ICTD and Social Entrepreneurship Leslie Dodson ATLAS Institute University of Colorado-Boulder.
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Transcript of ICTD and Social Entrepreneurship Leslie Dodson ATLAS Institute University of Colorado-Boulder.
ICTD and Social Entrepreneurship
Leslie DodsonATLAS InstituteUniversity of Colorado-Boulder
Sustainable What?
What the heck does sustainable mean? Fluffy, vague, overused term. Donors expect it. We use it.
Does financial sustainability mean: Costs are covered? The initiative “thrives?” The business turns a profit?
How does the community define sustainable?
One Definition of Financial Sustainability
A financially sustainable system should: Generate long-term revenue Maximize profitability Not threaten the financial wellbeing of
customers Not have any significant liabilities
www.espdesign.org
ICTD-Related Businesses
Crowdsourcing, micro-work Distributed work and information piecework m2Work, TxtEagle, Samasource
E-commerce, Web 2.0 enterprises Telecentres and other access points Equipment, calling cards, accessory sales ICT repair and maintenance
Social Entrepreneurship
Triple bottom line: people, profit, planet
Hybrid business model Social enterprises blend for-profit principles with
non-profit goals.
Social entrepreneurs seek to provide real social improvements as well
as attractive social or financial returns to investors
J. Gregory Dees. The Meaning of Social Entrepreneurship.
Overview
3 Features of Running a Business Revenue sources The Value Chain The Value Proposition
3 Key Components The Customer The Entrepreneur The Technology
3 Business Models Micro-Finance Micro-Franchise Micro-Consignment
3 Features of Running A Business
The Value Chain
Locate the business along the value chain
Raw goods supplier? Producer? Distributor? Marketing and Sales? Maintenance Provider?
This will help guide the role of the ICT and the potential for sustainability
Michael Porter. Competitive Advantage. 1985.
The Value Proposition
What is the ICT product or service?
How is it produced and delivered?
Who is the target market for the ICT? Demographics & psychographics How are buying decisions made? By whom? Are buying decisions made on price, quality, service,
convenience? How frequently is the ICT product/service purchased?
J. Timmons & M.H. Morris
Revenue Sources Access or monthly fees? Pay per use? Pay per view? Advertiser supported? Subsidized use? Flexible price?
What happens: if another vendor undercuts the price? If the product or service is given away? If the product becomes obsolete?
The Customer
ICTD and The “Bottom of The Pyramid” Customer
People in developing communities are avid buyers and consumers of ICT products and services
Developing communities represent new market opportunities
But…the “B-O-P” approach views the poor as customers, buyers, shoppers Can selling to the poor alleviate their poverty? Critics say the BOP approach exploits the poor
The Entrepreneur
The Iconic Entrepreneur
Entrepreneurship is often the last choice. “The poor are reluctant entrepreneurs.” The poor desire stability through steady income
Failure rate for startups in the US: 50+%
How much tougher is it in developing communities?
Without credit & banking - Without regulation Without infrastructure - Without contracts Without disposable income- Without access
A. Banerjee & E. Duflo. Poor Economics. 2011.1
1
2 Business Week
2
The Technology
The Technology
ICTD enterprises have to consider these and other technology-related costs
1. Design costs 2. Equipment costs 3. Training costs 4. Maintenance costs 5. Replacement/upgrade costs
3 Social Enterprise Business Models
Micro-Finance & ICTDAccess to Credit
Small, micro loans to the poor to finance ICT equipment or ICT-related businesses
Entrepreneur receives loan to buy tech or offer ICT services, uses sales revenue to pay back loans
Entrepreneur bears all of the financial risk up front
Micro-Finance & ICTDPros and Cons Benefits:
“My loan is my husband.” Provides working capital to under-served
populations Group support
Disadvantages: High interest rates Keeps borrowers in debt Constant pressure to pay back loan Group pressure and accountability
Micro-Franchise & ICTDAccess to Business-in-a-Box
Applies franchise concept modified to developing community
Replicable small enterprises with a social component
Reduced level of risk compared to starting a business from scratch
Micro-Franchise & ICTDPros and Cons
Benefits: Simplified, pre-packaged, standardized
business Business model and training provided Tested, proven businesses
Disadvantages: Inflexible. Can’t easily change business Requires management skills Owner responsible for hiring, firing,
managing employees Often need to buy in to a franchise
Micro-Consignment & ICTDAccess to Products
Entrepreneur is provided with a basket of products at no upfront cost
Entrepreneur pays for product after it’s sold,
keeps profit, restocks
Risk is shifted away from the entrepreneur
Micro-Consignment & ICTDPros and Cons
Benefits: Entrepreneur does not bear burden of holding
inventory. That risk held by an organization or NGO
Can work well with new products in new markets Much lower risk for entrepreneur
Disadvantages: Entrepreneur doesn’t decide what products to
sell Consignment process dictates products to be
sold
The Downside of Business(Not a Complete List!)
Charging for a product/service diverts money that may be needed elsewhere
Profit-seeking behavior breeds greed Business competition creates winners and
losers, haves and have-nots Profit doesn’t automatically create
widespread wealth The 1% syndrome If you build it, they may not come
Complications
Customers want the lowest price.Businesses want the highest profit.Donors want the biggest impact.Lenders want the least risk.Technologists want the widest diffusion.
Leslie DodsonATLAS InstituteUniversity of [email protected]
Resources Social Entrepreneurship:
C.K. Prahalad: The Fortune at the Bottom of the Pyramid. 2004 Aneel Karnani: Fortune at the Bottom of the Pyramid: A Mirage.
2007 Value Chain:
Michael Porter. Competitive Advantage. 1985. Microwork:
m2Work: www.infodev.org TxtEagle: www.jana.com Samasource: www.samasource.org
Micro-Finance: Muhammad Yunus. www.grameenfoundation.org
Micro-Franchise: Jason Fairbourne. MicroFranchising: Creating Wealth at the
Bottom of the Pyramid. 2008. Micro-Consignment:
Greg VanKirk. www.microconsignment.com