Thursday, September 9, 2010

Design for the BoP: Irrigating the "Perfect Solution" with DripTech's Peter Frykman

Peter Frykman is founder and CEO of DripTech, a low-cost drip irrigation company based in Palo Alto, CA.  I first met Peter when I moderated a “Design for Affordability” panel at last year’s Net Impact National Conference at Cornell.

I've since learned how extremely affordable DripTech's product is, and how important that is to the company's value proposition.  Says Peter:  "A small system could cost as little as $5, but typically farmers will invest $100 or more for a larger installation.  This is almost always purchased without any formal financing, though we look forward to adding this option in the future.  The purchase price of the system is usually paid back with 6 months in savings and gains."

A lot has changed in Peter’s world since last November, so I thought now would be a good time to catch up with the mechanical engineer-turned-start-up CEO.

I wanted to ask him about how design and the design thinking methodology he learned at Stanford has helped fuel DripTech’s growing success, and also how design thinking expands into business model development  as Peter and Co. begin to scale DripTech in India and China.  Here are edited excerpts from our conversation:

ThinkingDesign:  How did your business idea come about?
PF:  Driptech was founded out of a course called Entrepreneurial Design for Extreme Affordability at the at Stanford.  The is an interesting organization -- it’s an example of the benefits you get when you cross-pollinate and collaborate in different fields. 

                (Pollination or cross-pollination?  That's for Peter to know, and for you to find out.)

We were the only three-person team in the class:  one business student, one mechanical engineer (my background is in mechanical engineering – I studied that as an undergrad and stayed on to do masters degree), and one designer from the masters program in product design.  I had been familiar with the Stanford methodology for user-based design for some time, but that was my first experience working with business students.

Our product designer had a good business sense, and I was good at product design.  Our business student was really good at corralling us.  We were prone to getting wound up on tangents and going crazy with some of the design, so she did an effective job at managing our progress. 

ThinkingDesign:  How’d you go from taking the design from class to actually starting the company?
PF:  The best advice I ever got was from a mentor and advisor.  I told him I thought I was entrepreneurial and wanted to start a company or join a start-up, and could he give me any advice?  He said that, every year, about 50 people came into his office and told him the same thing that I had just told him.  The only difference between them, he said, was the ones that started a company just did, and the ones that didn’t didn’t.  They were all smart motivated people.  He said:  “If you want to be entrepreneurial, you just have to go do it.”

ThinkingDesign:  How do you design differently for the Base of the Pyramid (BoP) than for the developed world?
PF:  To me, design thinking has to be user-focused.  It comes down to whether it’s participatory, whether the user is at the focal point of the design process.  In many ways it’s even more important that you involve the user heavily in the design process when you’re targeting the product or service towards an emerging market or BoP customer, because there’s less wiggle room in getting the value proposition right.  If you don’t get it perfectly right, it’s not very forgiving, because these customers don’t have a lot of capital. They’re unable to take lots of new technology risks, so you need to make sure it’s the perfect product for the customer before you sell it to them.

You and me buy all kinds of junk that’s not perfect because we have money and it’s not important.  We can buy something with three features that we like but five that don’t really fit because we’ve got that luxury of those extra financial resources, but that’s not necessarily the case for a farmer that earns $2/day.  They have to get what they need and nothing more.

                                                   (DripTech's "perfect product" in India)

ThinkingDesign:  How did you get to that “perfect product”? 
PF:  We were very fortunate that the product we were looking at – affordable drip irrigation – is a good product for lots of farmers.  If you’ve got an enormous market, then finding a niche that your product really fits can be easy.  And when you’re a start-up, you need to focus on getting those first customers and finding the farmers, in our case, for whom the product is a perfect fit, then branching out from there and adding additional products and configurations.  That's what opens up new markets and new market segments.
So, you go out and you meet with farmers, you design your product, and then you come back and deliver it to them and the farmers that are like them.  There’s no such thing as a product that will fit everybody’s needs, but you have to pick somewhere to start. 

One of the main challenges is that you have to pick your ideal customer, and then, when you go to market, you have to target that ideal customer.  Because ultimately, if you’re going to be sustainable and scalable, you have to get the ball rolling and start getting some volume.  That starts with your early adopter customers.

ThinkingDesign:  Where did you do your research?  And did you go back to them for feedback once you’d done the initial design?
PF:  We did our initial user research in Ethiopia and sent some of the product back to them once we had produced it.  But when we went to start the company, we needed to find a place that could be a little more welcoming in terms of market infrastructure – democracy and banks and the ability for us to come in and out and operate, and shops where people buy things – so when we looked at that, we saw that India is really the easiest place for us to start.  There are more subsistence farmers in India than there are in all of Africa. 
After we had done our initial product testing and shown that the product worked in the lab, we needed to show that it would work in the hands of actual customers, so we went and did a pilot study.

ThinkingDesign:  What did you find when you commissioned the pilot?
PF:  We had a small team and very limited resources, so we tested it with about 15 farmers, and they all said that this saved them water of course, but also time and labor.  And that was a big surprise for us, because we didn’t know how much labor flood irrigation requires.  And these farmers were quite happy that they didn’t have to do all this backbreaking work.  They could just turn the drip irrigation on and have their elderly father watch it and turn it off when it was done and go do other work.

People will always say that BoP customers won’t pay to reduce their labor, because it’s a sunk cost and their own time that they’re not paying for out of pocket.  Sometimes that’s true, but they certainly appreciate it when you save them hard labor.  They might not pay much to forgo it, but they are certainly happy when it happens.

                                                 (Some very appreciative Indian farmers)

ThinkingDesign:  So you’d proved that the product worked.  How did you prove the business model from there?
PF:  We knew the product was good, but we had to show that people were willing to buy it at a price we could make money on and scale with.  We started looking at where we could make our first sale, so we actually got connected with somebody who introduced us to local government officials in China.  They wanted to buy our product for local farmers, and that was how we made our first commercial sale to 200 farms through a local government in China.  We went over and installed those at the beginning of this year.

Now, the farmers have been using the system for at least six months and we’re getting great results back.   

ThinkingDesign:  Have you found any unintended uses of the product, or people imitating it yet?
PF:  No imitators yet.  Of course, there are lots of commercial drip irrigation companies out there.  Our system have these little micro-jets of water, which are really neat because you can see them squirting up at the same height if the holes are facing up.  We always install them with the holes facing up as a technical test, but what we realized is that, usually when we do an installation like this, it looks really cool.  So all the kids in the area come out into the field and sort of play in the system.  So that’s been an unintended use for our product – as entertainment for the local children.

                                     (An unintended but wonderful use for DripTech's design)

ThinkingDesign:  You have to design the whole business spiel -- the supply chain, the business development and sales infrastructure and all that.  Do you revisit the design thinking process at all from here on out?
PF:  I think the concept of rapid prototyping and iterative design is really ingrained in our company culture, so even when we’re thinking about business model and marketing materials and anything that’s sort of customer –facing, we go through the same process and we get a lot of quick ideas and test and refine them.  And that’s kind of who we are. 

We’re very methodical about testing things out, and of course, there are lots of good examples of models that have started to work in this space for distribution and marketing, so we can borrow from other peoples’ success as well.

1 comment:

  1. perhaps it is special made for indian farmers
    because they have not a lot of money & govt. subsidy is too difficult to get.this system can
    be afforded by small & marginal farmers.