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.

Monday, October 6, 2014

A Piece of the Pie a la Modi

Last week, Adobe quietly announced it would close its R&D center in China due to rampant software piracy, a strategic shift toward a cloud-based, software-as-a-service business model, and China's increasingly hostile business environment. Just a few days after Adobe's announcement, India's new Prime Minister, Narenda Modi, was having lunch with Wall Street's fattest cats, a cozy dinner with President Obama, and a loud rally with 19,000 Indian-Americans in Madison Square Garden.

Modi's Magical Mystery Tour of the US was perfectly timed. As the list of American companies being harassed, blocked, banned, investigated, censored, shuttered, or spied on by Chinese authorities continues to grow, few can blame them for seeking another billion-person market with good growth prospects. Meanwhile, Modi is making all the right noises about improving infrastructure, cutting red tape, and welcoming foreign partnership and investment. In fact, there's a big pile of cash looking for a home right about now. Foreign direct investment in China was down 17% in July, and 14% in August - the first consecutive double-digit drop since 2009. The Financial Times blames China's protectionist policies, slowed production, and distressed banking and real estate markets for this pull-back. Business growth in India, on the other hand, has rebounded from years of stagnation since Modi took office. Everything from cookies to tires is selling well, riding a wave of consumer optimism and a steadily growing middle class. One Asia-focused investment banking company, CLSA, predicts that India's economic growth rate will exceed China's as early as 2016. 

It's too soon to shift all the eggs from the Chinese to the Indian basket. India has stubborn infrastructure, bureaucracy, and poverty problems that will take years of focused, effective governing to overcome. But the contrast between the current Indian and Chinese attitudes toward partnership and investment is stark. If Modi succeeds in reforming India's huge bureaucracy and creating honest incentives, there will be excellent opportunities in a wide range of industries. Modi's own commitment will be tested when foreign companies push for lower competitive barriers (e.g., as Amazon and Alibaba battle local heroes like Flipkart and Snapdeal). But if reality follows rhetoric (not always guaranteed), smart companies will start throwing their nets a little wider to catch the world's fastest-growing big fish.

Friday, October 3, 2014

Into Africa

Which area of the world boasts seven of the top 10 fastest growing economies since 2011? Latin America - nope. Asia - so ten years ago! The place to be for real growth is Africa, where private equity investments have doubled in just two years, and the US, Chinese and European governments are tripping over each other to pave inroads for their own corporations. In fact, the World Bank says the collective economy of the entire continent grew by 5.6% last year.

The first US Africa Summit, held in Washington DC in August, was widely reported as a pivotal shift in perceptions of Africa as a place of war, corruption, and disease to a place of economic growth, investment, and grassroots innovation. Many suspect this shift in perceptions is due to a realization among American politicians and business leaders that China is far beyond the US in terms of market creation in Africa. Companies in a wide range of industries are now forging ahead in Africa despite persistent challenges to the business environment (e.g., infrastructure, socioeconomic inequality, corruption, and regulatory obstacles). Technology, pharma, media, and consumer goods companies reason that the burgeoning young, urban consumer class, though still a minority in all African countries, has more disposable income and the tools (i.e., phones and Internet) to buy what they want.

But where exactly are the greatest opportunities? Corporations are approaching the market from the top-of-pyramid down to the middle class, and the development community from the base-of-pyramid upwards. In such an environment, the most potent opportunities are at the intersection of corporate and development community interests. For MNCs, this means designing and delivering digital and mobile services with both a strong commercial value proposition and the potential for social impact. As the development community seeks to bring digital and mobile services to scale, there will be a real opportunity for enterprise-grade solutions and platforms that deliver key financial, health, agriculture, and public services. (At the US Africa Summit, Power Africa was frequently cited as a model initiative.) For their part, local governments are playing the tricky game of encouraging investment without creating dependency or hobbling local industry. Despite the increasing power of the consumer class, few companies will succeed without the collaboration and support of key government and local stakeholders. As Africa grows and flexes its economic muscle, multinational technology companies will do better to be seen as a partner than as a vendor.