Monday, September 28, 2009
The growing buzz over the use of mobile phones to bring access to financial services to the world's poor got a boost this week when The Economist featured the trend on its cover. The issue's survey on telecoms in emerging markets puts a spotlight on the well-known success of ventures such as Safaricom's mPesa, as well as the efforts by MTN to extend a mobile money service it has launched in Uganda to other markets in Africa. The efforts of organizations such as the Grameen Foundation, FrontlineSMS and Google are also discussed, while the mHealth for Development report authored by Vital Wave Consulting is cited as proof of innovation in the health space.
While mobile money and other mobile services (in areas like health, education and agriculture) show tremendous potential to transform the lives of the world's poor, serious obstacles remain. Regulatory concerns, particularly for trans-border transactions, have to be overcome, while the objections of banks and other traditional providers of financial services may slow the momentum for mobile money in many countries. Each successful demonstration of mobiles' power to transform lives, however, increases the likelihood that mobiles will be the tool to lift millions out of poverty.
Friday, September 25, 2009
The mHealth Initiative hosted a very interesting West Coast Seminar on How New Communication Patterns Will Change Healthcare in San Francisco last Friday.
Interesting tidbits from the various speakers throughout the day:
- EMTs in San Diego spearheaded the introduction of a mobile health application that would allow them to begin to administer treatment and access patient records (i.e., allergies to medications, etc.) on the way to the emergency room.
- The European Unions ultra-strict privacy and medical-oriented regulations make mHealth almost impossible in Europe....shame as Europe is so much more advanced than the US in terms of adopting text messaging.
- Walmart and CVS are not competing (successfully) for primary care physicians. One doctor mentioned that if hospitals alienate primary care doctors by requiring that they work after hours to answer patient emails and SMS queries, that they may jump to Walmart and CVS - reasonable working hours, decent pay...new competitive threat.
- Doctors categorically DO NOT want patients to send them SMS or email them directly - the doctors fear that they may not receive the message until it is too late and the patient has experienced a "negative event" (e.g., landed in the ER room or died). Doctors prefer for these communications to occur at the practice/group-level where a timely response can be better assured. Not so much a legal liability issue as a ethical one for them. They DO want to communicate amongst themselves, using any and all communication modes possible (e.g., voice, email, IM, video)
- One mega provider's virtual care data (2008): 24 million eVisits, 6 million secure emails, 6 million electronic prescription refills and 17 million electronic transmissions of lab results. In their SMS trials they found that after stating their name (~20 characters) and a mandatory opt out statement (~25 characters), they only had ~120 characters left in their SMS message - not much to work with
Moscow’s SKOLKOVO Institute for Emerging Market Studies (SIEMS), a think tank that focuses on emerging markets with offices in Beijing, Moscow and India, recently released a report on Operational Challenges Facing Emerging Multinationals from Russia and China. Is definitely worth reading, but for those pressed for time, below is a short summary.
SKOLKOVO analyzed 92 Chinese and 55 Russian multinational firms and identified six main obstacles - and methods of overcoming them - to international expansion (in order of importance):
Challenge #1: Low brand recognition
- potential solution: build your brand, focus on consumers in less-loyal, more price-sensitive emerging markets
- examples (not from the report): from Bharti's (India) interest in MTN (Africa), Telmex/America Movil's (Mexico) expansion across Latin America and Huawei's (China) success in emerging markets across the globe are all examples of emerging-market firms' exploration of other emerging markets. With different perceptions of risk and cost structures than their developed-world peers, these firms may also be better positioned for success in these markets as well.
- potential solution: hire locals
- example: "VympelCom has made it a policy to gradually involve local talent in management, replacing Russian expatriates – despite the fact that successful local staffs often see the job in a multinational as a chance to leave the country. Such policies are not very characteristic of young multinationals."
- potential solution: make tactic knowledge explicit and foster organizational learning
- example: "According to Erik Eberhardson, who had led GAZ through the integration of LDV, two of his main takeaways from the LDV integration were that “one must ‘mix’ people more actively” and that “one should pay more attention to internal communication.”
- potential solution: Start with scale in mind and empower local subsidiaries while maintaining central control
- example: "managers in remote subsidiaries should have enough decision-making power to adapt to the various environments, and be accountable for results. At the same time, the corporate center should have sufficient authority to harness potential synergies, failing of which would not create additional value."
- potential solution: be informed and prepared...the authors offer little guidance in this area aside from saying to rely on local connections, but not too heavily on one group as they may lose favor as government administrations and preferences shift..
- potential solution: Tailor HR strategies to local, cultural norms
Wednesday, September 23, 2009
Indeed many multinationals are pursuing both sets of emerging-market customers. Nokia has penetrated the low end with affordable entry-level phones while maintaining a foothold at the high end. Its new Comes With Music service will initially provide high-end customers in markets such as Brazil, India and Mexico with unlimited music downloads. Meanwhile, the company has unveiled initiatives aimed at lower-income consumers such as installment plans, agricultural services and mobile payments. Microsoft has also adjusted its products to capture a larger segment of the lower-end market. It previously launched the Windows Starter Edition with reduced functionality and price compared to its standard operating system. More recently, Microsoft launched the new OneApp platform, which enables low-bandwidth versions of social networking and other applications to run on lower-end phones common in emerging markets. Adobe is also catering to both market segments. It decreased the features and price of its flagship Photoshop software to create Photoshop Elements, which is usable and affordable to a wider customer segment. The entire Netbook product category was initially geared to lower-income, first-time purchasers in developing countries, but found another market as a second PC in the developed world.
Targeting consumers at both ends of the market can run the risk of confusing a company’s brand identity, but there are also some clear benefits. High-end sales yield attractive margins which can help offset the smaller margins garnered at the low-end of the market. Entry-level products and services can build customer brand loyalty that may extend to a future purchase of a more advanced product. This also speaks to the benefits of targeting the growing middle-tier markets of the developing world. Addressing all levels of the market does not necessarily require a completely new offering. Through relatively small changes in functionality and pricing of core products, implementing new business models (e.g., services), or finding alternate usage scenarios, a company’s current offering becomes relevant to groups of consumers with entirely different needs, income levels and purchase behaviors. Multinational corporations may want to consider how their products, services and business models might be adapted (or repositioned) to have it all in emerging markets.
Friday, September 18, 2009
The momentum for using mobiles to promote development built further as the World Bank hosted a workshop on the use of mobiles for social and economic transformation on Wednesday at its headquarters in Washington. Speakers throughout the day used the opportunity to remind Bank employees, as well as observers watching the live webcast, that while mobiles present a great opportunity to boost development, a lot more needs to be done before the world of mServices reaches critical mass.
Vital Wave Consulting CEO Brooke Partridge kicked the day off with a presentation that laid out the scale of the opportunity provided by the global explosion in mobile and talked about the ways in which the World Bank and others in the development community could support efforts to scale mobile applications, including research that supports the business case for mServices. Senior Consultant Brendan Smith followed later with a talk on the landscape for mobile health applications, and pointed to some of the success factors that could allow the many pilots out in the field reach a level of sustainability that might be a game changer for those without access to quality health care.
Other presenters, from organizations like CGAP, Grameen Foundation, MobileActive and Voxiva, covered areas such as mobiles in education, rural development, governance and banking/payments. The common refrain was one of cautious enthusiasm: mobiles now reach further into the developing world than any other infrastructure and hold huge potential to change lives, but a great deal more coordination on the part of players in the government, NGO and private sector will be required before that potential is realized.
The main event page is at http://go.worldbank.org/7ZD6MGXWF0. You can watch the recorded webcast at mms://wbmswebcast1.worldbank.org/CITPO/2009-09-16/Mobile_Applications.asf.
Monday, September 14, 2009
Two weeks ago, we posted about Russia's economic travails and the perception of it as a tough place to do business, and we included a link to an article about Swedish furniture giant IKEA's recent decision several months back to halt new investment in the country until the country's massive corruption problem improves. One of the biggest obstacles cited by the retailer and other foreign investors is the demand for bribes by Russian officials in order to secure approval for hookups to utilities such as electricity and gas.
The plot thickened late last week, when IKEA revealed to the New York Times that it had recently lost a court decision in Russia after it canceled the contract of the company providing generator rentals (IKEA's way of avoiding bribes was to install its own generators). It did this after learning that the executive managing the generator rental company relationship had taken kickbacks to inflate the price of the generators, costing IKEA $196 million over two years.
IKEA thought it could recoup some of the lost money in Russian civil court, but instead the court ruled in the rental company's favor and ordered IKEA to pay it $7.1 million, to be held in escrow until an appeal was heard. But a lower court ordered the judgment money be withdrawn from IKEA's Citibank account. IKEA officials and lawyers suspect corruption in the courts too, as opposing lawyers seemed to know the decision in advance.
IKEA released details of the case in order to use publicity to embarrass Russian authorities into action. But graft seems to be so pervasive in Russia (the country ranked 147th out of 180 in Transparency International's rankings of clean government) that the countries authorities may be incapable of embarrassment. The losers (other than IKEA) in all of this? The average Russian, who pays higher prices and gets less choice when companies, both foreign and domestic, have to pay a bribe in order to do business.
Friday, September 11, 2009
The World Bank is hosting a workshop on mobile applications and their use in development, and you are invited to participate via live webcast/social media in this e-Development Thematic Group Workshop. Vital Wave Consulting CEO Brooke Partridge and Senior Consultant Brendan Smith will be presenting on the development of mobile services and the potential of mobile health applications to improve health outcomes around the developing world. Listen in to their trainings live or after the event.
"Mobile Innovations for Social and Economic Transformation. From Pilots to Scaled-up Implementation"
Time: September 16, 2009, 9:00 am - 5:15 p.m (All times Washington DC)
Event Web page: http://go.worldbank.org/7ZD6MGXWF0
You can watch live and recorded webcast at: www.worldbank.org/edevelopment/live
Click here to register for live webcast: http://go.worldbank.org/BGZ8XU3KF0
Follow the event on Twitter at hashtag #Mobile09
'Explosive' is the only way to describe mobile phone growth. Over half of the world's 6.5 billion people now use a mobile and over 60 percent of mobile phone users live in developing countries. Mobile-based innovations are quickly emerging as the new frontier in transforming government, health, banking, education and many other sectors due to fast growing penetration of mobile phones even in the poorest and remotest areas of the globe. Many services can be now made available on a 24x7x365 basis at any place in the world covered by mobile networks, which today means almost everywhere. Through mobiles, for the first time ever, many public and private services have now reached poor households and communities. The demand for mobile applications is fast picking up developing countries. The multitude of highly innovative applications have been developed for mobile banking and payments, phone based information services for farmers and fishermen, locations based medical services and monitoring and data collection in the health sector, to name a few. However, the enormous potential of mobile devices for transforming delivery of public and financial services is still largely untapped.
This workshop aims to raise awareness of World Bank Group staff of the transformational role mobile technologies can play in improving service delivery, efficiency and transparency by show-casing mobile-enabled innovations in a number of sectors and identifying emerging lessons learned and ways to scale up for achieving operational efficiencies and development impact.
9:00 -10:15 am Overview of Mobile Innovations Space and Enabling Environment
10:15 -10:30 am Coffee Break
10:30 -11:45 am Mobile Innovations in Financial Services
11:45 - 1:00 pm Mobile Innovations in Health
1:00 - 2:30 pm Working Lunch & Session: Mobile Innovations in Education
2:30 - 3:45 pm Mobile Applications in Agriculture and Rural Development
3:45 - 4:00 pm Coffee Break
4:00 - 5:15 pm Mobile Innovations in Governance
Should you have any questions, please contact us at email@example.com
e-Development Thematic Group, World Bank
Wednesday, September 9, 2009
The term 'BRIC' was coined by Goldman Sachs economist Jim O'Neill when he argued that these four largest emerging economies could become the dominant economic powers of the world by the middle of this century, eclipsing the economies of the Group of 7 industrialized democracies. The four nations have large populations and dominant positions in manufacturing (China), services (India) and raw materials (Brazil and Russia). Yet each of them has its problems. Corruption, persistent poverty and a groaning infrastructure are issues that afflict each of the BRIC nations to some extent. These are all obstacles that are worth overcoming, but only if there is a potential reward in the form of access to a vibrant, growing economy and consumer market. The difficulty of doing business in Russia, along with the more recent decline in economic opportunities has understandably caused many companies to prioritize the other 'BRIC' countries in their strategic growth plans.
Categorizations, such as the 'BRIC' countries, can be useful indicators of market size and economic power, but such designations cannot replace thorough due diligence regarding barriers to entry and other areas of business risk. The 'BRIC' club also eliminates some very interesting and sizable markets such as Mexico which trails close behind India in terms of GDP and provides nearly 10 times India's average per capita income. Firms would do well to consider a wide range of countries for revenue growth and determine a nation’s relevance to their own business strategies on a case-by-case basis.
The Vale Columbia Center (a joint effort between Columbia Law School and the Earth Institute at Columbia University) published some interesting briefs on outward FDI that are worth reading. These include briefs on China, India and Brazil.
China: Refutes anecdotal evidence that most outward FDI from China is directed toward Africa (actually stays within Asia) and is focused on natural resources (actually focuses in the service industry). Confirms the fact that most of the investments are made by state owned enterprises, although that appears to be changing.
India: After several years of near triple digit growth in outward FDI, investments began to decrease in 2008 and continue to do so in 2009. The global economic downturn and credit crunch are playing a large role in this decrease as are the depreciation of the rupee and decreases in export earnings.
Brazil: In contrast to China, the vast majority of Brazil's outward FDI is investments made by private sector firms in developed countries. Similar to China, however, it too focused its outward FDI on the services sector, specifically financial services. The main inhibitor of outward FDI seems to be tax-related, with double taxation a common concern.
Thursday, September 3, 2009
According to the IR/PS website, it "is the University of California's only professional school of international relations as well as the only such program in the U.S. focused on the Pacific region – Asia and the Americas. Only 20 years old, it was recently ranked in the top ten for foreign affairs by Foreign Policy."
Several Vital Wave Consulting team members - including Julie Pohlig and Yevgeniy Shishkanov - are IR/PS graduates and the firm continues to engage with the school by providing real-world consulting opportunities to its students.
Congratulations Brooke on this award!