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Kentaro Toyama Visiting Scholar University of California, Berkeley iHub

ICT or Development: Why It’s So Difficult to Get Rich and Help the Poor Simultaneously. Kentaro Toyama Visiting Scholar University of California, Berkeley iHub Nairobi – August 18, 2011.

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Kentaro Toyama Visiting Scholar University of California, Berkeley iHub

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  1. ICT or Development: Why It’s So Difficult to Get Rich and Help the Poor Simultaneously Kentaro Toyama Visiting Scholar University of California, Berkeley iHub Nairobi – August 18, 2011

  2. It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God. • Matthew 19:24 (King James Bible) It is not sufficient that I succeed – all others must fail. • Attributed to Genghis Khan

  3. C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (2004)

  4. Microsoft Research India (est. 2005) Bangalore

  5. remaining data p1 p2 t 0

  6. Research Sites - Microsoft Research India - Observational projects - Intervention projects

  7. C. K. Prahalad, The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits (2004)

  8. Reality:It is very difficult to make a lot of money by selling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  9. Maybe not impossible – but very, very difficult Clarification:It is very difficult to make a lot of money by selling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  10. A little is easy, but a lot is not Clarification:It is very difficult to make a lot of money by selling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  11. Selling to, not employing or giving to Clarification:It is very difficult to make a lot of money byselling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  12. Poor, not middle class Clarification:It is very difficult to make a lot of money byselling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  13. Real impact, not just market share Clarification:It is very difficult to make a lot of money by selling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  14. Even harder with ICT Clarification:It is very difficult to make a lot of money by selling goods or services to poor peoplein a way that has a meaningful, positive impact on their lives, especially with ICT.

  15. Outline Thesis Counterexamples, Almost Why It’s So Difficult Development? Recommendations

  16. Outline Thesis Counterexamples, Almost Why It’s So Difficult Development? Recommendations

  17. “It is very difficult…” E.g., Universal, high-quality education • Always government-funded • Also, healthcare • Also, police, etc. Not counterexample if… All criteria aren’t met. ICT cases • Telecenters • Computers in schools Middle school in Ruhiira, Uganda Photo: Kentaro Toyama

  18. “a lot of money…” E.g., Aravind Eye Hospital • Serves poor effectively • Breaks even • Rich? Not counterexample if… Limited profit/growth ICT cases • Internet cafés • Babajob.com Video teleconferencing at an Aravind rural clinic Photo: Sonesh Surana

  19. “by selling to…” E.g., Government contracts • Government pays • Contractors can get rich • Who deserves credit? Not counterexample if… Buyer ≠ beneficiary ICT cases • Voxiva • Comat (Bhoomi) Road sign in America showing tax dollars at work Photos: mikesamerica.blogspot.com

  20. “poor people…” E.g., High-end private schools • Very profitable • Meaningful impact • Serving the poor? Not counterexample if… Selling to richer base ICT examples • Most mobile VASs • JustDial Private school in Lucknow, India Photo: Randy Wang

  21. “meaningful, positive impact…” E.g., Coca Cola • Serves poor communities • Large profits • Positive impact? Not counterexample if… Not net positive ICT examples • Entertainment • including adult content • Ring tones Photos: cameroonechoes.org

  22. Counterexamples? Maybe... Photo: Safaricom

  23. Hope History of TV Reality Photos/: http://farm1.static.flickr.com/114/292673945_4377f46532.jpg; http://www.vedamsbooks.com; http://issamichuzi.blogspot.com

  24. Outline Thesis Counterexamples, Almost Why It’s So Difficult Development? Recommendations

  25. “Two Birds” Problem Every additional constraint makes a challenging problem even harder. Unbelievable! It looks like they’ve both been killed by the same stone.. Photo: http://www.cartoonstock.com/directory/k/kill_two_birds_with_one_stone.asp

  26. Ethics Problem “Profits on the backs of the poor…”? Vikram Akula of SKS microfinance with a borrower Photo: neytri.com

  27. Cost-of-Business Problem “Poverty premium” exists for a reason: Poor customers are more expensive to reach, have less disposable income, and often require additional support to extract value from product. Photo: Kentaro Toyama, http://www.gvepinternational.org/en/business/news/phone-charging-enterprise-enhances-lives-uganda

  28. “Nice Guys” Problem Additional costs of trying to reach the poor, or doing so generously, makes you less competitive. Photo: kickstart.org

  29. Branding Problem The rich can offset costs for the poor, but rich and poor live in different markets.

  30. “It’s Good for You” Problem Only a minority pay for things that are “good for you.” (Especially true for information among the less educated.) Photo: http://www.scientificamerican.com/article.cfm?id=outsourcing-medical-studi

  31. Outline Thesis Counterexamples, Almost Why It’s So Difficult Development? Recommendations

  32. Pyramids at Giza, Egypt Infosys campus, Bangalore, India Photos: Kentaro Toyama, Infosys

  33. The economic “pyramid”

  34. Development requires two activities. Social Welfare Public/non-profit services distribute means to wealth attention to justice Growth Corporations / taxation focus wealth attention to efficiency

  35. Too much growth, too little welfare… Growth Corporations / taxation focus wealth attention to efficiency Social Welfare Public/non-profit services distribute means to wealth attention to justice

  36. Too little growth, too much welfare… Social Welfare Public/non-profit services distribute means to wealth attention to justice Growth Corporations / taxation focus wealth attention to efficiency

  37. Balanced action leads to… Social Welfare Public/non-profit services distribute means to wealth attention to justice Growth Corporations / taxation focus wealth attention to efficiency

  38. Healthy development Social Welfare Public/non-profit services distribute means to wealth attention to justice Growth Corporations / taxation focus wealth attention to efficiency

  39. Outline Thesis Counterexamples, Almost Why It’s So Difficult Development? Recommendations

  40. Cons of Dual Goal For entrepreneurs… • Investors more skeptical • Poor consumers harder target • Suboptimal profits • Challenges hard enough without also trying to help poorer people For development-focused… • Impact goal gets diluted • Resists other funding models • Challenges hard enough without also trying to make money

  41. “Know Thyself” What remains of the Temple of Apollo Delphi, Greece Photo: Wikipedia - Patar Knight

  42. Get Rich, Help Poor, Serially Bill Gates • 1997-2008 • Microsoft • 2008-present • Gates Foundation Michael Mazgaonkar • 1987-1991 • University • 1991-present • Mozda Foundation “Bill Gates releases more bugs into the world.” Photo: TED2009

  43. Get Rich, Help Poor, in Parallel…But Ringfence Activities Individual • Work at MNC, and • Volunteer at NGO Corporation / NGO • Sell app for profit, and • Run mentoring program Ringfencing critical • Separate budget • Separate time • Autonomous goal E.g. E.g. Advertisement seeking donations for Médecins Sans Frontières. Photo: http://www.ads-ngo.com/tag/msf/

  44. Employ, or Buy from, Lower-Income Workers Poor as producers, not consumers. Benefit is not from selling to the poor. Caution: Avoid becoming a sweat shop. Amul Dairy Cooperative

  45. Summary Thesis • Difficult to get rich by selling to poor Counterexamples, Almost • Very few clear counterexamples Why It’s So Difficult • “2 birds”; ethics; costs; “it’s good for you” Recommendations • Follow true aspirations; separate activities; poor as producers

  46. Thanks! kentaro_toyama@hotmail.com Obligatory smiling kids photo: Samburu District, Kenya Photo: Kentaro Toyama

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