize of Euro 1 million, was given in 2007 to the Aravind
Eye Hospitals in Tamil Nadu, India. They could not have made a better choice.
Aravind Eye Hospitals are the highest volume cataract surgery facility in the world.
Their five hospitals examined over 2.3 million people and performed over 270,000
surgeries in 2006. Aravind is not only the highest volume cataract surgery system
in the world but also a trendsetter that has lifted the quality of cataract surgery in
India and set a new paradigm for delivering high volume, high-quality surgery to
the poor in a self sustaining manner. The founding genius was a spiritual guru for
all who now work in international eye care.
Dr. Govindappa Venkataswamy, affectionately known by family and friends as
“Dr. V,” passed away at age 87 in July 2006. He was born in 1918 in a poor farming
village. There was no school in his village. After tending the water buffalo in the
mornings, he would walk more than three miles to school every day. When a
school finally came to his community, there were no writing materials and the stu-
dents learned to write with sticks in the sand on the floor of their thatched roofed
schoolroom. Despite these obstacles, the brilliant young Venkataswamy earned a
scholarship to Stanley Medical College in Madras. Because of three cousins who
died during childbirth, he chose to specialize in obstetrics.
In his final year of training Dr. V was stricken with a severe form of rheuma-
toid arthritis. The young Venkataswamy was hospitalized for nearly two years.
Agonized by constant, severe, physical pain he watched helplessly as his fingers
twisted and deformed to the point where he knew his body could not function
Geoff Tabin is Professor of Ophthalmology and Visual Sciences at the University of

Utah and the John A. Moran Eye Center in Salt Lake City, Utah. Dr. Tabin is Co-
Founder and Co-Director of the Himalayan Cataract Project, which strives to eradi-
cate preventable and curable blindness in the Himalaya through high quality oph-
thalmic care, education, and establishment of a world-class eye care infrastructure. He
was the fourth person to climb the "7 Summits," the highest point of all seven conti-
nents; and has pioneered difficult technical rock, ice, and mountaineering routes on all
seven continents including the East Face of Mt. Everest. Dr. Tabin is a graduate of Yale
College, Oxford University (on a Marshall Scholarship) and Harvard Medical School.
This case discussion appears in volume 2, number 4, of Innovations.
© 2007 Geoffrey C. Tabin
delivering babies. He sought spiritual solace through the philosopher Sri

Aurobindo at his ashram in Pondicherry. His meditation led him to a new direc-
tion, a quest to “not aspire to some heaven, but to make every day life divine.” He
found his new purpose in ophthalmology. He taught himself new techniques to
perform delicate eye surgery and designed special instruments to fit and work with
his crippled hands. After completing his ophthalmology residency, he entered gov-
ernment service.
In 1976, at age 57, Dr. V was forced to retire from his job as a government serv-
ice ophthalmologist. Two years earlier, he had visited America and dined at a
McDonalds. He became obsessed with how McDonalds was able to deliver millions
of hamburgers with the same excellent quality, quickly and efficiently, to every cus-
tomer. He decided that he should be able to deliver a consistent product of excel-
lent cataract surgery, quickly and efficiently, to all the poor blind people in need in
India. Thin and wiry, barely five feet six inches tall, with graying hair and his frail
body obviously twisted by arthritis, Dr. V still radiated a quiet, gentle confidence
that rallied the talents of family members and colleagues. Less than a year out of
retirement he opened the first Aravind hospital, named for Auribindo, a twelve-
bed eye hospital in his brother’s home in Madurai. He set about to bring
McDonalds efficiency and consistency to cataract surgery delivery. The history of
the Aravind System is well chronicled in the accompanying article. One of the keys
to their success was delivering a reliable product. Dr. V developed an assembly line
method of serving up sight restoring cataract surgery.
Eye care is one of the greatest public health challenges for the twenty-first cen-
tury. Fifty million people in our world suffer in needless darkness. The vast major-
ity will remain blind until they die. Ninety percent of this blindness could have
been easily prevented or treated. Half are from treatable cataracts where inexpen-
sive surgery can restore perfect sight. Several studies have shown that sight restora-
tion with cataract surgery is among the most cost-effective interventions in health
care. Preventing visual loss from other major blinding diseases—trachoma,
onchocerciasis, and vitamin A deficiency—ranks with childhood vaccinations as
among the most efficacious prophylactic treatments. Although the numbers are
daunting, eliminating blindness from our world is a realistic goal. The World
Health Association and International Association to Prevent Blindness have set a
goal for overcoming needless sight loss by the year 2020.
Despite advances in other areas, the number of people blinded by cataracts
continues to increase. The number of cataract surgeries performed on people with
mild visual impairment is increasing every year. However, the number of people
rendered completely blind continues to grow. If we continue to operate at our cur-
rent rate, with increasing life expectancy, the number of people blinded by
cataracts will double by 2020.
Advances in health care technology over the past century have led to marked
improvements in the treatment of many conditions. Ophthalmology, in particular,
has seen fantastic advancements that have led to improved outcomes for a wide
variety of maladies. From laser treatment of retinal disease, to ultrasonic microin-

Geoffrey Tabin
cisional cataract surgery, the quality of modern eye care has increased dramatical-
ly each year. However, these new technologies have also led to a steady rise in health
care costs. In the developed world cataract surgery in particular has become ever
more sophisticated and refined and ever more expensive. With increased public
awareness that most people see well, and resume full activity soon after modern,
state-of-the-art cataract surgery, patients in the Western world now come for
cataract surgery as soon as they experience mild blurring. Ultrasonic phacoemul-
sification cataract removal with the placement of a posterior chamber intraocular
lens implant has become the most frequent operative procedure performed in
America with an annual cost to Medicare of 3.5 billion dollars.
The main thrust of research in cataract surgery has been on creating incremen-
tally better outcomes through ever more sophisticated and expensive techniques.
As the technology continues to improve, the costs continue to rise. Many of the
best doctors in the developing world want to emulate the methods performed by
their colleagues in the West. The middle and upper classes of even the least devel-
oped nations demand, and are willing to pay for, what they perceive to be the lat-
est and greatest surgical methods. Meanwhile the barriers to cataract care for the
majority of the world’s poor are becoming ever more daunting
Despite the incredible success and improvements in cataract management in
the developed world, most people who are blind from treatable cataracts are being
left behind and will die before they ever see a doctor. Moreover, if we apply the
same standards for when a patient is considered ready for surgery that we use in
the United States to the destitute of the world, then the number waiting for
cataract surgery is staggering. If we decide to operate when a person has difficulty
working at a job demanding reasonable vision, the number of poor people requir-
ing surgery is well over 100 million! The gap between those who are totally blind
and need surgery to survive, but are unable to attain it, and the wealthy of the
world who receive expensive surgery for mild visual problems, continues to widen.
There are several reasons why the poor are unable to obtain care. There are
economic, social, and environmental barriers that must be overcome and
addressed when designing a public health cataract intervention program. First and
foremost is providing top quality surgery. The greatest requirement in having poor
patients come for surgery is to provide them with superb visual restoration. Even
the poorest of the poor recognize quality. When a neighbor or a friend has high-
quality surgery it leads to other people seeking care. If the surgical outcome is bad,
then patients will not come. Next there needs to be excellent management of
human resources to maintain the high quality while delivering care with maxi-
mum efficiency in a cost-effective manner. Use of human resources and the train-
ing of ophthalmic assistants, technicians, nurses, and lay helpers can increase pub-
lic awareness and accessibility for all people. Finally, strategies must be implement-
ed for cost recovery to allow the highest quality of care to be delivered to the poor
in a sustaining fashion. With a small charge to those patients who can pay, and an
enormous volume of surgery, free care can be provided for the destitute. High-
quality care, training, education for the patients, and cost recovery from patients

who can afford care all combine to make the Aravind Hospitals the leader in
cataract care to the poor in India.
The Aravind approach has been called compassionate capitalism. Not only do
they provide excellent free care but they have solved the issue of sustainability. At
the core of their success was developing “Aurolab,” which manufactures and dis-
tributes needed pharmaceuticals, dis-
posables, and most importantly lens
implants for cataract surgery. With
Aurolab-produced products and an Fifty million people in our
efficient system, Aravind has brought world suffer in needless
the cost of a single sight restoring
cataract surgery to under 10 dollars per darkness. The vast
surgery. Then with an enormous vol- majority will remain blind
ume, the 30 percent of the patients
who can pay not only subsidize the free until they die. Ninety
care for the remaining 70 percent of
patients but also allow the hospital to
percent of this blindness
expand and remain state of the art. could have been easily
The lens of the eye is similar to a
peanut M&M’s candy. It has an outer prevented or treated.
shell called a capsule surrounding a
hard peanut, the lens nucleus, that is
encased in a soft cortex of protein. With a cataract, the normally clear crystalline
proteins in the nucleus and cortex become opaque. Early cataract surgery involved
slicing the eye almost in half, removing the entire lens complex, and then giving
thick, “Coke bottle” aphakic glasses to help focus light. In the best of hands, the
results were moderate and visual recovery slow because of high astigmatism
induced by the large wound and distortions of the image seen through the thick
glasses. A major advance occurred when a British Surgeon, Harold Ridley, noted
that a Royal Airforce pilot from World War Two had a small chip of windshield in
his eye for more than twenty years without causing inflammation or damage. He
postulated that he could make a replacement for the natural lens of the eye from
the material of the windshield. This revolutionized cataract surgery.
Sir Harold Ridley’s idea has led to the great advances in cataract surgery.
Ophthalmologists now make a tiny self-sealing incision in the eye and a circular
opening in the capsule (candy shell). The nucleus and cortex are removed and a
replacement lens with the power calculated to give the patient excellent vision is
placed back in the capsule in its normal anatomic position, restoring natural
vision. Unfortunately, the cost of the replacement lens implants manufactured in
the developed world was prohibitive—well over a hundred dollars for the least
expensive brands. In order to provide cost-effective care, Dr. V. realized that the
cost of the intraocular lens implant used to restore best quality vision after cataract
surgery had to be reduced. In conjunction with Aravind, he began Aurolab which
manufactured high-quality lenses for 5 dollars in Madurai. Aurolab then expand-

Geoffrey Tabin
ed to produce excellent low cost sutures for eye surgery, pharmaceuticals, and dis-
posables for surgery. They now sell full surgery packs with everything needed for
one cataract surgery for 10 dollars. Again, with an enormous volume and a high-
quality product Aravind’s compassionate capitalism has allowed care to extend
beyond their own bases in Tamil Nadu.
Doctors, nurses, and ophthalmic assistants from all over the world now come
to Aravind for training. Meanwhile they have developed a great local network of
outreach vision centers to screen patients. They perform outreach eye camps in the
poorest areas of Tamil Nadu and bus patients who are blind to Aravind for their
surgery. A combination of trained patient and family counselors, and attention to
details such as feeding the family members who accompany the blind person back
to Aravind for surgery, have led to a marked increase in cataract surgery volume.
Like McDonalds, Aravind has become the brand name even the poorest of India’s
poor can trust.
Aravind has also served as an inspiration and stating point for other systems.
The Tilganga Eye Care Hospital in Kathmandu Nepal, in conjunction with the
Himalayan Cataract Project of the USA and Fred Hollows Foundation of Australia
has achieved similar success. Led by Dr. Sanduk Ruit, who is one of the most bril-
liant innovators in ophthalmology, he is a master at delivering state of the art,
Western standard-care, at a low cost and providing the best possible care to the
poor. Dr. Ruit spent time at Aravind and brought many of their ideas to Nepal,
including starting a factory to produce low-cost lens implants. Similarly, many of
his surgical innovations have found their way back to Aravind and are now stan-
dard procedure.
However, the topography of Nepal is different from India. It is difficult to bus
poor patients into Kathmandu due to the lack of roads and isolation of many of
Nepal’s poorest villages. Moreover, there is not a sufficient population density to
support an ophthalmologist in the hilly regions. The strategy Tilganga adopted is
to train ophthalmic assistants to be based in the mountains providing primary eye
care, giving spectacles, and screening for eye disease. When a sufficient number of
people in any given region is blind from cataracts a mobile team comes to the
patients. Dr Ruit has perfected the art of setting up a sterile operation theater in
the most remote settings and providing outreach microsurgery with the same
quality as hospital-based surgery. Like Aravind, Tilganga has also emerged as an
international training center for high-quality eye care. The Tilganga model is now
being exported to many parts of Africa where similar geographic challenges pre-
vent patients from reaching care. Meanwhile the Aravind sytem is spreading
throughout India and extending into China.
Not long ago in Nepal and most of India it was an expectation that as people
grew older their hair would turn white, their eyes would turn white, and then they
would die. Although death is still inevitable, thanks to Aravind Eye Care blindness
in old age is no longer a certain outcome of a long life in Southern India. The chal-
lenge today is to extend that success to other regions of the world.

Victoria Hale
Seeking a Cure for Inequity in

Access to Medicines
Innovations Case Narrative:
The Institute for One World Health
The top five infectious disease killers in the world are HIV/AIDS, tuberculosis,
malaria, respiratory infections, and diarrhea. None of these, not even HIV/AIDS,
has received sufficient focus by the pharmaceutical industry to meet global health
needs. Though these diseases have severe global social and economic conse-
quences, very few effective treatments are available. Further, there are insufficient
incentives for industry to invest in developing new safe, affordable and effective
treatments.
Over 60% of the world’s population lives in the places where these infectious
diseases are most prevalent: the tropics. These regions in the middle band around
the globe—places such as sub-Saharan Africa, the Indian sub-continent, South
East Asia, and parts of Latin America—have high population densities, high pover-
ty rates and climates that are favorable to insects that transmit disease. Each year,
millions of lives are lost to infectious diseases.
Why, in the 21st century, is it that in some places people can get medical treat-
Victoria Hale is founder and chief executive officer of the Institute for OneWorld
Health (iOWH). Dr. Hale has been elected to membership in the Institute of Medicine
of the National Academies, is the recipient John D. and Catherine T. MacArthur
Foundation Fellow (2006), and has been selected as an Ashoka Fellow. She received
the Executive of the Year by Esquire Magazine (2005), The Economist Innovation
Award for Social and Economic Innovation (2005), and the Skoll Award for Social
Entrepreneurship from the Skoll Foundation (2005). Dr. Hale established her expert-
ise in all stages of biopharmaceutical drug development at the US Food and Drug
Administration (FDA) and at Genentech, Inc., the world's first biotechnology compa-
ny. Dr. Hale earned her Ph.D. in Pharmaceutical Chemistry from the University of
California, San Francisco.
This case narrative appears, accompanied by a case discussion authored by Wesley
Yin, in volume 2, number 4, of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Victoria Hale
as an Outstanding Social Entrepreneur.
© 2006 Tagore LLC

Victoria Hale
ment for nearly any condition, or even for a mere complaint, while in other places
in the world millions of children die from diarrhea?
The reason is simple. The therapeutic drugs that exist today are produced by
for-profit pharmaceutical companies. These companies operate according to a very
strict business model that requires a certain return on investment to shareholders
for any project undertaken. Adhering to this business model leads these companies
to pursue drugs for wealthy countries, focusing on heart disease, diabetes, cancer
and so-called ‘lifestyle’ drugs. These targets of opportunity are consistently more
appealing than taking on the
challenge of treating tropical
infectious diseases in places
[F]ully one-third of the where other challenges, such as
world’s population lacks the lack of markets and distribu-
tion networks, also exist.
access to essential medicines, As a consequence, fully one-
and in the poorest regions of third of the world’s population
lacks access to essential medi-
Africa and Asia, this figure cines, and in the poorest regions
rises to one-half. of Africa and Asia, this figure
rises to one-half. Between 1975
and 1999, out of 1,393 new drugs
developed, only 13 were
designed to treat tropical diseases. That is less than 1 percent, even though tropi-
cal diseases account for more than 90 percent of the worldwide disease burden.
More broadly, only 10 percent of the US$70 billion spent on health research world-
wide each year is for research into the health problems that affect 90 percent of the
world’s population.
The idea behind the Institute of One World Health is to look at this so-called
“90/10 gap” as evidence not only of past failure, but also of future opportunity.
Without question, pharmaceutical companies need to make profits to make drugs.
The research that goes into discovery, design, and testing for safety and efficacy is
expensive. If we can find ways to redirect back to global health even a fraction of
the intellectual property and human resources of the global pharmaceutical com-
munity, we can make a real difference. That is our aim.
Today, iOWH has a staff of 80, in offices in the US and in India, with the sci-
entific and policy expertise needed to identify new drug opportunities, produce a
product development plan, and shepherd drugs through the regulatory approval
process. IOWH also has an array of research and development partnerships that
work with us to develop a range of products for a variety of diseases. And we have
formed the partnerships we need to manufacture and deliver the medicines we
produce.

Seeking a Cure for Inequity in Access to Medicines
THE BEGINNING: “YOU HAVE ALL THE MONEY”

Back in 2000, I was riding in a taxi and chatting with the driver, an African immi-
grant. He asked me what I did for a living. I am very proud of the work I do so I
was happy to tell him that I am a pharmaceutical scientist. I was taken aback when
he responded by breaking out into a fit of laughter. When he finally regained his
composure, he remarked with a shake of his head: “You guys have all the money.”
All the money, yes. But to what end? His comment crystallized the growing dis-
comfort I had felt at the imbalance of resource allocation that was so evident in my
chosen field of work. I recalled another moment of troubling introspection I had
experienced not long before, while I was working at the Food and Drug
Administration. I came across the fact that up to one in five children in sub-
Saharan Africa does not live to see his or her fifth birthday. And each year in the
developing world, 10 million people die from neglected diseases, diseases for which
no effective treatments exist or are in development.
After my taxicab epiphany, I had an increasingly difficult time keeping these
numbers out of my head. The pride I felt in being a pharmaceutical scientist
became overwhelmed by feelings of embarrassment at being part of an industry
that was not taking full responsibility for the diseases of the world. I thought to
myself, if there is anything that I can do personally to change things, how can I not
do it?
In further considering the problem, I began to wonder if it might be possible
to take the profit imperative out of the drug development equation. Could I create
a process for developing drugs, including testing them and getting them approved
and manufactured, that would make them as safe and effective as any blockbuster
drug, but affordable enough for the poorest of the poor? Is it possible to organize
pharmaceutical development around the objective of human impact rather than
profitability?
I resigned from my position at Genentech and I took two years to simply con-
sider the parameters of the challenge. Travelling around the world was an eye-
opening experience, helping me better define the questions in mind and confirm-
ing my deep commitment to my pursuit. After a great deal of time and expense, I
began to see a way forward.
In July 2000 I founded the Institute for One World Health (iOWH), an entire-
ly new kind of pharmaceutical company.
THE EXPERIMENT: A NON-PROFIT PHARMACEUTICAL COMPANY

The pharmaceutical scientists who work at iOWH share a belief that their work
can change the world and save lives. Of the many possible paths one could imag-
ine toward this goal, the one we have taken is the development of a sustainable
non-profit pharmaceutical company focused on neglected diseases.
It is not possible for a non-profit pharmaceutical company to follow the stan-
dard big pharma business model. The big pharma model typically starts with basic

Victoria Hale
science and discovery in the laboratory and exploring educated hunches. When
promising results are identified, they are taken through the lengthy and expensive
process of drug formulation and sequential testing in petri dishes, animals, and
humans. Only one drug in 10,000 that is discovered actually makes it to clinical tri-
als. Only one drug in ten that makes it to human testing makes it to the market.
Compounding the risk, of the few drugs that actually reach the market, 70% fail to
recoup their R&D investments.
In many cases, drugs are cast aside by standard, for-profit pharmaceutical
firms for reasons having nothing to do with their potential to benefit people. For
example, some drugs are simply not profitable in any known application. Others
may not compete successfully with other known candidates for a given disease. Still
others are discarded because they have unacceptable side effects for the population
the drug will treat, but may be acceptable for other populations. (For instance, a
new antibiotic that causes sleepiness may be unacceptable for people who need to
drive or go to work while taking the drug. But for a malaria patient or for a bedrid-
den patient facing certain death from an infectious disease, sleepiness may be a
perfectly acceptable side effect.)
IOWH has sought a different path. For starters, we do not operate any of our
own laboratories. Instead, we have pursued a strategy of networked innovation,
with an emphasis on streamlining the traditional process of bringing drugs to
market. We streamline in many ways, of which partnership is the most important.
We partner with investigators in the public and private sector to discover new
compounds with potential for treating neglected diseases. We partner with for-
profit pharmaceutical companies to try to find opportunities to match their cast-
offs—abandoned, discontinued or no longer profitable drugs—with neglected dis-
eases. And we partner with manufacturers, non-government organizations
(NGOs), and local infrastructure service providers to manufacture drugs and
deliver them to patients. Our core operations involve using our R&D experience to
coordinate and collaborate with these partners and, most importantly, identifying
the technological leads and securing the funding to create—and seize—opportu-
nities to save lives. (See Figure 1.)
We also aim to streamline the clinical trials process wherever possible. This of
course does not imply that we cut corners in terms of safety. Rather, if we don’t
need to do as many trials—perhaps because our drugs do not compete with exist-
ing drugs—then we don’t. Finding a late-stage drug to take over the finish line
enables us to get the most from our investments. Also, when we bring a drug to a
developing country’s regulatory approval boards, we work with the agency to find
the most straightforward path to satisfying the regulatory requirements that will
prove safety and efficacy. Ultimately, we still have to do many studies, just as any
other pharmaceutical company must do, and these studies can cost tens of millions
of dollars.
These costs have been one of the biggest challenges to our model. What
replaces profit when you remove it from the equation? We account for success in
human terms and we value each life equally rather than weighting them in terms

innovations / Davos 2008
Figure 1. The Funding Model.
109
Victoria Hale
of ability or willingness to pay. We were working for the same global public health
outcomes as philanthropic organizations like the Bill and Melinda Gates
Foundation. We were pioneering a new business model that groups like the Skoll
Foundation and Schwab Foundation were looking to foster. Philanthropic funds
would be our main source of revenue, and capital would be put to work to achieve
a social return on investment.
But a shared sense of mission alone was not enough to persuade our current
partners at the Gates Foundation and elsewhere to support us in the earliest stages
of our development. What was required at the outset was a setting that would
enhance our prospects for success, enabling us to overcome the scientific, financial,
regulatory, and even political hurdles inherent in the development of drugs for
neglected diseases. For OneWorld Health, that setting was Bihar, India. The disease
was visceral leishmaniasis (VL), also known as “black fever,” or Kala-Azar by those
whom it afflicts.
MATCHING PROMISING DRUGS WITH NEGLECTED DISEASES

Paromomycin is an antibiotic developed by Pharmacia (now Pfizer), which dis-
continued it in the 1970s because it was no longer profitable. This drug floated to
the top of our list of drugs to treat neglected diseases because it had such great
potential. It had been a very effective and safe antibiotic, so much of the expensive
testing had already been completed. Moreover, an African researcher had discov-
ered that paromomycin had a powerful effect on a disease called Visceral
Leishmanaisis, a fatal disease for which safe, effective and affordable treatment
options were urgently needed. Consequently, Pharmacia granted the rights to
paromomycin to the World Health Organization (WHO). The WHO had put
some efforts into using paromomycin to treat VL, but ultimately abandoned the
effort.
VL is the second most deadly parasitic disease in the world. It is a devastating
affliction. Caused by a parasite spread by a common insect in the tropics called the
sand fly, the disease attacks the bone marrow and destroys the body’s ability to pro-
duce red and white blood cells. This leaves the patient extremely vulnerable to
infection. Similar to AIDS patients, those with Kala-Azar almost always die of a
side infection they simply cannot fight.
I visited with patients suffering from Kala-Azar in Bihar, India where it is most
prevalent, though the disease is also common in Nepal, Bangladesh, the Horn of
Africa and Brazil. This region of India hosts the poorest of people who have been
without food for years of their lives. Those afflicted with the disease are emaciated
except for their large bellies, where the parasite hides, enlarging the liver and
spleen. Witnessing the consequences of this illness was an indelibly marking expe-
rience.
In Bihar, a hundred million people are at risk for Kala-Azar. Approximately 1.5
million people are infected with the disease. There are 500,000 new cases and
300,000 deaths each year. Existing therapies are so expensive that families have

been put three generations into debt to treat and save a relative. In contrast, the
promise of paromomycin was a cure from Kala-Azar for between US$10 and
US$15.
Because my staff and I had experience with drug development and the regula-
tory process in various settings around the world, we entered into the project with
full awareness of the obstacles that faced us in seeking to turn paromomycin into
a drug for Kala-Azar, and then
getting it approved. Among the
many obstacles, one had more to In August of 2006, the
do with politics than science: it
might be termed the “Constant Paromomycin IM Injection
Gardener” factor. The Constant was approved by the Drug
Gardener, a novel by John le
Carré, tells the tale of a multina- Controller General of India
tional drug company that took
advantage of the political vul-
for the treatment of visceral
nerability of a particular group leishmaniasis (VL), the
of people in Africa to test a new
drug with known adverse conse- medical name for Kala-Azar.
quences. Precisely because the
novel reflects aspects of reality
and past experience, Western pharmaceutical companies seeking to test drugs on
populations in poor places anywhere in the world are often received immediately
with suspicion. Lack of trust makes such projects difficult for for-profit pharma-
ceutical companies—in some cases, simply infeasible.
We also came to Bihar as outsiders. But we came with a goal not of increasing
the value of shares, but instead sharing the value of cures. With our public health
mission irrevocably encoded into our non-profit form of organization, we were
able to overcome the Constant Gardener factor. The mutual trust that we cultivat-
ed over a period of time allowed us to move forward with our trials even in the
most challenging rural environments in Bihar.
Reaching our initial goal—conducting clinical trials in Bihar for treatment of
Kala-Azar —took four years. When, at last in 2004, I went to a hospital in India
during a trial of our drug, the experience was exciting but also frightening. We had
one chance to get this right and show that we could repurpose a drug to treat a dis-
ease the world had forgotten. To fail would in some ways be worse than not hav-
ing tried at all, as we would potentially discourage future efforts. Seeing patients
treated with our drug suddenly sitting up, awake, aware, even hungry, provoked an
indescribable feeling of elation.
We submitted the drug to the Indian government for regulatory approval in
2006. In August of 2006, the Paromomycin IM Injection was approved by the Drug
Controller General of India for the treatment of visceral leishmaniasis (VL), the
medical name for Kala-Azar. The approval of Paromomycin IM Injection came less
than three months after the submission of the application for approval, which was

Victoria Hale
prepared by iOWH in collaboration with our partner, Hyderabad-based drug

manufacturer Gland Pharma Limited. The drug is expected to be a key tool for
India’s National Vector Borne Disease Control Programme (NVBDCP), which
aims to rid the country of VL by 2010. We also expect the drug will be used in dis-
ease control programs in other leishmaniasis-endemic countries. Gland Pharma
will make the medicine available at cost, for approximately $10 per treatment
course, a significantly lower price than currently approved VL therapies.
While we saw the approval of Paromomycin IM Injection for treatment of VL
as a sufficient proof-of-concept for a non-profit pharmaceutical model, the follow-
ing months brought further validation of our work. In May 2007 the WHO
announced the inclusion of Paromomycin IM Injection on their list of Essential
Medicines. Then, in June 2007 the New England Journal of Medicine published our
Phase 3 findings, communicating to a broad audience within the medical commu-
nity, from its most reputable journal, the particulars of the approach we had taken.
THE PHARMACEUTICAL VALUE CHAIN

For all the milestones we reached and the corresponding sense of accomplishment
we experienced in 2006, we also ended the year facing a stark reality: it is one thing
to develop and manufacture a drug that works, but it is quite another to get that
drug to those who need it. As difficult as it is to discover a promising approach and
then develop a drug, the final stage of delivering treatment can be the most diffi-
cult. Drug distribution must be done by local healthcare workers in local clinics. It
involves getting the drug to the right places, storing it safely, and then administer-
ing it to people who have been properly diagnosed.
In the case of Kala-Azar, our strategy of matching an orphaned drug to a neg-
lected disease had worked, but it remained unfinished. As we sought avenues for
addressing the challenge of delivery, we began to broaden our thinking about how
to approach the challenge of reducing inequities in treatment. It became clear to
us that, in order to have our desired impact, we would need to develop the capa-
bility to engage at multiple stages along the pharmaceutical value chain. (See
Figure 2.)
In the case of paromomycin and VL, we started out in the late stages of
research and development with our Phase 3 trials. Then we partnered with Gland
Pharma and the International Dispensary Association (IDA) for manufacturing.
Now, we are working on a plan to distribute and deliver those drugs to the benefi-
ciaries, the people of Bihar. To test our plan, we opened a liaison field office in the
city of Patna in Bihar, India to oversee a Phase 4 pharmacovigilance and access
program for the paromomycin treatment, which is administered as a once-a-day
injection for 21 days. Working with the principal investigators who are experts in
the treatment of VL and nongovernmental organization (NGO) partners, this
Phase 4 Program will investigate the safety and efficacy of treatment with the
Paromomycin IM Injection in progressively more rural areas in Bihar. The first
module of the program will enroll approximately 500 patients to provide addition-

Figure 2. The Pharmaceutical Value Chain.
al safety data on the treatment.

Over the course of the two-year trial, up to 1500 additional patients will be
included in two subsequent access modules that will extend the network of treat-
ment facilities, providers, and related logistics systems into the most rural areas of
Bihar. This is an innovative access model for administering Paromomycin IM
Injection that uses an outpatient setting to diagnose and treat impoverished
patients and advanced data transmission technologies for pharmacovigilence in
the remote areas where VL is endemic.
To deliver drugs to these remote and difficult-to-reach locations, iOWH is
seeking to make use of existing infrastructure already put in place by NGOs. In this
case, an existing force of healthcare providers that provide women with prenatal
care will use a hub and spoke model to carry drugs from a central location to out-
lying destinations. We will train the clinicians and rural healthcare providers at
local centers in the administration of the drug. The trial is an example of how
iOWH is extending its partnerships all the way to the village level. Indeed, our
work would be nearly impossible without local partners and our in-country pres-
ence.
While establishing a distribution and delivery network is extremely challeng-
ing due to the unpredictable nature of these rural areas and the lack of services in
them, this step is also the most critical of all those that iOWH takes in terms of its
mission to save lives. Beyond the obvious effect of the drugs and their ability to
cure patients, the very existence of the drugs can have a ripple effect in a commu-
nity. It brings hope to family members who no longer face the choice between
extreme debt and the loss of a family member. It also brings new knowledge and

Victoria Hale
power to clinicians, who can now diagnose people, knowing that there is an acces-
sible cure to their devastating disease.
Our goal is to refine an effective and transferable access model, enabling us to
saves lives, to bring social change to families and communities and to expand our
reach beyond India and into other regions burdened by infectious disease.
If we are successful, this new product will build demand for new markets along
the way. From the manufacturing center in Hyderabad to the bedsides of patients,
this drug will create a demand for
transport, delivery, and storage.
Local communities become part-
[I]t is one thing to develop ners with iOWH by providing
and manufacture a drug that these services and providing med-
works, but it is quite another ical care. When a local communi-
ty becomes healthier both physi-
to get that drug to those who cally and economically, the result
can be a profound and far-reach-
need it. As difficult as it is to ing.
discover a promising In addition to affecting
change in rural areas, projects in
approach and then develop a this part of our value chain also
drug, the final stage of affect positive change in the
developed world by addressing
delivering treatment can be the emerging problem of what we
call innovation pile-up. There are
the most difficult. many innovations coming from
scientists and engineers who are
developing new tools to prevent
and treat patients. But getting these drugs and innovations out of the warehouse
and to the patient is often the most challenging part of the problem. When this
problem isn’t tackled, these innovations pile-up and become a burden and a dis-
appointment that could, eventually, squelch the creativity of those scientists who
invented them. By building channels for these innovations to flow through, iOWH
can help prevent innovation pile-up.
THE DOORS ARE OPEN

As we have sought a non-profit approach to working with innovators to find treat-
ments for neglected diseases, we have observed a change in the attitudes of our for-
profit counterparts. In 2000 and 2001, when first began talking with pharmaceuti-
cal companies about our vision for a different approach to drug development, the
response to the pitch was skeptical, to say the least. We were asking for these com-
panies to surrender to us parcels of hard-won intellectual property. Even if they
weren’t using the property, the request was bound to meet with considerable resist-
ance—which it did.

Over the past six years, the reception we receive has changed considerably.
Pharmaceutical scientists within the conventional drug companies understand the
challenge we are seeking to address, and, more importantly, can see the value of the
approach we propose. Some want to participate in iOWH during a sabbatical or
through fellowships. Others offer themselves as resources to be available to help
guide us. Even at the corporate level, there is an openness and willingness to talk.
We now have access to these companies. They want to know how they can con-
tribute. Where the doors of collaboration appeared less than a decade ago to be
shut, today they are open.
The result of this turn-around is that it makes our search for the next match-
up of an orphaned drug with a neglected disease that much easier. We have two
more in the works already. These new partnerships hold the promise of produc-
ing therapies that will cure people afflicted with malaria—the most deadly para-
sitic disease in the world—and diarrhea.
Our malaria program efforts fall solidly on the manufacturing and distribu-
tion links of the value chain. We are focusing on developing a supply chain for a
crucial malaria drug ingredient. The project involves a unique three-way partner-
ship between the iOWH, the University of California, Berkeley and Amyris
Biotechnologies. The partnership leverages new technology from Berkeley profes-
sor Jay Keasling and Amyris Biotechnologies that allows an anti-malarial drug pre-
cursor, artemisinic acid, to be manufactured using genetically engineered yeast.
Keasling and colleagues first described this new technology in the April 12, 2007
issue of the journal Nature. Prior to that discovery, only plants produced the com-
pound, making it an expensive and unreliable ingredient for a mass-produced
drug.
Despite this technological advancement, challenges remain. The yield of
artemisinic acid will need to be improved substantially in order to be economical-
ly acceptable for large-scale manufacturing. Moreover, iOWH must guide the
resulting drug through regulatory approval and contribute to its effective integra-
tion into the global market. We look forward to continued progress this year with
Amyris and UC Berkeley toward our goal of introducing microbially-derived
semisynthetic artemisinin into Artemisinin-based Combination Therapies (ACTs)
by 2010.
Our diarrhea program falls on the other end of the value chain. It focuses on
discovery. In 2006 the Bill & Melinda Gates Foundation awarded us a US$46 mil-
lion grant to develop wholly new treatments to complement traditional approach-
es for fighting diarrhea. Diarrheal diseases are a leading cause of death in children
under the age of five worldwide, killing an estimated 2 million children each year.
Typically, children die of complications from dehydration. Therapies exist that
help rehydrate these children, but no effective therapy exists to stem the loss of flu-
ids in the first place.
Our efforts will focus on developing safe, effective and affordable new anti-
secretory drugs that inhibit intestinal fluid loss. These novel anti-secretory drugs
will be deployed as an adjunct to oral rehydration therapy for the treatment of

Victoria Hale
acute secretory diarrhea, which is responsible for nearly 40% of reported cases of
diarrheal disease globally. During 2006, the iOWH Diarrheal Disease Program ini-
tiated several new collaborations which include BioFocus DPI, who will apply their
medicinal chemistry and early stage drug development expertise to identify new
anti-secretory drugs, and the International Center for Diarrheal Disease Research
in Bangladesh (ICDDR,B), who will conduct pre-clinical studies.
BUSINESS SUSTAINABILITY: THE MONEY CHALLENGE

The business of creating new drugs is slow and expensive. It involves great dili-
gence and care because of both cultural and ethical considerations involved in
treating patients with new medicines. We have proven that our model is effective,
but not yet that it is sustainable. A critical challenge in our next stage of develop-
ment will be to transition from exclusive reliance on philanthropic support and to
a model which combines grant-funding with revenues through sales.
With regard to philanthropic gifts and grants, we are increasingly aware of our
need to develop a funding pipeline to support our products development in each
stage. iOWH could, for instance, invest its funds in identifying good leads for the
orphaned drug-orphaned disease match-ups with the most potential. We would
then bring these leads and targets to outside funders who would help fund the
development of the drug, and to a likely different set of partners who would help
manufacture and distribute it.
With regard to sales, we have started to consider the applicability of a cross-
subsidization strategy: sales of a product to those able to pay can help cover costs
of providing therapies to those unable to do so. The approach is sound and well-
tested. (See, for example, the case in this issue on the Aravind Eye Hospital.) While
visceral leishmaniasis almost exclusively afflicts the poorest of people, such is not
the case is not with all neglected diseases. Malaria affects the middle and upper
classes. So does diarrhea. Similarly, a compound could be developed with for the
same indication in two regions of the world. This so-called dual market approach
has the potential to earn revenue and have public health impact.
Of course, we did not create iOWH to be yet another revenue-maximizing
drug company. Our non-profit model enables us to fulfill our mission to make
drugs that are not only safe and effective, but also affordable and accessible to all.
In order to do this important work far into the future, expanding our reach and
impact, we must continue to seek innovative ways to grow and sustain the organ-
ization.
NEGLECTED NO MORE
The Institute for One World Health is not the cure to global inequities of access to
medicines. If it is part of the solution, it will not be because of what we are able to
accomplish in isolation. Rather, it will be because others innovate at least as aggres-
sively as we have sought to, mobilizing resources, forming partnerships, affecting

changes in policy, and creating new paradigms that work for the poor, rather than
against them.
My own belief, however, is that new technologies, creative organizational
structures, and necessary re-alignments of incentives will be insufficient to bring
about such change unless all are combined with one other essential element: moral
outrage. When even a single life is wasted for want of a treatment that, if available,
could be provided for less than the cost of a box of Band-Aids, we as a global com-
munity have failed.
To address this failure will require an effort distributed across the globe, from
village clinics to corporate boardrooms—and it will necessitate great humility and
compassion. It may begin with the work of organizations such as ours in building
awareness and creating new opportunities for action. But it ends only when neg-
lected diseases, and the people they afflict, are neglected no more.
Acknowledgements
I am grateful to Jim Hickman, Ahvie Herskowitz, and Beth Doughterty for their
assistance in writing this case.

Dener Giovanini
Taking Animal Trafficking

Out of the Shadows
RENCTAS Uses the Internet to Combat
a Multi-Billion Dollar Trade
Innovations Case Narrative: RENCTAS
Animal trafficking, the third largest illegal trade in the world after drugs and arms,
is a US$20 billion business. Brazil is estimated to account for up to 15% of this
illicit global trade.1 In Brazil alone approximately 38 million animals are poached
every year, posing a deep threat to regional and global biodiversity. The trade is as
wasteful as it is massive; nine out of ten animals die while being captured or trans-
ported, often in torturous circumstances.
Animal trafficking is threatening Brazil’s biodiversity at an alarming rate. Over
the past 10 years, the official list of Brazilian animals threatened by extinction has
nearly doubled. Today, over 600 species are on this “death row.” Animal trafficking
has played a significant role in the growth of this list. Many species run the risk of
disappearing exclusively as a result of their illegal trade. In addition to contribut-
ing to the reduction of biodiversity, wild animal trafficking is responsible for the
transmission of diseases and disproportionately harms poverty-stricken commu-
nities.
As Environmental Secretary in the municipality of Três Rios, a small city in the
southern Brazilian state of Rio de Janeiro, in the mid-1990s, I was alarmed by a
growing number of incidents involving captured wild animals in my jurisdiction.
Dener Giovanini is founder of the National Network for Combating Wild Animal
Trafficking (RENCTAS). Prior to founding RENCTAS, Giovanini was Environmental
Secretary of Três Rios, a city in the Brazilian state of Rio de Janeiro. In 1999 he was
elected an Ashoka Fellow, and subsequently honored as a Schwab Social Entrepreneur.
In 2003 he was named co-winner of the United Nations Environment Program
(UNEP) Sasakawa Environment Prize, among the world’s most prestigious environ-
mental awards.
This case narrative originally appeared in volume 1, number 2, of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Dener
Giovanini as an Outstanding Social Entrepreneur.
© 2006 Tagore LLC

Dener Giovanini
Sensing a problem of significant magnitude, in early 1999, I founded an organiza-

tion to address animal trafficking at the local level. My two colleagues, Raulff Lima
and Sergio Peixoto, and I named our organization the National Network to Fight
the Trafficking of Wild Animals (the Portuguesa acronym is RENCTAS). In seven
years, RENCTAS has become the leading force combating illegal animal trafficking
in Brazil, and is among the major organizations of its type globally.
When we began, animal trafficking was a non-issue in Brazil. Today it is a pub-
lic concern addressed regularly on Brazil’s major news outlets. We have worked to
effect this change by documenting the particulars of the trade, enhancing public
awareness, educating law enforcement officials, influencing legislation, and shap-
ing public policy. Central to these successes is our use of the Internet to convert
animal trafficking from an unknown and un-quantified issue to a high-priority
item on the national policy agenda.
A BURGEONING TRADE
CAUSING ENVIRONMENTAL, SOCIAL, AND ECONOMIC DAMAGE
While animal trafficking has escalated dramatically in recent years, it is not a 20th-
century phenomenon. Five hundred years ago, when Europe began colonizing the
world, voyagers returned with unknown animals as evidence of having discovered
new continents. These animals drew attention and curiosity in Europe, and were
soon exhibited and traded in the streets.2 The possession of wild animals was a
symbol of power, wealth, and nobility. This status and curiosity fueled the creation
of a profitable business.
Brazil has long been a prime source of “exotic” animals. With an area covering
more than 8.47 million square kilometers, Brazil has one of the richest fauna
worldwide. It has the greatest number of species, with approximately 3,000 terres-
trial vertebrates and 3,000 fresh water fishes.3 Brazil is the richest country in mam-
mal diversity, with 524 species4 and ranks third in birds, with nearly 1,677 species,
5
fourth in reptiles, with 468 species, and first in amphibians, with 517 species.6
Traffickers plunder Brazil’s living resources for four markets. The first market
is made up of collectors and private zoos. Although these collectors and private
zoos hold illegally extracted animals, many in fact have government authorization
to operate. Private collectors are generally extremely wealthy individuals who
maintain collections for reasons of vanity. Although this is a serious problem in
Brazil, the problem is far more extensive abroad since these collectors are out of the
reach of Brazilian law. Supplying private collections is perhaps the most destruc-
tive type of wildlife trafficking because its primary focus is the most endangered
species; the rarer the species the higher an animal’s value. The lear’s macaw, for
example, fetches US$60,000 on the international market.
The second trade, biopiracy, extracts chemicals from animals for research and
production of medicines. This industry is growing daily, with the incursion of ille-
gal researchers within Brazil in search of new species. Huge revenues are garnered
from these activities. The nigriventer spider venom is coveted for research on a new

Taking Animal Trafficking Out of the Shadows
and more effective analgesic substance, with a value of up to US$4,000 a gram and
the market value for hypertension drugs uniquely derived from one Brazilian
snake species is US$500 million.
Biopiracy is supported through a complex operational system that navigates
loopholes in laws and discrepancies in international accords. Many animal and
plant-based chemical substances leave one country illegally but arrive at their final
destination as legal. This
occurs, among other rea-
sons, because the informa- Animal trafficking, the third
tion-sharing among
nations is still deficient. largest illegal trade in the world
Many countries allow pirat- after drugs and arms, is a US$20
ed animal materials to enter
their territory, unaware of billion business. Brazil is
their illegal origins. The
organized gangs who oper-
estimated to account for up to
ate in this market deploy 15% of this illicit global trade. In
diverse types of fraud, from
falsification of documents
Brazil alone approximately 38
to bribing public officials. million animals are poached
In some cases animal or
plant products are even every year, posing a deep threat to
patented, which requires regional and global biodiversity.
years to resolve through
international courts.
Pet animals are the
third market. Boas, turtles, macaws, marmosets, and many other creatures are cap-
tured; the few that survive end up in private homes in the United States, Europe,
Asia, or elsewhere. The fourth category, fauna products, consists of parts of ani-
mals, such as reptile skins or bird feathers, which are used as ornaments and in
crafts that cater to the fashion market.
Within Brazil, most stolen animals are transported by trafficking networks
operating across highways in trucks, buses, and cars. Corruption and fraud often
facilitate the process. According to the Brazilian Federal Police, smuggling is likely
to be supported and facilitated by government officers assigned to strategic posi-
tions such as ports, airports, and customs offices; on the international side,
researchers acting for international traffickers use government-issued credentials.
Also, “animal laundering” is carried out in Brazil through zoos or so-called scien-
tific, conservationist, or commercial breeding grounds which provide false certifi-
cates claiming that animals were born in captivity. Even when animals are recov-
ered during busts or sting operations, many cannot be returned to nature. Close to
60% are found in conditions so poor as to make their return impossible. These ani-
mals must spend the rest of their lives in captivity.
Brazil’s animal trafficking supply chain flows through three groups: suppliers,

Dener Giovanini
middlemen, and consumers. Suppliers are usually extremely poor people from the
backlands of Brazil for whom the fauna trade is a supplementary source of income.
The middlemen range from regatões (boatmen of the Northern and Mid-Western
regions), to farmers, truck and bus drivers, and street peddlers. Small and medium
traffickers connect these rural middlemen with the larger, international networks.
Large-scale international traffickers operate globally and deploy the same smug-
gling and corruption tools as other international trafficking networks. Some zoos
and breeding grounds also participate at this level. On the consumer end, animals
and animal products land in homes, zoos, aquaria, circuses, private collections,
tanneries for industry, fashion stylists and producers, and pharmaceutical indus-
try.
Like the drug trade, animal trafficking capitalizes on an asymmetric econom-
ic relationship between the source, usually developing countries with fragile and
under-funded enforcement capacity, many of whose citizens desperately need
income, and the demand, wealthy countries with purchasing power. This dispari-
ty brings corruption, further eroding the ability of Brazil and other developing-
country governments to build strong and accountable institutions. The responsi-
bilities of the various enforcement agencies are fragmented geographically by local,
national, and regional jurisdictions and bureaucratically by “silos” of operation.
Their lack of coordination undermines the ability of enforcement agencies to take
on the complex networks used by traffickers to move animals from their point of
capture or breeding to the final purchaser.
An alarming development with far-reaching consequences for Brazil and other
nations is the integration of trafficking activities, especially between animal traf-
ficking and the drug trade.7 For example, officials in Miami recently apprehended
a shipment of snakes together with packages of cocaine. As animal traffickers
become part of larger and more violent global criminal organizations, their capac-
ity to outgun and outmaneuver enforcement efforts grows.
One area where animal trafficking differed notably from the drug trade was in
the degree of public awareness of the scope and scale of the problem. In Brazil in
the late 1990s, the animal trade was unknown. Ignorance of the problem spanned
all regions and socio-economic strata of Brazilian society. For example, in an arti-
cle published in a daily newspaper an economist and former elected representative
was quoted criticizing Brazilian environmental enforcement because it arrested a
German trafficker. According to him, the intention of the “poor fellow” was to help
Brazil get rid of such plagues as spiders and other venomous animals. The animal
trafficking business operated almost entirely under the radar.
USING THE INTERNET TO GATHER AND ORGANIZE

INFORMATION ABOUT THE TRADE
When Raulff Lima, Sergio Peixoto, and I started RENCTAS in Três Rios in 1999,
information technology, including the Internet, was not part of our plan. Our
small team began by delivering workshops on the animal trafficking problem, and

we began collaborating with law enforcement groups and environmental agencies

locally and nationally. We also provided support to research projects concerning
conservation of endangered species and carried out national awareness campaigns.
Yet in trying to bring attention to the problem, we were confronted with indiffer-
ence caused by a sustained lack of information.
Many of the advocacy and training activities in which we engaged were fairly
traditional for non-governmental organizations (NGOs) at the time. However,
from the outset, the other critical component of our work was researching and
investigating trafficking activity so we could report it to the enforcement authori-
ties for action. Initially, all our research, tracking, and reporting of the illicit ani-
mal trade was paper-based. This changed late one Saturday night in our first year
of operation. I was home when I received a call at 10:00 p.m. from a police officer
at an international airport. She had just apprehended a foreign citizen who had in
his suitcase nearly 500 toads and 200 snakes. He was bound on a flight to a
European destination. As this individual was claiming that he was unaware that
taking these animals out of the country was illegal (a common ploy by traffickers),
the officer urgently needed to corroborate whether he had been involved in other
criminal trafficking activity in Brazil, as this would escalate the gravity of the
charges. Without this evidence, the police would be required to let him go after a
brief detention and confiscation of the animals. With the clock ticking, I quickly
called several colleagues away from their normal Saturday night festivities and
together we began to search frantically through our piles of files containing
approximately 30,000 papers. At 5:00 a.m., having given up, I sat in my chair,
despondent—and saw the paper I had been looking for, face up on the floor
among all the other papers.
Having found the needle in the haystack, we immediately phoned the police
officer, who told me that, regretfully, they had just released the suspect due to lack
of evidence proving deliberate intent to traffic animals. At that moment we real-
ized the imperative of collecting information electronically. Soon thereafter we
purchased database software and computers, and digitized our records.
Nevertheless, the story of the snake-trafficker resolved itself favorably. One
year later, I received a phone call from a judge in the Amazonian city of Manaus,
who had participated in one of our training workshops. She informed me that the
following day she would make a judgment on a case involving a foreign citizen who
claimed no knowledge of Brazilian law regarding animal transportation. Three
minutes later I had pulled the records on the individual, the same who had gotten
away the year before! This time, the government had the information it required
to press the case.
This “back end” database allowed us to track larger volumes of criminal activ-
ity; however, we quickly discovered that criminals didn’t appreciate being tracked.
At that point our base of operations was very local (in the state of Rio de Janeiro)
and very high-profile through talks we gave, our interactions with law enforce-
ment, and so forth. One day I was in a local hotel giving a speech when through a
door I saw a gun pointed at my head. The message was clear; the traffickers were

Dener Giovanini
giving me a “last chance” to withdraw our activities. This threat, coupled with an
increasing volume of e-mails from citizens and collaborators, made clear the
advantages–and necessity–of “going virtual.”
Although we were dragged by circumstance and frustration into the informa-
tion age, once online we were deliberate and aggressive in how we used our new
capacity. From this point forward we chose the Internet as the primary venue for
our work. The original core model of our virtual operation consisted of a website
we developed to allow ordinary citizens to report tips–instances of animal capture,
sale, transport, or illegal breeding. RENCTAS investigated the tips and passed the
findings to local law enforcement for action.
Our investigators also began using the Internet to scour auction sites, chat
rooms, and pet and collector bulletin boards for clues to illegal animal trafficking.
RENCTAS also employed old-school investigative tools such as the telephone and
even a CB radio to speak with truckers. The Internet, however, proved the most
efficient and effective way to gather information. As those who live by the sword
die by it, those who trade on the Internet can also get caught in it: One of our tech-
niques for identifying middlemen and sellers has been to pose as buyers on some
of the more than 5,000 animal sites that cater to animal traffickers.
The Internet has also provided a higher degree of anonymity to those wishing
to report animal trafficking crimes without being detected, as they might be by
walking into a local police station in a small town. But even with the Internet, we
must be careful. Given the risks inherent with digitally storing personal informa-
tion, all tips are immediately taken off computers and stored separately in safe
locations to protect the individual informers.
By the late 1990s, e-activism was nothing new. What was novel, however, was
our approach to it. Many NGOs were active online through chain-letter petitions,
letter-writing campaigns, and general list-serv-based forums for discussion. These
activities tended to be one-directional, directed at already mobilized constituents,
and they rarely linked the common citizen to tangible results. In contrast, we
internally mandated that each tip receive a personalized response and gave priori-
ty to updating our tipsters on the results of their contributions. It was clear to us
that virtual and anonymous online interactions required heavy personalization to
effectively build a community base.
TAPPING THE STRATEGIC LINK

BETWEEN VIRTUAL INTERACTIONS AND MEDIA DISSEMINATION
From this model of heavily personalized online information brokerage, two chal-
lenges began to emerge. First, although RENCTAS could investigate many local
cases, enforcement spanned many local, sub-national, and national government
levels in Brazil, a huge country. A second growing challenge for our investigative
staff of two was the sheer volume of tips, which were coming into our system at an
average of 30 per day. The problem of improving our coordination with govern-
ment enforcement agencies was partially addressed by our move, after one year of

operation, from the state of Rio de Janeiro to Brasilia, the country’s capital, in
January 2000. This gave us proximity to the federal government’s federal police
and environmental agencies such as IBAMA (Brazilian Institute for Natural and
Renewable Resources) and the Ministry of Environment.
Our move to Brasilia also coincided with a shift in the balance between virtu-
al and traditional interactions.
While we maintained our website
for tip-gathering and for nation- The tips we received related,
wide reach—continuing to bro-
ker information between citizens variously, to each point along
and law enforcement officials—
we began to leverage the value of
the traffickers’ supply chain,
that capacity in novel and power- from source to final buyer. We
ful ways. The tips we received
related, variously, to each point
began to translate the
along the traffickers’ supply information in those tips into
chain, from source to final buyer.
We began to translate the infor- a clear picture of the trade.
mation in those tips into a clear
picture of the trade. By aggregat-
ing the bits and pieces we gath-
ered through the Internet, we achieved an understanding of the process of animal
trafficking unsurpassed by anyone except, perhaps, the traffickers themselves.
We used this aggregated information to tell a compelling, and tragic story. In
January 2000, at the same time as our move to Brasilia, Brazil’s largest television
network, Rede Globo, broadcast a five-part series on animal trafficking called “Life
for Sale” based on the work of RENCTAS.8 In addition to dramatically boosting
awareness of the problem, the Globo series generated an explosion of 28,000 new
tips, queries, and other information through the RENCTAS site from throughout
the country. In the Brazilian print press, coverage of animal trafficking in the
country’s four leading daily newspapers multiplied fourfold between 1999, the year
of RENCTAS’ inception and 2006. RENCTAS and the problem it combats have
been featured in the leading international press as well, including The Economist,
the BBC, National Geographic, and the Christian Science Monitor.
One reason our media work in Brazil has been so effective is that we have
appealed to a sense of national pride in one of our most distinctive attributes: our
biodiversity, as symbolized by beautiful and unique animals. Appealing to the
emotional side of the problem also served another purpose: it gave us political cov-
erage and thus protected us from counterattacks, be they from corrupt officials or
the traffickers themselves.
Increasingly we learned to manage the interplay between our Internet work
and press coverage of animal trafficking. For example, each time a story appeared
in a local newspaper, our staff sent e-mails with a link to the article to our sub-
scribers, encouraging people to write the newspaper to thank them for covering

Dener Giovanini
the issue. This positive reinforcement motivated more coverage that, in turn, drove
even more traffic to RENCTAS. The dynamic between Internet and media ulti-
mately served our goal of creating awareness of a formerly invisible issue. The next
question was how to translate this awareness into changes in policy and practice.
We came to understand that many of the visitors to our website were environ-
mentalists who would respond to pleas for action. Using postings on the home
page of the site along with the “push” of e-mail messages to over 60,000 sub-
scribers, we developed the capacity to galvanize people to respond to specific issues
or threats. For example, at 9:00 a.m. one morning we learned that a measure with
harmful implications for wildlife conservation would be discussed and decided
upon that day at 11:00 a.m. in one of the Brazilian government agencies. We post-
ed the news on our site and via our e-mail listserv. By 10:30 a.m. 25 activists
dressed in black RENCTAS “uniforms” and wearing dark glasses were flashing
cameras at the participants arriving at the meeting. Our goal was to apply pressure
on decision makers by evoking an intimidating image, while suggesting that their
picture might appear in the media associated with an unpopular decision. We suc-
ceeded in influencing the outcome of this policy decision with only five minutes of
effort that morning. We increasingly use this type of “power of persuasion” to
accomplish our goals.
RENCTAS AND BRAZIL’S GOVERNMENT
In our early efforts to build relationships with local, national, and international
government organizations, we found that government attitudes about the problem
encompassed everything from inertia to outright obstruction by officials who were
probably compromised by the trafficking trade. We developed a two-pronged
approach to meet this challenge. First, we discovered pockets of enthusiasm among
lower-level government technical staff, many of whom were committed to saving
the environment. In contrast to many more combative Brazilian activist NGOs at
the time, we were cooperative with the government. At the same time, RENCTAS
never accepted government grants or program support to ensure its complete
autonomy. This stance has played a key role in building trust and respect with gov-
ernment officials, who realized that RENCTAS was not after their money.
Our strategy of collaborative autonomy allowed us to build support from the
bottom up in ministries and police agencies. We combined this with top-down
political pressure generated by the increasingly visible cycle of media publicity and
the growing volume of tips and other forms of citizen involvement flowing into
RENCTAS through the Internet. RENCTAS and the animal trafficking problem in
Brazil could no longer be ignored. As a result of our efforts, the Brazilian
Parliament created an Inquiry Commission to investigate the problem and the
Federal Police launched and implemented a national campaign against animal
trafficking. Interpol, the Brazilian Federal Police, IBAMA (the Brazilian national
environmental agency), the U.S. Department of Justice, CITES (the Convention on
International Trade in Endangered Species of Wild Fauna and Flora, headquar-

tered in Switzerland), WEG (Wildlife Enforcement Group, New Zealand) have all
grown to depend on RENCTAS for information and collaboration.
As time progressed, RENCTAS has increasingly diversified its operations and
has taken on training programs for police, hosted international conferences, and
published a book detailing the levels and patterns of animal trafficking.9
KEEPING PACE WITH AN INCREASINGLY GLOBAL AND INTEGRATED

TRAFFICKING NETWORK
Just as the Internet has evolved, so have we. While we continue to use the Internet
to drive enforcement, media coverage, activism, and public policy domestically
and internationally, we are also expanding our use of Web conferences and instant
messaging to interact online
in realtime with our collabo-
rators. We are also expanding As with all other forms of global
our use of “just-in-time”
activism, relying especially criminal networks, from drug
on our advocacy e-mail list of traffickers to terrorists, animal
60,000 thousand activists for
pointed, rapid mobilization trafficking networks increasingly
focused on public policy
decisions.
deploy technology to their
Ironically, while it was advantage to circumvent local
the traffickers who drove us
to the Internet in 1999, now enforcement and to capitalize on
we have driven them into the lack of both legislation to
more virtual spaces. The
clearest evidence of this is the regulate their online activities
disappearance of open mar- and government information-
kets in Brazil where, until a
couple of years ago, one sharing to pursue them.
could purchase huge varieties
of birds, reptiles, and even
primates. As with all other forms of global criminal networks, from drug traffick-
ers to terrorists, animal trafficking networks increasingly deploy technology to
their advantage to circumvent local enforcement and to capitalize on the lack of
both legislation to regulate their online activities and government information-
sharing to pursue them. Our challenge is to keep pace with them, which we do by
increasing our undercover presence in their online worlds. We are also working to
influence government regulation over these activities; most recently we succeeded
in providing the Brazilian justice ministry with information on over five thousand
violations based on our research of offers of illegal animal sales on the Internet.
One of our most significant recent actions has been to move directly into the
distribution channels by partnering with transportation companies that have

Dener Giovanini
served, often but not always unwittingly, as the conduits for animal trafficking. We
currently partner with the Itapemirim Group, one of Brazil’s largest passenger
transportation companies. Itapemirim was even considered an “accomplice” of
traffickers by some sectors of the government and society since its buses were often
used by traffickers. This bad publicity eventually compelled Itapemirim to rethink
its position in the market. By partnering with RENCTAS, the firm and its clients,
suppliers, and employees have been educated to realize that they were victims, not
villains. We have conducted a massive joint PR campaign to raise awareness among
the company’s drivers and passengers about animal trafficking. A second effort to
reach into the traffickers’ transportation networks in Brazil involves our collabo-
ration with the Martins Group, one of Latin America’s largest trucking firms which
travels over all of Brazil’s roads. The company’s entire team of truck drivers has
been provided with awareness training.
The aim of our partnerships with both Itapemerim and Martins is to make it
more difficult for animal traffickers to use transportation networks to transport
animals. By educating the drivers, cargo handlers, those in management positions,
and even the firms’ clients, we increase the level of vigilance and make it more dif-
ficult for all of these people to be co-opted into the animal-trafficking process.
This, in turn, leads to fewer denunciations (tips) linked to specific buses or trucks
(due, we believe, to reduced trafficking) which in turn translates into better busi-
ness for the transportation companies.
LOOKING AHEAD
Our work has garnered public recognition. In 1999 I was honored to be awarded a
fellowship by Ashoka for my work with RENCTAS, and in 2003 I received the
United Nations Environment Programme (UNEP) Sasakawa Environment Prize,
considered the highest distinction for environmental work in the world. In 2004,
Former Brazilian president José Sarney, then leader of the Brazilian Senate,
bestowed upon me the National Congressional Medal. At this ceremony he sum-
marized what we do:
The great merit of RENCTAS was, without doubt, to show Brazil a coun-
try we didn’t know. Today the trafficking of animals has come out from
the shadows thanks to the light that RENCTAS cast upon it to be seen by
all except those who refuse to look.
Indeed, lifting the curtain on this activity in Brazil is an important accomplish-
ment. However, just as trafficking is both global and domestic, our work increas-
ingly involves both spheres. The challenge at home still looms large. Perhaps our
biggest barrier is the relative lack of a civic and philanthropic culture to support
wildlife preservation in Brazil, among other things. Getting companies and citizens
on board in sustainable ways is a huge uphill battle in a country with a limited his-
tory in philanthropy or corporate responsibly. Many of our future efforts in Brazil
will be directed in this area. On the global front, we must raise awareness among

the consumers of animals and their products. Currently we are working with the
Brazilian Foreign Ministry to conduct an awareness campaign abroad with posters,
brochures, and other educational materials through our embassies worldwide.
Unfortunately, the accomplishments of RENCTAS and our colleagues in other
organizations can not ensure the survival of the 600 Brazilian species now on
extinction’s “death row,” nor can they ensure the sustainability of our planet’s bio-
diversity. As with arms and drugs, traffickers service a demand. Until citizens—
particularly individuals and institutions in industrialized countries—hold them-
selves and their governments fully responsible for curtailing consumer demand for
illegally traded animals, the traffic will continue.
Acknowledgements
I thank Winthrop Carty for his work in translating this paper from the Portuguese,
and providing invaluable assistance in framing and organizing the ideas presented.
I also thank Ashoka for their support along multiple dimensions, including the
development of a previous case study of RENCTAS.10
1. Rocha, F.M. (1995) Tráfico de Animais Silvestres, WWF. Discussion Paper.

2. Hagenbeck, C. (1910) Animales y Hombres. Hijos de Carlos Hagenbeck. Editores, Hamburgo-
Stellingen, . 483.
3. Mittermeier et al, (1992) “O País da megadiversidade”. Ciencia Hoje (14): p. 20-27, 81.
4. Fonseca et al, (1996). Lista Anotada dos Mamíferos do Brasil. Ocasional Paper no. 4, April,
Conservation Internacional.
5. Sick, H. (1997) Ornitologia brasileira. Nova Fronteira, Rio de Janeiro, p. 912.
6. Mittermeier et al, 1992
7. This relationship is documented in the final report of the Brazilian Congress’s Parliamentary
Inquiry Commission on Animal Trafficking.
8. “Vida a Venda” in Portuguese.
9. “First National Report on Fauna Traffic in Brazil.” Available in PDF format from
<http://www.renctas.org>.
10. Additionally, this article drew from a report written by Shannon Walbran, then of Ashoka in
2002 and from a case study co-authored by Stanley Yung, then of Ashoka, and Winthrop Carty, then
of the Ash Institute at Harvard University. For more about Ashoka see <www.ashoka.org>.

Jerry Mechling
Tools for Compliance

in a Networked World
Innovations Case Discussion: RENCTAS
Dener Giovanini's story of RENCTAS (the Portuguese acronym for National

Network to Fight the Trafficking of Wild Animals) is compelling and inspiring.
Using modern communications skillfully and with great personal courage, the
leaders of RENCTAS have shown that a few good people can virtually move moun-
tains, even against the money and guns of the third biggest illegal trade in the
world (after illegal arms and drugs).
But what are the more specific lessons from RENCTAS? What explains what
happened? Where will the lessons from animal trafficking in Brazil lead next?
This paper argues that key lessons from RENCTAS are about the power of the
Internet to:
a) make access to services and participation in the counter-trafficking effort
significantly easier and safer than it otherwise would be;
b) improve the transparency of trafficking activities, both for individual cases
and the larger system; and
c) communicate the emotions of the story, supporting adroit use of video and
pictures to mobilize Brazilian pride and their desire to protect their amazing native
animals.
Those three capabilities—for access, transparency, and emotional communica-
tions—explain much of what RENCTAS has been able to accomplish. They will
continue to be important for controlling animal trafficking and—more broadly—
for other efforts to gain compliance with social norms and laws. At the same time,
Jerry Mechling is a Lecturer in Public Policy and Director of the e-Government

Executive Education Project at the Kennedy School of Government, Harvard
University. A Fellow of the National Academy of Public Administration and four-time
winner of the Federal 100 Award, he was formerly a Fellow of the Institute of Politics,
served as an aide to the Mayor and Assistant Administrator of the New York City
Environmental Protection Administration, and served as Director of the Office of
Management and Budget for the City of Boston. He received his BA in physical sci-
ences from Harvard College and his MPA and PhD in economics and public affairs
from the Woodrow Wilson School at Princeton.
This case discussion originally appeared in volume 1, number 2, of Innovations.
© 2006 Tagore LLC

Tools for Compliance in a Networked World
easy access combined with transparency and emotional communications carries

risks as well as rewards, especially for minority rights and privacy. Good gover-
nance will require that we learn how to use these relatively new capabilities both
wisely and well.
In that context, let's look at the RENCTAS case, what explains it, and how we
might use its lessons in other settings.
RENCTAS—SUBSTANTIAL AND EFFICIENT PROGRESS

With 38 million animals worth US$3 billion poached in Brazil every year, the ille-
gal trade in animals was a major and growing problem in 1999 when Dener
Giovanini, Raulff Lima, and Sergio Priexoto formed RENCTAS in the relatively
small municipality of Três Rios. How could three people with little authority hope
to put a dent in a large illicit industry willing to protect its turf, if necessary, with
guns?
A more detailed examination shows an even more discouraging situation.
Despite the size of the problem, there was little public awareness or support in
Brazil for aggressive enforcement of the anti-trafficking laws. Given the money
available, along with the poverty of many of the Brazilians needed as suppliers or
middlemen, recruitment into trafficking was easy. Members of the bus, trucking,
and law enforcement communities had been significantly corrupted, especially at
ports where many of the animals were shipped out of the country. Foreign con-
sumers—typically quite rich in comparison to their Brazilian suppliers—wanted
entire animals as show-pieces or pets, or simply needed animal parts to feed vari-
ous fashions or for the exotic chemicals used for medicines or research. Law
enforcement personnel were fragmented into small jurisdictions and didn't share
information nearly as well as the criminals they were supposed to stop.
In the past seven years, however, much has changed.
Awareness of the problem has been greatly increased, helped considerably by a
five-part series on animal trafficking ("Life for Sale") by Rede Globo, Brazil's
largest television network. Print coverage is up by a factor of four, including inter-
national coverage in the Economist, National Geographic, and the Christian
Science Monitor.
Previous to much of this coverage, public participation in enforcement
increased dramatically, with individuals reporting suspected cases of poaching and
some 60,000 Brazilians signed up to receive blog postings and other information
on the battle. From this group, individuals are being readily recruited to write let-
ters to newspapers and legislators and to support events such as public hearings,
etc. Participation and awareness have created a positive feedback cycle, with each
leading to an increase in the other.
Beyond the general public, others are now being recruited to improve enforce-
ment and compliance with Brazil's anti-trafficking laws. Bus drivers are being
trained about the trade and how to thwart it, supported by a partnership by
RENCTAS with the Itapemirim Group, one of Brazil's largest passenger trans-

Jerry Mechling
portation companies. Similar efforts are proceeding with the Martins Group, one
of Latin America's largest trucking firms. Efforts are also reaching outside Brazil to
put heat on consumers in Switzerland, the U.S., and elsewhere. Working from the
ground up, RENCTAS has produced credible analysis making the trafficking
industry more accessible to an aroused public. Giovanini was awarded prestigious
prizes by Ashoka and by the United Nations Environment Program.
Despite the progress, the trafficking problem remains. Some 600 animals in
Brazil remain on the endangered species list. The animal trafficking industry seems
to be merging with drug trafficking, which may make it more vicious and difficult
to control.
Still, given that so much activity has been generated so quickly and by so few
in the core organization, RENCTAS must be judged incredibly efficient and effec-
tive. What has made them so successful?
EXPLAINING WHAT HAPPENED

Through insight, skill, and courage, Giovanini and RENCTAS have mobilized a
large and dispersed group of supporters to stand up to criminals and make it hard-
er and more costly to carry out illicit trades. Many factors may be needed to prop-
erly understand the varied elements of the story. However, three that seem partic-
ularly important—for RENCTAS and for other cases where people have been
mobilized to support a new activity—are accessible, transparent, and emotional
Internet-enabled communications.
Accessibility
The Internet globally is on the road to becoming pervasively accessible. In Brazil
that doesn't mean "anytime/anywhere" availability (compared to the extreme pen-
etration of broadband in South Korea, for example), but it does mean that
Internet-based services are often more accessible than those offered only on paper
or face-to-face. Internet communications can also be anonymous and speedy at
great distances compared to other forms for recruiting and involving people in
anti-trafficking activities.
Note that, when they began, RENCTAS worked largely through speeches and
public seminars, where they urged people to report suspected traffickers directly to
the police.
While initially effective—at least at gaining the attention of the traffickers—
the public meetings generated counter-threats from traffickers. Turning to recruit-
ment via the Internet made it much easier for potential supporters to contribute
safely and with relatively little effort. They didn't need to report to possibly corrupt
police, or travel to a special location. They merely needed to report suspicious inci-
dents to the RENCTAS web site, and the rest was handled on their behalf. RENC-
TAS protected anonymity while passing cases to the police, reporting back to the
informant, and keeping data handy for later analysis.
Web-based and push communications from RENCTAS also made it easier for

police, bus drivers, truck drivers, and others to stay connected to the movement.
Accessibility has been the prime benefit of global e-government for the past
decade and more. Net-delivered services are available 24/7 "online, not in line."
People have learned to both appreciate and expect the convenience.
More recently, people are learning that some kinds of group participation can
be fit into small blocks of time. You can get email on your Blackberry at the super-
market. That lets you keep up with some of the things that used to require a trip
and a meeting. For RENCTAS, this has allowed them to keep involved supporters
who, absent the Internet, would have found it too risky or time-consuming to be
of help.
A web site in Idaho offers another case that seems to be a frontrunner at mobi-
lizing the public by making demands for time and energy modest and digestible.
The site seeks to engage a balanced sample of individuals willing to vote in the state
primary elections and also devote one hour per year to issues coming before the
legislature. Keith Allred, the site's founder, meets with legislative staff and leaders
to scope out 20 or so issues likely to be decided in the upcoming session. He sum-
marizes each issue along with the most prominent positions taken (roughly a page
per issue). He tries to ensure that those taking the various positions accept the
validity of his summary. He then asks participants to use their promised hour to
study the issues and tell him what they want the legislature to do. He analyzes his
results for issues where the public response is clear (70% or more for one position)
AND is different from what those at the capitol think will come out of the legisla-
tive process. What he wants, in short, is to get the voice of the common interest
heard more clearly by the legislature (and by the media and the public). In the past
year, several positions he has identified in this way have won out over positions
supported by the most powerful and successful lobbyists in the state.
Making participation accessible can be powerful.
Transparency
The Internet and computer-based tools can also be used to increase transparency
in otherwise complex and confusing situations. Data can be indexed and analyzed
so it can be found, and so individual pieces can be aggregated into meaningful big-
ger pictures.
Both capabilities were important for RENCTAS. The case notes a major moti-
vating event early in Giovanini's work when he couldn't find a file soon enough to
meet legal requirements and a poacher therefore had to be released. That got him
to computerize all his records for rapid retrieval, updating, and sharing over the
net.
RENCTAS used this retrieval, updating, and sharing to maintain records that
provided feedback and reinforcement to field informants. While informants
remained safely anonymous, they could see what happened to their tips, and could
also see how their group in the aggregate was having a major impact.
Beyond simple aggregations, computers were used to collect new data and
massage it into a better understanding of the entire trafficking industry. Sleuthing

Jerry Mechling
via the web allowed RENCTAS to get clues on the enemy (e.g., via undercover work
in chat rooms where exotic animals were being sold). Adding their own data to
what they acquired over the web (and elsewhere), they were soon able to under-
stand more of the trafficking trade than was visible to most of the Brazilian
authorities. This made RENCTAS a valuable source of research. It also gave them
legitimacy with television people and the press. Those people, in turn, wrote sto-
ries that fed back to improve RENCTAS' legitimacy with the public.
The data that RENCTAS was able to assemble and analyze made new things
visible, for example, to senior managers within the Itapemirim and Martins
groups. These people could suddenly see the extent to which their buses or trucks
were implicated in illegal activities. Perhaps more important, RENCTAS analysis
could communicate the vulnerability that firms would face with an aroused pub-
lic that was also beginning to see and understand the data. Transparency led, as it
typically does, to heightened accountability.
Movement from analysis to transparency to accountability and responsiveness
was precisely what happened years earlier in the U.S. when the Toxics Release
Inventory data was made public in 1987. The law required firms to report their
toxics emissions to EPA. It then required EPA to make all the data available to the
public in computer-readable form. This reporting allowed a variety of groups
inside and outside of government to make it easy for individuals and community
groups to find out about emissions from plants near where they lived or worked.
It also allowed senior managers in those firms to find out about plants that were
bad polluters in comparison to other plants. The increased transparency led in
many cases to a quick assumption of accountability and "voluntary" corrective
actions that had not been possible before. Because of the transparency, the public
paid more attention, and because of the public's attention, the firms abated their
pollution.
Making the system transparent can be powerful.
(A number of the factors mentioned about the RENCTAS story are summa-
rized in Figure 1.)
Emotional Communications
While we typically use logic to rationalize decisions, we actually make those deci-
sions emotionally. Emotion drives our wants and desires, thus structuring and
motivating our decisions.
Text is efficient and effective for conveying concepts. While text can also be
powerful emotionally, much of our brain is wired for other signals. Visual inputs
get much attention, as do sounds and smells and taste and touch.
RENCTAS has long understood—at least implicitly—that the story of animal
trafficking and why it must be stopped needs to be carried by more than the data.
The RENCTAS site has accordingly used the Internet to tell stories and illustrate
with pictures. More recently, as the Internet increasingly supports broadband, full-
motion video and sound are frequently used for engaging story-telling.
Such communications carry emotional connections. They help explain how

Figure 1. Elements of the Animal Trafficking System in Brazil.
RENCTAS has engaged and motivated its supporters to proudly protect Brazil's
animals.
RENCTAS was particularly wise after their move to Brasilia to reach out to the
government-oriented television media located there. Much as RENCTAS had ear-
lier made reporting easy for the public they had wanted to recruit as informants
and supporters, in Brasilia they also made it easy for television reporters to devel-
op stories and visual materials. The television in turn had a huge impact on pub-
lic awareness.
Stories and other emotional material have been central to human communi-
cations since the post-hunt campfires organized before writing was even invented.
We interpret body language, voice, and facial expressions and are moved. As the
internet supports video more pervasively, it is becoming increasingly important as
an organizing tool.
For example, the Internet's ability to carry emotion to a dispersed audience
was recently used to stop a proposed water desalination plant in Monterrey Bay,
Mexico. The construction proposed by Toyota in Japan would have become the
world's largest desalination facility and created more than a thousand long-term
jobs. The issues raised were largely environmental, focused on effluents in the Bay.
The environmental community used the Internet effectively to mobilize sup-
port against the plant. They brought activists including Hollywood actors down to
the bay and took video of the humpback whales who calved in the waters there.
They used these videos effectively along with a letter-writing campaign to thou-
sands of mid-level managers at Toyota back in Japan.
What is interesting for this analysis is that the emotional campaign—carried
largely by pictures, video, voice, and humpback whale sounds—was promoted pri-
marily by people outside of Mexico rather than locals, yet was effective politically
within Mexico. The plant was scuttled.
Communicating emotional connections can be powerful.

Jerry Mechling
LESSONS AND ISSUES
The RENCTAS story primarily illustrates the power of Internet-enabled accessibil-

ity, transparency, and emotional connections.
So, where might we apply this power in the future?
One place would be the additional opportunities to fight animal trafficking in
Brazil. Legislators and staff are a target that has not been given much attention in
the RENCTAS case so far. There are also other parts of the animal trafficking sys-
tem not reached. Not much has been reported, for example, about efforts to engage
suppliers. While middlemen like bus and truck drivers are probably more cost-
effective targets (better organized and depending less on kick-backs from the traf-
ficking industry), it might also be possible to influence suppliers, perhaps through
a divide-and-conquer strategy of recruiting some as paid informants.
Beyond Brazil, but still on the trafficking problem, it might be possible to use
Internet communications to further attack consumer markets for exotic animals in
Europe, North America, and Asia. Giovanini established a number of partnerships
apparently for that purpose, and these relationships might be deepened and made
more active.
For what other locations and what other issues might we make progress using
Internet-based tools to mobilize and coordinate supporters?
Much is already being done with "Neighborhood-Watch" programs of various
sorts that could be expanded with Internet and other information technologies.
The RENCTAS approach of calling for reports of suspicious activity, protecting
informants with anonymity, and feeding case developments back to the inform-
ants could obviously apply elsewhere. So could aggregating data into the bigger
analysis and developing stories to make the work emotionally engaging and
"sticky."
As a variant, it may soon be possible to acquire technology cheap enough for
non-governmental groups to deploy digital sensors of various sorts. We might
expect a Neighborhood Watch group to use video cameras to record everything
that happens in specified places. It is now being done in shopping malls, and may
well move outside.
As activities become more visible and transparent, individuals can be expected
to feel more pressure to comply with the dominant culture and the law. This may
increase compliance but may also encourage illegal surveillance and a tyranny of
the majority. It may be good in some cases and bad in others. Figuring out which
is which, and how we can govern these fundamental issues of social organization,
will be a major challenge for the not-so-distant future.
We'll need respectful and effective dialog and decisions on how we want to
proceed.

CONCLUSION: BALANCING COMPLIANCE AND DIVERSITY

The RENCTAS case offers a compelling story of how the Internet can be used to
mobilize supporters. RENCTAS supporters greatly expanded the impact of the
work that RENCTAS did on its own. Much was accomplished in a short period of
7 years.
Generalized just a bit, the problem that RENCTAS addresses is a quite general
one: How can we mobilize and sustain support from those at a distance who have
little time to give? The problem of dispersed support and concentrated opposition
is a classic leadership challenge. Fortunately, we have recently developed Internet
tools that can help. Using the Internet, we can make it easier for supporters to par-
ticipate, even from a distance and even part time. We can make the system trans-
parent and understandable from the small local incident to the large system and
trends. We can include sights and sounds that carry emotions as a critical tool for
keeping supporters engaged. Easy access, improved transparency, and emotional
communications make it easier to mobilize support and, among other things, to
enforce compliance with laws and norms. We need that.
At the same time, we don't want the rigidity and even tyranny that can come
with a too-zealous focus on compliance. We also need diversity of opinion and
behavior and the continued innovation that diversity supports. In an increasingly
networked and changing world, we will need to continually construct and recon-
struct a proper governing balance between compliance with norms and respect for
diversity and innovation. RENCTAS has used its new tools for compliance in order
to support a diversity of wildlife in Brazil. Those of us learning from RENCTAS
will also need to keep the balance between compliance and diversity in mind. As
we get better using technology to mobilize dispersed supporters, we will also need
safeguards against improper and illegal use of these systems.
1. See <http://thecommoninterest.org> to explore this application.

2. See <http://www.epa.gov/tri/>; the early experience is described in "The Toxic Release Inventory:
Sharing Government Information with the Public". (KSG case no: 1154.0)
3. This experience was discussed at an unpublished workshop at the Kennedy School of
Government, Harvard University. A paper based on ideas from the conference, but not specifically
the case described here, is Levitt, James and Charles H.W. Foster. "Reawakening the Beginner's
Mind: Innovation in Environmental Practice." Discussion Paper 2001-7, Cambridge, MA: Belfer
Center for Science and International Affairs, Kennedy School of Government, June 2001.

Carter Roberts
Establishing and Strengthening

Wildlife Enforcement Networks
Innovations Case Comment: RENCTAS
Dener Giovanini does an excellent job of describing the challenges—and risk—

faced not only by RENCTAS, but by all conservationists who seek to protect
wildlife from illegal take and trade. And like the illegal trade of drugs and guns,
wildlife smuggling is a global business—one that often goes hand in hand with
other criminal activities.
There is also no doubt that the smuggling of illegal wildlife products is a multi-
billion dollar business. However, the $20 billion figure so often cited as an estimate
for the value of such trade does need to be re-examined. Using data from the early
1990s, TRAFFIC, the wildlife trade monitoring network of World Wildlife Fund
and IUCN, originally generated that estimate for the value for all wildlife trade,
both legal and illegal, excluding commodities like timber and fish. The figure
gained wide currency and was frequently quoted—and ultimately misquoted—as
the value for illegal trade alone. The true value of illegal wildlife trade may, by now,
indeed be that much. But we really don't know the exact number.
What we do know, however, is some of the same criminal syndicates dealing in
drugs and arms smuggling are also involved in the illegal wildlife trade. From Asia
to Africa to the Amazon, drugs, guns and animal parts are smuggled through the
same networks, down the same jungle trails and often by the same people. The
profits from one activity may finance another in a criminal cycle that weakens legal
norms and saps the natural resource base. Drug cartels in Peru, for instance, are
involved in mahogany smuggling.
There is one difference between the drug trade and the trade in wildlife: You
can't buy heroin on e-Bay. But, as our TRAFFIC investigators found out a few years
ago, you can buy animal products like ivory—much of it from sources that are
believed to have obtained it illegally.
Therein lies the challenge. The Internet has transformed the world of wildlife
smuggling in ways both good and bad. Conservationists have become cyber
sleuths, with dedicated groups like RENCTAS creatively using the Internet for both
Carter Roberts is President and CEO of the World Wildlife Fund-US.

This comment originallly appeared in volume 2, number 1/2 of Innovations.
© 2006 Carter Roberts
Strengthening Wildlife Enforcement Networks
investigative and informational purposes. Giovanini notes that the Internet has
also helped in another way—offering a higher degree of anonymity, and therefore
personal safety, to people passing along tips about instances of illegal animal traf-
ficking. Yet this anonymity is double-sided, for equally cyber savvy smuggling net-
works also use it to create and expand their markets.
WWF began using the net as an investigative tool in the early 1990s, when our
“Eyes and Ears” Campaign, a pilot project in the U.K., set up a web-based report-
ing system to receive tips and keep track of suspicious activity related to wildlife.
Initially, most of the “tips” we received concerned common species that could be
traded legally. But as both the Internet grew and public awareness increased as a
result of our efforts, we began to see a profound change. On the one hand, the
quantity and the quality of the information we received grew enormously. On the
other hand, we soon discovered that the trade itself had also moved online.
The change, since the early days of the Internet, has been staggering. Today,
much of the trade in wildlife is initiated on websites and negotiated via email and
instant messaging. As the battle lines shift from the jungle to the chat room, the
challenge moving forward lies in figuring out how to stay a step ahead of the
traders.
Our own conviction is that the Internet may help us to win some battles but
will not win the war. What else must we do?
It is generally acknowledged, among conservationists and law enforcement
officials, that the best way to combat the wildlife trade is by following it from
source to consumer and by putting intervention points in place along the way to
impede it. If a shipment is missed at export it may be caught upon import. The key
here lies in establishing and strengthening wildlife enforcement networks.
A good example is the Association of South East Asian Nations Wildlife
Enforcement Network (ASEAN-WEN). Established little more than a year ago, it
is already showing how working together within a region can achieve real results
and deter wildlife criminals through cross border initiatives. It is a model that
South America could easily adopt.
Conservation groups also need to network better. The models developed by
national and regional groups like RENCTAS, and international ones like WWF,
should be better integrated so that we can share information and coordinate our
efforts across country and regional boundaries. This is what we've been asking
governments and law enforcement agencies to do for years.
Let's stop asking and show them how to do it.

Jim Fruchterman
Developing Information
Technology to Meet Social Needs
Innovations Case Narrative: Benetech
Technology can be an immense force for good in the world. However, if a technol-
ogy innovation doesn’t generate major financial returns, it rarely is pursued.
Overcoming market failure in socially beneficial applications of information tech-
nology is the objective of my organization, Benetech. We build innovative technol-
ogy solutions and widely promote entrepreneurial models for developing projects
in the nonprofit community. Benetech was founded as a nonprofit social enter-
prise in 1989 to pursue the making of affordable reading machines for the blind,
because the market wasn’t interesting to my original, venture-capital backed, com-
pany. We’ve since branched out into three major fields in the social sector, helping
provide technology solutions to people with disabilities, human rights groups and
environmental groups. This case study will present Benetech’s history and show
how we’ve adapted the high tech company to developing technology for social
causes.
Benetech is a strong example of social entrepreneurship. We are part of a grow-
ing movement of people taking new approaches to solving social problems. A hall-
mark of this movement is approaching these problems in partnership with the
communities we want to help. This approach melds features from business and the
social sector, creating hybrid solutions. In some cases, the people we want to serve
are our customers, providing the market-based feedback that keeps us focused on
the needs of our users. In other cases, there is no revenue model, but the value
A technology entrepreneur and engineer, Jim Fruchterman has been a rocket scientist,
founded two of the foremost optical character recognition companies, and developed a
successful line of reading machines for the blind. He is now a leading social entrepre-
neur through his deliberately nonprofit technology company, Benetech. Benetech con-
centrates on applying technology to human rights and literacy for people with disabil-
ities. Fruchterman has won numerous awards for his work, including the 2006
MacArthur Fellowship and the Skoll Award for Social Entrepreneurship in 2004 and
2006.
This case narrative appears, accompanied by a case discussion authored by Gregg
Vanderheiden, in volume 2, number 4, of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Jim
Fruchterman as an Outstanding Social Entrepreneur.
© 2007 Jim Fruchterman

innovations / World Economic Forum special issue 141
Jim Fruchterman
exchanged is still real and shapes our accountability to our partners. In general,
social entrepreneurs are tackling market failures, meeting needs where business
entrepreneurs are unlikely or unwilling to fulfill. Yet, treating the communities we
serve more like customers than the recipients of charitable beneficence reflects the
new realities of global society. More to the point, it works.
FROM CALTECH TO ROCKET SCIENTIST TO ENTREPRENEUR

As a Caltech engineering student in the 1970s, I had the privilege of meeting and
working with brilliant and inspiring teachers. My fellow students were all linked by
our love of science and technology for its own sake. We didn’t know or care about
business: we wanted to win the Nobel Prize in one of the sciences. The challenge
was coming up with an original idea, and it was difficult imagining how this would
ever be possible when you were rubbing shoulders with faculty as brilliant as
Richard Feynman (the Nobel Laureate in Physics).
My breakthrough moment came in a Modern Optics class. We were learning
about optical processing using Fourier transforms, and the example was how to
build pattern recognition systems for smart missiles. The missile in question would
have a camera in its nose, and the pattern recognition system would have a repre-
sentation of the target: say, a tank or a bridge. When the target came into view, the
missile would recognize the target, lock on, and swoop down and blow it up.
I went back to my dorm room, wondering if there just might be a socially ben-
eficial application for this exciting technology. And then it came to me: you could
recognize letters and words instead of tanks or bridges, and then read those words
aloud to a blind person. It was electrifying: I had an actual idea! I didn’t even know
any blind people. Of I course fell in love with my first idea. My professor was
encouraging, but realistic, and the proposed design wasn’t going to work all that
well. However, it stuck with me, and I began to think that it might be possible to
come up with more ideas.
I went on to Stanford University to start working on a Ph.D. in 1980, and began
to hear about Silicon Valley and business. In quick succession, I co-founded an
entrepreneurial talk series at Stanford, was hired by the second speaker in that
series, dropped out of school and joined a fledgling Valley rocket company as its
electrical engineer. The rocket blew up on the launch pad (not an electrical prob-
lem!) and the company blew up along with it. We then started our own rocket
company with my former boss from the first rocket company, David Ross, but no
investors were willing to provide the $300 million in financing we were seeking.
After struggling with this for months, Dave suggested we meet with a colleague of
his, Eric Hannah, who was a chip designer for Hewlett Packard.
The three of us met in a restaurant, and Eric described his vision of building a
chip that did a specific application very well, rather than a general purpose chip
like a CPU or a memory. When I asked what application he had in mind, he said
that he wanted to build a chip that could read any text. My reaction was instant:
“You could build a reading machine for the blind with that chip!”

Developing Information Technology to Meet Social Needs
To make a long story short, the three of us started Calera Recognition Systems
together and ended up raising $25 million in venture capital. We invented the first
successful omnifont character recognition technology: a machine that could read
just about any machine-printed font without requiring human training. This tech-
nology had many commercial applications: scanning contracts for lawyers and
claim forms for insurance companies, and routing the mail for the post office. But,
the reading machine for the blind was always the application that had my heart: I
wanted to see us build that.
My passion was shared by the rest of the team at Calera, and the marketing and
engineering teams got together and built a prototype as a secret project. The
moment of truth came in a board meeting where we demonstrated the prototype
to our venture investors. The prototype, which at the time cost $50,000, took a
page of text and ran it through the scanner, taking a digital photograph of the page.
The optical character recognition turned the picture of the page into a word
processor text file, just as if someone had typed it in by hand. Then, a voice syn-
thesizer read the text aloud in a very mechanical voice. The board was intrigued,
and asked me (then the VP of Marketing) how large the market was for reading
machines for the blind. My answer was roughly one million dollars per year. This
was met with silence in the boardroom.
Calera’s investors understood why this was exciting as a product, but were also
quite clear that a $1 million per year market was not the $100 million per year mar-
ket they had been promised. To get the returns they needed on a $25 million
investment, they needed us to focus on that larger market. And they didn’t want us
to dilute our focus with a much smaller opportunity such as a reading machine for
the blind.
I reluctantly understood their position. We owed them our concentration on
making their investment worthwhile. But I was still disappointed. Helping the
blind was such a cool application, but not lucrative. How could we still do it, even
though it wouldn’t make a lot of money?
Gerry Davis, who was the software licensing lawyer for Calera, was sympathet-
ic to my problem. His idea was that we could start a deliberately nonprofit tech-
nology company to make reading machines for the blind. It would be structured
as a charity corporation, but operate like a technology company, designing and
building products for the blind. We hadn’t heard of anyone doing this, but Gerry
thought it would be possible and offered to take it to the Internal Revenue Service
as a pro bono project.
Soon thereafter, it came time for me to move on from Calera after working
there for seven years. The new CEO was very concerned about the possibility of me
competing with Calera or hiring away the engineers. So, in exchange for a non-
compete and a no-hire agreement, I obtained Calera’s agreement that I could start
a nonprofit to make reading machines for the blind, since they were clear that they
didn’t want to take on that product themselves. Gerry Davis’ law firm convinced
the IRS to approve our application as a charity and Benetech was born.

Jim Fruchterman
ARKENSTONE READERS
I named the new organization Arkenstone, after the gem in J.R.R. Tolkien’s The
Hobbit. Arkenstone surprised me: it was the only technology company with which
I had been associated that exceeded the expectations in its business plan. We hit
five million dollars in revenue in our third year and were actually profitable.
Our approach was considered highly innovative in the field of adaptive tech-
nology for people with disabilities. From my background in the tech industry, I
was simply using lessons I and other tech entrepreneurs had already learned. So
much innovation is actually borrowing a great idea from one field and applying it
to another. And so it was for Arkenstone.
Arkenstone innovated in three major ways: platform-based design, financial
structure, and a user-centered approach. Together, these helped us revolutionize
the availability of reading systems to blind people around the world, bringing this
capability to at least 100 times more people.
Platform-based Design
When we started, there was an existing reading machine for the blind, the Xerox-
Kurzweil Reader, which was a fine piece of engineering. However, it was custom-
built for the blind. Low production volumes made it very expensive to produce and
at least $10,000 to purchase. Our first innovation was to build our reading machine
based on the emerging personal computer platform. Initially, this was the IBM PC-
AT platform. We knew that every year PCs would get better and cheaper.
Our initial reading machine had four major components: the PC, the Calera
OCR board, a DECtalk voice synthesizer board, and a Hewlett Packard scanner.
Together, these three additional pieces turned a standard PC into a reading
machine. You could put a piece of paper or a book on the scanner, press the space
bar on the PC, and sixty seconds later the DECtalk would be reading the page
aloud to the user. Because it was based on a PC, it cost less than $5,000 to buy a
reading system when we launched it in 1989. And, over the next ten years, that
price went from 5K to 4K to 3K to 2K to 1.5K to 1.2 thousand dollars. Each time
the price went down, our unit volumes went up and our revenues stayed about the
same. As a result, more and more people got the benefit of this technology.
Financial Structure
I had spent five years as Calera’s Chief Financial Officer, which helped me under-
stand the challenges of starting a new venture. We knew we couldn’t raise money
from venture capitalists: the returns weren’t there. It didn’t even occur to us to talk
to foundations. So, we structured Arkenstone based on trade credit. We didn’t offer
our customers credit; they had to pay for the reading machines when they bought
them with cash or credit card. Calera, Hewlett Packard and DEC all allowed us to
pay them in 45 to 60 days. This difference in payment terms provided us with
enough capital to build a $5-million- per-year venture with only a $2,000 loan
from me to start up. We were still undercapitalized, but it was enough to run the
operation.

User-centered Approach
At the time we launched Arkenstone, the companies that made products for the
disabled sold “over the heads” of the users. The equipment was so expensive that it
made more sense to sell to government agencies and have the agencies give them
to the users. Of course, the users had relatively little say over what equipment they
received. They were expected to be happy with whatever they got. The industry
also avoided hiring people with disabilities for direct sales. It was highly ironic that
companies selling technology to empower people with disabilities didn’t feel com-
fortable empowering them to the extent of hiring them for these jobs! Arkenstone
changed both of these dynamics.
By bringing the price point under $5,000, be brought a reading machine with-
in the financial reach of far more individuals and families. Rather than govern-
ment agencies, the vast majority of Arkenstone’s sales in the first few years were to
individuals and families. And we changed the direct sales structure. When you’re
selling a product that costs over $10,000, you can afford to send direct sales people
(employees) out to sell them. We knew from the PC industry that as prices fell
below $5,000, a direct sales force stopped making sense. So we created a dealer
channel. But not just any dealer channel. The majority of our dealers were people
with disabilities themselves. They did a terrific job for us: within three years they
created the largest company making reading machines for the blind.
And, of course we paid a lot of attention to our users in the product design. We
quickly replaced our front-end software (which I had written) with a better front-
end designed by one of our blind dealers. Our first hire was a blind technologist
from Hewlett Packard. User-centered design is a common phrase in technology
today, but it was revolutionary in 1989 in the field of technology for the blind.
Focusing on the users in all these noteworthy ways was core to our success.
Arkenstone’s Success
Arkenstone quickly became the largest maker of reading systems for the blind. We
had assumed that the market was only $1 million per year, but we were wrong.
Within three years we were doing $5 million in annual sales. Part of the reason for
this was that many, many blind people had wanted the Xerox/Kurzweil reading
machine, but couldn’t afford it. Once we brought the price under $5,000, sudden-
ly they could afford these machines and they bought them. Arkenstone is still the
only high tech venture I’ve been associated with that actually exceeded its business
plan partly because our expectations were set so low.
Arkenstone rapidly expanded outside the United States. As soon as we sold an
English-reading machine, we had interested customers in many countries. When
we added Spanish, we enlarged our market even more. Soon, Arkenstone became
a leading machine in Canada, the UK, South Africa, Germany, France, Italy,
Portugal and so on. We adapted the reading machine to read almost all of the west-
ern European languages. We eventually had users in sixty countries reading a
dozen different languages.

Jim Fruchterman
Using our inside track of information from our contacts in the technology
industry, we knew that character recognition would soon move from a specialized
circuit board to a software-only solution which would decrease prices even more.
We developed and launched Open Book, the first talking Windows software prod-
uct for the blind. It was available both as a bundled reading machine for the blind
with a small keyboard, and as a software package that turned a PC into a reading
system.
After five years, we surveyed our customers. We learned some astonishing
things. First, we found that our technology abandonment rate after one year was
under 10%. Over 90% of our users were still using their reading machine one year
after purchase. We felt that compared very favorably compared to other assistive
technology, which often has abandonment rates over 50%.1 By selling reading
machines rather than giving them away, we believed we engaged our users in much
more depth. Second, we found that roughly 15% of our users weren’t blind at all:
they had learning disabilities such as dyslexia. We had heard stories of dyslexic
users, but we had no idea that they represented such a large percentage of our
users, with no effort on our part and with a product that in retrospect was poorly
suited to the needs of someone who could see, but struggled to read.
It turned out that one feature was key. Our Open Book software highlighted
each word visually as the voice synthesizer read it aloud. That way, a low vision (or
dyslexic) user could see and hear the word at the same time. Multi-modal input
turns out to be a key part of many techniques for teaching reading skills to students
with dyslexia. The rest of the user interface was, however, designed for someone
who couldn’t see and used the keyboard exclusively to interact with our software.
We had to redesign it completely for the needs of these different users, people who
could see and preferred a visual interface that used the computer’s mouse.
We built a completely different product on top of the same character recogni-
tion and voice synthesizer technology. Its name came about as a play on technical
words. During that time, word processors were touting that What You See is What
You Get (WYSIWYG), pronounced whizzy-wig. We wanted our dyslexic to get the
interface they needed, so it became nicknamed WYN: What You See is What You
Need. By the time it came to launch the product, we liked the codename so much
we ended up settling on WYNN: What You Need Now. The interface could be com-
pletely driven by the mouse, and the visual display could be extensively modified
to fit the user’s needs. The user could see the page as a picture, with the text and
graphics together, with the words being spotlighted as spoken on the picture of the
page of text. Or, they could see a text version of the page, with the color scheme,
size, spacing and font adjustable for each person.
We prototyped it with learning disabled students at the University of
California, Berkeley. These were very bright students who entered Berkeley and
suddenly came face to face with the fact they couldn’t keep up with the greatly
increased amount of reading (and lacked access to the relatives who had read to
them in high school). These students helped us build what turned out to be a great
product for helping them get through school.

We also made a modified version of our reading system for senior citizens.
Although seniors represent the majority of the blind, they had always been a small
part of Arkenstone’s users. PCs were intimidating, especially for a cohort of sen-
iors that had not used computers in the workplace. So, we hid the PC and scanner
inside a wood-veneered box and called it VERA, for Very Easy Reading Appliance.
We wanted it to look like high-end stereo equipment.
Each of these reading machines aimed at different segments of people who
couldn’t pick up and read a printed book or document. By the end of 1999,
Arkenstone had sold over 35,000 reading machines all over the world. It was an
exciting venture, but not all of the things we tried went well.
Arkenstone’s Challenges
Even from the early days, we saw social needs where we thought technology could
be well applied, needs the market was also failing to meet. In the early 1990s, I was
interested in helping the human rights movement, as I discuss below in more
detail. We also had lots of ideas for new products to help the blind.
One of our first five Arkenstone users said the following to me: “All my life, I
have wanted to read a book and drive a car.” He continued, “Now, thanks to
Arkenstone I can read a book. When are you going to help me drive a car?” Our
first employee, Mickey Quenzer, was blind and took the bus to work. One day, he
arrived late and was complaining bitterly about the bus driver who had dropped
him at the wrong stop. “If I ever get to drive a car, I’d like to run that guy over!” I
know that Mickey was kidding, but it made me think about what it would take to
help deal with the problem of personal mobility. We broke the problem into ori-
entation - where am I and how do I get to where I want to go, and mobility - how
do I actually travel between here and there safely? Hearing about the Global
Positioning System, it occurred to us that a talking GPS locator would be very
helpful to blind people.
Doing some research, we found that a visually impaired graduate student,
Charles Lapierre, in Canada was also working on this problem for his master’s the-
sis. Charles joined us via our Canadian development partner, VisuAide; together
with two other Arkenstone engineers, we got a patent on a talking GPS locator for
the blind, which we ended up naming Strider (another Tolkien reference). A tal-
ented blind executive, Mike May, was our Vice President of Sales, and he fell in love
with the product. However, it was challenging to finance this project. Our reading
machine business was operating close to break-even, and we diverted engineering
resources away from our core business onto Strider. This created an opportunity
for a new competitor in the reading machine field, Ray Kurzweil’s second reading
machine company, to gain ground, which increased the financial pressure on us.
Finally, something had to give. We had to lay off some of our staff, which was
personally very painful. Our entire team was dedicated to our mission and we had
let them down. We also put the Strider project on ice. Mike May, who had agreed
that Strider wasn’t going to make money in the short term, asked to spin the

Jim Fruchterman
Strider project out of Arkenstone because it was too important to let die. After sev-
eral years barely surviving, Mike’s perseverance paid off and he was able to secure
a multi-million dollar federal research project which carried the project until it
became the viable and suc-
cessful enterprise it is today.
We had come face-to-face with We refocused our team
on the reading systems and
one of the biggest problems of regained our momentum in
social enterprises. Low our core business. But, we
had come face-to-face with
profitability makes it well-nigh one of the biggest problems
impossible to find the funds to of social enterprises. Low
profitability makes it well-
invest in new projects. nigh impossible to find the
funds to invest in new proj-
ects. I found this personally
frustrating, because I had been doing the same thing for a decade. Although the
work was rewarding, I wanted new challenges. We needed to do more.
THE BENETECH INITIATIVE

In the late 1990s, I started working on a new concept to enlarge Arkenstone’s work,
code-named the Benetech (short for “beneficial technology”) plan. I wanted to
develop software for human rights groups and create more technology for disabled
people. Unlike my college days, where I despaired of ever having a good idea, I now
had many good ideas. They were good ideas for projects that made social sense, but
not business sense. It was relatively easy to come up with good social enterprise
ideas, since the lack of a profit motive frequently thinned the number of competi-
tors to worry about to zero! My challenge was finding money for these new proj-
ects. My idea was that this money would come from my financially successful
peers, the newly minted dot-com billionaires.
Unfortunately, the dot com-ers were all busy making their money and weren’t
ready to give it away to someone like me. About this time, an experienced execu-
tive named Richard Chandler talked to me at a disability technology trade show.
He wanted to know if I wanted to sell Arkenstone to him. I told him to go away,
that we were a nonprofit and weren’t interested in selling.
But, Chandler was persistent. He had started Sunrise Medical, a large compa-
ny serving people with physical disabilities. He had created it by buying several
other companies and building the combined entity into a Fortune 500 company.
He wanted to do the same thing in the vision impairment field, and planned on
buying up the leading companies in each major product segment of equipment for
the blind. He asked me what my dream was, and I described my goals. Chandler
offered to pay $5 million for the Arkenstone business (including the name), and
would allow me and the engineering team to stay inside the nonprofit. I grabbed

this opportunity.
Selling a nonprofit is more complex than selling a for-profit. We needed to
convince the office of the California attorney general that doing this deal was in the
best interest of the public. One way to think of a nonprofit is that it’s owned by the
taxpaying public and needs to be operated for the benefit of society. Our case to
the attorney general was straightforward. Before the deal, one social enterprise;
after the deal, three social enterprises (one for-profit run by Chandler and two
nonprofit projects run by us). Also, we committed to keep all of the funds in the
social sector (not that this is optional under nonprofit law). So, I didn’t get to
pocket the money, but I did get to control it as my new budget. The AG’s office
approved the sale, and in June, 2000, we sold the Arkenstone business to Chandler’s
newly-created company, Freedom Scientific. Since we had to sell the brand name
of Arkenstone as part of the deal, we changed the nonprofit’s name to Benetech
and began a new phase in our life.
What To Do With $5 Million?

We had to consider our strategy with this new sum of money. Did we invest it as
an endowment, and run Benetech on the small income stream? I decided that we
should be more aggressive and aim higher. We would invest the money over a cou-
ple of years in two new projects, and assumed we could start raising philanthrop-
ic money for the first time in our history. I had two ideas I wanted to develop with
the money we received from the Arkenstone asset sale, one in the human rights
field and one in the disability field. We expected that we would do more projects
in the future with the additional new money we’d find.
Martus
In 1993, I’d read a story about the El Mozote massacre, which happened in El
Salvador in 1981. I was bothered that more than 700 people could be killed, and it
could take a dozen years before the world actually believed the massacre had hap-
pened. The tough question was how to protect people from this kind of atrocity.
Dave Ross and I hiked in the hills above Stanford and Silicon Valley, brainstorm-
ing about this challenge. Being geeks, we tried to come up with fancy technology
solutions around defending people, but none of them made sense. We realized that
the only tool to fight human rights abuse is the truth. If we could get the right
information to the right people, quickly and reliably, we could address impunity.
If committing atrocities led to consequences more quickly, it would discourage this
kind of abuse. We called this idea Witness and immediately grabbed the domain
name. As I went around talking to human rights groups, like Human Rights Watch
and Amnesty International, I learned there already was a Witness Project in the
human rights field. Dave Ross suggested we rename it Martus, the Greek word for
witness, and the name stuck. We handed the Witness.org domain over to the
Witness project, which has done great work around video applications in human
rights.
Our initial idea was spying for human rights, using the same kind of technol-

Jim Fruchterman
ogy as the government intelligence agencies. We kicked it around throughout the

1990s, but we never had the time or money to do anything real. Until June 2000.
Through meetings with actual human rights groups, it was clear that technol-
ogy hadn’t penetrated far into the human rights community. It was also clear that
“Spying for Humanity” wasn’t the first place that technology should be used. There
were much more basic needs for information technology (IT) than sophisticated
surveillance tools. We needed to build tools that could be used by unsophisticated
human rights activists in the field.
The breakthrough in the conception of Martus came in a meeting in early 2000
with Dr. Patrick Ball of the American Association for the Advancement of Science.
Patrick is one of the world’s leading statisticians of large-scale human rights viola-
tions. His work involves gathering a large quantity of data about systematic viola-
tions, such as occurred in Guatemala, El Salvador, Ethiopia, Haiti, South Africa and
Kosovo. By investing the time to create a sophisticated database for these viola-
tions, and applying rigorous statistical techniques and quality control, it is possi-
ble to reach important conclusions about what happened in a civil war. For exam-
ple, Patrick’s work on the UN-sponsored truth commission in Guatemala led to a
report that documented the systematic murder and disappearance of at least
200,000 civilians by the Guatemalan military. The analysis was sufficiently detailed
and analytically rigorous that the military declined to contest the report in court
or in public.
We asked Patrick if he thought we should build database tools for the kind of
work he did. He demurred, pointing out that it is very expensive to create a major
database project. The staff needs to be intensively trained, and extensive quality
control mechanisms need to be put in place to ensure that the relational database
relationships and classification standards are followed. Instead, he argued that we
should focus on a technology tool that would be usable by the majority of human
rights groups in their daily work. Doing a major database analysis years later with
a truth commission would be much easier if the contemporary records of human
rights abuses were preserved and available. He supported this idea with a penetrat-
ing analysis of the human rights sector, treating it like it was an industry. His analy-
sis spoke to me as a tech business person who knew relatively little about human
rights, but a lot about technology. Patrick’s analysis formed the framework for the
design and nonprofit marketing of the Martus Project.
Think of the human rights sector as a processing industry with a typical pyra-
mid structure. At the base of the pyramid are the grassroots human rights organi-
zations numbering in the tens of thousands. These groups are on the front lines of
human rights violations. The victims of human rights abuses, or their friends and
families, are coming through the front doors of the grassroots groups and pouring
out their testimonies of the worst that humans can do to other humans. These nar-
ratives are the raw material of human rights work; everything else in human rights
work is built with these raw materials.
Above the grassroots groups in the pyramid are the provincial or national
groups. These larger groups are politically better connected, and offer their mem-

bers better access to the press and political connections. They also play a role in
quality control: membership in a bona fide network confers more credibility to the
reports of a grassroots group.
Regional and international groups concentrate the human rights information
even more. This information is aggregated and processed into higher value forms.
The single incident of human rights abuse is combined with other incidents into a
pattern of abuse. These patterns are the basis for international human rights cam-
paigns against torture, slavery or abuse of indigenous people.
At the top of the
human rights pyramid
are the organizations
with the greatest influ- The human rights sector is an
ence and authority. The information processing industry.
United Nations, fol-
lowed by Human Because of the limited resources
Rights Watch, Amnesty available, computers and
International and the
Lawyers Committee for information technology are not
Human Rights, have the
greatest reputation and
used to anywhere near full
credibility with the potential. The paradox of the
press, diplomats and
governments. For human rights community is that it
example, the typical is an information-processing
output from Human
Rights Watch is a care- industry that has limited access to
fully researched report information technology.
covering a national or
regional problem.
These reports don’t
include all of the individual incidents that have been reported. The Human Rights
Watch brand has come to mean high quality, exhaustively researched, authoritative
reporting on human rights issues.
The common product of the human rights community at all levels in the pyra-
mid is information. The human rights sector is an information processing indus-
try. Because of the limited resources available, computers and information tech-
nology are not used to anywhere near full potential. The paradox of the human
rights community is that it is an information-processing industry that has limited
access to information technology.
We identified the field workers as being least served with information technol-
ogy. The big groups, like the U.N. and Human Rights Watch, had good technolo-
gy, but their field staffs were struggling. We traveled around the world, talking to
human rights groups in Sri Lanka, Cambodia, Guatemala, and Russia. We learned
that they needed very simple tools that could help them collect human rights vio-

Jim Fruchterman
Figure 2. Martus Global Information Infrastructure.
lation information. We decided to build the Martus tool that met their needs.
The first piece is the Martus client: a piece of software that works on the
human rights activist’s personal computer. Although we originally thought we
could create do our software project over the web, we quickly learned that Internet
connectivity was spotty and expensive for our planned users. So, to collect the data,
we built a standalone piece of software that looked like simple email software. The
human rights abuse information would be stored in bulletins, and these would be
encrypted for security reasons. The encryption scrambles the data so it can’t be
read by other people who might steal the PC or intercept the information.
Whenever the PC was connected to the Internet, the bulletins would be sent to a
secure backup server of their choice, usually located in another country. Then, the
bulletins would get copied to more servers around the world, ensuring that the
human rights information wouldn’t be lost. This information stays encrypted so
that the people operating the servers couldn’t read it: even Benetech staff cannot
open the encrypted data. At the request of users, we added the option to make
some of the bulletin information public and created a different kind of server, a
Martus Search engine, which allows anybody in the world to read the information
about human rights abuse that the local group chooses to share.
Results: Human rights groups around the world now capture violations data
using Martus, which is available in languages such as English, Spanish, French,
Russian, Arabic, Thai and Nepali. The Guatemalan police archive project is the
largest single user, with more than 50,000 Martus bulletins about human rights
violations during the 20th century. Patrick Ball brought his human rights analysis
team to Benetech in 2003 with its Analyzer human rights statistics software, and
we help many countries answer the question of who did what to whom. Patrick
and his team have been involved with the majority of truth commissions over the
last decade. An example of Patrick’s influence was his role as the lead-off expert

witness in Slobodan Milosevic’s war crimes trial in The Hague. As the intellectual
father of Martus, Patrick is now the Director of our combined Human Rights
Program, which is now the leading provider of human rights technology and sta-
tistics research.
Bookshare.org
Our second new Benetech idea came from my teenage son Jimmy. Right before we
sold Arkenstone, I found an interesting new icon on my home PC. I asked Jimmy
about it and he told me that it was called Napster, and it was for downloading
music. Much to my delight, we spent an hour together playing with it and trading
off listening to music that Jimmy liked from the 1990s, and that I liked from the
1970s. The technology was impressive. At the end of the hour, I asked Jimmy how
much we were paying for this great service. “Paying?” was his answer, and I realized
that this was almost certainly illegal. But it was very cool. I quickly recognized how
the Napster-style approach could help people with disabilities. Hundreds of
Arkenstone users were scanning the exact same book over and over again. What if
they could share the books they scanned over the Internet? Then, we’d save many,
many hours of effort and greatly increase the availability of books.
I checked in with Gerry Davis, my problem-solving attorney, and we quickly
figured out that it was actually 100% legal under U.S. copyright law. Right in the
basic national copyright law, it said that copyright owners had the right to control
copying of their works, subject to roughly twenty exceptions for uses like libraries,
educational and fair use. One of these exceptions said that it was not a violation of
copyright restrictions for a nonprofit organization to make accessible copies of
books available to people with bona fide disabilities that kept them from reading
print books. Although no one had thought of a Napster-style solution when the
exception was put into the law, it fit our needs perfectly. We briefly called the proj-
ect Bookster, but within a short time we were convinced to rename it Bookshare to
avoid offending publishers.
Gerry also came up with a great idea to talk to the publishing industry. Rather
than spring Bookshare on them out of the blue, we would talk to them well in
advance of the launch. So, a year before Bookshare was ready, Gerry got us a meet-
ing with the Copyright Committee of the Association of American Publishers. This
committee is made up of the top lawyers from the major publishers. We explained
how we would honor the social bargain in the legal exception: help people with
disabilities while not hurting the business interests of publishers and authors.
Giving them a year to work with us to keep this social bargain gained us tremen-
dous credibility with the publishers and convinced them to not sue us.
Our shorthand description of Bookshare was Amazon.com meets Napster
meets Talking Books for the Blind, but legal! At the core of Bookshare is the
Bookshare.org website. It was set up to provide a place on the Internet where peo-
ple with disabilities could share their books legally. Members signed up and paid a
nominal fee to be able to access the books ($75 for the first year for all the books

Jim Fruchterman
you could read). Members had to provide proof of a qualifying disability, and agree
to use the books only for their own use and not provide them to other people.
Rather than us choosing the books in this new library, as had been traditionally
done by libraries for the blind, our members choose the books to be added. If one
person thinks a book is worth scanning and sharing, it will become available to the
entire community. Our users are in charge of collection development for
Bookshare.org, choosing over 80% of the titles that get added to the collection.
Results: Our volunteers have already provided Bookshare.org with more than
35,000 books, and we now have more than 100 daily newspapers available each
morning through a partnership with the National Federation of the Blind
Newsline program and the nation’s newspapers.
A person with a disability, such as blindness, goes to our website using their
talking screen reader or Braille access solution and searches for a book or newspa-
per. The user logs in and then is allowed to download the materials they want. The
book (or newspaper) is copied onto their PC hard drive as text. The text of the
book can then be read aloud with a synthetic speech synthesizer, enlarged for the
low vision person, or turned into Braille for a Braille reader.
Results: We felt that the subscription fees would over the long term provide the
funding to keep Bookshare.org going. At the time of this writing, the U.S.
Department of Education has just decided to pay for all schools and students with
print disabilities in the U.S. to receive Bookshare.org. So, in 2008, Bookshare.org
will be self-supporting from revenues.
How Benetech Picks Projects

We started with the Martus and Bookshare.org projects, but we wanted to do
more. We decided to launch roughly one new project per year. We knew that we’d
also have to start raising money for these new projects, since the original $5 mil-
lion wouldn’t last all that long. We needed to come up with a framework for mak-
ing these decisions.
An MBA friend of mine, Paul Losch, adapted a venture capital portfolio model
to our needs. The goals of venture capitalists, foundations and Benetech are quite
similar: how to achieve maximum results with a limited amount of money. We
took each venture capital criterion and either used it as is, or adapted it slightly to
our mission. The key considerations for new Benetech projects are:
• Return on investment. In our case, the return is to society, not to us. We frequent-
ly use benchmarking as a method of assessing returns.
• Uniqueness. We want to be dramatically different: no interest in being 10% bet-
ter than some other solution. If it already exists, we should be doing it for a frac-
tion of the existing cost or bringing it to a completely new community.
• A sustainability case. How can we keep this going without draining resources
from Benetech forever?
• Low technical risk. We assume the technology is out there, but nobody is moti-
vated to bring it to the social application.

Figure 1. The Benetech Project Pipeline.
• Deal size. Ideally in the $1 to $4 million range to encourage sustainability. The

deal should be bigger than one or two people can do themselves.
• Fit of the technology with our capabilities. Is it in a field that Benetech knows
something about. We can’t take on clean-burning car engines and water purifi-
cation at this time, because we don’t know anything about the technology.
Projects that aim at the same or a closely related community to an existing
Benetech project score higher.
• Exit options. We try to devise three exit options before we start a project.
• Access to resources. Can we access the resources we need to succeed? This could
be funding, access to technology or expertise. We are especially interested in get-
ting top domain experts involved to supply the knowledge about the field that
Benetech’s technical team typically lacks.
• Potential partnerships. What partners can we leverage? How can we encourage
community involvement in this project?
We also devised a process for developing and managing the projects that we
took on. Projects go through a narrowing funnel as they require more funding. We
have hundreds of possible concepts (free), dozens of projects that have had some
brainstorming (less than $5,000), and ten projects that we might start in the com-
ing year or two (less than $25,000). Because these projects are not highly profitable,
if we don’t get to them for two years, they probably will still be sitting there unad-
dressed. If someone else tackles one of these projects, that’s a victory for society
and we have one less need to consider meeting! (See Figure 1.)
Our method of management is very similar to that of a startup high tech com-
pany. We’re customer focused and keenly aware of the need to create a strong value
case for the user. We have engineers and product managers, systems administrators
and sales people, tech support people and marketing people. We just have one to
ten percent of the number of people on a project compared to the typical staff sup-
port of a for-profit company. This increases the need for us to work together effi-
ciently.

Jim Fruchterman
Raising Money
For the first five years of Arkenstone, we didn’t raise any money from outside par-
ties, nor did we need to. We made one try in the mid-1990s to raise money for new
projects from the major American foundations, and got nowhere. We simply
looked too much like a business for the comfort level of foundations back then.
What support we did get was mainly in-kind. We found it pretty straightforward
to ask our buddies at Hewlett Packard, IBM or at Intel for donations in the form
of technology: scanners, voice software or CPU chips for PCs. But money was far
tougher to find from corporations. Only IBM gave us any significant amount of
cash to help with our product push for people with dyslexia, and to translate our
products into Spanish and Portuguese, and this still represented less than 1% of
our budget.
It took us a while to become able to raise money. Luckily, we had had our $5
million of conversion funding from the sale of Arkenstone to tide us over for a
couple of years while we learned how to raise funds. It was easier to raise money
from foundations and donors to expand projects than to fund their early stages.
For example, the initial funding to create Martus was 75% from Benetech, and
25% from the Open Society Institute, who really saw the value of this kind of tool.
Bookshare.org was funded initially only by us.
Two major high tech funders then committed to supporting us. The Skoll
Foundation, created by the first president of eBay, Jeff Skoll, decided to start invest-
ing in Benetech as a venture capitalist would. They provided general support
grants to fund our vision. Each year they invested more until we were invited to
present a three-year business plan. Skoll then made a three-year commitment to
us. At roughly the same time, Pierre Omidyar, the founder of eBay, also made an
investment in our three-year plan through the Omidyar Network, his combination
for-profit/nonprofit social investing group. Together, these two tech leaders
became our biggest funders. And, unlike typical foundation grants, they made
investments in our business plan, and accepted our business plan objectives as the
tracking metrics for investment results. They were structured as general support
grants, but it felt more like a venture investment to me.
We also started to make great progress with some of the major foundations in
the United States. We and they had both changed since the mid-1990s. We had
learned more about how nonprofits and foundations worked. During this time,
foundations also became much more tech-savvy and comfortable making technol-
ogy grants. Our business-like approach was well suited to program officers at
foundations, as long as we could link what we did to the foundation’s grant-mak-
ing objectives.
Benetech Today
Benetech has five major projects going at the time of this writing. Bookshare.org
and the two human rights projects are fully operational and international in scope.
We have roughly 30 employees and consultants, and hundreds of volunteers, and

are we are growing rapidly. We have two new projects being tested by prospective
users with launches planned in 2008, Miradi and Route 66 Literacy.
Miradi is a tool for managing environmental projects. The environmental
movement came to Benetech after hearing about our work in human rights and
asked if we could also write software for field people who manage biodiversity
projects for groups such as The Nature Conservancy and the World Wildlife Fund.
Miradi has a step-by-step interview process (the wizard approach used famously
by the TurboTax software for preparing tax returns) that guides an environmental
conservation team through the steps they need to plan, manage and report on their
field project. The Miradi software is now in beta test, the last versions before the
officially complete first version. Instead of the 20 beta testers we expected, we now
have over 200 beta testers in 40 countries.
Route 66 Literacy is a web-based literacy curriculum designed for teenagers
and adults with developmental disabilities, such as Down Syndrome or autism.
Created by Professor Karen Erickson of the University of North Carolina, Chapel
Hill, it provides a literate but untrained person with the information they need to
be a good teacher of reading. Benetech is providing the technology development
and social enterprise structures to bring Route 66 to a larger population.
CONCLUSION
Benetech’s main achievement is proving the model of a technology-based social
enterprise. By replicating the model successfully with different projects and in dif-
ferent fields, we’ve shown that it is possible to adapt the high-tech business model
to primarily social endeavors. We’ve also shown the need to take major risks when
creating new technology, and have been able to fail on occasional projects without
losing our support.
Benetech is not the only technology enterprise in existence. We share the lead-
ership of this new movement with a handful of other innovative organizations,
such as Institute for One World Health, Project Impact, Cambia and
Compumentor. Together, we have demonstrated the leverage of technology to
make an impact. Just as Bill Gates can make many copies of a software package
cheaply and distribute it around the world, so can technology social enterprises
deliver their innovations globally at low cost.
The social sector lags the for-profit sector in the use of technology by two to
twenty years. As the world globalizes, so should technology applications for socie-
ty organizations. Hundreds, if not thousands, of great technology applications are
sitting on shelves because they are insufficiently profitable to shareholders. We
need to recapture these opportunities and ensure that technology fully serves all of
humanity.
1. http://www.r2d2.uwm.edu/atoms/archive/technicalreports/tr-discontinuance.htm

Richard Jefferson
Science as Social Enterprise

Innovations Case Narrative: The CAMBIA BiOS Initiative
Nearly four billion people live on daily incomes lower than the price of a latté at
Starbucks. Most of them make dramatically less than that—and from that income,
they must acquire their food, their medicine, their shelter and clothing, their edu-
cation, and their recreation, and they must build their future and their dreams.
Their lives, and the quality of their lives, hinge on biological innovation.
Biological innovation is the ability to harness living systems for our social,
environmental and economic well-being. It is the oldest and most fundamental
form of human innovation, involving as it does the getting of food, the striving for
health, the making of homes, and the building of communities. The wealth creat-
ed over the millennia through the domestication and husbandry of plants and ani-
mals has powered human society.
Of all areas of biological innovation, agriculture is the most important, affect-
ing our environment, our health, our economies, and the fabric of our societies.
The world’s poorest nations depend largely on agriculture for their economic sur-
vival as well as their food, fuel and fiber. The challenges of innovation to create and
sustain productive and environmentally sound agriculture are even more pro-
nounced in these societies. Any failure to do so has enormous implications for the
global community, over and above the social, economic, and environmental
impacts.
Richard Jefferson is the founder and CEO of CAMBIA-BiOS. He earned his Ph.D. at
the University of Colorado, Boulder. In 1989 he joined the Food and Agriculture
Organization as their first senior staff Molecular Biologist. He left the UN System in
1991 in order to establish CAMBIA as an autonomous private research and develop-
ment institute. In December 2003 he was named by Scientific American to the List of
World's 50 most influential technologists, and cited as the World Research Leader for
2003 for Economic Development. He was nominated as a finalist for Wired
Magazine's Rave Awards for Scientist of the Year for 2005, and received the American
Society of Plant Biologists (ASPB) "Leadership in Science Public Service Award" in
July 2005.
This case narrative originally appeared in volume 1, number 4, of Innovations.
The Schwab Foundation for Social Entrepreneurship has recognized Richard
Jefferson as an Outstanding Social Entrepreneur.
© 2006 Richard Jefferson

Richard Jefferson
For thousands of years biological innovation has been informed and guided by
keen observation and the accumulation and sharing of generations of empirical
knowledge. Farmers selected better crop varieties and livestock breeds, and devel-
oped management strategies to maximize their performance. Seeds were shared as
a practical matter of survival and each improvement formed the basis for further
innovation. Because seeds of most crop plants breed true, the ease of sharing, and
the barriers to doing so were min-
imal. As with digital information,
it is hard not to share, and hard to
Extraordinary efficiencies impose limits on sharing, so
occur when the tools of norms evolve to maximize value
from this inevitability.
innovation are shared, are But the post-Enlightenment
dynamically enhanced, have explosion of possibility that began
when the unprecedented power of
increased levels of confidence science became focused on food,
(legal and otherwise) agriculture, health, medicine and
environment seemed to dwarf all
associated with their use, and previous attainments. And indeed
in the past hundred years, with the
are low or no-cost. advent of genetics, the pace has
been gathering; the last thirty
years has seen an unprecedented
dynamism in life sciences that is
being hailed as a “biotechnology revolution.” But in this revolution, biotechnology
is rarely being applied to the critical issues of alleviating poverty, eliminating
hunger, stewarding natural resources, and preventing or curing the diseases of the
disadvantaged. The margins are small, the markets are modest, and the challenges
are great. Are the paradigms and practices that have emerged to harness science for
society sufficient to engage, and even solve, these seemingly intractable problems?
Today control over agricultural biotechnology is effectively limited to a few
multinational corporations who integrate seeds, agrichemicals, and biotechnology.
This disturbing consolidation of power is matched with a trend toward “me-too,”
big-ticket “innovations” of remarkable dullness. How many herbicide-tolerant big
acreage crops are enough? Similar trends are surfacing among the large pharma-
ceutical companies, collectively known as “big-pharma”: how many blockbuster
lifestyle drugs does society need?
Within the value system they respect, and according to their own success met-
rics of profitability, big agriculture and big pharma are not abject failures, but they
surely are not enough.
To address the myriad challenges of agriculture, environment and health that
are local in nature and modest in market or profit margins will require vigorous,
competitive, local-scale small to medium enterprises creating a business and inno-
vation ecology. It will also require a biological innovation culture where the costs

of innovation are low, and the power and relevance of technology are high. It will
require leveraging the contributions of diverse people and institutions to create
tools that better engage science into an integrated and economically sustainable
social agenda.
The mission of CAMBIA, of which I am the founder, is to advance this set of
required capabilities so that biological innovation can address the human chal-
lenges of the 21st century; the BiOS (Biological Open Source) Initiative is
CAMBIA’s mechanism for achieving its mission.
The term “open source” describes a paradigm for software development asso-
ciated with a set of innovation practices. The concept evolved out of the “free soft-
ware” movement, and is often merged into the expression “free and open source
software.” (See text box.) Several features together qualify a project as “open
source.”1 These include full disclosure of enabling information including docu-
mented source code and the use of legal instruments such as copyright licenses to
confer both permissive rights and responsibilities; they bind contributions into a
commons that is accessible to all who agree to share alike. Typically, certain prac-
tices and cultural norms are associated with distributive innovation, although this
is by no means required; some very successful free and open source software pro-
jects have only a few serious contributors, while others have thousands.
How Do you Make Money in Open Source?

Free and open source software has rapidly engendered highly productive and
profitable business models that create value from the non-rivalrous2 use of
software components. Examples of such software include the famous Linux
operating system, the Apache web server, databases such as MySQL, myriad
programming languages such as Perl and Python, and the Firefox web brows-
er. These types of open source projects, co-developed by thousands of pro-
grammers, and shared through creative licensing which demands covenants of
behavior rather than financial consideration from the licit community of users,
have transformed the information and communications technology (ICT) sec-
tor.
Most of the high-profile free and open source software projects that have
affected both the sector and the public’s imagination have been “tools” and
platforms, rather than end-user applications. These allow users to build fully
commercial web applications, with high functionality, on robust, dynamic plat-
forms, with no reach-through financial obligations. The economic success sto-
ries of free and open source software thus are not Linux and Apache, but eBay
and Google. The business models that are shaking the ICT world are not the
modest ones selling support for open source products, such as Red Hat Linux.
The signal successes are commercial enterprises that create wealth by providing
new social value. Many ask, “How do you make money in open source?” The
answer: you make money not by selling open source, but by using open source.

Richard Jefferson
Extraordinary efficiencies occur when the tools of innovation are shared, are
dynamically enhanced, have increased levels of confidence (legal and otherwise)
associated with their use, and are low or no-cost. Rent extraction from the process
of innovation is reduced, transactions costs are minimized and developers focus
their resources on creating revenue by providing products and services and enlarg-
ing markets.
This concept is fully generalizable—although clearly the specifics are not—and
a large part of CAMBIA’s BiOS initiative explores and extends the software
metaphor. BiOS strives to create new norms and practices for dynamically design-
ing and creating the tools of biological innovation, with binding covenants to pro-
tect and preserve their usefulness, while allowing diverse business models for
wealth creation, using these tools.
In the first part of this paper I discuss the simultaneous burst of knowledge in
molecular biology and the precipitous decline of a commons of tools, using exam-
ples from plant biotechnology. I develop a practical model of innovation, high-
lighting how biological innovation is stymied or deflected to high margin applica-
tions if tools are not freely available, continuously improving and embodying the
permission to deliver work product into markets. I explore parallels, divergences
and resonance with open source paradigms in software engineering. The rest of the
paper focuses on CAMBIA BiOS Initiative activities: the BiOS Framework, the
PatentLens, and the BioForge, and the creation of a “commons of capability”
through which new actors, including farmers and small-to-medium enterprise,
can use science to create viable innovations relevant to their needs.
POWER, TOOLS, AND THE COMMONS OF CAPABILITY

Twenty-eight years ago, I began a project to develop a set of tools—of tech-
niques—in molecular biology that could help researchers in that field visualize
how genes and cells functioned. Like virtually all scientific work, and most tech-
nology development, it was inspired and informed by what came before. And like
all tools and methods, it depends on the use of other tools and methods.
Some years earlier, Ethan Signer, Jonathan Beckwith, and others had made a
remarkable contribution to our toolkit for understanding how genes worked in
bacteria. They conceived of a single tool that would allow scientists to learn how
genes turn on and off in a bacterium. The tool “hooked up” the beta-galactosidase
gene (called lac) for which they had simple measurement tools and assays, to
another gene (called trp) for which measurement was difficult, but whose behav-
ior they were keen to understand. In so doing, they measured the trp gene by actu-
ally measuring lac. This tour de force of microbial genetics used publicly available
technologies and methods—in fact it was then unthinkable that there would be
any other kind. This occurred well before the advent of recombinant DNA, which
now allows apparently sophisticated genetic experiments to be done very simply.
And it occurred well before anyone had even contemplated patents on life sciences.

Years later, I thought, why not use the same concept to understand how cells in
animals and plants work? Why not have the organisms talk to us about their envi-
ronment, through their genes? I set out to develop a parallel system, using a differ-
ent enzyme and gene that could function in these new organisms. The one I chose
was prosaically called GUS.
As I worked, I became increasingly
aware that the availability of tools, and
their capabilities, completely dictated I became increasingly
the science that was done, and who was
doing it. As an undergraduate at the
aware that the availability
University of California and the of tools, and their
University of Edinburgh, I worked in
some of the key laboratories responsi- capabilities, completely
ble for inventing recombinant DNA dictated the science that
methodology. I watched, time and
again, how an entire field of scientific was done, and who was
endeavor would almost instantly doing it.
change course when a new technique—
tool—was provided.
When I first developed the GUS
technology, the scientific community I
was originally working within—which studied animal embryo development—was
not very interested; the tool just wasn’t needed much. My first paper on this topic
was received with an ill-stifled yawn. But I moved my interests to plants and agri-
culture, during the heady dawn of plant molecular genetics.
Efforts to transfer beneficial genes into key crops such as cotton, soybean,
maize, and rice were running into a brick wall. There was no way to visualize suc-
cess, nor to measure and improve on first steps. The GUS reporter system made
visualizing genes and their action in plants very easy and efficient—it was proving
to be a very powerful tool at the right time.
In 1985 I arrived for my postdoctoral research at the Plant Breeding Institute
(PBI) in Cambridge, England, a vigorous international group of colleagues who
were at the cutting edge of technology development and exploration in molecular
plant sciences. The Plant Breeding Institute was also one of the few sites in the
world that combined the patient and disciplined craft of successful agricultural
innovation, such as plant breeding and agronomy, with the impatient and fer-
menting world of molecular biology. As well, the Plant Breeding Institute was still
at that time an entity focused on the public good, a non-profit institute that earned
substantial income for the U.K. government through royalties on its own crop
varieties.
At Plant Breeding Institute, my colleagues3 and I designed and conducted the
first field test of a transgenic food crop. It was also the first BioSentinel experiment:
a gene we wished to study was fused to the GUS gene, to conduct a field trial ask-
ing a fundamental question about how genes act under field conditions. We used

Richard Jefferson
public money, in the public sector, to ask a fundamental question for the public.
The field was planted on June 1, 1987—completely by chance one day before
Monsanto’s first field trial. The lessons of the field trial were fascinating. We found
that gene activity in a field is extraordinarily variable, and our preconceived labo-
ratory-based notions of how genes worked would turn out to be very inadequate
when dealing with field populations. Our technology, though cutting-edge, was
not up to the questions that real-world agriculture presents.
The Plant Breeding Institute was an international institute, with students and
scientists from all over the world. The institute had a reputation for brilliant wheat
breeding and genetics, so most of the countries whose agriculture depended on
cereal production would send their scientists to us for training. Many of the stu-
dents and postdoctoral fellows in the Molecular Genetics department came from
India, Pakistan, Turkey, the Middle East, China, Africa, Latin America, and Eastern
Europe. Most of them indicated that this period in Cambridge was their one shot
at career establishment. If they published a paper or two in a good journal, they
had a reasonable chance of employment back home. And some of them confessed
that they likely would not be able to use the new biotechnologies to effect any
change in their home agriculture or economy. Not only did they lack the finances
and infrastructure to make use of these high-tech tools, but the tools were better
for science than for problem solving.
These people were exemplary of perhaps the most crucial but neglected
resource for social advancement through science: dedicated and capable people. I
observed, however, that instead of using their own experience to inform the sci-
ence that was being done and the technologies being developed, their own world-
views and self-images were rapidly aligning to the incentive and reward system of
the prevailing and fashionable science trends. And their energy to change the
options in their home countries was dissipating.
By early 1987, after intensive experimentation in-house, we had assembled
hundreds of copies of a GUS kit of dozens of DNA molecules and a comprehen-
sive “how-to” manual. I rewrote the big “GUS Manual” and sent it to a mass-mailed
newsletter called Plant Molecular Biology Reporter, which was distributed free to
thousands of scientists rather than initially publishing a peer-reviewed scientific
paper, which I eventually did.4 The grapevine is also a powerful communications
tool in science; soon many people were hearing about this new technology that
would let them see the cells and tissues where their gene was functioning. It would
also allow let them optimize gene delivery experiments; this was an urgent priori-
ty for both industry and academia. At that time no important commercial crop
had been genetically engineered, so requests started flooding in for the GUS sys-
tem. And I started sending out hundreds, even thousands of samples, and the
User’s Manual, all with no licenses, to scientists in dozens of countries, in both the
private and public sectors. I only included a letter saying that while I had filed for
a patent on the system, I wanted everyone to use it, and royalties—if any resulted
—would go back to creating the next generation of technology.

I sent the kit to scientists at Agracetus in Wisconsin who were working, with
little success, on transferring genes to soybeans. They had no idea if the genes they
were introducing with their new process were actually making it into the right
cells. One of those scientists, Paul Christou, told me of their thrill when they were
able to immediately visualize
gene transfer with the blue
color of the GUS test, and soon
succeeded at introducing genes Within a year after we began
into soybeans for the first time. widely distributing the GUS
And they could only do it with
GUS, which also had no appar- technology, hundreds of new
ent restrictions. They were avenues of plant science were
delighted, of course, as was
Monsanto, for whom they emerging. Within two years,
5
worked.
That work with GUS
breakthroughs in maize,
turned out to be the single soybean, cotton, and many
biggest money maker in plant
biotechnology, possibly ever in
other crops occurred.
agriculture. Monsanto devel-
oped its RoundUp ReadyTM soy-
bean line, which it ultimately
used to breed most of the transgenic soybean plants now covering the world, using
GUS to select plants.
Within a year after we began widely distributing the GUS technology, hun-
dreds of new avenues of plant science were emerging. Within two years, break-
throughs in maize, soybean, cotton, and many other crops occurred. New tech-
nologies were invented that used the tool in its very creation and optimization,
such as particle bombardment (the tool that Agracetus had been exploring) and
critical improvements were made to core technologies such as gene transfer by
Agrobacterium. GUS demonstrated that one powerful new tool, widely distributed,
could rapidly change an entire field.
The idea of intentionally changing the directions of inquiry and the demo-
graphics and economics of problem-solving by designing and providing new tools
would shape the next thirty years of my professional life. With increasing exposure
to the realities of practical agriculture, intellectual property, policy and business,
my definition of “tool” matured. It came to include not just the technologies need-
ed for scientific investigation, but also the critical normative, economic, policy,
legal and business instruments to convert investigation into socially and econom-
ically sound innovations. A business model really can be a tool.

Richard Jefferson
Enclosing the Toolkit: The Case of Agrobacterium
But while this period hinted at the vast potential for new tools emerging from
molecular biology to lead to rapid innovation, it also saw the rush to privatize the
kinds of tools that had always been seen as a commons, as exemplified by the
adventures of Agrobacterium. When I started to work at Plant Breeding Institute,
plant molecular genetics was in its infancy, and only three or four major institu-
tions had serious capability in this nascent field. All of them were using
Agrobacterium-mediated transformation as their fundamental tool for transferring
genes to plants.
Several years earlier, several public
research teams had discovered an
[T]he contents of many astonishing biological phenome-
non.6 A soil bacterium long known
patents were breathtakingly to be the agent of a familiar plant
obvious to all practitioners disease called crown gall was found
to cause these tumors on plants by a
in the field, but for small- to hitherto unforeseen mechanism.
medium-sized enterprises The bacterium—Agrobacterium—
actually inserted into the plant, by
these patents still served as a “natural” genetic engineering, a
real disincentive to innovate. component of its own genome, and
in so doing reprogrammed the plant
to produce a “gall” and new food for
the bacterium. This phenomenon, a
sort of biological Trojan horse, was
thought to be unique in the biological realm. And everyone in plant biology saw
that it was to be a critical tool in the development of new options of biotechnolo-
gy.
The groups that first made the discoveries were all in the public sector, funded
largely by public monies; they could all see that Agrobacterium would be a funda-
mental tool of the field. In spite, or perhaps because of all this, the gold rush for
patenting started. And not only did the pioneer groups in the field file patents; over
the next twenty years over a thousand patents were filed—and granted in many
nations—that covered various aspects of Agrobacterium-mediated gene transfer.
Some were so minor and trite as to be laughable were they not presumed valid by
law, but they still produced a thicket of rights, nearly impenetrable even to the spe-
cialist.
And of course the pioneering patents were fought over viciously. To monetize
the patents, the rights were sold to the highest bidder. But the rights were not clear;
bitter wrangling over primacy with the fundamental patents continued for almost
twenty years before any legal clarity emerged. Of course the winning bidders ended
up being large multinational companies, notably Monsanto (either directly or by
acquisition); and in most cases the payments to universities and institutes were

negligible or even negative. But the effect of increasingly consolidating these

patents in a few hands was anything but negligible.
Soon, public and private sector scientists were patenting their developments as
a matter of course. Some of these findings became powerful patent estates that
potentially blocked most of the world’s agricultural enterprises from using these
tools without permission, often at any price. For example, Japan Tobacco discov-
ered and patented a method to use Agrobacterium to transfer genes into rice and
other cereal crops.
The case of Agrobacterium was repeated with many subsequent technologies,
ranging from genetic selections, to the wholesale patenting of promoters and
genes,7 to gene inactivation technologies (such as RNAi and co-supression). Again,
the contents of many patents were breathtakingly obvious to all practitioners in
the field, but for small- to medium-sized enterprises these patents still served as a
real disincentive to innovate. They also extracted huge rents from industry, and
raised transaction costs to an unbearable level, mostly because the patent land-
scapes were so opaque and complex. This trend has accelerated markedly and now
applies to medical as well as agricultural technologies. The consequences are clear-
ly that only the biggest-ticket targets are getting attention. But blockbusters alone
don’t make for good agriculture, good environmental management or good pub-
lic health.
In 1985 the sector was viewed as exhilarating, entrepreneurial and vibrant,
with almost unlimited possibility for doing good in world agriculture; within a
decade or so it had all but stalled into a corporate oligopoly, with vertical integra-
tion, ossified and oppressive business models, and massive patent portfolios tying
up almost every key technology and platform used in the field. And though near-
ly all the pioneering discoveries were made in the public sector, they were not
reserved for public use or for the small-to-medium enterprise sector that the pub-
lic trusts. It is no surprise then that the public now views the entire agricultural
biotechnology sector—as manifest in the outcry against GMOs—as being a tawdry
exercise in failed promises, industry consolidation, public sector abandonment
and simplistic agendas. Perhaps the greatest crisis that has emerged from this cor-
porate control of problem-solving in agriculture is that the public now seems to
have very little confidence in the use of any science in agriculture! This has indeed
been a case of throwing the baby out with the bathwater.8
Biotech Bazaar: Tools for Sale

At the Plant Breeding Institute, I was working with colleagues from scientific cul-
tures that had historically used the discoveries and technologies that came before
to grapple with the next generation of scientific challenges, with the tacit under-
standing that this process would naturally yield real-world solutions, such as plant
varieties and agronomic processes. After all, the Plant Breeding Institute paid its
way in the world by doing just this.

Richard Jefferson
But that world was collapsing. The distinction between discovery and inven-
tion was being blurred as patents were filed on each component; that process
entirely altered the dynamic of translation into true innovation: delivering the
products of science and technology to the marketplace. It was now possible to con-
trol the tools and platform discov-
eries themselves, not just the prod-
ucts that they created.
Perhaps the greatest crisis In the early 1980s with the passing
that has emerged from this of the Bayh-Dole Act, universities
in the United States were actively
corporate control of encouraged to patent their work
problem-solving in products. The Act’s fundamental
policy goal was to see publicly-
agriculture is that the public funded science and technology
now seems to have very little better used by society, by encour-
aging industry to adopt it. The
confidence in the use of any trend of public agencies using the
patent system exploded interna-
science in agriculture. tionally into a filing frenzy. No one
foresaw then that the fragmenta-
tion of the platforms and tools
would make it so complex, so
expensive and so intractable to assemble the “freedom to operate and freedom to
innovate.” Nor did we see that the resulting innovations themselves would be so
few, so stodgy, and so slow to reach the marketplace.
At almost the same time, the advent of recombinant DNA and the ability to
determine DNA and protein sequences massively increased scientists’ ability to
explore, understand, and manipulate living systems, or at least living organisms. So
every new life sciences discovery could be, and often was, dressed up as an inven-
tion and subject to patent; as the patent claims were granted, they cast a huge net
over the possible options. Public sector coalitions would frequently compete with
private big-science, and who usually won the plum of patent monopoly? The pri-
vatized efforts. Was this right, or necessary?
I began my own foray into patents and their importance when I arrived in
Cambridge in 1986. I discovered close relationships between some large companies
and the public-sector institute where I was based, shaped by personal histories and
friendships. I didn’t view this as a bad thing. I shared all my ideas and technologies
with them from the outset. In fact, I shared with pretty much anyone who was
interested, thinking that—in economic terms—my ideas were non-rival; sharing
didn’t cost me the ability to use them myself. How wrong I would later prove to
be.9 And how times were changing.
One company, ICI,10 was keen to use GUS in its commercial development pro-
grams; like many companies it was mostly interested in having clear rights to do
so. ICI suggested that I patent my technology so it could be sure it would have

access to GUS in the future. I didn’t understand the logic at the time, but I took the
first steps and filed a patent in the United Kingdom and the United States, with a
filing date in 1986. The University of Colorado, where the first stages of the work
had been done, had waived its interest in patenting it.
Thus began a long and painful learning process of partnerships with powerful
attorneys in which I watched patent-craft by The Masters. It took almost seven
years for my first patent to issue in the USA, and nine years for the one with most
of the valuable claims. Even when it was issued, complex agendas and issues11 kept
me from licensing the patents or even having a clear title for quite some time. This
delay wrought havoc with my ambitions to use patents to create and fund CAM-
BIA, and when revenue did come in, it was in sporadic bursts, and barely in time
to make payroll.
As a technology, GUS has had a surprisingly long shelf-life, and is unusual in
being a largely stand-alone technology. If one has the “right” to put a gene into a
plant, GUS remained a useful and legally usable tool to monitor that gene and its
activity. But it turned out that even that right, the legal permission to transfer a
gene to a plant, proved to be a critical and contentious issue because patents are
opaque and licensing rights even more so, and because advances in the life sciences
are so interdependent.
Wheels and Spokes: The Interdependency of Technologies

The patent system is so complex it is almost awe-inspiring. Single patent docu-
ments can run to hundreds of pages, with arcane language that few understand,
and rights that courts interpret and re-interpret on the fly. Thousands of these can
exist in a single field of innovation, with many thousands more latent in the sys-
tem. One or two—or none—may be, or may unexpectedly become, dominant.
Fundamental biological processes, such as the ubiquitous gene-regulation mecha-
nism, RNAi, have been patented. Most of the important genes of many important
organisms—humans, rice, maize, mice- have been subject to patent applications
and sometimes grants, many of them contestable by many separate claimants. The
platforms on which we must build are privatized and enclosed, but the owners and
their ambitions are completely unclear; the platform for future innovation is built
on shifting sand.
But worse, while the ownership of the “patent” itself is usually a matter of pub-
lic record, the ownership of the rights—the most important feature of a patent —
is completely obscured. Nowhere, in most jurisdictions, is there recorded or avail-
able the patterns of power: who owns what rights. A university may own hundreds
of patents, and may have sold off the rights to any of the useful ones, but who
bought them? The answer is rarely clear.
When a small company licenses a patent, or develops its own patent portfolio,
to whom has it licensed and on what terms? The patterns of power and ownership
are as important—and in the aggregate perhaps more important—than any other
feature of a patent grant. And yet we have no public information whatsoever,

Richard Jefferson
except in piecemeal and scattered disclosures. Some jurisdictions, including Brazil

and France, do impose a responsibility on licensees to disclose—at least to the
patent office. But most do not. And none make it easy to find this information.
This makes it difficult, if not impossible, for a researcher in a small- or medium-
scale enterprise to assemble all the licenses or capabilities needed to refine and
adapt a tool and ultimately to create an
innovation that will help meet basic
needs.
Virtually all the practices And researchers need this informa-
of academic scientists tion because few discoveries stand on
their own, and even fewer inventions.
promote the belief that Not only do they each depend on the
“good science” can, almost pre-existing knowledge base; they
almost always incorporate components
by magic, transform itself of many other technologies in their exe-
into public or private cution. This is particularly true of
“meta-technologies,” tools and tech-
goods. It can’t. nologies with broad effects used by
communities of innovators quite dis-
tant from the tool’s original inventor.
Consider the wheel, perhaps a six-
spoked wheel. In some ways, it is the most fundamental and important tool in
society. It has countless uses unanticipated by its inventors; most were made by
people who are not wheel-builders. The wheel is only useful when it is used for
something, such as moving a cart; its economic value to society lies not in the price
of the wheel, but in the wealth created through the use of the wheel.
If it takes all six spokes for this wheel to turn, and each of these spokes is poten-
tially different in some way, we have a good metaphor for a modern biological
technology. Increasingly, biological technologies are not self-contained; rather they
are rather interdependent technologies that require multiple key methods and
components to function. If one spoke is withheld, no wheel is built. If one spoke is
broken the wheel will jam. And then the cart cannot move forward. By analogy, the
most powerful technologies can be considered as “wheels,” requiring a number of
“spokes” to function. For instance, the ability to transfer a gene to a crop plant may
require dozens of individually protected, discrete technologies. Denial of access to
any one of these “spokes” obstructs not only the use of the technology, but its
improvement. Only when the core technology is in place, with full functionality,
can it be subject to iterative and cooperative shaping to meet diverse users’ needs.
Unfortunately, even placing one or more key methods or components into the
public domain allows no leverage to bring other components into a collective
whole with broad access. Virtually all the practices of academic scientists promote
the belief that “good science” can, almost by magic, transform itself into public or
private goods. It can’t. In fact, by failing to deliver such goods with broad and pre-
served access, the public sector science community is complicit by neglect, because

the true stranglehold rests where much less public sector effort is expended: in the
process of converting invention and discovery into innovation, by building and
using wheels.
But we can change this landscape, if we provide one or more of the spokes to
all the wheel-builders and users with covenants of behavior, rather than financial
consideration (outlined later as BiOS licenses). If a user can access a spoke only by
promising to share spokes, or improvements, then the whole logic can change.
This is where we find the leverage: change the logic of copyright licenses in
software to allow free and open source software to exist, and do the same for patent
licenses or Materials Transfer Agreements (MTAs) in BiOS. Then we can regain a
full complement of spokes, and see the “wheels” of real innovation turn rapidly
and deploy on many roads, creating wealth through their use.
How Fear, Uncertainty, and Doubt Can Deter Innovation

Uncertainties over intellectual property rights undermine the long-term and sus-
tainable pursuit of innovation by making projects look more risky to potential
partners and investors. This risk combines with others characteristic of early stage
technology development: lack of a fully-specified business model, concerns over
potential technology effectiveness, and the absence of a well-established delivery
channel. Together they generate the fear, uncertainty and doubt (FUD, in the awk-
ward but widely used acronym) that is the core impediment to technology devel-
opment. Currently, every worldwide industry that depends intensively on science
and technology experiences FUD. Sometimes a competitor is the focus; sometimes
the bleak patent situation alone can lead an investor, client, customer and/or the
public to lose confidence in the prospects of creating a viable technology-driven
enterprise.
In the face of the uncertainties associated with the complex and opaque patent
situation, multinational private-sector firms have responded by acquiring large IP
portfolios and negotiating cross-licensing arrangements to obtain platforms of
enabling technologies. Even so, these companies still often find themselves with
constrained freedom to operate. Faced with the uncertainty of patent rights, they
seem to be involved in a sort of mutually assured destruction.
In contrast, the public-good sector, and small-to-medium enterprises have
only fragmentary portfolios, often made up of publicly-developed technology and
modest non-fixed capital pools that they believe can be expanded by their eager-
ness to license them out, but they are at a grave disadvantage; they face a monop-
sony.
Unfortunately, this approach not only destroys public value and confidence; it
is also ineffective in ensuring a sustainable private competitive advantage. As the
expense of sequestering intellectual property outside the public domain in itera-
tive patents has increased, some leading technology firms have decided that an
open source model may yield higher private, as well as public, returns. A notable
example is IBM Corporation; in a bold recent move it is stimulating a universally

Richard Jefferson
accessible “protected commons” of patents in a pool available for any open source
development. As the world’s largest patent holder, IBM could be viewed as a “rights
maximalist;” over 500 of its key software patents have been made available to all—
including competitors—who choose to use them under open source rules. Within
days, Sun Microsystems followed suit with another 1600 patents, and a myriad of
other companies are doing the same. The snowball effect continues, as companies
realize that their sector makes progress when the standards and the toolkits are
clear, open, of high quality and consistently available.
Clearly, true wealth creation will come not through extracting rent from a tool,
but through using a continuously improving toolkit, with continuously decreasing
costs of innovation and a continuously expanding group of tool users. Diverse and
prosperous agriculture, robust public health and sustainable natural resource
management are the publicly valuable goals we must keep in clear sight. The tools
associated with their improvements must be plentiful, powerful and affordable.
As the ICT sector realized, we also need an open source movement in biologi-
cal innovation that can empower public and private sector innovators with the
tools, platforms and paradigms to allow rapid and efficient life-sciences innova-
tions for neglected priorities and new opportunities.
CREATING CAMBIA, MAKING CHANGE

In the mid-1980s, when I first formulated the ideas that became CAMBIA, I did
not intend to build an institution; I spent much time between 1987 and 1990 try-
ing unsuccessfully to convince universities or later the United Nations or the
CGIAR12 system to take on and host CAMBIA’s mission. But the complexity and
edgy nature of the mission, the need to integrate diverse skills and strategies, and
the entrepreneurial spirit, ultimately required an independent base.
In early 1992 I moved to Canberra, Australia, to begin a project on behalf of
the Rockefeller Foundation, troubleshooting its rice biotechnology network in
Asia. At this point CAMBIA was not a legally incorporated body, but had reams of
letterhead and surprising credibility. Our job was to travel to virtually every labo-
ratory in the developing world that had Rockefeller Foundation support—and
over the next eight years this must have been hundreds—to help develop, improve,
and apply their biotechnology capabilities, especially as they pertained to rice
molecular biology. We developed and provided to many hundreds of labs—per-
haps over a thousand—the most effective and widely used “vectors” in plant
molecular biology, the pCAMBIA series, and provided courses and workshops in
the science and increasingly over time, in intellectual property management. In
hundreds of working visits to China, Indonesia, India, the Philippines, Thailand,
Vietnam and many other countries of Asia, Africa and Latin America, we forged a
sense of the possibilities if we had new types of technologies, and new communi-
ties to improve and share them.
During these years, as we became more sophisticated about licensing and
understanding the patent systems, we also became more aware of the yawning gulf

between biotechnology rhetoric and innovation realities in most of the world. On

the one hand we saw a large, untapped population of dedicated and knowledgeable
problem solvers, committed to solve problems of real substance to their countries
and peers—but they lacked the usable technologies that would improve their situ-
ation. We also saw that the science itself was not up to the job: the research being
conducted in the early days of plant molecular biology (and sadly still now) is
intensely reductionist, whereas the problems of agriculture and society are inte-
grated into complex systems. On the other hand, if we could design and provide
tools that fit the problem and the hand of the tool-user, we could rapidly and effec-
tively change the entire platform of problem solving, as long as the tools were
dynamic and could embody the permissions to integrate into real-world innova-
tion. CAMBIA was conceived to integrate and to address these issues.
Outlined in the earliest CAMBIA prospectus was the premise of using patent
revenues to create a sustainable funding base. We surmised that we would ask a
fair, tiered licensing fee of each company that was using the technology, propor-
tionate to their ability to pay. A big company pays a lot, mom-and-pop companies
pay peanuts, developing countries pay nothing. Then we would use the resulting
revenue stream to invent and distribute the next generation of technology. At the
time it looked like a logical and efficient way to move the sector forward with fair
and open competition, not for the capability to innovate, but for the innovations
themselves.
This worked to some extent, in that CAMBIA exists and might not have done
so without patent revenues. Companies that licensed the technology range from
giants like Monsanto, Dupont, Pioneer, Bayer, BASF, and Syngenta down to enti-
ties as small as the Hawaiian Papaya Growers Cooperative. But we also realized we
could not generalize or scale it as a business model in the current climate of frag-
mented rights and capabilities. The transaction costs of negotiating licenses, as
more and more “spokes” were required to move forward, would simply be impos-
sible to bear for any but the highest-margin applications.
CAMBIA addresses these challenges through three interdependent activities:
1. The BiOS Framework creates, validates and promulgates licensing tools, along
with the norms and new business models to make use of strategies for “open
source” creation, improvement, and sharing of enabling technology.
2. The Patent Lens is a platform to focus, understand, and investigate the patent
rights and to inform practitioners and policy-makers.
3. CAMBIA’s own research into creating and distributing key “pump-priming”
enabling technologies is made available through our online interface, the BioForge.
The BiOS Framework

Biological Open Source is a nascent movement, evocative of the transformative
changes in information and communications technologies (ICTs) wrought by free
and open source software (FOSS). The two movements share some goals: seeing
transformational effects on a sector, and increasing the democratic involvement in

Richard Jefferson
Patent Lens: A Platform for Understanding IP Landscapes

CAMBIA’s Patent Lens includes one of the world’s most comprehensive full-
text searchable databases of patents; cost-free and available to anyone, it has a
seven-year history of continued growth in features and power. It incorporates
the full text of applications and granted patents from the U.S. Patent and
Trademark Office, Patent Cooperation Treaty (PCV) database, European and
Australian jurisdictions, and their status and family relationships in many
dozens of countries. Its fast and user-friendly search engine has a nuanced
interface and presents common and harmonized data structures so that these
jurisdictions can be searched simultaneously.
The Patent Lens is becoming an increasingly important resource as the fee-
requiring “value-added” patent data providers continue to consolidate. Because
no national patent office has taken on the task of harmonizing collections over
many jurisdictions, the role of the “patent clergy’ remains central, and the gate-
keeper functions of the information providers remain onerous. National and
regional patent offices provide quite variable free patent searching; some are
appallingly primitive while others, like the European Patent Office, are quite
sophisticated. Patent offices, however, have complex relationships with com-
mercial providers such as Thomson, which actually provide the patent offices
with integrated searching functions for their own in-house use. To further
complicate the situation, commercial providers have been calling for a reduc-
tion in the role of national patent offices as “value added” providers. The need
for a public good provider has never been greater.
Patent Lens focuses on user-adaptability, integration, annotation capabili-
ty and availability to the world community for free; these key features render it
particularly helpful in efforts to restore public good and transparency as the
raison d’etre of intellectual property systems.
Technology Intellectual Property (IP) Landscapes

IP Landscapes are analyses of key platform technologies, and the IP positions
associated with their development and use. They build on and use the patent
database, but include much more than a collection of relevant patents. Each
landscape is a searching and analysis effort involving many person-months, by
CAMBIA staff and soon others, who have particular knowledge of the science
and technology and of patent claims. Typically, patent “professionals” within
law firms accumulate billable hours by providing the same information over
problem solving; we are learning many lessons from the software world, and will
continue to. But it would be a mistake to push the comparison too far. BiOS con-
cepts have emerged from twenty years within the life sciences and human develop-
ment culture, to address the needs and challenges of biological innovation.

and over for different customers, and charging full fees again to update them
periodically. Increasingly we wish to do something no fee-requiring patent data
provider will ever do: turn the landscapes into living repositories of constantly
updated information, so no more updates will ever be required.
The goal is to use the harmonized datasets to create a facility where distrib-
uted and diverse users can generate, link, and dynamically annotate patent
landscape analyses through web interfaces. The landscapes will ultimately
become maps and decision support tools so users can distinguish greenfields
from minefields in the long path from discovery to practical delivery of an
innovation.
We have created a substantial number of such landscapes, in an early,
hypertext-linked but basically flat structure. But we aim to enable the prepara-
tion of many more, by many people, by leveraging informatics to create ready
frameworks and linkages between world patent literature and such resources as
PubMed Central, and Google Scholar whose relevance engines can enrich the
process. Ultimately we see the navigation of technology landscapes as being a
critical feature in research and development decision making, but people will
only use them when their costs, in both time and money, are negligible and the
relevance and utility of the guided decisions are clear.
Patents, Policies & Practices

This component includes tutorials that guide users in reading and interpreting
patents; the aim is to make novices more sophisticated about the nuanced real-
ities of intellectual property, particularly patents. It also includes Policy &
Practices papers that describe and advocate for informed and productive
changes in international, regional and national forums and laws.
The goal is to forge a learning resource that participants in innovation sys-
tems at all levels—scientists and engineers, business and legal professionals, cit-
izens and policy-makers—can use to learn of critical and timely issues relevant
to improving the public good and social and economic value by engaging with
the patent system.
The standards of modern patents are widely viewed as execrable; though
many patents are presumed valid by law, they are at best frivolous and often
egregious. We aspire to provide the public with tools to recognize and overturn
such patents where they undermine progress or are being used without a long-
term and well-articulated stake in industry or society.
The idea of using patent licenses not to extract a financial return from a user
of a technology, but rather to impose a covenant of behavior, is the single feature
of BiOS that is most resonant with Free and Open Source Software. We13 worked
with small companies, university offices of technology transfer, attorneys and large

Richard Jefferson
multinational corporations to understand their concerns and experiences, and

then create a platform to share productive and sustainable technology.
The basic premise underlying that license is that we would not charge any fee
for use of the “basket” of technologies with the patent estate being offered. By mak-
ing the license cost-free, we hoped to induce the most valuable contribution to the
license community: “freedom to innovate.” In exchange for full, unfettered com-
mercial rights to our technologies, licensees are required to comply with three con-
ditions:
y They will share with all BiOS licensees any improvements to the core technolo-
gies as defined, for which they seek any IP protection.
y They agree not to assert over other BiOS licensees their own or third-party rights
that might dominate the defined technologies.
y They agree to share with the public any and all information about the biosafety
of the defined technologies.
Several further features of BiOS Certified licenses are very important:
y The definitions are critical. The core capabilities (enabling technologies, plat-
forms) and their scope must be carefully defined to allow confidence in the
development of viable business models that use these BiOS licensed technolo-
gies.
y The BiOS License structure must be scalable, and it should be generalizable,
capable of development within these guidelines, and overseen by diverse institu-
tions. We recognized that different technology sets have very different implica-
tions in the innovation chain, and that the agreement must accommodate differ-
ent sectors (e.g., agricultural and medical) and different economic circum-
stances (industrialized and less-developed countries). Therefore we developed a
suite of licenses around several different enabling technologies CAMBIA devel-
oped. We created them around our own technologies to have first-hand learning
platforms from which we could generalize and help others create their own
BiOS-Certified programs.
As we have gained experience with our first-generation licenses through the
concerns and suggestions of many licensees and potential licensees, we have aimed
to create a “brand” of Biological Open Source (BiOS) that is independent of insti-
tution. The BiOS certification program will help ensure that core BiOS character-
istics are sculpted into forms that allow institutions to preserve their own cultures
and priorities. They may do this through the medium of patent licensing or
through materials transfer agreements (MTAs), a common form of bailment used
to provide materials for life sciences research, such as bacterial strains, plant lines,
cell cultures or DNA.
The certification approach has been particularly valuable in software develop-
ment, through the activities of the Open Source Initiative (opensource.org) which
overseas the branding of such licenses associated with copyright of free and open
source software. However, life sciences are extremely sector-specific and technolo-
gy-specific, and it is impossible to forecast or fully anticipate the emerging patent
rights; these facts complicate BiOS certification and licensing. Of course these

same challenges also render patent-based BiOS licensing and MTAs even more
necessary.
Patent Lens: A Platform for Understanding IP Landscapes

With funding from the Rockefeller Foundation, in 1999 CAMBIA began to devel-
op an integrated, full-text database of patents in the agricultural sciences. Under
the initial guidance of Dr. Carol Nottenburg, then CAMBIA’s Director of
Intellectual Property, the CAMBIA IP Resource became a prominent web-based
data tool to investigate patents in this field. Over the years, both the ambitions and
the capabilities of the CAMBIA Patent Lens team grew,14 and PatentLens has now
become one of the world’s foremost cost-free resources for full-text searching and
understanding patents in many jurisdictions and in all classifications. Patent Lens
(www.patentlens.net) harmonizes, parses and presents worldwide patent and tech-
nology data in a full-text searchable and highly integrated manner.
However, it is much more than a patent database. PatentLens is an integrated
response to the massive complexity and opacity of the world of patents. It is
intended as a public platform to enable many actors to investigate and share analy-
sis of relevant IP issues, and to foster community involvement in overseeing and
guiding the patent system.
The patent system has grown so rapidly and become so complex and opaque
that even the most privileged and skilled clergy of patent law can only parse a tiny
area of specialized knowledge, and that tiny area changes daily. This fragmentation
has made it almost impossible to thoughtfully and factually assess the conse-
quences of action and inaction: How can the consequences of policy be modeled
or validated when patents are treated as fungibles? How can efficient progress in
sectors critical to social progress, such as health, environment, and agriculture, be
secured when the rights are tangled in a skein of patents?
The goal of the Patent Lens is to use the power of informatics and communi-
ty to harmonize and make transparent the world of patents, so that thoughtful
individuals, institutions and agencies can guide thoughtful and humane reform of
the innovation system and to spur efficient and socially relevant innovation. This
is an essential platform if we are to make use of the patent system itself to expand
and protect a technology commons, and to collectively target breakthrough inven-
tions, work-arounds and “work-beyonds”15 and to make thoughtful and informed
partnerships.
BioForge: Field of Dreams?

BioForge was initially launched as a web-based collaboration platform to take
CAMBIA’s pump-priming technologies—including Transbacter (described later),
a new generation GUS called GUSPlus, and a novel genetic fingerprint technology
called DArT—and throw open the gates to enlightened self-interest. We wanted
scientists to try Transbacter in diverse bacteria and crops to create an open source
and effective toolkit. The first version of the web facility was based on a very cred-

Richard Jefferson
BioForge: The Challenge of Aligning Incentives and Rewards

In initially designing BioForge, we had hoped that scientists in public sector
institutions would come to see the value of working together to build powerful
common toolkits to solve problems. Clearly most public entities endorse and
even encourage the notion of pulling together to solve intractable social and
economic problems: market failures. Indeed, this is the best justification for the
very existence of a public sector. But if the toolkit does not encourage scientists
to solve problems for their self interest, it will be irrelevant. And if such partic-
ipation carries a cost—in real time and resources—that is yet another disincen-
tive.
Furthermore, while discovery and occasionally invention are activities
within the public purview in universities and government agencies, innova-
tion—the delivery of new and tangible improvements to society—is not. Hence
it is not part of academic science culture to be aware of the challenges to inno-
vation. Nor does academia do much to reward sharing. The metrics for success
are almost always being “first” in a field of endeavor that is widely hailed as
being important and timely. The grind of innovation, with its need for long
timelines and the building of confidence at many stages of product or process
delivery, has little appeal and less relevance to academic advancement. In fact,
the market increasingly rewards those who monetize or sequester the necessary
components of innovation—a perverse set of incentives if there ever was one.
ible collaborative software development platform created by Brian Behlendorf16

and his colleagues at Collabnet. We had hoped—in retrospect, perhaps naively—
to see a surge of interest: scientists from around the world, initially from the pub-
lic sector, would register, log on, and offer to collaborate to improve these tools,
and to share their thoughts and actions.
The initial response was mildly enthusiastic, but within a few months we real-
ized that the actual engagement and contribution of scientific or personal
resources was miniscule. While the BioForge has almost a thousand registered
users, very few of them have substantially assisted the listed projects, technically or
scientifically. However, many of the registered users are from India, China, and
other countries widely viewed as out of the mainstream of cutting-edge biological
research. This may reveal a latent need or desire for a better-crafted collaboration
culture. We also believe it reflects CAMBIA’s reputation as a provider of enabling
technology. Thousands of our pCAMBIA DNA vectors toolkits are in use in almost
every country, so this “market” knowledge and confidence could also be skewing
the numbers. Still, at this stage BioForge has yet to create a vibrant web-connected
community that actually does anything. We use it constantly, as a transparent and
inclusive “lab notebook” for our own work at CAMBIA.

Discoveries are routinely patented; while they are only part of the complex web
of capabilities that must be aggregated to create wealth, owners can game them
for short-term financial gain at the expense of sectoral progress.
Success with a BioForge project—or any cooperative project with long
timelines and complex feedback loops—requires aligning incentives and
rewards. The most prominent metric for academic advance is reputation, but
the tools for recognizing and enhancing reputation are still very primitive,
including publication in high-impact peer-reviewed journals and serving on
committees and review panels to cement relationships.
BioForge lacks any mechanism to demonstrate its contributors’ influence
and success to the community at large, or to those entities and individuals that
have power over professional advancement. It takes an exceptional scientist to
work toward improving a technology if she or he has no personal stake in its
success.
The long timelines of agricultural and medical research and product devel-
opment all but forbid direct feedback when an innovation enters the market-
place. This is a key justification for vertically integrated companies: to ensure
that managerial oversight creates these links. If we wish to see alternative, dis-
tributive innovation in sectors with such challenges, we must create intermedi-
ate, interconnected and valuable feedback that enhances contributors’ reputa-
tions, as well as new incentive pulls to participate.
To address the issue of enhancing contributors’ reputations (see BioForge text

box), CAMBIA has started a software development project called Karmeleon to
create open source, modular, software-mediated reputation metric tools. We hope
that people in many collaborative and distributive projects can use these tools, and
tune them to their diverse needs, ranging from online review of scientific publica-
tions through to research collaboration and product development. Our premise is
that individuals should be rated on their contributions by accredited (rated) peers
in a transparent manner, but using sophisticated, multivariate metrics to reflect the
complex and diverse nature of the value of their contributions. Beyond their pro-
fessional value, these contributions can and often do have important community
and utility implications.
If we make valid, less “game-able” metrics available, users can develop confi-
dence in the value of one another’s contributions, and provide rewards as their
community norms dictate: career advancement, peer reputation, funding and so
on. But the reputation metrics must be adaptable to the culture where the contrib-
utor is working and being evaluated. Our initial drafts of Karmeleon use three
metrics: Community value, Utility value, and Professional value. Scores in each
category in turn impact the “gravitas” of a user; we hope this will encourage more
sensible ratings to emerge.

Richard Jefferson
An “Apollo Project” for Biological Innovation?

Several months after we published our TransBacter paper in Nature, Nature
Biotechnology—the most prominent scientific journal in the commercial
biotechnology sector—published an editorial expressing skepticism that a true
open source movement could happen in biotechnology, given the extent of
entrenched norms and interests.19 The title of the editorial, “Open Sesame,”
implied that a vision as clearly utopian and impractical as that of open source
for biotechnology would need a magic incantation in order to become reality.20
The article did conclude, however, that an open source movement in biotech-
nology might just take root if, in an “Apollo Project” of some type could be
used to forge a common ground to develop new collaboration norms, tools,
business models and science around some mutually agreeable and highly desir-
able goal.21
While we at CAMBIA do not agree with the editors of Nature Biotechnology
that the only way forward for open source in biotechnology is a grand-scale
“Apollo project” of the type they suggested, we do agree that it may be an
attractive option
What would a 21st century Apollo project to spur biological innovation
look like? If the BiOS Initiative and the movement need such a platform from
which to explore, create and coordinate new modes of problem solving using
life sciences, what will that platform be? First, the project would require a
socially and economically highly desired goal for which a technological inter-
vention of great promise can be articulated. The project would need to focus
on catalyzing new opportunities for problem solving, not just on creating an
The first generation of BioForge taught us something fairly obvious: that the
cultures of software engineering and the life sciences overlap very little. Software
developers live online. Their tool—the computer - is their window to the Internet.
Their product, software code, can be tested almost instantly and can be evaluated,
rejected or accepted almost as quickly. The engineer can build on tested code, and
be fairly confident of a secure base. In the life sciences, experiments can take
months or years; validation, scaling and quality assurance take even longer. And
the process can be so expensive or so specific to circumstances that it may never be
replicated by another entity.
We are cautiously optimistic that as we introduce new, recognized and respect-
ed “reputational” tools, if we nurture high profile and energetic champions for par-
ticular projects, and if we create new incentive and reward systems, we will be able
to move the BioForge from a field of dreams into a productive and focused mech-
anism for distributive innovation.

imposed “solution.” It would not have a linear impact, nor would it merely
improve the cost effectiveness of conventional paradigms.
To engage both the scientific and the business community, such a coordi-
nated effort would offer an intellectually exciting proving ground for new col-
laborative approaches and new science and must require interdisciplinary
skills. The imagination and creative energy of science would be harnessed, but
much of science is intensely self-absorbed. An interesting problem will attract
much more attention than a mundane one.
The platform activities would afford opportunities for “spin off ” value for
other initiatives and activities, and would have impacts beyond its target goals.
A broad constituency must see some merit in various components of the proj-
ect—so that diverse, even divergent interests would build coalitions.
The project would also have a credible promise, or proof of principle.22 It
would not be too risky—or too safe. While it may be somewhat encumbered
by intellectual property, it would not yet be completely constrained. If the tar-
get has a suite of challenging IP thickets, that would be a platform for new
strategies—of decision support, collaboration and invention—to emerge,
allowing us to hone these capabilities. It would be in a field with few
entrenched interests, or those interests must be diffuse or distracted. If major
economic interests push back too early, they could slow or stall the effort.
Finally—and critically—it would also be in an arena where civil society,
industry and academia can engage constructively towards a détente, and where
they can explore and validate new models of social enterprise and business, as
well as new economic and innovation strategies.
Beyond the Thicket: Transbacter

By about 2000, my colleagues at CAMBIA and I had seen so much “me-too” sci-
ence going on around the world and the vast increases in patenting and vertical
industry integration. We also saw public support eroding for genetic modification
and then for all scientific interventions in agriculture. So we decided it was time to
act more aggressively.
We decided to attack the first and most prominent thicket of patent rights—
that around Agrobacterium— which represented the beginning of the patent rush
in agricultural biotechnology. We chose this technology not because we believe
that it presents a unique or critical bottleneck to many new entrants into the sec-
tor, or because anyone has called for these patents to be revoked or broadly
licensed. In fact, these tools have little market pull now. The “scorched earth” pol-
icy in the agricultural biotechnology sector has left virtually no inventive entities
queuing up to develop products, and no public desire for such products.
Rather, we wanted to show the potential for a new combination: what if we
combined patent informatics and transparency with creative, targeted scientific

Richard Jefferson
research, and new normative and licensing tools? What if we used it to build a true
public commons of technology—or rather “rebuild” a public commons of capabil-
ity. We sought not a silver bullet, but rather a platform to test and explore our
hypothesis that in alternate universes of innovation, tools and foundational dis-
coveries could be constantly improving common goods, and that prosperous
industries and business could be built on them.
Assessing the Patent Landscape

In about 2000, we began a comprehensive analysis of the patent situation sur-
rounding Agrobacterium-mediated gene-transfer (AMGT), the process I discussed
earlier. We intended to publish a simple white paper describing this key thicket of
rights. But the task proved much more complex. Ultimately we published the first
analysis online; almost 400 pages, and covering the top few hundred patents,17 it
has since seen two major updates. Over 1000 users downloaded it. But as we began
to realize the extent of the problem, we also realized that it could not be attacked
piece by piece. As we analyzed the “patent landscape,” we noted that all of the
patents used a common language and set of definitions that dated to the original
filings: that the inter-kingdom gene transfer was achieved as a unique event medi-
ated by a particular bacterial species, Agrobacterium tumefaciens.
Definitions are the key to a patent; they are critical in a patent prosecution to
establish the metes and bounds of the claimed invention, and to guide courts in the
event of a dispute. And the pioneering inventions typically establish precedent that
persists. In the case of Agrobacterium-mediated gene transfer, it was widely
believed and promoted that Agrobacterium was a one-off; a unique situation in
biology. To this day most scientific papers baldly state that it is the only such situ-
ation.
The Strategy
My logic, and that of most biologists trained in evolution, is that if something hap-
pens once in life, it probably happens many times—maybe ubiquitously. We think
of a “one-off ” because we can rarely see other instances. So I began looking for
hints in the literature that other bacterial species could transfer genes to plants,
either natively or with a bit of convincing. And I found hints aplenty. So we set
out—again with support from the Rockefeller Foundation—to find or generate
the capacity for benign plant-associated bacteria to conduct gene transfer, and thus
to develop a system that would be competent to transfer genes to plants, which was
not infringing any Agrobacterium patents. If we could do this, the toolkit would
clearly fall outside all the patents over AMGT, rendering hundreds, even thousands
of patents irrelevant as blocking tools, but useful as “background science and tech-
nology.”
We further speculated that we would be able to develop a system that was not
only free and clear of the onerous Agrobacterium thicket, but would ultimately be
superior to Agrobacterium as a technology. Agrobacterium is a plant pathogen,

which normally causes disease in susceptible plants. Plants—even non-susceptible

ones—seem to know this, and become stressed. We reasoned that by using totally
benign symbionts, we’d eliminate the stress on the plant, and open new opportu-
nities for genetic enhancement. If we could make the technology more efficient
and wide-acting than Agrobacterium, a wholesale migration to the use would
occur, even by academics. This would infiltrate the new open source norms into
that most conservative of communities.
The R&D
The process turned out to be more straightforward than most anyone expected,
and we published our results, which described a new system called “Transbacter,”
in Nature18 on February 10, 2005. After nearly two years of hard work by a skilled
laboratory staff, we described in that paper how we had induced three different
genera of benign plant bacteria to transfer genes to three different genera of plants.
These plants included the world’s most important crop, rice, over which Japan
Tobacco held dominant rights, and broadleaf plants, over which Monsanto held
dominant rights.
The capability of Agrobacterium to transfer genes to plants is virtually identi-
cal at a molecular level to the ubiquitous system by which virtually all bacteria
exchange genetic material, and even by which proteins and other molecules are
secreted. This similarity allowed us to excise and move this capability on a fairly
well-defined DNA construct into the benign symbionts. We were able to test the
system with the most sensitive tools in the sector: the open-sourced GUSPlus
reporter system.
The paper received exceptional coverage in the press, ranging from the New
York Times and Science to Nature Biotechnology and the Economist, but not just for
its scientific contributions.
The BiOS Licensing Framework

To share this technology, perhaps counter-intuitively, we filed patents on it. At first
glance, this is anathema to open sharing. But we were learning the lessons of pos-
itive selection and the ugliness of patent gaming and trolling (for an example, see
appendix). As we developed the new technology we also developed, in parallel,
draft licensing templates for a prototype “BiOS” license, as I described earlier. Two
years later, we have over fifty licensees, including large multinational corporations,
small companies, and diverse public sector institutions. We have recently stream-
lined this technology to be more universal and easily disseminated, and have dis-
tributed over 300 kits of the new materials. Traction is building as the technology
is improving.
But this is not really transformative, merely illustrative and instructive. Real
transformation occurs when completely new actors are brought into innovation
systems, and when radically new options for problem solving emerge.
This is our next ambition.

Richard Jefferson
The Role of Measurement in the Next Green Revolution

It is often said—and it is true—that the Green Revolution, which so trans-
formed the agricultural and economic fabric of Asia and much of the rest of the
world, passed Africa by. The Green Revolution is not largely about plant breed-
ing, although the short-stature varieties garner great attention. Rather the great
advances were in the availability and management of inputs in agriculture.
Water, nitrogen, phosphorus, potassium, acidity and countless micro-nutrient
and abiotic stresses can each separately and together constitute major produc-
tion constraints, as well as input costs, to an agricultural system. Combine this
complexity with the countless impacts of biotic challenges such as pests and
diseases, especially cryptic or latent soil-borne diseases, and creating any kind
of profitable and ecologically sustainable farming becomes horrifically com-
plex in the best of circumstances. Little wonder that industrial agriculture’s
greatest successes—with their concomitant problems—come from homoge-
nizing these environments with massive inputs and then breeding and manag-
ing these artificial and unstable conditions to get maximum yields.
These options are not available for transforming low-input, low-output
agriculture into a prosperous enterprise. When capital, infrastructure and com-
munications are precarious, it becomes even more crucial to accurately and
judiciously source and apply suitable nutrition, and to guide management
decisions well.
The management of natural resources, whether endogenous or enhanced
by inputs, is the most critical and challenging bottleneck in agriculture. It will
be the lynchpin of the next Green Revolution. It is also the component most
amenable to measurement. But here is the conundrum: to have a sustainable
and scalable impact, such management decisions must be made by local prob-
lem solvers, and many such people are extraordinarily poor. They cannot afford
to measure, and they cannot afford not to.
BIOSENTINELS: A 3D VISION FOR EQUITABLE INNOVATION

The most powerful impact of the scientific method has been to help us understand
what had been incomprehensible; it has also helped us visualize and measure the
parameters of the natural world. The importance of measurement cannot be over-
stated. Without the ability to measure—to see the consequences of an experiment
or intervention—we cannot understand it, or improve or build upon it. The future
of biological innovation will similarly hinge on turning the unseen into the seen,
and to sensibly report on the world around us so we can better respond.
Most critically, we must democratize these abilities, both to measure and to
respond, in order to diversify agro-ecosystems and environments and decentralize
the problem-solving capability. We will achieve this by fostering scientific method
and harnessing local knowledge and commitment in communities that have pre-

viously been ignored or treated as passive recipients of help. This is our 3D vision,
and the BioSentinel project will be the platform for exploring and realizing this
vision.
In many vineyards around the world, rosebushes are attractively located at the
end of each row. This curious planting regime does not reflect some shared aes-
thetic among winemakers or grape-growers. Rosebushes are sensitive to certain
fungal diseases that affect grapevines
more than the grapes themselves. If they
plant and observe roses, growers can eas-
ily see the early stages of fungal infection [W]e are beginning to
on the roses, and can take measures to
prevent disease in the grapes. The rose is create an open source
a natural BioSentinel. platform to use plants as
For the last 15 years CAMBIA has
been working on the components neces- versatile living
23
sary to generalize this phenomenon.
Now, with the advent of new scientific
BioSentinels to measure
understanding, new proofs of principle, and report on the status
and the BiOS Framework, this work can
now be brought to scale. With initial of their environment.
support from the Lemelson Foundation,
we are beginning to create an open
source platform to use plants as versatile
living BioSentinels to measure and report on the status of their environment.
Imagine a plant—not necessarily a food plant—that has been engineered as an
instrument to produce a colour, a smell, or a shape that indicates the level of nitro-
gen or another essential nutrient in the soil. This plant will be developed in a col-
laborative, open sourced environment with components that are BiOS licensed
and held in public trust. It will be a cost-free instrument that allows any farmer to
better judge the condition of her cropping system, and to create wealth by making
careful decisions, informed by measurements of the unseen parameters that influ-
ence her crop and its environment.
But the BioSentinel project involves much more than engineering one plant to
make one color in a glasshouse. It is no mere academic curiosity. We intend to
develop the platform to create a modular toolkit for the public and private sectors
alike. We envision mixing and matching components to sense virtually any param-
eter (nutrient, water, pathogen), transmission of this signal via open standards,
and reporting on this parameter with any of several different detection systems
(color, fluorescence, smell, form). We also intend to consider all the quality assur-
ance, regulatory and other parameters necessary for diverse collaborators to create
practical and deliverable innovations. The BioSentinels will cost nothing to man-
ufacture, once developed. They will cost nothing to use. But they will add value
through the information they make available.

Richard Jefferson
This platform will be built using technologies developed under BiOS license,
guided by sophisticated patent informatics to ensure permissive use, and will pio-
neer new collaborative research methods that enshrine and perpetuate permissive
use by all parties. The platform need not create GMO foods, but will create new
communities of informed decision makers who are empowered to evaluate and
improve their own ecologies and economies.
CONCLUSION
At the start of the twenty-first century, science is at a critical juncture. Four cen-
turies of inquiry, discovery, and invention have created a base of knowledge that
has the potential to provide people everywhere, in all circumstances, with nourish-
ment, improved health, and longer life. But the institutional mechanisms that
ostensibly exist to encourage the application of science to practical problems are
today hindering that very process. The norms that have evolved around gate-keep-
ing have created new clergy, new impediments and new inefficiencies. Without a
systemic change, science’s promise will not be available for those who most need
it, and the promise of a truly diverse, robust and fair innovation culture may elude
us.
Patents are at the heart of the system of institutions that convert basic scientif-
ic knowledge into practical applications. The modern patent system was intended
to advance the public good by balancing the disclosure of ideas and the transpar-
ent definition of limited property rights. Today, it has degenerated into an instru-
ment that is often misused to obstruct the public good through enclosure of ideas
and obscure assertion of property rights that have no concomitant social benefit.
To the shared dismay of both scientists and thoughtful citizens, patent systems and
the myriad gaming practices they have spawned today are impeding innovation as
a social enterprise, and continuing to deprive most of the world’s population of
such fundamentals as adequate nutrition, access to health care services, and clean
water. This does not have to be. It is up to us to reclaim the beauty of science as a
democratized tool for social advancement and wealth creation. It is up to us to
write the terms of the compact. It is up to us to move beyond rhetoric and into
constructive engagement in reforming our innovation systems for economic
robustness and social justice.
APPENDIX. CO-OPTING THE COMMONS:

A NEGATIVE EXPERIENCE OF POSITIVE SELECTION
For nearly seven years, with expenditures of over $100,000, CAMBIA has battled
Syngenta, the large Swiss agribusiness, in European Patent Office opposition pro-
ceedings and appeals over the validity and scope of Syngenta’s patents on “Positive
Selection.” These broad patents (e.g. EP 601092, but with counterparts in the USA)
were granted with sweeping claims that conferred on Syngenta an absolute
monopoly on “positive selection” in plants.

Positive selection is the provision of a benign compound—such as a sugar—

that an organism cannot use without the action of a new gene; thus it “selects” for
those organisms that have acquired that gene. Positive Selection is one of the most
basic tools in genetics, used since the beginning of microbial genetics; all the bac-
terial genetics in the 1950’s and 60’s was based on one bacterial strain gaining the
ability to grow on new sources of carbon and energy. When I started working with
plants, it was thus immediately obvious to me (and presumably to anyone not
employed at the patent office) that we could easily adapt this concept to plant
genetics, to determine when a new gene had been added to a crop plant, and that
a good first use would be my GUS gene.
So I began adapting GUS for this purpose, around the time I started sending
out GUS kits and information, and giving hundreds of lectures on its use. While
this mode of distribution was to dramatically change the field, it also allowed some
aspects of the system to be co-opted. Our ideas and hard work were basically
turned from “non-rival” goods that were available for all as we intended, into a pri-
vate monopoly that could, and did, suppress innovation by competitors.
Scientists at a Danish sugar company, DANISCO, filed a patent well after I had
given them the GUS gene, and after I had given public lectures on the use of GUS
for such purposes. In this patent, they were granted broad claims to all uses of pos-
itive selection, with any compound and any gene in any plant. This breathtaking
scope of claims was based solely on experiments described in the applications that
used the GUS gene to activate a biological compound that would allow plant cul-
tures that had GUS to stay green and be “selected.” This was fundamentally what I
had already reported at international meetings, with data showing that it worked.
Like many scientists, when I reported it at international congresses, I intended to
see it shared with everyone. DANISCO’s intention clearly was not.
The potential value of this patent estate caught the eye of Heinz Imhof, then
chairman of Novartis, who intervened personally to buy the patent applications
from DANISCO outright. These patents then served as powerful ammunition in
the patent war chest of Novartis, which went on to merge with other companies in
the vertical integration frenzy of agricultural biotech, to become Syngenta. The
evolving strategy of Mutually Assured Destruction by Patent Estate between the
large multinationals required just such weapons.
The breadth of the claims as granted in Europe—together with their counter-
parts in the USA—ensures that any entity using the approach of conferring a
growth advantage on a cell or plant to obtain transgenic plants would be infring-
ing. This left only the use of antibiotic resistance and herbicide resistance as the
means of selecting transformed plants. The adverse public response to such antibi-
otic gene use is well documented.
Thus the environmentally attractive and benign technology of cleaving a sugar
and growing preferentially, with no antibiotics, was denied to the world’s agricul-
ture community by one group of patents, whose entire rationale was derived from
work that I had intended to make public. But with the patent, it was “enclosed.”

Richard Jefferson
I had several meetings with Imhof and others at Syngenta; I attempted to make
the case that using GUS to garner such a powerful and oppressive patent position
was unjust and inappropriate and would ultimately be a pyrrhic victory for the
sector. The discussions went nowhere.
So we made use of one of the few remedies afforded in the patent system to
small players: the opposition process. Once patents are granted in Europe, they can
immediately be challenged if one submits to the European Patent Office (EPO)
prior art that had not been considered. Our contention in the EPO was that much
public work, as well as my own work, including my public disclosure of the basic
idea, pre-dated the filings and would thus invalidate the novelty requirement for
the patent. We also argued that the patent was obvious in light of the pervasive use
of positive selection in every other biological system for many years. We also
asserted that the patent did not sufficiently enable one to practice the invention,
and in particular, did not merit the breadth of claims granted.
The opposition process is widely touted as much more affordable than litiga-
tion. No doubt this is true. Instead of paying several million dollars to lawyers so
we could be screwed by a multinational corporation in front of a judge, we only
had to pay a hundred thousand or so for the same privilege, but in front of a panel
of patent professionals. Of course reconsiderations of patent validity are conduct-
ed by the very same entity—the administrative machine of the patent office - that
made the initial patent grant. So even in the face of what we felt to be compelling
prior art, and convincing case law, the deck was stacked in favor of the status quo.
Watching the process, and the craft and gaming skills involved, was an eye-
opener for me. Until one has actually endured the multi-year posturing, arguing,
heartache and expense, there can be no clear way to convey the dysfunction of the
system, or its debilitating effect on inventors. We achieved only modest inroads in
restricting the breadth of their claims. But we did consume years of time and huge
amounts of money, in a failed bid to restore for public use a key application of a
technology that I had developed and had inadvertently let a multinational pull into
its private fiefdom. The opposition process is not available in the United States, so
the opportunity to lose extravagant sums of money there was denied to us.
What did Syngenta do with this technology? With the example they claimed
using GUS, nothing. They never made a single product using that tool, nor did
they develop it further. But they used the broad claims, granted by both the
European and U.S. patent offices, to ensure that no other player—large or small—
attempted positive selection without becoming beholden to them. Later, from
DANISCO, they acquired other examples of positive selection protocols which
worked pretty well and were protected under the umbrella of the broad claims,
they made them “available” under a research license to unsuspecting scientists in
the public sector. This “research license” strategy is one of the most pernicious co-
opting approaches used by large private-sector companies. Once a tool is used
under such a license, the only way to then release a product is through after-the-
fact negotiations for a “commercial license.” Several friends have gone through this

process and reported a bare-knuckled strategy that gives the licensee almost no
share in the benefit of the product they developed. Few takers, of course.
What are the lessons. Don’t share? This is not a lesson I cleave to, nor a recipe
for social progress. Could it have happened otherwise? Absolutely. This example
was a case study of how “open source” licenses could be crafted and protect the
public commons, yet allow the private sector to build prosperous businesses using
that commons of technology. Perhaps I should have only sent the GUS gene and
disclosed the information to those who agreed to terms by which they would share
improvements that specifically used GUS; then the entire broad positive selection
concept would likely have stayed available to all entities—public and private, large
and small—that wished to explore its use. As would the many modifications on
which others had filed patents. Just imagine: what would happen if the public sec-
tor technology transfer professionals had access to such a leverage tool to further
the power of the commons toolkit and advance their mission?
1. For example <www.opensource.org>.

2. In economics, a good is considered either rivalrous (rival) or nonrival. Rival goods are goods
whose consumption by one consumer prevents simultaneous consumption by other consumers.
In contrast, nonrival goods may be consumed by one consumer without preventing simultaneous
consumption by others. Most examples of nonrival goods are intangible goods. (from Wikipedia,
2007).
3. Mike Bevan, my principal collaborator, went on to play a key role in coordinating the public sec-
tor sequencing of the Arabidopsis genome . Arabidopsis is the workhorse model plant of biotech-
nology, and was the first plant to have its entire DNA sequence described in the literature. The
public efforts to create a public good, like some of mine, were likely co-opted by the secretive
wholesale filing of patents on the Arabidopsis genome by Mendel Biotechnology, an affiliate of
Monsanto. These patents have only recently surfaced (<www.patentlens.net>) but pre-dated the
public effort by as much as two years, thus potentially capturing or hijacking much publicly-fund-
ed work, through a legal, though unpalatable practice called 'after-claiming'.
4. R.A. Jefferson, T. A. Kavanagh, and M. W. Bevan (1987), “GUS fusions: beta-glucuronidase as a
sensitive and versatile gene fusion marker in higher plants.” European Molecular Biology
Organization Journal, December 20; 6(13): 3901–3907. Apparently it has been read often, as it has
been cited in the scientific literature thousands of times. To our delight, however, the user's man-
ual in Plant Molecular Biology Reporter has been similarly cited, and likely more influential, in
the precursor to the Open Access publishing movement.
5. Monsanto later engaged Agracetus in a heated patent battle for the right to do genetic manipula-
tions in soybeans, and ultimately purchased Agracetus and its patents. At this point the patents
owned by Agracetus ceased being seen as reprehensible and unfair, and were defended as pillars
of rectitude.
6. These scientists included groups led by Mary Dell Chilton, Marc van Montagu, Eugene Nester, Jeff
Schell, Pat Zambryski and others, at the University of Washington, the University of Ghent, the
Max Planck Institute, and elsewhere.
7 See forthcoming “Patent Landscape on Plant Genomes.”
8. Jefferson, R.A. (2001). “Transcending Transgenics: Is there a baby in that bathwater, or is it a dor-
sal fin?,” in The Future of Food,” edited by Phil Pardey (International Food Policy Research
Institute with Johns Hopkins Press), pp75-91.
9. See Appendix on positive selection.
10. Imperial Chemical Industries; its plant work was later absorbed into Zeneca and then into
Syngenta.

Richard Jefferson
11. More details on the complexities of this period can be found in Richard Poynder's online inter-
view of me: The Basement Interview: Biological Open Source,
<http://poynder.blogspot.com/2006/09/interview-with-richard-jefferson.html>
12. The Consultative Group on International Agricultural Research, <www.cigar.org>, a consortium
of 15 agricultural research institutes and many governments, is the principal non-profit entity
engaged in agricultural development through science for poverty reduction.
13. Dr Marie Connett, CAMBIA's Deputy CEO, a scientist, patent agent, and IP Manager, jumped
into the deep end when she joined in 2005, and found herself working round the clock on cre-
ating the license, consulting with dozens of technology transfer professionals, lawyers, industry
colleagues and scientists.
14. The Patent Lens was featured in an editorial in Nature Biotechnology (2006, 24:474), called
“Patently Transparent” which was disarmingly positive about our PatentLens activity providing
a critical breath of transparent fresh air to the patent frenzy that is creating a crisis in biotech-
nology. The PatentLens team, led for the last two years by Dr. Marie Connett, still has its origi-
nal three software informatics specialists, Greg Quinn, Doug Ashton and Nick Dos Remedios,
and has been strengthened by additional talent, including Paul Freeland, Neil Bacon and Josh
Cole.
15. A work-beyond refers to a created technology which both bypasses and transcends the propri-
etary technology it seeks to replace. Transbacter, described later, is an example of a 'work
around', which will become a work-beyond when its efficacy and uptake increases.
16. Brian Behlendorf is the Chairman of the Apache Software Foundation, and a driving force in the
creation of the Apache Web server, one of the most widely used open source software tools in the
world, with nearly 70% of the world wide web making use of it.
17. See <www.patentlens.net>. The first version was mostly a tour de force by Carolina Roa
Rodiguez with guidance from Carol Nottenburg. -
18. Nature, 2005, 433:629-633. “Gene Transfer to Plants by Diverse Species of Bacteria.”
19 An outstanding article by Kenneth Cukier appeared about a year later: “Navigating the Future(s)
of Biotech Intellectual Property,” Nature Biotechnology (2006) 24:249-251. It articulately
described the increasing impasse in biotechnology caused by misuse of the IP system, and fea-
tured CAMBIA's BiOS Initiative very prominently and favorably. The metaphor Kenn used in
this paper-that of maritime navigation and commerce - is extremely apt and informative. His
paper is strongly recommended.
20. “Open Sesame,” Nature Biotechnology (2005), 23:633. Clearly the authors did not have a young
child to remind them that “Open Sesame” was the incantation that would open the cave in which
thieves had already sequestered stolen riches, a suitable parable for the misuse of the patent sys-
tem.
21. The Apollo project was the concerted effort by the United States government to reach the moon
before the Soviet Union did. The long-term focus may have been to reach the moon, but the pro-
ject's real purpose was to coordinate massive scientific, engineering and technological progress
with industrial development, while building and preserving a societal and political confidence
associated with success. It wasn't really about reaching the moon, it was about being able to reach
the moon.
22 In the absence of jet aircraft, rocket propulsion and supersonic flight, the idea of space flight
would have seemed ludicrous to many.
23. This work has benefited particularly from early contributions of Kate Wilson and Steve Hughes,
both Members of CAMBIA, now with CSIRO and Exeter University, respectively. Summarized
in, e.g. R. A. Jefferson (1993), “Beyond Model Systems: New Strategies, Methods, and
Mechanisms for Agricultural Research,” Biotechnology R & D Trends, Volume 700 of the Annals
of the New York Academy of Sciences, December 21, 1993. pp 53-73; Wilson, K. J, A. Sessitsch, J.
C. Corbo, K. E. Giller, A. D. L. Akkermans, and R. A. Jefferson (1995), “¼-Glucuronidase (GUS)
transposons for ecological and genetic studies of rhizobia and other Gram-negative bacteria.”
Microbiology 141: 1691-1705.

Open Source in Biotechnology:

Open Questions
Innovations Case Discussion: CAMBIA-BiOS
The case narrative by Richard Jefferson in this issue of Innovations shows how the
rate and direction of progress in biology is constrained by available tools; a novel
tool can set the field on a new and more productive course, but only if creative sci-
entists are free to use it. The history of ¼-glucuronidase (GUS) reporter genes illus-
trates the great impact a technology can have when it is novel, useful, and globally
available on reasonable terms. Now Jefferson’s energy is directed at restoring
biotechnologists’ global freedom to innovate, by “inventing around” essential, but
proprietarily owned, research tools, and trying to ensure that the new alternatives
remain freely available for use and improvement.
A key part of his program is the development of BiOS, an institutional inno-
vation that applies aspects of the open source software model to biotechnology.
Although the jury is still out on the effectiveness and sustainability of BiOS,
Jefferson’s detailed account provides a good foundation for initial analysis. Perhaps
more important than his discussion of the BiOS model itself, however, is Jefferson’s
articulation of the intellectual property problems faced by innovators in biotech-
nology who want to see their efforts make a difference to end-users globally. What
he has to say demands the attention of the many lawyers and economists who see
no problems with intellectual property protection in biotechnology.
Open source is currently one among several approaches designed to encourage
broad based participation in research in biotechnology in the face of the restric-
tions imposed by intellectual property rights on key enabling technologies.1 Open
source in biology is a work in progress, highly experimental and controversial. This
essay seeks to reach beyond the rhetoric of openness and transparency, to consid-
Sara Boettiger is Director of Strategic Planning and Development at PIPRA (The

Public Intellectual Property Resource for Agriculture, <www.pipra.org>). Brian
Wright is professor of Agricultural and Resource Economics, University of California,
Berkeley, and member, Giannini Foundation.
This case discussion originallly appeared in volume 1, number 4, of Innovations.
© 2007 Sara Boettiger and Brian Wright
er some of the challenges that confront the BiOS project, and some of the oppor-
tunities that might be created in biotechnology in general, and agricultural
biotechnology in particular, by open source innovation.
A DIFFERENT PATH
The GUS reporter gene and subsequent innovations, (and especially Jefferson’s
publication with almost 4,000 citations) are achievements for which many a pro-
fessor would contemplate homicide. This narrative has a familiar ring to those who
like to read the lives of the academ-
ic super-heroes. Outstanding stu-
While most lawyers and dent meets creative mentors on the
cutting edge, encounters the right
economists were still research problem in the wrong field,
and ports the solution to the right
debating whether access to application just when it is needed.
technology and freedom-to- The accomplishment is widely cele-
brated and the just patent reward is
operate problems even claimed.
existed, Jefferson designed But at this point Jefferson
begins to steer his career away from
CAMBIA and, in turn, BiOS the conventional, exhibiting reckless
to tackle those problems. disregard of academic disciplinary
boundaries and fiscal prudence.
Many of those GUS citations, some
might have noticed, were generated
by his own efforts to disseminate the reporter gene technology far and wide in use-
ful kits which enabled disenfranchised scientists in obscure corners of the world to
do more effective plant breeding. Eschewing the single-minded pursuit of further
publications and attainment of tenure, Jefferson turned to champion an interna-
tional community of scientists, entrepreneurs, and farmers and their capacity to
embrace the emerging scientific opportunities offered by biotechnology. Against
the backdrop of such auspicious scientific potential, the constraints imposed by
lack of resources and encroaching patent claims caught his attention. Had he fol-
lowed Adam Smith’s recognition of the key role of specialization in innovation and
the social merits of selfish pursuing profit maximization, Richard Jefferson’s career
would have taken a very different, and less interesting, path.
Because he has played on both sides of the patent game in a rapidly evolving
commercial field, he has had the opportunity to observe how patents can restrict,
or even kill, promising technologies, and stifle the formation of startup firms that
generate the flow of innovations to the end users. While most lawyers and econo-
mists were still debating whether access to technology and freedom-to-operate
problems even existed, Jefferson designed CAMBIA and, in turn, BiOS to tackle
those problems. His experience has earned him notable credibility in this debate.

Open Source in Biotechnology: Open Questions
OPEN SOURCE: FROM SOFTWARE TO BIOLOGY

The merits of open source (OS) in software, though still debated, are widely
acknowledged. Some advocates of OS software, from its beginnings, have promot-
ed its development with mystical zeal. But, over time, its success as a production
model has garnered the respect of hard-headed lawyers and businessmen. OS has
proved to be an efficient, thus far sustainable, and competitive system for develop-
ment of some software applications, delivering high quality products, with faster
development time, at a fraction of the cost of firm-based production models.
In OS, self-selected volunteers develop ideas that might make their own lives a
little easier. For example, they remove bugs encountered in their idiosyncratic
work environments (Bessen 2005), some of which could only be detected by a cen-
tralized research authority with great difficulty and expense. This activity is known
as user innovation Von Hippel (2005). Often, they share their results with others,
and enjoy the resulting peer acknowledgement of their contributions. But none of
this started with software. Not by a long shot.
The first modern economist, Adam Smith, described the phenomenon in 1776.
A great part of the machines … in those manufactures in which labor is
most subdivided, were originally the inventions of common workmen,
who, … employed in some very simple operation, naturally turned their
thoughts towards finding out easier and readier methods of performing
it. Whoever has been much accustomed to visit such manufactures must
frequently have been shown very pretty machines, which were the inven-
tions of such workmen in order to facilitate and quicken their particular
part of the work.
Note the lack of any hint of monetary awards for the inventions, and the
assumed willingness of the employers to share them with all comers. Long before
Smith, farmers were solving biological problems without thought of monetary
award, and sharing their inventions with their peers. Open source agriculture is
more a restoration than a revolution.
To agricultural scientists, OS offers a promise of a return to the scientific envi-
ronment of decades past, where materials and ideas were exchanged with greater
fluidity, and today’s preoccupation with intellectual property rights that was
absent. But BiOS’ wet lab plant biotechnology constitutes a young field very differ-
ent from that of software production, or traditional plant breeding before the twin
revolutions in biotechnology and intellectual property rights. Jefferson’s initiative
accordingly provides an interesting lens through which to examine the prospects
for the open source model in novel terrain.2
The shift from copyright to patent law, and the complex and expensive regula-
tory regime, profoundly affect the prospects for open, distributed innovation and
the creation of protected commons of easily accessible technology in plant
biotechnology. The appropriate architecture for an OS model in biotechnology,
like the appropriate design of any innovation, is hard to predict ex ante. The fate of
BiOS, as a practical implementation of the model, will be highly instructive.

Patent vs. Copyright Law

Free access to technologies in the OS model fundamentally depends on the protec-
tion of those technologies from encroaching IP claims. This is accomplished
through an open source license in which the right to use the technology is
exchanged for the promise not to privately appropriate it. In software, the strategy
designed to create a protected commons of accessible technologies involves the
dominant IP form, copyright, as the key legal instrument in the open source. In
biology, the dominant form of intel-
lectual property protection is not
copyright but patents. Several char-
The shift from copyright to acteristics of patent law pose serious
patent law, and the complex challenges to the translation of the
OS software model to biotechnolo-
and expensive regulatory gy.3
regime, profoundly affect Whereas copyright attaches
instantaneously and with zero cost to
the prospects for open new software code, obtaining patent
[source]...in plant protection (“patent prosecution”)
for an innovation in biotechnology
biotechnology. costs tens of thousands of dollars,
and entails months if not years of
back and forth between the applicant
and the patent office. The traditional
OS model depends on the collaborative contributions of programmers who
engage in the project for any number of well-researched motives (reputation, fun,
improved skills, connection to community, etc.), but if their innovations were to
be protected by patents, and the cost of patenting were shared by all research col-
laborators, the community of contributors would likely collapse.
Given that the cost of the patent system discourages the patenting of every iter-
ative improvement to open sourced biotechnologies, it would be necessary to make
informed bets as to what ought to be patented in order to achieve a cost-effective
degree of protection for the growing commons of the project. Remaining tech-
nologies might be defensively published. The Single Nucleotide Polymorphism
(SNP) consortium4 provides an example of effectively combining defensive pub-
lishing and defensive patenting to reach a similar goal of sustained open access, but
without the complication of maintaining access to “improvements” of key
enabling technologies.
A priori decisions must also be made regarding where to patent. One strength
of the OS model in software is its ability to cross national boundaries, gaining from
the talents of a truly international set of developers.5 While copyright lends itself
to virtually costless international coverage,6 patents are national in scope. Applying
for patent protection worldwide can be prohibitively expensive; even filing in a
handful of wealthy countries can cost hundreds of thousands of dollars in fees and

associated expenses.
In patents, as in copyright, the utility of the protection gained from intellectu-
al property rights depends on the ability to enforce. All the expenditures and effort
involved in patent prosecution are in vain unless the OS commons has the credi-
ble financial capacity to sue infringers and finance the necessary litigation through
to a decision, if necessary. In patents this capacity does not come cheap; each law-
suit in the United States costs millions of dollars. It is not clear whether the issue
of enforcement is less serious in OS software, which is itself a pioneering commons
institution, and, as such, still a work in progress.
One practical distinction between software and plant biotechnology in this
regard is that infringers may have less incentive to fight to the end if they can, at
low cost to themselves, cease infringing by substituting lines of new code in a rel-
atively short time period. In plant biotechnology, however, an accused infringer is
likely to have less attractive alternatives to legal warfare; switching to a non-
infringing technology may forfeit an investment of years of development, back-
crossing and regulatory testing because patented technology is often locked into
the genome of a novel plant variety.
In light of these constraints, BiOS, for effective management to achieve unfet-
tered access to crucial technologies, needs to be able to make centralized decisions
about patenting and publishing, and to have the financial capacity to enforce its
rights. Centralized decisions are not foreign to the traditional open source model;
despite claims of democratic innovation by OS protagonists, the system most often
depends on a hierarchy of reviewers ensuring quality control and assigning cred-
it.7 But even with this hierarchy, the OS quality control process lends itself to, and
indeed finds strength in, its openness and immediacy. To our knowledge, BiOS and
other OS biology initiatives have not addressed the issues of confidentiality, delays
and capital requirements associated with extension of the OS model to patentable
biotechnologies.
Open Access to End-Products

Beyond the challenges posed by the shift from copyright to patent law, further con-
straints to the translation of the open source model into applied biotechnology
arise from fundamental differences in the characteristics of product commercial-
ization paths. In the life sciences a significant amount of capital is often necessary
to move inventions through development, field testing, manufacturing, and distri-
bution. OS software, on the other hand, has no expensive regulatory hurdles to tra-
verse and can be replicated and distributed at zero marginal cost.
If the goal is open access to an end-product, not to a research tool (as in BiOS),
then widespread delivery of the product may depend on engaging capital to get it
from the lab out into the hands of consumers. The ability to leverage patent rights
can, in some cases, play a critical role. If the product has both commercial and
humanitarian markets (consider, for example, an AIDS vaccine), the patent owner
may license the patent rights to a company for use in the lucrative developed coun-

try market in exchange for the company’s promise to manufacture and deliver the
product into developing country markets at a reasonable price. This logic is not
new, of course. Product development public private partnerships (PDP’s), among
others, have demonstrated how to leverage intellectual property rights, segmenting
the market in their licensing agreements in order to achieve the ultimate goals of
delivering biomedical innovations to poor and underserved populations where
there are very limited commercial markets. It is in cases like these that open source
licenses may hinder the product’s commercialization by precluding the engage-
ment of private capital. An understanding of this dynamic is in part what drove the
BiOS model to focus on enabling technologies, preserving the potential for patent
rights on application-level technologies.
The polio vaccine provides a historical example that seems to contradict the
cautions above. It is often cited as a case where the choice not to patent resulted in
a major public health success. Jonas Salk famously stated: “Who owns my polio
vaccine? The people! Could you patent the sun?” It’s true that Salk did not patent
his work and open access was achieved, by almost anyone’s standard, as the polio
vaccine represents one of history’s great public health success stories.
The polio vaccine was delivered through an extraordinary collaboration
between individual volunteers and a public charity, the National Foundation for
Infantile Paralysis (now known as the March of Dimes), founded by Franklin
Delano Roosevelt. Salk’s work was funded by the National Foundation. The field
trials were the biggest peace-time mobilization of volunteers in U.S. history. Nearly
two million school children, called the “Polio Pioneers,” and thousands of health-
care workers and lay people volunteered to take part in or assist with the vaccine
field trials. The results of the trials were analyzed at the University of Michigan.
Millions of Americans participated by raising funds in their communities. The
National Foundation for Infantile Paralysis even funded the manufacture of the
vaccines by subsidizing the production of nine million dollars worth of vaccines.
The story of the polio vaccine is, indeed, an inspirational illustration of a
nation mobilizing its resources to address a public health crisis. But it was devel-
oped with ample funding and without a thicket of potentially blocking patents.
Remember, too, that vaccines are currently under-supplied globally. The Salk
model has not been sustained. A major source of vaccines for tropical diseases is
the U.S. government, which funds the necessary research to protect soldiers who
might one day fight in tropical lands; any gains that accrue to locals in such coun-
tries are more or less incidental. Where there is still some doubt as to whether pri-
vate sector resources may need to be engaged, the option to use IP rights as a tool
to achieve the goals of open access may be valuable.
The larger point is that different IP management tools fit different circum-
stances. There are many instances where publishing and not patenting is the path
to ensuring open access. Yet another important strategy, widely praised as judi-
cious, is exemplified by the broad and non-exclusive licensing strategy implement-
ed for the key Cohen-Boyer patents. Effective IP management plans require flexi-
bility and knowledgeable professionals. They should be designed to support par-

ticular goals, and depend on the characteristics of a technology and surrounding

circumstances as they unfold. Open source mechanisms, though, are not flexible;
in terms of IP, the fate of a new invention is mandated ahead of time. This can
mean missed opportunities.
Inter-operability and Parallels to Linux

The burgeoning of the OS model in software and its ability to generate serious
rivals to commercial products in some market segments was dependent, in part, on
two critical elements. First, the contribution of a kernel by Linus Torvalds in 1991
enabled Linux to become a complete, functional alternative to proprietary operat-
ing systems, and subsequently the flagship for OS success. Second, the creation of
a set of OS licenses with different degrees of virality, allowed OS code to be used in
combination with proprietary software, thereby broadening the range of business
applications that could integrate OS code. The original OS license, the GNU
General Public License (GPL), has a viral quality which mandates that products
incorporating the original code also become additions to the commons and must
be licensed under the same GPL terms. In response to needs for an OS license
where interoperability brought fewer restrictions, other licenses were developed8
which allowed OS code to be incorporated into proprietary commercial products.
The range of degrees of virality among licenses reflects a trade-off. More viral
licenses promote greater growth in the protected commons of code, but at a cost
of reducing the range of applications for the code. Less viral licenses still can work
to preserve the commons of code, but lean more toward the direction of a static
commons which does not grow as quickly.
It is natural to look to OS in software to find a model for the protected com-
mons of technology that BiOS seeks to create. Jefferson rightly identifies the need
for a complete platform of enabling technologies, tools for plant genetic transfor-
mation, as an important element of OS application for agricultural biotechnology.
Along with Jefferson, the press has highlighted parallels between his Transbacter™
technology, designed to work around existing, proprietarily-owned, plant trans-
formation methods that form a crucial bottleneck in agricultural biotechnology,
and the kernel of what we now know as Linux. The analogy, though, is premature,
for two reasons. First, Torvald’s kernel was the lynchpin to the system—with it a
truly self-sufficient operating system was born. Transbacter™, though, removes
only one of two current bottlenecks. There is yet another technology that remains
a critical impediment to operability.9 Second, Transbacter™ is a young technology.
Its utility for plant breeders is not yet established.10
In any case, because of the territorial nature of patents, these bottlenecks of
proprietarily owned enabling technologies exist for the most part in only a few
countries (including the United States). The key patents creating the bottlenecks
in the U.S. were either never issued, or have expired in many other countries.
While it is true that products exported back into territories where these patent bot-
tlenecks exist will have problems, there are many countries without these patents

in which researchers can use a full set of technologies in the public domain with
impunity, and with no need to consider BiOS license terms. There are other, non-
IP, reasons why this is not done; access to materials, biosafety issues, liability and
stewardship issues, and a weakness in scientific capacity can be more serious
impediments than foreign patents in hindering progress in plant biotechnology in
developing countries.
However, the path pioneered by BiOS could become a route to freedom to
operate for poor countries in the future. The full effects of the global spread of
patenting fostered by the TRIPS Agreement of the World Trade Organization, and
even more onerous bilateral agreements, are now coming to bear on agricultural
researchers in developing countries. As their scientific capacities develop, the full
force of patent claims might well become a serious obstacle.
Because BiOS does not currently provide a complete and viable alternative
platform, interoperability concerns are not just important, but essential.
Researchers have no alternative to using technologies licensed under the BiOS
terms in conjunction with patented technologies owned by others. Unfortunately
the BiOS license mandates encumbrances that “infect” key complementary
enabling technologies. Owners of patents on such technologies might well find
these encumbrances unacceptable.
Suppose, for instance, a scientist creates a plant transformation vector (the
research tool that enables a researcher to insert a gene into a plant’s DNA), with a
BiOS enabling technology as one of its many component technologies. Under the
terms of the license, the entire vector system must be granted back to BiOS. The
BiOS license, in its reservation of rights for the licensee to own application tech-
nologies (i.e. not enabling technologies), falls short of what is known in open
source software licensing as “viral.”11 However, the BiOS license does have a viral
quality to it that affects enabling technologies.
The terms of the BiOS license could mean that researchers become limited in
the set of tools from which they choose. In a sense, the BiOS license could, count-
er-intuitively discourage, rather than encourage collaboration. To see this effect,
imagine again the vector system referred to above where one component is a BiOS
technology. The researcher would like to use another component that happens to
be patented by a commercial firm. The commercial firm will not agree to the use
of their technology knowing that the vector system, incorporating their technolo-
gy will be available for free under the BiOS license. Therefore the researcher’s
choice of tools is effectively diminished by having chosen to use the BiOS technol-
ogy; he has relinquished the ability to use certain tools because he has brought a
technology into his lab under the terms of the BiOS license.
It is true that the BiOS license allows the licensee to refrain from granting back
improvements if they are kept as trade secrets. (Not only can the licensees benefit
from access to enabling technologies, and the improvements of others, but they
can use trade secrecy, where feasible, to avoid making their own improvements
available to other licensees.) The trade secrecy option is, however, unlikely to be a
useful concession for universities, where disclosure is an important part of the cul-

ture and materials are regularly shared among researchers in a lab (or among labs)
informally.12
In sum, creation of a transformation platform as a flagship application with
freedom to operate has been the subject of much effort and creativity, but it is still
a work in progress.
Is the BiOS Model Sustainable?

In order for BiOS to be a viable and replicable model, sustainability is essential.
Richard Jefferson has generously seeded the model by placing his own patents
under the BiOS license; the Rockefeller Foundation and IBM, among others, have
provided financial or material support. The initiative aims to increase the com-
mons with improvements to the existing technologies. But what about new tech-
nologies? The incentives for participating by signing the BiOS license are separate
from the incentives needed to get people to donate new technology. Will the latter
be forthcoming to BiOS as contributions from the private sector or public sector?
Jefferson’s own experience with BiOS is not encouraging on this point. Perhaps the
BiOS approach will be sustained by replication, with each new collaboration initi-
ated by a creative leader who sets the broad agenda. The key enabling technology
for widespread adoption of the BiOS model might be a perfected BiOS license.
The culture of hackers that continues to fuel the advances of OS in software
may not be replicable in the field of biology. But to the extent that it is, researchers
in the public sector are likely to be crucial participants, especially in less developed
economies where almost all agriculture-related research is public. In its present
form, the BiOS license remains a poor contractual fit for universities (particularly
those in the U.S.13). Some would argue that the goal of the BiOS model to provide
for dissemination and access is already part of the university process. Universities
publish, they collaborate, they share and exchange. Having learned from painful
experiences akin to Jefferson’s loss of access to a positive selection strategy, when
universities license their technology they typically retain the right to publish, con-
duct research, and allow other universities/non-profits to do the same for research
and educational purposes.
The reach of the BiOS grantback14 goes beyond what is often found in licenses
from the nonprofit sector, and could impose obligations that public sector scien-
tists are not free to satisfy, since the rights to their inventions are often mediated by
their employer institutions. This is a problem that arises when the OS approach is
ported from the world of copyright to the world of patents. Universities have not
wrested control of copyright on texts from the grasp of their academic authors,
even if the work is produced on campus. By contrast, patents on inventions origi-
nating in U.S. university labs are assigned to the institution. It may be that a sus-
tainable OS model in patentable biotechnologies will need to utilize a legal mech-
anism that is better-suited to the peculiarities of academic institutions.

Some Perspective
At this point, it is appropriate to put some perspective on the relevance of open
source initiatives for global agriculture. To date, it is unlikely that massive numbers
have died of hunger due to the current state of agricultural intellectual property
rights. Subsidized by rich countries’ agricultural policies, the world markets have
offered basic foods at prices lower than ever recorded.
Furthermore, almost all currently useful agricultural biotechnology has been
available, without patent protection, to most developing countries, for all purpos-
es except incorporation in exports to countries with relevant patents in force. It has
not been widely adopted for basic food production, for two reasons. First, wide-
spread opposition to genetic modifica-
tion, for reasons of biosafety and pub-
At present, open source is a lic acceptance, has discouraged this
type on innovation. (For example, as
promising, but problematic, of 2006, South Africa was the only
way to preserve some country in Africa where genetically
engineered crops are grown commer-
freedom to innovate in a cially).15
world of patent thickets. Second, the less developed coun-
tries, with a handful of notable excep-
tions including China, India, Brazil
and Argentina, lack any real capacity to
exploit the new technologies, because the substantial, sustained investments in
education, research and facilities necessary to get the process under way have not
been made.
Nevertheless this is the right time to be addressing patent problems in devel-
oping countries. The long downtrend in food prices has been interrupted, a
reminder that the food yield increases behind recent declining price trends did not
come automatically, but reflect sustained, large, largely public, investments in
research. In the past year, the world has awakened from complacency about atmos-
pheric carbon, on the one hand, and reliance on imported fuels, on the other, to
support massive increases in ethanol production from crops. If these increases
continue, large yield improvements in the productivity of crops will be needed to
ensure that competition from gasoline consumers does not cause an increase in the
numbers of the world's poor and hungry.
Considerable investments have already been made into researching the genet-
ic modification of developing-country crops (for instance, biofortification, disease
and pest resistance, and drought tolerance). These projects must consider con-
straints and opportunities associated with intellectual property rights in order to
ensure the intended delivery of the products of their research into the hands of
farmers. In its short history, there is already an accumulation of anecdotal evidence
of agricultural biotechnology research projects being delayed, re-directed, or halt-
ed all together because of intellectual property rights problems (Wright and

Pardey 2006a, 2006b). A recent survey of agricultural biologists at U.S. Land Grant
Universities reveals that they, as a group unusually familiar with patenting and the
exchange of tools, believe that intellectual property rights, through their effects on
transactions with their peers, are on balance hindering progress in their research
areas (Lei et al., 2007).
There is, therefore, a sound argument that we cannot wait to find out how the
global implementation of the TRIPS agreement, and subsequent bilateral negotia-
tions on intellectual property rights, affect global innovation over the next quarter
century. IPRs, among the many challenges in life sciences, require forethought.
Decisions today about the ownership of and access to technologies (through
patents and licenses) will affect the paths of research and development for decades
ahead.
CONCLUSION
To develop BiOS, Jefferson has had to dedicate years of effort and ingenuity, call-
ing on all his talents as scientist, entrepreneur, innovator, fund-raiser and cheer-
leader. To create a flagship application for BiOS, he and his colleagues have invent-
ed a novel technology for genetic transformation of plants, designed to be unen-
cumbered by prior patent claims. To ensure its development follows the open
source model, he has fashioned the BiOS license, porting the open source licensing
concept from copyright to a more complex world of patent protection and biosafe-
ty regulation.
Given the magnitude of the task, it is no surprise that the development of BiOS
as a sustainable institutional innovation is still a work in progress. But at this stage,
the story merits a close reading. Jefferson has indisputable credibility as a witness
to the multidimensional challenges of acquiring freedom to operate in agricultur-
al biotechnology.
From a policy perspective, the major lesson is implicit. Almost the entire effort
in creating BiOS constitutes expenditure of valuable, if not unique, resources that
would be unnecessary, absent a patent system, or a system of efficient license agree-
ments. This effort, then, constitutes a concrete example of the “excess burden” of
the patent system, as it exists in developed countries, that is, its cost to innovators
that does not get transferred to others as benefits, but is lost as economic waste.
The availability of global communication at virtually zero cost offers unprece-
dented opportunities for exploiting specialization and the division of labor in
biotechnology research. Unfortunately, the recent revolution in patent protection,
and constraints imposed by biosafety regulations, have had the opposite effect,
forcing “in-house” aggregation of essential agricultural biotechnology innovation
capabilities within a few vertically-integrated firms. As this has happened, the
innovation race has slowed to a crawl.
Thus far, the prudent caution regarding biosafety, and the slowdown in
biotechnology innovation, have had no serious effects on food consumption; past
research investments, and rich-country food subsidies, have kept prices low and

supplies high. Given the current surge in biofuels demand, and the continuing
increase in world population, it would be foolhardy to assume that this situation
will continue. At present, open source is a promising, but problematic, way to pre-
serve some freedom to innovate in a world of patent thickets. Achievement of a less
restrictive patent regime would allow the full creative potential of open source col-
laboration to be realized in ensuring an adequate supply of food for the years
ahead.
Endnotes
1. Other models include patent pooling, clearinghouse mechanisms, and humanitarian licensing.
2. It is not clear that biotechnology per se is less amenable to specialization and open source collab-
oration, absent biosafety and intellectual property constraints. The potential efficiencies of spe-
cialization and collaboration in synthetic biology are illustrated by the BioBricks initiative
<http://www.biobricks.org/>. See Endy (2005).
3. In the interest of brevity, we discuss only highlights of several differences between patent and
copyright law and their significance for the translation of the OS model are provided. In fact, dif-
ferences in the legal systems have wide-ranging implications for OS that deserve more in-depth
analysis.
4. Robert Cook-Deegan (2003) describes how a group of academic institutions and thirteen private
firms formed a consortium to ensure the SNPs remained broadly accessible and were not private-
ly appropriated. He writes: “The SNP Consortium did not just dump the data. They filed patent
applications and then characterized the SNP markers enough so that they could be sure that
nobody else could patent them. At that point, they would abandon the patent. It is a very sophis-
ticated intellectual property strategy that in the end was intended to bolster the public domain. It
requires coordination, lots of paperwork, and it costs money to file and process applications, but
it appears to be an effective defensive patenting strategy.”
5. Lancashire (2001) reports 33 different nationalities among Linux contributors.
6. There are two principal international copyright conventions: the Universal Copyright Convention
(or UCC) and the Berne Convention. To protect copyright internationally the name of the author
is required and (for the UCC) the year of publication and a © symbol.
7. Jill Coffin (2006) notes: “For [an open source project] to function…an organizational and polit-
ical structure must support it. Hybrid, flexible political systems based upon meritocracy moti-
vates participants, provide rewards in the absence of capital, and encourage a community-wide
sense of project ownership. In addition to the bottom–up, peer–administered hierarchy described
in the analysis of Wikipedia, the benevolent dictator and consistently active personnel keep the
project alive and dialog open from above, so to speak…A transparent meritocratic structure also
allows for smooth succession in administrative and leadership positions.”
8. For instance the Berkeley Software Distribution (BSD) style licenses.
9. Generating genetically modified crops requires several indispensable technologies including those
necessary to transfer foreign DNA into a plant cell, selection gene markers to distinguish geneti-
cally modified cells from untransformed cells, and marker-excision technologies to remove super-
fluous DNA after successful integration of the trait gene into the plant genome. This packet of
core technologies is complemented with other research-specific technologies, which may also be
protected by IP. Of the transgenic crop technologies, transformation and selectable markers may
be considered “bottleneck” areas where the restricted access to the technologies can impede inno-
vation.
10. Broothaerts et al. found that the transformation efficiency of non-Agrobacterium bacterial
species ranged from less than 1% to almost 40% of that of Agrobacterium-mediated transforma-

tion, depending on the transformation assays and species used. (Gene Transfer to Plants by
Diverse Species of Bacteria, Nature 433, 629-633 (10 February 2005)
11. The GPL (http://www.gnu.org/copyleft/gpl.html), requires in clause 2(b) that any works derived
from the licensed software must also to be distributed under the GPL.
12. Another anomaly differentiating the commercial use of the BiOS license from academic has to
do with federal funding and obligations that are common in university policy as a consequence
of the adoption of the Bayh Dole Act.
13. PIPRA, The Public Intellectual Property Resource for Agriculture, www.pipra.org, has complet-
ed an in- depth analysis of the BiOS license from the perspective of a U.S. university as a poten-
tial licensee.
14. For a legal discussion of the BiOS license see Boettiger and Burk (2004).
15. See Eicher (2006).
References
Boettiger, S. and D. L.Burk (2004). “Open Source Patenting”. Journal of International Biotechnology
Law, Vol. 1, pp. 221-231. Available at SSRN: <http://ssrn.com/abstract=645182>
Coffin, J. (2006). “Analysis of Open Source Principles in Diverse Collaborative Communities,” First
Monday, 11:6, <http://www.firstmonday.org/issues/issue11_6/coffin/index.html> (accessed 3
March 2007).
Cook-Deegan, R. (2003). “The Urge to Commercialize: Interactions Between Public and Private
Research Development in The Role of Scientific and Technical Data and Information” in The
Public Domain: Proceedings of a Symposium, Julie M. Esanu and Paul F. Uhlir, Eds., National
Academies Press, Washington, D.C.
Eicher, C., K. Maredia, I. Sithole-Niang (2006). “Crop biotechnology and the African Farmer,” Food
Policy, 31 pp. 504-527.
Endy D. (2005). “Foundations for engineering biology,” Nature, 24 November.
DOI:10.1038/nature04342
Lancashire, D. (2001). The Fading Altruism of Open Source Development, First Monday, 6:12
(December), <http://firstmonday.org/issues/issue6_12/lancashire/index.html> (accessed 3
March 2007).
Lei, Z., R. Juneja and B. D. Wright (2007). “Implications of Intellectual Property Protection for
Academic Agricultural Biologists.” Mimeo, University of California, Berkeley.
Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, Book 1, Chapter
1. < http://geolib.com/smith.adam/won1-01.html>, last accessed March 4, 2007.
Von Hippel, E. (2005). Democratizing Innovation. Cambridge, MA: MIT Press, 2005.
Wright, B.D. and P.G. Pardey (2006). “Changing Intellectual Property Regimes: Implications for
Developing Country Agriculture.” International Journal of Technology and Globalization 2, nos.
1/2: 93-114.

Yochai Benkler
Commons-Based Agricultural Innovation

Innovations Case Discussion: CAMBIA-BiOS
Computation and access to existing scientific research are important in the devel-
opment of any nation, yet both still operate at a remove from the most basic needs
of the world poor. On its face, it is far from obvious how the emergence of the net-
worked information economy can grow rice to feed millions of malnourished chil-
dren or deliver drugs to millions of HIV/AIDS patients. On closer observation,
however, it becomes apparent that a tremendous proportion of the way modern
societies grow food and develop medicines is based on scientific research and tech-
nical innovation. Important implications for the direction of innovation and for
access to its products exist in the basic choice between two models: (1) a system
that depends on exclusive rights and business models that use exclusion to appro-
priate research outputs and (2) a system that weaves together various actors—pub-
lic and private, organized and individual—in a nonproprietary social network of
innovation.
The failure of the exclusive rights model in meeting the needs of people in
developing countries has received considerable public attention in the context of
Yochai Benkler a Professor of Law at Yale Law School. His research focuses on the
effects of laws that regulate information production and exchange on the distribu-
tion of control over information flows, knowledge, and culture in the digital envi-
ronment. His particular focus has been on the neglected role of commons-based
approaches towards management of resources in the digitally networked environ-
ment. He has written about the economics and political theory of rules governing
telecommunications infrastructure, with a special emphasis on wireless communi-
cations, rules governing private control over information, in particular intellectu-
al property, and of relevant aspects of U.S. constitutional law.
This discussion is excerpted from The Wealth of Networks: How Social
Production Transforms Markets and Freedom (New Haven: Yale University Press),
2006, pp. 341-356. The editors of Innovations initiated the proposal to publish this
excerpt, benefiting from the provisions of Creative Commons Noncommercial Share
alike license under which an online version of The Wealth of Networks was distrib-
uted.
© 2006 Yochai Benkler
204 innovations / World Economic Forum Special edition
the HIV/AIDS crisis in Africa—particularly with regard to the lack of access to

existing drugs because of their high costs. However, that crisis is merely the tip of
the iceberg. It is the most visible to many because of the presence of the disease in
rich countries and its cultural and political salience in the United States and
Europe. The exclusive rights system is, as a general rule, a poor institutional mech-
anism for serving the
needs of those who
are worst off around
the globe—not only The failure of the exclusive rights
the victims of model in meeting the needs of
HIV/AIDS. Its weak-
nesses pervade the people in developing countries has
problems of food received considerable public
security and agricul-
tural research aimed attention in the context of the
at increasing the sup-
ply of nourishing
HIV/AIDS crisis in Africa—
food throughout the particularly with regard to the lack of
developing world,
and of access to med- access to existing drugs because of
icines in general, and their high costs. However, that crisis
to medicines for
developing-world dis- is merely the tip of the iceberg.
eases in particular.
Each of these areas
has seen a similar
shift in national and international policy toward greater reliance on exclusive
rights, most important of which are patents. Each area has also begun to see the
emergence of commons-based models to alleviate the problems of patents.
Leaving aside national efforts in developing nations, there are two major paths
for commons-based research and development in agriculture that could serve the
developing world more generally. The first is based on a loose affiliation of univer-
sity scientists, nongovernmental organizations, and individuals such as played sig-
nificant role in the development of free and open-source software. The second is
based on existing research institutes and programs cooperating to build a com-
mons-based system, cleared of the barriers of patents and breeders’ rights, outside
and alongside the proprietary system. The most promising current effort in the
former vein, and probably the most ambitious commons based project for biolog-
ical innovation currently contemplated, is BIOS (Biological Innovation for an
Open Society). The most promising models of the latter are the PIPRA (Public
Intellectual Property for Agriculture) coalition of public-sector universities in the
United States, and, if it delivers on its theoretical promises, the Generation
Challenge Program led by CGIAR (the Consultative Group on International
Agricultural Research).

Yochai Benkler
CAMBIA-BIOS
As Richard Jefferson’s case narrative in this issue of Innovations describes, BiOS is

an initiative of CAMBIA (Center for the Application of Molecular Biology to
International Agriculture), a nonprofit agricultural research institute based in
Australia. BiOS is based on the observation that much of contemporary agricul-
tural research depends on access to tools and enabling technologies—such as
mechanisms to identify genes or for transferring them into target plants. When
these tools are appropriated by a small number of firms and available only as part
of capital-intensive production techniques, they cannot serve as the basis for inno-
vation at the local level or for research organized on nonproprietary models. One
of the core insights driving the BiOS initiative is the recognition that when a sub-
set of necessary tools is available in the public domain, but other critical tools are
not, the owners of those tools appropriate the full benefits of public domain inno-
vation without at the same time changing the basic structural barriers to use of the
proprietary technology. To overcome these problems, the BiOS initiative includes
both a strong informatics component and a fairly ambitious “copyleft”-like model
of licensing CAMBIA’s basic tools and those of other members of the BiOS initia-
tive.1 The informatics component builds on a patent database that has been devel-
oped by CAMBIA for a number of years, and whose ambition is to provide as com-
plete as possible a dataset of who owns what tools, what the contours of ownership
are, and by implication, who needs to be negotiated with and where research paths
might emerge that are not yet appropriated and therefore may be open to unre-
stricted innovation.
The licensing or pooling component is more proactive, and is likely the most
significant of the project. BiOS is setting up a licensing and pooling arrangement,
“primed” by CAMBIA’s own significant innovations in tools, which are licensed to
all of the initiative’s participants on a free model, with grant-back provisions that
perform an openness-binding function similar to copyleft.2 In coarse terms, this
means that anyone who builds upon the contributions of others must contribute
improvements back to the other participants. One aspect of this model is that it
does not assume that all research comes from academic institutions or from tradi-
tional government funded, nongovernmental, or intergovernmental research insti-
tutes. It tries to create a framework that, like the open-source development com-
munity, engages commercial and noncommercial, public and private, organized
and individual participants into a cooperative research network. The platform for
this collaboration is “BioForge,” styled after Sourceforge, one of the major free and
open-source software development platforms. The commitment to engage many
different innovators is most clearly seen in the efforts of BiOS to include major
international commercial providers and local potential commercial breeders
alongside the more likely targets of a commons-based initiative.
Central to this move is the belief that in agricultural science, the basic tools
can, although this may be hard, be separated from specific applications or prod-
ucts. All actors, including the commercial ones, therefore have an interest in the

open and efficient development of tools, leaving competition and profit making
for the market in applications. At the other end of the spectrum, BiOS’s focus on
making tools freely available is built on the proposition that innovation for food
security involves more than biotechnology alone. It involves environmental man-
agement, locale-specific adaptations, and social and economic adoption in forms
that are locally and internally sustainable, as opposed to dependent on a constant
inflow of commoditized seed and other inputs. The range of participants is, then,
much wider than envisioned by PIPRA or the GCP. It ranges from multinational
corporations through academic scientists, to farmers and local associations, pool-
ing their efforts in a communications platform and institutional model that is very
similar to the way in which the GNU/Linux operating system has been developed.
As of this writing, the BiOS project is still in its early infancy, and cannot be eval-
uated by its outputs. However, its structure offers the crispest example of the extent
to which the peer-production model in particular, and commons-based produc-
tion more generally, can be transposed into other areas of innovation at the very
heart of what makes for human development—the ability to feed oneself ade-
quately.
THE PUBLIC INTELLECTUAL PROPERTY RESOURCE FOR AGRICULTURE
The Public Intellectual Property Resource for Agriculture (PIPRA) is a collabora-

tion effort among public-sector universities and agricultural research institutes in
the United States, aimed at managing their rights portfolio in a way that will give
their own and other researchers freedom to operate in an institutional ecology
increasingly populated by patents and other rights that make work difficult. The
basic thesis and underlying problem that led to PIPRA’s founding were expressed
in an article in Science coauthored by fourteen university presidents.3 They under-
scored the centrality of public-sector, land-grant university-based research to
American agriculture, and the shift over the last twenty-five years toward increased
use of intellectual property rules to cover basic discoveries and tools necessary for
agricultural innovation. These strategies have been adopted by both commercial
firms and, increasingly, by public-sector universities as the primary mechanism for
technology transfer from the scientific institute to the commercializing firms.
The problem they saw was that in agricultural research, innovation was incre-
mental. It relies on access to existing germplasm and crop varieties that, with each
generation of innovation, brought with them an ever-increasing set of intellectual
property claims that had to be licensed in order to obtain permission to innovate
further. The universities decided to use the power that ownership over roughly 24
percent of the patents in agricultural biotechnology innovations provides them as
a lever with which to unravel the patent thickets and to reduce the barriers to
research that they increasingly found themselves dealing with. The main story, one
might say the “founding myth” of PIPRA, was the story of golden rice. Golden rice
is a variety of rice that was engineered to provide dietary vitamin A. It was devel-
oped with the hope that it could introduce vitamin A supplement to populations

Yochai Benkler
Table 1. Selected University Gross Revenues and Patent Licensing Revenues

Sources: Aggregate revenues: U.S. Dept. of Education, National Center for Education Statistics,
Enrollment in Postsecondary Institutions, Fall 2001, and Financial Statistics, Fiscal Year 2001 (2003),
Table F; Association of University Technology Management, Annual Survey Summary FY 2002
(AUTM 2003), Table S-12. Individual institutions: publicly available annual reports of each univer-
sity and/or its technology transfer office for FY 2003.
Notes:
a. Large ambiguity results because technology transfer office reports increased revenues for yearend
2003 as $178M without reporting expenses; University Annual Report reports licensing revenue
with all “revenue from other educational and research activities,” and reports a 10 percent decline in
this category, “reflecting an anticipated decline in royalty and license income” from the $133M for
the previous year-end, 2002. The table reflects an assumed net contribution to university revenues
between $100-120M (the entire decline in the category due to royalty/royalties decreased propor-
tionately with the category).
b. University of California Annual Report of the Office of Technology Transfer is more transparent
than most in providing expenses—both net legal expenses and tech transfer direct operating
expenses, which allows a clear separation of net revenues from technology transfer activities.
c. Minus direct expenses, not including expenses for unlicensed inventions.
d. Federal- and nonfederal-sponsored research.
e. Almost half of this amount is in income from a single Initial Public Offering, and therefore
does not represent a recurring source of licensing revenue.
f. Technology transfer gross revenue minus the one-time event of an initial public offering
of LiquidMetal Technologies.

in which vitamin A deficiency causes roughly 500,000 cases of blindness a year and
contributes to more than 2 million deaths a year. However, when it came to trans-
lating the research into deliverable plants, the developers encountered more than
seventy patents in a number of
countries and six materials
transfer agreements that Increasing appropriation of
restricted the work and delayed
it substantially. PIPRA was basic tools and enabling
launched as an effort of public-
sector universities to cooperate
technologies creates barriers to
in achieving two core goals that entry for innovators—public-
would respond to this type of
barrier—preserving the right to sector, nonprofit organizations,
pursue applications to subsis- and the local farmers
tence crops and other develop-
ing-world-related crops, and themselves—concerned with
preserving their own freedom feeding those who cannot
to operate vis-à-vis each other’s
patent portfolios. signal with their dollars that
The basic insight of PIPRA,
which can serve as a model for
they are in need.
university alliances in the con-
text of the development of
medicines as well as agriculture, is that universities are not profit-seeking enter-
prises, and university scientists are not primarily driven by a profit motive. In a sys-
tem that offers opportunities for academic and business tracks for people with
similar basic skills, academia tends to attract those who are more driven by non-
monetary motivations. While universities have invested a good deal of time and
money since the Bayh-Dole Act of 1980 permitted and indeed encouraged them to
patent innovations developed with public funding, patent and other exclusive-
rights-based revenues have not generally emerged as an important part of the rev-
enue scheme of universities. As table 1 shows, except for one or two outliers, patent
revenues have been all but negligible in university budgets.4 This fact makes it fis-
cally feasible for universities to use their patent portfolios to maximize the global
social benefit of their research, rather than trying to maximize patent revenue. In
particular, universities can aim to include provisions in their technology licensing
agreements that are aimed at the dual goals of (a) delivering products embedding
their innovations to developing nations at reasonable prices and (b) providing
researchers and plant breeders the freedom to operate that would allow them to
research, develop, and ultimately produce crops that would improve food security
in the developing world.
While PIPRA shows an avenue for collaboration among universities in the
public interest, it is an avenue that does not specifically rely on, or benefit in great
measure from, the information networks or the networked information economy.

Yochai Benkler
It continues to rely on the traditional model of publicly funded research. More

explicit in its effort to leverage the cost savings made possible by networked infor-
mation systems is the Generation Challenge Program (GCP). The GCP is an effort
to bring the CGIAR into the biotechnology sphere, carefully, given the political
resistance to genetically modified foods, and quickly, given the already relatively
late start that the international research centers have had in this area. Its stated
emphasis is on building an architecture of innovation, or network of research rela-
tionships, that will provide low-cost techniques for the basic contemporary tech-
nologies of agricultural research. The program has five primary foci, but the basic
thrust is to generate improvements both in basic genomics science and in breed-
ing and farmer education, in both cases for developing world agriculture. One
early focus would be on building a communications system that allows participat-
ing institutions and scientists to move information efficiently and utilize compu-
tational resources to pursue research. There are hundreds of thousands of samples
of germplasm, from “landrace” (that is, locally agriculturally developed) and wild
varieties to modern varieties, located in databases around the world in internation-
al, national, and academic institutions.
There are tremendous high-capacity computation resources in some of the
most advanced research institutes, but not in many of the national and interna-
tional programs. One of the major goals articulated for the GCP is to develop Web-
based interfaces to share these data and computational resources. Another is to
provide a platform for sharing new questions and directions of research among
participants. The work in this network will, in turn, rely on materials that have
proprietary interests attached to them, and will produce outputs that could have
proprietary interests attached to them as well. Just like the universities, the GCP
institutes (national, international, and nonprofit) are looking for an approach
aimed to secure open access to research materials and tools and to provide human-
itarian access to its products, particularly for subsistence crop development and
use. As of this writing, however, the GCP is still in a formative stage, more an aspi-
ration than a working model. Whether it will succeed in overcoming the political
constraints placed on the CGIAR as well as the relative latecomer status of the
international public efforts to this area of work remains to be seen. But the ele-
ments of the GCP certainly exhibit an understanding of the possibilities presented
by commons-based networked collaboration, and an ambition to both build upon
them and contribute to their development.
CONCLUSION
The BiOS initiative and PIPRA are the most salient examples of, and the most sig-
nificant first steps in, the development of commons-based strategies to achieve
food security. Their vitality and necessity challenge the conventional wisdom that
ever-increasing intellectual property rights are necessary to secure greater invest-
ment in research, or that the adoption of proprietary rights is benign. Increasing
appropriation of basic tools and enabling technologies creates barriers to entry for

innovators—public-sector, nonprofit organizations, and the local farmers them-

selves—concerned with feeding those who cannot signal with their dollars that
they are in need. The emergence of commons-based techniques—particularly, of
an open innovation platform that can incorporate farmers and local agronomists
from around the world into the development and feedback process through net-
worked collaboration platforms—promises the most likely avenue to achieve
research oriented toward increased food security in the developing world. It prom-
ises a mechanism of development that will not increase the relative weight and
control of a small number of commercial firms that specialize in agricultural pro-
duction. It will instead release the products of innovation into a self-binding com-
mons—one that is institutionally designed to defend itself against appropriation.
It promises an iterative collaboration platform that would be able to collect envi-
ronmental and local feedback in the way that a free software development project
collects bug reports—through a continuous process of networked conversation
among the user-innovators themselves.
In combination with public investments from national governments in the
developing world, from the developed world, and from more traditional interna-
tional research centers, agricultural research for food security may be on a path of
development toward constructing a sustainable commons-based innovation ecol-
ogy alongside the proprietary system. Whether it follows this path will be partly a
function of the engagement of the actors themselves, but partly a function of the
extent to which the international intellectual property/trade system will refrain
from raising obstacles to the emergence of these commons-based efforts.
1. This is similar to the General Public License of the GNU project

<http://www.gnu.org/copyleft/gpl.html>. For further description, see chapter 3 of Yochai Benkler
(2006), The Wealth of Networks (New Haven, CT: Yale University Press), available for free
download at <www.benkler.org>
2. Wim Broothaertz et al. (2005), “Gene Transfer to Plants by Diverse Species of Bacteria,” Nature
433:629.
3. Richard Atkinson et al. (2003), “Public Sector Collaboration for Agricultural IP Management,”
Science 301: 174.
4. This table is a slightly expanded version of one originally published in Yochai Benkler (2004),
“Commons Based Strategies and the Problems of Patents,” Science 305:1110.

innovations
INNOVATIONS IS JOINTLY HOSTED BY

GEORGE MASON UNIVERSITY HARVARD UNIVERSITY
School of Public Policy Kennedy School of Government
Center for Science and Technology Policy Belfer Center for
Science and International Affairs
with assistance from

The Lemelson Foundation
The Schwab Foundation for Social Entrepreneurship
The Ash Institute for Democratic Governance and Innovation, Harvard University
The Center for Global Studies, George Mason University
School of Public Policy
mitpress.mit.edu/innovations
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Davos 2008 An MIT Press Journal

The Power of Positive Doing

Cases Authored by Innovators

Making Sight Affordable V. Kasturi Rangan & R.D. Thulasiraj

Seeking a Cure for Inequity in Access to Medicines Victoria Hale

Information Technology to Meet Social Needs Jim Fruchterman

FEATURING SCHWAB SOCIAL ENTREPRENEURS

Cases Authored by Innovators

85 The Aravind Eye Care System: Making Sight Affordable

105 Institute for OneWorld Health: Seeking a Cure for Inequity

119 Taking Animal Trafficking Out of the Shadows: RENCTAS

World Economic Forum special edition | Davos 2008

141 Benetech: Developing Information Technology

159 Science as Social Enterprise: The CAMBIA BiOS Initiative

© 2006 Tagore LLC

4 innovations / World Economic Forum special edition

innovations / Davos 2008 5

Social Innovators with a Business Case

© 2006 Klaus Schwab and Pamela Hartigan

8 innovations / World Economic Forum special edition

innovations / Davos 2008 9

10 innovations / World Economic Forum special edition

business alone. Increasing recognition of the importance of social innovation and

innovations / Davos 2008 11

© 2007 Fazle Hasan Abed and Imran Matin

HARNESSING THE PROCESS CAPITAL OF MICROFINANCE:

The process of providing microfinance thus creates new forms of engagements,

14 innovations /World Economic Forum special edition

BRAC: Summary Statistics

Source: BRAC <www.brac.net.>

innovations / Davos 2008 15

Developing poultry as a viable enterprise for the poor

16 innovations / World Economic Forum special edition

innovations / Davos 2008 17

Getting basic health services to reach the poor

18 innovations / World Economic Forum special edition

INCLUSIVE MICROFINANCE: NEW GROUPS, NEW SERVICES

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CFPR/TUP program form their own microfinance groups. As of December 2006,

Microfinance for adolescents: Starting early

22 innovations / World Economic Forum special edition

Reaching the socially excluded: Microfinance for Commercial Sex Workers

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24 innovations / World Economic Forum special edition

As of December 2006 the UNNOTI program had almost 550,000 members,

Transfer at the doorstep: Remittance partnership

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NEEDED: A BOLDER MICROFINANCE VISION

26 innovations / World Economic Forum special edition

What we have argued in this paper is that the process of microfinancing,

innovations / Davos 2008 27

Martin Fisher is the co-founder and CEO of KickStart (formerly ApproTEC), an

© 2006 Tagore LLC

irrigation, entrepreneurial farmers can grow three or four crops of high-value

THE UNFULFILLED PROMISE OF “APPROPRIATE TECHNOLOGY”

As a doctoral student in mechanical engineering in the early 1980s reading E.F.

30 innovations / World Economic Forum special edition

RE-THINKING THE CHALLENGE OF PERSISTENT POVERTY:

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