Transformational change and technology – guest post

Let us take a break from macro-economics. I have great pleasure in hosting this first guest post by good friend Vineet Rai, founder-partner, Aavishkaar Venture Management Services. Check out their website to see what they do. Vineet and I go back thirteen years. Back in the early years of the millennium, he and I (along with others) raised the first micro-venture capital fund for India – probably the first of its kind in the world, then. Today, he and Aavishkaar are the go-to person and institution respectively for Social Investing/Impact Investing/Double bottom-line investing, even globally.

But, Vineet remains a man who hates jargon and who likes to put it plainly and bluntly. His thoughts have been immeasurably embellished by the enormous amount of on-field investing that he has done, by his exchanges with thought leaders and do-ers across the globe. Some of the mails he sends to his team (I am also one of them as an Advisor to Aavishkaar Venture Management Services) are extremely thoughtful.

I took his permission to post some of them here because I felt that the points he puts across are very original, thoughtful and go against conventional wisdom. All I have done is to remove the typos before I posted his email here.

As he says below, comments are most welcome and essential for exchange of ideas. I am going to post my own reply to his mail as the first comment on this post 🙂

Over to Vineet.

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As I talk to people, I continually hear that technology has the potential to change the world. I do not have a specific opinion in favour or against technology or its capability to transform lives but in my current quest to see what interventions can make ‘Poor people Rich’ or at least self-sustained I have been trying to understand the emergence of technology and its introduction to developing world and finally its role in touching lives at the Base of the Pyramid (BoP).

Certain technological intervention do make direct impact. Issues concerning transparency, improving the performance of businesses and even in making businesses more accessible to masses technology plays a stellar role.

Based on whatever I have seen ( and I agree it is limited), it appears that most successful technological interventions that created strong visible developmental impact are those that were not designed with development in mind. Like Mobile Phone or Generic Drug delivery or Internet.

It appears to me that the reason is that these technologies emerged in the ecosystem that has the best human resource, right capital and right ecosystem to design and deliver most robust, reliable and strong technologies.

Mobile Phone – a product that was neither designed nor invented keeping in mind possibly even developing countries leave aside development as a paradigm. It required sophisticated engineering skills, significant amount of capital, rich people as early adopters and key customers for it to reach the level of sophistication and ruggedness to be usable by everyone today. Possibly it appears that it is right to let these technologies appear in these places only keeping in mind the right ingredients they have to deliver them.

However, the migration of these technologies from the developed world to developing world was not led by Multinationals from the Developed Nations but by the intrepid entrepreneurs from the developing world who took the risk, had speed, agility but most importantly better understanding and deep insights about the markets in their countries.(My statement is a bit of a over-generalisation as I know for a fact that Vodafone moved into Africa before any local entrepreneur did. So, cut me a bit of slack on it.)

These entrepreneurs introduced these technological interventions and innovated around the service delivery to make them successful, acceptable and affordable. Like it happened in case of Mobile phone in India.

Finally, it was the creative thinking or ‘Jugaad’ that made the masses adopt this tool to enhance their livelihood like the road side vegetable vendor is doing while delivering vegetables to his customer by taking order over phone and competing with the biggest retail chains.

In my view, the final impactful use of mobile phone to enhance the livelihood of the vegetable vendor would have not been possible if mobile telephony was not invented where the resources were, not brought to India by the people who understood the markets and made it massively affordable.

The above is possibly the most clichéd example of technology and its role in development. But this has learning’s for the For-Profit Social entrepreneurship and Impact Investing World as also for the rapidly evolving Base of the Pyramid dedicated labs in the Elite Global Universities of the world who are trying to speed up the process of development with new ideas, products and businesses. They seem to be missing the importance of the two steps I laid out above.

I wanted to conclude my rambling by drawing on some conclusions and I would be keen to hear your views on them.

1) The first and surely not the most profound is that technology is a tool or a means to an end and not a end itself specifically in the field of development.

2) The second and, in my view, a slightly more profound learning is that technologies that were designed with no intent for development have been more successful in impacting lives of the people at the BoP (Mobile Phones compared to tele-medicine. The process of development and its transfer is key to making the product succeed to make a difference to the under-served and BoP markets.

Put differently, it is important to realize that the mainstream markets in developing world are important to test these technological solutions for adaptability to local context before one plans to adopt these innovations for the benefit of those who are under-served or at the BoP.

3) The third is that while designing product with a clear motive to bring about development, understanding of context and defining the problem are very important. The dedicated laboratories and research centres in the Universities possibly need to focus on the ‘Problem Statement’ more carefully than is currently being done. Price points and affordability drive BoP markets. Heat and dust are major causes of failure. Price sensitivity, constrained thinking, heat and dust are all absent in developed world.

4) My fourth conclusion is that dedicated interventions for alleviating poverty through product development are great on intent and have a very high feel-good factor but may have significant limitations and at best have only peripheral impact in addressing developmental challenges.

5) My fifth conclusion is that mainstream entrepreneurs are far more important as intermediaries to test these products in broader markets to help identify product weaknesses, improve product features for local contexts and in making them affordable. Additionally, their undivided attention toward building businesses and a bottom line and the inherent desire to make money (let us look at Greed positively for a moment) are important to test the sustainability aspect as well.

6) My sixth conclusion is that social entrepreneurs and impact investors must use their limited resources to intervene at the end of the technological debate and not at the beginning to make sure that they succeed more often than fail. It is important to shift the risk paradigm to execution rather than technology when a social entrepreneur intervenes and his focus should be to use these technological products and contextualize them to local needs and make them effective for transforming lives.

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