Appropriate Organizational Design: A hybrid business model for technology transfer to the developing world

Paul Hudnut
Colorado State University
Tim Bauer and Nathan Lorenz
EnviroFit International, Ltd.

The developing world faces significant environmental, health, and social problems. Often, technical solutions are the primary focus, with emphasis placed on appropriate or sustainable design. Attention must also be given to designing appropriate and sustainable business models to disseminate these technologies. Technology dissemination is hindered by adherence to a view that an organization must select a for profit or non-profit business model, and the dissemination of technologies will be enhanced by exploring new business models that share attributes of both these historically dominant models. This paper addresses the design and implementation of a hybrid business model that bridges these models and may provide a long-term, sustainable means of transferring socially desirable technology to the developing world. The discussion is anchored around an actual case involving a retrofit technology for two-stroke motorcycle engines, a major source of air pollution in Asia.

Introduction
The developing world faces significant environmental, health and social problems. Despite billions of dollars of aid programs and well-intentioned charitable efforts, many problems remain. The UN Millennium Project outlines the challenges our world continues to face: poverty, hunger, disease, and environmental degradation. (Sachs 2005) Many of these problems result from market failures, and past approaches have relied largely on government aid and charitable assistance to help remedy the symptoms, and sometimes the causes, of these seemingly intractable problems. Recently, however, there have been growing efforts to use entrepreneurial, private sector approaches to solve these problems.

These efforts, broadly labelled as “social entrepreneurship,” represent an additional tool in addressing market and social needs. (Dees et al. 2004) They also indicate that the market failures that give rise to these global problems may also create global opportunities for entrepreneurs. (Prahalad 2004; Dean and McMullen 2005) These socially entrepreneurial organizations face unique challenges and opportunities, as they strive to achieve significant changes over a long period of time. As stated by Professor Gregory Dees:

When your primary objective is social impact and not profit, it affects how you assess opportunities, mobilize resources, structure your organization, market your products or services, price your services, design your strategies, and grow your venture. The simple adoption of business frameworks is often not appropriate. Business tools have to be adapted to a social purpose. (Dees 2004)

Much has been written on appropriate and sustainable design for technology (Schumacher 1989, Hawken et al. 2000), and perhaps rather than adaptation of business tools, the focus should be on the appropriate design of these business tools for socially entrepreneurial ventures. In many instances, well designed technologies do not become broadly adopted, not because of flaws in the technology, but because there is not a sustainable method of distributing, servicing, and improving the technology. This paper will discuss some of the considerations and constraints on appropriate organizational design for these ventures, and anchor this discussion around an actual case of EnviroFit International, Ltd., an early stage hybrid organization.

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