Wednesday, June 17, 2015

The Sharing Economy and Emerging Market Development

Jane Donor went trekking in Nepal a few years ago, and the place left a magical impression. After the recent earthquake, she kept thinking of all the wonderful people she met - guides, inn-keepers, market vendors - who must be struggling to rebuild. She wants to help with the rebuilding effort, but wants to be sure her donation will be used for a targeted, lean, effective relief program in Nepal (rather than a bloated general fund). Jane has been a member of the sharing economy for years; she finds lodging on Airbnb, summons rides through Uber, and supports startups on Indiegogo. So, she does what she normally does to find resources and solve problems nowadays - she whips out her smartphone.

Within minutes, she finds a long list of organizations working in Nepal. After digging into their mobile website, she weighs the merits of each program and a few criteria begin to crystalize. There has to be solid evidence that the organization is doing meaningful, long-term work in Nepal. (Some websites seem to use the disaster as a landing-page hook, but provide little information about their actual work in country.) She wants a clear understanding of how much of her donation will actually go to the specific relief program. It takes money to run an organization; a portion for overhead is acceptable, but how big is that portion? She eventually sends a donation (through PayPal) to an NGO with rich data on their medical equipment deliveries to government-run clinics in several of the villages she visited during her trip.

New tech-enabled models are making it easier for the Jane Donors of the world to participate directly in a wide range of development efforts - from disaster relief, to small business loans, to "no-strings" cash infusions. Comparatively, small innovative organizations like Kiva, MyC4, Bondora, and GiveDirectly are taking advantage of leaner, platform-based models that challenge traditional development financing, long dominated by foundations, NGOs, banks, and MFIs. It?s unlikely that these new web-enabled technologies will completely replace the standard model of development funding. Sometimes, it takes a big organization with a sizeable general fund to steer healthcare systems, regulatory environments, infrastructure policies, and other big ships. But development organizations would benefit from integrating crowdfunding and peer-to-peer transactions into their own funding models. One option is to support an existing (or nascent) P2P funding tool that is already infiltrating higher-income groups in developing countries and regions. With guidance and investment, such a tool could be extended to poorer segments of the population. Another option is to create such a system internally, and support it with data-rich, mobile-friendly marketing. This would involve many activities NGOs already perform - awareness-raising, education, localization, record-keeping, partnerships. Would Jane Donor be more inclined to donate to an NGO that offered an in-house P2P donation service? Maybe, but if they don't adapt their operational model to this kind of funding, they may have lost Jane Donor forever.

Wednesday, May 27, 2015

Finally! Relief for Hungry Farm Dogs

Last summer, Google introduced its developmental drone delivery system, "Project Wing," with a video showing a dog food air drop to a farmer in the Australian outback. This was at the height of the Ebola outbreak in West Africa, and just a few weeks after deadly mudslides in Afghanistan and India, and a severe earthquake in Ludian, China. Instead of highlighting the disaster relief potential for drone delivery, or demonstrating that drones have uses beyond spying and launching missiles, Google's marketing department promised help for rural dog owners hoping to avoid a long drive into town. And this spectacular marketing miss has since been repeated by other leading tech innovators. The slick videos, launch parties, and press releases for Tesla's home battery, Apple's HealthKit, and Microsoft's HoloLens all suggest there is no world beyond North American and Europe.

These innovations would be a slight convenience or a cool new gadget for developed-country users, but a valuable necessity in developing countries, where systems of house numbering, street naming, postal delivery, grid power, data collection, job training, and healthcare are all lacking. Few will blame tech giants for focusing mainly on lucrative consumer, gaming, and medical markets in developed countries; that's where their marketing and distribution channels exist. And of course there are considerable challenges to launching and scaling in developing countries. But the principle of user-centered design begins with the idea that users really need what you're building. Do doctors in a remote relief center in Nepal need antibiotics delivered by drone? Yes, they do - much more than an Aussie farmer needs a bag of kibble. They also need to report and track cholera outbreaks. And they might also have to walk a scared, inexperienced health worker in another town through an amputation - both wearing a HoloLens connected to a Tesla Powerwall.

The use cases for these innovations in emerging markets are plentiful, and the utility is far more convincing than it is in most mature-market contexts. Tech innovators would certainly claim that developing-country consumers are free to buy and use their new products and services, but they are being priced too high for most people, and there has been no appreciable effort to market or distribute them in developing countries. (Elon Musk claims the Powerwall would be great for "people in remote parts of the world," but China is the only developing country for which Tesla's website has been adapted.) Tech companies that ignore emerging markets are leaving the doors of opportunity open to low-cost imitators and counterfeiters. Instead, they should be developing tailored, affordable versions of these solutions for specific geographies and use cases. They could also pair these new products (through partnership or acquisition) with enabling innovations in payment and delivery so they can market, sell, and distribute them anywhere in the world. Apple will make a quarter of their income - more than $60 billion - in China this year, up from less than $1 billion in 2009. Are tech companies doing what it takes to realize this kind of growth in emerging markets when today's innovations are as common as a second-hand iPhone?

Tuesday, April 14, 2015

The Ends Justify the Menial

Among the world's most influential foundations (Gates, Rockefeller, Grameen, etc.), there's little doubt that digital financial services are a benefit to the world's poor. Local and national banks, which were stunningly slow to see the opportunity advocated by MFIs and mobile money services like M-Pesa, are now getting with the program. Government reaction ranges from actively supportive to behavior that would make an ostrich blush. But what do poor people think about digital financial services? As the MasterCard Foundation recently stated, they're "trapped in a cash economy," but are they even aware that digital alternatives are possible?

Well, sending a few mBucks back to the family in the village is certainly cheaper and less risky than taking a long bus ride with a pocket full of cash. And small-scale efforts to, for instance, deliver training per diems or pay school fees through mobile money have been well received by consumers and their institutional partners. Many such initiatives are part of a concerted effort to build a digital financial services (DFS) ecosystem that supports a wide variety of transfer, payment, savings, and insurance programs. In their 2015 annual letter, Bill and Melinda Gates made it clear they would be among the drivers of this effort. And when organizations with the power to move the needle as much as the Gates Foundation begin talking about creating an ecosystem, it doesn't take a bloodhound smell an opportunity.

A robust DFS ecosystem in Africa, Asia, and Latin America would serve three billion people who, for a variety of reasons, have been largely ignored by formal financial service providers like banks and insurance companies. People at the bottom of the pyramid are eager to smooth out the shocks of inflation, currency devaluation, political turmoil, crop-killing droughts, or monthly bus rides to the village. A healthy, comprehensive DFS ecosystem would serve this purpose, but creating it will require a lot of heavy lifting. Some members of the value chain can be relied on to pursue a profitable new market. Back-end networking and data firms, credit and payment companies, aggregators, and programmers will be on board. But the big players - government agencies, formal financial institutions, mobile operators - may need more convincing that an inclusive DFS ecosystem is in their best interest. The development community can influence this process through advocacy and by supporting research, innovation, and scale. This is not a trivial commitment. It means a whole lot of hot taxi rides, endless meetings, menial data collection, aggravating partnerships, roadblocks and course reversals, trial and error, followed by trial and success. In short, it will require all the sustained, determined effort that gets people into development work to begin with, because the result will be helpful to millions and millions of people.

Wednesday, March 11, 2015

Markets Grow up so Fast These Days

All eyes were on the Mobile World Congress in Barcelona last week. The annual event has become a critical showcase for new technologies and a premier forum for lively discussions about all aspects of global mobile markets. All the key players are present - operators, handset manufacturers, platform and content companies, government and NGO representatives.

There were a number of hot topics at MWC 2015. Last-mile connectivity initiatives like Internet.org and Google's Loon never fail to garner attention, even though, as Facebook CEO Mark Zuckerberg pointed out, 90% of the world's population already has access to mobile Internet coverage on their phones. Social media and “over the top” (OTT) apps are shifting operator revenues from voice and SMS to data, though some of the most prominent service providers are pushing for free access. (The money will come later, we promise!) Demand for smartphones continues to skyrocket, and low-cost models are flooding markets from Jo'berg to Jakarta. Creative partnerships and service bundles are blossoming in some countries, turning narrow service apps into potentially powerful, multi-industry platforms. And everyone from handset makers to app developers is going hyper-local, offering different languages, content, and business models to meet the quirky demands of local regulators, partners, and specific user groups.

Segmentation and hyper-localization are signs of market maturity, even though the global mobile market has a lot of growing up to do. This year's MWC featured a lot of jockeying for position in anticipation of a market full of people with smartphones, universal mobile broadband connectivity, and a broad range of mobile-based services. It was the digital equivalent of mourning a child's loss of innocence, while eagerly waiting for the day when he has his driver's license and you don't have to drive him around all day. The opportunity for philanthropic organizations in this environment is to facilitate the transition to maturity, especially in ways that are not obviously profitable for enterprise partners - training, capacity building, public service tie-ins to for-profit or OTT platforms, partner-driven initiatives, match-making, and entrepreneurial support. This is a critical role for the development community, aiding both end users and the companies that serve them. Jumping into maturity (or being dragged into it) can be traumatic, and every driving student can use a good co-pilot.

Wednesday, December 10, 2014

Not so fast

Anyone paying attention to the news can be forgiven for feeling that things have been moving really fast lately. In less than 10 years, over half the world could be connected to the Internet via smartphones. People will order (and pay for) everything electronically, and products will be delivered by drones. We'll go from point A to point B in electric vehicles that drive themselves, and wear a diverse array of devices and sensors that inform our health, manage our time, and control our "things" (fridge, car, solar panels, etc.). Our glasses will take videos and stream our lives on Facebook, auto-saved to the Cloud and scanned by data-bots that mine our life-streams for marketing gold.

It's easy to feel that the current rate of change is so fast, it's no use designing for current markets. The big winners are designing ecosystems, not products. But this would be a mistake. Yes, mobile phones have arrived, even in remote, rural areas of developing countries. And in some countries, they are being used for an impressive variety of financial, health, entertainment, or social services. But the vast majority of people in emerging markets still use mobile phones as a tool for basic communication. Their adoption of new mobile services is gaining momentum, but it will always be guided by the perceived utility and relevance of the service. Feature phones are regularly used to send or receive money because it saves people from long, expensive bus rides, or from walking around with a pocketful of cash. But mobile money is still not very common in mature markets. As two billion emerging-market consumers acquire smartphones, there is no reason to believe they will use apps and services in the same way as they do in developed countries.

Conventional wisdom says that companies must control the platforms and onramps to the mobile web to thrive in the global market, but there are opportunities for any company that supports, enables, and promotes the development of locally relevant content and services. Large and small companies in many industries can directly engage with local content and service developers through acquisition, partnerships, and incubation programs. As the pace of change quickens and smartphones usher in the Internet of Things, even appliance makers need to understand the challenges of owning a fridge in Zimbabwe.

Monday, October 27, 2014

The Tension Between Those Who Have Data, and Those Who Need It

By David Sessions

In recent weeks, experts from all over the world have come together to solve some very vexing issues relating to the use of data by private institutions, public agencies, and civil society.  As the sheer volume of data collected begins to mount, and myriad sources of new data come available, questions emerge about who should have access, under what conditions, and what role the data owner has in governing its use.  In most cases, individuals are unaware their data is being even being collected and used without permission.  But data has significant utility in solving social issues such as disease containment and eradication, poverty, government service delivery, and even the creation and timely provision of commercial products, so the issues must be resolved.

The Stanford Center on Philanthropy and Civil Society (Stanford PACS) recently hosted a conference with over an hundred participants on the topic of Ethics of Data in Civil Society.  At the conference, scholars, activists, policy makers, and funders considered the implications of how data are collected, stored, and disseminated, then suggested specific actions that would promote access to data while maintaining individual rights.  Policy that governs data in both developed and emerging markets were tested through working small working groups and active discussions with the entire conference.  The conference produced several actionable ideas, university courses, and even a potential for a startup company to evaluate algorithms used to analyze data.

Given the number of conversations taking place in other venues on the topic of data ethics, the problem is growing and is exacerbated by a wide diversity of policy.  Some policies restrict the use of certain data under any circumstances, and the liability for misuse or loss remains with the data collection entity, regardless of how or where the data enters the public domain. Meanwhile, policies provide little or no protection for the individual, much less any control.


Search engines, mobile phone companies, financial institutions (largely through payment accounts like debit or credit cards), and social websites all collect behavior and transaction data.  As access to the Internet becomes more ubiquitous, the responsibility for the ethical collection, access, and governance of data will only increase.  These issues are complex, and the solutions will require unprecedented collaborations across political and geographic boundaries.  Those with the most power in this conversation are those who profit from data, and they must take the lead in providing solutions whether through the execution of an active Corporate Social Responsibility program, or because they understand that by improving the lives of all global citizens they create larger addressable markets for their products.

Monday, October 20, 2014

Gold Rushes and Good Deeds

As articles on Myanmar (or Burma) pop up in the news like so many mushrooms, there was some debate about whether to address the opportunities in the country as a corporate or philanthropic issue. (Vital Wave alternates between corporate and philanthropic editions of the Nugget. With a business-forward approach to development, and an emphasis on sustainability and social responsibility in business growth, we try to provide something of value to all readers in each edition.)

Most reports on Myanmar, particularly in the telecoms and mobile services space, see it as the next big Gold Rush. Breathy pronouncements about the untapped, 50-million-person market and the inevitable rapid uptake of smartphones promised steep growth rates and high profits. But in reality, the companies that stand to build an honest, sustainable, and profitable business in Myanmar are already active in other Southeast Asian markets, paving roads to the gold-laden Burmese mountains with years of relationship building and regulatory battles. In short, you know who you are, and you know what to do. 

Far more intriguing is the potential role of the development community in Myanmar. The country presents a unique opportunity to measure the true economic and social impact of mobile technology in relative isolation. All those claims about the broader economic bump from ICT investment can now be validated or improved. But few development organizations will be content to stand back and observe. There will also be a vital role to play in implementation and education. Many reports on mobile services conclude that a significant barrier to adoption is a lack of understanding of exactly what a smartphone can do. In most markets, operators, handset manufacturers, and service providers are content to let awareness grow organically. In Myanmar, however, the technological literacy gap is likely to be wider than in other Asian countries, particularly in rural areas. Development organizations can steer the perceived utility of mobile phones toward self-empowering tools and services, and away from time- and resource-sucking games and social media sites. They can also help educate users about the potentially negative impact of new technologies - loss of privacy, ubiquitous advertising, and government surveillance. As the Gold Rush in Myanmar unfolds, the development community can ensure that some of that gold dust settles on Burmese entrepreneurs, activists, women, students, teachers, doctors, farmers, and so many others.