It’s pretty clear that the mobile device is no longer just a talking device for personal use, designed for urban users – but it’s instead a computing device, an economic device, an opportunity gateway.. that has the power to transform lives through inclusion.
I studied four examples specifically to cull out some learning on how 'opportunity models' have been crafted using mobility as the route:
1. Space Data Corp - Wireless Network Coverage
Jerry Knoblach wanted to bring wireless service to millions of rural Americans. His plan: Beam it down from balloons hovering at the edge of space. His company, Space Data Corp., already launches 10 balloons a day across the Southern U.S., providing specialized telecom services to truckers and oil companies. The balloons soar 20 miles into the stratosphere, each carrying a shoebox-size payload of electronics that acts like a mini cell phone "tower" covering thousands of square miles below. To make this effective, an operational and economical model has been put into place that pays farmers to release hot air balloons with transmitters every 24 hours.
2. M-Pesa (Vodafone – Safaricom)
In a country like Kenya, where there are less than 2 million bank accounts serving a population of 32 million, the lack of an efficient, affordable banking infrastructure is a contributing factor in the persistence of poverty. Prohibitively high cost of banking and the fact that a majority of Kenyans earn less than $1 a day added to the problem and left a big gap in the development potential.
Vodafone came up with a single but powerful approach to tackle poverty in the developing countries where they operated, based on the insight that access to finance facilitates entrepreneurial activity. And thus was born M-Pesa.
Essentially account holders can have virtual accounts at Safaricom and operate it using SMS – thus transacting business between individuals and individual to businesses, without really needing a 'traditional' bank account.
3. Cell Bazaar
A rudimentary e-bay like service that leverages the simple, widespread power of SMS to bring the market to the phone. By sending simple text messages to 3838, users post items for sale, look for items to buy, and obtain current market prices of products or services.
This is essentially a craigslist over mobile phones! Any Grameenphone user can dial 3838 and listen to the latest items on the market in Bengali. After dialing 3838, users choose from 8 categories: Jobs, Mobile Phones, Agriculture, Motorcycle, Car, Electronics, Computers, and To-Let. Every few hours, users will hear new information through this service.
Although 75% of Bangladesh’s population has no access to electricity and Internet penetration is only 0.03%, Cell Bazaar has more than one million users.
4. Voxiva - Alerta
A health and disease surveillance system that enables health workers to use existing modes of communication, without any Internet access. This system challenges old paradigms related to monitoring diseases in remote rural contexts by enabling:
• Real-time collection of critical information from a distributed network of people;
• Rapid analysis of data to drive decision-making and allocation of resources;
• Communication back to the field to coordinate response.
Effectively transforming the village pay phone into a communications device on par with that of a computer – and putting the power of technology and communication within easy access for remote rural users.
These four diverse examples from very different corners of the world had insightful patterns:
1. The economics of phone usage currently assumes that the consumer of services pays for it. Instead we see here that service providers need to view the consumers as the producers. Producers of real time data, knowledge, information and insights that can be exchanged for services. The business model is not based on usage – but on contribution. Cell Bazaar applies the principle of user-generated content becoming the currency for mobile usage.
2. Access to mobile solutions is largely based on network coverage, which involves high investments and slow movements into remote areas. Space Data Corp experiments demonstrate that Network coverage can potentially break free from the assumptions of location, physical infrastructure and huge investments – to a method where it can reach everyone. With an effective economic model that pays for itself.
3. Paradoxically high-tech solutions need not mean more devices, or more complex applications for users. Alerta combines existing modes of communication inside villages and overlays it with a robust application to capture and interpret voice inputs from all kinds of devices…the backend of this solution is fairly sophisticated. But for the user it just involves talking into a phone. A simple act that now has the power to save lives, control disease and enable prosperity.
4. Urban users have followed a sequence in reaching today’s advanced technology state. From simple phones and computers to high tech converged gadgets using cloud computing. There is no reason that rural users need to follow this sequence. Business model innovations that compel users to adapt to voice or video or any other complex technology have demonstrated this already.
Its very interesting to note that Prosperity (and inclusive growth) is a combination of economics, opportunity and accessibility. Examples like M-Pesa, Cell Bazaar and Alerta have created opportunity models and powered them with mobile technology – thus driving prosperity in developing economies.
When Samsung says 'Next is What?' - its time to look away from the product paradigm and dig deeper into user lives and regional contexts. Nokia's Life Tools has some interesting initial experiments in that direction for rural users...
Thursday, June 11, 2009
Sunday, February 1, 2009
Innovation...for Inclusive Growth.
The economy of India, measured in US exchange terms is the twelfth largest in the world, with a GDP of around $ 1 Trillion . It recorded a GDP growth rate of 9.1% for the fiscal year 2007-2008 which makes its growth the second fastest among emerging economies in the world, after China.
However in parallel, the Planning commission of India estimates that 27.5% of the total population of India lives below the poverty line. This is measured based on per ca pita consumption expenditure of a household below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. That is below $1.25 per person.
In addition, a 2007 report by the state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) found that 65% of Indians, or approximately 750 million people, lived on less than 20 rupees per day (equivalent parity with $2 per day) with most working in the "informal labor sector with no job or social security. Of this population approximately 80% live in the rural or semi urban context.
What this means in simple terms is that approximately 750 millions Indians are outside the purview of what is classically perceived as the ‘traditional market’ for most goods and services. This ‘under served’ market has the attention of the world ever since Bottom of the Pyramid was written.
This market is expected to behave and function in a different manner than traditional. And so Sales & Marketing teams often try to penetrate this market with modified urban strategies, fail in their efforts to create any impact - and then respond with the sentiment that the fortune at the bottom of the pyramid is a myth and that ‘this market is not yet ready for our products – it needs to mature’.
Increasingly I find organizations reaching this conclusion after some attempts - and subsequently stopping initiatives in really penetrating these under served markets. Instead the Chairman or CEO converts it into a CSR initiative. Inclusion then suddenly gets limited to a 'feel good' factor under Corporate Social responsibility.
CSR works on the limited paradigm of Philanthropy - rather than sustained impact.And so while there are several CSR initiatives, the sum total of all such initiatives creates very little impact.
Notwithstanding these dilutions, the sheer size (750 million people) of these under served markets commands a perspective. And while these complex ecosystems need maturing, it is clear that the sequence for impact will need to be:
Step1, create a fortune for the bottom of the pyramid - through economic and social opportunity creation and inclusion
And then step 2, capture a portion of the new value created in an equitable manner. This will form the fortune at the bottom of the pyramid.
The success of the Micro finance model is a testimony to this sequence. In a recent visit to an MFI center near Hyderabad I met a group of women who have benefited from these small loans. A stone cutter who could often not even feed her children a few years ago is today running her own micro-enterprise, providing employment to 10 others. She is perfectly happy paying the high interest charged - is driving the MFI to give her larger loans - so that she can grow faster. Her aspiration today is for gold jewelery, a pension scheme for future investment and durables. Service providers in these areas will today find this woman a 'mature' consumer who is ready to consume!!
But if we go deeper into the process, the steps clearly include first creating new value by delivering the most relevant service (organized micro finance) and then capturing resulting value (higher interest rates + new opportunities for other servivces) - in a manner that it benefits everyone involved.
This in many ways, I believe, is the basis for a truly impactful 'inclusive growth' story.
Such an approach presumes a few critical innovation sensitive areas:
1. Focus on crafting unique win-win business models - not just having an idea to 'help' a community. Crafting business models needs 'business thinking' profit/ loss/ income/ expenditure. These terms are often anathema to social organizations. That's a mindset that needs change.
2. Crafting unique 'Engagement Models' - of how entities will interact with each other in socially acceptable ways. A business model that makes a land owning farmer sell FMCG products to his village will probably not work. Because the farmer considers 'selling soaps and shampoo' below his social dignity. Therefore insights are needed about the relevant social norms, such that unique engagement models can be crafted.
3. Collaboration amongst entities in the ecosystem - its not sustainable (or feasible) for a single entity to create new value models, deliver that value and also find ways to capture it. Therefore you may need an MFI to create new value, a rural distribution network to add depth and capture some value, a telecom network to deliver and capture some value, a school/ hospital to enhance capacity to create value in the long term. So here a key question is how can such entities identify each other and co-create new models and work together to create and capture value?
4. Deploy technology to consolidate information, learning and data capture across collaborating entities. This is probably the most critical element. If everything else works, but there is no technology to consolidate learning, analyse data and make relevant decisions - there is no way to scale an inclusive growth model. Mobile networks, computers, satellite scans, GPRS etc are now reaching deep parts of India. How do we build solutions that connect all these into central frameworks where data can be consolidated?
Do such examples exist? What can we learn from them?
However in parallel, the Planning commission of India estimates that 27.5% of the total population of India lives below the poverty line. This is measured based on per ca pita consumption expenditure of a household below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. That is below $1.25 per person.
In addition, a 2007 report by the state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) found that 65% of Indians, or approximately 750 million people, lived on less than 20 rupees per day (equivalent parity with $2 per day) with most working in the "informal labor sector with no job or social security. Of this population approximately 80% live in the rural or semi urban context.
What this means in simple terms is that approximately 750 millions Indians are outside the purview of what is classically perceived as the ‘traditional market’ for most goods and services. This ‘under served’ market has the attention of the world ever since Bottom of the Pyramid was written.
This market is expected to behave and function in a different manner than traditional. And so Sales & Marketing teams often try to penetrate this market with modified urban strategies, fail in their efforts to create any impact - and then respond with the sentiment that the fortune at the bottom of the pyramid is a myth and that ‘this market is not yet ready for our products – it needs to mature’.
Increasingly I find organizations reaching this conclusion after some attempts - and subsequently stopping initiatives in really penetrating these under served markets. Instead the Chairman or CEO converts it into a CSR initiative. Inclusion then suddenly gets limited to a 'feel good' factor under Corporate Social responsibility.
CSR works on the limited paradigm of Philanthropy - rather than sustained impact.And so while there are several CSR initiatives, the sum total of all such initiatives creates very little impact.
Notwithstanding these dilutions, the sheer size (750 million people) of these under served markets commands a perspective. And while these complex ecosystems need maturing, it is clear that the sequence for impact will need to be:
Step1, create a fortune for the bottom of the pyramid - through economic and social opportunity creation and inclusion
And then step 2, capture a portion of the new value created in an equitable manner. This will form the fortune at the bottom of the pyramid.
The success of the Micro finance model is a testimony to this sequence. In a recent visit to an MFI center near Hyderabad I met a group of women who have benefited from these small loans. A stone cutter who could often not even feed her children a few years ago is today running her own micro-enterprise, providing employment to 10 others. She is perfectly happy paying the high interest charged - is driving the MFI to give her larger loans - so that she can grow faster. Her aspiration today is for gold jewelery, a pension scheme for future investment and durables. Service providers in these areas will today find this woman a 'mature' consumer who is ready to consume!!
But if we go deeper into the process, the steps clearly include first creating new value by delivering the most relevant service (organized micro finance) and then capturing resulting value (higher interest rates + new opportunities for other servivces) - in a manner that it benefits everyone involved.
This in many ways, I believe, is the basis for a truly impactful 'inclusive growth' story.
Such an approach presumes a few critical innovation sensitive areas:
1. Focus on crafting unique win-win business models - not just having an idea to 'help' a community. Crafting business models needs 'business thinking' profit/ loss/ income/ expenditure. These terms are often anathema to social organizations. That's a mindset that needs change.
2. Crafting unique 'Engagement Models' - of how entities will interact with each other in socially acceptable ways. A business model that makes a land owning farmer sell FMCG products to his village will probably not work. Because the farmer considers 'selling soaps and shampoo' below his social dignity. Therefore insights are needed about the relevant social norms, such that unique engagement models can be crafted.
3. Collaboration amongst entities in the ecosystem - its not sustainable (or feasible) for a single entity to create new value models, deliver that value and also find ways to capture it. Therefore you may need an MFI to create new value, a rural distribution network to add depth and capture some value, a telecom network to deliver and capture some value, a school/ hospital to enhance capacity to create value in the long term. So here a key question is how can such entities identify each other and co-create new models and work together to create and capture value?
4. Deploy technology to consolidate information, learning and data capture across collaborating entities. This is probably the most critical element. If everything else works, but there is no technology to consolidate learning, analyse data and make relevant decisions - there is no way to scale an inclusive growth model. Mobile networks, computers, satellite scans, GPRS etc are now reaching deep parts of India. How do we build solutions that connect all these into central frameworks where data can be consolidated?
Do such examples exist? What can we learn from them?
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