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Charles Slaughter of Living Goods applies the Avon model to healthcare in Uganda

,    /   Jan 12th, 2011Business, Interviews

Living Goods is a hybrid microfinance and public health organization; it operates a network of saleswomen in Uganda who go door to door offering health products, like bed nets, condoms and water treatment tabs, at affordable prices. The women get a reliable job, and community members get access to basic health care products outside of a hospital or clinic system. Below Charles Slaughter, CEO, talks about how the model came about, the organization’s advanced monitoring and evaluation program and what keeps him up at night.

Dowser: How did you get the idea for Living Goods?
Slaughter: I sold my company [TravelSmith] about four or five years ago. Almost at exactly the same time a friend here in San Francisco introduced me to an organization in East Africa called CFW Shops. CFW Shops is a network of drug shops and very small clinics operating in Kenya under a franchise-like system.  I went over to visit in 2004. Two things struck me upon seeing it in person. One, it was a pretty inspired idea. Two, this particular organization was really dysfunctional.

I asked myself, how we could take this to much higher scale and why we couldn’t get rid of the store altogether? That’s where the idea came from to apply the Avon door-to-door model to this problem of public health.

How did you settle on the Avon model?
I did a lot of research on Avon and direct selling in general and found an interesting fact: Avon was started in 1886 in rural California, [where] women needed a source of cash income, but there was no job economy. They also had houses, families, and farms to take care of, so any income-generating activity had to fit all those needs. Village social connections were much more cohesive than they are today. This isn’t a bad analogy for what you find in Africa. That reinforced the hunch that this might be a good model.

I started working on this in 2006, and we went through an exhaustive process of country selection with criteria on demographics, health indicators, population density, and potential for local partnerships. We picked Uganda.

How do you measure the success of Living Goods’ projects?
For an organization of our relative youth and size, I think we have one of the most robust monitoring and evaluation (M&E) strategies out there.  We use four measurement tools. One, we measure basic outputs — how many bed nets did we sell, how many packets of water treatment, how much contraceptive protection, etc. Multiple independent studies establish the correlation between those commodities and specific health outcomes. Second, we collect sales and expense data that enables us to measure our sustainability. Sales and expense data is compiled on an organizational basis as well as on an individual branch and individual entrepreneur basis. Third, we are implementing longitudinal studies that sample basic behavior change like: ‘Were we able to encourage people to get early treatment for malaria and diarrheal disease?’

We’re also doing the gold standard in social science – the randomized control trial. We have randomly selected dozens of sites where we’re working, and we’ve randomly created control sites where we’re not going to work. The goal is to determine, with the greatest certainty possible, what effect we have on any changes in mortality and morbidity. It’s an intense study – it involves a one-and-a-half-hour interview for each household that covers about fifteen different health behaviors and health outcomes. It also includes biometrics. We just finished the baseline for the randomized control trial, and we will go back and measure in 24-36 months.

Is there anything that keeps you up at night?
The number one thing that keeps me up at night is my 14 month old [laughs].  I’ll put it to you this way – I am working much harder on this than I imagined.  And, my wife would complain, if she was on the phone, that I have pulled more all-nighters on Living Goods than I ever did as an undergrad or in running my own business.

How do you see Living Goods expanding?
Living Goods started in the health space where I think there is great potential, but the big vision here is a sustainable platform for products and services to the poor. As such, we will be expanding into two other areas in the next few years that could potentially become new business-format franchises.  One new area is energy. We are currently testing two products: a solar lantern and a high-efficiency cook stove. One thing that both of these products have in common is that they both could potentially save a lot of money for rural households.

Tell me about the high-efficiency cook stove.
The cook stove is my favorite example. About a billion and a half people still cook on wood, charcoal or dung. These fuels create all kinds of indoor air pollution (which is a significant contributor to mortality), they’re expensive, throw off tons of carbon, etc. A small ceramic cook stove uses half the fuel of a traditional cook stove but produces the same heat. And, if you attach a simple flue to it, you can get the smoke out of the house. You can make the efficient cook stove for $10. The problem is that most of the people that you’re trying to sell them to don’t have $10.

This technology has been around for a number of years, but it has never gained significant traction or distribution. There are three reasons these things don’t get distributed, and this is true for the solar lighting too. First of all, the people who have developed appropriate technology products are mainly techies, and they’re not marketing people. Second, they’re generally one-product organizations. It’s very hard to build a sustainable, efficient organization with one product – there’s no economy of assortment. Third, no one has figured out to get past the problem that most people don’t have $10 or $20 in their pocket.

So how do you get around those issues?
Living Goods has a potential solution to all three of those problems. We’re going to bring together a whole suite of these pro-poor technologies and sell them through the Living Goods channels on installment. The idea will be to make the installment payments approximate the household’s weekly savings. For example, with the cook stove, a typical family that cooks with charcoal in Uganda might spend $2.50 to $3.00 a week on charcoal. If they are able to save half of that expenditure using the new cook stove, they might have $1.25 a week in extra cash. So, in 10 to 20 weeks they can pay off and own the cook stove.

It’s quadruple bottom line. The family has an ongoing savings of $1.25 a week which can be as much as a 20 percent increase in income, if they’re living on a dollar a day. Carbon output will be reduced by half. Health outcomes are improved because you don’t have the indoor air pollution. A version of the same math applies to replacing kerosene lights with solar lanterns. A variation of the theme can be applied to selling simple efficient irrigation technologies like foot pumps and drip irrigation.

Quadruple bottom-line products are an area that I am particularly excited about because the economics for the end user are so powerful – there’s a really good value proposition.

Any other goals?
In the long term the most important thing we’re going to do is to demonstrate that you can create sustainable distribution platforms for essential products and services for the poor, and principally in health.  If you look at Grameen and BRAC – their biggest success over 30 years has not been their own geographic expansion. It has not been building their own empire; it’s been inspiring others. That’s the same arc that we envision emulating.

This interview has been edited and condensed.

Photo: Living Goods

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