Kentaro Toyama

1
ICT or Development Why Its 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 1924 (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
(No Transcript)
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
RealityIt 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
ClarificationIt 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
ClarificationIt 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
ClarificationIt 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.
12
Poor, not middle class
ClarificationIt 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.
13
Real impact, not just market share
ClarificationIt 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
ClarificationIt 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 Its So Difficult
• Development?
• Recommendations

16
Outline

• Thesis
• Counterexamples, Almost
• Why Its 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 arent 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
What about free services?

• Nothing is free!
• Ad-based models exchange services for attention
  (which advertisers convert to sales).
• How much is a poor persons attention worth to
  advertisers?
• Long term Poor left out with better
  ad-targeting, or poor end up paying for free
  services.

21
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
22
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
23
Counterexamples?
Maybe...
Photo Safaricom
24
Hope
History of TV
Reality
Photos/ http//farm1.static.flickr.com/114/292673
945_4377f46532.jpg http//www.vedamsbooks.com
http//issamichuzi.blogspot.com
25
Outline

• Thesis
• Counterexamples, Almost
• Why Its So Difficult
• Development?
• Recommendations

26
Two Birds Problem

• Every additional constraint makes a challenging
  problem even harder.

Photo http//www.cartoonstock.com/directory/k/kil
l_two_birds_with_one_stone.asp
27
Ethics Problem

• Profits on the backs of the poor?

Vikram Akula of SKS microfinance with a borrower
Photo neytri.com
28
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.gvepinternationa
l.org/en/business/news/phone-charging-enterprise-e
nhances-lives-uganda
29
Nice Guys Problem

• Additional costs of trying to reach the poor, or
  doing so generously, makes you less competitive.

Photo kickstart.org
30
Branding Problem

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

31
Its 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.c
fm?idoutsourcing-medical-studi
32
Outline

• Thesis
• Counterexamples, Almost
• Why Its So Difficult
• Development?
• Recommendations

33
Infosys campus, Bangalore, India
Pyramids at Giza, Egypt
Photos Kentaro Toyama, Infosys
34
The economic pyramid
35
Development requires two activities.
Social Welfare Public/non-profit
services distribute means to wealth attention
to justice
Growth Corporations / taxation focus wealth att
ention to efficiency
36
Too much growth, too little welfare
Growth Corporations / taxation focus wealth att
ention to efficiency
Social Welfare Public/non-profit
services distribute means to wealth attention
to justice
37
Too little growth, too much welfare
Social Welfare Public/non-profit
services distribute means to wealth attention
to justice
Growth Corporations / taxation focus wealth att
ention to efficiency
38
Balanced action leads to
Social Welfare Public/non-profit
services distribute means to wealth attention
to justice
Growth Corporations / taxation focus wealth att
ention to efficiency
39
Healthy development
Social Welfare Public/non-profit
services distribute means to wealth attention
to justice
Growth Corporations / taxation focus wealth att
ention to efficiency
40
Outline

• Thesis
• Counterexamples, Almost
• Why Its So Difficult
• Development?
• Recommendations

41
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

42
Know Thyself
What remains of the Temple of Apollo Delphi,
Greece
Photo Wikipedia - Patar Knight
43
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
44
Get Rich, Help Poor, in ParallelBut 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/
45
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
46
Summary

• Thesis
• Difficult to get rich by selling to poor
• Counterexamples, Almost
• Very few clear counterexamples
• Why Its So Difficult
• 2 birds ethics costs its good for you
• Recommendations
• Follow true aspirations separate activities
  poor as producers

47
Obligatory smiling kids photo Samburu District,
Kenya

• Thanks!
• kentaro_toyama_at_hotmail.com

Photo Kentaro Toyama