Entries in value chain (6)


Addressing Ghana's counterfeit drug problem one text at a time

Image Source: Bloomberg, Photographer: Nana Kofi Acquah

Drug Lane, which runs through a market in the heart of Accra, Ghana, is littered with vendors selling painkillers and antibiotics from various pharmaceutical companies, reports a recent Bloomberg article.  Drug Lane's system, however, has such little oversight and is so permeable that as many as one in three medicines sold there could be counterfeit, according to the U.S. Centers for Disease Control and Prevention, compared to just 1% in the U.S. and Europe. This is a major issue for Ghana and other African regions, where according to one study, fake and poorly made malaria drugs contributed to the deaths of more than 100,000 children across Africa.

While many agencies and NGOs have tried to address the issue, one Ghanaian entrepreneur in particular is making headway in the crackdown of Drug Lane and other areas like it. Bright Simons launched his company, mPedigree Network, in 2007. The company sells software that manufacturers use to label individual packs of medication with a 12-digit code hidden under a scratch-off panel on the packaging. Those who purchase the medication can text the code to mPedigree to determine if the product is authentic or not. The company believes that being based directly in one of the regions worst hit by counterfeit drugs offers a competitive advantage, and others agree. According to Jorn Lyseggen, a San Francisco-based entrepreneur:

African entrepreneurs, African startups, (and) African companies, of course are the first and the best to find a solution to local problems.

Technology and local knowledge are powerful tools to help address social issues like counterfeit drugs in African regions. Here at Mars, we are working with one startup through our Kenya-based entrepreneur accelerator program, Maua, called Reliefwatch. The startup helps developing countries that lack the infrastructure to effectively manage supply chains track expired and out of stock medications and medical supplies through cloud technology.

We want to hear from you. Are there other examples in developing countries where technology is intersecting with social issues to drive solutions?

-- Clara Shen


Hybrid value chain and social impact in developed economies

Poverty and economic inequality are global challenges that have an impact on even the most developed economies, as we noted in a post earlier this year. I recently had the pleasure to participate on a panel with an experienced entrepreneur and value chain expert who is involved with i-propeller open innovation -- an initiative to create a platform to allow businesses to address some of the challenges of poverty in Belgium.

Just over 15% of Belgians live in poverty, which affects their material and social wellbeing as well as their health. The i-propeller Business & Poverty platform seeks to use structural and innovative power of business to develop meaningful and scalable solutions. Businesses will, at the same time, be able to gear up their organizations for the future, with innovative solutions and market approaches.

This is an example of a hybrid value chain approach: a process of collaborative entrepreneurship designed to combine the power of innovation and entrepreneurship of the business and citizen sectors. HVCs are partnerships that include social outcomes, but are rooted in a market-oriented for-profit approach. Businesses offer scale and expertise in operations & finance. Social entrepreneurs and their organizations offer lower costs, strong social networks, and a deeper understanding of customers and communities.

We have used this approach in some of our own efforts to test new business models, and look forward to learning of other cases where they have been deployed, or are in the process of being deployed.

Image source: i-propeller

-- Clara Shen


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


The outlook for the African economy and food supply

David Leonhardt gives an interesting assessment of economics and the food supply value chain for Africa in a recent New York Times The Upshot column.

Observing that economic growth on the continent in the past decade has kept pace with growth in the rest of the world (see graphic, below), Leonhardt discusses how a healthy growing economy and a strengthening middle class might transform Africa's food production and value chain.

Image source: New York Times

African agriculture faces myriad challenges, including lack of access to agricultural technology, training, and market information, as well as an underdeveloped infrastructure. Numerous organizations, from the private sector to NGOs and government agencies, are seeking solutions to these challenges. Leonhardt seems optimistic, though he notes that "Progress isn’t inevitable just because it’s happened before."

-- Clara Shen


Developing apps with mutuality

I came across this article regarding the experience and unexpected challenges of building apps for low income Americans, written by a developer from Significance Labs. Significance Labs makes "middle of the diamond" products for developed world, and I found many points from her experience that are relevant to the work we are doing at the Mutuality Lab. Key takeaways include:

  • The challenges faced by low income communities in the developed world can be very similar to that of the low income communities in developing world -- "Living on a low income translates into other forms of scarcity: of power, information, respect, opportunity, time, health, security, and even of sleep”
  • Building a mutual business model would require very clear motives and steer determination -- "It’s much easier to feel good by giving away meals to starving kids in Sudan, but you are not going to solve any systemic problem in the world by doing that. This is business, and business is messy and you have to make hard decisions."
    • Sometimes even the poor communities may think that “we were a company… trying to take advantage of them”
    • Building a business model for the poor will need a lot of hard work, to win the trust of many stakeholders operating in the hybrid value chain we have set up (in the case of Project Maua / Project Bloom).
  • Intuitive knowledge is very important when trying to develop something for the low income groups
    • In Significance Labs, all six fellows are “zero or first-generation immigrants”, and “their families know what it was like to live a very different life”.
    • “Maybe the best long-term solution is to train a new generation of developers and designers from a low-income background to build their own solutions”

--Jia Yan Toh