What do you think causes millions of people to miss work and school in developing economies? Illness? Lack of childcare? Minimal professional training? Insufficient infrastructure? While all of those certainly play a role, I'm guessing that what Elizabeth Scharpf stumbled across as a critical factor in absenteeism wasn't on your radar. While interning in Mozambique in 2005 for the one-person (!) private-sector development division of the World Bank — studying how small and medium-sized businesses can play a role in developing economies — Scharpf, now a 34 year-old graduate of Harvard's graduate schools of business and government, happened to overhear a local colleague complaining that her employees often missed work because they were menstruating.
Perplexed and intrigued, Scharpf thought this might represent a business opportunity, and decided to dig deeper.
A study fielded by the Council on Foreign Relations, "Addressing the Special Needs of Girls," underscores why missing school matters in a big, long-term way. The research found that each extra year of secondary education increases a woman's potential earnings by 25% on average. In South Asia and sub-Saharan Africa, another long-term study found that "more equal education between men and women could have led to nearly 1 percent higher annual per capita GDP growth" in each country. Beyond the humiliating difficulties for millions of impoverished individual women trying to improve themselves and support their families, this is a global issue with significant consequences for the economies of developing countries.
Scharpf was passionately determined to find a solution, tackling the problem the way she always does — by talking with people. "And when you talk to people," she says, "you discover what's missing. It's that simple." Those conversations revealed that it was the economy, stupid. A study found that 18% of school age girls in Rwanda, for instance, miss school because menstrual pads are too expensive. In countries like Mozambique and Rwanda, where the per capita GDP is under $1,000, the average annual cost of $33 (12 months x 5 days x 5 pad/day x .11/pad) for the cheapest imported sanitary pad can often be simply unaffordable. Because the "unmentionable" subject of menstruation is taboo, the market failure — supplying cheaper pads — had never received the attention it deserved.
Scharpf found that absorbent wood pulp was the biggest raw material manufacturing expense for pads, and wondered if cheaper indigenous materials could be used for local production, and if also coupled with a more efficient distribution network, there might be a real business opportunity given the huge underserved populations.
Successful Social Entrepreneurship Combines Mind and Heart
Scharpf did all the traditional MBA number-crunching and analyses, but recognized that tapping into emotion — the incredulity, outrage and fellow-feeling aroused in industrialized countries by the discovery that 21st century working women are routinely reduced to sometimes using ineffective rags, or even bark or mud in rural areas, for feminine hygiene — would be essential if a fledging enterprise were to succeed. "I have empathy with these women," she told me, "because I don't think where you are born should be the biggest indicator of your potential for health, wealth and happiness. I want to change that dynamic."
Rwanda was a good place for Scharpf to launch her first initiative because local female entrepreneurs had already established their integral role to the economic renewal of the country in the years since the genocidal 1994 civil war. In 2009, with $60,000 in seed money from the not-for-profit VC organization Echoing Green, and with the Harvard Business School's first social entrepreneur fellowship, Scharpf founded Sustainable Health Enterprises (SHE).
Instead of simply raising charity cash to import finished pads, Scharpf and her organization are inventing a whole new system of community-based education, business training, manufacture and distribution from locally-sourced banana fiber — that is, solving this serious problem and creating a sustainable regional business. SHE has created a franchise model — providing business skill training, technical expertise, and co-investment — to partner with women in Rwanda and other developing-country communities to distribute and ultimately manufacture and launch their own SHE LaunchPads franchises. As product is sold, some of the initial working capital that SHE puts up is paid back, with the entrepreneurs eventually owning their local franchises. In turn, SHE reinvests its profits in new geographies or other disruptive enterprises.
Emotion Creates a Common Language
Scharpf says her challenge in dealing with scientists, academics, businesspeople, community activists and policy wonks "is always, 'How do I speak in the same language to each of these different constituencies each with their unique language and objectives?'"
Scharpf and the SHE team, for example, first identified in banana-plants a local agro-waste fiber, and after experimenting, concluded that it had the potential to be an absorbent, cheap, safe material. They then approached MIT to partner on enhancing the process to make it more absorbent. She didn't initiate the conversations by tugging on the professors' heartstrings, highlighting SHE's efforts to improve girl's and women's lives, but rather by challenging the scientists to help her solve a complicated new chemical engineering problem. But she realizes that it was the practical need to pioneer new materials technology under strict cost constraints in tandem with improving lives that really accelerated the innovation process. "I've found," says Scharpf, "that the common language is the one of emotion."
Emotion Attracts Good People
Scharpf told me she recently ran an ad for SHE's first job opening in New York. "If you read the job description," she said, "beside the intro and stuff about the need to financially analyze the potential to grow a business in x y and z ways, it was very dry stuff, but when we added the emotional elements around that factual description — that we are trying to basically change the paradigm of how international development is done, that we're trying to work with communities to help improve lives, that we want to be disruptors — all those good things — well, the response was overwhelming."
Scharpf has experienced firsthand that what inspires people — a mission to improve lives — is also good for business. This elusive component is something that behavioral economists are beginning to document. As Gretchen Spreitzer and Christine Porath reported in a recent issue of HBR, for organizations to prosper today, their employees need to feel as if they are "engaged in creating the future — the company's and their own." Research is also demonstrating that basing performance purely on beating the competition or making money can actually decrease employees' intrinsic motivations to pursue a goal. In her book Rapt: Attention and the Focused Life, Winifred Gallagher cited a study in which "college students who were paid to do a puzzle were significantly less motivated than those who worked for free."
Emotion Inspires Ongoing Development and Builds Community
Scharpf intends for Rwanda to be just a phase-one proving ground. "We're looking at Costa Rica and India to explore how we can technologically and operationally increase distribution either through new natural fiber based lines and/or by distributing other sorts of products via our network." She was recently contacted by entrepreneurs from Zambia and Zimbabwe who were interested in starting SHE franchises. While doing a typical needs assessment, the first question Scharpf asks is "who is the person and what is driving them" — and then she explores the local raw materials and local business conditions. Scharpf ardently believes that SHE's performance is influenced not only by the through-put of their machines and the efficiency of their distribution network, but by their ability to align people's interests and passions with their roles.
Managing Emotion Effectively Keeps Business On Track
Scharpf says being attuned to the emotional aspect of work keeps her sensitive to issues that otherwise might not be immediately obvious — allowing her to pre-emptively deal with challenges before they grow disruptive. "The biggest challenges I have on a daily basis are with regard to human emotions," she says. "They should have a psychology class at the business school because I am finding I am most effective when I understand what drives people to do what they do, whether it's what they are passionate about, or what makes them feel insecure, or what makes them feel good about themselves, or what makes them have confidence, or what they can be proud of — keeping in mind all of those things."
The bottom line is that empathy without rigorous, rational analysis solves no important problems — but rationality without empathy simply misses plenty of important and soluble problems. To be a responsible human and to be a successful entrepreneur requires both, working in tandem.