This is serious business:
Bezos raises the stakes in retail warfare: drone delivery... Are you worried Fedex?
What's wrong with this picture?
According to the Global Innovation Index (GII) - co-published by Cornell University, INSEAD and the World Intellectual Property Organization (WIPO) - the most innovative countries in the world are:
3. United Kingdom
5. United States of America
7. Hong Kong (China)
Other than chocolate, watches, and secret bank accounts, I've never viewed Swiss innovation as leading the world. The same goes for Sweden (IKEA, Abba?) and the Netherlands (Shell).
Why are these countries being hyped as the most innovative countries in the world?
Let's dig a little deeper. Firstly, the index tracks the wrong measures of innovation:
Swiss "innovation" looks like this:
The USA looks like this:
So, let's look at three other "not-so innovative" countries: Brazil, China, and India - yes, they are "emerging markets"...
See the problem? Innovation cannot be measured by number of entries to Wikipedia, or number of papers, or patents, or YouTube uploads.
Rather, it should be measured in terms of innovation (and disruption) - by industry.
Brazil, is the first country where renewable energy accounts for more than 85.4% of the domestically produced electricity used. If that's not innovative, I'll go re-read Heidi.
China? Well, they're China. Every product the Swiss used to make is now made cheaper and of comparable quality in China. Red capitalism rules the business world right now, so that's something of a disruptive innovation, don't you agree?
And India? They've got more scientists and engineers who are hungry to make something happen. India's also the hot-bed for reverse innovation (which does not seem to be on the radar at the WIPO). And they just sent a mission to Mars...
So what's wrong with this innovation survey?
Simply put, it's not based on reality. And it's not an accident that Switzerland is "so innovative," according to this survey - which happens to be sponsored by INSEAD (in Lausanne) and the WIPO (Geneva). The innovation for Switzerland is its opaque banking system (ask China about that: Chinese government officials hold about 5,000 personal Swiss bank accounts with the Swiss global financial services company UBS. Two thirds of those accounts belong to high level central government officials.)
... Wait. There is one true innovation from Switzerland that does deserve a mention: the cap on CEO pay. Let's see if it flies.
Companies and countries that are serious about innovation would do well to not pay attention to this survey, and focus instead on their schools, quality of science education, business transparency, social mobility, gini coefficients, and of course, governance itself (the Corruption Index). See also the Big Shift and A New Culture of Learning.
And if you want to measure creativity, that's going to be something else entirely.
Elvis Presley and Bob Marley as they would look today (h/t these folks):
What can we learn from these lads? These, the young lions, who conquered the world like Alexander, but then had it all taken from them by Thanatos.
One thing you have they don't. And if you escape the sword of Thanatos for a while, you still have to deal daily with his post-modern cousins: Boredom and Anxiety.
He realized now that to be afraid of this death he was staring at with animal terror meant to be afraid of life. Fear of dying justified a limitless attachment to what is alive in man. And all those who had not made the gestures necessary to live their lives, all those who feared and exalted impotence-- they were afraid of death because of the sanction it gave to a life in which they had not been involved. They had not lived enough, never having lived at all.
― Albert Camus, A Happy Death
The man also said, "to have time was at once the most magnificent and the most dangerous of experiments."
Every minute counts. Each year is 525949 minutes. How do you make every minute mean something? How do you escape everydayness?
When Apple announced its plans to bring a 100% renewable energy powered manufacturing plant to Arizona, we would do well to ask why?
The answer is partly to be found in the map below:
1) Proximity to Mexico
There's a Foxconn manufacturing base in Juarez - just over the Mexican border - and it seems like the output from the Arizona plant will end up there.
2) Tax Structure
Over the past 15 years Arizona has demonstrated a "pro-business" mentality combined with a minimalist regulatory approach by reducing taxes and decreasing regulations:
Arizona also has aggressive tax credits to reduce state corporate income tax liability. This includes phasing in a corporate income tax rate from 6.9% in 2012 to 4.9% in 2017.
So what does this mean for neighboring states?
It's too early to call this is a new wave of innovation, but it's worth thinking about. How can states like California, Texas, and New Mexico join this solar-shift? Do they even want to?
C'mon, New Mexico!
Apple is to be applauded for bringing manufacturing back to the US. More importantly, they can still think different.
One of the primary reasons for the failure of development projects is that they cannot be sustained. Traditional approaches don’t always work; as soon as the development institutions (NGOs, agencies) leave, things fall apart. Soon the project is either abandoned or simply turned off. This happens all the time with water and energy projects.
One way to work around this and “make it stick” is to involve women in the project. This has been the secret behind the success of organizations like Grameen and the Solar Electric Light Fund. When women lead and control their own destinies, stuff happens. This is a lesson learned in the field, but overall the “development-through-empowering-women” movement is fizzling.
Is there anything else we can think of to make development changes stick?
How about the profit motive?
So here’s what takes care of this gap:
The Kodak story so far has been rather colorful, but as Kodak emerges from Chapter 11 bankruptcy, it looks like another company altogether. Will it ever shine again?
Gone is the document imaging business (spun off as Kodak Alaris; new owners = Kodak's UK Pension Plan). Instead, the focus is on a new set of markets:
In short, the new Kodak ain't the old Kodak. The key to survival is going to be professional services (watch out Xerox!) >>
Can they do it? How are they going to win? Do they have the capabilities they need?
The search for a new CEO is on. She's going to have to be a consultant's consultant - a professional services expert. Good night, Kodak. Good night, moon. Good luck.
The disruptors are getting disrupted.
In Consulting on the Cusp of Disruption (Harvard Business Review), Clayton Christensen, Dina Wang & Derek van Bever point out the coming disruptive changes in the world of management consulting.
And the big boys are getting ready. McKinsey Solutions, for example, is essentially a business model innovation that could reshape the way the global consulting firm engages with clients. It’s about “embedding software and technology-based analytics and tools providing ongoing engagement outside the traditional project-based model.“ According to Christensen and friends, “McKinsey Solutions is intended to provide a strong hedge against potential disruption.”
So, will software robots replace the consultants?
No just yet, but the authors warn that the threat from smaller, more nimble competitors is real:
At traditional strategy-consulting firms, the share of work that is classic strategy has been steadily decreasing and is now about 20%, down from 60% to 70% some 30 years ago.
Wow. That’s some serious disruption, don’t you think? Clients are focusing on value-based pricing instead of per-diem billing. (And not a moment too soon!) If you’re engaged in any kind of consulting work, or even services, you would do well to buy the article. (As a bonus, you get to learn how the legal market got disrupted!)
Here’s a sample of their thinking: the three consulting business models observed and cataloged:
New upstarts like IDEO bring a collection of skills and capabilities not found in traditional firms. They bridge “the disciplines of industrial design and innovation consulting… Its unique mix of talent and strength in solving interdependent problems makes it hard to imitate.”
Discovered in an attic in Norway:
I showed my support by building Jim's website.
The incumbent is a Republican guy who doesn't believe in public health. He's against child immunization, apparently.
After getting a few emails about this article in the Guardian, I went back to Professor Clayton Christensen's op-ed in the New York Times (h/t Derek Van Bever) and asked myself this question: What kind of innovation is the $300 House really?
I went through the "types" of innovation as described by Christensen:
Empowering Innovation: transforms complicated and costly products available to a few into simpler, cheaper products available to the many, thus creating jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital -- to expand capacity and to finance receivables and inventory.
Sustaining Innovation: replaces old products with new models, but creates few new jobs; such innovation has a neutral effect on economic activity and on capital.
Efficiency Innovation: reduces the cost of making and distributing existing products and services. Such innovations almost always reduce the net number of jobs, because they streamline processes, reduce capital investments, and eliminate waste.
So what about the Base of the Pyramid? What about the non-customer, the folks (generally poor) that are always under-served?
The result? Let's define a new term: Impact Innovation - which like Impact Investing - seeks to make a difference.
Impact Innovations are innovations which:
1) solve a major problem (or several major problems simultaneously)
2) are sustainable
3) are affordable (may include hybrid business models)
4) serve the non-customer (new markets that did not exist before).
5) build an ecosystem of products. services, and experiences around the innovation
None of this is especially new, but the language we need to describe the problems we are facing is.
My point is simple: this is going to be the future of development. Governments, non-profits, and business will have to work together. Either that, or we're in serious trouble.
Becks walks off the pitch in his last home game for PSG. Say what you want, but the man was hardworking, loved the game, inspired his team, won big (except for the World Cup - sorry Three Lions!), and
was is a marketing wonder:
Funny, isn't it, that Beckham and Alex Ferguson leave the game together?
This will be quick. Sometimes when you have a bad customer experience at a store, you can whine and complain, display 6 types of anger all at once, or just blog about it, as I'm choosing to do here.
So there I was, out with friends, a couple and their kids, ready to see the new Star Trek movie. We got to the theater early, early enough for me to get some snacks. I went to buy two icees and a bucket of popcorn.
I got a blueberry flavored icee and the popcorn, and they sold me an large, empty cup but told me to come back in 10 minutes for the coke-icee. I noticed the manager was cheerfully reciting a limerick: "There once was a man from Nantucket."
I came back ten minutes later. The coke icee wasn't ready, so I wandered off again came back 5 minutes later. This time, I passed my shiny cup over, and asked for the cherry flavor, since the coke was still freezing... and that's when things got interesting.
The guy took my clean empty cup with a lid on it, wheeled around, and held up another cup - one that was clearly wet - filled with droplets of something and something like "I just dropped your lid, but let me fill up your cup."
I was surprised and said: "That's not my cup. My cup was dry. That's not my cup, and you know that."
He insisted: "That's the cup you just gave me."
I replied: "Don't do this man, you know what you did."
At this point the limerick-manager comes over and says: "That's the cup you gave him. Don't talk to him - I'm the manager, talk to me about it."
I explained again: "I gave him a brand new cup. The one he's got is wet. It's used."
The "manager" turns up the volume and says: "That's the cup you gave him."
Flashback to high school - back when I worked at a theater in the summers. I realize what's going on. The concessions staff is measured by the cup. They sell cups, not drinks. So each cup is worth 5 bucks. I know that's how the movie theaters make their money - from their concessions.
I said: "All right. What's your name and may I take your picture? You know this is wrong."
The "manager" replied in a disdainful tone: "My name is Brandon. And go ahead, take my picture."
I did (see art-photography above).
He then said: "I can give you a new cup. Give him a new cup."
To which I replied: "Do, and can I please watch you get my drink?"
The "manager" proceeded to fill my drink with style and a flourish of his hand.
"May I have a straw with that?" I asked.
The "manager" handed over a straw slowly, with another flourish.
I asked him his name again, to which he said "Brandon Phillips, and I will see you on the screen."
I wonder what that means.
So basically that's my story. The fact that the "manager" was "in" on the sell-the-dirty-cup trick means one of the following:
a) employees are punished for losing cups, i.e. filling out a lost cup report is held against them,
b) employees are making extra money selling used cups,
c) the practice is part of the business model, and it's just how they make better margins.
Regardless, I have decided to never buy anything from the movie concessions ever again.
Brand destruction lesson: don't mess up on trivial stuff and then treat your customer like an idiot. You will loose the customer for life.
Do the math, Cinemark.
On January 19, 2012, Kodak, the once iconic US company which had democratized photography, filed for chapter 11 in the U.S. Bankruptcy Court in the Southern District of New York.
To the millions of lives and memories touched by Kodak over the years, the news may have come as a huge surprise. But to those who make a living following companies' growth or demise, there was zero surprise. Kodak's ties with its customers had been weakening over the years - when Kodak was synonymous with amateur photography. Now, customers, both new and experienced, were choosing to bypass Kodak altogether. Simply put, Kodak had nothing to offer them; nothing valuable enough anyway, for them to stay.
So, what happened? How did a company that once owned the hill tumble down and lose its crown? Let's see if we can understand what happened.
When George Eastman decided "to make the camera as convenient as the pencil" which is how he explained Kodak's value proposition, he literally transformed our lives by introducing us to our personal "Kodak moments" - the memories that the individual captures as a way to celebrate, share, and communicate our most precious memories with our friends and families.
Kodak was the Apple and Facebook of its day because Eastman understood what customers valued. He realized that technology could change markets - overnight. And of course, that is precisely how he started Kodak - by creating the dry-plate technology which made photography accessible to all.
But Eastman could have easily failed to see the significance of the new. He could have stuck to his profitable business model, hypnotized by the massive profits his dry-plates produced for Kodak. He could have failed, but he did not. In fact, he bet the company not once, but twice, and both times he won because he kept stuck with his imagination - he clearly had the capability to envision how the right technology could transform the customer experience for the better.
The first time Eastman bet the company was when dry-plates were threatened by a new technology. Eastman gave up on his dry-plate business to pursue a promising new technology developed by Kodak - film. Eastman's first simple camera in 1888 was a wooden, light-tight box with a simple lens and shutter that was factory-filled with film. Priced at $22.00, the world was forever changed.
Later, Eastman faced another existential Kodak moment when he again bet the company's future on color film, which at the time was not as high in quality as the established black and white.
Eastman built the Kodak empire on a deceptively simple "razor and blades strategy," selling inexpensive cameras and making money on the back end on film and printing.
So what happened?
The inexpensive business historian known as Wikipedia tells us that the problem with Kodak was that its "unassailable competitive position would foster an unimaginative and complacent corporate culture."
In 1975, a Kodak engineer - Steve Sasson - invented the digital camera. But this time Kodak was no longer the Kodak of George Eastman. As Sasson desperately wandered around the company trying to convince senior executives of the potential of his discovery, he was met with the mindset of a company in love with the present. Sadly, there were no George Eastmans left at Kodak.
His presentations "met with a lot of curiosity, some annoyance." According to Sasson, "Many times people talked about all the reasons why it would never happen. But there were many people that quietly looked at it and said, 'Boy, it's a long time, but I don't see that it won't happen.'"
As Kodak "fumbled the future," Japanese firms like Sony leapfrogged Kodak, establishing a lasting reputation for inexpensive digital cameras.
At the time of its bankruptcy filing, Kodak gave several reasons for taking such drastic action: "to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines." In the same release, Kodak also stated that they had "made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011."
So while Kodak eventually got serious, and become the world's leading seller of digital cameras, it had lost its profit engine. The "razor and blades" business model had evaporated. Without profits driven by the sales of film, Kodak was in a black hole of its own making.
Two other fatal flaws can be observed in hindsight.
The first was Kodak's hubris in terms of marketing. As Adrian Woolridge wrote in his Schumpeter column, Kodak made the fatal mistake of "competing through one's marketing rather than taking the harder route of developing new products and new businesses." As we'll see, its competitor Fuji Films - facing exactly the same predicament as Kodak - has managed to survive and thrive in the same business climate that drove Kodak to ruin.
The second fatal flaw was, in my view, the mindset of the executive team. In 1989, the board placed the wrong bet when they chose Kay Whitmore as CEO over Phil Samper. Whitmore was a hardliner - a veteran of the traditional film business. Samper (the digital "hope") left to join Sun Microsystems. Three years later, the board fired Whitmore, and then went on to institute a revolving door policy which saw a line of CEOs fail one after the other.
To this very day, Kodak has an identity crisis: it does not understand who its customer is, and in its dithering, it no longer knows what Kodak is. The current Chairman and Chief Executive Antonio Perez is an HP printer executive, and has predictably steered Kodak toward consumer and commercial printers.
He says that the bankruptcy will help Kodak maximize the value of patents related to digital imaging. The final strategy? Litigation. According to Reuters, Kodak is trying to create new revenue streams using extensive litigation with rivals such as Apple Inc, BlackBerry maker Research in Motion Ltd, South Korea's Samsung Electronics Co and Taiwan's HTC Corp.
The failure of Kodak is a failure of management imagination. It is the failure of the executive mindset that no longer is connected to the customer.
The sad truth is when you take a photo today, Kodak is not part of the picture.
Kodak's story is neither peculiar, nor unique. To attribute its crumbling relationship with customers to a single disruptive technology or market trend - example, digital transformation, would be overly simplistic. What happened to Kodak is a failing that repeatedly expresses itself in countless companies across the globe. They lost touch with their customers.
The predictable, strategic failure of Nook is now on the front pages of dead-tree media. Despite Nook's problems, Barnes & Noble Chief
Executive William Lynch said the company "remains committed" to the
Nook devices. He's on his way out.
What Barnes & Noble needs to do is think.
Barnes & Noble has to remember what it is.
Here's what it is not:
Who will save Barnes & Noble for us? Watch your customers, B&N!
How's it going J. C. Penney?
The Productization of Bob Marley is one of the saddest moments in his career. Bob Marley has become Babylon. I guess even revolutionaries get consumerized... See my 2009 post on the monetization of Bob Marley. The reality is worse than I feared.
R.I.P. Bob! Even though your family seems to have sold you out, your music will do the heavy lifting - dreader than dread.
Once again, I make a fool of myself… Can you be a 33% Sanyasi?
How do you build an ecosystem of resources and assets around a physical community?
That's the question I've been struggling with for the past few months. During my recent trip to India, I found there were varied answers to the question, ranging from "it's the government's job" to "the community will have to do everything for itself." I finally heard the answer I wanted to hear from the dynamic leaders of an emerging Indian giant. Over breakfast they told me that they were trying to build the right ecosystem around a rural village, and they were serious about building employment opportunities into the village itself.
Back in the USA, retired research biologist Marlene Warner gave me a book yesterday which made me sit up. It was John McKnight's The Careless Society: Community and Its Counterfeits. In it, McKnight talks about diagnostic and anti-diagnostic ideologies.
This diagram is diagnostic; it points out needs and deficiencies, and turns citizens into consumers of medical social and service systems:
The second diagram is anti-diagnostic; it creates a map of capacities and assets, and empowers citizens, associations, and enterprises. The author says it can be a resource magnet.
A synthesis of these two maps is needed, says McKnight. These diagrams have to be integrated to build an integrated development model, and the community must be involved in the creation or co-creation of its future.
The legendary reggae band releases the 2012 version of the Barack Obama Song >>
The 2008 video version is here >>
I know what some of you are thinking - "Well, did America have a soul to begin with?" I happen to think it did. For me the soul of America is "We, the people..."
Furthermore, I'm quite sure that people, as defined by our founders, did not mean corporations. (See what Charles Handy has to say >>)
But to get back to the topic of inclusivity, I'd like to make a shameless plug for our new book, co-authored with University of Michigan's Professor Michael Gordon, called Inclusivity: Will America Find Its Soul Again?
BUY now >>
I go to my local bookstore, drink a coffee and
browse the shelves. When I get home, I rush to the computer and buy the books I
fancied - online! If it's a business
book, I download a copy on my digital reader, and if it's a literary
work, I buy the physical book at a discounted price.
As a way to assuage my guilt, I've thought of some ways to help my local bookstore survive - because, like so many of us, I love the physical bookstore experience - nothing beats the Zen practice of disinterested info-grazing - and I'd like to continue to enjoy it.
However, I notice at my local Barnes & Noble that
they're busy selling Nook ereaders in every cranny. [Do they really think they
can compete with the iPad or even Kindle?] Is this really going to save the
physical store? Nope.
Most likely, it's an idea dreamt up by the financial types at headquarters who've been "missioned" to tap into the digital value-stream. After all, why should B&N just stand there and watch their profits drift lazily down a South American river? It's important to note that despite B&N saying the Nook is a "success," they still rely on brick and mortar stores (retail and college bookstores) for over 75% of their revenue and the competition is going to become even more intense with dozens of new tablet and reader devices being introduced this year.
And how does B&N take a trip down the Nile? Apparently, the secret sauce is that they allow Nook owners to take their devices into any B&N physical store and read any e-book for free. Nooktalk tells us that in reality, it's not exactly a seamless reading experience. And now that Amazon allows Kindle owners to "lend" books to each other, the Nook may find itself in the, ahem, corner.
So what can your local bookstore do to take advantage of its strengths?
Here are three suggestions to shake up the physical bookstore business model:
Daily Book Rental
Why can't the bookstore become a pay-as-you-read library? As a kid growing up in India, I remember borrowing books (alright, some these were Asterix and Tintin comics) from the bookstore for a daily fee. This business model shows some reverse innovation promise. Can you imagine "tiered pricing" linked to free coffee rewards? Sign up for the all-you-can-read buffet. And of course, we get to pay fines if we return our books late.
Distribute Local Books
What if a physical copy of your book gets published in-store and sold in your town's bookstore? Can you visualize a "Newbie Authors" section where one copy of your book gets to sit on the shelf for a week? If it doesn't sell in a week, you can either pay for shelf space or you can buy your books back. The minute you or your mother buys your Great American Novel, a new one is printed and placed on the shelf. The top 5 bestsellers in each town get national distribution and placement for a week. Book fest!
How does a bookstore do this? If you're Barnes and Noble, you could hire retired teachers to do this; pick people who are enthusiastic and spread their love of the subject. If you're a small bookstore, you can still find enthusiastic community leaders to do the same - in fact you can specialize, and create a niche around the main clientele in your store.
Does all of this sound a bit off the wall? Good, then it's worth a try. The Nook, I'm sorry to say, isn't going to save Barnes & Noble.
P.S. Over at HBR, Sarah Green gives us another suggestion: Amazon should partner with Independent Bookstores!
Michael Gordon's book, Design Your Life, Change the World: Your Path as a Social Entrepreneur [A GUIDE for CHANGEMAKERS] is for changemakers - the people and organizations that want to make a difference in the world.
The book tries to answer two questions, says Professor Gordon:
1) How can organizations best address important societal problems such as poverty, inadequate health care, sub-par education, and an unhealthy planet?
2) What's the best advice for students who want to address these issues and still live lives of relative comfort?
The reason I'm helping the professor is because now, more than ever, we need the brightest students to tackle the world's biggest problems. And the oil-coal-nuclear lobby isn't making things any easier...
Are you a changemaker? Go find out >>
P.S. - you can download the PDF version here >>
I don’t watch TV much but I just caught a clip of Richard Branson promoting his book Screw Business As Usual. Looks like he’s on the same page as Stuart Hart - who has been essentially saying the same thing for twenty years. They ought to compare notes!
What was funny was watching Branson sit there as the producers had him wait and wait for his three minute interview. He was clearly in distress - the anguish of the entrepreneur who can’t bear to waste time - as he smiled and waved every time they turned the camera on him.
The book is available later this month… have a Happy Green Christmas!
I first met Bob Freling at a board meeting of the Solar Electric Light Fund (SELF) in San Francisco several years ago. At the time, I felt that here was an NGO doing innovative things but not getting enough visibility for their work. They were solar way before solar was cool.
What struck me is how informal and close the board members were. One of the board members - Larry Hagman (good ol’ J.R. Ewing) - did a brilliant set of solar commercials which I think says a lot about his character and wanting to make the world a better place (quite the opposite of his TV character!). But I digress.
The story here is that SELF pioneered the use of solar power to fight “energy poverty” across a spectrum of applications with their “solar integrated development model” - from clean water, to drip irrigation to improve food security, to electricity for health clinics, schools, and micro-enterprise.
In his blog post about the $300 House Energy Challenge, Bob explains:
“It’s simple really. First, solar energy powers pumps and filters for clean water. This also enables drip irrigation for critical crops. Once people have those necessities, the solar energy is used to power health care facilities which can power equipment and refrigerate vaccines, for example. This increasingly healthy population can then open schools which are powered by solar to provide computer and Internet-based learning. Finally, these well-fed, well-cared for, well-educated villagers can begin community and entrepreneurial activities to grow their economy.”
Bob’s optimism is tempered with reality. The Millennium Development Goals won’t be achieved without energy access, he explains in another blog post. In case you forgot what the MDGs are (as I often do) they’re listed as:
1) eradicating extreme poverty and hunger;
2) achieving universal primary education;
3) promoting gender equality and empowering women;
4) reducing child mortality;
5) improving maternal health;
6) combating HIV/AIDS, malaria, and other diseases;
7) ensuring environmental sustainability; and
8) building a global partnership for development.
Note that they are interrelated, ecosystemic problems - and that from Bob’s perspective, energy is the key factor which makes all of them feasible.
With the $300 House project, my eyes have been opened to the fact that the approaches for dealing with the poor are often not very constructive, and sometimes end up doing more damage than good. That’s what $300 House adviser Stuart L. Hart is talking about when he says we need to create smaller problems. It is also a concern of our critics on the $300 House. When I spoke to Matias Echanove recently, he was concerned that mass produced housing could in fact disrupt the local economy - the small businesses that are based in informal slums around the country. I hear him.
Our $300 House project is exploring ways to integrate services and jobs into the ecosystem as well, and we’re reaching out to talk to the leaders in the communities that are interested in this approach. In India, we’ve just completed a survey - with the help of THL - that covers 15 villages in three of the poorest states in India - Uttar Pradesh, Bihar, and Jharkhand. I’ll go into more detail in a later post.
For me the question is quite simple - we see an explosion of interest in developing integrated townships for the middle class in India, but why is there nothing comparable for the poor? To borrow a phrase from the US, why can’t we build “master-planned communities” for the poor?
Is it too much to ask that governments, NGOs and development institutions, and businesses work together with the communities involved to build integrated solutions?
Unfortunately, there are far too few examples of collaborative development. This is something we all need to look at urgently. There is also a problem of ownership. The development community, NGOs, and most governments think they “own” the problem. Unfortunately, without a business mindset to make solutions scale, their is so little real progress.
The poor remain poor.
And that’s why the work Paul Polak is doing is so important. He’s looking at making small changes at the bottom of the pyramid; small changes that make a big difference in the earnings of the poor. This is also the approach advocated by Esther Duflo and Abhijit Bannerjee in Poor Economics.
At a much larger scale, we see an example in the Gates Foundation’s approach - which is all about examining the ecosystems of poverty. A common criticism of the Gates Foundation goes along these lines: “How can people like Gates, living in a different universe, help people at the bottom of the pyramid?” This is a false and damaging argument, but answered quite well by Sam Dryden:
“Some people may ask how my team and I—working at the world’s largest foundation located in a prosperous corner of a rich nation—can relate to a subsistence farming family in Ethiopia or Bangladesh. This is a very reasonable question to ask. The farmer has a direct connection to the land and we are considerably removed, both by distance and culture. We begin by realizing these differences and humbly listening to farmers and their families, learning and respecting their cultures, ways of living, and knowledge of place and home. The solutions we seek are those appropriate and welcomed in this context, not those imposed by distant values or interests.”
And finally, perhaps there is an alternative to the giant top-down programs, and incremental bottom-up “Let the Poor Do It Themselves” approaches we’ve encountered.
With the $300 House, we’re thinking micro-development - is it possible to build integrated micro-solutions at the village level? And in cities, at the neighborhood level?
When I first started working on classifying online ecosystems, I had no idea that my thinking there would influence my thoughts on the $300 House. But now it seems like the systems approach to understanding wicked problems is pretty much the only way to go. None of this is new, of course, but I'm still impressed at the power of ecosystem thinking.
Here's how Nobel prize laureate Gunnar Myrdal was thinking about the problems of race and poverty:
The "vicious circle" has not yet made its way into our political thinking though, if we judge the policy makers of today's Congress. Heck, they can't even bring themselves to accept the effects of global warming - in no small part thanks to our lobbyist friends.
The idea of poverty as the outcome of a dysfunctional ecosystem is explained here as well:
Note that this applies to poverty in the US as well, not just the emerging world.
So, part of tackling the issue of affordable housing for the poor is to try to understand the interconnected nature of these problems. I tried to draw causal arrows between the various problems, but gave up. In essence, we have a problem of insecurity, in which all of these factors must be addressed simultaneously if we are to change the vicious cycle of poverty, disease, and suffering. Here's what I ended up with:
The poor live in an insecure, unbalanced universe.
I'm calling it the "ecosystems of poverty."
Next we'll look at the idea of integrated development (another old idea) which fell out of favor, but must be re-evaluated in today's light if we are serious about poverty alleviation.
Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.
During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.
Sometimes not knowing what you’re doing can help you do it.
Here I make a fool of myself at the Guardian’s Activate2011 conference in London:
The final Harvard Business Review post in the series, and hopefully the start of some real change at the bottom of the pyramid.
Our goal is to go social for social business. Can social co-creation help the poor?
Thanks also to Scott Berinato at HBR and of course - VG, my partner in crime.
For the past two years I have been conducting some extensive testing with a number of my clients in various fields - software, consulting services, academics, non-profits, entertainment, and self improvement - and here's what I came up with at the end of the study. I'm interested in one metric - conversion to sales.
Conversion to Sales
Website: 29.5% of sales
Facebook: 4% of sales
Twitter: 1.5% of sales
Print: 2% of sales
Book: 9% of sales
E-book: 7% of sales
Email newsletter and blog combined: 42% of sales
The old rules of online marketing beat social media by a mile, period.
See you later, FB and Twitter...
Writes Floyd Norris in the New York Times:
The Business Roundtable, a group comprising 200 of the largest companies in the United States, is out with a “study” that claims to show that the United States levies excessively high tax rates on companies. It actually shows nothing of the kind.
This is the sort of thing that makes business look E-V-I-L.
Surprise! They’re only the CEOs of the “most respected” companies in the US.
Have they no shame? No sense of decency?
The CEOs should be embarrassed, but instead they keep playing this absurd, deceptive game. We have come to expect this sort of behavior from the oil and coal lobby, but not you. To Bank of America, General Electric, Xerox, Wal-Mart, UPS, Target, SAP, Pepsico, Microsoft, and Procter and Gamble: Grow up, ladies and gentlemen. You are hurting both democracy and capitalism. Not to mention your brand.
Good on you, Google and Apple, for not being part of this institutional lying machine.
This chart by the folks at the Eurasia Group, got me thinking. Something just doesn’t make sense:
Then it hit me. This is a rather conventional way to screen for global opportunities. If we looked at other screens like “innovation potential,” “middle class expansion rate,” “Gini coefficient shrinkage,” or “corruption index,”you’d see a very different picture.