Clever Geek Handbook
21 January 2026

The 75 Greatest Management Decisions Ever Made

Recommendation

Great authors, historians, musicians, and sports stars are usually included in end of the year "best" lists. Managers rarely show up on such lists. This book highlights 75 history-making management decisions that changed the way we think, live, and work. The decisions profiled remind executives that great management requires experience, vision, the ability to take risks, and good luck. This entertaining volume also covers 21 truly mistaken management decisions, a valuable contrast. BooksInShort recommends this book to executives and managers who would like to be able to recount colorful war stories about some ups and downs in the evolution of management.

Take-Aways

  • Inventing an industry is one way to ensure your place in the management hall of fame.
  • "In business, names matter."
  • Do not underestimate the power of marketing.
  • Trust and follow your gut instinct. If a decision feels right, it probably is.
  • Putting ethics before profit yields its own reward.
  • Recognize your strengths and weaknesses. Identify your skills and work to improve them.
  • Establish your values. Do what you love.
  • Establish and maintain a competitive advantage by being cheaper, better, or faster than the competition.
  • Go crazy. Take risks. If you have a bright idea, share it. Have the courage and the strength to carry out your idea even if it makes people laugh.
  • You can not manage the market or your stockholders. You can manage people. Listen to and respect your people, or you will lose your most valuable asset.

Summary

Great Management Decisions

What makes a management decision great? It’s hard to quantify or classify which management decisions will bring success and which ones will bring failure. Making a good decision is a combination of factors: imagination, courage, experience, and sometimes just plain luck. Good managers are good listeners. They can bring ideas to fruition even if they didn’t originate the ideas. However, good managers also follow their gut instincts. They are not afraid to challenge the status quo, especially if they strongly believe in an idea and feel they are right. The following examples of the world’s greatest management decisions show these common strengths.

The Birth of Advertising

One hundred years before the birth of Jesus Christ, someone lost a slave named Shem in the city of Thebes. The owner publicly offered a "whole gold coin" for returning the slave. Today, it’s hard to imagine a world without advertising. You see advertising on billboards while speeding along the highway, on television when you’re watching the nightly news, and on the Internet when you check stock quotes. You hear it on the car radio and see it on hot air balloons at sporting events. Because advertising comes in so many different forms, you cannot escape its pervasiveness. Whatever physical form it takes, advertising is designed to do one thing. It sells your company. Few companies would be successful without advertising. Shem’s owner invented an industry, which is something few people can claim.

What’s In a Name?

Thomas Watson Sr. is not a household name, but he created one of the world’s most admired companies. Under Watson’s leadership in the early 1900s, the Computing Tabulating Recording Co. nearly doubled its sales from $4.2 million to $8.3 million. You probably never heard of this company, but perhaps you will recognize its second name. Watson changed his company’s name to International Business Machines (IBM) in 1924. In doing so, he created a self-fulfilling prophecy. IBM was not an international company in the 1920s, but the name change reflected Watson’s dream of a firm that would change with the times. The Computing Tabulating Recording Co. sold butcher’s scales and meat slicers before selling more sophisticated tabulating machines, such as calculators. IBM wouldn’t be the behemoth it is today without its legendary founder who had the foresight to think big and expand internationally.

Brand New Extensions

Despite such new-fangled toys as Nintendo and Beanie Babies, dolls never go out of fashion. Consider the case of Barbie. If Barbie were real, she would be a freak standing seven-feet tall with a size 40 bust and 22-inch waist. Although critics say her disproportionate figure contributes to lower self-esteem among girls, it hasn’t stopped sales. Despite her success, something was missing in Barbie’s life. Mattel, the company that produces Barbie, introduced Ken in 1961. Ken paved the way for other dolls that complement Barbie. Barbie has also matured. She has been an astronaut, surgeon, diplomat, business executive, aerobics instructor, airline pilot, and athlete. Barbie provides two valuable marketing lessons: Develop "add-ons" to your product or service, and grow and change with the market.

Listening to the Beat Within

Akito Morita (born 1921) and Masura Ibuka (1908-1997) founded Sony - America’s most respected brand - according to one Harris poll. Originally called the Tokyo Tsushin Kogyo company, Sony sold its first tape recorder in 1950 in Japan. Seven years later, the company made a pocket-sized radio. By 1958, Morita and Ibuka had renamed their company Sony, based on the Latin word for sound: sonus. Sony is famous for several electronic products, but its crowning achievement was the Walkman. The Walkman stemmed from Morita’s observations that young people liked music and were always on the go. "I do not believe that any amount of market research could have told us that it would have been successful," Morita said about his invention. "The public does not know what is possible, we do." Morita did not conduct any scientific studies or polls to prove that consumers would buy the Walkman. He instinctively knew they would. Morita had an idea and followed it. The Sony story proves that some of the best decisions come from within.

Ethical Leadership

Levi-Strauss & Co., the world’s largest apparel company, continually wins awards for its ethics. Top business leaders regard it as the "most ethical private company" in the United States. Two major events secured its reputation for integrity. In 1906, an earthquake and later a fire destroyed company headquarters and two factories. Levi-Strauss extended credit to its wholesale customers so they could recover their losses. The company built a temporary office and kept employees on the payroll. It also continued to pay its employees during the Great Depression. While other companies measured performance by revenues, Levi-Strauss based its decisions on adhering to its corporate "aspirations statement" as well as the bottom line.

“Good companies will meet needs; great companies will create markets.”-- Philip Kotler, marketing expert

Published in 1987, this "aspirations statement" requires all employees to demonstrate leadership in "modeling new behaviors, empowerment, ethical management practices, and good communications." Their strategy has proved successful so far; management turnover at the San Francisco headquarters is just 1.5 percent annually. Declare your company’s intentions, and remember that trust is earned.

Infrastructure Matters

The Incas, a diverse group of six million people spread throughout modern South America, could show today’s managers how to rule a wide spread empire effectively. During the fifteenth century, the Incas controlled modern Peru, Ecuador, Chile, Bolivia, and Argentina. A system of administration based on numbers of ten - the precursor to the decimal system - remains one of their major contributions to the modern world. The Incas also created a vast network of administrative centers and food warehouses. Most importantly, the Incas built a 23,000 kilometer road system by training runners to pass on messages to their various administrative centers and forts. Logistics matter. Speed is a vital part of a global business; you must be able to quash turmoil quickly. Standardizing your administrative processes is also important but beware of overkill. The Incas’ massive empire only lasted 100 years.

Directions

Imagine a world without Peter Drucker. Without a telephone call in late 1943, Drucker would not have become the "founder of modern management." Drucker was born in Austria in 1909. His father, Adolf, was the chief economist in the Austrian civil service. Drucker himself was a teacher and writer before becoming a journalist and immigrating to the United States in 1937. In 1943, Paul Garrett of General Motors (GM) phoned Drucker and invited him to study GM. Drucker’s observations appeared in his 1946 book, Concept of the Corporation, which revealed a highly developed social system within the economical powerhouse. Since then, Drucker has produced nearly thirty books about every aspect of management including Managing for Results (1964) and The Effective Executive (1966), both of which were revolutionary in their time. The phone call piqued Drucker’s interest, and he followed his heart. Drucker’s life may have taken a different direction had it not been for that fateful phone call.

Printing Power

Establishing a competitive advantage is not easy. Rupert Murdoch, a multibillionaire with more than 780 businesses in 52 countries, redefined the newspaper industry in the mid-1980s. In 1985, Murdoch built a printing plant at Wapping that did not require union labor. On January 25, 1986, his Wapping plant near London printed four million newspapers from computers that transferred editorial content directly to paper. Murdoch emerged victorious despite the war that picketing printers and union members waged at Wapping. He streamlined his business operations and substantially reduced costs. From his humble beginnings at The Adelaide News in 1952, Murdoch proved to be a savvy businessman. He borrowed money to buy weak newspapers, so he could remake them. He repaid his loans on time, so banks began to trust him. Today, Rupert Murdoch’s News Corporation owns The London Times, The News of the World, the Los Angeles Dodgers, HarperCollins, 20th Century Fox, Star TV, and much more.

Seizing Opportunities

Once upon a time, two McDonald brothers owned a barbecue restaurant in San Bernardino, California. Dick and Maurice (known as "Mac") noticed that their customers didn’t like waiting for food. Their idea of "fast food" became a reality when they established the first McDonald’s in December of 1948. Customers could buy a hamburger for fifteen cents, a malt drink for twenty cents, and fries for ten cents. The brothers eventually opened eight restaurants. One customer, kitchen equipment salesman Ray Kroc, felt Dick and Mac were on to something big. In 1954, Kroc purchased the United States rights to the McDonald’s restaurants. In 1961, he bought the world rights. Today, 38 million people eat at McDonald’s every day. Although the McDonalds had a great idea, Kroc seized the real opportunity. Kroc carried out his vision by insisting on quality, cleanliness, and uniformity.

The Golden Rule

Not much is known about the Roman Emperor Hadrian besides the wall he built. Hadrian, who ruled from 117 to 138, advocated "people power" long before such buzzwords existed. As a young man, Hadrian joined the army and shared the same conditions as his troops. He even refused to wear a cloak or cap, regardless of weather conditions. He made sure that all Roman mines had bathhouses, so miners could wash after work. This made him popular with constituents, but not with other leaders. Hadrian traveled extensively rather than ruling from Rome. He forbade castration and demanded that slaves be treated fairly. Some historians call Hadrian a "modern monarch" because of his management style. Hadrian’s biography reminds executives to practice what they preach.

Other Great Decisions

Other great decision-makers include such innovators as Henry Ford, Steve Jobs, and Bill Gates. Ford’s decision to mass-produce his automobiles is mentioned frequently as one of history’s greatest management decisions. Jobs, founder of Apple, built the first personal computer in his garage in 1977. However, Gates, founder of Microsoft, persuaded eighty percent of computer owners to use his operating system, not Apple’s.

The Hall of Infamy

Oddly enough, some of the worst management decisions are linked to some of the best. For every success, hundreds of failures exist. For instance, in 1899, Asa Candler sold Benjamin Thomas and Joseph Whitehead the bottling rights for Coca-Cola for $1. Candler mistakenly thought the drink would be sold at soda fountains. Apple makes the hall of infamy for its refusal to license its Macintosh operating system to other manufacturers, forcing customers to buy only Apple computers. If Apple had given up control, it might be where Microsoft is today. Although Henry Ford is credited for introducing the concept of mass production, the credit should go to Honore Blanc. Blanc, an eighteenth century French gunsmith, realized he could use unskilled laborers to make interchangeable parts. However, the French government vetoed his idea, reasoning that it didn’t make sense to make only part of a product.

About the Author

Stuart Crainer, a business and management writer, contributes to a number of leading business publications including The Financial Times, Across the Board and The Times of London. He has written many books including The Ultimate Business Library, The Ultimate Book of Business Quotations, and The Ultimate Book of Business Gurus. He lives near Oxford, England.

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The 75 Greatest Management Decisions Ever Made

Book The 75 Greatest Management Decisions Ever Made

...and 21 of the Worst

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21 January 2026

The Talent Powered Organization

Recommendation

You don’t need to be a genius to figure out that your company’s performance depends on your employees. But Peter Cheese, Robert J. Thomas and Elizabeth Craig maintain that having the right people is only part of the formula for achieving organizational affluence. They say good companies know how to get the most from their talented people and keep them motivated. The authors discuss the pivotal role of line managers in employee retention, performance and job satisifcation. They offer a thoughtful overview (if less generally original content) covering new findings in the field, including solid case histories and analyses of recent surveys and polls. BooksInShort believes managers will find value in this thorough exposition of how to recruit, engage, guide and motivate talented staff members.

Take-Aways

  • Your organization’s prosperity depends on how you target, manage, motivate and develop talented people.
  • Highly motivated employees perform 50% better than unmotivated workers.
  • Engaged employees are more energetic, focused, fulfilled, trustworthy and secure.
  • Younger employees are likely to hold several jobs over their careers. They tend to be more demanding and less loyal than baby boomers.
  • Line managers should have primary responsibility for nurturing talent.
  • Get the full value from your human resources department by involving it in talent recruitment and development.
  • To build a talented workforce, focus on “defining talent needs,” “discovering talent sources,” “developing talent potential” and “deploying talent strategically.”
  • To engage employees, provide career advancement, show appreciation, foster work-life balance, and offer consistent internal information about your ideals and ethics.
  • Align the learning you offer with your organization’s strategic goals.
  • Measure the results of learning initiatives.

Summary

Making Talent a Priority

Your organization’s long-term growth and prosperity requires identifying the skills and attributes you need your employees to have, and then bringing the right individuals into the fold. Once you master those challenges, you need to take an additional step. Establishing and maintaining a competitive advantage depends on your ability to manage, develop, motivate and deploy your talented people. That is not so easy, especially when you consider how the business world is evolving.

“The way your organization deploys its talent will...have an enormous impact on employee engagement – the secret sauce of talent-powered organizations.”

Although the global workforce is diverse and expanding, particularly in China and India, the world’s talent pool is shrinking. One study indicates that the U.S. will fall short by 17 million skilled workers over the next 20 years as experienced baby boomers leave the workplace. The battle for talent is fierce and complicated. Younger employees can be more selective about their prospective employers. They can demand higher salaries, better benefits and an improved work-life balance. At the same time, they are less loyal and more likely to take advantage of the next great opportunity, even just a couple of years down the line.

“The task of finding and managing talent has become more complex, turbulent and contradictory than ever before.”

Although a recent Gallup poll indicated that the majority of young Chinese prioritize “working hard and getting rich,” their counterparts in America and Europe focus more on achieving a work-life balance. While U.S. baby boomers valued stability and structure, Generation X desires flexibility and freedom. Employees now younger than 35 may end up working for a handful of companies during their lifetimes and even change careers a couple of times. Technology expands workers’ opportunities, including the ability to telecommute or to become Internet entrepreneurs.

You Need Talent to Develop Talent

Various business studies reveal two interesting phenomena: Executives believe that their companies are underperforming and they agree that “human capital” is the primary factor in organizational performance. However, developing talented employees requires an honest assessment of your organization’s strengths and weaknesses, financial resources, and leadership capabilities and potential. If you are determined to cultivate and sustain a talent-based workforce, focus on four strategic areas:

  1. “Defining talent needs” – Evaluate your current employees’ talents in light of your strategic objectives and your future personnel needs. Simply put, you need to be sure you can put the right people in the right places.
  2. “Discovering talent sources” – Leave no stone unturned. Age, nationality and gender should not influence personnel decisions. Your supply chains should be nimble enough to adjust to fluctuating market conditions.
  3. “Developing talent potential” – Employees, including managers, should have ample opportunities to learn new skills and take on greater responsibilities. Use training programs and special assignments to increase your employees’ competencies.
  4. “Deploying talent strategically” – Employees should play to their strengths while meeting the company’s daily and long-range needs. Consider asking outstanding employees to serve as troubleshooters outside their departments and spark fresh ideas across the organization.

The Value of Human Resource Departments

Human resource (HR) departments must play an integral role in identifying and cultivating talented people. Progressive organizations have come to view HR as a strategic partner instead of a separate entity focused solely on administrative tasks. But many companies are still reluctant to commit the time, money and effort needed to elevate HR properly. Consequently, organizations often do not tap HR’s full potential for adding value to their business.

“There are two distinct dimensions to the deployment challenge: managing the work and developing talent.”

Streamlining or outsourcing less critical administrative duties is one way of enabling HR personnel to concentrate on strategic concerns. For instance, instead of being bogged down with record keeping, HR staffers can zero in on recruiting and performance management. To fulfill their own talent demands, HR departments will need to hire educated professionals with business know-how who can offer wise counsel to line managers and other corporate leaders.

Finding Talent Requires Talent

Thanks to the Internet, the search for talented people has expanded far beyond traditional resources such as newspaper ads, jobs boards and business schools. Indeed, the best individuals for your firm may be halfway around the world. What’s more, technological advancements may allow them to remain thousands of miles away and still be key performers for your company.

“Devise strategies and options with flexibility to adjust to the needs of different sections of the workforce.”

The first step is determining the type of talent you need. A professional football coach would never participate in the college draft without knowing what positions he had to fill on his team. Once you decide, for example, that your IT department requires additional help, make a list of the skills, knowledge and behaviors required of potential candidates. Companies with strong brand identification have a better chance of attracting outstanding employees. People want to work for Google or Apple or Bristol-Myers. Google’s management also works hard to make the company a great place to work, with an emphasis on how fulfilling it is to serve so many people worldwide. Employee perks range from on-site doctors, dentists and daycare nurseries, to free food, yoga, running trails and career-building classes. Google stresses fun, cooperation and innovation, plus solid 401 (K) plans other benefits.

“Traditional organizations often lag far behind the changes in the way people want to work.”

To find talented people, maximize your company’s online presence. An attractive and informative Web site actually can be your most effective recruiting tool. Send a positive message that promotes your company. Many companies now outsource recruitment. That’s fine, as long as you carefully monitor the results. The outsourcing firm must know exactly which sorts of people you are seeking and should be able to deliver viable candidates.

The Critical Role of Training and Teaching

Successful organizations adapt to changing conditions and demands. Rapid evolution in the business world, spurred by extraordinary technological advances, has forced companies to adapt or fall by the wayside. Knowledge is at a premium. One study suggests that in the next decade at least three-quarters of today’s American workforce will require retraining. Employees need to adjust to new technologies, work efficiently in team settings, solve new problems and learn to innovate. The ability to acquire fresh skills may be as important as job performance. Moreover, many executives believe their employees severely underperform in critical areas, such as sales, customer service and finance. That is a clear call for specific supplemental training.

“A human capital strategy is essential to support your organization’s strategic goals.”

Organizations must cultivate learning cultures where employees exchange ideas, share information and benefit from each other’s experience as a matter of course. Companies should not limit learning to training classes, seminars or workshops. Organizations that are committed to building learning cultures provide ongoing leadership training for their executives and career development for their employees. In fact, many executives learn to conduct training sessions for midlevel managers and line workers. Individuals who have spent time in the trenches are typically best suited to guide less experienced professionals and to serve as mentors.

“High-performance learning organizations understand [the] growing importance of offering learning programs across a company’s value chain.”

Align the content that your organization teaches with its strategic goals. Measure what your employees have learned to be sure that they retain their new knowledge, demonstrate higher levels of competency and find greater job satisfaction. Are they more responsive to leadership? Does customer feedback indicate that your service or products have improved? Have sales increased? Are profits up? The bottom line can reveal a lot about the merit of your learning initiatives.

Get Involved

Employee engagement is a big challenge. Training programs, attractive salaries, comprehensive benefits and flexible work schedules are important in luring and retaining top-level talent. But incentives do not necessarily provide that special spark that motivates employees to strive for excellence and exceed expectations. Employee engagement can make the difference between a profitable company and one that barely stays afloat.

“E-learning has really come of age, and has shown many advantages when used effectively.”

According to a 2006 study, “organizations with highly engaged workforces performed up to 50% better than those with low-engagement” employees. Not surprisingly, the companies that show up frequently on “best-places-to-work” lists are also among the most profitable.

Research has determined that engaged employees share some pivotal traits. They are:

  • Physically more alert, enthusiastic and energetic – Setbacks don’t discourage them from pursuing their objectives.
  • Absorbed and fulfilled by their work – Unlike those who count the minutes until quitting time, engaged employees pay little attention to the clock.
  • Proud of their accomplishments – They welcome additional responsibilities and embrace opportunities to contribute to the organization’s overall purpose.
  • Secure in their relationships with colleagues and bosses – They feel comfortable offering suggestions and input.
  • Trustworthy and sincere – They do not violate confidences, or take inappropriate advantage of situations or relationships.
  • Confident about assessment – They aren’t threatened by evaluations and feedback.
“Technology can provide many advantages for work and life flexibility, but it is also easy to abuse and therefore create more stress.”

Organizations with engaged employees also have certain characteristics in common. They generally:

  • Provide opportunities for career advancement – Encourage supervisors to cross-train by working in different departments.
  • Convey a consistent internal message – Ensure that line managers transmit accurate messages about the organization’s ethics, ideals and objectives.
  • Care about work-life balance – Understand that this is a priority for many employees and foster their goals.
  • Show appreciation – Use bonuses, incentive programs or simple thank-you notes to show that you appreciate your employees’ efforts.

Managing Responsibilities

Having line managers bear much of the responsibility for talent management makes sense. After all, they are the ones who are most involved with employees’ daily activities. Yet many line managers find that they are too busy to supervise employees or to spend time interacting. They may be overburdened with administrative tasks, or so focused on bottom-line results that they regard employees merely as performance mechanisms and not as human beings.

“If the recruitment process fails to discover the talent you need, your company will wither.”

Managers should be involved with their staff members on a daily basis, providing feedback, guidance and encouragement. Managers should know every worker’s career goals and help staffers reach their objectives. Train your managers to resist the temptation to focus all their attention on top performers or potential superstars. They should make every employee feel valuable. And all staff members – not just future leaders – deserve assignments that challenge their skills and build their knowledge.

“Discovering and recruiting talent is becoming a lot harder.”

Line managers also need reassurance and recognition when they do their jobs well. Upper-level executives should maintain open lines of communication with their line managers. Many companies provide incentives, such as pay increases, bonuses and promotions, for managers who discover, develop and inspire talented people. Rewards are powerful motivational tools – especially for those who may feel underappreciated.

“People need physical, intellectual and emotional resources to engage at work.”

Think carefully about the individuals you move into management positions. For example, a crackerjack salesperson who consistently beats the company’s quotas will not necessarily make an effective administrator. Managing people requires patience, diplomacy and decisiveness – skills that even the best employees may lack. Placing the wrong person in a position of authority can severely damage a department.

About the Authors

Peter Cheese is managing director of an international consultancy’s “Human Performance” practice. Robert J. Thomas is executive director of the company’s performance training institute. Elizabeth Craig is a research fellow with the company.

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The Talent Powered Organization

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Strategies for Globalization, Talent Management and High Performance

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21 January 2026

Out of Poverty

Recommendation

Free-market advocate Paul Polak is an atypical poverty expert. He compellingly argues that handouts do not alleviate poverty and might make it worse. Instead, he insists, the true solution to poverty lies in unleashing the poor’s entrepreneurial power. Polak says successful entrepreneurs like him are the ones who can help the poor make more money. His company designs cheap water pumps and irrigation systems that sell for a profit while helping subsistence farmers make more money. Although he frequently repeats the same points, Polak’s treatise is a lively read. BooksInShort recommends Polak’s point of view to readers who seek a contrary – and practical – perspective on the problem of global poverty.

Take-Aways

  • Worldwide some 800 million people are subsistence farmers, earning about a dollar a day.
  • Donors have directed billions in charity at the abjectly poor, yet their numbers grow.
  • The true solution to global poverty lies in helping subsistence farmers produce more crops and earn more money.
  • Poverty experts rely on three flawed solutions: charity, national economic growth and the largesse of big business.
  • Ask developing-world subsistence farmers why they’re poor, and they’ll give you an obvious answer: They can’t make enough money.
  • Small-plot farmers typically grow just enough to stave off starvation.
  • With irrigation and better fertilizer, dollar-a-day farmers can grow and sell enough produce to make $5 a day, middle class by rural developing-world standards.
  • Treadle pumps and drip irrigation could move poor farmers to prosperity.
  • Designing products for the poor requires visiting them where they live.
  • Most companies focus on designing products for the richest 10% of the world’s population while ignoring the poorest 90%.

Summary

From Subsistence to Middle Class

Millions of poor families worldwide eke out a meager subsistence by growing their own food, selling whatever crops they don’t eat and working odd jobs. Some 800 million people scrape by, earning less than a dollar a day while cultivating an acre or less. These small-plot farmers live across Africa, and in Bangladesh, Nepal, India and other developing-world locales. Such farmers often grow rice and vegetables during the rainy seasons, but they lack the knowledge and resources to raise crops during dry times, when their produce is more valuable. By investing in affordable irrigation systems, and learning how to make fertilizer from manure and human urine, subsistence farmers can dramatically increase their production and their incomes. Farmers who follow this strategy have boosted themselves from shoestring budgets to middle class, at least by the standards of their countries – where $5 a day can be considered a comfortable living.

“Working to alleviate poverty is a lively, exciting field capable of generating new hope and inspiration, not feelings of gloom and doom.”

Most poverty experts miss these common-sense solutions. They rarely visit subsistence farmers to ask what they need. As a result, rich governments flood poor countries with billions in aid, only to see the money disappear to corrupt bureaucracies or misguided projects. The money that does reach the intended recipients never quite accomplishes its goal because the aid invariably provides an artificial, temporary boost to subsistence farmers, but no lasting change in the way they live and do business. Poverty’s true solution lies in free markets. Entrepreneurs must find out what subsistence farmers need and how much they’d pay for it, and then sell it to them in a way that creates profitable, sustainable businesses. Author Paul Polak is such an entrepreneur – he has designed and now markets low-cost drip irrigation systems that are sold to developing-world farmers.

Twelve Steps to Profitable Products for the Poor

Most entrepreneurs focus on rich consumers and sell costly products. Ignoring the impoverished masses means missing a massive opportunity. Developing a successful product for the poor requires entrepreneurs to take 12 steps:

  1. “Go to where the action is” – Whether you’re working with the homeless in the U.S. or poor farmers in Asia, get out of your office and interact with your consumers. Go talk to the homeless; you might discover a business in cheap storage lockers. Visit small, subsistence farms; you might find a demand for fertilizer.
  2. “Talk to the people who have the problem and listen to what they say” – Agricultural experts in Bangladesh in the 1990s were dismayed that subsistence farmers wouldn’t apply full doses of fertilizer to their crops in the rainy season, even though that would increase their yields. But the farmers had a logical reason for hoarding some of their precious fertilizer: Once a decade, a major flood would inundate their crops, carrying away all their fertilizer, so their decision to use only as much fertilizer as they could “afford to lose” was actually rational.
  3. “Learn everything you can about the problem’s specific context” – Polak successfully sold treadle pumps in Bangladesh, where these simple pumps work well because the water table is high. Where water needs to be lifted more than 27 feet, treadle pumps don’t work. The lesson: Poverty doesn’t have a one-size-fits-all solution. The best options for each farmer hinge on a variety of factors. What types of crops grow in which season? Who’s competing at the local market? Is cheap farm help available?
  4. “Think big and act big” – To truly make a difference, look for an innovation that could help millions of people, not just thousands. A billion people need eyeglasses but can’t afford them. Think big: The right combination of low-cost manufacturing and efficient distribution could deliver $2 glasses to hundreds of millions of poor people.
  5. “Think like a child” – Children have a way of reducing problems to their simplest form, unfiltered by education, training and experience. Polak was trying to help Brazilian farmers learn to shell and dry nuts. Many villagers owned small clay furnaces for drying flour, so Polak adapted their furnaces for drying nuts. Thinking like a child led to a simple but practical answer.
  6. “See and do the obvious” – Of course, the obvious isn’t always evident. It took Polak years of research and hundreds of interviews with poor families to arrive at a not-so-obvious conclusion: Millions of people farm small plots of land. Eradicating poverty requires products and processes that make these plots more productive.
  7. “If somebody has already invented it, you don’t need to” – Polak thought he had created the idea of drip irrigation, a way of watering crops by putting holes in plastic pipes and letting a trickle of water slowly quench the plants. He soon learned Israeli farmers had used it for decades. So Polak only had to customize it so it could be made and sold cheaply to subsistence farmers.
  8. Shoot for profits and scale – Aid workers all too frequently focus on profitless projects that are unsustainable. In Somalia, the International Labor Organization taught women refugees how to make and sell soap. Alas, the soap was of poor quality and more expensive than fine imported soaps. The aid workers wanted to boost the refugees’ self-esteem, not their income. Yet, what could boost a refugee’s self-esteem more than earning enough to be self-supporting? Forget squishy goals like self-esteem. Set measurable goals, such as profitability and scalability.
  9. “Design to specific cost and price targets” – The refugees were learning nothing valuable by apprenticing themselves to make overpriced soap. However, if they had learned how to buy materials cheaply and set a competitive price for the finished product, they would have gained knowledge that would help lift them from poverty.
  10. “Follow practical three-year plans” – Changing the world by helping millions of poor people is an audacious, daunting goal. Without a plan and specific action, such a goal is little more than talk. To make big goals attainable, break them into smaller three-year goals. That creates enough of a challenge to sustain your motivation, but not such a Herculean task that you give up the battle.
  11. “Continue to learn from your customers” – When Polak introduced drip irrigation systems in Nepal, first-year sales were promising. But sales slumped in the second year. Investigation revealed that many farmers believed that growing vegetables during the dry season was impossible, even with irrigation. The belief had no scientific basis; it was just conventional wisdom. Polak sent his local salesforce to dispel the myth.
  12. “Stay positive” – Any innovator faces negative opinions. When you develop products for the poor, critics claim that if there were a demand for the product, someone would have introduced it long ago. Polak faced this argument against his treadle pump and his irrigation systems. The truth is, few are developing products for the poor. Some 10 million families might buy drip irrigation systems – a huge, ignored market.

Three Myths of Global Poverty – and One Truth

Poverty experts, charity workers and government officials invariably fall prey to three myths about ending poverty:

  1. Charity will end poverty – Influential leaders often repeat this old saw. For decades, the World Bank, UNICEF and others have sent boatloads of cash to poor people. Yet they’re still poor. The World Bank has delivered some $586 billion to Africa over the past four decades, yet its per capita income has refused to budge. From 1990 to 2002, the share of sub-Saharan Africans living on $1 a day remained at 44%. Charity creates problems. True, education, health care and other infrastructure measures require charity. But the real road out of poverty doesn’t hinge on handouts. Only encouraging free markets and the entrepreneurial drive of developing-world residents will make a dent. In fact, subsistence farmers already are scrappy entrepreneurs – they just need to learn how to harness their energy in profitable ways.
  2. “National economic growth will end poverty” – Economic growth benefits the educated classes and urban workers near factories. Growth bypasses rural areas where subsistence farmers live. Even rich countries with fast-growing economies suffer poverty. In the U.S, 13% of the population was poor in 2005. In China and India, millions face poverty, in spite of their nations’ astronomical growth.
  3. “Big business will end poverty” – In recent years, aid workers have changed their perception of multinational companies. They once perceived multinationals as greedy and evil, and now they see them as potential saviors. Both views are misguided. A corporation is just an entity organized to do business. Few large companies have figured out how to make a profit by serving poor people who can’t read their ads, and who lack televisions or computers. Large companies can address the needs of the very poor only by radically changing their strategies and their products.
“The path out of poverty lies in releasing the energy of Third World entrepreneurs.”

The true cure for poverty is stunningly simple: The poor need to find ways to earn more. Polak once asked a Nepalese farmer named Bahadur why he was poor. “I’m poor because I haven’t found a way to earn more money,” said the farmer. He grew enough rice and vegetables to stave off starvation, and he made about $35 a year selling rainy-season vegetables. He and his son earned $70 taking temporary jobs in the city. However, it all added up to only a subsistence existence. The poor lack clean water, health care, nutrition and education. But when someone like this farmer boosts his income from $1 to $5 a day, he gains access to better water and food, to doctors and medicine. He can even send his kids to school.

Designing for the Poor: Think Cheap

Many firms are working on many products for subsistence farmers. Since most small-plot growers haul water by hand, many new designs focus on water. They include motorized water pumps and low-pressure sprinkler systems. One revolutionary innovation could come in housing. Many of the rural poor live under thatched roofs, between walls made of sticks, mud or dung – structures that have no value as loan collateral or resale property. A $100 house made of solid but cheap materials would find a huge developing-world market. Heed these tips for cheap design of breakthrough products:

  • Impose a “radical weight-loss diet” – Lighter means cheaper. Most sprinkler pipes are made for First World water pressure. Because he designed plastic tubes to accommodate 10 pounds per square inch of pressure instead of 30, Polak could use flimsier plastic, which made the pipes affordable for poor farmers.
  • Forget about lawsuits – In the U.S., if you tell an engineer to design a bridge for a 10-ton load, he’ll design it to hold 30 tons. After all, if he designs to a lower standard and the bridge collapses, he’ll face a lawsuit. In the developing world, where lawsuits are less of a menace, affordability trumps liability.
  • Use LEGO sets as a model – Poor farmers lack cash or financing, so the customer for a drip irrigation system might be able to afford only a system large enough for a 16th of an acre. When he gets the cash from those irrigated crops, he can add to his system. Design products for the poor to be “infinitely expandable.”
  • Trade quality for affordability – The cash-strapped farmer doesn’t care that your product will last seven years if he can’t afford it. He’d rather buy a cheaper product that might last only two years if it boosts his income enough to buy a better version later.

Educating the Poor: Plays, Songs and Film

For subsistence farmers, a lack of knowledge poses a significant barrier to earning more. Many farmers don’t know the basics of agriculture, so they miss simple ways to boost their yields. Most small-plot farmers fertilize with manure, but typically they don’t use enough. One easy solution is “manure tea.” Put a burlap bag of animal manure in a barrel of water, steep for two days, and then put the nutrient-rich mixture on the plants. Human urine is another free fertilizer. A farmer’s family can urinate into a container, cut the urine with water and apply it to plants. A family of four that’s vigilant about recycling urine easily can fertilize a quarter-acre vegetable plot.

“Affordability isn’t everything. It’s the only thing.”

Subsistence farmers also often fail to realize how much an investment in a pump or an irrigation system would boost their finances. These consumers often are illiterate, and can’t be reached through traditional advertising. To market treadle pumps in Bangladesh, Polak used innovative promotions. He hired four-member bands to visit markets and fairs, where they’d sing songs about treadle pumps. He hired actors to perform short plays espousing treadle pumps. He even produced a 90-minute movie using Bangladeshi actors and showed it in villages with the help of a portable generator.

About the Author

Paul Polak founded International Development Enterprises, which sells products to rural farmers in Bangladesh, Cambodia, Ethiopia and other poor countries. In 2007, IDE received a $13 million grant from the Bill & Melinda Gates Foundation. Polak won the Scientific American Top 50 award and an Ernst & Young Entrepreneur of the Year award.

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Out of Poverty

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