ICTD and Social
Entrepreneurship
Leslie Dodson
ATLAS Institute
University of Colorado-Boulder
Sustainable What?
 What
the heck does sustainable mean?
 Fluffy,
vague, overused term.
 Donors expect it. We use it.
 Does
financial sustainability mean:
 Costs
are covered?
 The initiative “thrives?”
 The business turns a profit?
 How
does the community define
sustainable?
One Definition of Financial
Sustainability
A financially sustainable system should:
 Generate long-term revenue
 Maximize profitability
 Not threaten the financial wellbeing of
customers
 Not have any significant liabilities
www.espdesign.org
ICTD-Related Businesses
 Crowdsourcing,

micro-work
Distributed work and information piecework
 m2Work,
TxtEagle, Samasource
 E-commerce, Web 2.0 enterprises
 Telecentres and other access points
 Equipment, calling cards, accessory sales
 ICT repair and maintenance
Social Entrepreneurship
 Triple
bottom line: people, profit, planet
 Hybrid

business model
Social enterprises blend for-profit principles with
non-profit goals.
 Social
entrepreneurs
 seek
to provide real social improvements as
well as attractive social or financial returns to
investors
J. Gregory Dees. The Meaning of Social Entrepreneurship.
Overview
3
Features of Running a Business



3
Key Components



3
Revenue sources
The Value Chain
The Value Proposition
The Customer
The Entrepreneur
The Technology
Business Models



Micro-Finance
Micro-Franchise
Micro-Consignment
3 Features of Running A Business
The Value Chain
 Locate
the business along the value chain
 Raw
goods supplier? Producer? Distributor?
Marketing and Sales? Maintenance Provider?
 This
will help guide the role of the ICT and the
potential for sustainability
Michael Porter. Competitive Advantage. 1985.
The Value Proposition

What is the ICT product or service?

How is it produced and delivered?

Who is the target market for the ICT?




Demographics & psychographics
How are buying decisions made? By whom?
Are buying decisions made on price, quality, service,
convenience?
How frequently is the ICT product/service purchased?
J. Timmons & M.H. Morris
Revenue Sources
 Access or monthly fees?
 Pay per use?
 Pay per view?
 Advertiser supported?
 Subsidized use?
 Flexible price?
 What



happens:
if another vendor undercuts the price?
If the product or service is given away?
If the product becomes obsolete?
The Customer
ICTD and The
“Bottom of The Pyramid” Customer
 People
in developing communities are avid
buyers and consumers of ICT products and
services
 Developing communities represent new
market opportunities
 But…the “B-O-P” approach views the poor
as customers, buyers, shoppers
 Can
selling to the poor alleviate their poverty?
 Critics say the BOP approach exploits the poor
The Entrepreneur
The Iconic Entrepreneur
Entrepreneurship
1
is often the last choice.
 “The
poor are reluctant entrepreneurs.”
 The poor desire stability through steady
income
Failure
2
rate for startups in the US: 50+%
How
much tougher is it in developing
communities?
 Without
credit & banking
- Without regulation
 Without infrastructure
- Without contracts
1 A. Banerjee & E. Duflo. Poor Economics. 2011.
 Without disposable income2 Business
- Without
access
Week
The Technology
The Technology
 ICTD
enterprises have to consider these and
other technology-related costs
 1. Design costs
 2. Equipment costs
 3. Training costs
 4. Maintenance costs
 5. Replacement/upgrade costs
3 Social Enterprise Business Models
Micro-Finance & 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
front
bears all of the financial risk up
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
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
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
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
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
The Downside of Business
(Not a Complete List!)
 Charging
for a product/service diverts
money that may be needed elsewhere
 Profit-seeking behavior breeds greed
 Business competition creates winners and
losers, haves and have-nots
 Profit doesn’t automatically create
widespread wealth
 The 1% syndrome
 If you build it, they may not come
Complications
 Customers
want the lowest price.
 Businesses want the highest profit.
 Donors want the biggest impact.
 Lenders want the least risk.
 Technologists want the widest diffusion.
Leslie Dodson
ATLAS Institute
University of Colorado-Boulder
Leslie.dodson@colorado.edu
Resources

Social Entrepreneurship:



Value Chain:




Muhammad Yunus. www.grameenfoundation.org
Micro-Franchise:


m2Work: www.infodev.org
TxtEagle: www.jana.com
Samasource: www.samasource.org
Micro-Finance:


Michael Porter. Competitive Advantage. 1985.
Microwork:


C.K. Prahalad: The Fortune at the Bottom of the Pyramid. 2004
Aneel Karnani: Fortune at the Bottom of the Pyramid: A Mirage.
2007
Jason Fairbourne. MicroFranchising: Creating Wealth at the
Bottom of the Pyramid. 2008.
Micro-Consignment:

Greg VanKirk. www.microconsignment.com