Listening to voices unheard is a core tenet of Acumen’s approach to solving poverty. We strive to give voice to the voiceless in everything we do, from the investments we make in social enterprises to the courses we offer our global community of change-makers. But the translation from intention to practice has been imperfect.
While we have always prioritized conversations with customers to understand their perspective before and after we make an investment, the reality is we work in some of the hardest-to-reach places in the world. Our companies have touched the lives of more than 100 million people — people who largely live in remote locations and earn less than $4 a day — and it’s been virtually impossible to hear their voices in any consistent, tangible way.
The technology revolution we’ve experienced in the last 15 years is now reaching almost every corner of the developing world. Today there are nearly 7 billion mobile subscribers globally, 5.5 billion of whom live in the developing world. These numbers are growing fast.
In sub-Saharan Africa alone, the number of mobile subscribers will grow from 600 million today to 930 million by 2020. Even more exciting, by 2020 nearly half of the world’s 6.1 billion smartphone users will live in the developing world.
This explosion in mobile penetration means that we now have the ability to hear from the poorest customers in the world to understand their wants and needs in a new way. We are turning our philosophy of listening to marginalized populations into a practice of gathering data directly from these customers through a new initiative we call Lean Data. Lean Data revolutionizes traditional measurement techniques in international development by cutting the costs of collecting data by up to 100 times and decreasing the collection time from years to weeks or even days. In the last 18 months, we’ve completed Lean Data projects with 12 of our companies and gathered data from more than 5,000 low-income customers — all through their mobile phones.
The structure of these Lean Data projects is relatively simple. We work with companies to understand how they think their products or services improve their customers’ lives and then we ask their customers questions via their mobile phones, often using SMS or call centers to speak to them directly.
The art of Lean Data is in how we ask questions: the right questions generate clear, reliable information from low-income customers; the wrong ones give us nothing.
For example, because we invest in social businesses tackling the problems of poverty, it is essential for us to know the products the poorest customers can afford. The problem is when you ask a poor customer how much he or she earned last week, you don’t always get good data back. This is partially because everyone, rich and poor alike, can over- or under-report their income. The bigger problem, however, is that a typical poor person will have eight or more small sources of income and tallying that all up is just hard to do.
To address this challenge, we use the Progress Out of Poverty Index (PPI), developed by the Grameen Foundation. Grameen discovered that asking 10 simple questions — like “How many members does your household have?” or “What is the main source of lighting fuel for your household?” — gives a much more reliable picture of a person’s wealth than asking about earnings. So far we’ve used PPI surveys across 12 of our companies and found that 50 to 75 percent of the customers a typical Acumen investee serves fall below the poverty line. This confirms we are serving the people we set out to serve and helps us understand how far markets can go to solve the problems of poverty.
We’re also getting powerful data about how our companies are improving their customers’ lives. For example, we worked with Burn Manufacturing, our clean cookstove investment in Kenya, to interview 1,000 customers through the Kenyan mobile survey platform, mSurvey. Burn wanted to understand how much their customers saved on charcoal after buying a new stove. Over the course of four weeks, we collected and validated data that showed that an average customer saved 60 percent on charcoal. We also gleaned other important insights on additional benefits the customers received, including time savings and improved health. The cost to gather this data was $3,000, a tiny outlay compared to the typical $300,000 to multimillion-dollar cost of a randomized controlled trial.
We are also seeing some of the limits of collecting data through mobile phones. Our investee Guardian in India provides loans that allow its customers to build private toilets and bring water taps into their homes. Guardian has reached more than 200,000 customers and is seeing a nearly 100 percent payback on these water and sanitation loans. However the company suspects that the new toilets customers build in their homes are often underutilized, decreasing the potential impact on their families’ lives. In a customer segment where open defecation is still the norm, this is a case of a new product hitting up against centuries of established behaviors.
After a few small pilots, we quickly confirmed our suspicion about gathering data on toilet use over mobile phones. No matter how we tried to rephrase our questions, we weren’t getting good data back from customers. To overcome this hurdle, we are developing a first-of-its-kind sensor that anonymously monitors toilet usage. The information we collect will allow Guardian to better serve its customers because the company will have, for the first time, data to inform the conversation about what it takes for customers to change their entrenched behaviors around sanitation.
These are just two examples of what can happen when a company lifts up the voices of its customers and uses data to better meet their needs.
By collecting this kind of data quickly and efficiently, we can help our companies be smarter and more responsive in serving their customers, allowing them to create improved, more impactful products and services for the poor.
The spread of technology gives us the opportunity to listen to billions of previously unheard consumers. Lean Data leverages this interconnectedness so that, together, we can build solutions that address the root causes of poverty from the ground up.
The Stanford Social Innovation Review will publish “The Power of Lean Data,” an in-depth overview of Lean Data, in the Winter 2015 issue.
To learn more about Lean Data, visit http://acumen.org/ideas/lean-data/.