Digesting Singularity

It's been a couple of months since I left my new home. Singularity was an amazing, life changing experience - one I wish for everybody alive.

In digesting what I've seen and heard a parting piece of advice from our GSP coordinator, David Roberts, stuck in my head.

"on arriving," he wrote "focus all your attention to understand their summer experience -- and resist the temptation to arrive home, bust in the door, and start first talking about how amazing YOUR summer was -- without them"

So I did, or rather tried to do. As a result I'm only just trying to publicly digest what I've gone through. My first attempt last night was targeted at some wonderful friends we meet with on Wednesday's to discuss things people are involved in. The presentation* was a partial success - I forgot how scared people (including me) are when they first hear about these innovations. So my plan - to make up for Singularity's biggest flaw, and to explore how these great new technologies can be applied to where they are needed most, didn't really work out. Instead we spent most of the time digesting what has happened.

Maybe that's where it's at though now. Shows what a seminal experience Singularity was that now, 2 months later, i still have no clue how to talk about it.




*(watch out, its meant for private consumption so I haven't sorted out the copyright issues)

Falling Walls

I'm doing something different in a couple weeks: Attending a conference on a topic that's not my own, just to break out of the box and see something else. There's no real desire for change on my side, neither am I intending to become omniscient over night, but it will give me a good opportunity to see what else is out there. Plus I get out of Nigeria, into Berlin, and get to see a host of fun things and friends. Win-win really.

As part of the scholarship I'm meant to present a Breakthrough of my own on the day before the real thing. I'm interpreting that liberally and hoping that few at the conference have heard of the BOP, let alone how to serve them, and am doing mine on "Breaking the Wall of Poverty Perception". The number of slides are limited so in this case not particularly descriptive. I hope you can make sense of them nonetheless. Comments welcome; maybe I can sneak in an edit before D-day. I'm planning to experiment with live blogging from the event - lets see how it goes.

Falling Walls - Breaking the Wall of Poverty Perception

View more presentations from Andre_Wegner.

Big Ticket Items

The new World Development Report touches on something I've been thinking about for some time: The need to build environments where people and business can flourish, before adding the proverbial cherries on top - infrastructure, education, finance etc.

The report's data shows that fundamental settings matter to progress. No amount of microcredit, health spending or agricultural value chain development matters if there is no peace, as the graph makes clear.

With all our fancy new initiatives that drive business thinking into every livelihood angle we can think of, we seem to have forgotten the basics. Maybe forgotten is unfair - de-emphasised maybe. For me, there are three learnings here: 

1. There are limits to human resilience: This is clearly the cause of violence in the first place; the point the pain of violence comes second to the pain of injustice (although, as the report indicates, people may underestimate the cause of violence). But it also the underlying principle of underachievement in violent states; resilience and ingenuity of people matters not if there is no stability and environment where citizens can "make do".

2. There seems to be a Elementary Hierarchy of Development Needs, which we would do well to remember before designing other well-meaning interventions. I know this is nothing new, but the plethora of conflicts and the increasing issues they generate seem to stem from them seems to indicate that we haven't learned the lesson.

This hierarchy is a key learning I gained from my transition from India (a stable and 'fairly' well functioning environment where the most blatant structural issues have been overcome), to Nigeria (a 'fairly' unstable environment where hardly any structural issues have been dealt with). In India, my work with SMEs, microfinance and other 'social' enterprises, made me feel as though I was adding something to the country. In Nigeria similar, more innovative work (in relation to other stuff that's going on), makes me feel as though I'm running my head into a brick wall.

3. Simple is best: Our apparent preference for micro interventions in recent decades (following years of focus on structural issues), has led to the relative neglect of big issue topics such as corruption and infrastructure development. The WDR reflects this when it mentions the number of laws (244) that the government has had to pass and repeal.

Clearly, where livelihood solutions reduce poverty and injustice they foster peace and thus create a virtuous cycle. Indeed, the report shows clearly that poverty and injustice are the main causes of violence. But people can create livelihood solutions themselves, and too often intervening in/subsidizing those initiatives creates dependencies that then create at least the appearance of injustice. With limited resources at the disposal of development organizations we must concentrate on the big ticket items that can get people to a place where they can determine their own future. This is the same premise the microfinance industry built its reputation on - give people what they need to make their own lives better. Fortunately they can (already do, through loan sharks even where 'modern microfinance' doesn't exist) supply these services themselves. Unfortunately, the cannot do so for structural issues or peace.

NOTE: Neeraj Swaroop, regional chief executive India and South Asia, Standard Chartered Bank maintains that livelihood solutions might have no effect if the underlying requirements aren't there to start with:

"A lot of the accounts are dormant and not activated because there's no credit as those people are really poor," he added. "You can't have financial inclusion go ahead without economic inclusion and if those people don't have access to roads, electricity, [a steady stream of income]."

HT: NextBillion

Critical infrastructure

What happens when services provided by private companies become critical to the nation? First off, governments start paying more attention to you. They may monitor and protect your facilities and supply lines, as Wikileaks showed. But companies also stands in the duty to ensure the provision of these services is widely available if required.

Mobile phones are a great example of this. State run telecoms monopolies have been undermined by mobile networks, although some have been reigned back in as the case of pro-Mubarak messages in Egypt showed. Largely they now stand a as a bulwark that allows people to communicate, even if everything else falls apart.

That's if you can get hold of phone credit. Most people who first come to Lagos are astounded by the plethora of recharge retailers that sell their ware for a 3% margin. They are everywhere. However, if there is violence or even war these guys would disappear pretty promptly I'd imagine, or people might not be able to go on the street to buy any for fear of being shot, or they might not be able to afford any because they haven't earned their day wages due to the unrest or there's simply no currency available. These factors certainly seem to be the case in Ivory Coast, even though credit is more desperately needed than before to get in touch with loved ones or update everybody on events (maybe using Twitter). Now, after a campaign started here and promoted here, Orange is the first provider to commit to free credit. According to Ethan Zuckerman, they are:

giving credit of 2000 CFA (a little under $5) to all customers, a week of free calls to a landline number of their choice or an Orange number and a week of free Internet access. Most touchingly, they closed their announcement (posted to their Facebook wall) with this statement:

Par ces gestes de solidarité, Orange Côte d’Ivoire et Côte d’ivoire Telecom apportent leur soutien à tous leurs clients pour leur permettre de garder le lien avec leurs proches en ces moments difficiles.

(Rough translation: With these acts of solidarity, Orange Côte d’Ivoire is providing support to all their customers to help them stay connected with loved ones during this difficult time.)

HT: Ethan Zuckerman

Information Highways

In countries like Nigeria I'm always reminded how important information is and how hard it is to come bye. It affects everything from concert timings, flight schedules, to market prices and food delivery. Google and Time Out have spoiled us in the West. In Nigeria, I have to be in 20 different mailing lists and get a whole lot of spam, just to find out what's going on next weekend. In a city of 20mn! Crazy!!

There's clearly room for innovation here. Companies that can capitalize on the information arbitrage that exists more clearly here than nearly anywhere else stand to win big. Cool new products won't help anyone if they don't know they exist! Technology can help spread 'the message'; low technology (SMS) probably more so than high tech (internet), but whatever we use we need to have a solid understanding of how it spreads. Shamefully, this is an area most companies have completely underperformed in. Though they now know better how their products get to people, they have little clue how news of them is getting there. There's no data that could help, and often information highways bear little resemblance to what we know or can conceive. A story told by a colleague recently brought the message home.

Her sisters dogs went missing on the mainland and couldn't be found; a cause of great upset not only to my colleague's sister, who I heard whaling on the other side of the line, but of the security guard who left the gate open, who now feared for his position and more. The dogs couldn't be traced anywhere. At the same time the sheer size of the dogs had scared a motorbike-taxi (Okada) driver to drop his passenger at the sight of them  on the other side of town. A resident on the street noticed the commotion on the way back from work and found the dogs. Eventually he noticed that they were well bread and decided to take them in, telling his staff to keep an eye out for the owners. The news was told to a newspaper boy who served the house and who happend to drop papers at my colleague's sister's house too. When he heard from her guard that he had upset the family by leaving the gate open and letting the dog escape, he immedateyl remembered the story and dog and owners were eventually reunited.

This unlikely tale is more than an anecdote on the power of the word of mouth but emphasises the crucial role that information intermediaries play in societies with poor formal information highways. I know little of these opportunities to bring news to low-income households, and from experience I know that marketing departments know even less. Clearly there's an opportunity here that we must develop on if we're to build inclusive products/markets. Any companies/people out there that do this kind of research/consultancy?

Let the local guys help...

An evolving product of the ANDE conference, which I hope to write more about soon:

The growing number and capacity of local intermediaries in emerging markets is a success story of Small and Growing Business (SGB) investing. Yet, they have not found their space in the investment value chain. They are underutilized as a potential deal source and investment advisor, with investment funds relying on parallel structures to make investments. This failure to adapt to new possibilities is stunting the growth of SGB investing.

To read more, click here... opinions welcome!

Getting In...

Getting in to social enterprise is notoriously difficult. The same with the charitable sector. I do not remember my own experiences fondly - running up to the stage at BOP conferences in Barcelona, Paris, Warsaw, New York with half of the audience, just to be disappointed to find that the speakers could not give us a job! Or spending two months in Dakar looking for productive work... I wasn't picky.

Having said that, im not sure its supposed to be easy. Those months of really trying show dedication and initiative: Real entrepreneurs are found through a tough selection process. I dont want to undersell it, but supporting a nascent industry in develping countries is not always easy and requires an edge. Not that one is supposed to say this out loud, but its not like im trying to pull up any ladder and am always happy to help those who really try. I am mainly basing this on my experiences which brought me into contact with a lot of people that were just not ready for this, and in the end always left unhappy and with the organization in tatters. There is a darker side to this too: I was in the fortunate position to be able to afford the low wages and distance to family and friends. Many are not, and I am fully aware that this drives an industry that is carved more of one mind than is probably good for it...

The reason I've been thinking about this are a series of posts on Next Billion, most prominently "Looking for ways to get invloved", which seems to advocate Fellowships as the new internships (although internships are still available). New Ventures and the organizations listed are only continuing (or have led) a proliferation of websites and events that give an "in" to the industry (Just Means, Social Edge). By an large they are doing a great job supporting a larger, more sophisticated talent pool, but i wonder at what point there will be too much of a good thing.

Economic Development equals Social Development

In a country like Nigeria, where most wealth is held by a tiny minority, you’ve got to wonder how much impact enterprise development really has on poverty alleviation. This is a view that was mirrored by a few authors in the Africa section at Foyles, which I got the chance to browse on a recent lazy afternoon in London. Corruption plays a part in this, but so does the standard way of doing business in these countries, where access to key players means nearly everything.

Microfinance and similar initiatives play a large role in “broadening the ownership of businesses” (Alitheia’s mission), but such initiatives represent a fraction of the total economy. The above statement is largely portrayed as “conventional wisdom” amongst my peers and there are, of course, plenty of examples to support it. In my frustration with the limited scale of social enterprise, the sectors continued drive towards paternalism and my urge to help by enabling people to make a life of their own has driven my thinking the same way as my peers. Unfortunately that’s all I have to go on right now. Initial research shows me that the field is overly political, which tends to distort facts. If anybody who reads this has a clue where to look for reasoned qualifications of the above statement or comparative figures, I’d be delighted to hear from you.

Franchising

Like others before me, I have been getting increasingly interested in the idea of franchising.

The idea appeals to me partly because of my experiences with IDG and Intellecap. Firstly I realized that what we need in development and what everybody is looking for are two different things. This struck me again at a recent social enterprise event in London, where people urging those present to “listen deeply” were adamant about supporting entrepreneurship by bridging the “missing middle”. Though I don’t doubt the validity of the concept I’m unsure about its application and potential to help bring large number of people out of poverty. We look for striking examples of innovation (which we may well need in some cases – green energy for instance), but what we really need is marginal improvement on existing products and services (often simple process improvement). With these marginal innovations we could deliver the services that people already demand and obtain more efficiently and to a larger part of the population.

Secondly I realized that these entrepreneurs are hard to find. My job in India constituted of searching for and supporting them. Alas only few were of the kind where you’d have no doubt in applying the label to – obsessed, innovative, inspiring and successful at once. Real entrepreneurs, of the kind we look for, are in short a rare breed. Self-motivated and intelligent people with multiple commitments are however not. People like my mother seek self-employment and may not look to expand their business beyond a certain size. Others are more ambitious but are limited by their ability or inventiveness. All have local ties of some sort and know what the market needs. Franchisees are, in short, abundant.

The market in the US is a case in point. So plentiful are the franchisee offers that innovative matchmaking services have had to be created to make the choice easier. Be it services or manufacturing; everything is run through franchise operations – even chicken production for the most part I hear. For an outsider the depth of the industry is astonishing – the pizza industry in America alone is said to be worth $30bn.  

The opportunity in places like India the opportunity is palatable, with several outfits taking advantage already. Naturally a big market with a surging middle class and a whole host of new, more sophisticated tastes means that providers have to roll out at speed, often necessitating franchising strategies. Moreover economies in places like India, and Nigeria for that matter, are often dominated by a few conglomerates, from Dangote to Reliance. Meanwhile, 98% of the businesses are sole proprietorships or the like, mostly operating as traders. They are run by quintessential franchisees with limited imagination, a feeling for local demands and shallow growth opportunities. The vast majority stay the size they are until it’s time to past them on to the children, who might grow the business slightly out of necessity.

What’s stopping us from grabbing this opportunity for the good? Several things, in my opinion. Firstly, despite the choice of franchisable enterprises there’s a dearth of truly integrated franchise packages at the small scale, which make it as easy as possible for the entrepreneur. This is especially true for socially conscious ideas; the franchise space is dominated by corporate like McDonalds. One of the reasons may be that the former have not found the right marketing mix to attract franchise operators. Another might be that at the BOP level the initial capital contribution expected of franchisees might prove prohibitive. If that is the case it is the originators of the franchise have to structure their offer differently, maybe in collaboration with microfinance institutions.

An example of franchising at the lower end of the economic spectrum recently caught my eye in India. Trendyworks launched a huge “Say No To Jobs!” publicity campaign in Hyderabad in promotion of their “Web Entrepreneur Program”, a Rs. 16,000 (roughly $350) 3-month course designed to help the student become a self-sufficient web-designer.  The promotion was professionally staged, with billboard, radio, SMS, online features, advertising catchy slogans, taster courses and freebies. The latter included Trendyworks’ own proprietary web-design software used in the course, the continued use of which seemingly constituted the second phase of the franchise operation. The third phase seems to be continued deal flow following graduation from the program, naturally including royalty payments to Trendyworks. The effect could be described as the largest no-cost, quality assured outsourcing centre. It also diversifies the risk for the corporate parent, as cash flow occurs during every phase of the process. Without this program it may only be able to rely on sales of its software. Though it stretches the definition of franchising slightly, it shows how a combination of good packaging, professional processes and thoughtful business models can create new opportunities for profits and social improvement even at the lower end of the economic spectrum.

Applying such a model to easily transferable businesses and technologies such as biogas, affordable building, education, etc could bring huge scale to socially conscious ideas at low cost. The Access Healthcare Initiative, now part of the Centre for Emerging Markets Solutions at the Indian School of Business, is trying to do so by getting MBA students to document successful health delivery models and bringing them to other emerging markets (think pharmacy’s in Afghanisthan).

 Venture Philanthropist organizations, from Aavishkaar to Acumen, have spent countless dollars hunting innovative local social enterprises the world over. What remains more often than not are huge databases of underutilized proprietary ideas (see the HoneyBee network). Although venture capital techniques have improved their performance, young enterprises inevitably face growing pains few are able to overcome. As a result, these kind of start-ups are rarely able to make good on their promise. It may be better to switch the focus of our initiatives to franchising the ideas we have identified rather than seeking and supporting new ones.

Do you have or know of a franchiseable socially conscious business model? What other barriers do you see? Is the search for truly entrepreneurial, innovative business models at the BOP really failing? Any comments welcome.

Yunus's gilded splinters

Was reading a BBC online article the other day (nb: no. 1 waste of time... general news websites). Its about Yunus's political hopes, and his failure to present a viable opposition party because he

"discovered that I couldn't motivate enough people to put together a team powerful enough for such a daunting task"

(From Spiegel interview: "Ich habe festgestellt, dass ich nicht genügend Menschen motivieren kann, um ein schlagkräftiges Team für eine so große Aufgabe zusammenzustellen.")

Of course the news itself is sad. It looks as though Bangladesh could really do with some renewal in its politics to bring in trust and progressive learning.

But whilst reading the article something entirely else sprang to mind. I have been reading Banker to the Poor, his Autobiography (exceptionally easy read - story telling with nuggets). In it he mentions one particular episode, the opening ceremony of the newly independent Grameen Bank in a rural area, during which he:

"Looked out over all those women seated in their colorful red, green, ocher, and pink saris - a sea of saris - these hundreds of barefoot borrowers who joined our celebration. They had voted with their feet. There was no doubt about their commitment and their determination to break free from poverty. It was a beautiful spectacle"

Comparing this to a comment in the BBC article, which said that:

"Correspondents say that many people questioned whether he had over-estimated his popularity in rural areas, where his bank's high interest rates are disliked."

I wondered whether all was not rosy in the BOP/Microfinance space. Whether we are really listening deeply, or once again imposing conceptual solutions. Of course the history of Yunus's movement discredits this line of thought, being practical in origins. But can we really not do better than being the lesser evil?

What's up?

Not much, to put it bluntly. I said when coming here that it was for jobs and to examine BOP reality. Well, I noticed pretty soon that the former was a no go (even though I put extra effort in after noticing how high the quality of life is here). The main blame is with my need to remain in control (ie. I still feel unable to give my CV to somebody and “hope for the best”). Anyway, being in Intellecap’s second round and having a shot at the BOP impact assessment probably lets me off the hook on that one.

What do I mean when I speak of BOP (Base of the “economic” Pyramid – pc!!!) reality? Well. Its life really. Finding out who’s providing what for the poor… and what they demand. Old examples (BOP 1.0) include shampoo in single use sachets or the small Wrigley’s packet (see pic). Despite language barrier, I am trying to see what’s out there in the 2.0 world. Mobile Banking would certainly be one of them. But this seems a little unattainable for the BOP community non? I did here that there were some pilot projects out there? Can anybody help?

Best part of the 2.0 world is the “deep listening” requirement. I’m taking that seriously. Hanging out with as many locals as will hang out with me (although the rich world of Dakar and the middle class neighbourhood here somewhat inhibit me on the poor front). That means in short many evenings spent on the local basketball court (… these guys are good). Also the French course at university is doing its part of putting me in touch with locals. Although they are mostly from other West African countries and have come here to study language with an eye to university admission later.

Lately shopping has become a big feature, as well as a colonial style search for root causes. Im sure there’ll be more on that later.

all together

One question that has rattled me in BOP theory is how on earth you want to do all at once: Protect the environment, end corruption and develop markets & standards of living. In many cases it seems outright contradictory, especially for the first two.
The answer to the first problem is usually technology. Hart in Capitalism at the Crossroads advocates building entirely innovative infrastructures, taking us for instance completely away from a reliance on oil by selling only hydrogen cars in emerging economies, and building a supply chain to match. The sad truth is that development of such infrastructures it peu a peu, and based on the cheapest available technology. Both speak against such innovative solutions. This seems to be the case with TATA's $2000 car. From PSD Blog:

Four wheels at the bottom of the pyramid

Following $3 software and a $100 laptop comes the $2000 car. With the transport market at the BOP estimated at $180 billion, no carmaker can afford to laugh anymore. BusinessWeek writes:

The key is India's low-cost engineers and their prodigious ability to trim needless spending to the bone, a skill developed by years of selling to the bottom of the pyramid. "You have to cut costs on everything—seats, materials, components—the whole package," says Tata Group Chairman Ratan N. Tata.

[…] emerging markets, which held little appeal for the major car brands even 10 years ago, now offer a volume bonanza that can make even cheap cars profit spinners. In India alone, some 1.6 million motorcycle and scooter riders are likely to buy a car over the next five years […]. India's auto market is set to double to 3.3 million cars by 2014, while China's will grow 140% over the same period, to 16.5 million cars, according to J.D. Power Automotive Forecasting. That kind of demand makes dirt-cheap cars viable.

Seems therefore that we can't look to developing countries to come up with solutions. They are probably more likely to benefit from our efforts to manage a transition. There is some truth in the comment made by one of the "Big Global Warming Lie" guys who says that the Environmental protection is in direct opposition to development. Any comments on this point would be welcome.

Its a similar story with corruption, which any attempt to do business in the poorest countries (and the rich too, in many cases) is likely to support. The usual answer to this is that corruption is everywhere. A convenient one-liner Reuben Abraham used on me at Doing Good and Doing Well. True to an extent, but that doesnt excuse the extent of it in some places.