Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, I will not make this a long post. From what I learned as an engineer and economics student, and then as an accountant and involved with business management and consultancy, and then relief and development ... it is absolutely clear that profitability is needed for sustainability. The word for profitability can be changed to suit the not-for-profit world or the public sector ... but nothing survives in the long run unless its value creation is greater than its cost. In my view there can be enormous value in using modern ICT to facilitate productivity improvements ... but as private practitioners know, governments and regulators and incumbent controllers of local monopolies are not encouraging new innovations, but rather are discouraging valuable innovation. Hopefully enlightened leadership will soon embrace the great possibilities of modern ICT and make progress possible. My favorite major development project ... one that resulted in enormous improvement in US productivity was the US Interstate Highway System ... initially promoted by President Eisenhower ... and eventually built at tax-payer expense for the profit of almost everyone in the USA. The cost was huge but the incremental economic value was many times as much. And the capital markets encouraged the program. From the perspective of the US economy as a whole this was a profitable investment, though costly for the government. In contrast the information highways in developing countries are not getting built and the political and business leadership and the financial community (capital markets) have not yet become committed beyond the easy high profit elite (rather than universal) market. Hopefully this is now changing and will soon change a lot more. Some time ago I evaluated an FAO - UNDP project. It was an excellent project that did not cost much, and made a huge difference to a quite large rural community. The project was sustainable ... bit it did not sustain because, in this case, the country itself could not sustain anything beyond mere subsistance. The country had become totally dependent on foreign donor funding and then landed in the vicious cycle of guns and diamonds and all that. Sad. But the lesson is that both micro (the entity) and macro (the nation) need to be profitable to be sustainable. Sincerely, Peter Burgess Peter Burgess in New York Tel: 212 772 6918 Email: mailto:[EMAIL PROTECTED] Database http://www.afrifund.com/wiki/index.pcgi?page=AfrifundDatabase Coffee: http://afrifund.coffeefair.com Blog: http://taame.blogspot.com This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
[GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD List Members, On Friday, November 26, 2004, Shahid Uddin Akbar wrote: Still we didn't find any single project which can claim itself as Sustainable in terms of being financially viable and serving the local rural communities anywhere in the world. ..snip... Why are the organizations rushing for financial sustainability in the case of rural ICT projects? It also must have some donor driven ideology to make the development initiatives Commercially viable, which is not possible in a realistic approach. ..snip... So, can we put the idea aside to make all rural ICT for Development projects commercially viable? I would say yes and no. We have developed a viable model for financing the initial investment to set up rural TeleCenters/kiosks, with Donor money, on a wide scale. But thereafter, Telecenters HAVE to be able to pay for maintenance, amortization of equipment and operating costs, by themselves! In fact, a lot of Donor money DEPENDS on providing credible forecasts about this. One year's costs can be as much as the whole initial investment and the Donors we work with don't want to have to come in year after year, or see the projects fail. Therefore, we have developed (and are close to marketing even in Bangladesh) a system called VillagE-volution, a Knowledge, Information, Commercial and Consultancy system, aimed at rural communities wordwide, that should greatly help villagers in their development process and therefore even in paying for the Telecenters. We are even putting together a good, sustainable, Telecenter business model, based on VillagE-volution and the best services that can be provided with today's most up-to-date technology (VSAT, wireless and all), to be presented very soon to the Donors and then implemented locally, through NGOs and other entities with which we are connected. Therefore, we are analyzing all the information that we can find on rural Telecenter profitability (the main sources of revenue in the more successful examples until today and the reasons for failure of the ones that did not succeed). From your first sentence, it looks like you have some knowledge on the matter, or you may know someone that does. Or other List Members may. If so, could you kindly provide us with such information? Thanks for your support and the enlightening contributions that List Members and the Organizers have provided us. Arrigo della Gherardesca Managing Director ItAfrica - Italian African Alliance srl Milano, Italy This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, I am not sure if the time on this focused discussion is up, but it would be too bad if it was, because I feel there is much to discuss and the discussion here has been continual and robust. [***Moderator's Note: Although today is the last day of the focused discussion, the GKD List is ongoing (and has been for over 7 years); we will continue to post messages relating to the theme of Technology, Globalization and the Poor after today, as well as more general submissions.***] When I fist read your article Shahid, I thought you were referring to ecological sustainability. Reading it more carefully I now see you are talking about financial sustainability. However many say the same truth also applies to the development of ecologically and socially sustainable projects. I know there are at least a few of us here who are concerned with the social, ecological as well as financial issues of sustainability. In America, we refer to this as the triple bottom line. In terms of what we at OVF www.onevillagefoundation.org are shooting for, we want an integrated model for rural or urban (what do we actually mean by rural) development that is community oriented. There are several missing gaps I have seen in these email exchanges that focus on these two areas: 1. The important social and community aspects of sustainability 2. A whole systems approach to sustainability as mentioned below Andrew Kean previously worked for a leading eco-think tank in America called Rocky Mountain Institute. He explains the importance of whole systems thinking, specially looking at the development of the Factor Ten Engineering movement in the engineering field: http://www.rmi.org/sitepages/pid1081.php Factor 10X engineering is based on a proactive approach and optimistic outlook despite the challenges. An influential book - Factor Four http://www.ecouncil.ac.cr/rio/focus/report/english/wupprtal.htm suggested that large productivity gains are possible, that it is possible to double output while halving resource consumption. Factor Ten is based on a revision of this by Friedrich Schmidt-Bleek of the Wuppertal Institute http://www.wupperinst.org/ of Germany who suggested that in developed countries factor four was unlikely to be enough. Professionals from governmental, industrial and academic institutions met in Carnoules, France http://www.techfak.uni-bielefeld.de/~walter/f10/declaration94.html to further define Factor Ten in 1994. This is known as the declaration of the Factor 10 club. The phrase factor ten, comes from the realization that globally, the material turnover (per unit of production) needs to be drastically reduced in order to ensure sustainable resources use and ultimately survival of industrial society. They noted that to address adverse ecological and the associated health and social affects of modernization to sustainable levels, we would need to reduce the current human footprint by around a factor of TEN. Large gains in resource productivity are achieved by a shift in thinking, by an integration of management, technological and process improvements. Attention is directed not only to the manufacture of products and delivery of services but to consideration of the way your products and services are designed, produced, packaged, transported, sold, used and disposed of http://www.factorten.co.uk/ While we at oneVillage Foundation are not engineers we feel that we have a grasp on the necessary changes that need to take place to make human systems sustainable over the next few years. 1. Introduce pedagogic tools on whole system design. The first stage of our program is aimed at developing Community and Technology centers to provide hands-on experiences in the design of sustainable systems for the grassroots/bottom up economy starting with communities we have identified in Africa to be the first sites for Unity Centers. Our proposed Open and Distance Learning Program will teach Africans to develop and evolve sustainability concepts based on their own local perspectives and needs. 2. The next step involves exploring case studies/best practices on whole systems design that are relevant to local needs. Sustainable systems will be designed to boost resource productivity and replicate them at the community level, first in the centers and then expanding to the surrounding community or communities, using factor ten or similar methodologies in all aspects of human design and development. 3. Develop financially profitable self-sustaining economies at the local rural level to encourage local production empowering local economies and mitigate unsustainable global trade flows of capital and resources. All social initiatives do not need to be financially viable but they have to be aligned with cross sector partners who will see a reason to fund these projects indefinitely. I see a model that might fit your needs and concerns. It is not so much an issue of whether a project is of a purely business nature so much as
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD Members, I too will keep this short. But first, per instructions, a brief introduction: I am currently in Mali working on sustainable (from a profit-seeking standpoint) business models for Internet access in some of the poorest regions of the world. Not only is the profit motive an essential focusing element in the work I do, but it is a fun challenge. And, I am happy to report, it is possible to make a profit providing Internet access here. One List member quoted an email I had sent to him on a different discussion thread, so I figured if I was going to be quoted here, I might as well have some control over what was being quoted! (humor implied, if not achieved) Peter Burgess said essentially all that need be said with regard to the need for profit as a necessary condition for sustainability: nothing survives in the long run unless its value creation is greater than its cost. If this isn't intuitively obvious, you need think only of the opportunity cost of money-losing projects. If a project is not creating value, then it is destroying value and resources that could be put to better use elsewhere. Such a situation will not long endure; anyone reading this has an interest in value-creation (or they wouldn't subscribe to this List) and must surely take offense at the squandering of finite resources. Peter Baldwin [EMAIL PROTECTED] www.anapurnawebdesign.com This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, Sustainabiliy is a very critical issue for any ICT for Development project with the focus on rural areas. Still we didn't find any single project which can claim itself as Sustainable in terms of being financially viable and serving the local rural communities anywhere in the world. And again, the Profitablity is another major issue that needs to be addressed. Do all social initiatives need to be financially viable? Is it something of a purely business nature? Why are the organizations rushing for financial sustainability in the case of rural ICT projects? It also must have some donor driven ideology to make the development initiatives Commercially viable, which is not possible in a realistic approach. Experience of different successful Rural ICT initiatives categorically shows that the social benefits of the rural ICT project is much more valuable than financial viability. These projects are aimed towards EMPOWERMENT of rural communities which can not be done through a commercial venture. So, can we put the idea aside to make all rural ICT for Development projects commercially viable? Best, Shahid Uddin Akbar ICT Consultant SwissContact / KATALYST BANGLADESH This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Something I may have missed from this conversation is upfront rigorous RD traditionally required before launching innovations out into the business mainstream... (legal) drugs are a good metaphor...maybe profit is down the road, but to get to the stage where that is possible, big (business) risks have to be taken on a sometimes slender set of hypotheses i.e. that this product a) will pass regulatory requirements for human experimentation, b) pass optimally through a protracted, expensive expensive clinical trials process, and ultimately c) survive legal challenges in the open marketplace investments in this process are argued for by drug companies as rationale for high prices, and relentless profit seeking In the social service arena, do we go out too readily with marketing 'products' (services) based on little except flawed 'best case' precedents... ? John Lawrence former Principal Adviser, UNDP On Monday, November 22, 2004, Jeff Cochrane [EMAIL PROTECTED] wrote: ..snip... Nonetheless, I do think that in some circumstances a solution based on profitability can be the optimal one. In those circumstances, the challenge seems to be finding an innovative business model that targets the poor as consumers. The emphasis is on **innovative**. ..snip... How do we set about the task of first unearthing, and then exploring, those innovative business models that can make profitability work for the poor, not necessarily in every case, but at least in more cases than we're seeing now? My personal sense is that standard approaches to program development cannot cope. This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, Vickram Crishna's comment But only if I wasn't prepared to think that maybe there are other paybacks taking place, just that my monetary or even my measurement system hasn't learned to be flexible or inclusive enough is my cue to introduce myself. My name is John Rogers. I am coordinator of the Wales Institute for Community Currencies working in the former mining and steel-making communities of South Wales which drove the Industrial Revolution in the UK for 200 years. Working here in a 'post industrial' context we are experimenting with the tool of 'community currencies' to regenerate social networks in depressed communities with high unemployment and sickness rates. The concept of a 'community currency' is deceptively simple. Sometimes known as 'complementary currencies' they are local, regional or sectoral currencies designed to work in parallel with rather than to supplant national currencies. The problem with national currencies is their in-built scarcity due to factors of central control. Complementary currencies offer a different 'measuring tool' for effort, skills and value at the *local* level and they can be used by individuals, groups and businesses. The first challenge for all of us (and the biggest) is to recognise the hegemony of mono-national currencies, not just over trading relationships, but over politics, economics and, most difficult of all, over our thinking. Once we admit the possibility of parallel currencies all manner of creativity and 'thinking outside the box' is made possible. In fact whole new worlds of relationships can be created which are not possible with single currencies. In systems-thinking terms this is a matter of creating measuring tools which capture 'local variety' to complement the 'national variety' which national currencies measure. All for now. There is much, much more to say on this and lots of possible links to leading writers in this field. John Rogers Cydlynydd Prosiect Project Coordinator Sefydliad Arian Cymunedol Cymru Wales Institute for Community Currencies Canolfan Dyfeisgarwch Innovation Centre Parc Busnes Victoria Victoria Business Park Festival Drive Festival Drive Glyn Ebwy Ebbw Vale NP23 8XA NP23 8XA Tel: 01495 356722 Fax: 01495 356723 Email: [EMAIL PROTECTED] Y Prosiect Partneriaid gan Prifsygol Cymru Casnewydd, Plant Y Cymoedd ac Time Banks UK, rhan-ariennir gan yr Cronfa Ddatblygu Ranbarthol Ewropeiaidd A partnership between University of Wales Newport, Valleys Kids and Time Banks UK part financed with European Regional Development Funds. This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Answer: Of course not. But it might be the best answer in many more cases than we think. *** Take any given activity deemed socially worthy -- an educational radio boradcast, for example. If it is socially worthy, then by definition it **should** happen. How, then, shall the costs of making it happen be afforded? There are likely many possibilities, each likely to succeed to some extent. Sustainability is presumably part of the definition of success. Of course profitability is not essential for sustainability. Kassides at the Bank is an economist who argues essentially that there will always be some services ripe for public-sector management. That's perhaps another way of saying that some population broader than the immediate consumers of a good should pay for its production, if only because the benefits of the good flow beyond the immediate consumers to that broader population. So, if profitability is not essential for sustainability, there are of course successes out there that do not rely on profitability. Nonetheless, I do think that in some circumstances a solution based on profitability can be the optimal one. In those circumstances, the challenge seems to be finding an innovative business model that targets the poor as consumers. The emphasis is on **innovative**. While I do not know what form that kind of profitability answer would take, in the case of the program Michael Bosse describes (below) in Nepal, which has to do with education carried out by broadcast radio for a large number of very poor people, I have heard (through Digital Dividend and elsewhere) that there are interesting ideas worth exploring. Many of these move beyond the conventional advertising models perfected in the West for wealthier audiences. The innovators will essentially ask, If the traditional advertisers see no market through our radio programs sufficient for them to pay a lot of money for 30-second spots, then is there some other group out there willing to buy time on our show in order to meet some other market demand for their products? Or perhaps more cleverly they might ask, Is there some entirely new way of using broadcast radio that can generate revenues sufficient to cover costs in a way we've never even thought of before? In Mali, I hear birth, death, and wedding announcements generate the big bucks. In the USA I see we get the consumers themselves to pay for some programming. I'm sure none of these are the right answer for Nepal, the point merely being that the key can be finding the right business model. Or stepping out into the bold new frontiers of innovative questioning, Is there some way to tap the collective wealth of the very poor in order to provide our educational product while covering costs, whether with broadcast radio or without? And then there's the supply-side question: Are we truly selling a worthwhile product? Was our determination of social worthiness for our educational program properly done at the outset? That's all part of the business model, yes? Thus the crux of the matter for me boils down to this: How do we set about the task of first unearthing, and then exploring, those innovative business models that can make profitability work for the poor, not necessarily in every case, but at least in more cases than we're seeing now? My personal sense is that standard approaches to program development cannot cope. Cheers! Jeff Bureau for Economic Growth, Agriculture and Trade Office for Energy and Information Technology RRB 4.06-066 1300 Pennsylvania Ave NW, Washington, DC 20523-3800 Tel +1 (202) 712-1956, Cell +1 (301) 728-2160 Email [EMAIL PROTECTED] http://www.usaid.gov Keyword:InfoTech On Tuesday, November 16, 2004, Michael Bosse wrote: I'd like to share a wonderful story about the concept of sustainability and profitability in the area my organization www.equalaccess.org works, providing information and education to rural and under-served communities by broadcast technologies. It's also an idea and short-cut for measuring sustainability where there is large reach. Equal Access uses audio programs (radio) but the central challenge presented applies to anyone who measures impact and profit beyond the direct price paid for services delivered (as Lee Thorn and others have suggested, profit can be much more than monetary). ..snip... This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
On Tuesday, November 9, 2004, Adriana Labardini wrote: If someone is still skeptical about the potential impact of ICT...just take a look at this very discussion forum... ..snip... 4. Working on the demand side training people on the use of IT and developing useful LOCAL applications that meet the communities' needs rather than providing cookie-cutter solutions. It is important to build the capacity of local people to recognise and define local needs related to ICTs. Teachers in rural Nigeria are community leaders - they are also farmers in addition to being teachers. In a very real sense if you teach the teachers then you teach the community. This is something very much in the minds of the people running the Teachers Talking course at Fantsuam Foundation's centre at Kafanchan later this month. We hope to take advantage of the present situation of teachers seeking to know computer and use it to give these community representatives an insight into the potential of ICTs not just in education but in wider community development and economic growth. The current interest amongst rural teachers is caused by the Nigerian government saying that teachers who want a promotion will need to be computer literate. As a result some teachers are turning to community development centres like Fantsuam Foundation and the InfoCentre in Ago-Are to seek training. The teachers in rural communities are the educated minority, literate and bi-lingual, able to use English to learn new ideas and gain new experiences, able to share those ideas in their mother-tongue with their whole communities, not just their colleagues and pupils. We hope the course we are setting up for them - called Teachers Talking - will open their eyes to the potential of ICTs for themselves and their communities. They will have a week as visitors to the world of computers and connectivity. We are setting up a virtual community for them to join during their course so they are welcomed into the connected community. As part of their introduction to ICTs we hope they will experience the power of the Internet as a resource for Life Long Learning - especially discussion lists and peer-to-peer learning across cultures. For further details of Teachers Talking (TT), or to apply to join the TT virtual community see http://groups.yahoo.com/group/CawdTeachersTalking/ We hope these ICT tourists will be inspired by their visit and will go back to their communities with positive travellers tales about the connected world, a desire to revisit it whenever the opportunity presents itself, and the stirrings of vision for how it could benefit the rural communities they know so well. We hope to develop the course and offer it more widely, gradually building up a nucleus of teachers/community leaders who can contribute to informed discussion on the role of ICTs in rural education and development. To link this back in with the main subject of the discussion: Fantsuam began as a micro-credit organisation. The course organisers are concerned with various aspects of training and livelihoods and are realistic about the need for establishing sustainable initiatives. The TT work is part of a wider vision for sustainable development. Pamela McLean This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
While believing that info-kiosks can reduce poverty, especially in rural areas, we espouse the socio-economic role of an info-kiosk in a rural community. Given the decreasing costs of wireless access equipment in general, access to rural wireless networks seems to be profitably feasible in some areas -- areas where agricultural and SME productivity, literacy and an enbling infrastructure exists. For those areas, a multi stakeholder collaboration involving private, public and civil society institutions can start and operate small to large scale community wireless networks. Private sector Telcos can think of BOT mechanism, taking loans to build the infrastructure to later transfer to the rural entrepreneurs. While the role of public organisations would essentially be to facilitate the entrepreneurial venture availing the infrastructural, regulatory and financial facilities. Civil society institutions can be instrumental in feeding knowledge-based products into the network's services that can enhance the knowledge of rural communities. But what about those areas where the profitability seems to be a distant dream? How can we address that issue? What would be the role of government, private sector and civil society in that case? For developing countries, grant mechanisms, be it through a USO model or donor-funded model, seems to be only solution as of now. We shall really seek an answer to this issue. Can we think of giving access to info-structures like community info-kiosks as essential as giving access to primary education or healthcare? -- Atanu Garai ICT Advocacy Officer OneWorld South Asia C-2/6 Safdarjung Development Area New Delhi - 110016. T (91 11) 517-56975 F (91 11) 517-56976 E [EMAIL PROTECTED] On 11/11/04, Al Hammond [EMAIL PROTECTED] wrote: Adriana Labardini raises a very important question--how to get infrastructure and connectivity into rural areas. She poises the question of prices, but the real failure of old-line telcos is that they are wedded to a subscription model--the right business model (shared use, pre-paid in small units, local entreprenuers as resellers) would open up service in many places. Grameen Phone's village phone model, Vodacom's community phone shops, and others show this approach can be very profitable, and also provide affordable service where it is needed. ..snip... This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
I would like to react as follows to Lee Thorn's comments on sustainability and profitability: For any project or venture to be successful, there has to be a return on investment, tangible or intangible. Without this, the initiative is deemed unproductive and hence a waste. Preferably, for sustainability, at least the variable cost should be covered fully. If it covers either a part or fully the fixed cost, it is ideal. If it can also cover the opportunity cost, there is the possibility of creating other better income generating opportunities in lieu of doing the current project, then there is motivation to continue and scale up the project. This is what is termed as profit by others. I don't know, if I am right or wrong. I would like to benefit by others' opinions. Kris Dev (Krishnan) [EMAIL PROTECTED] http://ll2b.blogspot.com This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Thank you, Professor Lanfranco for your message on 11/4/04. I find your position very clear and helpful. I have some questions for you: Are NGO project subsidies assessed in terms of their ability to align wider benefits with costs? Do you know of any proven ways to do this or even just ways you like? Is it always necessary to quantify these benefits to compare them with costs? Is it important to quantify social costs (or savings), such as envirnomental ones, when measuring in this way? The sustainability of good projects requires profitability as a performance indicator and performance tool. If the profit motive is not the driving force for decision makers, something else must operate as the driving force for cost and marketing decisions. If there are externalities these must be explicitly addressed in strategic planning and in how projects are costed, funded, and how their goods and services are priced. How would you describe these 'externalities' you mention? They seem very important to me and in my experience with strategic planning they are expressed at least in the SWOT or similar analysis phase, even in the newer planning formats like dialog or visioning, but I am not sure how to quantify them or change them in some way so that they are/can be expressed in costs, funds, and prices. Lastly, all of these require a level of management, administration and accountability that is seldom found in development projects. I think this is a crucial point. It is certainly true about Jhai Foundation. I am not sure quantification is the key to measuring these other inputs and outputs. What is the key? For now I wonder if a whole marriage between profit-making and benefit-producing is necessary in the extreme conditions that many of us work. Perhaps the measures can be parallel rather than integrated, partial rather than holistic, paradoxical rather than sublime. What may matter most is how we report these things so that a discussion takes place where we agree to terms. Are we there yet? Are we near? At the same time there needs always to be room for 'the gift'. 'The gift' is usually understood in terms of flows rather than snapshots. Sometimes I wonder if what we need to do is examine more closely what a gift really is in cultures where people think more in terms of family and community than they do in under-developed places like the United States. Maybe there are clues there for all of us. I really like what you have written. I just am a bit ignorant and would like more help. Thanks. Yours, in Peace, Lee Thorn Jhai Foundation Lee Thorn Chair [EMAIL PROTECTED] www.jhai.org 350 Townsend St., Ste. 309 San Francisco, CA 94107 USA tel: 1 415 344 0360 fax: 1 415 344 0360 mobile: 1 415 420 2870 This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
The main problem here are the vague philosophical concepts and ideas, like the so called social justice that can not be defined, but can be infinitely distorted to suit the theories and demands of incredibly powerful would be rulers and pressure groups, who invented a new language and new meaning to many commonly used words to reach their goals, backed up with a strictly controlled media to mislead people. For example, the often quoted past prophets, like Smith and Ricardo, have never said, or wrote the things attributed to them, now used to justify limitless greed and exploitation. Ricardo never advocated the free movement capital with his marginal advantage theory and the way Smith's self interest and invisible hand theories, both in the same short paragraph, have been distorted to come up with idiocies like In competition individual ambition serves the common good is outright fraud. (I have the book, so I know exactly what he wrote and also how Friedman et al have distorted his words). If we really want to solve growing global poverty, ideologies and faith based isms are dead and should be buried, because sooner, or later some would be rulers will distort them and use them for their own power trips as they have distorted every religion, ideology and philosophical theory through history. Then we come to the calculations used by neoclassical market economists today, like the totally meaningless and fraudulent GDP, growth, productivity and even inflation and unemployment figures and we can only shake our heads in awe how they can get away with it and how the public and politicians can be gullible enough to tie the lives of billions of people to these transparent lies ? For example, the stated purpose of economics, in every textbook, is The science for the management and distribution of scarce resources. At the same time economic efficiency is defined in several different ways, but basically with the same meaning as The biggest monetary returns for the smallest monetary inputs, totally ignoring the distribution aspect, replacing it with pigs fighting at the trough, as the ideal economic model. To the best of my recollection, scientific laws and definitions are supposed to be sector neutral and apply equally to everybody, regardless of race, creed, or financial standing, while this aberration of decency, justice and logic gives a free hand to any sector to exploit others and the environment for their demands. Monetary values can not be used for any scientific, or economic calculations, because they do not represent realities, but often violence induced, temporary perceptions, therefore the presently used definition of economic efficiency is false and the cause of the biggest environmental destruction and human destitution on Earth. Neoclassical economics are not a science, but the biggest crime wave in history. With bank deregulation, money ceased to exist at a certain level and became a Licence to control energy and resources, issued by a special interest sector for its own benefit. The present monetary system permits the creation of inflated, infinite amounts imaginary monetary capital by self appointed powers, who are then licenced by the perceived power of that non existing money to overcapitalize resource conversion systems and take control of whole countries to divert the benefits into the pockets of an international aristocracy, while the legal owners of the resources are disenfranchised and destituted. E.g., the population of oil producing countries, while their GDPs are flying high, in praise of the wealth creating global marketplace and tens of millions are starving. Wealth and property are the temporary control of resources and energy. This also includes profits. Neither can be created, only taken from the environment, or from other sectors. Profits are a form of unilateral taxation without representation and although they are necessary for the survival of businesses, when they reach certain levels in the hands of multinational oligopolies and conglomerates, they become outright theft and the cause of daily growing global income gap. There's nothing wrong with private property, in fact it is necessary for human existence, I'm a property owner and and independent business owner/manager in BC since 1957, just as there's nothing wrong with the occasional glass of wine, or beer. But there's a lot wrong with drunkenness and alcoholism, just as there's a lot wrong with the fact that less than 400 people own and control half of the world's resources and wealth, CEOs taking home tens of millions every year, while firing and outsourcing thousands of jobs and raising prices in the name of so called economic efficiency . As JK Galbraith wrote many years ago The purpose of economic competition is to eliminate competition. Today the main purpose is to raise incomes for a few and expropriate the lives of many with the perceived power of imaginary money. The key to poverty elimination is the
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
On 11/9/04, Jean-Patrick Lucien wrote: How about an NGO running a franchise where they license those cyber-cafes to small entrepreneurs. Jean Patrick Lucien, to add to your comments, perhaps, better still would be to allow these individuals to run the cyber cafe on a day basis for a small fee which would cover the franchise fee (apportioned daily); the day owner should be able to keep the remainder of the day's earnings. This way the poorer individuals would be able to afford the cost and we are creating an enabling environment and increasing opportunity, almost the same way as Unilever India created the sample size soap bars to offer to the BOP market. Just as Barry Coetzee suggested, we need to scale our product to the requirements of the BOP market. Nevine Gulamhusein, Tel: 281-980-4747 Ext 359 Fax: 281-980-4787 This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
John, my quick response is that regulation follows public sentiment and values, thus, for me an appeal to branding is a consistent touch stone in that persuasion of the public, involving people in a values shift. We don't pay the gas taxes they do in Europe because our higher value is the open road rather than the impact on global warming. Reaching an EU level of environmentally sound level of regulation would require branding our impact on the environment more than our desire for open road, heavy-footed independence. On 11/4/04, John Broomfield [EMAIL PROTECTED] wrote: One observation to the comment on Branding. I'm not sure I agree with Kevin Jones (or maybe I just missed the context?) that ...the pricing changes coupled to getting externalities to be included in the cost of goods sold is a branding issue... I agree brand is important in terms of increasing the likelihood that consumers will pay a higher price for goods which cost more because of a pricing component which compensates for externalities. In this sense a particular brand is providing some intangible value to consumers who buy into (or can be persuaded to buy into) the approach that Kevin outlined below. Brand is also doubly important in this context if particular organizations are acting in isolation in taking on this additional cost burden while competitive products or services continue to enjoy a free ride. However I'm guessing that regulation/legislation forcing or incentivising (maybe through tax breaks) all producers of a particular product or service to internalize some of the external costs of production - and therefore create a level playing field for all - plays a more important role here. Especially for products and services which are becoming more commoditized and consumers are therefore buying more on price than values or attributes associated with a particular brand. Creating conversations between technology marketers and their customers Kevin Jones co-founder, Microcast Communications This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
My comments: How about an NGO running a franchise where they license those cyber-cafes to small entrepreneurs. 1) The NGO provides the training and investment seed to individuals who want to start their cyber-cafe. 2) The individuals purchase a franchise license to run the cyber-cafe. 3) The investor in return pays a yearly franchise fee to the NGO and also complies with some rules set to protect the community. For example, the cyber-cafe has to remain in the community. 4) A portion of the franchise fee is used to cover internal costs to pay the NGO and also to support other projects in the community. This way, the NGO does not control the financial profit of the investor but controls the benefit of the cyber-cafe in the community. Regards, Jean-Patrick Lucien EDEM Foundation www.edem2.org This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD List Members, If someone is still skeptical about the potential impact of ICT in productivity, knowledge opportunities, finding resources and expertise and social capital, just take a look at this very discussion forum that without the Internet would take hundreds of people having to pay travel expenses plus opportunity costs of their time to be able to have a dialogue like this. So thank God for Tim Berners-Lee, the creator of the World Wide Web. The problem is how many have ACCESS to ICT and at what price? This hits the very keen observation of Mr. Sam Lanfranco about the existence of a market failure when it deals with providing basic infrastructure for even telephone services, not to mention Internet, to poor, remote, disperse communities mostly in developing countries. To our great disappointment, introduction of competition of telecomm services in countries like Mexico did not raise the penetration of services in rural areas, and service diversification and penetration happened basically in medium and large cities. Even cellular phones that grew exponentially, are not affordable or available for poor, rural people. So in a regulated industry such as telecommunications, reaching the BOP through affordable, ad hoc ICT services where purchasing power is low, fixed costs high and competition policies weak, takes a really BOP-empathetic approach and a NEW MINDSET: 1. Perhaps there wouldn't be a market failure if providers were to offer services at the same prices they do to urban/wealthier customers, on the theory that they will have a much larger market with great needs of communication and information, provided they are affordable. 2. Reducing the cost of deploying infrastructure through disruptive technologies that leapfrog the expensive wire-based ones. For example, through WiMax networks that can even be owned by the community or town. 3. Government support of these access technologies through policies and incentives that enable use of free spectrum, which means giving up proceeds from spectrum auctions. 4. Working on the demand side training people on the use of IT and developing useful LOCAL applications that meet the communities' needs rather than providing cookie-cutter solutions. I am sure some of you have worked, or are currently working, on economic development projects through ICT using innovative technologies. Please share your experiences and challenges as to access issues and using unlicensed spectrum and VoIP, and if you dealt with regulatory problems. Thanks to you all for your enlightening comments and stories. Adriana Labardini Attorney Mexico City [EMAIL PROTECTED] (52 55) 5812 1356 This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, Once again I have mixed views. I think that Jim Forster's point about the public sector role in investing in part of the infrastructure for ICT is very important and indeed important from a country's e-readiness perspective as well, and that there is a clear similarity here with other public sector investments into water, railways etc. I also agree that the market's ability to listen to customers is one of its key qualities (however, this is assuming that all customer voices are heard). Allen Hammond's research is excellent, needed and very encouraging for businesses in doubt about investing in poorly served markets, and with the current trend for corporate responsibility some externalities will no doubt be taken care of. However, if we are talking about eliminating poverty, the cut-off of $6000 per household per year is rather high. But perhaps this is not the point? Perhaps it is merely that there is a large untapped market amongst the poorer (not the absolute poor) and that this group would benefit from the investment? If the key question is can profit alone eliminate poverty and businesses take over where NGO's and Governments fail -- then I think the answer has to be no -- simply because their motivations and goals are different. But if the key question is can businesses provide ICT services better than NGO's, and is there a business case for entering bottom of the pyramid markets, I think the answer is without a doubt - yes! When it comes to the very poor or otherwise disadvantaged groups, and when it comes to market externalities such as the environment, governments and NGOs must continue to play a role. Albeit, a more efficient role than in the past! In this regard, I found Sam Lanfranco's analysis of the driving forces of development projects excellent, and I agree that often development projects do not have the required level of management, administration and accountability. The latter is an area that the not-for-profit organisations desperately need to address. Although I don't think that NGOs' function will become superseded by business (rather, they have different roles to play), Tom Abeles' point here that the current trend poses new challenges to NGOs is very relevant, and perhaps this debate will lead to greater transparency and efficiency in the not-for-profit sector, which in itself, would not be such a bad thing. Best wishes, Bettina Gronblom Hammerich This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, I would place the question into a broader context: For example, if we call 'S' the benefit to society (or the community) and 'I' the benefit to the individual (profit), any type of human action can be grouped as follows: S 0 and I 0 : social investment S 0 and I 0 : destructive egoism S 0 and I 0 : true altruism S 0 and I 0 : destructive behavior Yet economic history, logic and computer simulations (see: http://atta.labb.usb.ve/Klaus/altrupun.pdf) show that only the first one on this list causes sustainable economic growth. In relation to non-economic benefits, estimated through the human development index (HDI), there is a very close correlation between HDI and GDP (more data on this, though in Spanish, can be had at http://www.cee.usb.ve/La%20riqueza%20de%20las%20naciones.htm). Thus clearly, at least for the poor, economic considerations are the most important (if not they wouldn't have been called poor in the first place). Does anybody know of a web site with a list of successful projects worldwide? Klaus Jaffe Universidad Simon Bolivar Apartado 89000, Caracas 1080 http://atta.labb.usb.ve/Klaus/klaus.htm This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
On 11/3/04, Andy Lieberman [EMAIL PROTECTED] wrote: While I feel comfortable with the above-stated model at the local level, I am struggling a bit with the ethics and reality of whether a mid-sized local NGO should build its sustainability off end users. For example, some people have suggested that our NGO could create a franchise scheme where our partner centers could pay us a fee for which we would provide ongoing technical and administrative support. It is certainly solid as a business plan, although I wonder about our capacity to provide quality services at a low enough cost. Regarding ethics, I would not feel comfortable knowing that my salary is coming directly from the pockets of the rural poor we are trying to help. Yet, if we are not able to offer those services, the telecenters end up paying private companies for that assistance. So, maybe I am wrong in my thinking and that this scheme would really be a win-win. Our NGO is doing its best to be transparent, so that any profits obtained should truly be channeled back to our target population. I would welcome testimony from anyone or any organization that has gone through these types of growing pains. Andy, I would understand your feeling against feeding from the poor's hands. I think the most important issue here is the service you will offer and how it fits into the larger community aspirations. I have worked with setting up School-Based Telecenters (SBTs) in Uganda and Zimbabwe under the World Bank Institute program. In Uganda alone there are over 15 SBTs. The strength of the SBT is as much in the networking and sharing of resources. They can negotiate fair prices and services etc., as a block. Therefore if you can make your services available to help organise common interests around a need - for instance PC servicing and repairs, training etc, that would be great. They can in turn pay some fees at a price deemed necessary for the service. In case there is a doubt - take it that if you don't help, someone else will, but might require higher fees than what you might be willing to do the same job for. I think its all a WIN-WIN situation if you help and charge less than the market cost - if you can get a good service for that amount. I would be happy to know how you get through on this. Regards, Meddie This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, This really is a fascinating discussion. So fascinating that I feel compelled to make my first post - so please be gentle.:) One observation to the comment on Branding. I'm not sure I agree with Kevin Jones (or maybe I just missed the context?) that ...the pricing changes coupled to getting externalities to be included in the cost of goods sold is a branding issue... I agree brand is important in terms of increasing the likelihood that consumers will pay a higher price for goods which cost more because of a pricing component which compensates for externalities. In this sense a particular brand is providing some intangible value to consumers who buy into (or can be persuaded to buy into) the approach that Kevin outlined below. Brand is also doubly important in this context if particular organizations are acting in isolation in taking on this additional cost burden while competitive products or services continue to enjoy a free ride. However I'm guessing that regulation/legislation forcing or incentivising (maybe through tax breaks) all producers of a particular product or service to internalize some of the external costs of production - and therefore create a level playing field for all - plays a more important role here. Especially for products and services which are becoming more commoditized and consumers are therefore buying more on price than values or attributes associated with a particular brand. Just my 2 cents. Regards to all, John This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD Members, It is great to hear all the thoughtful ideas and I am encouraged by them particularly as a nice counterpoint to the recent political setbacks in US. I am working with a start up social enterprise called the oneVillage Foundation http://www.onevillagefoundation.org. We are excited by this conference and the potential of BOP. We currently are in the beginning stages of developing what we call Unity Centers. I hope that our work on this may have some relevance to this discussion. Most telecenters are not profitable or economically self-sustaining. This would not be an issue so much if the telecenters were developing an integrated program of development that incubated social enterprises in the communities they operated out of. It is not so much an issue of whether telecenters are directly profitable but whether they are building economic value in the communities they are operating in. Yet as Meddie Mayanja seems to imply, profit is essential not only for successful ICT Development but for all things done in a civilized society. If one is ideologically downed by the idea of profit then one can use the term resources. To replicate sustainable communities-based economies you need to have a return on the initial investment. Here is one scenario we have looked at as we have worked to develop a comprehensive plan for local community development around ICT centers: ICT centers could be designed as money losers but the businesses and other organizations they incubate or assist could pay a fund to keep the operation going from their profits or surplus revenues. At the same time, the program could be designed to subsidize small groups doing research and organizational work relevant to increasing the momentum of local development. People just wanting to see the Madonna website or find out if Bush won the re-election on CBS.com would have to pay to use the computers, as would be the case in normal cyber-cafes where everyone has to pay. The subsidy towards serious computer usage would discourage frivolous use of what is still a very precious resource in non-affluent countries. I think it is important to not only look at profit but how the profits are spent. This is a real issue in non-affluent nations and also affluent ones (probably more so as they are the 15% of the world's population that unsustainably consumes 85% of the world's resources) as well. More on this later... Jeff This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Jim Forster makes some good points below. One thing I'd like to add is that the pricing changes coupled to getting externalities to be included in the cost of goods sold is a branding issue that extends all the way from state fiscal and monetary policy down to the level of consumer purchases costing more at the cash register. That pricing change will come if it's accompanied by a value change that is deep and heartfelt and desires expression throughout a lifestyle. A first target might be the LOHAS market (lifestyles of health and sustainability). Get this ethically purchasing consumer to wake up to poverty and get them willing to pay to fight the conditions that foster it and you have something. If you can get the selfish yuppies who are trying to treat their own bodies and minds well to think about extending that kind of regard to somebody else who has less than they do, then it could work. They'd have to see how global economic justice is in their best interests, just as they have become enlightened consumers of personal products and services, this is about them becoming enlightened consumers, about expanding their horizons of what is in their best interests. You would in effect get them to pay a poverty fighting/environment cleaning surtax, but do it through being willing to pay a premium for poverty fighting just like they already do for environment cleaning. It would also have to be tied to those developing world cultures selling their culture effectively into the developed world, just as the developed world shoves media and culture into the developing world. The transmission of value would be two way... If that happened, then market forces can make the difference. Here's Jim's response to a previous post: Bettina Hammerich made some very good points in her recent posting that also pertain to the current question of the role of profitability, including: * Businesses are more likely to be efficient service providers * Governments and NGO's can be corrupt and/or ineffective and * Environmental and human rights are not best served by the free market * The level playing field is uneven and everyone is not free to choose * MNCs are not transparent Perhaps some of the concerns in the second group can be addressed in time. I would hope, for instance, that some of the environmental effects could be reduced by burdening the products with projected environmental costs and in some way capturing the externalities. This is easier said than done but simple examples include requiring recycling fees at the time of purchase. MNCs are not transparent; neither are some NGOs and some governments. All should be pressured to be more transparent. ..snip... Creating conversations between tech marketers and their customers Kevin Jones, co-founder, Microcast Communications This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
This question is really two questions. The first part is Must a venture/project earn an adequate return to be sustainable? The answer is an obvious yes, but leaves open what is meant by an adequate return. An adequate return must generate a revenue flow to sustain operating expenses. It should also provide for the replacement of the initial investment (fixed assets). Whether it needs to return a competitive rate of return on those initial assets depends on the nature of that investment. If it is venture capital (from investors) it needs a rate of return in addition to covering operating expenses. If it is a grant there may only be need for replacement investment. The second part of the question is Must the profit motive be a driving force for success. The answer here is more mixed. The profit motive includes maximizing revenue, but it also involves minimizing expenses. The profit motive is as much about good cost management as it is good marketing. Both are possible without an explicit self interested profit motive on the part of those who own the assets and receive the profits, but both are more difficult and require extra dedication and care. There is a further complication here, in that some development projects are undertaken because there is what economists call a market failure. For such development projects this usually means that the benefits are spread wider than just to those who pay. The market demand for the service or produce will be less than socially optimal unless there is a subsidy to reduce costs and lower prices. Education and health are areas where one frequently finds market failure. There are then three lessons to be drawn here. First, profitability as the need to pay attention to keeping costs in line and worrying about pricing/marketing is essential whether the operation is a private for profit operation or a social for community project. Capitalists ignore this at the risk of their capital. NGOs ignore this at the risk of their projects. Second, If the profit motive of owners is not the driver for efficiency and effectiveness in the provision of goods and services, some other explicit benchmark measures need to be in place to assess and discipline the projects. For community projects this needs to be more than bookkeeping, it needs to be strategic financial planning. Third, If projects involve addressing externalities an explicit strategy of dealing with externalities needs to be part of the strategic planning. Are private sector projects subsidized to better align wider benefits with project costs? Are NGO project subsidies assessed in terms of their ability to align wider benefits with costs? The sustainability of good projects requires profitability as a performance indicator and performance tool. If the profit motive is not the driving force for decision makers, something else must operate as the driving force for cost and marketing decisions. If there are externalities these must be explicitly addressed in strategic planning and in how projects are costed, funded, and how their goods and services are priced. Lastly, all of these require a level of management, administration and accountability that is seldom found in development projects. Sam Lanfranco Distributed Knowledge Project York University This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, I realize I left out one other point about ICT development and profitability: I was making the case for profit as an important metric, and indeed I think that private, for-profit companies can and should take the lead in much of ICT, but profit is not the only metric and there is an important and natural role for the public sector in creating part of the network infrastructure for ICT. In the networking part of ICT I would propose a hybrid of public/private investment, somewhat analogous to many of our transportation systems (except railroads). The public sector builds the roads and highways, but the private sector supplies the vehicles, fuel distribution systems, trucking companies, etc. I think the road construction, while not cheap, is quite smaller than the rest of the system. In particular, I think in many cases it makes a lot of sense for the public sector to build what we call Layer 0 of the networking stack: the physical layer. In cities that would be fiber conduits and possibly fiber bundles. They could then rent access to these conduits or fibers to companies that install equipment that uses these to make useful services, such as voice and data connectivity. These companies in turn would sell voice or data service to individuals and businesses. Secondly, in some cases it may make sense for the public sector to take the lead in building a backbone network, to which smaller regional or community networks might attach. And in most cases the public sector funds much of the educational system. The Internet is now a vital part of the educational system, and as such, public funding of educational uses of the Internet makes sense too. Thanks, -- Jim This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Al Hammond's posts on GKD are wonderfully articulated. And I think they are on target. They validate the models developed by Harvard's Clayton Christensen (Seeing What's Next) for example. The focus on this list seem to me to be formed around social justice and similar issues, where the ICT's are just the surrogates in this ongoing debate between the neo-classical economic advocates (business models) and the emerging heterodox thinkers (more driven by social justice issues). The fact that these ICTs that Hammond cites bring social benefit is more in the way of a rationalization that the standard economic model can make money and still be socially and environmentally responsible. The social activists on the lists, though, start with the issues of social justice which is paramount, and if it makes money, that is also good, as long as its not too much. The problem is that the business model starts with private capital and entrepreneurial spirit and risk. Such funds are unavailable to those seeking social justice; thus, the latter group has little to do except to try to inform the private capital of its social responsibility. Advocating for public sector support, gives the social justice organizations the funds they need to implement a different model. Unfortunately, this latter model is dependent on government largess to sustain it and there is little effort to concentrate on a business model which seems to contradict the ideas around social justice. If the larger ideas underlying the models that Hammond describes, work; and, if the business community does adhere to issues of environmental sustainability and social justice, then the roles of the NGO's will be seriously abridged and altered and, possibly, their voices may be muted. The NGO's have more than issues of thwarted social justice on their agenda. These are big IF's; but the NGO's may need to seriously reconsider their roles in this arena. A number of years ago, the surrogate was appropriate technology or micro enterprises, today, ICT's and tomorrow...?? Thoughts? On Wednesday, November 3, 2004, Al Hammond [EMAIL PROTECTED] wrote: Bettina Hammerich and Jim Forster both make useful points. Of course, markets don't attend well to everything. But the core of providing useful services at prices people will pay--and the market discipline of listening to customers that Forster underscores--is a strength of the business approach, one that might be usefully incorporated further into development strategies even in very poor communities. ..snip... This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Bettina Hammerich and Jim Forster both make useful points. Of course, markets don't attend well to everything. But the core of providing useful services at prices people will pay--and the market discipline of listening to customers that Forster underscores--is a strength of the business approach, one that might be usefully incorporated further into development strategies even in very poor communities. I'd like to share some analysis that pertains to this question. We have been analyzing income structure in developing countries, using a cut-off of $6000 per household/y as a working definition of the level below which the bottom of the pyramid or poorly-served market exists. This is not absolute poverty, but it is still very low income, a few $ per day per person. In China, there are 286 million households below this cutoff with a collective income of $691 billion/y--67% of the total income in China. For India, the figures are 171 million households, $378 billion, 75% of the total income. Across some 18 countries, the BOP market has more than $1.7 trillion in income--about the size of Germany's GDP. This is a substantial market. From a number of detailed case studies, we can document that low-income households are willing to spend 4-7% of their income on communications and access to information (because it often substitutes for more expensive travel). Thus the potential ICT market in developing countries exceeds $100 billion per year, most of it larely untapped. The size of the market means that substantial investment to tap it might be warranted. It's dispersed character (much of it in rural areas) means that wireless systems may have an advantage in aggregating that demand up to commercially viable levels. And it means that the market opportunity is for services (including the infrastructure and device cost) that cost $50-$300 per household per year. That in turn means a strong advantage for shared use models or other approaches that spread network and device costs over a large number of users or concentrate them in local entrepreneurs serving pre-paid or pay-per-use customers, as well as for services that can be bought in increments of a few cents up to a few dollars. Not surprisingly, we find that most of the successful models we have documented in case studies have one or more of these characteristics. A few examples, some well-known, others perhaps less so. GrameenPhone's rural village phones generate an average of $96/m each--they are very profitable. Smart Telecommunications in the Philippines has built a profitable cellular phone business with over 14 million customers on the strength of selling pre-paid text-messaging units to low income customers at units as small as $.03. They use a network of some 500,000 local entrepreneurs to sell those units; the business grew 40 % last year. ITC's e-choupal network in India reaches 4 million poor farmers via an Internet-connected PC network, more than recouping the cost of the system by savings on the price of the grain it buys over the network and other sources of value. Similar imbedded systems can be found in health care, education, and banking enterprises aimed at BOP markets. We do not believe that these examples, and others we have documented, though limited, are unique or due to special circumstances. The underlying business models are quite robust and, we believe, replicable; indeed, the GrameenPhone model is now being successfully adapted to Uganda, and many of the elements of the ITC model are being adapted by Pride Africa to Kenya. So we conclude that there is enormous untapped scope for market-driven ICT services that confer significant benefits on the customers and communities served. Allen L. Hammond Vice President for Innovation Special Projects World Resources Institute 10 G Street NE Washington, DC 20002 USA V (202) 729- F (202) 729-7775 [EMAIL PROTECTED] www.wri.org www.digitaldividend.org This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD Members, I would like to add to Meddie's comments with a couple of things that have worked well for us in Guatemala. I would also like to describe a dilemma I am going through on the issue of profitability in a NGO. With the help of USAID/AED/EDC and World Learning, we have set up 28 school-based telecenters, all of which are sustainable (so far) and almost all are putting social service over profits. The two principles that we have applied are: 1. Select partner implementors that are really dedicated to serving the community. In our case, most centers have been given to community-run schools, but a couple of others have been small, local NGOs. 2. Let the partners cover all recurrent operating costs from the outset and some of the start-up costs. This scares off many potential partners, but has served as a good filter to ensure that the partner schools have the economic base and administrative capacity to sustain the center. When we find a partner that responds well to both of these principles, the result is a telecenter that instinctively finds a happy balance between keeping the center sustainable and providing needed community services. These centers compete fairly with the small local entrepeneurs who set up private Internet cafes. The schools have the advantage of a captive user base while the entrepeneurs have lower overhead and better capacity to respond to local demands in terms of services and scheduling. We accept this competition as inevitable and healthy because it keeps everyone on their toes. In the end, the consumer wins. While I feel comfortable with the above-stated model at the local level, I am struggling a bit with the ethics and reality of whether a mid-sized local NGO should build its sustainability off end users. For example, some people have suggested that our NGO could create a franchise scheme where our partner centers could pay us a fee for which we would provide ongoing technical and administrative support. It is certainly solid as a business plan, although I wonder about our capacity to provide quality services at a low enough cost. Regarding ethics, I would not feel comfortable knowing that my salary is coming directly from the pockets of the rural poor we are trying to help. Yet, if we are not able to offer those services, the telecenters end up paying private companies for that assistance. So, maybe I am wrong in my thinking and that this scheme would really be a win-win. Our NGO is doing its best to be transparent, so that any profits obtained should truly be channeled back to our target population. I would welcome testimony from anyone or any organization that has gone through these types of growing pains. Thanks, Andy Andrew E. Lieberman Presidente (Nab'e Eqanel) Asociacion Ajb'atz' Enlace Quiche 5a. Calle 3-42, Zona 5 Sta. Cruz del Quiche, Guatemala Tel. y Fax: (502) 7755-4801, 7755-0810 [EMAIL PROTECTED] www.enlacequiche.org.gt Para recursos y noticias sobre educacion bilingue intercultural en Guatemala, visite: www.ebiguatemala.org This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear Colleagues, Whether profit is essential on not for successful ICT for Development activities depends on the nature and over all mission of the activity under question. Profits are certainly necessary for financial sustainability. As far as I know, however, the profit is not the problem/issue at all -- the issue should be probably what is the price mark-up on the ICT for Development activities -- which activities/services are charged for profit? We may recall that one of the reasons why rural communities can not use ICT to improve livelihood is cost and availability of ICT resources. It's not an either or situation; once ICT tools are made available (e.g., Telecenters) they should be affordable. You also notice that affordability is relative to community economics. On the other hand, it's OK for an ICT for Devlopment initiative to seek profits to ensure that services are available the next day. Detailed planning would have to be made to decide upon which services to charge for and which will be essential for fostering development - where profit-motivated charges could kill interest for the service. A strategy that I have found useful is to identify a few core services that businesses would charge less for (e.g., cost recovery fees) for their community development impact, and leave others on a full cost basis to support sustainability. This would ensure that poor people are not neglected for services in pursuit of profits. The rush for profit (in the extreme) is an engine for promoting the digital divide and growing the gap between the rich and poor. I understand it is the bedrock of the growth of civil society organisations to balance up effects of private sector led development around the world. There is also such a thing as cost-recovery which can be applied to critical services selectively. Regards, Meddie Mayanja This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Dear GKD Members, I'm Jim Forster. I am a Distinguished Engineer at Cisco Systems and have worked here since close to the beginning. Bettina Hammerich made some very good points in her recent posting that also pertain to the current question of the role of profitability, including: * Businesses are more likely to be efficient service providers * Governments and NGO's can be corrupt and/or ineffective and * Environmental and human rights are not best served by the free market * The level playing field is uneven and everyone is not free to choose * MNCs are not transparent Perhaps some of the concerns in the second group can be addressed in time. I would hope, for instance, that some of the environmental effects could be reduced by burdening the products with projected environmental costs and in some way capturing the externalities. This is easier said than done but simple examples include requiring recycling fees at the time of purchase. MNCs are not transparent; neither are some NGOs and some governments. All should be pressured to be more transparent. To me, a major benefit of a for-profit goal is that the profit (or loss) is a very convenient metric that indicates whether the goods or services are useful when compared to alternatives. This metric includes factors from both the demand side (do people want it enough to pay for it) and the supply side (is it being done efficiently). I've been very suspicious of other metrics because I think they're too easily 'gamed' by insiders. Even the profit system can be cheated with an uneven playing field or without the rule of law. Without feedback from the people it's very easy to fall into the trap of 'knowing what is good for others'. I've worked at for-profit company (Cisco Systems) for a long while, and I have to say that while I think we've got great employees, we've succeeded because we learned how to listen when our customers have voted with their wallets. I trust our customer's judgment of what they want more than our expertise. -- Jim This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
Re: [GKD-DOTCOM] Is Profitability Essential for Sustainability?
Initial remarks: the Moderator's question does not contain a definition of profit; it might be a monetary return on invested capital, it might be an excess over pure operation-costs, it might be equal to the operation costs but those who use the offered ICT-services do better by using those services. Second remark: we made a large comparative study on Telecenters in Nicaragua and do continous monitoring and -except in very special settings like schools- we didn't observe any significant difference in services offered, prices charged and people attending, between supposedly for profit and supposedly non-profit Telecenters. Third remarks: (1) Unfortunately ICT-services are not free -like air- someone has to provide them and someone has to pay those who provide them. (2) Costs to be covered are the use of communication-infrastructure, the personel involved in bringing the service, the replacement of equipment and consumables, the place (or the rent for it), the energy used. (3) It turns out that 1 years full operation-costs (including depreciation for equipment replacement) in many cases comes already close to the initial investment-costs or even exceeds them. (4) The current trend -look at Cellular phones and their business model or Ink-jet printers- for communication-technology makes that initial investment become more and more irrelevant compared to operation-costs. (5) Hence the whole question boils down to who pays and how (and to a certain degree why) and specifically the operation-costs. Fourth remark: if -as in some cases- philanthropic initial donors also cover the operation-costs -mostly they don't- still the question is whether donors should be encouraged to spend on ICT or is the money better spent on other more important issues. If it is claimed that Governments -either donors or local- should cover these costs, the question becomes even more important. The only reason might be that ICT is more effective than other means to fight poverty (or it's a basic requirement to achieve those other means). Generalized hard evidence is missing. Fifth remark: if there is no substantial gain for beneficiaries -i.e. they are truly better off with ICT than without or ICT provides essential services at lower costs -then there is no reason to spend on ICT- neither for them nor for anyone else. This depends on a case by case analysis -and unfortunately this analysis in many, many instances is not done, neither before nor after. Sixth remark: A telecenter -or whatever other type of ICT-service- without a sound business-model with respect to the above ... shouldn't even be started. Seventh remark: We found -and there are other examples in the literature- that non-benefactor Telecenters (i.e. those either started for profit or by the beneficiaries themselves) had in general more sound business-models than those mounted for benefit (i.e. by any type of Benefactors, public, private, NGOs). Corollary: self interest -some times expressed in terms of profit-expectations- is a necessary requirement for sustainability. Cornelio This DOT-COM Discussion is funded by USAID's dot-ORG Cooperative Agreement with AED, in partnership with World Resources Institute's Digital Dividend Project, and hosted by GKD. http://www.dot-com-alliance.org and http://www.digitaldividend.org provide more information. To post a message, send it to: [EMAIL PROTECTED] To subscribe or unsubscribe, send a message to: [EMAIL PROTECTED]. In the 1st line of the message type: subscribe gkd OR type: unsubscribe gkd Archives of previous GKD messages can be found at: http://www.dot-com-alliance.org/archive.html
