Since its inception in 1946, the World Bank has had 12 presidents, each of them an American. The practice of choosing an American for the job has gone unopposed given that the U.S. has been the world’s biggest donor nation. Similarly, the Europeans traditionally pick one of their own to run the IMF. This arrangement is known as a “gentleman’s agreement”.

But this year there’s a wrinkle in the World Bank process. A battle is underway among three candidates vying to succeed the incumbent president, Robert Zoellick, whose term ends in June.

Two of the candidates are economists from emerging markets: They are Nigeria’s Finance Minister Ngozi Okonjo-Iweala, who was previously a managing director of the World Bank. And, former Colombian finance minister and Columbia University professor, Jose Antonio Ocampo.

The third candidate, nominated by the White House, is Korean-born American, Jim Yong Kim, President of Dartmouth College and an HIV/AIDS expert. As an anthropologist and physician, rather than a banker or economist, Dr. Kim doesn’t fit the mould of prior World Bank leaders which may not be a bad thing.

Stakeholders outside the U.S. and Europe want to break the tradition of automatically slotting an American in the job. In a world now influenced to a greater extent by the rise of emerging economies, they say that it’s time to re-examine the Bank’s strategic role. The real question is, which nominee can best serve the interests of the Bank and its client countries in a multi-polar world?

American calculus

Unfortunately, the prospect of breaking the gentleman’s agreement seems improbable given that the U.S. is coming into its election season. It’s far more likely that the White House will use its clout — holding the most votes on the Board of Governors — to press hard for its nominee.

Alan Beattie, international economics editor at the Financial Times, quoting an unnamed World Bank official, said: “In a U.S. election year, and given the need to do nothing to upset Congress by appearing weak internationally, the strong feeling around the Bank is that the White House will absolutely insist on getting its way.”

The Obama team knows that if an American isn’t appointed, precious political capital will be spent defending the president  from charges of weakness by his opponents. But, by taking the politically expedient step, the White House is closing the door on a rare opportunity.

Features and benefits

Each of the candidates brings distinctive attributes, but Dr. Okonjo-Iweala is uniquely qualified. She has the experience, skills and perspective to recalibrate the Bank for the multi-polar era. By selecting a capable African woman to run an institution that has a central role in the developing world, the Bank has an opportunity to renew its covenant with client countries.

Raised in a time of conflict and deprivation, she’s become a battle-tested reformer of her nation’s institutions. She’s won some skirmishes and lost others, but she’s never walked away from confrontations.

She has valuable insider knowledge gained in her earlier stint at the World Bank. Knowing the institution from both the inside and outside is an advantage that her competitors can’t match.

As both a two-term finance minister and an economist, Dr. Okonjo-Iweala recognizes that reducing poverty comes from generating economic growth, requiring tough choices in emerging countries where governments have a preponderant role. She knows that the Word Bank has a vital role to play in that mix.

She noted that the Bank must address three challenges confronting client countries in “ways that respect their priorities, their culture and their own processes.” She said, “These three major challenges – creating jobs, investing in the human capital of the poor and building institutions – have to be pursued with vigor.”

The BBC reported, “The three-way fight is attracting increasingly passionate comment from candidates’ supporters. It has also shone a light on the way the World Bank chooses its head.”

The fact that this battle exists at all is proof that a shift in thinking among stakeholders has already occurred. The World Bank now finds itself at a critical junction. One thing is clear: the era of the gentleman’s agreement has passed. A transparent, merit-based selection process is in the stakeholders’ best interests.

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More on this subject?

• World Bank officials and observers weigh in on the selection process at the Bank’s site,
• Here’s an essay in the Economist, Hats Off to Ngozi,
• And my 2011 piece about Okonjo-Iweala (“The Disruptor”).

Addenda, 4/15/12:

• Okonjo-Iweala appeals to ‘cherished values’ Post by CDG’s Lawrence MacDonald,
• Does it matter who runs the World Bank? Post by CDG’s Nancy Birdsall,
• Dr. Okonjo-Iweala interviewed on Fareed Zakiria GPS (aired 4/15/12).

Post-script – The selection of Dr. Kim was announced on 4/16:

• BBC piece (4/16): “Africa’s World Bank Hopes Dashed as Okonjo-Iweala loses,”
• NYT article (4/16): “World Bank Officially Selects Kim,”
• Economist piece (4/16): “Kim for President”.

Related:

• Council on Foreign Relations piece (4/18): “The World Bank Group”

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 Cause for Hope

Good news continues to stream in about the unprecedented growth and stability of Africa’s frontier economies. The Economist, which ran a cover story in 2000 headlined, “The Hopeless Continent”, reversed course in December 2011, dubbing Africa, “The Hopeful Continent”.

Africa’s newer narrative is grounded in economics. In the last decade, six of the world’s 10 fastest growing nations have been in the Sub-Sahara, and that trend is expected to continue into the foreseeable future. The continent rebounded quickly from the global recession reaching 6% growth last year, surpassing East Asia.

Africa is too vast and diverse to be handled in a broad brush treatment. Each of its economies is affected by a unique and dynamic set of drivers.

However, on the whole, the Sub-Sahara is being shaped by converging forces: global demand for resources, burgeoning consumer markets and government reforms are placing the continent on a path toward sustainable growth. Regional trade and foreign investment are increasingly important. There’s cause for optimism and for a closer look at Africa’s Great Boom.

New seeds of growth

Historically, Africa experienced cyclical growth based on fluctuating prices of oil and other commodities. In recent years, steady demand for oil and other mineral resources has boosted growth. Today’s new sources of growth are more diverse and consumer-based.

Half of the continent’s new growth now comes from consumer services, namely mobile phones, banking (including m-banking) and insurance.  Consumer-led growth not only provides diversity to African economies, it accelerates cross-sector growth.

Africa, the world’s fastest growing mobile market with over 600 million mobile users, is second only to Asia in its number of subscribers. In each of the last five years, mobile penetration increased by 20% annually which has stimulated economic growth supporting a range of sectors that benefit from connectivity.

The London Business School found that an increase of 10 percentage points in mobile penetration boosts GDP by 0.6% in developing markets.

Indeed, mobile services encourage a more efficient mix of activities than would be undertaken in the absence of mobile services. Further analysis is needed to measure mobile’s contribution to regional growth, but arguably, it’s a game-changer throughout the Sub-Sahara.

More trade and investment 

Another new source of growth is intra-regional trade which has been historically insignificant. African governments are removing longstanding trade barriers and consolidating cross-border ties creating new trading partners and patterns. Intra-regional trade, still in its infancy, accounts for only 12% of commerce, but it’s poised to play a larger role in the future.

Foreign investment is also having an effect. Western firms are joining the influx of Chinese and a growing number of Indian companies competing in Africa. Local governments are making it easier for foreign firms to do business there. The World Bank and IFC’s annual assessment of commercial practices shows that 36 out of 46 African countries have reformed their foreign investment policies in the past year.

Challenges remain at the intersection of the government and the private sector where the pace of reform has been brisk but uneven. Although political patronage persists in some quarters, many governments have made strides in encouraging private investment, decentralizing service delivery and achieving greater transparency.

Despite its challenges, Africa’s prospects, on balance, are promising. Demand for natural resources, consumer-led growth and widespread institutional reforms are remodeling the continent. Foreign investment is increasingly important and will have a far greater impact in the future.

Foreign companies that are ready to come to the Sub-Sahara and roll up their sleeves will encounter confident, energized African business leaders who are convinced that this is, after all, Africa’s time.

 ***

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Image courtesy of Martin Power

More?

Helpful analysis and perspectives on this topic can be found at the following:

• The World Bank – Africa Blogs
• Africa Development Bank
• Center for Strategic & International Studies – Africa.

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Last July, Kenya became the first sub-Saharan country to launch an open data government site, enabling its citizens to gain access to vital information. After only six months, the Kenya Open Data Initiative (KODI) is still a work in progress, but it’s already reshaped Kenya’s culture of government.

When KODI was launched, Kenya was only the 22nd country with an open government portal. Today, 30 countries have live, open government sites, though dozens of other countries are in some stage of developing their own. Kenya’s early adoption is due in large part to the efforts of open data advocates both within Kenya’s government and among its influential technology community.

Whether Kenya’s open government will have a lasting, positive impact depends on how Kenyans use the information over time. But KODI’s successful launch illustrates what’s possible when government and technology converge to serve the needs of society.

Many stakeholders, one vision 

Last month, the World Bank released a detailed report about KODI that serves as a case study for open government advocates and practitioners everywhere. Among the takeaways, one can learn how a diverse group of stakeholders from the public, civic and private sectors coalesced to do something tough but important, despite their differences.

Gathering, structuring and publishing large data sets presented KODI’s developers with complex technical challenges. The portal makes available hundreds of data sets from the country’s 2009 census, and from health, education, infrastructure, water and sanitation services. The World Bank provided its development data.

Dr. Bitange Ndemo, Kenya’s Permanent Secretary of Information and Communications was the project driver with vigorous support from Paul Kukubo of Kenya’s ICT Board, and various government agencies.

To garner impetus and support, Ndemo forged a series of critical partnerships with the World Bank and Google, which both provided technical assistance, as well as with a host of local teams.

The platform is powered by Socrata, a Seattle-based company that fashions platforms for local, state and federal governments in the U.S., including open data sites for the city governments of Chicago and Seattle.

Choosing a U.S. firm’s platform rather than to use local developers raised initial concerns. But given the project’s aggressive timetable, the team settled on Socrata, one of only a few companies in the world with the capacity and experience in handling mammoth data sets.

Kenya’s celebrated technology community was instrumental in moving the project forward. Nairobi’s iHub, an “open space” community for developers, played a critical role, as did Ushahidi, the country’s homegrown crisis-mapping agency. (iHub developers built a mobile app enabling a user to locate Constituency Development fund projects and add images of them. The Ushahidi team mashed up census data with health services data on their Huduma site.)

Giant Leap forward

KODI’s launch marks a new chapter in Kenya’s government. Only four years after the country was rocked by post-election violence leaving 1,000 people killed and over a half a million displaced, Kenya fulfilled its mandate of providing citizens with unprecedented transparency and accountability.

Kenya’s President, Mwai Kibuki observed, “Data is the foundation of improving accountability and governance.” Dr. Ndemo tweeted, ”Data will fuel employment and wealth creation like never before.”

In his comments about the initiative, the The World Bank’s Tariq Khokhar, an open data evangelist, said, “Open data in Kenya is special: it comes at a time of national change; it’s got a head start on tools and expertise from the global open data community and it’s happening in a country where the information ecosystem is still maturing.”

The World Bank’s Country Director, Johannes Zutt remarked, “This portal is one of the first and largest government portals with reusable data in sub-Saharan Africa, making Kenya one of the world’s leading exemplars of open data.”

Alex Howard (@digiphile) of O’Reilly Media said, “Open Kenya isn’t simply about meeting data standards or publishing data online. Ultimately, it’s about changing the compact between citizens and their government.”

KODI’s development model can serve as a roadmap for other countries committed to realizing open government. Its successful launch is further proof that open government is an idea whose time has come.

At a time when politics is dictating social agendas in many countries, Kenya’s open government initiative is a testament to what a society can do when it focuses on what really matters.

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More on this subject?

Have a look at Alex Howard’s thorough piece, “GOV 2.0 2011 – Year in Review” and his earlier article, “Open Government Data to fuel Kenya’s App Economy”.  Here’s a post about KODI on the Ushahidi blog.

The OpenGovPartnership noted (1/31): “Now that Kenya has launched its open data portal, the OGP taskforce is becoming less focused on the programmers and more focused on civil society leadership. This week, Kenya’s open data initiative organized a workshop (with the World Bank and the African Media Initiative) for media leaders and journalists…”

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The West and the Rest

This is a tale of two economies with interlocking features. One has excess supply; the other has gnawing demand. In the West, economic growth is slowed while emerging markets are busting at the seams. An explosion in the number of urban, middle class consumers and related factors is powering growth in emerging markets.

The World Bank estimates that, on average, emerging nations will grow by 4.7 percent – double that of developed countries — through 2025. That growth isn’t only evident in the so-called BRIC nations, but in Turkey, Indonesia, South Korea, and across the developing world. Some of the fast growing regions are in Sub-Saharan Africa.

In fact, growth in emerging markets would be even greater if it weren’t constrained by a lack of capital, infrastructure and technological capacity. Western companies have the resources and expertise to help bridge many of these gaps.

This is a propitious time for Western firms with a global agenda to enter emerging markets. They can tap these markets by creating new business models, innovative services, and value-added plays by leveraging their IT capability. Here are points that Western businesses ought to consider if emerging markets are on their agenda.

Ready or Not? 

It’s interesting to work with Western companies that see opportunities in foreign markets but haven’t yet devised a market entry strategy. My advice for clients considering emerging markets is to focus on the fundamentals of value-creation. My playbook calls for first conducting a market readiness study to measure the potential demand for the product or service and, on that basis, to help plot a sound market entry strategy.

Understanding customers is central to serving any new market. Customers in emerging markets — both B2C and B2B — often have different buying drivers, like less disposable income, than those in developed markets.  It’s smart to visit the region, meet directly with prospective customers, and ask plenty of questions.  It’s important to gain a rich understanding of the market — its economics, demographics and business climate.

Then comes another round of questions — this one for key stakeholders — including: How will demand be generated (by segment)? Who are the competitors and how will they respond? What are the market barriers — regulatory hurdles, corruption, and supply chain gaps? In short, what are the known risks and how can they be overcome?

Soft Landing

For organizations that have completed the discovery exercises, tested assumptions, and are convinced of the merits of serving the target market, I suggest that they explore several market entry scenarios to choose a strategy that fits their situation.

Some companies benefit from acquiring businesses in the target market while others prefer to form alliances with firms that can help them establish a beachhead. Either approach comes with advantages and disadvantages.

Alliance-building is an undervalued competency that can be nurtured. A skilled alliance officer can identify prospective partners, negotiate partnership deals and help keep alliances on track as the business evolves.

The ‘Ecosystem’

After establishing its beachhead, the market entrant should build a network of diverse, local suppliers. This local ‘ecosystem’ can be leveraged to support many of the company’s critical market penetration activities.

On a related note, I think it’s smart to use local talent and develop local skills wherever possible. That’s an effective way to demonstrate a longer-term commitment to the community. The high caliber of talent that I’ve encountered in emerging markets has been inspiring.

Western companies with a global agenda ought to evaluate whether serving emerging markets makes sense for their business. If so, there are benefits to seizing the opportunity before the inevitable onslaught of competitors joins the fray.

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As always, I’d appreciate your feedback.

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TALE OF TWO ECONOMIES – ENDNOTES.

Thanks, Alexandre Giesbrecht, for the image.

The section title ‘The West and the Rest’ refers to Fareed Zakaria’s “rise of the rest” thesis in The Post-American World (’08) (updated in ’11).

Despite it’s popularity, I don’t care for the term ‘BRIC’ because it includes oil-based Russia with the more diversified economies of Brazil, India and China.

Seven of the 10 fastest-growing nations over the next five years are in the Sub-Sahara, as charted in this Economist piece (1/11).

More on this subject:

In their 2010 book, Winning in Emerging Markets, Tarun Khanna and Krishna Palepu offer their framework for evaluating and entering emerging markets.

The International Finance Corporation (IFC) provides their annual Doing Business reports ranking countries by regulatory barriers. Year-to-year changes suggest regulatory reform trends. This is Doing Business 2012. 

The World Bank’s report, Global Development Horizons 2011—Multipolarity: The New Global Economy shows that emerging markets will drive global economic growth through 2025.

Related: Strategy +Business piece, Competing for the Global Middle Class (8/11)

Addenda:

The World Economic Forum’s Competitiveness Index (2011-2012)

HBR piece, New Business Models in Emerging Markets (1-2/11), i.e. targeting the middle market opportunities

McKinsey Global Institute (MGI) publications on the subject of economic integration

KPMG’s High Growth Magazine

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The misdeeds of Africa’s despots get plenty of media attention because they fit a Western “plug-n-play” narrative about the region. Conversely, the work of Africa’s exemplary leaders is often overlooked.

I’d offer the story of an extraordinary African leader determined to improve the quality of life in her nation. She’s Dr. Ngozi Okonjo-Iweala, who was recently appointed Nigeria’s Finance Minister.

In her previous stint in that role, she compiled a stunning record of economic reform. She was the first woman to serve as her country’s Finance Minister and as its Foreign Minister.

Okonjo-Iweala is an inveterate disruptor of the status quo who is guided by her vision for what’s possible and a zeal for instigating change.

Stories like hers give rise to an emergent narrative that’s being written by Africans. As she puts it, “This is the Africa of opportunity. This is the Africa where people want to take charge of their own futures and their own destinies.”

The Journey

Dr. Okonjo-Iweala has championed economic reform in her native Nigeria and on a global stage. Before accepting the job of Finance Minister for the second time, she served as the World Bank’s Managing Director. Her remarkable record of achievement is due to a formidable blend of intellect, creativity and steely tenacity.

Okonjo-Iweala tells the story of growing up in the Delta State near the Niger River during the Nigeria-Biafra war in the late 60′s. Her father fought on the Biafra side during the conflict as the family struggled to survive. At age fifteen, while her mother was ill, her three-year old sister became stricken with malaria.

She placed her sister on her back and walked 10 kilometers to a clinic. When they arrived, hundreds of people were queued at the entrance. Instead of waiting, Okonjo-Iweala made her way to the side of the building and climbed in through a window. “I knew if she didn’t get help she’d die.”

A doctor gave the baby a shot of chloroquine and re-hydrated her. Within hours, her sister had recovered. “The ten kilometers home with her on my back — that was the shortest walk of my life.”

Okonjo-Iweala’s journey had only begun. She went on to earn an undergraduate degree at Harvard and a Ph.D. in regional economics and development at MIT.

‘Trouble Woman’

Okonjo-Iweala was the mother of four children when she began her first stint as Finance Minister in 2003. Soon, she became known for rooting out corruption and making government more transparent.

She led a series of reforms including decoupling the country’s budget from the price of oil, Nigeria’s chief export, to end its perennial liquidity crisis. She led investigations into government corruption and sacked crooked officials.

In addition, she streamlined the country’s bloated public sector and led efforts to crack down on its notorious Internet and letter extortion scams. Oil companies were required to publish how much they paid the government.

As a result of her stringent measures, public trust in government skyrocketed and Nigeria became more attractive to foreign investment. While a majority of Nigerians embraced Okonjo-Iweala, she made enemies among the country’s anti-reformists.

“They called me Okonjo-Wahala [a play on her surname] — or Trouble Woman. It means ‘I give you hell’. But I don’t care what names they call me. I’m a fighter; I’m very focused on what I’m doing, and relentless in what I want to achieve. If you get in my way, you get kicked.”

Her tenacity served her well. In 2005, she spearheaded her government’s negotiations with the Paris Club of Creditors to pay down $30 billion USD of the country’s debt including the cancellation of $18 billion USD.

Before resigning her post in 2006, Okonjo-Iweala stabilized Nigeria’s currency and cut its inflation rate from 28 percent to about 11 percent. The country’s GDP grew to over 6 percent from 2.3 percent in the prior decade. She strengthened the country’s banks and recovered millions of dollars in stolen assets.

The Mandate

After leaving office, Okonjo-Iweala continued fighting for developing countries at the World Bank raising a record $49.3 billion USD through the Institutional Development Fund. She also had oversight of the Bank’s special food crisis fund helping countries impacted by high and volatile food prices. More than 40 million people in 44 countries around the world benefit from the fund.

Okonjo-Iweala reached her latest milestone on August 17, 2011 when Nigeria’s new president, Goodluck Jonathan, swore her in for her second term as Finance Minister.

This time she has a mandate for extirpating corruption. As a condition to accepting the job, she was granted expanded control over all aspects of the economy including oversight of its ministers.

Okonjo-Iweala’s job won’t be easy. Her mandate comes with lofty expectations. Nigeria’s growth rate remains high but much of its population of 140 million still lives on under $2 a day. Institutional corruption is pervasive.

“The expectation, not just for Nigerians but for the whole world, is quite high,” President Jonathan observed at her swearing in, according to AllAfrica.com.

“People expect so much from you. Some feel that you have the magic wand to change everything. I believe with your level of experience and the support we will give you and the cooperation of your colleagues, all of you collectively, will help to change our own country.”

***

Headshot images: Courtesy of the World Bank/IMF Archives

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Want more info on this subject?

Here’s Dr. Okonjo-Iweala’s engaging ’07 TED Talk and a video clip in which she talks about facing Nigeria’s generals after recommending sizable defense spending cuts to fund education.

One of Dr. Okonjo-Iweala’s focus issues, not mentioned in the post, is South-South cooperation, i.e. fostering trade among developing nations.

“I Keep My Ego in My Handbag”, Guardian piece on  Dr. Okonjo-Iweala’s career, work ethic and family life. 

“Is Okonko-Iweala the DeFacto Prime Minister? AllAfrica.com op-ed (9/4/11).

Related but interesting:

Her son, Uzodinma Iweala, is the author of a critically acclaimed novel, Beasts of No Nation (2005). (Here is an audio reading by the author.)

Background:

Recommended for readers interested in Nigerian history – Peter Cunliffe-Jones’ crisp account, My Nigeria – Five Decades of Independence (2010).

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Nairobi Skyline

“This is the future of African technology, and if you blink, you’ll miss it.”  ~Erik Hersman

On the ‘Silicon Savanna’

Last month in Nairobi, Kenya, a conference called Pivot25 connected 25 promising mobile app developers from East Africa with investors and venture capitalists. Events like this one, based on the Y Combinator model, give aspiring developers a rare chance to pitch their ideas for possible seed capital.

What’s intriguing about Pivot25 is the attention that it drew from outside the region. TIME Magazine ran a piece about the conference from the standpoint of Nairobi’s contribution to global technology. CNN’s Global Public Square covered the event, too. Why so much attention?

It’s due to Nairobi’s growing reputation as a hotbed of mobile software development. The city has earned the moniker ‘Silicon Savanna’ due to high-profile, innovative mobile ventures launched there including Ushahidi, the ‘open source’ crisis-mapping platform, and M-Pesa, the world’s first mobile money service — a model for ‘access to banking’ services.

Both platforms were originally modest, homegrown solutions for local problems that were later widely adopted outside the region. The global tech community is expecting stellar performers in Nairobi’s next wave of apps and services, too.

The right stuff

On the surface, Nairobi may not look like a prime contender to be the next ICT hub. With a population of 3.5 million, it’s only the 12th largest city on the continent, but it’s one of East Africa’s most vital commercial and cultural centers.

Incubators are springing up in Lagos, Accra, Dakar and other large African cities, but Nairobi stands out due to the top-tier multinational firms using the city as a base for serving Africa’s booming mobile markets.

Nairobi is becoming known for its vibrant community of mobile developers whose ingenuity and confidence are growing over time. Their cleverly designed apps — elegant in their simplicity — are now part of Africa’s social landscape.

The city is also home to a small, vocal cadre of tech advocates who’ve trumpeted their community’s early wins, convincing audiences around the world that there’s more innovation on the way. The impact of potent advocacy is often overlooked when observers speculate about why Nairobi has the right stuff to be the epicenter of mobile technology.

An ‘ecosystem built on talent’

One of Nairobi’s more influential advocates is Erik Hersman, co-founder of Ushahidi, and founder of iHub (‘innovation-Hub’), an open-space tech incubator with over three thousand members. He contends that Nairobi’s pool of gifted developers is responsible for the region’s dominance.

“It’s an ecosystem built on talent,” he said in an interview with TNW Africa. “Nairobi is exploding with world-caliber techies, and companies such as Google, Cisco, Nokia, Seimens and Airtel (all of which built their African headquarters in Nairobi) have recognized that.”

He added, “Certain cities tend to be hubs, success breeds success, so when someone wins in a place like Nairobi, it quickly attracts more entrepreneurs and spinouts.”

A global stage

Success does indeed breed success, but the region also benefits from Hersman’s unique ability to attract capital for funding new projects. He’s not only a champion for Nairobi’s talent, he also creates workspaces for nurturing it.

In addition to his iHub initiative, described as “part open community workspace, part vector for investors and VCs, and part incubator,” Hersman is a driving force behind m:labs — Africa’s first mobile incubator launched on the heels of Pivot25 with support from the World Bank, Nokia and the Government of Finland.

Through his influential ‘White African’ blog and his roles as a TED Fellow and a PopTech Fellow, Hersman has a global stage on which to showcase his community’s engineers who bring, as he says, “ingenuity born of necessity”.

His latest contribution to building Nairobi’s image as an tech hub was his involvement in the Kenya Open Data Initiative (KODI), launched July 8, when Kenya became the first African country, and one of the first in the world, to make government data accessible to its citizens. (Here’s more on KODI.)

Hersman’s pitch to investors is compelling: Nairobi’s talented developers are creating the next wave of mobile software for the African market and beyond. Like their predecessors, the most promising new apps will affect a large number of people in a meaningful way.

This is an exciting space to watch. We’re witnessing history unfold now in Africa. As TIME Magazine’s Africa bureau chief put it: “…this is not a story merely of how technology is changing Africa. Africans are changing technology right back.”

***

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Image: ‘Nairobi from Uhuru Park’ Courtesy of Arthur Buliva

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Want more info on this subject?

• –Superb WIRED piece, Switching On: Africa’s Vast New Tech Opportunity (7/11).
• –Other champions of Kenya’s mobile tech community include Ory Okolloh of Google Africa and Juliana Rotich of Ushahidi
• –Hersman makes the case (2 clips): Africa in the 21st Century, and in his ‘09 TED Talk on launching Ushahidi
• –For context, Ken Banks, founder of kiwanja.net and FrontlineSMS, shares his views on mobile usage in developing markets
• –WIRED piece (July 12, 2011): Switching on: Africa’s new tech opportunity
• –TED Global – Africa (’07) series from Arusha, Tanzania — it’s amazing how far the African tech scene has evolved since then
• –A Touch Points post on Ushahidi’s role in the aftermath of the Haiti earthquake

• –Addendum: Hershman post (7/18), “What makes iHub work?”

As always, I’d appreciate your views…

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Turning the page…

Another interesting year is rapidly winding down. This year, I had the chance to work with many gifted business and tech leaders, but it was particularly satisfying collaborating with innovators in developing regions — the Sub-Sahara, the Middle East and South Asia.

It’s time for Western multinational companies — especially those in the customer-facing sectors — to enter developing markets where consumer-led growth is robust but capital and resources are in short supply.

Many Westerners have misconceptions about working in emerging markets. For example, they assume that the transfer of knowledge flows only in one direction — from us to them. But our clients in developing regions bring a keen understanding of their markets and what’s needed to elevate their businesses. We typically learn as much from them as they do from us.

Innovation Hothouses

Some of the most interesting business and technology breakthroughs are now coming from developing markets which have become hothouses of disruptive innovation. Behold the $2,500 car, the $25 business hotel room and the $25 mobile handset that provides service for just 2.5 cents a minute.

Developing innovators are finding novel ways for using mobile phones to perform vital functions like transferring money, paying bills, monitoring elections, diagnosing and treating illnesses, and buying and selling food. Each of these breakthroughs was created by inventive, driven entrepreneurs and engineers to improve the lives of consumers in their markets.

Those who aspire to work with innovators in developing regions must recognize the unique challenges that they face.  While conditions are generally improving, operators are often grappling with government red tape, dodgy distribution networks and difficulty securing credit. They demonstrate in quotidian ways how to overcome the kinds of constraints that would crush many Western enterprises.

Price of Admission

To contribute to and benefit from opportunities in emerging regions demands the wise use of capital, talent and resources. Understanding the market and culture are essential. Patience and perseverance are crucial.

Working in these markets also obliges us to give a portion of our time and resources to lend a helping hand where it’s needed the most. Whether that means donating digital equipment to bridge information gaps or mentoring a new generation of leaders, each of us can have a lasting impact.

Serving developing markets isn’t for everyone. For those who are fiercely determined to make a meaningful contribution on a global stage, the rewards outweigh the inconveniences.

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Want more?

I suggest a book, Winning in Emerging Markets, by two Harvard professors, Tarun Khanna and Krishna Palepu. They write, “Companies with ambitious emerging market growth strategies have no choice but to engage deeply with these economies – but the complex nature of these markets has made success elusive.”

Also have a look at McKinsey On Africa — a continent on the move, a “box-set” of essays and interviews about the opportunities and challenges in Africa.

In prior posts I’ve looked at how mobile phones are being used in emerging markets including in this tribute to Professor C. K. Prahalad who died earlier this year. His sage advice resonates. “Focus on becoming part of global citizenry. In exchange for the opportunity to participate everywhere/anywhere in the world you have the obligation to do something productive, which will improve the world.”

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Out of the East

Asia’s growing influence in Africa is receiving worldwide attention. China’s investment in Africa will top $100 billion dollars this year making it the continent’s biggest trading partner. There are 800 Chinese companies with over 4 million Chinese people living and working there. China’s impact on Africa, as author Richard Dowden observed, is the biggest economic shift of the twenty-first century.

Now, the story of Asia’s push into Africa is being revised to highlight players from India. In June, Bharti Airtel, India’s largest mobile carrier – the 5^th largest telecom in the world – bought Kuwait-based Zain’s operations in 16 African countries for $10.7 billion in cash.

Bharti has been eager to grab a piece of Africa’s growing mobile market for some time. In 2009, it tried to buy MTN, Africa’s largest carrier, but the deal failed due to regulatory roadblocks. Undeterred, Bharti pivoted quickly setting its sights on Zain.  By June, Bharti bagged its African trophy, though some analysts thought it paid too much for Zain’s assets.

The Bharti Recipe

Bharti didn’t waste any time plotting its next moves. By September, the carrier had chosen IBM, a partner since 2004, to run its network and IT for its 2G and 3G services in a 10-year deal worth over $1.7 billion.  IBM will manage the company’s data centers, servers and desktop operations.

This week, Bharti announced its selection of two Indian outsourcing specialists, Tech Mahindra and Spanco, to run its back office and customer care operations in Africa.

With its coalition of outsourcing partners in place, Bharti aims to streamline its sub-Saharan operation and cut costs to service Africa’s low-income markets. The carrier hopes to grow its 36 million subscriber base to over 100 million by 2012.

That’s an ambitious plan considering that Bharti will only control the product development, brand management and marketing portions of its business. Bharti thinks that these are the only functions essential to differentiating its offerings.

Multinational carriers have been relying on “managed services” companies that specialize in providing technology and customer care. Bharti pioneered and refined the managed services strategy in India for nearly a decade. Their model is considered an industry prototype.

The African Factor

Bharti’s gambit in Africa is unique in several critical ways: Africa is Bharti’s first market beyond the Indian sub-continent. The African market is both large and amazingly diverse. The sheer scale and complexity of their African foray is raising a critical question among industry analysts: Can a company, even one as disciplined as Bharti, get its arms around such a diverse amalgam of people, cultures and processes?

Jai Menon, group director of IT at Bharti thinks it can. He told the Economic Times of India: “The system was built in India and did operate in geographies where the diversity is huge — be it culture, language, devices and affordability. It will be the same across Africa. This system will address the entire pyramid, and not just the top or bottom of the pyramid.”

It will be interesting to watch Bharti choreograph its operations while launching its brand across Africa’s disparate social, economic and political cultures.They’ve begun by hiring African personnel from other carriers to assume key roles. Bharti will need to recruit more African talent to build a business culture that can realize the company’s aspirations.

Bharti brings to Africa an uncanny knack for squeezing out costs. India has been a hothouse for cultivating their scalable, ultra low-cost model.  If we’ve learned anything, it’s that Africa will likely present new and unexpected challenges.  In any case, Indian companies, led by Bharti Airtel, are emerging as major players in Africa.

***

As always, I’d appreciate your perspective.

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Want more info?

The Economic Times of India’s (Oct 26)  piece : “Bharti splits $500 mn Africa deal among IBM, Tech Mahindra and Spanco”.

Bharti Airtel & IBM described their plan for Africa in joint video press release .

Want more context?

Richard Dowden’s quote in the post’s opening paragraph is from his ’08 book, Africa – Altered States, Ordinary Miracles.  His section (Ch 17) “Asia in Africa – new colonists or old friends?” sketches Asia’s  long  history in Africa. He writes, “India is following China’s path. Though its rise is less dramatic.  In a few years time maybe every reference to China in this chapter would be followed by ‘ and India’.”

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A recent Ewing Marion Kauffman Foundation study revived the term “gazelle companies” to describe the young, rapidly-growing U.S.firms that are producing the majority of new jobs in the U.S.  The report recommends that policy-makers nurture Gazelles to stimulate job growth at a time when unemployment is high.

I’m interested in another class of companies—agile, well-run firms in emerging regions like the sub-Sahara. Like their Western counterparts, they’re creating a disproportionate number of jobs. But these young African companies are playing a more crucial role than gazelles do in driving market growth.

To belabor the metaphor, I call them Impalas, after the lean, swift gazelles indigenous to Africa. Impalas provide technology-enabled and outsourcing services to a growing number of multinational (MNC) service providers – mobiles, airlines and banks – in Johannesburg, Accra, and Nairobi, etc.  They share many of the characteristics of gazelles, but there are some notable differences.

Impalas make it possible for their MNC clients to devote more of their limited resources to building their core capabilities. For example, telecoms can concentrate on expanding their network infrastructures and building their brands while their resourceful Impala partners supply customer care and data services.

Business process outsourcers (BPOs) and large enterprises work together around the world—this practice is commonplace. Africa is different because it’s growing so rapidly. Only China’s consumer markets are growing more quickly.

Despite it’s rapid rise, the sub-Sahara’s growth trajectory is unsustainable because of  acute capability gaps in the region.  Companies are struggling to meet the needs of their customers. As African markets mature, Impalas are providing vital, high margin services like customer care, back-office support, and data analysis that require advanced technical and managerial talent.

Just as U.S. policymakers are advised to remove barriers to gazelles’ growth, African governments ought to lend a helping hand to Impalas which are creating jobs and raising standards of living for their citizens.

That’s been happening in economic hot spots like Botswana and Mauritius, but elsewhere on the continent, progressive economic policies are scarce.  Lack of access to capital and excessive regulatory burdens stifle young African companies.  Policymakers in Africa are missing a critical opportunity to move their economies forward at a time when the continent is poised for more growth.

There is an opportunity here for Western companies that can see and are willing to seize opportunities in Africa.  Partnering with Impalas on knowledge-exchange projects can be rewarding. Impalas benefit from acquiring tools and skills that Western companies have developed, and Western companies can become players in one of the most dynamic markets in the world.  Of course, it’s imperative to choose such opportunities wisely.

***

As always, I’d love to find out what you think about this subject…

Image courtesy of Daryona

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The term ‘gazelle’  was coined by David Birch of Cognetics (c. 2001) to describe a class of companies that “run fast and jump high.”

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The World Comes to Africa

As the World Cup gets underway this week in South Africa—the first ever to be held on the African continent—the world media is turning its attention there.

Typically, coverage of Africa by the international media is limited to stories about intractable problems—disease, war, famine, and corruption. Many of the World Cup stories are taking a similar tact. Stories about the South Africa’s five new stadiums underscore the nation’s mounting debt while other pieces highlight its security concerns.

A lot of the coverage reflects the world media’s skewed view of Africa as a monolithic place that’s plagued with tragedy. Severe challenges do exist, but many African societies are quietly building their institutions and infrastructures.  It’s time the outside world views Africa through a broader, more accurate lens.

Scale and Diversity

Africa is a vast and diverse continent where triumph and despair co-exist with everything in between.  It’s the “in-between” that tends to be overlooked in coverage about Africa.

Outsiders tends to underestimate Africa’s scale. As writer John Reader points out, the U.S., China, India, and New Zealand, together with most of Europe, could all fit within Africa’s coastline. This enormous continent contains almost a quarter of the world’s land mass.

The continent is amazingly diverse. The continent’s billion people inhabit 53 countries and speak over two thousand languages arguably making it the world’s most diverse region.  Africa’s diversity extends to its topography, climate, and culture.

Despite its remarkable diversity, most outsiders tend to picture Africa as a homogeneous region instead of as a melange of distinctive ethnic groups and cultures that influence everything from art and music to social structures.

Author Richard Dowden observes, “Every time you say ‘Africa is…’ the words crumble and break.  Every generalization must exclude at least five countries. And just as you have nailed down a certainty, a defining characteristic, you find the opposite is true.”  Stark contrasts and rich diversity are Africa’s defining features.

Failed States and Model Nations

One need only look at Africa’s recent history to get a sense of its diversity. During the last decade, the Democratic Republic of the Congo (DRC) was ravaged by an incomprehensibly violent civil war where millions perished. Somalia maintained its role as one of the world’s most lawless and dangerous states. Zimbabwe, endowed with abundant natural resources became known for its delusional ruler, Robert Mugabe, who decimated his nation’s economy. It’s understandable that such dire cases grabbed the headlines and shaped the world’s perception of Africa.

But during the same period, Botswana, Seychelles, Mauritius and, to a lesser extent, Senegal, Zambia, and Namibia encouraged private investment, grew their economies, and improved their living standards.  Kenya focused on building its tech sector and similar initiatives were launched in Ghana and Tanzania.  Oil-rich Nigeria took steps to reform its institutions and diversify its economy.

In light of Africa’s stark contrasts and rich diversity, it’s fitting that the World Cup is hosted by South Africa, a nation where eleven languages are recognized as official and many more are spoken.  South Africa has the continent’s largest and most diversified economy, but it faces serious challenges including steep unemployment and the world’s highest HIV/AIDS rates.  Here, too, great promise and opportunity co-exist with poverty and despair.

I’ve been traveling to Africa since the mid-80′s and whenever I think I’ve found an explanation for why things are the way they are, I’m proven wrong.  There’s always an exception. Diversity rules in Africa.

I’ll be watching the World Cup matches and rooting for the six African teams who qualified. They’re all underdogs, but I’ve learned never to count Africa out.

***

Post-script:  It was a treat to experience the World Cup from Accra, Ghana. The country’s Black Stars team beat the USA to make it to the quarter finals.  Here are images from that trip.

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What do you think? As always, I’d appreciate your perspective.

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Distinguished scholar and visionary

The distinguished business scholar, C. K. Prahalad, died unexpectedly last week of a lung ailment at the age of 69. His contributions to the pursuit of business strategy and innovation are unparalleled.  He’s had an enormous influence on my work and that of my peers.

Dr. Prahalad was more than a celebrated management guru, he was a visionary.  He redefined the way that a growing number of global businesses deal with developing markets, and he helped to shape a new economic paradigm.

The Indian-born Prahalad received his doctorate from Harvard and taught at the University of Michigan’s Ross School of Business, but he never strayed far from contemplating the social and economic issues that affected his native India.

A recurring theme in his work concerned the centrality of the customer in today’s global, interconnected marketplace. He urged business leaders to “co-create” or develop products in tandem with their customers.

During the much of his career, his focus was on corporate strategy at multinational enterprises. Among his  notable works were “The Core Competence of the Corporation” (Harvard Business Review, May-June, 1990), and a 1994 book,  Competing for the Future, both of which which he co-wrote with Gary Hamel.

The Bottom of the Pyramid

However, C. K. Prahalad is best known for his 2004 book, The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits.  In that work, he argued that businesses stand to reap benefits from serving the world’s poorest people or those at “Bottom of the Pyramid” (BoP) who live on $2 or less per day and who comprise a majority of the world’s population.

“Four billion poor can be the engine of the next round of global trade and prosperity,” he wrote.  “If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.”

His view of serving consumers in emerging markets, or “inclusive capitalism”, was eye-opening for many business leaders who had long ignored the needs of the poor and, in so doing, missed important opportunities.

Accessible and affordable products

Dr. Prahalad identified several obstacles in serving BoP consumers. For example, he observed that poor consumers typically have unpredictable income streams and they subsist on daily wages. They tend to buy only when they have money on hand, and only what they need that day.

Accordingly, he pointed out that single-serve packaging, for items like shampoo, condiments, tea and coffee, and aspirin, is well suited to this population, noting that a single-serve revolution is sweeping BoP markets.

In order to make products accessible and affordable for BoP consumers, Dr. Prahalad challenged business leaders to re-think traditional value chains by determining which components can be outsourced and which need to be “centralized” to minimize costs while maintaining quality.

Dr. Prahalad also recognized that emerging markets are “laboratories” for innovation.  He argued that reverse or “trickle up” innovation — goods and services made in and for developing markets — can transform industries in developed markets.

Examples  of “trickle-up” innovations include micro-lending, mobile-banking (“M-banking”), low-cost mobile phones, low cost hotels, and even car manufacturing where Tata Motors’ Nano – a car made for Indian consumers that sells for $2,000 USD – is slated to be sold in developed markets.

Lessons learned

Western businesses have only begun serving BoP markets, but a growing number of us are learning from consumers and entrepreneurs in developing markets about how to restructure our own business models.  The lessons we’re learning about lean manufacturing and virtual distribution chains from BoP markets are already transforming global markets.

The most profound change that we in the West have in serving BoP consumers is one of attitude. As we drop our assumptions and learn to better understand the needs of low income consumers, we’ll be able to tap the full measure of opportunities that Dr. Prahalad envisaged.

C.K. Prahalad spoke poignantly about how much the developed world can gain from serving and ultimately raising the living standards of people at the base of the Pyramid. He’s inspired my colleagues and me to see both developing markets and consumers through sharper, more accurate lenses, and we owe him an inestimable debt of gratitude.  He’ll be sorely missed.

***

As always I’d appreciate your perspective.

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Want more information about Dr. Prahalad? Here is the Times Of India’s eulogy.

This is an ’07 video clip featuring his discussion of  “the good and not-so-good” news about globalization’s impact on the Bottom of the Pyramid.

This video features an interview with Dr. Prahalad via Thinkers50 which named him “the most influential business thinker in the world” in 2009.  Here is his keynote address to the Acumen Fund Fellows Class of 2009.

I  recommend Dr. Prahalad’s ’08 book, New Age of Innovation, co-written with M. S. Krishnan.

Finally, here are assorted posts on this blog referring to Dr. Prahalad and emerging markets opportunities and issues.

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Downtown Cape Coast, Ghana

Pulsating business scene

I spent the last couple weeks on assignment in Accra, Ghana. On this trip, I’ve seen more growth than any time since my company started working there in ’07. This is a period of unprecedented business activity and promising new projects within and beyond the mobile sector.  Meanwhile, new competitors from around the world are streaming in. This corner of Africa’s business scene is pulsating.

Astute businesses here are taking steps to preserve their client base and deepen relationships with their customers. We’re privileged to work with a new generation of African business leaders with the courage and determination to transform their offerings to meet the needs of an emerging class of consumers.

These are exciting times to work with African business leaders who take seriously their mandate for investing in new technologies and business practices.  We’re helping them gain competitive advantages by improving the service systems that support touch points, by adding new service channels, and by harvesting business intelligence, among other initiatives.

Building competitiveness

The most effective strategy for businesses to gain a competitive edge here is to understand and meet the customer needs better than their rivals.  Forward-thinking leaders here know that competing on service will help preserve their customer base and attract new customers even as the marketplace grows more crowded with aggressive new entrants.

Developing insights about customers’ preferences and purchasing drivers helps companies here achieve competitiveness as well as profitability.

It also creates jobs. Thriving regional businesses are Africa’s greatest engine of job creation and economic growth.  That’s why we’re committed to collaborating with leading African businesses, knowing that their success means more jobs and higher living standards across the region.

What it takes to work here

This question comes up frequently in my circles. I think Western companies operating here require a distinctive set of leadership and communication skills. Traditional business skills are necessary but not sufficient to address the complexity and scale of challenges on this continent.

But what’s needed for Western companies to operate effectively in this environment? We’ve explored this question with business leaders in various sectors as well as academics, entrepreneurs, and technology innovators.

Our conclusion is that it’s not enough to bring an open mind. We must be skillful listeners. That means checking our assumptions at the door and listening with the intention of gaining deeper insights about the market and, most importantly, the customer.  Deep collaboration with partners and clients is key.

Africa’s dynamism and complexity require going beyond merely tolerating ambiguity. Ambiguity, a ubiquitous feature here, must be embraced.  “Leaning into” uncertainty is critical to problem-solving in this market.

It’s critical to drop the need for control, otherwise it’s tough to handle the inherent ‘push-pull’ of a region that’s steeped in tradition while it grows so rapidly.

The ability to consider competing, often “fuzzy” options helps us work with stakeholders here to produce the imaginative, yet practical solutions that the region demands.

Finally, operating in the region requires extraordinary levels of patience and perseverance.  Change rarely happens in sweeping strokes here. Instead change occurs through “successive approximations”.  One step forward, two back but always moving ahead.  Patience — never my strongest card — is essential.  (Note: I’m working on it.)

People, Process and Technology – Redux

Succeeding here requires mastery in choreographing people, process and technology, and we help clients focus on all three dimensions — what we refer to as “service systems”.  Of the three, ‘people’ is the most critical and challenging to optimize.

Africa’s leading companies are now investing heavily in their people because they know, in the end, that this the only sustainable ‘differentiator’.

On this trip, I observed how one company in particular, a leading business process outsourcer and partner, transformed its organization into a high performance business by nurturing its talent.  It accomplished this feat by fostering competition among its teams while encouraging buy-in and autonomy among team members.

Watching their evolution over time has been both heartening and instructive. Today, I’d stack them up against any competitor in the world. This kind of innovative, customer-focused organization is poised to meet the needs of customers in any market.

Lessons from Africa

Like all prior trips to Africa, this one was a valuable learning experience on several levels.  I encountered a new generation of leaders and was impressed by their willingness to invest in becoming more competitive. The vitality of the continent’s nascent mobile-web industry is breathtaking.  Keep an eye on this exciting space…

I also learned more about my company on this journey. I’m reminded that what separates us from our peers is our passion for and commitment to producing substantial results for our clients and their customers across the sub-Sahara.  It’s energizing to work on a continent of one billion people whose economic growth is only surpassed by China, and I never forget what a rare opportunity it is.

***

What do you think?  I’d appreciate hearing your perspective.

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Want more info on this subject?  You’re not alone.  There’s a plethora of books about conflicts and coups in Africa, but there are fewer resources about doing business on the continent.  I’ve previously recommended Paul Collier’s ’07 book, The Bottom Billion, which remains relevant.

In ’07, TED organized Africa: The Next Chapter, a series of talks which included the first TED conference held on the continent.  The series featured a stellar lineup of speakers on a range of topics about Africa.  Since then, TED has added new presentations about business development in Africa to the series, and  I heartily recommend it.

Here are some of my prior posts about the sub-Sahara.

I’d appreciate hearing your recommendations about resources on this topic.

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Evening at Cape Point on the tip of South Africa

While the business world is preoccupied with the global economic recovery, a mobile revolution is quietly reshaping the marketplace in the developing world. In Africa, mobile phones are providing access to communications for millions of people who’ve never had fixed communications let alone cell phones. I’ve written before about the impact that such ‘leapfrogging’ is having on African business.  Now, we’re beginning to see exciting and substantial commercial projects taking shape, particularly in the service sector.

By the numbers

To call this a ‘revolution’ is hardly hyperbole. Consider the scale of mobile industry’s growth in Africa. According to a recent report by the International Telecommunications Union, the number of mobile subscribers skyrocketed from 5% of Africa’s population in 2003 to over 30% by the end of 2008.  Today, some 400 million Africans have mobile phones — that’s 100 million more than in North America.

Since only a third of Africa’s billion people have handsets, there’s plenty of room for more growth ahead. But, the interesting story, I think, is how the mobile phone is already remodeling African economies and creating promising, new opportunities for businesses and individuals in the region.

Mobile phones are enabling rural and low income people to join the economy while creating a stable infrastructure for businesses and emerging consumer markets.  Mobile communications are making it possible for new services to develop and thrive.

At the junction of mobile and web

Africa’s mobile subscribers are using handsets to access services that consumers in developed markets typically get from the fixed internet. The junction of mobile and web is a green field for inventive engineers and entrepreneurs.

New, innovative mobile applications are being developed in sectors ranging from banking, agriculture and fishing, medical, education, to government and non-profits.  It seems that every week, we read about a novel way that mobile technology is being used to meet the consumer needs.

M-banking, as mobile-banking is known, is arguably Africa’s most successful mobile-enabled service sector so far. Last year, m-banking initiatives were launched in almost every country across the continent. As banks and mobile operators join forces to deliver m-banking programs, Visa and MasterCard are watching the sector closely hoping to ‘leapfrog’ into markets where no viable payment infrastructure currently exists.

Kenya’s Safaricom was one of the first mobile operators anywhere to roll out an m-banking program, M-Pesa. Originally it was used solely for money transfer but Kenyans are increasingly using M-Pesa to pay their utility bills.

Taking this a step further, m-banking is enabling another layer of services — known as ‘m-commerce’ — where goods and services can be bought, sold or traded. In remote regions where the fixed-line communications are thin or non-existent, m-commerce can enable buyers and sellers of goods and services to find each other.

What’s next?

As new land-based and submarine cable deployments slated for later this year make 3G widely available in many parts of Africa, we’re likely to see m-commerce grow which should mean more investment by the business community and, ultimately, more jobs for Africans and improvements in their quality of life.

Africa’s mobile revolution is bringing as many challenges as opportunities. Governments on the continent must keep pace with dynamic mobile economy by taking courageous steps to encourage outside business investments.   African governments must develop templates for working collaboratively with businesses to enable their citizens to enjoy the benefits of the mobile revolution.

One thing is clear: there’s no stopping the growth of the mobile industry in developing markets, especially in Africa. The mobile phone is helping to put the continent on a path toward greater economic sustainability.  I find it utterly fascinating to see how innovative businesses and imaginative people are harnessing the power of connectivity in Africa.

***

As always, I’d love to know your perspective.

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Want more info?  Here’s an October ’09 piece in the Guardian, “Africa Calling…” and a New York Times article from the same period.

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It’s been a week since the Port-au-Prince earthquake and images streaming in are helping us to grasp the region’s boundless misery and desperation. Hundreds of thousands have perished, and despite our best efforts, more will die and suffer for myriad reasons including the inability to deliver relief where it’s needed.

Despite the gut-wrenching news, it’s heartening to learn that determined, inventive people are finding ways to alleviate the suffering and, in some cases, save lives.

One of the more interesting stories is about an open-source project called Ushahidi which takes its name from the Swahili word for “testimony”.  The software, developed during the post-election violence in Kenya in 2008, enables text messages to be mapped by time and location.  Anyone with an internet connection, regardless of the device they use to access it, can send a text message, an image or an email. Ushahidi can also store data offline for later synchronization.

During its initial deployment in Kenya, Ushahidi was used to record hundreds of incidents of violence that might have otherwise gone undetected. It’s since been used to document incidents in the War in Gaza,the Vote Report India and Pak Voices (violence in Pakistan).  Ushahidi has also been used to track crime using its Atlanta Crime Maps.

But the application met its most demanding test after the earthquake in Haiti when the country’s mobile networks were down. Even after coverage was restored, the Ushahidi team realized that they needed a local SMS short code for the system to be widely accessible.

With a little help from our friends

Fortunately, Ushahidi has friends in high places. The team turned to Josh Nesbit, Co-Founder of FrontlineSMS:Medic, who used Twitter to reach a contact on the ground who was on his way to local mobile carrier DigiCel’s command center. With the help of the U.S. State Department, Ushahidi secured short code 4636 from DigiCel which is now being used to record the times, locations, and accounts of incidents.

Ushahidi updates its Haiti incident map with reports of medical emergencies, security threats, relief efforts and logistical bottlenecks.  It provides a filter for mapping earthquake survivors and deaths. Ushahidi also aggregates Tweets and streams from YouTube and Flickr, all of which can serve to orient first responders and relief workers while giving the rest of us a granular picture of what’s going on in the region.

Ushahidi teams in Kenya and Uganda are working around the clock to verify data from Haiti, and a university in Geneva, Switzerland is establishing a situation room there. Meanwhile, Ushahidi’s Boston team has approached Harvard, MIT and other institutions seeking volunteers to handle the massive volume of data pouring in.

As someone interested in how “home grown” technology is used in developing regions, this story is especially gratifying.  Ushahidi is about how inventive people in one developing country have created a simple but powerful “crowd-sourcing” tool to provide assistance in another hemisphere.

I’m concerned that “crisis fatigue” will set in, dampening world interest in supporting Haiti’s relief efforts.  By raising awareness about the on-going challenges in the region, we stand a chance of preventing the potential “disaster after the disaster”.

As this crisis evolves, new unforeseen challenges will arise. Let’s recognize that this is a long-haul operation. Perhaps stories like Ushahidi can serve to focus our attention on the enormous level of humanitarian assistance that’s needed in Haiti, and what we can do about it.

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Note: Ushahidi is currently seeking volunteers to process incoming SMS reports. Here are instructions to find out how you can help.

> Update (4/6/10):  Here’s an interview with Ushahidi’s Patrick Meier on a range of issues around crisis mapping and validation.

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Want more info about Ushahidi? Here is more on the 4636 SMS emergency code being used in Haiti.

And this is a Forbes piece (11-08), Citizen Voices:  “A Kenyan blogger found a way to get information from the crowd. Now she wants to take the idea to other parts of the world in trouble.”

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To support his argument, he cites the case of PUR, a low-cost water purification system developed by Procter & Gamble. The product provides the obvious benefit of affordable clean water where the risks of drinking contaminated water are high. But curiously, PUR* achieved low market penetration rates in test markets.

Why would consumers reject a product as salient as PUR? The author contends that Western companies simply haven’t created demand among low income consumers. “Companies must create markets—new lifestyles—among poor consumers,” he insists. His prescription is that Western businesses need to do a better job “conditioning” low-income  people to be better consumers.  Really?

He argues that Western businesses ought to show people in emerging markets how enjoyable life would be if they were using products like PUR.  Companies, he says, ought to “make the idea of paying money for the products seem natural,” and “induce consumers to fit those goods into their long-held routines.”  Get a load of our stuff!

The fact is that consumers in developing markets usually know value when they see it. For example, businesses don’t have to create demand for mobile phones bought by the millions at the Bottom of the Pyramid—the fastest growing mobile market in the world. Consumers in developing markets can see how phones improve their lives.

Low-income consumers often buy mobile phones from street vendors, and they continually invent ways to squeeze more value from the devices than designers could have imagined. Customers use the devices to handle tasks like transferring money and finding markets for their goods that were never conceived by the phone’s developers or market researchers.

Jan Chipchase, a field researcher at Nokia who studies user behavior in developing markets observes that however cleverly products and go-to-market strategies are designed, “the street” figures out novel ways to distribute and use them.

So what does it take to sell products in developing markets? Listen to and carefully observe potential users. It makes sense to educate and inform emerging market consumers, but businesses have a lot to learn from them about creating value in their markets.

A more enlightened approach to serving the needs of potential consumers in emerging markets is to bring them into both the product design, communication and distribution processes.

I don’t mean to sound flip but next time a Western company comes up with a hot new product for the Bottom of the Pyramid, they should keep it out of the hands of marketing gurus. Instead,  they ought to consult vendors on on the street and figure out a way to share the revenue with them.  If street vendors can’t sell it, no one can.

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* P&G now sells PUR in developing markets at cost and is partnering with non-profit organizations to distribute the product through humanitarian relief networks.

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What do you think? As always, I’d love to hear your views…

Want more on this topic?

Check out INSEAD’s piece, Social Innovation — Creating Products for Those at the Bottom of the Pyramid. For a broader perspective, read C. K. Prahalad’s classic, The Fortune at the Bottom of the Pyramid.

My related posts include Mobile Growth in Emerging Markets and various posts on emerging markets.

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Nearly every day, I work with colleagues who are eight or more time zones away. I’ve been doing this, with few interruptions, since the ‘80s. Back then, “geographically distributed” projects were run only by multinational corporations.  Times have changed.

Global markets have become more interdependent, and collaboration across borders is now commonplace, even at smaller companies.  Businesses know that they have to team up with companies in other regions to compete in the global “value creation” race*.

But a lot of companies struggle with this. In a June, 2009 survey by TMA World, 82% of respondents rated the performance of their company’s “global, virtual” teams as either ‘moderate’ or ‘poor’.  Yet nearly all of those surveyed said that global teams were ‘very important’ to their organizations.

The reason for this disconnect is that going global is a relatively new undertaking for lots of businesses. Many organizations simply haven’t “re-calibrated” for a global marketplace, and they don’t have all the pieces to support a successful global strategy.

“Expert” Advice?

There’s no shortage of advice from experts on how to improve cross-cultural business performance. Their recommendations — depending on what they’re selling — range from adopting more robust collaborative tools to receiving cross-cultural training.  Smart tools and interventions do have their place, but the missing piece at a lot of organizations is experienced talent, particularly at the leadership level.

Organizations interested in thriving on a global stage need leaders with high-level experience in regions where they’re operating, or at least in culturally similar markets.  This is particularly true for companies working in developing regions where business conditions are undergoing rapid change.

The Virtues of Seasoned Leaders

Leaders with relevant international business experience can bring dexterity to handling cultural differences in communications styles, approaches to completing tasks, and ways of handling conflict which can become magnified over the life of a project.

At a tactical (project) level, seasoned leaders with strong relational skills can recognize whether a breakdown in a project stems from a misunderstanding due to cross-cultural differences or from another source.  Seasoned leaders can take proactive steps to help their team to avoid the risks of cross-cultural misunderstanding.

In addition to interpersonal skills they’ve acquired, seasoned leaders can provide context to projects in developing regions where laws, commercial practices, and attitudes toward business are in flux.

Seasoned leaders can bring a rich perspective to multinational projects. Most of us who enjoy working in other markets are deeply interested in these regions. We become intimate with each country — its landscape, history, and politics. We devour every obscure book and report for the sheer joy of learning more, and we’re energized by putting the knowledge to practical use.

Lasting Value

Internationally-seasoned leaders can steer a steady course over the inevitable bumps and around the unexpected curves of cross-cultural projects.  The positive impact can extend across the organization long after the project or campaign has ended. They can help to shape their organization’s culture by passing on their knowledge to the next generation of leaders.

Courses in cross-cultural relations can inform your workers about handling cultural differences. But, there’s no substitute for having leaders who’ve managed high-level assignments in relevant foreign markets. My advice is this: Be sure to add international seasoning to the mix.

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As always, I’d love to hear your views.  What opportunities and challenges do you see in the global economy, and how do they affect you?

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* In their ’08 book, The New Age of Innovation, C.K. Prahalad and M.S. Krishnan use the term R = G (Resources = Global) to describe collaboration across cultures as an imperative: “All firms will access resources from a wide variety of other big and small firms—a global ecosystem”. (I discussed the book here.)

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Want more info on this subject? Here are some recommendations from broad to narrow in focus:

I’d previously recommended Fareed Zakaria’s book, The Post-American World (W.W. Norton & Co., ’08) which makes a compelling case for the rise of developing countries in an increasingly interconnected economy.

Parag Khanna’s book, The Second World: Empires and Influence in the New Global Order (Random House, 2008), makes a compelling case for understanding the world from the standpoint of Second World countries. I reviewed Khanna’s book  here.

For a variety of books about doing business in cross-cultural settings, check out the resources at Intercultural Press.

INSEAD professor Horacio Falcao discusses how to avoid the pitfalls of cross-cultural negotiations featuring this short video on the subject.  (When do we underestimate vs. overestimate the impact of cross-cultural differences?)

Related post: International Rules of Engagement, April, 15, 2009, and various posts on Emerging Markets topics.

What resources would you recommend?

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