Friday, June 29, 2007

Book: Capitalism at the Crossroads

I've been out of the loop lately as I haven't had access to the Internet while traveling, but I'm back now and the quest for knowledge continues.

Stuart Hart's Capitalism at the Crossroads is another one of those essential reads for people interested in business solutions to global poverty. In my mind his fundamental messages are:
1- Business has the power, capability, technology, and financing to best address the modern issues of climate change and poverty
2- However, current business practices must fundamentally transform if they are to be successful at the BOP.
3- We have the opportunity to "start fresh" when bringing global capitalism to the BOP and can decide to apply sustainable methods and technologies from the get-go
4- Product design, services, and delivery must be tailored specifically to the poor
5- Appropriate design will require the input of the poor themselves
5- Disruptive solutions will come in small packages

His recommendations have some implications for our current topic of microfranchising. The term 'franchising' could be interpreted to imply a single solution package that will be replicated exactly the same all over the world. This would be in conflict with Hart's idea of becoming "indigenous" and adapting to local conditions from the bottom-up. I think there can be a balance. The benefits of microfranchising are the systems, training, quality management, and lower costs it could bring to the informal market. However, when designing a microfranchise, practitioners must be prepared to be flexible and take cues from the local community and end users in refining business models. I think it will require more than simply changing the product basket, such as the modifications McDonalds makes in their menu in India or in Muslim countries. There will need to be fundamental changes in product design, marketing, purchasing plans to make them appropriate for the BOP. There are a number of publications now available including Next4Billion and a paper on the Economic lives of the Poor, that are shedding light on the unique economic behaviors and decision making of the poor. Such information will help us better anticipate some of the challenges of working at the BOP. I also think development of successful microfranchises will be an organic process. I would get something out there and let the market/local context refine it before I package it and implement it on a large scale.

In his book Hart is trying to get the attention of MNC's and I agree that if they really caught this vision then they are in a wonderful position to make a huge impact on the world in a relatively short amount of time. However, I anticipate that reaching the BOP will be more along the lines of the disruptive technologies Clay Christensen has written about. I think there are two groups of people that are converging at the same time that could potentially be the entrepreneurs to introduce such solutions: retiring baby boomers who have wealth and want to make a difference but perhaps not the full energy or desire to start something from the bottom-up and college-aged students who are more globally orientated than ever before and who are looking to make a difference in the world instead of simply chasing wealth. I think the marriage of these two populations has a great potential to produce solutions for the BOP.

I also like his emphasis on the small and simple. In the West, technology is all about the latest and greatest with the most bells and whistles. It will take restraint and perhaps more creativity for designers to produce products with a priority for simplicity, functionality, and ultimate low costs. When considering the crossroads at which we stand, I am optimistic that we will rise to the challenge and design the course correction that capitalism needs in our modern times.

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