“There will come a day when you will not be able to tell the difference between a for-profit and a nonprofit organization.” Those words, spoken by the late Peter Drucker to the Harvard Business Review in 1993, planted the seeds that have led to Value, the first new business magazine in a decade.

Value offers a new lens on tomorrow’s markets, enterprise and investment. According to the editors, “A large part of value creation has to do with maximizing economic value and financial returns for shareholders. Yet, it is increasingly obvious that in order to maximize economic value one must consider not simply the easily defined indicators we have traditionally relied upon, but rather the less easily defined aspects of value that are extra-financial often social and/or environmental in nature.”

John’s discovery of Value and subsequent post prompted me to probe a bit deeper into the site. First of all, it’s nice to see a business magazine that has the phrase “Tomorrow’s Markets” in the sub-title. Nicer still is that Value provides content of...well, value. Take for instance this excellent interview, The Global Economy's Immune System, conducted by John Elkington with Paul Hawken, the noted environmentalist and businessman.

Their conversation gets right to the point, and Hawken expresses some serious criticism of the bottom of the pyramid hypothesis. Excerpts:

I’m also more than a little concerned about the thinking that there are three billion new consumers out there, that the next big thing is the “bottom of the pyramid.” From the view of the global south that is not trained in corporations and business schools, it smacks of colonialism and imperialism all over again... It is about this idea that we can open up the bottom of the pyramid to a flood of Western-made goods that will vault them into the lower to middle classes. But then what? What the poor want are rights, not foil packets. I hope that you take these issues head on.

Thanks , Rob, for submitting a news story on water research that highlights what is (hopefully) a trend: the delivery of clean water to the BOP and the increased efficiency of water usage during production of other goods.

For those of you who do not check the activity database faithfully, you might have missed the recent changes (Courtland and I updated and recategorized the 280+ activity capsules last week). There is now a "water" category, owing to the growing number of water-related activities. Some of these are focused on low-cost pumps for the BOP, others on individual or household water filtration , a village-wide solar-powered irrigation systems with delivery via "water credit cards." , and nutritional supplements to mix with water.

The 2006 Transparency International report is out, and this year's focus is on health services--apparently a sector particularly prone to corruption.  Why? The executive summary highlights three reasons: imbalance of information (health professionals know more than patients, and pharmaceutical companies know more about their products than public officials),  uncertainty in health markets (how many people will fall ill , where/when humanitarian disasters will strike makes it hard to manage resources), and the opaque, complex relations within the health system.

"Putting Paid to Poverty" provides a hopeful scenario for the development of the 'base of the pyramid' over the next ten years. It was written by Allen Hammond, VP for Innovation and Special Projects and William Kramer, Deputy Director of the Development Through Enterprise initiative at the World Resources Institute. The article originally appeared in Value magazine.

It began slowly, with the dawning recognition that traditional development projects were not sufficient to accomplish the Millennium Development Goals and with a UN commission report citing the essential role of the private sector 1. Still, in 2005, there were only a handful of major companies putting serious money behind developing low-income markets. The Year of Microfinance celebrations focused on achieving 100 million clients of an estimated 500 million potential and the growing involvement of banks and other major financial institutions in scaling up, but overlooked the almost complete lack of “mesofinance” investment capital to enable small and medium companies to expand. At the same time, many countries experienced the hollowing out of development strategies tied to export-led growth, as they began to lose jobs to China’s emerging dominance as a manufacturing platform. But the potential of domestic low-income markets—the base of the economic pyramid—as a more sustainable driver of growth was not widely recognized.

David at Microcapital reminds us of the Remote Transaction System, developed by Hewlett-Packard in conjunction with partner MFIs to widen the reach of financial services into rural areas. WRI was closely associated with the RTS project, at one time holding the intellectual capital in trust and later writing a full-length case study on the project’s results and potential.

David, meanwhile, wonders whether the open-source solution – now being shepherded by Sevak Solutions – will set an industry standard for microfinance software. Excerpts:

The RTS innovation will hopefully...allow for the creation of an industry standard and also achieve a breakthrough in the scale of microfinance services, because only open source might be affordable for all those tiny, cash-strapped microfinance institutions out there. Will this open source development create an industry standard? A standard is certainly needed. Banking software taken downstream to service microfinance is just too expensive to buy and maintain for most micro-lenders, while on the other hand, the new products from technology firms focused on microfinance are limited in the face of microfinance market challenges, namely varying language, regulation, maintenance (infrastructure is scarce) and of course, cost.

In response to the World Bank's Doing Business Index of 2006, which ranks many African countries quite low (with a few exceptions among countries that are working on pro-business reforms), the BBC is requesting testimonials from people now doing or who have done business in an African country.Their questions:

Unlike Pablo, I haven't gotten explicit permission from Katherine Marshall of the World Bank to post an excerpt from her Davos notes, but I point you to PSDblog for her interesting summary of the last days' discussions.

Highlights: questions on why Africa isn't higher on the agenda; underrepresentation of women panelists at Davos; underrepresentation of men in audience at AIDS/poverty/development panels throughout.

The following was written by Lee Thorn of the Jhai Foundation, originally sent to us via the Foundation's newsletter.

I think it might be useful to look at rural ICT and development from a social perspective. What works from this perspective? What doesn't?

What Jhai does is consulting about processes that are critical parts of economic development for people who have been left out. We are especially concerned about people left out of the opportunity to use information and communication technology tools that might help them increase earnings and deepen their social networks, business relations, and friendships.

"A quantum universe is enacted only in an environment rich in relationships. Nothing happens in the quantum world without something encountering something else. Nothing is independent of relationships that occur. I am constantly creating the world - evoking it, not discovering it - as I participate in all its many interactions. This is a world of process, not a world of things." - Margaret Wheatley, Leadership and the New Science, Barrett-Koehler (pb), 1994, p. 68

Google announced this week that it has selected Abuja, Nigeria as one of about seven African cities the company will fully connect with a wireless network. Although described as one of Google's "social responsibility projects", the announcement follows the company's proposal last October to create a citywide Wi-Fi network for San Francisco. Could Google's activities in Africa be a central part of its long-term business strategy?

This is just the latest example of Google focusing its resources on the "base of the pyramid". Last year, the company announced the creation of a foundation with the explicit goal of “giving on world poverty and the environment." One of the most interesting aspects of the fund is that it will support for-profit enterprises. The company has also chipped in $2 million to MIT's One Laptop Per Child (OLPC) program, which aims to distribute cheap laptops to millions of children in emerging markets.

So what is Google's plan for its Wi-Fi network? The company confirmed last month that it is preparing its own distribution of Linux for the desktop.

William Easterly's Monday column in the Washington Post, "The West Can't Save Africa," was unreservedly caustic toward all the big talk and promises in 2005 about ending poverty. Easterly pinpoints a most fundamental error in Western aid's orientation toward poverty alleviation--its assumption of a savior complex toward Africans who are cast as an altogether destitute, disease-ridden, starving population. They are shut out from participating in discussions on how to "save" their own communities. Easterly's basic point is well-made and articulates the motivation behind NextBillion: "Economic development in Africa will depend--as it has elsewhere and throughout the history of the modern world--on the success of private-sector entrepreneurs, social entrepreneurs and African political reformers." NextBillion's database catalogues scores of local enterprises that are providing services and creating jobs in low-income communities--the bedrock of societies that can meet the needs of their citizens.

But what of aid? The G-8 has plans to double aid from $25 billion to $50 billion. Easterly grazes the subject of how to redirect aid by calling for "achievable and accountable programs" subject to "independent evaluation" and "with high potential for poor individuals to help themselves." Examples he gives are investments in children's education and nutrition, and SME development programs. Another intriguing possibility for aid money is to serve as initial investments or subsidies for products developed for the BOP but as yet unable to reach economies of scale and costs per unit low enough to be sold directly to the BOP. The question is how best to leverage the increasing billions in aid and philanthropy, often culpable in the past of decapacitating economies? How do we convert aid into investment dollars for local economies? The below technologies, recently in debate by NextBillion staff, might yield critical opportunities.

Here at NextBillion, we know the importance of good data to good research, which is why we have nothing but the deepest respect for our WRI cousins working on EarthTrends: The Environmental Information Portal. Now, they’ve gone and upped the ante – literally. EarthTrends has opened up an essay contest; the winners will receive cash prizes and have their work published on WRI’s most-visited web site.

You might be asking, “What is EarthTrends, anyway?” It’s a comprehensive, online database focusing on the environmental, social, and economic trends that shape our world. Their essay contest, which closes April 1, 2006, seeks “fact-based analysis of an important condition or trend related to the environment and sustainable development...Entries should discuss issues that have a global or regional (larger than single country) impact.”

What does green look like at the base of the economic pyramid? SustainAbility’s John Elkington and Mark Lee take that question on in a recent article, Fatigue of Nations, published by Grist. Elkington and Lee write in the engaging, tongue-in-cheek style embraced by Grist, and the result is eminently readable. The authors discuss the potential role of business in greening the base of the pyramid:

In the business world, there are several levels of response to all of this. At the grassroots level, a growing number of social entrepreneurs are working to create new markets for, among other things, renewable energy and waste-management services. In the middle are the corporations that are being teased by the notion of the fortunes to be made at the bottom of the wealth pyramid. And then, perhaps the potential solution that really dares not speak its name, there is Wal-Mart and its globe-straddling supply chain.

The much-hammered $300 billion-a-year behemoth has begun pledging itself to sell everything from organic cotton baby clothes to sustainable fish. While its supply chain initiatives still lag way behind the likes of Nike and Gap, the potential for allying Wal-Mart's cost-reduction power with the green agenda should tempt us to at least think the unthinkable. What if Hurricane Katrina really did turn out to be CEO Lee Scott's Road to Damascus, and Wal-Mart really were to embrace sustainability? If Scott stuck with this long and effectively enough, would we put his name up in lights alongside the likes of BP's Lord John Browne and GE's Jeff Immelt? We shouldn't count on it, but stranger things have happened.

I like that environmentalists such as Elkington at least acknowledge the potential for companies to create wealth – sustainably – at the BOP. There’s been a knee-jerk reaction among the green crowd to corporate involvement in emerging economies for a long time, but that’s starting to change. And when you get down to it, the so-called BOP isn’t going to care about the environment unless they have enough income to put food on the table, a roof over their head, send their kids to school, and stay healthy. Unfortunately for the hard-core green set, the best way to do that is with a job. Fortunately for the green set, the companies out to provide those jobs are increasingly interested in doing so in environmentally sustainable ways. Yet to be seen, but food for thought.

Hardly a day goes by where I don’t read something about the rapid expansion of mobile phone services in emerging markets. According to one recent article, “industry analysts forecast that 80% of the next billion mobile phone customers will come from emerging markets. Africa, for example, has the fastest growing mobile market in the world. The continent's subscriber base grew by 66% in 2005 to 135 million users, compared with growth of just 11% in Western Europe during the same period.”

Craig Ehrlich of the GSM Association, a trade association representing more than 680 million mobile operators around the globe, asserts that “the global mobile industry is now connecting more than one million people a day. Within a few years, the mobile industry will have more customers in the developing world than the developed.”

This pent up demand is “putting pressure on infrastructure and handset providers to start tailoring some of their products to these emerging markets.” How they handle this opportunity will be one of the first examples of a mature industry retooling its strategies to meet market demand at the base of the pyramid.

So far, it’s primarily been about cost reduction. The wholesale cost of entry-level mobile handsets has fallen dramatically in the past 18 months – from $100 to below $30. Much of the credit for this belongs to the GSM Association, which has catalyzed the market for these low-cost phones through its Emerging Market Handset Program. Motorola was chosen to supply the first GSMA endorsed handset for this new segment, 12 million of which have been ordered since last year.

Let’s play a game of name-that-quote. I’ll reproduce a quote below, and you guess who said it. Ready? No cheating...

Business does good by doing business

Did anyone guess Milton Friedman? Heck, how about Adam Smith? Maybe Martin Feldstein? Wrong. Here’s another excerpt from the same source:

...the leading global companies of 2020 will be those that provide goods and services and reach new customers in ways that address the world’s major challenges – including poverty, climate change, resource depletion, globalization, and demographic shifts.

Did anyone guess Joel Makower? How about John Elkington? Or Stuart Hart? Maybe WRI’s Jonathan Lash, known for his forward-thinking pronouncements about the role of business?

If you did, you wouldn’t be guilty of bad reasoning. But you would again be wrong. These quotes can be attributed to a group of eight multinational corporate execs convened by the World Business Council for Sustainable Development as its “Tomorrow’s Leaders” group. The eight include some heavy hitters from companies like SwissRe, GrupoNueva, BP, and P&G. They’ve just published From Challenge to Opportunity: The Role of Business in Tomorrow’s Society, a 40-page “manifesto for tomorrow’s global business.”