Industry Trends

Why Mobile is Key to Development

February 21, 2011
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Ineffective development and infrastructure growth plans have prevented Africa and much of the developing world from operating on a similar level to the developed world.

Yet this apparent lack of technological capability presents a promising silver lining, that if realized, can provide an ‘express lane’ to closing the poverty gap.

I am, of course, talking about mobile phone infrastructure and its increasingly relevant usage in the lives of those at the Bottom of the Pyramid.  From offering up to date pricing and crop information to farmers or providing a platform to accept mobile payments, the innovative uses for mobile technology are on the rise and at the forefront of development efforts around the developing world.

Why?  There are a few key reasons why the advances, adoption, and growth of the mobile industry are paramount to the successes at the BoP; and they all center around a simple theme: It Works. Read more »

How Can I Pay My Loans If I Can’t Afford an Onion?

February 10, 2011
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A few weeks ago I visited Andhra Pradesh—the very stage that has been featuring the sold-out microfinance performance of late.   The drama has unfolded over the last few months, but one truth has been clear: Microfinance institutions (MFIs) have sold out.

In the music business, when an underground band with a small but loyal following tastes success and tries to cash in by going big, they are branded as sell-outs.  Most of the time the bands you hear on the radio or read about in the news sold out at some point; the protagonists in this show have been no exception.

India’s microfinance crisis has been all over the news the past few months because of re-payment struggles and the controversial for-profit model. Recently, Chris eloquently gave the cliff notes of ACT I in his post, The Microcredit Tipping Point.

Whether or not you believe that MFIs selling out is a bad thing, it certainly is not clear that all of the ills cited in the debate are due to MFIs alone.

Read more »

Global Poverty Rate Cut in Half? Not So Fast

January 31, 2011
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Early last week, the Brookings Institute released a report complete with data supporting the progress of the successful fight against global poverty.  In short, the results are nothing less than impressive, and everyone involved in making these results a reality should be commended.  Good news about the fight against poverty is always welcomed especially considering the rash of negative PR we have seen with Andrha Pradesh.

While the results are indeed promising, I caution the trumpeting of this report of success beyond our goal definition.  Poverty is a real term and should not only be viewed as landing above or below a certain income threshold.  Daily income rates have become a strong and widely accepted measure of poverty, but its important to keep in mind that while data points help to ground our assumptions and estimates, the real issue of poverty still exists at an alarming rate.

An important caveat to keep in mind is that the data referenced for this study holds true through 2005.  The Great Recession that affected so much of the global economy as well as recent devastating natural disasters will have no doubt negatively contributed to these results.  This downward shift in the poverty population is a great sign in the right direction, yet one data point should not equate to a trend – yet.  Sustaining this trend and building upon it through infrastructure, health, and environmental improvements is where we have an opportunity to truly turn the corner.

So what should we think then?  The journey needs its milestones to be celebrated, but the objective is far from met.

Though we here at Rising Pyramid may have a tendency to be slightly biased, I would like to believe that Social Enterprise has played a role in and of itself in this promising statistic.  As stated in the Brookings report, “From 2003 onwards, developing economies have expanded by more than 6 percent in every year except 2009, during the height of the Great Recession.”  This economic growth will  continue to be the backbone upon which this growth is predicated and social entrepreneurs aim to assist in that area.

While the extent of the data can be debated, there is no doubt that the conclusions of the report indicate something positive.  Let us read this as a sign that we’re moving in the right direction, and continue to bring innovation and business to the BoP in the hope of hearing equally positive news the next time around.

- Chris

Imagination is More Important than Knowledge

January 24, 2011
By

This is quite the interesting quote, especially considering the person who coined it. Albert Einstein, one of the most intelligent people to walk this earth, believed that our sense of imagination is what is most valuable. In today’s age of information domination, it can be a curious task to mentally switch gears from being an intellectual sponge to turning on your own creativity jets. Simply put – easier said than done.

Imagination requires us to at times separate ourselves from the bubble of reality and brainstorm off the wall wacky ideas and hypotheses that very well may end up as wadded up balls of paper in the trash can. To be truly unafraid and unencumbered by the constraints of the status quo, only then can we begin to reach into our mental potential. Read more »

The Microcredit Tipping Point

January 17, 2011
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2011 is already off to a fast and controversial start in the world of microcredit.  A first pass at microfinance regulation came into effect January 1 and hotly contested responses to the crisis in Andhra Pradesh in India have set the table for what looks to be a very crucial year for everyone involved in the microfinance world.

The new year started off with the enacting of Andhra Pradesh Micro Finance Institutions Regulation of Money Lending Act, 2011, designed to put some further structure around an already loose microlending industry.  Some highlights of the Act include:

  • MFIs will now have to specify the area of their operations, their charged and proposed interest rates and their system of operation and recovery while registering with the Registering Authority
  • MFIs  cannot extend a second loan unless the first loan has been fully paid off
  • The state government will soon establish fast track courts after consultation with the High Court for settlement of disputes of civil nature

This bill is a step in the right direction for a young and fragile industry that desperately needs structure.  But is it enough?  Is it enough to calm the public relations storm that has overshadowed microfinance as of late? Read more »

What are you listening for?

January 10, 2011
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This weekend I was lucky enough to spend an hour drinking coffee sitting on a bench overlooking the waves of the Pacific Ocean.  I closed my eyes and just listened.  What was around me?  Waves, dogs, birds, a jumble of various conversations, passing cars…

I quickly opened my eyes and thought “what am I listening for?  What did I expect to hear?  What can I hear through all the noise?”

When you don’t know what you’re listening for, its difficult to decipher what is content and what is just noise. Frankly, I think this is a conundrum for many companies in both the traditional for-profit and social enterprise sectors.

Why do companies need to listen?  Who do they listen to?  Many times its those with the most influence.  Advisors, bankers, investors, and consultants rank among the top of the list.  The voice of the customer has been heard from a marketing standpoint for many years.  What makes the customer purchase more?  What will entice them further? Read more »

The Responsibility That Social Enterprises Bear

January 3, 2011
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In a recent McKinsey & Company article from their “What Matters” group, Raj Kumar postulates that “social enterprises are at a comparative disadvantage to business”.  His statement is supported by the the usual critique of social enterprises – the added costs – yet he proceeds to site the lack of networks as an industry momentum inhibitor.

While my instinct is to immediately disagree that social enterprises are inherently at a financially competitive disadvantage, I believe that conceptual argument has been made already.  What’s lacking is the empirical evidence to back up claims of equality or inequality.  Yet, a more qualitative point that wasn’t highlighted in the article is the unseen responsibility that social enterprises bear on a daily basis – and most times unbeknownst to them.

With the explosion of interest in Social Entrepreneurship, and a growing number of entrants into the marketplace, the industry desperately seeks a poster child of success.  What social enterprises may or may not realize is that they are under heavier scrutiny – I’d venture to say more than other industries – to prove their value.  A single slip up could potentially set back the reputation of a still fragile industry. Read more »

Why You Should Be More Focused on Data Access at the BoP

December 30, 2010
By

“Knowledge is power”

-          Sir Francis Bacon

The Power of Data
After the industrial revolution, the global economy shifted from the production of physical goods to the provision of services.  However, the digital age has ushered in a new focus: the data economy.

Businesses are sparking up left and right to find efficient ways of gathering data, storing it or distributing it.  At the 2010 Kellogg Marketing Conference, the keynote speaker, Stephen Baker, a BusinessWeek writer, said “Data is changing our jobs and businesses, and it’s also changing our lives.”

There is little doubt that data is the future and that businesses which make information available (think Google) will grow, while those without access to data will suffer.

The Knowledge Gap
It appears as if, once again, developing countries (and especially the poor within those countries) will be left behind. It happened before in the manufacturing revolution and it seems that the information age is no different. Read more »

Mercy Corps Brings Mobile Money to Haiti

December 27, 2010
By

With all of problems and complexities that plague today’s political, financial, and economic  systems, have you ever wondered what it’d be like to start from a relatively clean slate?  This thought is a silly one, when thinking about the United States, for example, because we know that a complete overhaul of the financial system is too large of an ordeal that will be hindered by politicians, infrastructure, and preset belief systems.

Yet in a place like Haiti – which is still reeling from the devastating earthquake – there lies an opportunity to skirt the lack of financial infrastructure and culture, and innovate the way business is done.  Mercy Corps is doing just that. Read more »

How do you grade Social Entrepreneurship?

December 20, 2010
By

“The two hardest things in life to deal with are success and failure.”

- Author Unknown

I ended my last post mentioning a way Social Entrepreneurship can continue their recent success. Shortly after posting, someone posed the question to me: “How will you know if it ever is successful?”

Excellent question.

As with most foundations of business, there is no one metric to determine success. Profit is the age old golden rule for capitalism, but the deeper you dig into business analysis, the more you realize that profit is not the only leading indicator of health. Growth, market share, ratios, etc – all levers to analyze the progress of a company. Just as it would be misleading to apply only one metric to determine the health of an economy, it would also be incorrect to define the success of Social Entrepreneurship by one factor. Read more »

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