MIT Students Apply 'Sustainability' in Ghana
A team of Massachusetts Institute of Technology Sloan MBA students traveled to Africa recently to work with Pure Home Water (PHW), a small firm seeking to provide northern Ghana with safe drinking water while becoming financially self-sustaining.
The students participated in the Global Entrepreneurship Laboratory (G-Lab), a program that enables teams of students to work closely with top management of international startups in solving real-world problems.
"I was attracted to G-Lab because of the opportunity to work with small, entrepreneurial firms in developing countries," said Avani Kadakia, who grew up in Randolph, N.J., and worked at JP Morgan for four years before attending Sloan. "I had never spent time in Africa or in such a rural part of any country, so I was interested in learning about a new culture, the advantages and disadvantages of doing business in another country, and studying an industry with which I was unfamiliar."
In Ghana, the G-Lab students helped PHW develop and conduct a consumer study in Tamale, a city in the northern region of Ghana about the perceived value and cost of various household drinking water treatment options. "We hoped to figure out which aspects of a home water treatment product were the most important to local residents," said Matthew Thomson, a G-Lab member from San Francisco. "For example, was it more important that their water look clean or was it more important that the filter do its job quickly? The result was not what you'd expect from people in what amounts to a subsistence economy – as long as it was within reason, price turned out to be the least important factor in their decision-making process. The primary factors were how much of a health improvement the filter conferred and what type of filter it was."
The students presented their findings and recommendations to PHW. "We hope that they will now be able to develop a product that suits the needs of the people in rural and urban Ghana," said Kadakia. "The product should not only be appealing from a taste and price perspective, but be able to provide enough clean water for an average household. For us, this was a great learning experience and an opportunity to have a true impact on a small community."
The students' most important recommendation was that PHW charge more for its product. "It may sound evil to recommend increasing prices on families with subsistence incomes," said Wheeler. "But that leads to the long-term payoff for PHW -- the price increase can allow it to become a sustainable business that doesn't need grants and outside sources of money to continue operations."
And that, he added, is a key component of sustainability. "It can be very hard to align the goals of an organization that is focused on a social mission and not on a bottom line," said Wheeler. "In these environments, it seems easier to make short-term decisions, such as to sell below cost, which may lead to an unsustainable business in the long term because you run through funding very quickly."