Case Abstract

This case study is about Irvine, California-based WaterHealth International Inc. (WHI), a social purpose for-profit venture in the safe water sector, focused on serving the traditionally underserved ‘Bottom of the Pyramid’ (BoP) segment. The company’s aim was to ensure increasing returns for the company and its investors while achieving a social impact.

Developing countries face a water crisis with more than 2 billion people lacking access to potable water and often having to rely on contaminated water resources. This has led to children suffering from diminutive growth due to water-borne diseases. In addition to deaths and economic loss, women and girls, on whom the burden of obtaining water falls, have to trek long distances and spend hours of their time fetching water – time that could be better spent with the family or on economic activities.
Distressed by the suffering caused by water-borne diseases and the associated economic loss, Ashok Gadgil (Gadgil), an Indian born physicist at Lawrence Berkeley National Laboratory, sought to find a solution to the problem. And he came up with the innovative and breakthrough UV Waterworks (UVW) technology. The UVW technology disinfected water from harmful pathogens and microbes with the help of ultraviolet light. The result was safe and clean drinking water that exceeded the World Health Organization’s (WHO) water standards and was sold to BoP consumers. In 1996, Gadgil licensed the UVW technology to WHI, set up by Ghana-born entrepreneur and Johnson & Johnson veteran Tralance Addy (Addy).
As the CEO of WHI, Addy played a crucial role in refining the business model. WHI helped arrange loans for communities to finance the installations of its water systems and the beneficiaries had to pay a nominal user fee to avail of the service. The company also offered a franchise model to entrepreneurs where they received a return on investment within 12 to 18 months. The proceeds were enough to cover the expense of the UVW system, cost of installations, and maintenance of the equipment. WHI was successful in attracting commercial financing for setting up its water systems.
As of mid-2009, more than 600 WaterHealthCenters (WHCs) had been installed in many countries including India, the Philippines, and Ghana, providing safe water to more than one million people around the world. WHI’s aim was to take the UVW technology and its water system to needy communities throughout the world by establishing a global presence. While experts appreciated WHI’s efforts to provide potable supply of water to underprivileged communities in developing countries and felt the business model was sustainable, they pointed out that certain aspects of its water systems and business model needed to be changed to make it more relevant to the target segment. Obtaining the capital to help more communities finance these water systems, so as to ultimately achieve significant scale relative to the magnitude of the problem, was another challenge.

Case Abstract

The global water crisis is a silent crisis. It does not attract the same level of attention as airline accidents or plummeting economic statistics, yet its toll is far more staggering: more than 3 billion illnesses and 2 million deaths result from drinking contaminated water each year. These casualties take place almost exclusively in the developing world and the rural poor bear the brunt of the burden. Hippo Water International (HWI) is U.S.-based nonprofit organization that aims to improve access to water by implementing sustainable solutions to the global water crisis. HWI’s flagship product is the Water Roller, an innovative water transportation tool that carries water inside its “wheel,” transforming 200 pounds (90 kg) of water to an effective weight of just 22 pounds (10 kg). The Water Roller makes it possible to collect 24 gallons (90 liters) of water- five times the amount possible using traditional methods – in less time and much more easily.

The Water Roller was invented in 1991, and over the course of the next 15 years, approximately 30,000 Water Rollers were distributed, almost exclusively in a few South African provinces. HWI’s director, Cynthia Koenig, founded the organisation with the intention of assisting the manufacturer / distributer of the Water Roller bring the product to new international markets. But what began as a project to occupy her spare time as she searched for full-time employment soon took centre stage, with Cynthia taking on responsibility for marketing, fundraising, product redesign, and day-to-day operations. Different business philosophies and goals ultimately led Cynthia and HWI to break their ties with the South African manufacturer and strike out on their own with the redesigned Water Roller. In the process, Cynthia has experienced the professional and personal challenges and rewards of starting and operating a social enterprise.