Monday, April 14, 2014

Net Wars - Attack of the Drones

At the recent Mobile World Congress in Barcelona, Facebook's Mark Zuckerberg urged operators to offer unlimited, low-cost service bundles, in which free versions of Facebook, Whatsapp, Google, Skype and other popular sites are treated like "utilities." Experience in the Philippines and Paraguay, he said, prove that the net benefit - typically in broader penetration, more subscribers, and increased daily use - justifies the expense of building out a network and offering free and bundled services. This assertion received a polite but muted response from an audience that is all too aware of the capital and operating costs of rolling out more, bigger, and better networks. Less than a month after the MWC, Zuckerberg (as the figurehead and public face of reiterated his intention to deliver last-mile Internet services with solar-powered drones, satellites, and lasers. Though light on details, the idea has generated a fair amount of buzz and only a few critical comments about how developing countries may not be excited about a fleet of US-company-supported drones circling their airspace. Even fewer consider the implications of Facebook's drones (or Google's balloons) bypassing network operators completely, and putting the keys to Internet access firmly in the hands of advertising giants.

The Day of Global Internet Coverage is coming, though no one knows the date. It's notable that the advertising, e-commerce, and mobile phone crowd is making the most noise about it. And why shouldn't they? They have a lot to gain from Bushmen friending Sherpas. Someone will find a workable model for extending Internet connectivity to every corner of the globe, by working with network operators to reduce their CAPEX and OPEX exposure (e.g., through leasing models, sponsored access, compressed bandwidth technologies, PAYGI or PAYGS plans), or by floating drones and balloons, or with a combination of these and other ideas. 

No single company will achieve the goal of global coverage., with the footprint, depth of experience, and vast assets of all the partners (Facebook, Qualcomm, Ericsson, Samsung, and others) could move it along significantly. But all those assets still need to be marshalled under a clear and detailed strategy, as surely as solar-powered drones need the sun.

Monday, March 31, 2014

Russian Roulette

When your standard marching orders are to grow the company's emerging market business, what's to be done with sudden political crises like those we've seen in Russia? Since Vladimir Putin decided to help himself to part of Ukraine, the Russian economy has seen $70 billion in capital flight (slightly more than all of 2013), leading to stagnant growth and fears of inflation. Investors and business managers are less concerned with a few Black Sea ports than they are with precedents like annexing ethnic enclaves and shutting off oil spigots to Ukraine or Europe.

Seasoned emerging-market veterans will see the rising tension between Russia and the West for what it is - part of the cost of doing business in a market with inherent political risks. As the Russian oligarchy and its pugnacious leader engage in riskier behavior, executives in tech, pharma, and a number of other industries might decide to make their big moves elsewhere. However, it's worth noting that business growth in Russia (and other politically risky emerging markets) has been fairly robust for almost 20 years, and though the oil-and-gas gravy train may be slowing, most of the other engines are on track: the middle class is growing, demand for consumer products and services is soaring, and there's room for growth in many industries.

With the exception of a few industries, business leaders who worry about getting in bed with robber barons have a few mitigating factors to consider. Technology has a democratizing effect, education and healthcare help the masses, financial services spread the wealth, and agriculture puts food on the table. By focusing on trends, not on the crisis, companies can identify long-term opportunities that merit the complex navigation through political storms. There will be opportunities in Russia after Crimea, in India after the elections, in Brazil when the debt bubble bursts. When choosing the "wait and see" approach, don't stop asking the man on the street what he's going to do with all that hard-earned cash when the dust settles.

Friday, March 14, 2014

The Shift to Sustainability in the Post-2015 Agenda

From November 2013 to February 2014, Richard Heeks at ICT4D published a series of nuanced and well-cited analyses of the process and likely outcomes of the post-2015 development agenda. His 4-part investigation included a graphic history of the creation of MDGs, a review of post-MDG events, textual analysis of the documents resulting from those events, and a comparison of new agenda items to the outgoing goals and objectives. For anyone in the development community, or even private sector players who understand how the global development agenda can influence public policies and expenditures, Heeks' concise analysis is worth a read.
Heeks argues that the development agenda dynamics "reflect real-world change," responding to the shifting roles of aid and the private sector, the rising tide of domestic and international migration, the supremacy of services over manufacturing, and the ubiquity of mobile devices. According to his early analysis, three issues will increase in importance after 2015:
  1. Environment and Sustainability
  2. Migration
  3. Open and Inclusive Development
These three issues are likely to cut across industry-specific initiatives, requiring "systems thinking" as the development community moves from strategy to implementation.

Systems thinking means the development community will need to understand not just an isolated issue, but how that issue (and programs designed to address it) impacts and is impacted by other elements in the ecosystem. When choosing partners, organizations may want to consider how those partners and their incentives will shift dynamically over time. In effect, no matter where the compass points when the post-2015 course is set, thorough ecosystem assessment, dynamic business modeling, and understanding links between different solutions can help organizations implement more sustainable programs and measure holistically their impact over time. 

Tuesday, February 18, 2014

Wildflower Hunters: Take the Mountain Road to the Back Country

800 million people is a respectable market opportunity. Okay, it's more than respectable - it's really big. But when gauging market potential, businesses have to consider many things. Chief among those considerations is, "How many people actually want what we're selling?" 

The good news for the many providers of smartphones, mobile broadband services and applications, is that there is a potential 800-million-strong market available - and a lot of the people in that market want what they're selling. Who are these hungry buyers? Working women in the developing world. In a recent study conducted with Qualcomm and the GSMA, Vital Wave surveyed over 1,000 employed women throughout Brazil, China, India, Indonesia, and Nigeria who own either a feature phone or a smartphone. The study showed that working women highly value mobile broadband for communicating with co-workers, locating customers, marketing their goods and services, and finding educational or job opportunities. Of those surveyed, 77 percent already own a smartphone would not go back to using a phone without Internet access. Two-thirds of the feature phone owners reported that they want smartphones and would be willing to pay for a mobile data plan, and half said they intend to buy a smartphone within the next two years. 

Despite these numbers, capturing this market will not be as simple or easy as picking wildflowers in a summer meadow. For all the programs that currently exist to expand technology in the developing world, very few focus on marketing, products and services to working women. In order to succeed, handset manufacturers, operators, governments, and even NGOs need to address the limited awareness as to the value of the Internet and the cash-flow implications of the handset purchase - the two most immediate barriers to smartphone uptake for women. Strategies to address these challenges include the development of public-private partnerships, creative financing, sponsored data schemes, and shared-use plans. Expanding Internet access, particularly in rural areas, will also increase women's use and appreciation for online services - a crucial first step for women who don't see the utility or convenience of mobile broadband. To discover additional insights, country-specific observations, market segmentation information, and directions to the best wildflower fields, download the full report here.

Wednesday, January 29, 2014

Fighting the Health War on Two Fronts

As any student of history will tell you, the surest way to lose a war is to fight on two fronts. For decades, developing countries have been fighting a war against persistent poverty, famine, and disaster-related illnesses like cholera and diarrhea. Resources were stretched to the breaking point in many countries as they struggled to build a health system that is responsive to a well-established set of health problems. So it probably came as welcome relief when economic fortunes turned rosy, and developing-country governments could allocate more resources to infrastructure and public services like health and education. Until, of course, the spoils of rapid economic development began to spoil.

Health systems across the developing world are suddenly dealing with a range of health issues that hitched a ride with prosperity: diabetes, hypertension, obesity, and heart disease - to name only a few. It turns out that a sedentary fast-food lifestyle is as unhealthy for the Chinese as it is for Americans. In fact, the Overseas Development Institute, a UK-based think tank, calculated that the number of overweight and obese people in developing countries has quadrupled to one billion people in only 30 years.

In newly prosperous countries, this is not a transition; it's an addition to the normal roster of water-borne and tropical diseases which are still thriving in remote, rural areas. The opening of a new, unfamiliar front in the health war presents opportunities for both the development community and the private sector (e.g., pharma). With many years of data on the long-term cost of chronic diseases in developed countries, there is a compelling argument for even modest investment in nutrition, wellness and preventative programs. Such modern illnesses can by addressed by mobile-based information campaigns, digital reminders, and remote reporting and diagnostics. It's not very sporting to capitalize on another's misfortune. But mature-market providers can chalk it up to helping the new kids learn from past mistakes, and giving them a fighting chance in a historically uphill battle.

Thursday, December 12, 2013

All Aboard!?

Despite the raging success of M-Pesa in Kenya, the spread of mobile payments in neighboring countries has been more restrained. Less reliable phone networks, a different rural/urban distribution, mistrust of the technology, and even education levels have been cited as possible explanations for the comparatively subdued reception of mobile money in other parts of Africa.

When Vital Wave began working with USAID Uganda to help non-government organizations (NGOs) make bulk digital payments to trainees at health and education workshops around the country, one thing was clear: the transition from cash to digital payments had to be logical and smooth for NGO staff so they would accept the change and advocate its advantages to trainees. Vital Wave's field implementation team began by reaching out to NGOs in Kenya and Tanzania, which had started to make the transition to digital payments. Research showed that it was preferable to work with "aggregators" (companies that managed the payments process) rather than directly with network operators, and discussions with USAID, NGOs and other players pointed to concrete ways the aggregators' platforms could be upgraded to better serve NGOs. After selecting five NGOs and three aggregators in Uganda, the field team decided to test the digital payment process with NGO staff. These pre-tests would allow aggregators and NGOs to functionally test the system while fostering internal buy-in and reducing the risk of beneficiary resistance.

The program is still underway, early results are promising, and the takeaways so far are worth considering. Many well-conceived projects in developing countries are scuttled by a lack of local buy-in. This is usually clear after the project is completed, but it's the early decisions and actions that determine whether local recipients will see the benefits and work to adopt a new technology, process, or idea. In the case of digital payments, the benefits for the NGOs are not the same as the benefits for the trainee recipients. NGOs see cash payments as risky, vulnerable to fraud or theft. Trainee beneficiaries may see a text message confirming payment in a dimmer light than the warm glow of cash in the hand. Reconciling these perceptions will require the development and adoption of a much broader system of mobile money - particularly by local merchants - but for the NGOs participating in the program, learning from pioneers and turning staff into advocates are crucial early steps.

Sunday, October 13, 2013

The Good, the Bad, and the Unknown

Ekocenter. Stare at the word for a while and you still might not see the cleverly hidden moniker of one of the world's most ubiquitous brands - Coke. There it is, the first four letters staring in a mirror. Coca-Cola's CEO Muhtar Kent first described the Ekocenter initiative in January, saying it grew out of a partnership with renowned inventor Dean Kamen (of Segway fame), who created the "Slingshot" - an efficient water-purification box capable of purifying enough water for 300 people a year. An Ekocenter is a fully-contained, solar-powered, re-purposed shipping container, equipped with a Slingshot water purifier, an electrical charging station, an Internet access point, refrigerated vaccines, and a few basic necessities - all run by entrepreneurial women in remote locations around the developing world. That's the theory, anyway. The prototype can be seen in Heidelberg, South Africa, and the goal is to deploy 300 more Ekocenters to villages in 20 African and Latin American countries by 2015.

Coca-Cola is working with both public- and private-sector partners, including IBM, Qualcomm, IBM, McCann Health, the Inter-American Development Bank and others to develop and deliver the kiosks. The challenge, well-known by the project partners, is to find the right business model - one that offers a flexible set of tailored products and services, and enough profit to warrant rapid scale. As they fine tune their business model, Coca-Cola can draw from decades of telecenter and cybercafe projects that saw varying degrees of success. These initiatives typically had a narrower range of services - usually telephones and/or internet connectivity - and often followed a franchise model. Many succumbed to the challenges of providing training, support, and security, paying the high cost of telecommunications, or finding long-term economic buyers after the start-up support dried up.

Ekocenters will undoubtedly benefit from the mother company's world-beating distribution system, deep pockets, and the seemingly genuine support of top management. But it's one thing to drop off a case of Coke 500 miles north of Timbuktu, quite another to supply, train, support and protect a scarcely educated woman running the franchise with your logo on it. Coca-Cola and its partners bring enough assets to the Ekocenter initiative to have a fighting chance of success, but finding the right business model is only the first step. The second, third, and fourth step (and every step thereafter) will be committing to that model through ongoing investment, evaluation, improvement, and scale.