Wednesday, June 22, 2011

New Incubation Labs Boost Mobile Innovation in the Developing World

Egypt's Technology and Entrepreneurship Center recently announced agreements with Nokia to establish mobile application incubation initiatives in Egypt known as mLabs. The partners will provide training, certification, business mentoring and other services to local universities, entrepreneurs and developer communities in order to encourage growth of local mobile applications and content. Incubators - like the mLabs network  supported by infoDev, Nokia and the Government of Finland - seek to build a community of mobile technology entrepreneurs and accelerate development of locally oriented mobile businesses. mLabs typically offer services such as technical training, business training and access to important players in the mobile ecosystem like mobile operators or investors. As the mobile application market is expected to reach $15 billion in revenue in 2014, with over $10 billion going directly to mobile application developers, mobile incubators are expected to multiply in the coming years.

Vital Wave Consulting research has shown that the number of mobile incubators are increasing globally.  However, they are still at a nascent stage and exhibit a range of business and operating models.  These findings are part of a larger report Vital Wave Consulting recently authored for infoDev, Finland and Nokia to support mLabs - and other mobile application laboratory initiatives globally - in the development of sustainable business models. A global landscape analysis of incubators included in the report reveals that there is a spectrum of laboratory-types. At one end are grant-funded laboratories that focus on social returns and assist NGOs and local governments in the delivery of public services. At the other end are profit-driven incubators that work with entrepreneurs to develop commercially viable mobile applications to compete on a broader national or international scale. Other incubators combine these two models to achieve profitability and social returns. Public or private organizations, or a consortium of public and private entities working in partnership, can be equally well suited for sustainability.

While the mLabs movement is still in its early stages, and critical success factors and lessons learned are still evolving, it is clear that many different approaches for operating these programs have enjoyed initial success. Regardless of the business model, mobile application incubators will have increasing impact on the local mobile industry of developing countries, especially in the area of value-added services (VAS). The private sector would do well to pay attention to the growth of mLabs and to the development community as an influencer and investor in application development. Furthermore, for all stakeholders involved - such as development agencies, network operators, handset manufacturers, investors and mobile platform providers - promoting local business models and enabling entrepreneurs to build applications relevant to their local communities are essential components to driving demand for the products and services they offer. 

Thursday, June 9, 2011

A Case for Strengthening CSR in Emerging Markets

The nongovernmental group World Growth recently released a report entitled "Corporate Social Responsibility: How Global Business is Getting it Wrong in Emerging Markets." The report examines the corporate social responsibility (CSR) policies of nine major international corporations including Nestle, P&G and Unilever. According to the report, the CSR policies of these corporations are disproportionately influenced by developed-world NGOs, such as the World Wide Fund for Nature (WWF). As a result, their policies often hurt low-income producers, are misaligned with emerging market national development objectives, and promote causes of little value to local people in emerging markets. 

CSR may have once been understood as philanthropy. However, many firms are realizing that giving away a product or service to communities that need them is often a short-term solution to a long-term problem and are examining other models for social and economic development. Companies like Novartis have encouraged supply chain innovation to create profitable new business models that better serve emerging markets in a sustainable manner. Pharmaceutical giant Novo Nordisk recognized how epidemic diseases strain national health systems in markets where it operates. Together with Oxford University, the World Health Organization and Yale University, the pharmaceutical firm spearheaded an international healthcare campaign focused on improving diets and encouraging exercise to fight chronic diseases that it stands to profit from. Rather than giving drugs away, GlaxoSmithKline cut the cost of its products in its poorest markets by providing regulatory and technical support to establish production facilities with local third-party contractors. 

As the above cases demonstrate, CSR efforts in emerging markets can be executed in a profitable and sustainable manner. Firms seeking to improve their CSR programs in emerging markets can focus on improving the delivery of their products or services to make them more accessible, affordable and usable. In addition to discovering new business models, firms seeking to address local problems can engage in partnerships with experts who understand these environments and the needs of customers within them. Mutually beneficial strategic partnerships can also help multinational firms leverage partner core competencies to help gain access to local markets and support operations. When firms consider the impact of their activities from the vantage point of potential emerging market customers and governments, they are better positioned to discover new business models and capture new sources of revenues.