Entries in business model (28)


Africa's new relationship to innovation

I enjoyed this recent piece in the Economist that looks at technology in Africa.

Technology deployment and innovation in Africa was for a long time based on "hand me downs" from the Western developed world, but the paradigm for innovation across the continent is evolving. Today a host of technologies are being deployed, tested, and developed in Africa -- even before they are implemented elsewhere.

Examples of this include mobile payments, solutions for broader and more efficient wifi, and drone-based air cargo services. These initiatives are based on serving African requirements -- such as supplying food or medicine to remote communities or refugee populations -- but they have broader potential.

What is responsible for this changing relationship to innovation and technology? The authors point to a "peculiar confluence of economic and political circumstances." Lighter regulation and weak governance means that engineers can try things on the continent that are either prohibited or prohibitively bureaucratic elsewhere. The shortfall of traditional infrastructure such as roads or landlines means that new technologies or business models have a more open playing field.

Business investment is also growing, and the article ends with the hopeful prospect that Africa will become the source of new solutions for the challenges it's facing.

Image source: The Economist

-- Clara Shen



Capitalism, equality and questions about the sharing economy

In the opinion of OuiShare connector Arthur De Grave, the "sharing economy" is not really about sharing, altruism, or a moral revolution. Rather, it's one element of the "collaborative economy (which includes the distributed production, peer-to-peer finance, and open source movements), and it raises a number of interesting questions.

De Grave seems primarily concerned with the question of whether the sharing economy is part of the next evolution of capitalism.  Within that framework, he also explores two areas of emerging discontent with the sharing economy:

  • Is the sharing economy addressing inequality in ownership structures? And,
  • Will it destroy jobs (and the privileges and programs workers have fought hard to win over the decades)?

In a wide ranging essay that makes references figures from Thomas Hobbes to Eric Schmidt, De Grave covers a great deal of ground. While ultimately stopping short of making a prediction or conclusion, the piece does create a potential framework for a more thorough exploration of these important questions.

Image source: Forbes

-- Jia Yan Toh



Inclusive business & managing unintended consequences

This month Tufts' Fletcher School hosted a two-day conference, Inclusion Inc., to test the idea that “the only competitive business is an inclusive business.” In this summary written by the senior associate dean of the school, Bhaskar Chakravorti, we learn that inclusive business models and strategies can have unintended consequences. According to Chakravorti, these include:

  • Pressures of public market expectations: The first unintended consequence of inclusive business has its origins in an organizational contradiction: key stakeholders – shareholders, market analysts, and even line managers whose compensation is tied to quarterly targets and stock performance – may not support a corporate decision to be inclusive.
  • Stresses along the supply chain: It is easy to imagine the pressures placed on suppliers as inclusive businesses push into market segments where the margins are thin and volumes are large. The challenge is particularly acute in the emerging markets where value chains are incomplete and the supporting infrastructure and institutions are under-developed.
  • Distortions in production: As an inclusive business creates incentives for local communities to join the value chain, resource are re-prioritized to align with commercial demands.
  • Distortions in consumption: Many of the original critiques of the movement to serve the “bottom of the pyramid” consumer made the observation that the poor will spend their limited budgets on the products that are most successful in reaching them. It begs the question at to whether more readily available products have displaced essentials from the consumption basket.
  • Challenges in scaling-up frugal innovation: Many inclusive businesses get a jumpstart through improvisation and assembling of locally available resources – often described as frugal, MacGyver – after the endlessly inventive 80s TV hero – or, in India, “jugaad” innovation. These innovations capture the imagination, attract media coverage, and, most importantly, attract resources. Unfortunately, the vast majority of such ideas have had difficulty deploying at a large scale.

We appreciate the concluding suggestion that before taking the "pill" of an inclusive business model, "it is advisable to read the label on the side-effects first and manage them before taking the pill and enjoying its many benefits." Certainly, any new ventures will bring some unexpected results and generate lessons to be learned -- but trying to understand the "side effects" in advance should improve the chances for success in the long term.

Image source: Fletcher School of Law and Diplomacy

-- Clara Shen


Modernization in many forms

Lee Kuan Yew, founder and longtime ruler of Singapore, passed away last week. His accomplishments in establishing Singapore as a modern economic power have been widely recognized and lauded, and he will be missed.

Mr. Lee's success in building a nation-state is instructive in many ways.  Recent commentary in the New York Times has focused on the relationship he had with China -- for while his government was an anti-communist bastion during the Cold War, it was also not a liberal-Western democracy, and the Chinese are interested in learning from his example.

“Singapore created a miracle of development that has astounded the world,” said a commentary issued on last week by Xinhua, China’s state news agency. “The impact and significance of this miracle lies in how Singapore forged a path that did not lead to Westernization, and instead took a path of Singaporean modernization through self-reliance drawing from the strengths of West and East.”

Taking a step back from global politics and looking at the larger question of modernization, Singapore's path demonstrates that while globalization and modernization are common driving forces worldwide, they are not uniform. There are multiple globalizations, multiple forms of modernization, and this has significant implications for corporations doing business on a multinational scale.

At Catalyst we have been interested in this topic for a number of years. We held a multidisciplinary conference a while back to examine what forms modernization was taking in Asia, and what this meant for economic and business models -- you can read our pre-conference and post-conference snapshots by following the links -- and our learning process continues.

-- Clara Shen


Charities, cross-sector collaboration, and "stealing" models that work

Corporations are re-assessing business models and moving, in some cases, to implement social business frameworks in collaboration with nonprofits. What about the nonprofit sector itself?

I enjoyed this article by Eric Stowe (founder and director of Splash -- an international nonprofit working on smart solutions to the water crisis in developing countries), advocating the need to keep social business models open source to achieve transformational scale. He provocatively suggests that chartitable organizations should promote the "theft" of their operating plans in order to foster greater, faster success.

By opening up our models, successful groups will make second-mover advantage (when a company benefits from feedback on a competitor’s earlier release) possible—in fact, probable."

It's an example of the charitable sector opening up to cross-sector collaboration, giving the opportunity for nonprofits, funders, governments, and companies to work more closely and act collectively to deliver effective solutions for global social and environmental problems.

Stowe has also shared his vision for the charitable sector on achieving sustainability through local community empowerment in his recent TEDx talk, "How To Kill Your Charity."

-- Jia Yan Toh