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.

Money Changers

What are the basic tools in your personal financial toolbox? Cash, of course. A debit card tied to a checking account. Credit cards. A savings account. And then there are a whole bunch of comparatively passive tools designed to stave off disaster - health and life insurance, retirement account, mortgage, stocks, and bonds.

Now imagine you were born and raised in rural Tanzania, or Thailand, or Brazil, and you have none of the pre-conceived notions about those financial tools. There are no banks in the village, and even if there were, you're not sure the bank can be trusted. No one owns a credit card, or insurance, or stocks or bonds. You're paid in cash for the work you do. Your daughter convinced you to sign up for mobile money when she moved to the capital to work, and it was the easiest way to send money home. Then, it seems overnight, you could use your mobile wallet to buy food, or pay for a taxi. Now you have a better phone, and your daughter says you can use it to find information about the weather or yesterday's game, open a savings account, buy insurance, apply for a small loan, and pay bills.

The fact is, the concept of money is undergoing a fundamental transformation, and different players are stepping in to offer financial services where there were none before. (Think M-Pesa and its imitators, Google Wallet, and Facebook's quiet, impending launch of mobile money in Ireland.) New financial services by any company will have to gain the trust of wary consumers and navigate a tricky set of regulatory and business-model obstacles. Still, the relatively open regulatory environment, the greenfield technology and banking landscape, and a clear willingness by consumers to adopt technologies that improve their lives make developing countries fertile ground for the introduction of new financial services. Emerging markets are already out in front of a brave new financial world, and villagers in Tanzania, Thailand, and Brazil are starting to look at our paper checks and credit cards with a mix of confusion and humor.

Mobile Meals

The Economist is the latest to serve up lukewarm Emerging Market news after a decades-long buffet with all the gluttonous expansion the world could ingest. Slowed growth, lackluster ROI, bribery and corruption scandals, and of course the PC getting served with divorce papers by a few billion former prospects. Companies that have counted on emerging-markets growth have fallen short, leading some to question whether the buffet is closed for good.

These are worrying trends, to be sure, but they are hardly signs of the apocalypse. Emerging markets are not the feast they used to be, but they still offer myriad opportunities for growth. As smartphones pass the noteworthy milestone of outselling feature phones globally - due largely to swelling sales in Asia, Latin America and Eastern Europe - many opportunities will be mobile-based. Besides the obvious boon for operators and handset manufacturers, there is promised growth for everyone in the mobile Internet value chain (app developers and store owners, content and service providers, networking and even peripherals). The ad agency Publicis, which recently merged with Omnicom, has seen the writing on the wall and gone on a buying spree of emerging-market firms. As billions of new consumers acquire smartphones and tablets (and the means to purchase more goods), it makes sense to be the one who speaks to those buyers. 

Who will mobile advertisers be working with in 10 years? They will be working with companies that develop products and services with compelling features and functionality, at the right price for wildly diverse emerging-market customer segments. Their clients will have a plan for navigating an increasingly competitive environment, hyper-localized go-to-market strategies, and careful management of country risk factors. They will be working with company executives who don't mind snacking on-the-go. 

Oh Moses, Where Art Thou?

When a small town government on the New Jersey shore wanted to build protective sand dunes along the Atlantic coast, it faced stiff resistance from homeowners who demanded compensation for losing their view of the ocean. The conflict made its way to the courts before Hurricane Sandy hit the Northeastern coast in October, 2012. After Sandy, the courts, governments at all levels, the real estate and insurance industries, and even homeowners with a view admit that houses shielded by natural barriers fared much better than those without. The case for compensation was blown away like a 1920's bungalow.

The argument for "green-gray" infrastructure – a combination of engineering and natural barriers like sand dunes, oyster beds and salt marshes – is building worldwide as rising sea levels cause increasingly erratic weather patterns and violent storms. Governments and funders have learned the hard way that vast infrastructure investments can be completely undone by natural disasters. This is particularly true in seaside urban centers in developing countries, where huge populations, entrenched poverty, and misguided policies put tremendous pressure on the environment through polluting, overfishing, and the destruction of coastal forests. In fact, as part of a broad research effort, studies funded by the Rockefeller Foundation found that there is substantial interest by funders and governments in climate change adaptation, but little funding is focused directly on protecting the 200 million urban poor in coastal areas.

There are limits to what any single organization can do to combat rising sea levels. Government efforts generally end at their own borders, and the motivation for private industries (e.g., engineering and construction) is to build, baby, build – regardless of the potentially long-term negative effects of artificial sea-walls and dykes. The most likely candidate for battling the rising waters isn't a single entity; it's a coalition of stakeholders focused on funding and scaling high-profile projects to demonstrate the effectiveness of green-gray infrastructure. A cross-sector coalition including the public and private sectors, non-profits, foundations, and academia can provide incentives for sustainable green-gray strategies, while discouraging short-term, ecologically harmful engineering and construction projects. These coalitions may not be able to hold back the waters, but they can mitigate risk and maximize impact by tying funds to sustainable long-term solutions. 

Emerging Markets Go Social

Online users from emerging markets are more engaged in the Internet than their counterparts from developed countries. So concludes a recent survey of nearly 50,000 online users from around the world. User engagement - as determined by levels of usage, behavior and attitudes towards the Internet - is far higher in Egypt and China, for instance, than it is in countries such as Finland and Japan. Internet users in emerging markets are also more engaged in social networking, instant messaging and blogging than email and static Internet pages, which are more heavily used in developed counties. And people in emerging markets are becoming avid online users despite having less access to affordable and reliable high-speed Internet than in developed countries.

The results of this survey comes on the heels of a host of reports underscoring the increasing global importance of social networking. A recent report published by Intuit on the 20 trends that will shape the next decade cites social networking and collaboration as key trends that will infiltrate education, work and life. The McKinsey Quarterly spotlights the impact of digital communities, networks and collaboration on the business landscape while also focusing in on how Asian countries such as Malaysia, China and India differ in their Internet usage habits and content preferences. What is clear from these reports is that - while individuals in emerging markets have become increasingly digitally savvy and connected - they are still thirsty for content, tools and services that will enhance their experience as citizens, consumers and employees. 

Unleashing this demand will require creative product, partnership and promotional strategies with a little help from improving infrastructure. There is an opportunity for multinationals to make social networking tools available on low-end devices, still pervasive in the developing world, while fostering the development of localized applications. Bringing in new partners such as advertisers and other third parties to defray the cost of the device and services to the consumer can improve accessibility and catalyze further network effects. Finally, there may be opportunities to utilize the Internet as a sales channel and social networks as a promotional vehicle, but companies may want to tool their approach to local usage patterns and preferences.