On May 20, join me at HBR's annual leadership summit with master classes, interviews with the CEOs of AT&T and Mattel and an interactive case discussion led by Harvard Business School Professor Kareem Lakhani. This all virtual day will give you practical frameworks to lead with purpose and strengthen culture across your organization. To learn more go to hbr.org/leadershipsummit, see you there. Welcome to Cold Call, the podcast where we dive deep into the groundbreaking ideas behind Harvard Business School case studies. Access to safe sanitation is something many of us take for granted. We flush, we wash our hands, and we move on. But for more than three billion people around the world, that basic routine is anything but routine. The consequences extend far beyond inconvenience and to public health, gender, equity, urban infrastructure, environmental sustainability, and economic development. Today's case explores what happens when engineers attempt to reinvent one of the most entrenched pieces of infrastructure in modern society, the toilet. Not just to improve it incrementally, but to fundamentally redesign it so it works off grid, treats waste on site, uses minimal water, and can operate in places where sewer systems don't exist. But solving the technical problem is just the beginning. This is really a case about the delicate balance between social impact and financial viability. Today on Cold Call, we're joined by Professor Maria Roach and Dr. Shannon Yee to discuss toilets for the underserved, the Sirc commercialization challenge. I'm your host Brian Kenny and you're listening to Cold Call on the HBR Podcast Network. Maria Roach is a repeat guest here on Cold Call. Welcome back, Maria. Thank you for having me. So excited to be here again. It's great to have you and Shannon Yee is the protagonist in today's episode and joining us from George Attack. Welcome Shannon. Thank you. It's great to be here. Obviously everybody uses toilets. So I think this will be a pretty, a lot of people probably think they know what we're going to talk about, but they really don't. So this is a super interesting case. I found it really fascinating and I think people will enjoy learning about the things that you're doing Shannon and the impact that that's having in the world. And from a business perspective, it's complicated. It gets really complicated really fast. So Maria, thanks for writing a case and for being here to talk about it with us. And I think I'll just start with you if we just dive in. I'm curious as to why you found this a compelling topic for a case. These are the cases that I love best where you scratch your head and go, huh, how is that on HBS business case? And also wondering what your cold call is when you start the discussion. Of course. So before I dive in to the cold call and everything, I did want to give a special shout out to my co-authors on the case. Sure. Anne Marie and Alex, because over the last four years, they have, you know, maybe pestering isn't the right word, but close to it, have been pestering me about this case. And have been saying, this is so amazing. We need to write a case about it, but they both talked to me individually about it. So it was really interesting. And then after waiting and waiting, I was like, okay, now is the time to write this case because I launched a new course called Innovating at Scale. And I finally found a home for the case. And so then we're like, okay, it's go time. Let's write this case. And I have to say it was the fastest one I've ever written. It took us a month. Of course Shannon also works at super speed. This whole different kind of level of how Shannon works. So we got it done in a month and launched it in the fall in our new course. And the cold call question is, is certs failure to scale primarily a technology problem? And the reason I asked this question is because it really nicely splits the room because half the class usually gravitates towards yes, you know, manufacturing costs. We don't know if it's a proven technology yet. But then the other half realizes, which is really where I'm trying to go with the case, is that a lot of it has to do with adoption. And these barriers to adoptions and issues that new technologies often face, where they tend to get over engineered almost and then no one actually needs them. And this builds really nicely also on frameworks used by NASA and the Department of Energy, where they think about adoption readiness levels and technology readiness levels. So people listening right now. First of all, if you could maybe explain what cert stands for, but also just highlight the sort of central theme of the case, because we've talked about toilets, but we haven't given much more information than that. Absolutely. Cert stands for single user-reamented toilet. And this toilet and Shannon will talk to us all about the technology behind it. We expect them to. Yep. Essentially a self-contained toilet that doesn't really need access to sewer systems. Think about it in a place where you're using septic tanks or you don't have access to a sewer system. You can use this toilet and you don't need water. You don't need anywhere to put the things that come out. Yep. And so this is the beauty of this technology and this toilet. And until you understand more, you probably think that sounds really gross listeners. I don't blame you. But you're going to be amazed at the way that this has been engineered. So Shannon, let me turn to you and thanks again for joining us today. The case opens up with a quote. And I just want to read it quickly, the technology was hard, but the business is going to be even harder. And I believe that quote's attributed to you. And I'm wondering if you can maybe tell our listeners why you found the commercial aspects of this to be even more daunting than the engineering challenges. Oh, most certainly. Yep. The engineering challenges were hard. But when I look to how this is going to take off, the business case, you have to figure out so many things about the market, about regulation, about how you can structure and sell a product at the price that people are willing to pay. When you look at toilets, you think of them as kind of a commodity. You could just buy them that low cost from your local hardware store. You don't think about the embedded infrastructure behind the toilet. Everything that takes waste from your house to a centralized sewage treatment plant. And that has large business implications. It touches on the fabric of society with how are struggles and city hall and everything like that. I think the business side is going to be way more difficult than what it took to just invent a toilet that could treat waste onsite. Yeah. And we're dealing in many cases around the world where there are existing sewage systems. They are antiquated. And we're seeing that surface in the news all the time. This could be a very, very timely development. Exactly. I think in the developed world we're lucky. We still have a little bit more time and we're financially well off. But half the world doesn't have that same privilege. We really need to reinvent or reinvent the technology so it can become accessible to half the world. So the tagline we use is half the world needs a toilet. The other half needs a better one. So we have some work ahead of us. And if you think about it, like the appliances in your house, your dishwasher, your washing machine, they clean things. We might as well have an appliance in the bathroom that cleans your waste. Makes perfect sense. Real let me come back to you. There's a lot of pieces in this case, a lot of sort of moving parts. One of the biggest ones was the Gates Foundation, which was a big supporter of the project. And I'm wondering how you can talk about the complications when you're engaging with an organization like the Gates Foundation. They've got requirements. They want to make sure that their investments are being used wisely. How does that affect the way Shannon and his team have to think about the commercialization aspect of this? So on the one hand, the Gates Foundation made this possible. They provided the funds. They made the invention possible. So without it, probably it would have been really difficult to get this whole technology off the ground. However, they also implemented some constraints around what kind of technology commercialization past the team could take. And one of the things is exclusive licensing and having to deploy the technology in lower income developing countries. And this is tough because especially when you're dealing with technologies that are what I would call tough technologies or deep technologies that take a lot of money to create in the first place and then have these huge adoption hurdles as well. You need a lot of scale. You need to build these multiple times so that you can get the price down to the price point that someone in them who maybe not have $400 lying around for a toilet is able to purchase this technology. And so this kind of makes it difficult to go the optimal commercialization route because of these constraints. Again, without the Gates Foundation, we don't know if they would have had enough cash to even invent the toilet. But with them, these constraints kind of made it difficult to have the adoption down the line. Yeah, so it's a little bit of a cart and horse thing too, right? You need the big numbers to get the adoption, but in order to get the big numbers, you need the market there. You need the addressable market. So in a way, a nice analogy of what happened is in a way, the constraints or the requirements that the Gates Foundation had is like making a drug generic from day one. You're not giving inventors the incentives to actually push the technology forward. It's like, right, with drugs. If you don't have IP, you don't have monopoly, right? It's going to be really hard to make any money out of it. And if you don't have those incentives, you will have these lost technologies. Yeah. We talk a lot about the case rather talks a lot about the adoption challenges, Shannon. I wonder if you could maybe describe for our listeners, how is the cert different from the traditional toilet that people are accustomed to using? Your traditional toilet doesn't really treat waste at all. You just kind of flush it and forget it. Your traditional toilet is reliant on a centralized treatment system that does all the magic, right? It treats the waste. It turns it into clean water. You know, this reinvented toilet. We have to take all of that infrastructure, the miles and miles of pipes, the large biological digesters. And we have to figure out how to completely do it in a new way that can fit in your bathroom. So what we do is we rely on thermal chemical and other thermal processes.
to be able to do it all in your bathroom without relying on large biological treatment systems. How did you land on this as a problem you wanted to solve? Oh, great question. So after completing tenure, we're always told we can go after some of those really challenging problems. And I said, great, I'm going to go after working on toilets. And I can say my colleagues looked at me in skepticism and said, I'm throwing away my academic career. What if we just kind of, yeah, that's right. Exactly. So I just kind of embraced it and said, let's go with this. If we got one life to live, I only got a few opportunities to make a difference in this world. Let's jump on into it. So, yeah, that was kind of my rationale for getting into the program. Yeah. Marie, I want to come back to you because the case highlights some of the enormous spill overs that we talk about, no pun intended, but certainly, you know, public health, water savings, worker safety. You know, why are those things difficult to capture in a traditional pricing model? These are all great benefits. But it's hard to articulate that in the pricing model. Yeah. So the big issue here with spill overs is that the benefits accrue to those beyond the buyer. Right. So the person buying the toilet doesn't even see all the benefits this has for disease prevention, general public health, et cetera. And so it's really hard to say how much that's even worth. Right. So the public value, the social value is much higher than the private value. And the other thing is it's hard for people to see, well, now I have this toilet. You don't know what you're actually preventing either, right? So it's a bit tricky to see the outcomes or the benefits of this new technology right away. Yeah. Especially if you're thinking about who's buying the toilets versus who's usually hit by these diseases, the hundreds of thousands of babies that die of diarrhea every year. They're not making these purchasing choices. And so that makes it really, really tricky to price that in. How did you make the argument, Shannon, when you were trying to get people to buy into this vision of yours? What was the case that you made for it? A lot of the time we were recruiting engineers. So those engineer scientists and designers, how do you get them excited about it? Like how do you get people excited about this? Yeah. It's pointing to a big problem, right? And it's showing similarities for that big problem on other engineering challenges. You know, I think I'm lucky in the sense that you find that personality type that just wants to dig into a technical challenge. And we were able to craft it as a technical challenge for individuals there. A lot of it is just motivating people and showing a path that they can contribute to. You know, one of the things that you pointed out earlier was that the engineering piece was a big challenge. And I'm wondering if there were points throughout the process where you thought to yourself, you know, this isn't going to work. We made a mistake here. And then maybe was there a moment where the light came on and you said, wait a second, this actually, this will work. There were numerous moments where I was like, I don't know if there's a solution here, right? I really kicked off the project with a series of workshops where we were de-risking different concepts through those workshops, making a prioritized list and down selecting. It was after the fourth workshop that we had a plan to actually say, hey, we may be able to put together a technology that works like this that kicked off an 18 month development effort. And then after those 18 months, we had something that actually worked, right? So it just required going through the standard engineering practice and getting there. And then I think after we had that technology that actually worked, you know, Bill Gates wrote an article and Gates notes titled, I need to take a yee, like I need to take a pee, right? And so for me, that was the moment where I'm like, yep, the technology is solved. Now we have to figure out the testing, demonstration, and commercialization aspect, which took us the next three years, right? I'm just really showing people that the technology does work and getting people inspired to take on that manufacturing and commercialization challenge. So that actually took longer than the development of the product itself? Most certainly. Yes. Marie, I'm sure a lot of the people that are listening, we have a lot of business listeners, obviously. This is a management podcast. They're probably thinking, you know, the market for these toilets is huge, but they've got to go to places that are really hard to build, you know, a clientele. What would you say to somebody who's thinking about how do you prioritize whether or not to go into markets like this? Why should they take the chance? What I would say is think about timing too and when you go to that market. So you can go to the market at some point, but maybe not as the first market. In class, when we teach this case, the one learning we get out at the end of the discussion is that what may be the better approach is actually partnering with high income customers, such as our friends in Mali Buu, who may have a lot of money, but have septic tanks, and need to toilet that self-contained. Or with the government, especially the military, that is a customer that needs a lot of quantity of this toilet. So you can produce this over and over again and move down the learning curve so that you can get the cost down to this spot that will make it possible to even go into these lower income regions and geographies. Because we know that certainly a highly educated population has a strong interest in sustainability and climate change and all the things that go along with that. That's an addressable market for this. One of the interesting aspects in the case was the potential military partnerships. Certainly less price sensitive, clearly defined needs, but a very, very different use case. Shannon, I'm wondering how you think about balancing the near term revenue opportunities as you were rolling this out with the long term social impact because it feels like you got into this with the idea of social impact being a really important part. Yeah, most certainly. So social impact, I think, was the primary motivator when we were looking at what could we do to hand this off? We did consider military applications. Since then, there have been a number of calls for improved latrines for different military options. None of them have really panned out, but it's something we really looked into and said, "Okay, maybe there's a good partnership there, but nothing really came of it." Yeah, it seems like a no-brainer, but I guess sometimes these things that look like they're going to be super promising just don't pan out. I would imagine we've done call call episodes before about selling into the Department of Defense, which is big as a small country. So it's a very difficult prospect of doing that. You also considered launching independently in a South African township, and I'm wondering, if you think about that, what were the advantages of being embedded in a community first and starting there and learning from that? We were considering both South Africa and India as target launch areas. The big thing is you could really rely on local manufacturing. So the concept was, could companies come together or form a consortia where we would license the technology from the university, and those companies could work with each other and be-to-be relationships in order to create a thriving ecosystem? Unfortunately, that didn't pan out either, but the route that did work was licensing to large global manufacturers and then inspiring them to take it forward and start transforming their own industry. Yeah. Maria, as you think about that from a strategy standpoint, what are some of the trade-offs of partnering with a single large manufacturer that way? Partnering with a single large manufacturer can have huge advantages, but going back to what I mentioned earlier, the constraints that the Gates Foundation imposed are going to make it really tricky. Even that the licensing deals that they could get are non-exclusive, this means that competitors could also license the technology at the same time, which really, really reduces the incentives of anyone to invest into creating the infrastructure for this technology. Because for one, there's no IP mode, so you can't really protect yourself. The other thing is there's still the demand uncertainty, so this goes beyond the competition that these large manufacturers will inherit when they start working on this. So it's not like it resolves much of the problem. The other thing these large manufacturers, if they do licensing, decides the competitive aspect, is that many of these companies think about Bosch or Whirlpool. This isn't the kind of product they usually bring to market, so there's a kind of a mismatch there. That will also risk mission drift from the perspective of what Shannon's trying to achieve, but also what these large manufacturers tend to try to do. There's not really a match there as well, so that can get tricky. Does that ring true to you Shannon? Did you encounter any of that tension as you were talking with manufacturers? Yes, that very much rings true. That's exactly the struggle that we had. Fortunately, about the same time, all in 2024, we had three groups that came forward and they decided to license, so it did kind of strike that competition mode a little bit. I think some of that is still existing, but when I look at the world and three, three, and a half billion people, that's a pretty large market, so even if you get a portion of that, that's a good place to begin. What Maria also mentioned is it kind of talks to a company's mission drift. The company has to be really well aligned. It has to go all the way up to the CEO and the C-suite executives for it to be really close to their hearts for it to actually work. I think we actually have that with our first licensee, which was a lixel. The CEO I know has been talking about it whenever he addresses the entire company, so it's very much aligned with what the mission for this company is, so I think that's why they were the first to step up in license. They see it maybe as a brand enhancer. It's sort of a purpose-driven way of thinking about business, which is a way to get maybe their employees and their customers excited. Exactly. Maria, the case does draw the analogy to people adopting refrigeration, which obviously happened a long time, even before me. I'm wondering if you can talk about the analogy here and how alike or different this is than adopting refrigeration technology. Absolutely. I'll start with how they're alike. What's nice here is that the fridge and the storage.
have a aimed price that is similar, which shows us that it's possible to have also in these low-income countries that they will be able to purchase an item like this. So they were able to buy a fridge, it should be feasible to also purchase a toilet. So that's where they're similar, right? And they've also gone down learning curves, it started up with really high manufacturing costs. And in the case we also talk about how the fridge is managed to get the cost down through learning. Where they're different though, and this goes back to what I mentioned earlier, is that how do you perceive the benefit? So a fridge, you see that it keeps your food cold, your drinks cold, it's right there. A toilet, okay, maybe it's a nicer experience to go to the bathroom, but other than that, do you see the benefits? No, not really, and so it's really hard to kind of convince people to change their habits of how they go to the bathroom. That does actually make the difference if you don't see the instant benefit of it. Yeah, yeah. So Shannon, what do they have to do differently? Does the technology require you to do things differently? Not to get too up close and personal, but I'm just wondering what's the experience like for the user? We said at the onset is one of our engineering requirements that we cannot expect behavioral change. So the user needs to use the toilet the exact same way that they would use the toilet, right? I think we have them push a button to flush it instead of pulling a lever, but essentially nothing else needs to change for the user's operation. However, it's a technology and technologies require maintenance. You're going to have to change some filters from time to time. That could be done not necessarily by the homeowner or the individual user. That could be done by a service company. You could also imagine situations where people may get curious and want to be able to change it themselves. So there has to be that kind of interaction with the technology. We set off with the engineer requirement that the users wouldn't change their behavior. But I will add that for some places, this toilet is a completely new device, right? If you're going into countries or places where it's usually an outhouse, there's no flush toilet or the other option of just going in the field. This is a big behavioral change, which is the places where the Gates Foundation was trying to go first. Okay. Is there an educational effort that goes along with that? Do they send people to help you learn how to use the technology? I think there would have to be. I remember hearing about certain other projects where they were looking at trying to address open defecation and they would provide people with the toilet, an outhouse, a ventilated pitlatory. There were times where people didn't know what to do. We have to even instruct small children on how to use the toilet the first few times. There is definitely going to have to be an educational component, but I think it's also very culturally based. The other complicating factor here, Maria, is municipalities. Municipalities run on infrastructure that's centralized. It gets really complicated for them and probably financially a concern for them if all of a sudden people have these self-cleaning toilets that don't need to be tied into the system. How do you think about that? This is where it gets really tricky, right? Because on the one hand, we talked about this before that the private benefit is probably lower than the social benefit. So who should step in is usually the government or the municipalities. But they have very different motivations because how do they make money? They typically make money from water supply, sanitation, sewage systems. So you are essentially competing with the actor that's supposed to support you in implementing this. So it gets really, really tricky. And there's a lot of money on the line, right? It becomes political really quickly because a lot of jobs actually are created around sanitation. Maybe they're substituted with new ones that could happen. And upgrading these sewer systems also costs a lot of money. They can cost up to, I think Boston, the numbers are about 100 billion just to upgrade the sewage system. Again, that creates a lot of jobs. That's a lot of money going through a city. And if you suddenly don't have that anymore, that's a problem. That makes you really, really tricky. Shannon, have you engaged in any conversations with any municipalities about this? I'm just wondering how those unfold? Yes. What Maria described is exactly true. The nice thing is this isn't going to happen all of a sudden. If anything, it'll be a gradual process. Many municipalities are facing constraints where the city itself wants and needs to grow, but they're constrained by their current sanitation systems. So this provides an opportunity for some of those municipalities that they can adopt something that doesn't require them to put in the infrastructure, but it does have all of these knock on effects as Maria mentioned. It's one of those that I think you could see a gradual transition. In the case for Boston, a hundred billion dollars, right? That's a lot. Many cities can't afford that. That's right. I know New York City, for example, right? I think it's a hundred and ten billion dollars for New York City. And there's only a million toilets in Lower Manhattan. So that comes out at a cost of about $10,000 a toilet. And if it only costs about $3,000 for us to build one of these reinvented toilets, it's cost-competited, even in that market. So it's something to think about going, huh, maybe there are other solutions where, you know, when sanitation infrastructure fails, which it will pipes do rust, that there's new technology that people could adopt. So business models are going to have to adapt city municipalities are going to have to adapt. And I'm just excited to see how that case unfolds. Yeah. We're getting close to the end of our time. And I've really enjoyed this conversation. I've only got a couple of questions left for one for each of you actually. And actually that's a great segue Shannon into what I wanted to talk about with you, which is many, many years ago, I worked at a consulting firm. And one of the practices that they had was power generation. And they talked about, you know, the future being distributed power. We're going to do distributed power generation. We're going to set up these small power compounds everywhere. And there'll be one on your block and it will power your grid. And that was going back probably 20 years. And that still hasn't unfolded. One of the things that you've talked about in the case is this idea of distributed sanitation. And, you know, is that something that you can see coming into shape in a decade or so. And what would that look like? And what needs to happen for it to materialize? In the next decade, probably not. But within the next 20, 30 years, yeah, I could see that actually being a likelihood things I could say are not the same in every part of the world. There are places, for example, Pakistan that has really adopted a lot of solar and distributed electricity generation. I think you could see that in other countries as well, maybe not so much in the countries that have a really established centralized system that will take a longer, decadal transition if necessary to go through that. But I think there are places in the world that could adopt and leapfrog to a distributed sanitation system versus the high cost centralized systems. And as you just pointed out, the infrastructure is not going to last forever. And we're already seeing evidence of that, you know, popping up in cities across the United States. So maybe that'll force the issue a little bit. That's right. Yeah, a B case in 10 years. Maybe even sooner. Maybe even sooner. So Maria, let me turn to you. I'll give you the last word here. I actually saw this as a really hopeful case and actually talking to Shannon only gets me more excited about the possibilities of it because you can hear his enthusiasm. But I'm also wondering, you know, what the case sort of teaches us ultimately about the challenge of introducing breakthrough technologies to underserved populations, which is where they're needed most. And how our listeners should think about leading change at this intersection between innovation and impact, which we know is going to be really important to solving a lot of these problems. Absolutely. I see this case as having really four core lessons. One is what I talked about at the beginning as well and Shannon kind of pushed on his invention only goes so far. And innovation is only really innovation with adoption of these inventions. And so often folks focus on having these ideas and coming up with these technologies without actually thinking about how to get this to where it's needed. So that's the one thing. Yeah. The second one is who you partner with fundamentally drives what you can actually achieve and how you can achieve it. Philanthropy in this case with the Gates Foundation is an amazing partner, but you need to know what kind of trade offs you will be facing when you pick that partner. The third one is that tough technology often requires a bit of a reversal of logic that we typically think about when we have new technologies and innovations where we think make a great product that people will come. In this case, it's more like you need to find the customer first and then make that product so that you can finally get to where you want to get at some point. So it's kind of reversing the logic. And then the final point is that in these situations in this context, innovation and bringing these inventions to the market is as much orchestration of the market, then actually the technology part. But you have to figure out the ecosystem. It's managing all these different stakeholders and municipalities, the users, the governments. It takes so much more than just the technology to get this off the ground. Yeah. As we often hear here at Harvard Business School, it's all about the people at the end of the day, the technology can't do it alone. Shannon Maria, thank you for joining me on Cold Call. Thanks for having us. Thank you very much. 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