Emerging Markets
Designing a Different World (SoCap09)
Published August 31, 2009 @ 08:35AM PT
Social change means thinking differently. For design firms like frogdesign and IDEO, thinking differently is at the core of their business. In the last few years, there has been a growing recognition that the process of understanding how people interact with their peers and their environments in order to design new products is not just useful for companies, but can be an integral process of producing better solutions to social problems, as well. Design thinking is on display at the Social Capital Markets conference, and one of the ways the conference is pushing the field.
The problem of access to clear water afflicts more than a billion people around the world. In addition to the myriad health concerns this creates, many speculate that water shortages are at the root of conflict like Darfur. Social venture funder the Acumen Fund has long been concerned with water access, and has years of experience investing in local companies and nonprofits trying to address these issues.
Last year, Acumen teamed up with IDEO to better unleash local talent and collaboration by trying to learn more about the root causes and impacts of water access issues and by helping grassroots level organizations learn to think like "designers."
Together, IDEO and Acumen used the "Human Centered Design Toolkit," to help their local partners think differently about how to provide sustainable access to water. The project, Ripple Effect, has involved a number of discreet phases in India and East Africa.
In each of these locations, IDEO teams worked first with local organizations to better understand how people interact with water; how did people view trade offs between quality and convenience? Did "clean" have variable definitions? Did water (or retrieving water) have other societal relevance beyond simply needing water?
From there, they convene a huge array of stakeholders to gather new insights and put into a public space all that has been learned. Finally, they provide grants and a hands-on training for local organizations to develop and prototype solutions.
According to project lead Sally Madsen, the results have been incredible, particularly in the way that leading local organizations have taken the Human Centered Design process and made it their own. One example was the Naandi Foundation, a large group that has water purification plants in Punjab and Andhra Pradesh. One of their staffers, Satyam, became so excited about the process of field research and understanding that since the collaboration with IDEO he has been facilitating discussions about how to incorporate similar processes across the organization.
This is disruptive because it's a way of seeing the world and a methodology to put that vision into practice. I think that connects it deeply with the sensibility of the emerging social capital market space, which is both advocating a way of seeing the world in which financial, social, and environmental good are inseperable - and is convening the actors who are creating the methodology for business to be and do good.
And although IDEO are leaders in this space, they're not the only ones who will be connecting design with social entrepreneurship. At least one of the bloggers from the absolutely brilliant designmind blog by frog will be in attendence as well, and I'm sure I'll be linking to them all week.
This is part of a series called "Pushing the Field at SoCap09," in which I'm attempting to understand how the conversation at this year's social capital markets conference are point the social entrepreneurship world in new directions. See the lead-in post here.
(photo: Nat'l Geographic)
Sending Airtime to India with Aryty
Published August 03, 2009 @ 05:03PM PT
The benefits of mobile phones to local economies and local communities have been written about extensively, on this blog and elsewhere. More connectivity means a better ability to coordinate markets, keep track of loved ones, and support health systems.
But airtime is expensive, and most of the developing world continues to buy mobile network access in small chunks week to week. Many people stick to texting because voice service is just too expensive.
Written up on TechCrunch, Aryty creates a new opportunity for members of the global disapora to automatically buy and transfer airtime to their loved ones and contacts back home. The service doesn't have any fees, making it much cheaper than wiring money, which can cost an exorbitant amount. The company makes money because it signs bulk deals with carriers that lowers the price they buy minutes for. When they charge the commercial rate to customers, they make a profit.
This is an extremely high value service. Mobile connectivity is incredibly important, and as the application ecosystem begins to thrive, mobiles become gateways to more and better types of information. Remittances in general are a huge part of the global economy, and an essential element of many developing economies. 
2006 estimates for total global remittances ranged from $250 billion to $400 billion dollars.
The company has successfully formed deals with major carriers in the Philippines and estimates that 98% of Indian mobile users will be covered by the end of the year.
Rwanda and the Infrastructure of the Future
Published June 24, 2009 @ 10:07AM PT
(A One Laptop Per Child workshop in Kigali, Rwanda)
The thing that I love most about the post-genocide Rwandan development experiment is its aspiration. President Paul Kagame's approach to rebuilding his country might be summed up as "be damned with the scraps from the global economic table, we deserve and will build a 21st century economy." Fundamentally, the approach seems to me to be about vision and infrastructure; a vision of a prosperous, thriving, unique African country and the infrastructure - from hospitals to broadband cable - to make it a reality.
As I've written before, Kagame's strong hand is cause for concern for many. In "Rwanda Rising," one of the best articles written about Rwanda's particular approach to economic growth, Jeff Chu wrote about the President's disinclination toward other people's ideas of how his country should be run.
"No country can depend on development aid forever," Kagame told Fast Company. "Such dependency dehumanizes us and robs us of our dignity." It may also, of course, make him accountable to people outside Rwanda. Last December, following a United Nations report that Rwanda was supporting Tutsi rebels in Congo, the Netherlands and Sweden suspended $20 million in aid. Kagame slammed what he called the donors' "arrogance" -- then arrested the rebel leader and made a deal with the Congolese president.
But that was not the main point of the article. Indeed, the article focused more on how Kagame leverages strategic connections to build the economic relationships that can help the country thrive. During a trip to the US, Kagame parlayed a meeting with Costco CEO Jim Senegal into a promise to visit the country, which has since led to Costo becoming one of the two biggest buyers of Rwandan coffee - purchasing about 25% of the country's premium crop.
Recently, I've been incredible excited to see entrepreneurship and technology reporter Sarah Lacy's dispatches from Rwanda, one of the countries featured in a new book she's working on. Today, she wrote about how Rwanda is overcoming the digital divide by investing in technology infrastructure and training for young leaders.
According to Lacy, it's all about infrastructure: first making sure that mobile phones - the lifeblood of the economy - work everywhere; next, laying out the cable that will help carry broadband internet to every district in the country; finally, investing in human capital to transform these ingredients into entrepreneurial opportunities.
Rwanda sends 300 students at a time to India Institute of Technology to develop skills in hardware, software and telecom they can bring back to their home country. When one kid graduates, another one gets to go. Why IIT? It’s cheaper than Western schools, just as good at training engineers, and has a better understanding of the challenges and needs of emerging markets, Bakuramutsa says. In addition, Rwanda hopes their kids will pick up some of the Indians’ entrepreneurial spirit. (Pay attention here, US: We’re no longer the education destination of choice for the emerging world.)
There are a few important take aways for all of us in the social entrepreneurship space:
1. The difference between "social entrepreneurship" and "entrepreneurship" can break down quickly. When we're talking about African students building new web applications to make it easier to send money to families back home, what should we designate that? Entrepreneurship or Social Entrepreneurship? Or does it not matter? Should it perhaps make us wonder if we should instead be holding up that type of work to argue that real entrepreneurship is about the creation of all types of value - not just about financial wealth. In other words, maybe our view should be about the inseparability of "social" from "entrepreneurship," and perhaps that's easier to understand in the emerging market context.
2. Entrepreneurship needs infrastructure to thrive. A lesson from Rwanda should be that we have to give entrepreneurship the ingredients it needs to thrive - technological and physical infrastructure, training and education, effective regulatory environments with appropriate protections for intellectual property, and more. The more we locate the entrepreneur him or herself as the unit of change, the easier it is to forget that for entrepreneurship to benefit society, it needs to be within an ecosystem optimized for the impact of that entrepreneurship to disperse and scale.
The Democratization of End User Innovation
Published June 05, 2009 @ 06:49AM PT
Venture Capitalist Fred Wilson wrote an awesome post this morning called "Open Platforms and Innovation," in which he discusses Time magazine's cover story this week about Twitter.
The major take away from the article, in Fred's mind, is a shift in thinking about innovation. While evidence of innovation (or innovation capacity) is usually measured in patents and PhD's, there seems to be a disconnect between those numbers and the sort of consumer innovation that is becoming so seamlessly integrated with the modern internet.
Technology has reached a point where anyone can get involved with innovation. Patents and degrees matter a lot less. Imagining something and then coding it up is what its all about these days.
We are engaged in what Eric von Hippel calls "end user innovation" and it is a fundamental shift in the way society innovates. The Twitter founders are a perfect example. They built a simple tool to share short messages and it has become something entirely different.
Now clearly Fred is focused on the consumer internet, but there is evidence of this thesis all around. My friend Alex at NetSquared posted an awesome interview with Appfrica Founder Jon Gosier. Talking about the genesis for the idea:
So at Barcamp Kampala (or Campala as we called it), about 80 to 100 hungry software developers showed up. They had never done anything like it before. They were mostly students but there were also CEOs, administrators, and leaders from the industry (like Joseph Mucheru from Google East Africa). Unlike most events here, everyone was an equal, it didn't matter if you were a student or millionaire, everyone had equal control. That seemd to really resonate. One of the things the crowd kept mentioning was that there was a lack of mentors and access to capital for software developers. I decided to start Appfrica Labs out of those discussions.
Appfrica just saw the first investment in one of it's developer's companies, Status.ug.
The fascinating thing is that while the tech world has some unique circumstances, it's impact is enabling the democratization of innovation elsewhere, as well. For example, the rural clinics who are beginning to use FrontlineSMS:Medic aren't necessarily hacking the software, but they are building use cases that can be shared across their network and diffuse innovative practical applications.
This is extremely powerful stuff.
Muslim Social Entrepreneurs and Obama's New Era
Published June 04, 2009 @ 11:37AM PT
Photo credit: Stephen Crowley/New York Times
This morning's speech in Cairo signaled a new US approach to the Muslim world; an approach that like the rest of Obama's young presidency seems to be characterized by pragmatism, common sense, and a deep-seeded belief that all people, communities, and cultures have something to contribute to a sustainable, thriving, peaceful global world, and that at the end of the day, we're only as strong as we are together. There were also, as we've seen elsewhere, indications that economic prosperity relied on a combination of actors including social entrepreneurs.
The speech is a particularly significant moment for me personally. Cairo is a place whose story has become interwoven in complex ways with my own. I wrote earlier this year:
In 2004, I found myself in Cairo, Egypt for a semester abroad. It was after 9/11, a year into the Iraq war, and I was skeptical of the dogmatic us, them, clash of civilizations mindset that seemed to be in style. I wanted to see it for myself.
Egypt was not a random location. My parents had visited Jordan, Israel, and Egypt when I was only three, and just after the start of the first intifada. Their stories introduced me not only to the majesty of history, but of our power to destroy - and often to destroy in the name of the good. I would find an Egypt just as confusing.
Almost from the moment I arrived, I loved Egypt. I loved the layers of history embedded in the very buildings themselves; I loved the passion of constant conversation. I loved the cab drivers who consoled me and my American friends the day after George Bush was re-elected.
But at the same time, my Egypt was not just about Pyramids and politics. In 2004, the violence in Darfur had just flared up and I began volunteering with refugees from the horn of Africa as a way to "do my part." It quickly became the most important part of my week. I spent as much time as I could tutoring English at St. Andrews, a small sanctuary from the cacophony of the outside world.
While I was captivated, I was also appalled. There is no place where I've felt the injustice of opportunity denied quite as oppressively as among the refugees of Cairo. Brilliant, talented, compassionate people are left to languish, denied the basic rights of employment and education. An entire generation of Sudanese youth have grown up outside of any systemic support. And if the Egyptian government's treatment of refugees isn't deplorable enough, the rest of the world treats Cairo like a convenient dumping ground, progressively reducing the number of refugees we allow to cross our borders.
It was the first moment that I felt the seemingly immense gap between my desire to do good, and my ability to actually impact global problems.
I included in that piece just how powerless I felt that fall sitting in a hotel room in Cairo surrounded by other idealistic young friends watching George Bush be re-elected as president. To see then, today, our new president forcefully reject the politics of fear and division and project a new vision of an era of US-Muslim cooperation is thrilling.
In the section of the speech dedicated to what happens next, President Obama asserted that "education and innovation will be the currency of the 21st century," and that success would take cross-sector collaboration:
On education, we will expand exchange programs, and increase scholarships, like the one that brought my father to America, while encouraging more Americans to study in Muslim communities. And we will match promising Muslim students with internships in America; invest in on-line learning for teachers and children around the world; and create a new online network, so a teenager in Kansas can communicate instantly with a teenager in Cairo.
On economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries. And I will host a Summit on Entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world.
In response to that gap I felt in 2004 between my desire and ability to do good, I've tried to answer by investing in the social entrepreneurship sector. It's incredible to see our president refer to Muslim social entrepreneurs because of the immense potential for positive energy they're creating around the Muslim world. Referring specifically to Arab social entrepreneurs, Ashoka Arab World wrote this week:
...the very movements that have the most potential to realize these promises of change, are receiving the least press coverage. They are those movements for social change that are taking place in the Arab region right now. They consist of civil society leaders, activists, organizations and associations that are committed to tackle systemic issues that their societies face using home-grown and innovative ways. Regardless of which of the twenty-two Arab states you look at, there are movements underway to address pressing social issue.
In Egypt, for example, Ehaab Abdou is mobilizing disaffected young professionals to positively contribute to their country. Ehaab established ‘Nahdet el Mahrousa’ to engage young social entrepreneurs in Egypt and abroad and to push them to be responsible for creating the change they themselves hope for. Hisham el Rouby is another example of a committed leader that is giving youth a strong taste of civic engagement and social responsibility. Through his Youth Association for Development, Hisham is popularizing the concept of volunteer-service, an idea that has already led to the establishment of youth volunteer centers in Yemen, Egypt, Syria, the United Arab Emirates and Tunisia since 2003. In Lebanon, Selim Mawad is creating a cadre of “agents of change” by providing young people with the skills and knowledge necessary to teach their communities about the need for transparency and accountability in government. His country-fellow, Wael Hamdian, is inspiring youth to become engaged in realizing social change by identifying and promoting ‘local heroes’. In the occupied Palestinian territories, Abdelfattah Abusrour is introducing Palestinian children in refugee camps to a non-violent form of channeling their frustration and anger by promoting a ‘Beautiful Resistance’ that uses arts and theatre.
These are the Ashoka fellows, but after even just five years of traveling to the Middle East and inviting young Middle Eastern leaders like Hany Amin and his brother Ramy Sami, leaders of Better World NGO dedicated to using technology to unleash youth potential in Egypt, I can say that the excitement and passion for social entrepreneurship increasingly characterizing American youth leaders does not stop at our borders.
An Egyptian man applauds as he watches this morning's speech (Getty)
All At Once Entrepreneurship In China
Published June 02, 2009 @ 10:08AM PT
A string of recent books, from Fareed Zakaria's "The Post-American World" to National University of Singapore professor Kishore Mahbubani's "The New Asian Hemisphere," have argued that there is, in Mahbubani's words, an irresistible shift of power to the East. These works argue that the increasing economic and political strength of Asian countries is a force that the US should embrace, as it's not about a fall of the West but a "rise of the rest" so to speak. They also argue that whether we like it or not, these forces are here to stay. Yet these works also tend not to locate the nexus of economic growth in entrepreneurship. It's fascinating to see a few articles in the last week, then, about the emergence of entrepreneurship (including social entrepreneurship) in China. Tech journalist Sarah Lacy wrote a post on TechCrunch yesterday called "Why China Isn't the Next Silicon Valley." Her point was basically that there is something uniquely different about the all at once nature of China's growth.
What makes China so staggering is that everything that happened to corporate America over decades—think the television and media studios build out of the 1950s, the greed of the 1980s, the dot com bubble, the build out of physical and IT infrastructure, current Web 2.0 and CleanTech innovation—is all happening to China at once.
Imagine: At the same time eCommerce is getting sea legs, TV Home Shopping is also getting hot. Online ads are growing not because people are TiVoing through commercials—both TV and online ads are growth markets at the same time. Ditto for entertainment and piracy: While Hollywood sees the Internet as a threat to its cozy legacy business, China’s entertainment industry is just now building amid a world where piracy is already rampant. No one assumes anyone will buy a CD, so they just look for other ways to make money. The wonder of China right now isn’t just the size of the market. It’s the rate at which dozens of “old” and “new” economies are all maturing amid one another, and the hyper-network effects that such economic progress is having throughout the country.
As for China’s start-up ecosystem , it’s working to build its own Valley-like infrastructure, but it doesn’t have the luxury of growing it steadily over several decades. Experts say there’s at least $20 billion in venture capital sloshing around the country right now. It’s probably double that if you count angels and unofficial or very local funds, says Rocky Lee
of DLA Piper, a law firm that represents much of that venture money in China.
That’s why calling China merely “the next Silicon Valley” misses the singularity of what’s happening there. The Valley has never been like this, and I don’t say that to knock the Valley. In many ways, our steady development has been healthier. But it’s also a lot less electric. In the next ten years or so way more money will be lost amid the China chaos, but I’m betting way more money will be made too.
It's not just new economies that are being created, however. A few weeks ago, a delegation of Chinese leaders representing the government, media, and the private sector gathered in Beaverton, Oregon for a 9 day "Social Innovation Leaders Program" in order to learn about how US companies and other private actors work actively to create social good. From a story in the Seattle Times
:
Wu Qungang, a young government official from China, came to Oregon this month for an unusual nine days of study about social innovation in a capitalist country. He learned how Nike funds youth athletics and Starbucks gives grants for community projects and heard about a host of other ways that business and philanthropy can be harnessed to make life better.
Then Wu asked a question: What about the shareholders and the bottom line — all this giving reduces profits. "What can the corporation do to convince the shareholders to continue all of this social responsibility?"
Wu's comments reflect the debate brewing among a generation of Chinese who came of age amid a juggernaut of entrepreneurial growth that made some in their nation rich while expanding the gap with those who remain poor.
They see a need for more philanthropy and more public-private partnerships to tackle the social, economic and environmental problems of 21st-century China.
Root Cause founder (and peer social innovation blogger) Andrew Wolk wrote a piece reflecting that the world is at an inflection point. In "China's Opportuntiy for Social and Public Innovation" he wrote:
As I reflected on the time I spent with these participants, it occurred to me that China, because of its recent adoption of capitalism, has a particularly interesting opportunity to advance social innovation. It was only 30 years ago that China began to explore free markets, and yet the country is already seeing market failures along with the vast opportunities to advance social innovation that come with those failures...The leadership of the All-China Youth Federation got it, recognizing that it would take all three sectors to tackle issues of poverty, the environment and other society-wide challenges that will become even more pronounced as their economy continues to grow.
It's easy to forget how powerful youth is. For each of the last two years, the Global Engagement Summit has welcomed undergraduate members of the Chinese Youth Social Entrepreneurship Network to Chicago. New websites like Responsible China are keeping track of social responsibility and innovation among Chinese companies. Young Chinese leaders have (and are clearly taking) the opportunity to design their capitalism, and it seems to me to be worth investment and support to help social innovation and entrepreneurialism take root at the heart of their vision.
Image Credit: "Traffic (Are You Ready?)" by SmokingPermitted
The Limits of Online Fundraising Contests
Published May 27, 2009 @ 10:17AM PT
Stacey from Epic Change wrote an important piece yesterday about how vote-driven online competitions select against international social innovators and give Americans and Europeans one more advantage. I think she's right on, but I think it's important to parse a few things out.
1. Contests are PR and a context for asking for things. Don't get me wrong, I think online contests can be great if done well - we do one each year with Global Giving for the Global Engagement Summit. But they are largely about PR and marketing. The quid pro quo of an online contest is that you (the social innovator) have an excuse to mobilize your communities of stakeholders and ask for things, and in return, the action platform gets more traffic and eyeballs which could result in advertising, larger user bases, media and publicity that send more traffic, etc. I don't think this is cynical at all; people need reasons to act and contests are a great context for trying to inspire buy-in for both the project and the platform.
2. Contests are not rewards for quality social impact. Let's be clear and up front about this one; contests do not reward quality or quantity of social impact, they reward capacity for mobilization. To the extent that people are willing to be mobilized because of quality of social impact, there's a correlation, but by no means is quality a prerequisite. To hold our own feet to the fire a little bit, a lot of the young organizations who win contests frankly don't have the history or infrastructure to have collected lots of robust data about their impact, anyway, so we should be careful about being hypocritical with this critique.
3. Contests have taken on the significance they have because the cost-reward calculus is more clear than other forms of nonprofit fundraising. There is a more or less direct relationship between how hard you work and how likely to succeed you are in an online contest that requires mobilization. If you spend 18 hours a day emailing, you're likely to have more votes than the person who spends 8 hours a day emailing. Compare this to the largely opaque waiting game that is institutional funding. Often for small groups starting up, all they have is their communities of friends and family, and so this takes on the role of bridge or seed funding.
4. (Most) contests are not trying to solve the problem of seed funding for international innovators; not are they trying to solve the problem of internet access. The reality is that contests are designed to get lots of people to do a specific thing in order to increase traffic. This is different from setting out to solve the problem of seed funding for international innovators, which is a deep and profound problem. Now if someone was setting out to solve that problem with a contest, I think that the current constraints would most definitely make that a tough proposition. Even with that said, I think it would be a fair counter argument for someone like GlobalGiving to say that they *are* trying to solve that problem and that contests increase traffic which, overall, makes it easier to solve that problem.
5. Hopefully, contests (and even the current generation of action platforms) are the early indications of a changing social good funding ecosystem. One of the major motivations behind this blog is to see how the ecosystem for supporting and doing good is changing. Contests to me seem to be one exciting element of that, but they should be viewed in that larger context. There are conversations happening around the world about social stock exchanges, new forms of partnerships between non and for-profit orgs, and there are even folks explicitly focused on growing the social capital market. We should keep asking tough questions, but recognize that it won't be every organizations job to answer all of them.
Update: Looking back, I wanted to give a little bit more space to the question of whether contests, as they currently exist, select against international participants. The short answer is yes. We had students in Tanzania, Romania, Ukraine, and a number of other places participating in our Project Challenge this year. The contest was structured so that both amount of money raised and number of donations mattered. But for our international students, credit card processed donations weren't often an option, and so while they had people willing to give them cash, these individuals weren't added to their totals. This is a major problem and something we're working to update for next year; although how we'll do that we haven't figured out yet.
