via NYTimes

By DONALD G. McNEIL Jr.

If necessity is the mother of invention, Paul Polak is one of its fathers.

For 30 years Dr. Polak, a 78-year-old former psychiatrist, has focused on creating devices that will improve the lives of 2.6 billion people living on less than $2 a day. But, he insists, they must be so cheap and effective that the poor will actually buy them, since charity disappears when donors find new causes.

Inventing a new device is only the beginning, he says; the harder part is finding dependable manufacturers and creating profitable distributorships. The “appropriate technology” field, he argues, is “dominated by tinkerers and short of entrepreneurs.”


His greatest success has been a treadle pump that lets farmers raise groundwater in the dry season, when crops fetch more money. He has sold more than two million, he said.

He also helped develop a $25 artificial knee and a $400 hospital lamp to save newborns with life-threatening jaundice. He is field-testing a reprogrammable “talking poster” that gives mini-lectures in local languages, with pictures, on topics as varied as rice-planting and hand-washing. And he has an ambitious project to create franchises through which Indian village shopkeepers will purify polluted water and sell it. We spoke at a convention of young inventors in Arlington, Va.; what follows is an edited version of our conversation.

Q. What in your past led you into this unusual specialty?

A. My dad comes from a peasant background in Czechoslovakia; he lived in a house with the people upstairs and animals downstairs, so I have an innate affinity for peasants. Also, we were Jewish, and in 1938 refugees were streaming across the border from Germany with broken heads.

Pretty much anybody could see what was coming. My dad said, “There’s going to be hell to pay soon,” and made plans to escape. But when he tried to tell our family and friends, they said things like “But what would we do with the furniture?” I got from him an eye for seeing the obvious.

He also had an entrepreneur’s streak, which I inherited. He had a high school education, but he started a plant nursery and was doing very well. He sold everything at 10 cents on the dollar, and we escaped to Canada.

I went to medical school, got a degree in psychiatry, and in 1959 I moved to Denver and got a job at Fort Logan Mental Health Center. In my spare time, I invested in real estate. I bought mismanaged apartment buildings. I also owned a small oil company drilling stripper wells. I invented a pump jack for the oilfield industry — I’ve always knocked around in that kind of stuff. By 1981, I’d worked for 22 years as a psychiatrist, and I’d cleared about three million bucks, mostly in real estate.

Q. What got you interested in poverty?

A. I was one of the pioneers in treating people more effectively in real-life settings. The conventional assumption is that patients are admitted to psychiatric institutions because a therapist or family member says they’re mentally ill. But I talked to a lot of our patients as if they were customers, and they defined something going on in their family or workplace as the primary reason they were there. So I started going into patients’ homes or workplaces.

At the time, there was a lot of emphasis on making the wards a lot more like a family. I came to the astonishing conclusion that the most familylike setting was a family. So we recruited nine healthy private families and admitted acutely ill patients to them.

It was much more effective. If you’re a guest in somebody’s nice home, you ain’t going to break the furniture. We provided the support — the physicals, the lab tests, rapid tranquilization. But the deinstitutionalization model that followed that dumped people out with no follow-up was in some cases worse than being institutionalized.

I also noticed that a lot of these people were very poor, and that had a big impact on their symptoms. That got me interested in poverty.

Q. And in third-world poverty?

A. My wife’s a Mennonite, and they had programs in Bangladesh. It had hit me between the eyes that homeless people in Denver were living on $500 a month, but there were people overseas living on $30 a month. So I took a trip to Bangladesh.

Some farmers were using hand pumps, but biomechanically, that’s a lousy way to raise water. A Mennonite guy had invented a rower pump that would pull up enough to water a half-acre of vegetables. They had installed 2,000 over five years, and those farmers seemed to be making a lot of money, so I said, “Why don’t we do a project, with an objective of selling 25,000 a year?”

We hit that pretty quickly. One or two Mennonites objected — they considered the idea of selling something to poor people immoral. But we kept at it, and then we found the treadle pump. It was brilliantly simple, it could be manufactured by local workshops, and a local driller could dig a 40-foot well and install it for $25. Studies showed that farmers made $100 in one season on that investment.

We talked to 75 little welding shops where they make things like bedsprings, and jawboned them into making treadle pumps. We went to people who sold things like toilet bowls, and cut a deal with them to be dealers. We trained 3,000 tinkerers to be well-drillers. We hired troubadours to write songs about treadle pumps, and we’d pass out leaflets when they performed. We even produced a 90-minute Bollywood movie.

Q. About treadle pumps?

A. Yeah. People in these little villages couldn’t read or write. We hired the top director in Bangladesh and two top actors. It cost us 25 grand of our Canadian government grant. The plot was “boy meets girl, but they can’t marry because her father can’t afford a dowry.” Then she falls into the hands of dowry bandits, then there’s a near-suicide. By now, with lots of singing and dancing, you’re 60 minutes in.

At the climactic moment, the movie stops. Our dealers get customers up on model pumps. The movie resumes, the father buys a pump, makes enough for the dowry, they live happily ever after. Somewhat cheesy, but we bought a van with a video setup, and took it to villages — a typical open-air audience was 2,000 to 5,000 people.

Q. What’s the biggest mistake aid agencies make?

A. As we were developing our pump, the World Bank was subsidizing deep-well diesel pumps that could cover 40 acres. The theory was that you’d get a macroeconomic benefit, but it was also very destructive to social justice. The big pumps were handed out by government agents; the government agent was bribeable. The pump would go to the biggest landholder, and he’d become a waterlord.

Q. There have been some well-known failures in this field, like One Laptop Per Child and the Playpump. Can you say why?

A. The laptop was a middle-class device that doesn’t communicate with people who don’t read and write. It cost $100, plus it used the charity model — buy two, give one away. The Playpump, which was a children’s merry-go-round that pumps water, cost $11,000. Women in Africa walk for hours to a well, and then jiggle the pump handle for 60 seconds. This replaces the jiggling. How important is that? And they break. For $11,000, you could dig five wells and eliminate the walk.

Q. What are your principles for success?

A. In 1981, I said, “I’m going to interview 100 $1-a-day families every year, come rain or shine, and learn from them first.”

Over 28 years, I’ve interviewed over 3,000 families. I spend about six hours with each one — walking with them through their fields, asking what they had for breakfast, how far their kids walk to school, what they feed their dog, what all their sources of income are. This is not rocket science. Any businessman knows this: You’ve got to talk to your customers.

According to National Geographic:
The map shows population density; the brightest points are the highest densities. Each country is colored according to its average annual gross national income per capita, using categories established by the World Bank (see key below). Some nations— like economic powerhouses China and India—have an especially wide range of incomes. But as the two most populous countries, both are lower middle class when income is averaged per capita.

The feature article, Age of Man, is worth perusing, as well. If you’re a visual learner, you’ll also enjoy The Face of Seven Billion, where you can explore how the global population breaks down in terms of language, nationality, literacy, religion, and so on.

via the Wall Street Journal

Fast-growing emerging market economies are attracting soaring investment flows as growth in the U.S. and Europe remains sluggish. The trend has produced unexpected downsides such as overvalued currencies. Mouse over each emerging market country to see what the effects have been, and what the governments have tried to do about it.
Click on the image to launch the interactive feature.

SPRING HILL, Tenn. — When General Motors stopped building cars here two years ago, as the auto industry hit rock bottom and tens of thousands of assembly-line jobs evaporated nationwide, Chad Poynor packed up and moved to Michigan to keep working at another plant.

Mr. Poynor said he made the nine-hour drive back to Tennessee to see his wife and three children 24 times in the first year alone. “I’d go back tomorrow if I could,” Mr. Poynor said Wednesday after finishing his overnight shift in Lansing, Mich. He and hundreds of other autoworkers may get that chance.

In a glimmer of light in a mostly downbeat economy, G.M. and the United Automobile Workers union have agreed to give the plant here a second chance as part of a tentative new labor contract. It is highly unusual for an automaker to bring jobs back to a factory all but left for dead, and several G.M. plants, including Spring Hill, will be adding work that had been headed to Mexico.

“I actually have a smile on my face today,” Mike O’Rourke, the president of U.A.W. Local 1853 in Spring Hill, said after learning the details of the contract. “It was very much gloom and doom. I lost all my hair and gained 50 pounds.”

The resurrection of Spring Hill would be another milestone in the fortunes of the domestic auto industry and, in particular, G.M.’s comeback from its government bailout and bankruptcy in 2009. The promise in the new contract of 6,400 jobs over the next four years, including 1,700 here, is being seen as a vote of confidence that autoworkers in the United States, even unionized ones, can compete with lower-wage nations.

Some of the jobs here will go to current G.M. workers at full wages of $28 an hour, but many of the workers will be hired on G.M.’s second-tier pay scale, which would start around $15 an hour in the new contract.

“We’re bringing back a lot of work that left this country,” the U.A.W.’s president, Bob King, said of the contract, which is subject to ratification by G.M.’s 48,500 workers in the United States.

Perhaps nothing better symbolizes the ragged journey of Detroit’s Big Three in recent decades than the Spring Hill plant, which was built in the 1980s as the launching pad for G.M.’s highly promoted Saturn division. In the 1990s, thousands of Saturn owners traveled here for “homecoming” parties to celebrate their bond with the vehicles and the workers who made them. The plant became known to TV viewers after G.M. hired the advertising agency famous for creating President Ronald Reagan’s upbeat “Morning in America” re-election ads. Commercials featured the plant and its workers with the slogan, “A different kind of company, a different kind of car.”

But the Saturn brand never lived up to its promise and is now a casualty of G.M.’s bankruptcy. The only work being done at the plant here, 30 miles south of Nashville, is a much smaller operation making engines. James L. Bailey, the mayor of Maury County, which includes Spring Hill, described the past two years as “a time of trauma.”

Unemployment in the county rose as high as 17 percent after the plant closed; the rate is now about 13 percent. In nearby Columbia, where many G.M. workers lived, downtown storefronts emptied and homes went into foreclosure. The Santa Fe Cattle Company, a steakhouse with a U.A.W. flag in its foyer, closed, and this year’s graduating high school class lost 85 students after the plant shut down.

“They bought a lot of things, they did a lot of things,” Mr. Bailey, who works out of a cramped, century-old courthouse in Columbia’s town square, said of G.M. workers. “When they went away, it affected a lot of businesses here.”

G.M. declined to publicly comment on the Spring Hill decision. The company has avoided discussing specific terms of the agreement until it is approved by members. People with knowledge of the negotiations said that union leaders pressed hard in the final stages of the talks for Spring Hill to be reopened. Michael Robinet, an analyst with the research firm IHS Automotive, said the company saw an opportunity to make inroads with the U.A.W. while bringing back a facility at a relatively low cost.

“The Tier 2 workers definitely changed the economics of the plant,” he said. “It’s definitely a win for the union. I can’t recall the last time a plant of this size was brought back after it was closed.”

How quickly workers may be able to return to Spring Hill is not known, and for some the situation is complicated by relocation agreements they signed requiring them to spend a certain length of time at another plant. Union officials said that about 600 jobs would be created by the end of next year, followed by 1,100 more in 2013. G.M. said it planned to invest $419 million in the plant so that it could build two new midsize vehicles. The sense of anticipation in Spring Hill, whose population increased twentyfold in the two decades after G.M. began making Saturns amid rolling farmland near a Civil War battleground, was palpable this week.

“I can see the light at the end of the tunnel now,” said Todd Horton, a G.M. worker who stayed after being laid off in the hopes of getting called back. Mr. Horton, a married father of two, turned down a transfer offer two weeks ago, even though supplemental unemployment benefits from the company were about to run out and there had been no word that the plant would reopen.

“My hope is just that the economy can sustain it and they can follow through with the plans,” said Mr. Horton, whose final responsibility in the plant’s training department was helping his coworkers move elsewhere.

Many of them are in Lansing, Mich., having followed production of the last vehicle built in Spring Hill, the Chevrolet Traverse Crossover. Glenn Tucker, who is a little more than a year away from being able to retire from G.M. with full benefits, is waiting to learn how quickly he can come back. His wife, Danean, stayed in Tennessee to keep her job managing a restaurant and so that their son could graduate from high school.

“There was no hope for most of us that it would ever reopen,” Mrs. Tucker said.

Said Mr. O’Rourke, the local union official, “All you got to do is drive around any big city — Detroit, Milwaukee, Chicago — and you can see a lot of empty factories that have never reopened.”

NYTIMES By NICK BUNKLEY and BILL VLASIC
Nick Bunkley reported from Spring Hill, Tenn., and Bill Vlasic from Detroit.

Cambridge, UK

via Harvard Business Review
By: Navi Radjou, Jaideep Prabhu, Prasad Kaipa, Simone Ahuja

We recently visited the brand-new R&D lab of Dr Reddy’s, one of India’s leading pharmaceutical firms. This lab isn’t located in Bangalore or Hyderabad (where Dr Reddy’s is headquartered) but in … Cambridge, U.K.

In 2008, Dr Reddy’s acquired Chirotech, Dow Chemical’s R&D unit, for $32 million, and in April 2011 relocated it to a new 33,000 sq. ft. facility in Cambridge Science Park. Chirotech specializes in biocatalysis and chemocatalysis, two important subspecialties of biotechnology and chemistry that help develop key biological and chemical intermediates needed for the efficient production of medicines. Dr Reddy’s plan is to leverage Chirotech’s scientific capabilities to optimize drug development processes, thus lowering manufacturing costs and speeding time-to-market. In doing so, Dr Reddy’s strengthens its core generic drugs business and boosts the custom manufacturing services it provides to Big Pharma and nimble biotech startups.

In prior blog posts, we have described how Western multinationals such as Xerox and GE are embracing polycentric innovation by sourcing more R&D capabilities from emerging markets such as India and China and integrating them into a synergistic global innovation network. In recent years, Indian firms such as Dr Reddy’s have also started globalizing their R&D footprint by moving into Western markets. They have been tapping into the sophisticated technical and scientific talent available in Western economies as part of their strategy to access international markets and build global brands.

Besides Dr Reddy’s, several leading Indian firms are pioneering polycentric innovation:

Tata Motors. While the $2000 Nano car was mostly developed in India, Tata Motor’s Indica Vista Electric Vehicle and the Pixel city car were primarily designed and built by the Tata Motors European Technical Centre (TMETC) in Coventry, U.K., in close partnership with the University of Warwick. TMETC, which was established in 2005, got a big talent boost when Tata Motors acquired Jaguar and Land Rover in 2008.

Suzlon. The world’s eighth-largest wind turbine manufacturer may be headquartered in Pune, India, but its main R&D centers are located in the Netherlands, Germany, and Denmark, nations that actively promote wind energy and boast a huge talent pool. Suzlon recently completed its acquisition of Germany-based REpower Systems, gaining access to cutting-edge expertise in aerodynamics and electronics.

Reliance MediaWorks. This media powerhouse offers creative and production services as well as cutting-edge post-production services to such films as Avatar and The Curious Case of Benjamin Button. To best leverage worldwide creative talent, Reliance MediaWorks operates a global network of creative centers located in Burbank, San Francisco, London, Tokyo, and across India.

TCS. Asia’s largest IT service provider has built what it calls a global Co-Innovation Network (COIN), which includes technology partnerships with startups and VC firms in Silicon Valley as well as academic tie-ups with leading American universities such as MIT, Georgia Tech, and Stanford.

Having extensively interacted with the leaders of these organizations, we find that Indian firms have developed several best practices around how to implement polycentric innovation effectively:

Cultivate a polycentric mindset to make global innovation work. Polycentric innovation won’t work in organizations that promote groupthink. The Indian firms we studied promote diversity in their R&D management by hiring external talent to build and oversee their global innovation network. Tata Motors appointed Tim Leverthon, who previously led R&D at BMW, as head of its global R&D. Suzlon’s head of technology is John O’Halloran, a former Cummins Engine executive who now leads Suzlon’s 500-strong global R&D team out of Hamburg.

Decentralize and empower global R&D units. You can’t run your global R&D operations from headquarters in Mumbai. The Indian firms we worked with strive to empower their regional R&D units. TMETC has full operational autonomy even though it collaborates closely with Tata Motors’ Indian R&D unit. Reliance MediaWorks’ global creative network is highly decentralized, allowing each design studio head in the U.S. and the U.K. to make independent decisions that best serve local customer needs.

Communicate constantly to break down cultural barriers. Cultural differences can severely hamper cooperation between Western and Eastern engineers. Constant communication across geographically dispersed teams is vital to keep creative synergies flowing in a global R&D network. The senior leaders of the Indian firms we examined regularly meet with their global R&D units to ensure they feel part of a ‘global family,’ as Ravi Kant, Vice Chairman of Tata Motors, puts it.

Integrate with local innovation ecosystems. Building a global innovation network doesn’t just mean opening R&D labs all over the world. It also means integrating yourself into local innovation ecosystems. That’s why Tata Motors collaborates extensively with the University of Warwick in the U.K. while Suzlon has forged partnerships with Delft University in the Netherlands and the Fraunhofer Gesellschaft and the University of Kiel in Germany.

Leverage global talent to move up the value chain while defending core business for now. It is commonly believed that emerging market companies tap Western R&D talent in order to ‘move up the value chain.’ That is certainly true in the case of Tata Motors, which is using TMETC to develop its electric car, and Reliance MediaWorks, which is leveraging its studios in California and London for high-end work. At the same time, these companies are using foreign expertise to bolster their core business as well. Some TCS academic alliances in the U.S. are aimed at finding ways to lower the cost of its core activities like software testing. And Dr Reddy’s is using Chirotech’s talent to make its generic drug business more cost-competitive rather than develop new branded drugs.

In an increasingly polycentric world, the battle between incumbent Western multinationals and up-and-coming Eastern multinationals will be fought around who is best at integrating and driving synergies across globally-distributed R&D networks. Moreover, Western and Eastern firms come to this battle with different assets and backgrounds. Western firms are masters of structured approaches to innovation that deliver scale and efficiency. Eastern firms excel at more frugal and flexible forms of innovation. In a global market that includes both affluent and mass market consumers, and in a world of polycentric innovation, firms will need to master and integrate both structured and flexible approaches to innovation. It will be interesting to see which firms turn out to be best at seamlessly integrating both approaches into a new paradigm for a polycentric world.

Is your company globalizing R&D? How are you preparing for the world of polycentric innovation? Do you have examples of companies that are innovating wisely across geographies? Please share with us your stories, challenges and best practices.

by: Jon Roberts, Principal, TIP Strategies, Inc.

We have been following manufacturing trends closely for the last decade. The decline in manufacturing employment – which we predicted would continue – is as apparent as ever. In fact, we argued that manufacturing employment would follow the same downward trend that agricultural employment followed at the end of the previous century. For both sectors, increased automation has steadily replaced labor and helped drive tremendous productivity gains. The primary difference is that we are far removed from the transition which took agriculture from farm laborers to combines. In the case of manufacturing, we are square in the middle of it.

The August 15th Cheap Robots vs. Cheap Labor editorial from the New York Times regarding Foxconn is revealing. Foxconn is the world’s largest manufacturer and assembler of electronic components. Despite the fact that Chinese employees typically earn only a fraction of what U.S. workers earn ($1.36/hour), the founder and chairman of Foxconn is aggressively seeking to reduce his workforce through industrial automation. Productivity gains within the workforce have natural limits. Employees get sick, need personal time off, and are subject to spells of low productivity in ways that “robots” never are. Or, to put it differently, investment in new equipment heightens productivity in a cost-efficient manner. Even a very low-cost labor force is not as efficient (or as affordable) when industrial equipment is an option.

We know that productivity and employment growth are not necessarily linked. As a business we become more productive when we do more with less. And that “less” is first and foremost represented by labor costs. Which is why Foxconn will replace thousands upon thousands of workers with machines. This is a trend that has been occurring for decades and it will only accelerate. While we know this, and accept it as a business reality, it is deeply disturbing to say the obvious in a political context. We cannot simultaneously praise productivity gains while bemoaning the loss of manufacturing employment. Productivity can – in many cases – be achieved precisely by cutting workers. Reduced employment rolls often follow in tandem with significant productivity improvements.

If we assumed that our competitive advantage, as a nation, was being compromised by the off-shoring of our manufacturing we would be missing the larger point. Whether we manufacture in the U.S. or in China (or anywhere else), the pressure to reduce labor costs is the same. And the more that other countries achieve greater productivity, the greater is the incentive for our businesses to make the capital investments that reduce labor costs. There is, after all, no better way to reduce labor costs than to reduce the total number of workers.


Not only is the total number of people employed in manufacturing declining, so is manufacturing’s share of total employment. Of course, it is worth repeating that a decline in the share of manufacturing employment does not indicate a decline in the productivity (or output) of the manufacturing sector. In fact quite the contrary has been true in recent decades. While the actual number of manufacturing jobs has dropped steadily since 2000, the value of manufacturing output (as measured in shipments per worker) has increased dramatically.

These trends in no way imply that manufacturing (or agriculture, for that matter) is not important to the economy. It is as important as it has ever been. What we have been arguing is that manufacturing employment is a problematic economic development indicator. In other words, measuring local economic development success by the number of new manufacturing jobs created can take you down the wrong path.