Being part of an ever-connected society, many people in the Global North can barely fathom that still more than 1.5 billion people live off the grid. Instead of simply plugging in, they use kerosene lanterns that only illuminate spots in their home, walk miles to charge their mobile phones, or run a diesel genset for their business.
Proclaiming 2014 – 2024 the “Decade of Sustainable Energy for All”, the United Nations has brought the issue of access to modern energy services to the center of the international development stage, underscoring the importance of energy for development efforts in areas such as health, education, clean water, and economic progress.
Mobisol’s mission reads like an excerpt from the UN goal of providing clean, reliable energy to rural off-grid households in sub-Saharan Africa to stimulate social and economic prosperity. The company combines technology, deep customer knowledge, and a sustainable business model into a product that has started to revolutionize the rural sub-Saharan energy sector: solar panels large enough to power bigger appliances with an unprecedented rent-to-own payment model that enforces customer loyalty.
How Mobisol’s Story Started
With no more in his hands than a technological tweak—a light bulb that could be switched on and off with a simple text message —Thomas Gottschalk embarked on an adventure that in the course of three years would transform a three-person startup into a market leading company with 350 employees spread across three countries. After three years of iteration spent perfecting technology, value proposition and business model the company had its breakthrough. In August 2015 alone Mobisol sold more solar systems than between 2011-July 2015 altogether. Now the company is moving on: from scaling, to expanding into new markets in new countries.
The Birth of a New Company: A Simple Technology Combined with a Simple Idea
“On the one hand, we saw rapidly decreasing prices for PV solar technology; on the other hand, we saw how the mobile revolution put cellphones in the hands of millions in sub-Saharan Africa. We wanted to combine that, but had no clear idea how,” says Klara Lindner, Mobisol’s co-founder and design thinking architect. “We chose PV solar because of their efficiency, modularity, and low maintenance. Despite steep cost decreases, they were still quite expensive. We added a remote control functionality to embed this technology into a more long-term finance agreement: If a customer does not pay for his or her PV solar, we could simply switch it off.”
Design Thinking First and Always First – Business Ideas Will Follow
Being an alumnus of the HPI School of Design Thinking, Klara Lindner, the company’s design thinking architect, was the person to introduce the methodology into the startup’s founding process from the very beginning. A smart technology alone – the text-message-switch light bulb – was not enough to create a great business idea. The team started to engage in field research without having a final product in mind. Design thinking experience guided them: This meant that researching user needs first will likely spark an idea that could hit a sweet spot in the market.
With the production cost of solar panels dropping and the adoption of mobile solar panels in sub Saharan Africa rising, the three-person startup, backed by an angel investor, decided to fly to rural Tanzania to gain empathy for their potential users. They observed villagers in their everyday life and talked to them about their needs for electricity and the potential use of mobile solar panels. Mobisol’s Silicon Valley venture-capital-founded competitors followed the mainstream assumption that solar electricity is primarily needed for lighting purposes. This was a notion put forward, for example, by the ‘Global Offgrid Lighting Association’ founded in 2012 by the World Bank.
‘Advisers’ said: Make the system cheaper! Give one-year credit maximum! Simply rent out the system, people will only pay 5€/month!
But Mobisol realized: if people really want something, they find ways to pay for it — also in small Tanzanian villages.
In the meantime, the Mobisol design thinkers quickly realized that energy needs in rural Tanzania were about more than just light. They are mainly about radio (information), TV (status) and cell phone charging (communication). The Mobisol crew further discovered that cell phone and MPESA use was everywhere, as was PV solar, but due to a lack of maintenance infrastructure only with very poor quality. Nevertheless, energy spendings already averaged roughly 15€/month and home. The startup further realized that cost was not the limiting factor in this emerging market. For example, many people they visited owned expensive phones. Mobisol concluded that whenever and wherever people really want something, they will try to find ways to pay for it—also in small Tanzanian villages. In these areas people often had three to four different sources of income. They relied on these funds, in particular when they really wanted to buy something extra.
Identifying Constraints and Design Principles
Back in Germany in June 2011, the Mobisol crew extracted four key design principles from their field research on which they based their subsequent product development. The table below summarizes some of the design team’s major learning cycles.
|1||What people really need is radio and TV, not light.||The demand for electricity is way higher than just for lighting.||Solar panels must be big enough to power larger appliances, such as televisions.|
|2||There exists no infrastructure to save up money (no banking infrastructure, houses can’t be locked).||Money has to be spent the moment it is earned.||Monthly payment options are a core requirement.|
|3||Belongings are well-kept and respected.||Private property is better maintained than rentals are.||Renting may win games, ownership wins championships. To ensure long-term electrification, people need to have the feeling they actually own their solar panels.|
|4||Existing PV are solar are often non-functioning.||If a supportive infrastructure isn’t provided, people can’t maintain their solar panels.||A maintenance infrastructure on-site is key to success.|
Having engaged intensely with customers, Mobisol knew it was imperative to build a system that was large enough to power televisions and radios, in addition to providing lighting and cell phone charging. The cheapest system for these functions cost €500. In addition to not following the mainstream assumption that solar is mainly needed to power lighting, Mobisol rejected the prevailing reasoning that credits may only be given for a maximum of one year. Furthermore, Mobisol refuted the argument that rental solutions are the most profitable ones. Despite counter advice and laughter from their competitors, Mobisol thus gave their customers a three-year credit with a rate of 15€/month and introduced the concept of ‘rent-to-own’. All of Mobisol’s competitors offered rental solutions back then. Today all of them offer rent-to-own solutions, too.
Discovering the Critical Details of the Business Model
The rent-to-own concept is at the heart of Mobisol’s simple but effective payment philosophy: Ensure that customers have good reason to pay back their entire credit. Sounds too simple too be true, so how does Mobisol make sure customers really pay their monthly fees?
Feeling of Ownership
|Customers don’t rent the system, but pay 36 monthly fees to OWN the system at the end. The feeling of ownership makes the product more precious to customers and attaches them emotionally to ‘their’ solar panel.|
Smart Payment Enforcement
|The Mobisol solar panel can be switched on and off via the internet [GPRS/GSM]. In case the customer neglects to pay, the solar panel is deactivated via a text message until the payment is made.|
Good maintenance infrastructure
|During their field work Mobisol realized that systems were often in bad shape and if panels didn’t work properly, customers would obviously discontinue paying back their credit.|
In 2012 (A) and (B) were already in place, only (C) —a good maintenance infrastructure— was still missing. Therefore the young startup had to embark on its next design thinking challenge: How to create a self-sustaining, reliable maintenance infrastructure?
Business Challenge #1: How to Create a Self-Sustaining, Reliable Maintenance Infrastructure?
The starting point of maintenance is the system’s installation on the roof of the house. Mobisol experimented with an easy-to-use plug-and-play system that customers could simply install themselves. The team went again to Tanzania, gave the plug-and-play system to customers, watched them install it, iterated the system based on this user testing, and eventually developed a easy-to-understand comic installation manual along with a plug-and-play system.
However, the design team also realized: “Our customers feel like they just bought a Mercedes. They are very proud of having the solar panel but at the same time also very afraid of breaking the precious, new panel. Customers would actually rather pay someone to come install the panel and know their new “Mercedes”— aka solar panel— is safe.”
Mobisol decided to adopt the already developed and tested plug-and-play system to this customer insight. Klara Lindner recalls: “It’s actually super easy to install the system. Our customers just don’t want to do it themselves as they don’t want to be responsible if something goes wrong.” So how about training people from the village, who already have a reputation for being able to repair things (e.g. cell phone repairmen or craftsmen) to safely install the solar panels? This idea lit up like fireworks.
Chosen people receive two weeks training and then install panels as certified Mobisol freelancers, who receive money for each system they install. Today there are 200 freelancers (with the number growing) installing Mobisol solar panels. Mobisol’s vision to foster social and economic prosperity in the region – besides electrification – starts to take shape.
Mobisol also benefits from this model directly, as over the course of time customer care has become Mobisol’s most valuable asset. In addition to exceptional maintenance service infrastructure, there is a free Mobisol hotline where Mobisol employees immediately help customers with any technological problem.
Business Challenge #2: How to Rethink Last Mile Distribution?
The final challenge Mobisol encountered during their field research and testings and before the business could really take off, was the last mile distribution. In rural areas, where postal services (such as DHL) are non-existent and where infrastructure is chaotic, without any maps, street names or street numbers, with streets sometimes barely wide enough to let a motorcycle pass and sometimes only reachable by boat, it’s basically impossible to actually deliver goods to a customer’s house.
Again, Mobisol’s key design insight to circumvent the problem of last-mile-delivery arose from field observation. Mobisol used a technique called ‘analogue observation’: They visited places (informal markets) where last mile distribution already works smoothly and efficiently. This led to the realization that they were not the right one to handle last mile distribution. Why? Because only customers know the most cost-efficient ways to their homes!
When building a house, people pick up the material needed at markets and transport it themselves the last few kilometers to their homes. In an analogy, Mobisol sells their products at informal marketplaces and customers take the components to their homes where they meet the service technician who then assembles and installs it. Problem solved!
Really…? Even though this approach of last mile delivery works perfectly well for Mobisol’s offering in the current context, the team couldn’t stop thinking about this problem space: What about medicines, smaller deliveries and similar urgent parcels? Can’t there be a more efficient way of handling last mile deliveries?
New Business Opportunities are Looming
Having realized how big the general problem of last mile delivery is in these rural communities, Mobisol asked itself: What if we did it again and combined smart technology with deep customer knowledge and a sustainable business model?
This inquisitiveness is exactly the reason for their latest business expansion. Mobisol’s newest pilot project is a drone delivery service. The vision is, ‘to become the Amazon or Alibaba for remote, rural communities in sub-Saharan Africa.’ Through-the-air delivery by drones is already possible but mainly hindered by the short distances drones can fly.
Mobisol’s newest pilot is a drone delivery service. The vision is ‘to become the Alibaba for remote, rural communities in sub-Saharan Africa’.
But what if there was already a distributed system of solar charging stations in place? These could be owned my Mobisol’s loyal customers who also had the opportunity to earn additional income by allowing the drones to recharge via their solar panels. Wouldn’t that be a win-win situation? One that might even increase the sale of solar systems? And wouldn’t those with additional income be able to afford more Mobisol panels?
The field experiment is ongoing. Only the future will show whether a solar-powered drone delivery can be another viable element of a future Mobisol business system. What is certain as of now is that serendipity favors the prepared. If Mobisol hadn’t engaged in deeply empathic user research and continuous experimentation it would not have been able to discover new business opportunities like these. And speaking of business, below is a short summary of Mobisol achievements with its rapidly growing solar core business up to now. Welcome to the world of business opportunities based on customer needs; welcome to the world of design thinking.
Mobisol’s impact to date
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