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When Neil Houghton, MBA 2001, walked down the streets of Sicuani, Peru, he wasn't looking for a business plan. But suddenly he found one right under his nose—his eyes, actually.
Houghton noticed how rare it was to see anyone wearing eyeglasses, and started to wonder about the problems of a distribution system that prevented people from obtaining needed eyewear. The inspiration led to a business plan that last month won the Social Enterprise Track of the 2001 HBS Business Plan Contest. This year, for the first time, the contest featured a separate track for social entrepreneurs, with different judges and its own prize money. Eleven social enterprise plans were submitted.
Imagine trying to learn at school when you can't see what your teachers and classmates assume you can see. Imagine having to give up your livelihood because you can no longer see well enough to cut hair, sew, weave, or fish. Imagine driving on a busy road where other vehicles are a blur and road signs might as well not be there. It is estimated that 1 billion people in the world need glasses but can't get them either because of cost or availability. The problem may cost up to $70 billion annually in lost productivity and caring for people who would otherwise be self-sufficient.
Houghton took this problem with him to HBS and started working on it in earnest in Stefan Thomke's second year course, Managing Product Development. There, Houghton worked on a product that would be low cost to produce and ship and that could be prescribed, assembled, and fitted in the field by trained micro-entrepreneurs rather than optometrists or ophthalmologists.
The next step was to form a team and enter Low Cost Available Eyeglasses in the HBS Business Plan Contest. The team's skills were varied. Houghton had experience starting a company, DoubleLinks.com, and had worked in venture capital and consulting. Naomi Weinberg, MBA 2001, whose father is an ophthalmologist, worked with the product and had a background in strategic planning. HBS classmate Ashley Magargee worked in the non-profit sector and is now writing a field study on a micro-enterprise in Bangladesh. Marcel Acosta, a GSD Loeb fellow, came to the team with a background in municipal planning. Rachel Ross, the enterprise's first employee, conducted field research in Nicaragua. The team's advisers included Thomke, entrepreneurs, consultants, product designers, and ophthalmologists.
How it works
The distribution system is a key element in the Low Cost Available Eyeglasses solution.
The "current system" in the United States and much of the rest of the world relies on highly trained specialists who use sophisticated and expensive equipment to provide choice and fashion to consumers who are not primarily concerned with cost. The result is that in the developing world a pair of glasses can cost more than a month's wages.
By contrast, the proposed Low Cost Available Eyeglasses distribution is elegant in its simplicity, the backers believe. The direct customer would be a micro-entrepreneur who is part of a network of a Micro-Finance Institution (MFI) such as Accion or Grameen Bank. The micro-entrepreneur borrows money from the MFI to pay for a testing kit and eyeglass supplies, and undergoes a one-week training session. The entrepreneur will then be able to sell eyeglasses for less than $5.00 per pair, with a margin of about $1.00 to repay the loan and earn a profit.
Low Cost Available Eyeglasses is an enterprise, not a charity. For Houghton this is an important distinction. "Many charities face a scalability issue… the more successful you are with the charity, the more your services are being used … the faster you run out of money.
"We're trying to set up a system that, as it becomes more useful to people and as more people use it, it's inherently better funded because it's funded by the end user."
Another plus for Low Cost Available Eyeglasses: Not much competition. "Our true competition is fuzzy vision," Houghton says.
From paper to reality
In addition to mainstream distributors, there are other groups working on the problem from either a charity or enterprise model. Houghton views these groups as collaborators. "We're all disrupters. We've agreed to share data, share experiments, and try to figure out a solution to the problem that's at least possible without being competitive."
Weinberg credits the Business Plan Contest with being a "forcing factor" that enabled the group to get closer to its goal of distributing eyeglasses faster than would have otherwise been possible. Houghton adds, "It's a great way to get the rigorous thinking to get something done and a great network of people who are willing to support you."
Houghton is committed to taking the plan to reality. He has funded the venture to this point and plans to spend the summer with his team selecting countries in which to start the venture. The country choice will be driven by a number of different factors including market size, regulation, and access to micro-finance institutions that are friendly enough and sizable.
Weinberg hopes the model will eventually evolve to work in under-served parts of the United States. This would be possible, she adds, "if we are able to patent our technology and then let optometrists use it. But there is no way that we can do it now because the distribution is too highly regulated."
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