Big Data = New Class of Economic Asset

In a single week, a small-scale farmer in rural Kenya may use his mobile phone to pay for seeds, search for co-ops offering the best prices for sorghum, and text his expatriate brother asking for money for school fees or medicine for a sick child. This farmer’s mobile phone usage may be of interest to a sociologist or cultural anthropologist. But when combined with usage information from 27 million other mobile subscribers in Kenya, the data paint a unique, unprecedented image of public behaviors, preferences, and needs. According to IBM, 2.5 quintillion bytes of data are generated worldwide every 24 hours. Interest in the collection and use of this so-called "big data" is gathering steam. It is new class of economic asset, like currency or gold.

Yet, there is an important difference between developed and developing countries in terms of data creation. In the developed world, data is produced by a wide variety of sources - Internet-enabled computers and mobile devices, ATMs, cash registers, GPSs, cell phones, RFID tags, and many others. In urban areas of developing countries, the variety of data sources is beginning to rival mature-market cities. However, in the remote areas of many countries, mobile phones are by far the dominant source of data. This presents a unique opportunity for private companies, governments, academic institutions, and development organizations. Data from mobile phones can be used by companies to support new product definition, market segmentation, and ongoing product and service development. Governments and NGOs can use big data to allocate resources, evaluate and improve social programs, and quickly identify (and respond to) health and environmental crises.

In a recent report for the World Economic Forum, Vital Wave Consulting showed that momentum is growing for a centralized "data commons" that will guide public and private sector efforts to gather, clean, protect, and share data. This work is being advanced by the UN, NGOs, academic institutions, and innovative organizations like Kenya’s Ushahidi and San Francisco’s Global Viral Forecasting Initiative. These groups foresee the application of big data to persistent challenges in the areas of health, public services, agriculture, financial services for the poor, and disaster relief. To be sure, there are obstacles to overcome - privacy and security, data quality, incentivizing private companies to share data, and a dearth of data mining and analysis expertise. But the singular importance of mobile phone-generated data throughout the developing world presents a clearer path to data gathering and usage. And the potential benefits to sharing and aggregating data are becoming more evident each day.

Measuring Gates' Creative Capitalism

Last month’s World Economic Forum provided a good setting for one of Bill Gates’ parting speeches as a Microsoft employee and his personal reflections on the role of capitalism in the modern world. Speaking to global industry and political leaders, Gates urged his audience to find a way to ensure that capitalism serves the world’s poor. Labeling this vision “Creative Capitalism,” Gates advocated a twin mission for corporations: make profits and improve the lives of those who do not currently benefit from market forces. As Gates shifts to management of his $39 billion foundation, he will encourage the world’s largest businesses to design products and services that address the needs of the poor. He suggested that, when profit is not feasible, corporations should be motivated by the recognition that comes with serving the poor.

While “Creative Capitalism” may gain currency as a new buzz word, the concept is not new. Many large multinational corporations (MNCs) have tried to find the right mix of pure philanthropy, market development and business development in poor countries. HP’s e-Inclusion program, AMD’s 50x15 initiative and Cisco’s Networking Academies are (or were) pioneering programs that merge self-interest with service. With a new spotlight on this type of business approach, it is worth noting the most common reason for failure – the challenge of measuring results. While Gates stressed the value of recognition, he did not explain how business managers can measure it. To garner the support of shareholders and ensure long-term company commitment, all forms of value should be quantifiable.

Gates’ spotlight on business in new markets will surely increase public pressure on MNCs to demonstrate efforts in this area. This presents an opportunity for MNCs to apply rigorous business practices to their emerging-market effort. MNCs that are committed to becoming recognizable leaders in the developing world will ensure that programs designed to capitalize on new markets are fully incorporated into the company’s main lines of business, rather than lumped into a soft basket of corporate social responsibility (CSR) initiatives. By developing new methods for quantifying abstract values, business managers can see both the immediate and long-term value of investments in new markets. If companies react to Gates’ call by beefing up their CSR programs, they will be missing out on the lessons learned long before “Creative Capitalism” showed up at Davos.

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