Anita began the conversation by asking Diana about her journey as a co-founder of Essmart Global to the PhD Program in Strategic Management at Michigan, and then to her work on cookstoves as a Professor at Rice.

So you start out your career in China distributing cookstoves, and then you eventually make your way to MIT where you meet Jackie Stetson, who shares your passion for getting products into the hands of people who need them most.  From there, you start Essmart Global.  Can you tell us a bit about that journey and the idea behind Essmart Global?

Diana explained that she got started in thinking about the issue of bringing tech into low-income communities as an undergraduate at MIT.  She had friends designing all sorts of exciting technologies like baby incubators, solar home cookers, and bicycle-powered energy systems, but the uptake of them in communities just wasn’t there.   She realized that she was more interested in human systems than in engineering systems.   And so Diana brought her interests in distribution to the question of:  How do we get the products that people need into the hands of those who need them most?

As she studied international development in the Urban Studies Department at MIT as a Master’s degree candidate, she became more deeply aware of the breadth and prevalence of this “last mile” problem.   In talking with a professor, she learned about the work of a Harvard graduate student working on similar problems in East Africa.  Diana teamed up with the student, Jackie Stetson, to start Essmart Global, which focused specifically on overcoming the supply-chain and distributional challenges.    Together, Diana and Jackie entered a number of social-enterprise competitions, attracted capital investment, and set up their company in India.  For four years, Diana worked on getting tech-based products to users.   Key issues related to the setting up of retail outlets in local communities, and then backstopping these outlets with distribution capacity that brought products mainly from cities/ports into communities.  There were both supply and demand issues.  On the demand side, challenges including disseminating information, pricing, and so on.    Essmart Global is still in business today on a hub-and-spoke model serving these communities.

What did you find impeded global supply chains from linking with smaller distributors in low-income settings?  Was there something systematic that got in the way?  Or was this just a matter of getting capital into communities to structure warehouses and to finance purchasing?

Diana explained that infrastructure needs arose not just in roads and bridges, but also in socio-cognitive models of understanding the importance of clean stoves, for example.  She talked about the challenges of educating people to change cultural practices that might be deeply embedded but that involved the consumption of smokey food that was not optimally healthy.  Lots of change was required that extended well beyond obtaining physical access to the products themselves. 

From Essmart, somehow you made your way to the PhD Program in Strategic Management at Michigan.   What drew you into a PhD program in business particularly?

For Diana, pursuing a PhD in business was a logical step in her journey toward understanding how to overcome barriers to the distribution of products and services to lower-income customers.  Her dissertation at the University of Michigan involved codifying, documenting, and investigating the kinds of issues that she had encountered at Essmart Global.

Am I right in understanding that markets in low-income countries for these health-improving devices fail for reasons that implicate the failure of “moral markets,” an “expat gap,” and a resistance by local entrepreneurs to products that create profits for non-local companies?   What are these concepts and how are they connected?

Diana explained that the “expat gap” arises from the systems for allocating capital from investors in emerging markets.  Often this capital ends up going to entrepreneurs from relatively wealthy countries instead of locals.  That’s the gap:  Locals are left out of the investment pool, and investible capital stays in the hands of those from wealthy countries.

“Moral markets” are constructed to address social and grand challenges.  They address issues of social significance.

Diana described how the expat gap arises in moral markets in a way that can create a kind of paradoxical outcome:   The gap between the rich and the poor is amplified as a consequence of investing in pro-poor innovation.

Local resistance to expat-driven initiatives can arise because of this paradox.   Sometimes this occurs at the governmental level.  Donors and local organizations may have ties that keep money in a wealthy home country for the entrepreneur in a way that experienced locals understand and find ineffective.  Local entrepreneurs push back because they want technology that will be sustainable locally through available spare parts and extended consumer-education programs.   On the ground, there may be the most resistance in overcoming barriers to purchasing that reflect that users don’t want to change their habits and practices.   Unless social entrepreneurs make a long-term commitment, they may not be able to overcome this resistance.

What makes you optimistic?

Diana appreciates the concerted global effort that has been made – and that continues – to bring advanced technologies to low-income environments.  She appreciates the awareness that has developed in high-income countries of the challenges facing low-income consumers.   She also appreciates the commitments that both locals and expats make to work together to overcome barriers to adoption, even when that takes time.  Inclusion of this kind is critical to success.