1. ICTD and Social Entrepreneurship Leslie Dodson ATLAS Institute University of Colorado-Boulder

3. Sustainable What?  What the heck does sustainable mean?  Fluffy, vague, overused term.  Donors expect it. We use it.  Does financial sustainability mean:  Costs are covered?  The initiative “thrives?”  The business turns a profit?  How does the community define sustainable?

4. One Definition of Financial Sustainability A financially sustainable system should:  Generate long-term revenue  Maximize profitability  Not threaten the financial wellbeing of customers  Not have any significant liabilities www.espdesign.org

5. ICTD-Related Businesses  Crowdsourcing, micro-work  Distributed work and information piecework  m2Work, TxtEagle, Samasource  E-commerce, Web 2.0 enterprises  Telecentres and other access points  Equipment, calling cards, accessory sales  ICT repair and maintenance

6. Social Entrepreneurship  Triple bottom line: people, profit, planet  Hybrid business model  Social enterprises blend for-profit principles with non-profit goals.  Social entrepreneurs  seek to provide real social improvements as well as attractive social or financial returns to investors J. Gregory Dees. The Meaning of Social Entrepreneurship.

7. Overview  3 Features of Running a Business  Revenue sources  The Value Chain  The Value Proposition  3 Key Components  The Customer  The Entrepreneur  The Technology  3 Business Models  Micro-Finance  Micro-Franchise  Micro-Consignment

8. 3 Features of Running A Business

9. The Value Chain  Locate the business along the value chain  Raw goods supplier? Producer? Distributor? Marketing and Sales? Maintenance Provider?  This will help guide the role of the ICT and the potential for sustainability Michael Porter. Competitive Advantage. 1985.

10. The Value Proposition  What is the ICT product or service?  How is it produced and delivered?  Who is the target market for the ICT?  Demographics & psychographics  How are buying decisions made? By whom?  Are buying decisions made on price, quality, service, convenience?  How frequently is the ICT product/service purchased? J. Timmons & M.H. Morris

11. Revenue Sources  Access or monthly fees?  Pay per use?  Pay per view?  Advertiser supported?  Subsidized use?  Flexible price?  What happens:  if another vendor undercuts the price?  If the product or service is given away?  If the product becomes obsolete?

12. The Customer

13. ICTD and The “Bottom of The Pyramid” Customer  People in developing communities are avid buyers and consumers of ICT products and services  Developing communities represent new market opportunities  But…the “B-O-P” approach views the poor as customers, buyers, shoppers  Can selling to the poor alleviate their poverty?  Critics say the BOP approach exploits the poor

14. The Entrepreneur

15. The Iconic Entrepreneur  Entrepreneurship is often the last choice.  “The poor are reluctant entrepreneurs.”  The poor desire stability through steady income  Failure rate for startups in the US: 50+%  How much tougher is it in developing communities?  Without credit & banking- Without regulation  Without infrastructure - Without contracts  Without disposable income- Without access A. Banerjee & E. Duflo. Poor Economics. 2011. 1 1 2 Business Week 2

16. The Technology

17.  ICTD enterprises have to consider these and other technology-related costs  1. Design costs  2. Equipment costs  3. Training costs  4. Maintenance costs  5. Replacement/upgrade costs

18. 3 Social Enterprise Business Models

19. Micro-Finance & ICTD Access to Credit  Small, micro loans to the poor to finance ICT equipment or ICT-related businesses  Entrepreneur receives loan to buy tech or offer ICT services, uses sales revenue to pay back loans  Entrepreneur bears all of the financial risk up front

20. Micro-Finance & ICTD Pros and Cons  Benefits:  “My loan is my husband.”  Provides working capital to under-served populations  Group support  Disadvantages:  High interest rates  Keeps borrowers in debt  Constant pressure to pay back loan  Group pressure and accountability

21. Micro-Franchise & ICTD Access to Business-in-a-Box  Applies franchise concept modified to developing community  Replicable small enterprises with a social component  Reduced level of risk compared to starting a business from scratch

22. Micro-Franchise & ICTD Pros and Cons  Benefits:  Simplified, pre-packaged, standardized business  Business model and training provided  Tested, proven businesses  Disadvantages:  Inflexible. Can’t easily change business  Requires management skills  Owner responsible for hiring, firing, managing employees  Often need to buy in to a franchise

23. Micro-Consignment & ICTD Access to Products  Entrepreneur is provided with a basket of products at no upfront cost  Entrepreneur pays for product after it’s sold, keeps profit, restocks  Risk is shifted away from the entrepreneur

24. Micro-Consignment & ICTD Pros and Cons  Benefits:  Entrepreneur does not bear burden of holding inventory. That risk held by an organization or NGO  Can work well with new products in new markets  Much lower risk for entrepreneur  Disadvantages:  Entrepreneur doesn’t decide what products to sell  Consignment process dictates products to be sold

25. The Downside of Business (Not a Complete List!)  Charging for a product/service diverts money that may be needed elsewhere  Profit-seeking behavior breeds greed  Business competition creates winners and losers, haves and have-nots  Profit doesn’t automatically create widespread wealth  The 1% syndrome  If you build it, they may not come

26. Complications  Customers want the lowest price.  Businesses want the highest profit.  Donors want the biggest impact.  Lenders want the least risk.  Technologists want the widest diffusion.

27. Leslie Dodson ATLAS Institute University of Colorado-Boulder Leslie.dodson@colorado.edu

28. Resources  Social Entrepreneurship:  C.K. Prahalad: The Fortune at the Bottom of the Pyramid. 2004  Aneel Karnani: Fortune at the Bottom of the Pyramid: A Mirage. 2007  Value Chain:  Michael Porter. Competitive Advantage. 1985.  Microwork:  m2Work: www.infodev.org  TxtEagle: www.jana.com  Samasource: www.samasource.org  Micro-Finance:  Muhammad Yunus. www.grameenfoundation.org  Micro-Franchise:  Jason Fairbourne. MicroFranchising: Creating Wealth at the Bottom of the Pyramid. 2008.  Micro-Consignment:  Greg VanKirk. www.microconsignment.com