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Asks BOPreneur Paul Hudnut in a blog post published this weekend. He does so in response to the Fast Company article about J-PAL, which I linked to late last week and cites one of J-PAL's researchers arguing against the practice of charging fees for products and services at the BoP. "Charging small fees is exactly the wrong thing to do", says Rachel Glennester  in the second to last paragraph of a short article (even by Fast Company's standards) that left no room for him or his team to go into the nuances and details of such an assertion.

Hudnut is concerned, with right, that a sound bite like this goes on to create a false absolute notion about something that is nuanced in nature -in short, the answer to the question in the title is not always; market based approaches are not a feasible answer to the challenges of poverty in all circumstances. In FC's piece, however, the reference to it is almost literally a sound bite (it takes roughly 200 of the 2,600 words that build the whole piece); in fact, the charge-or-not-to-charge citation is just one among many examples chosen by the author to make the article's central point: that the J-PAL team is creating a lot of buzz and currently taking on many questions related to anti-poverty strategies.

But in a world where ideas are spreading 140 characters at a time 200 words can go a long way, and regardless of the original purpose of Mr. Blitstein's article for FC, it successfully managed to raise some important thoughts in Hudnut's mind, which he was generous to share via his blog. The resulting article is thought-provoking and a must if you're interested in market based approaches to development challenges.

I'd like to add a couple of additional arguments to the discussion Paul started. Both start from the assumption that I think charging and creating market dynamics is essential. If I didn't, NextBillion would probably be the wrong train to be riding.

The first one relates to the crucial role of transparency in pricing and the use of subsidies to increase the access to products or services for the poor. To make my point, let me use the same example that is cited in the FC article: anti-malaria bednets. That "charging small fees is the wrong thing to do" and arises after observing reaction to price points in the distribution of these nets, giving no explanation about the possible differences that exist among groups of users. Not all malaria bednet users live under the same conditions and some middle ground between "free" and "full price" can be found to make ventures that manufacture and channels that distribute the nets more viable and more efficient.

Examples of this "tiered-pricing" approach (charging a different price to different segments according to a pre-established set of criteria) abound and, in all of them, transparency has been the key factor of success. Take 1298, for instance, a company that provides quality ambulance services for all in Mumbai, rich and poor, making it clear that fees will vary from $0 to $___ (I ignore the full fee value) according to the type of hospital you ask to be driven to. Aravind Eye Hospitals is another example of a tiered-pricing model that works (which, ironically, lies at the heart of what makes it one of the world's most innovative businesses, as judged by Fast Company).

These models are transparent and have proved viable for the most part, which is not to say that challenges do not arise. If you are getting something for free and suddenly someone starts charging for it, it's likely you'll reject that condition in the short term. Water provides a good example for this. That community scale treatment systems (like those of Naandi Foundation or WaterHealth International) have grown from a handful of experiments to almost an industry on their own has been possible only because fees are being charged. Technology is key but by no means the whole trick. Companies that know how to install and operate membranes that make dirty water clean have had to partner with other organizations that know the communities very well, and make joint efforts around something deemed as social marketing, or the practice to tell people the reasons why it makes sense to pay for something even though it seems you could get it for free by walking a couple more kilometers.

In conclusion, I'm sure that it was not J-PAL's intention to rule out all market based approaches, nor the purpose of Fast Company's article. I do know that Fast Company's piece becomes a lot richer with addendums like Paul's blog post.

That's the beauty of the time we live in. Five years ago, Paul would have called on the phone to tell me "can you believe this generalization?". We would have discussed and then would have had to wait a whole month until his Letter to the Editor was published. I guess we're lucky that nowadays thinking, disagreeing, discussing and building upon the ideas of others is something we can do out loud and almost real time.

Happy Monday.  

I'll add to Francisco's Thanksgiving post to say thank you to NextBillion's readers.  Of course reading a blog is great, but what is more important is the motivation to think about the issues this site covers, and it's a privilege to support an online community that can thank its members for who they are and what they're doing, not just what they're clicking on.

Also, give thanks for challenges, prizes, and some links to good thinking and good works.  I've saved the best link for last.

First up, the Austria-based VC firm Ennovent is sponsoring a "Challenge" in partnership with the Scheuch Family Foundation to provide up to $500,000 in investment to a technology or approach that will provide clean energy in India at a price point that's affordable to people living on ~$3 a day.  Submissions run through January 31. Ennovent is essentially turning inside out their process of looking for investment opportunities by inviting others to come to them in this competition format.  But at least they're also willing to reward others for help in the process, providing a $3,000 reward for the Connector who refers the winning team.

Second, this year's Dell Social Innovation Competition is underway, with its range of submission categories so broad it could only be held in Texas.  My friends at Gardens for Health International won the $50,000 prize last year.  If anyone can suggest an approach more profoundly transformative than providing female subsistence farmers living with HIV/AIDS in Rwanda the agricultural inputs necessary to generate the basic nutrition required for the efficacy of antiretrovirals, they deserve to win this year.

On that topic, earlier this week, Dr. Ajay Nair was interviewed for the Global Alliance to Improve Nutrition, speaking about the partnership between GAIN and Acumen Fund, and how GAIN's depth of knowledge aids in Acumen's investment strategy.

At the Emerging Futures Lab, Niti Bhan has written about the realities of retail of consumer products at corner shops in the Philippines.  Middlemen (or in this case women) get a bad rap but Niti asks how these shop owners should be accounted for in pricing strategies for base of the pyramid consumer products.  Individually-packaged shots of shampoo are great, but shop owners are still just eking out a living if they're getting squeezed by P&G.  My second favorite Echoing Green Fellow this year (after Gardens for Health, see above) is Frogtek, which will use mobile applications to help micro-retailers manage inventory, expenses, and notice when they're paying more to bring a product from an urban center on a motorcycle than they get from selling it. 

Even on the internet, middlemen have value, says Margaret Kururi defending Kiva against the criticism that has been levelled against it in the blogosphere as the actual nature of running a nonprofit P2P microfinance operation has become apparent to people who thought Kiva was just a fantastic version of Adopt-a-Child-in-Africa 2.0.  Ms. Kururi works with a rural MFI, PEMCI, in Kenya, and has been one of the few commentators on Kivagate who are on the receiving end of Kiva's funding approach.

Although it is easy to forget, some media is not published on the internet and I therefore cannot link to it.  However I can recommend the second issue of Beyond Profit, the emerging trade publication for "development through enterprise," which was physically mailed to my house in San Francisco all the way from India if you can believe that.  Ironically enough it is focused this month on building awareness through online platforms, but also includes an interview with successful women entrepreneurs in Mumbai and an essay on modes of social entrepreneurship by Gabriel Brodbar of NYU which has been posted on Beyond Profit's blog.  Because it was written for print, is long enough to actually say something and is fully footnoted.

Finally, I'll again try to leave you with something you actually want to read at the end of the week: the students of the inaugural class of the African Leadership Academy in Johannesburg.  William Kamkwamba, of The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope is just one of eleven. 

NextBillion is housed by US-based organizations, which means we'll be taking a short break for the next few days. We'll be back on track with lots of interesting content on Monday. But wait! Don't press your space bar just yet. Keep reading if you're interested in taking with you a couple of noteworthy pieces to read over this long weekend. They will come handy during your long airport/ highway waits in the US or just while relaxing in your neck of the woods wherever that is.

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Though broad business opportunities exist in the largely untapped markets at the base of the pyramid, few multinational companies have taken advantage of them. So what does it take "to pick up that money lying in the street"? And is it really that easy to seize those opportunities?

In their new publication “Entwicklungsgeschäfte – Geschäfte machen gegen Armut” (German for Inclusive Business – Doing Business to Fight Poverty) the Emergia Institute, a Berlin-based think tank and consultancy, summarizes everything that one needs to consider when doing business with the poor. In roughly 90 pages, companies, entrepreneurs and development practitioners gain comprehensive insight into the “what?”, the “how?” and the “where?”:

• To address the “what?”, the authors introduce the concept, opportunities and challenges of doing business with low-income communities and declutter the numerous terms used to describe the interconnection of business and development.
• The “how?” is broken down into key success factors, the dos and don’ts, practical tools (such as the Sustainable Venture Crosshairs from the UNEP Towards Triple Impact report and the UNDP Strategy Matrix), and case examples; all along the lines of a 3 phases x 4 steps model (see graph below).
• Finally, the “where?” is described with key data on promising markets (Brazil, China, India, Mexico, Russia, South Africa) and sectors (energy, financial services, health, ICT, food and agriculture, water, construction and housing).

The concept of doing business with the poor is still not widely known or discussed in Germany, though a few companies are taking first steps towards targeting low-income markets with more inclusive business models. Similarly, the German Federal Ministry for Economic Development Cooperation (through agencies like GTZ and DEG) has supported several Public Private Partnerships aiming to serve people in poverty. Examples range from systemic approaches across countries to local interventions. For example, the SAFO initiative with German chemical giant BASF enables local companies in various countries to fortify staple foods with vitamin A; the start-up company INENSUS implements an off-grid wind power project in Senegal; Bosch und Siemens Hausgeräte (a corporate group stemming from a joint venture between Bosch and Siemens) brings energy-efficient and low-emission plant oil cookers to people living in poverty.

Considering that Germany is the world’s leader in exports, however, there is still considerable potential for more companies to deliver goods, services, and income opportunities to those living in poverty. “Entwicklungsgeschäfte” provides a solid basis of relevant knowledge, contacts and references to promote increased involvement in those low-income markets.

The publication is only available in German for now - but that is good news (the Emergia Institute is currently looking for partners to translate the publication into English)! It shows that the idea of approaching development with an entrepreneurial mindset is also spreading in Europe. Publications such as “Entwicklungsgeschäfte” present available data and know-how in a way that appeals to local business mentalities and provides references to local institutional frameworks, making it much easier to create awareness amongst relevant stakeholders. Companies, entrepreneurs and development practitioners may use this as an inspiration for innovation and collaboration, tailored to their needs and their environment.

The report highlights that there is still a long way to go in order to bring business and development closer together. Hopefully, addressing stakeholders in their language will make it easier to discuss opportunities in untapped markets and jointly meet potential challenges. Only through experimentation and collaboration will we learn what works and what doesn’t.

On this note and to quote the concluding words of the publication:

“Weiter geht’s!” / “Let’s keep going!”

If you happen to be in or around London next week, here's an event you won't want to miss. Convened by our allies at Business Fights Poverty and UNDP's Growing Inclusive Markets initiative, Business Innovations to Fight Climate Change and Poverty will bring together a number of key players representing various perspectives of the development through enterprise discussion.

With COP15 around the corner, a smart conversation about the intersection between enterprise, poverty and climate change becomes all the more timely and relevant. So make sure to check out the details and register here. You'll have to become a member of BFP, so if you're not one already, go ahead and sign up. I hear that spaces fill pretty quickly so save your spot!

Though I'd love to be there myself, I'll have to ask one of the attendees for the proceeds afterwards. We'll also work to recruit one or two of Guest Bloggers that can share the highlights of the venue with the NextBillion community. 

Reporting from Kathmandu, I wanted to update our readers on events and resources in the Asia region. What follows is a list with links and more to help you navigate the latest in Asia.

Goldman Sachs recently released a paper about women as the next emerging market. Much of the growing middle class of women are in Asia, in countries such as Indonesia, Vietnam, the Philippines, and India. Goldman puts forth an interesting take on emerging market demographics, cutting through geographic lines. The report discusses the gradual transition of women who are now low-income but will become "middle class" by 2015 and 2020.

The Busines Civic Leadership Center and the U.S. Chamber of Commerce released a report titled, Partnering for Global Development: The Evolving Links Between Business and International Development Agencies. The report highlights emerging partnerships across sectors, with special attention given to partnerships serving the BOP in China.

Similarly, iBoP Asia just released a casebook titled Nurturing the Enterprising BoP: Cases from the PBSP Business Advisory Program, which can be downloded here. The casebook highlights the Philippine Business for Social Progress' Business Advisory Program, which is the "largest corporate-led, non-profit social development foundation in the Philippines" according to the PBSP website.  iBoP Asia also announced the launch of an innovative new program, iTalk: Innovation Talk, that aims to bring together grantees, partners, academics, and students to discuss BoP issues and ideas in SouthEast Asia.

Curious about CSR activities and rankings in Asia? CSR Asia recently launched the Asian Sustainability Rating, a website and initiative that rates countries in Asia according to their CSR activities. So far, China and India are in the top five.

Lastly, the UK-based VC firm, Impax, is looking for clean energy, water, and waste companies to invest in in Asia. They raised funds with the view that Asia's environmental policies will become increasingly strict; see here for more details.

That's it for now. Feel free to add more to the list in the comments section below.

Over the last five years, the public and private sectors have introduced a number of initiatives aimed at bridging the digital divide and bringing computers to under-served markets.

Intel launched the World Ahead program in 2006, a broad sweeping initiative to encompass all activities Intel was driving to bridge the digital divide. Microsoft launched Unlimited Potential in 2007. AMD was ahead of the curve introducing 50x15 in 2005.

International and regional development agencies have also gotten into the game. The United Nation introduced the UN Global Alliance for ICT Development (UN GAID) in 2006. Africa had the New Partnership for Africa Development (NEPAD), which included bring ICT to schools throughout Africa.

There are many more public and private initiatives, but I will use these few to answer the question: have these initiatives, having been in place for five years or more, made an impact accelerating ICT for Development?

My view? Mixed.

Private sector: Great PR, limited results.

When I was first asked to create an initiative at Intel that would put Intel “back” in the thought leader position in emerging markets, I balked. Our emerging market products, such as the Classmate PC, were a year off from being ready. I didn’t like being reactive to the competition -- Negroponte’s One Laptop per Child and AMD’s 50x15 initiative were getting headlines and irritating the Intel brass, to such a point that Craig Barrett, then Intel’s Chairman, was goaded into calling it a “gadget” in the press. And without a product to launch, it seemed like it would just be “PR vaporware.”

But you can disagree with your boss for only so long (at Intel, we called it “disagree and commit”). To make a long story short, we created and launched World Ahead (for more detail, see the two part series on thought leadership).

The results? Great PR, a new emerging market sales force, and the emergence of a new category of computers (netbooks). But actual sales haven fallen significantly short of the original goals. Keep in mind that for-profit companies have two major measures of success: sales growth and profits. As a result, AMD, World Ahead, and Ultimate Potential are shells of the programs they used to be, due mostly to disappointing results.

But there was a positive impact, mainly in the influence to governmental and non-governmental organizations. The role of computers as a key enabler to economic development is now recognized by institutions around the world.

Public Sector: Focused efforts hampered by public sector bureaucracy

UN GAID was announced in 2006 with great fanfare. It arose from the US Millenium Goals and the UN World Summit for an Information Society (UN WSIS) in October 2005. UN GAID’s mission is:

Respond to the need and demand for an inclusive global forum and platform for cross-sectoral policy dialogue on the use of ICT for enhancing the achievement of internationally agreed development goals, notably reduction of poverty.

It is comprised of a Steering Committee, a Strategy Council, and a Champions Network. My current employer is an active member of the Strategy Council and had a significant role in this year’s Global Forum on ICT for education in Monterey, Mexico.

NEPAD was started in 2001, and in 2003 launched an e-schools initiative to bring computers to schools in Africa. Major tech companies such as Microsoft, Cisco and others invested $1M each in 6 “demos.” I met with the head of this project in Johannesburg, South Africa in 2006 in my role in World Ahead. NEPAD’s plans were grand … deploy thousands of computers to schools throughout Africa. A progress report in 2008 stated:

Eighty (80) schools in fifteen countries have had computers and printers, local networks, audio/visual equipment, and internet connectivity installed. Teachers and learners have been trained and acquired ICT skills. Mauritius and Kenya have adopted the NEPAD e-Schools Model and have already started rolling out ICT to 100 schools using resources mobilized internally and from partners.

The results of UN GAID and NEPAD? Increased coordination and focus on ICT for development, but poor results in both execution and implementation which has limited the scale of the deployment of computers. Per the progress report above, 80 schools out of the 1000's that exist in Africa is not a dramatic impact.

When I attended UN WSIS in 2005, I was struck by the sheer number of for-profit, nonprofit and governmental agencies in attendance, and the diversity and innovation of the various ICT products and initiatives. But all of these efforts were fragmented and lacked a mechanism to bring focus and a cohesive mission. UN GAID has successfully served that purpose. It plays a key role bringing private and public sector to share and coordinate best practices and ideas.

NEPAD serves a similar role for Africa. It is a forum for coordination and facilitation of projects towards common goals.

But the real problem is in poor execution and lack of real results. My experiences working with the public sector, whether it be government, academia, NGO's or non-profits, is that things move sllooowwww. As such, if you are expecting to get anything done through organizations such as these, make sure you have the patience of Job.

Results count

In the end, results matter. My brain has been wired to see success through dramatic impact on a large scale. That means tens of millions more students have access to ICT. Computer skills and the quality of education quality are significantly improved. Both private and public sector initiatives have fallen short if measured by these goals. That being said, they have created a centralized forum to focus the dialogue on ICT for development. Plus, these initiatives have significant value to their participants, including:

• Increased access to a broad network of public and private individuals and organizations that have similar goals and objectives,
• Increased opportunities to influence these organizations in a way that helps the participant achieve its own objectives.
• Increased credibility of the participating organization by being involved with the initiative.

These initiatives have laudable goals and have improved the "facilitation" of ICT for development. The next step is to move beyond facilitation to execution and impact.

Microfinance is widely touted as a major private sector success in tackling development. According to the State of the Microcredit Summit Campaign Report 2009, microfinance now reaches more than 100 million people through more than 3,500 organizations. Nonetheless, like many forms of financing, microfinance is a coarse tool to lift people out of poverty insofar as it usually lends to people who may be willing to invest in the development of fixed assets, traditionally in farming or small businesses. More recently, microfinance products have tried to sharpen their focus to stimulate investment in particular assets such housing or healthcare.

However, one of the most glaring omissions in the 30-year development of the microfinance industry has been the lack of attention paid to possible synergies between microfinance products and education. Although there are already some mechanisms to promote basic education in low-income communities through Conditional Cash Transfer programs, there are few microfinance institutions (MFIs) offering micro-loans for students who may want to take their education beyond the secondary level. With the exception of a handful of avant-garde MFIs working independently or in partnership with Vittana, MFIs have yet to figure out the right approach to profitably offer student loans directed to those wanting to enter into tertiary education. Furthermore, investors are reluctant about risking their money in exploring possible venues to develop these business models. After all, the benefits of doing so would not be captured only by the investors themselves but by the whole microfinance industry, while the exploration costs would be accrued by the investors alone. This results in a “vicious circle” by which no organization has yet developed a suitable business model.

Such a lack of private sector solutions is an important market failure. Studies show that tertiary education, while often neglected in favor of primary and secondary schooling, can be an equally effective poverty alleviation tool. Private returns to tertiary education in low-income countries seem to be frequently on par with the returns from primary education. For example, at the country level, in Sub-Saharan Africa, a one-year increase in average tertiary education levels is estimated to raise annual GDP growth by 0.39 percentage points (World Bank, 2008). At the individual level, each additional year of education can yield 10% to 15% returns in the form of higher wages (World Bank, 2008). The private benefits for individuals are well established and include better employment prospects, higher salaries, and a greater ability to save and invest (Bloom, Canning and Chan, 2005). These benefits may in turn result in better health and improved quality of life (Bloom, Canning and Chan, 2005).

Stimulating tertiary education also seems to make business sense.  MFIs estimate that the market for student micro-loans will amount to between 10% (Peru) to 40% (India) of their future portfolio (Source: internal market studies from MFIs and Vittana). Time appears to be ripe for a profitable microfinance product that enables prospective borrowers to further their education.

Vittana is a young, non-profit start-up founded 18 months ago that is aiming to fill this market failure. It was founded by Kushal Chakrabarti (at left), who used to run the personalized recommendations team at Amazon.com, along with Brett Witt. Vittana’s stated mission is to break the vicious cycle mentioned above by which big investors are not willing to start offering student micro-loans until they see a significant track record of student micro-loans being profitable and having a positive social impact. To this effect it has developed a business model to offer student micro-loans based on two pillars.

First, Vittana makes use of its extensive field experience to share best practices with MFIs and to co-develop a micro-loan product adapted to local markets. Many of the ingredients required to develop student micro-loans are not as similar to standard microfinance practices as one could expect. For example, instead of lending to groups of individuals, Vittana suggests that mothers of prospective borrowers should co-sign the loan. Moreover, the ideal student-borrower is a high school graduate wanting to enroll in a vocational school to acquire a set of skills that will allow him or her to find formal employment. The majority of the “best” student-borrowers are often the children of successful previous microfinance borrowers, to whom MFIs have easy access and about whom they have good financial information. Therefore, finding successful and efficient MFIs is crucial in order to gain scale and fine-tune the loan product to specific regional circumstances. MFIs are fully responsible for marketing the loan, finding suitable borrowers and managing the customer relationship. Moreover, Vittana is engaged in random audits of their partners to ensure that the individual lenders’ money is well spent.

However, this first pillar alone is not enough to break the vicious circle because the business model remains to be conclusively proven. This need gives rise to the second pillar, Vittana’s search engine. Following Kiva’s footprint, Vittana has developed a person-to-person microlending website. Since there are no big investors willing or able to step in, Vittana’s solution is to make it possible for potentially millions of small investors to fill in the financing gap. Their website allows individual lenders to browse through possible student-borrowers and select an individual to receive the loan. You can view, for instance, the profiles of several of their current student-borrowers here: 1, 2 and 3. Vittana has no capital of its own to disburse, so it exclusively depends on individual lenders to generate cash for their loans. According to Vittana’s strategy, these two pillars will enable them to develop and provide a source of finance to a healthy portfolio of student micro-loan products.

Given their innovative model and the importance of the gap they are trying to address, it is no wonder that the Huffington Post has named Vittana number one of the top 10 “game changers” in philanthropy. Vittana makes no secret of its huge ambition and its early success in its promotional video and in its public figures. After Vittana’s first agreement  with a Paraguayan MFI one year ago, people around the world (mostly the United States, but also Sweden, Germany, and The Netherlands) have been disbursing more than $10,000 in loans every month. Loan volumes are experiencing double digit monthly percentage growth rates with nearly perfect (97%) repayment rates. Vittana now supports about 50 students and is adding 10 students per month to its portfolio.

Even though it currently operates exclusively in Paraguay, Nicaragua, Peru and Mongolia, Vittana is looking forward to expanding into other countries very soon. In the long term, it aims to jump-start a broad, global system in student micro-loans and become a focal point for MFIs interested in figuring out how to add this type of loans to their array of services. In fact, there are already indications of this: Vittana is emerging as the “go-to” organization for interested MFIs eager to find a way of increasing their bottom line as microfinance products such as business loans, home loans and other credit lines become increasingly standard.

Those of our readers interested in lending money to Vittana should know that the full amount of their money will go towards the loan. After the disbursement they can also make small donations to Vittana as well (there is a short video explanation online about how the loan process works). As in Kiva, many individual lenders are needed to reach the total amount of money required by the borrower to enroll in further studies (usually between $500 and $1,500). The typical loan recipient is between 18 to 25 years of age and takes 6 to 24 months to fully repay the loan.

Neither Vittana nor Vittana lenders receive any interest on the loans, although MFIs do charge some interest to cover their operating costs. These rates are usually much lower (10-15% per year) than those of traditional microfinance (40-60% per year). Vittana's daily activities are maintained by optional donations made by its lenders, as well as generous support from its lead funders including the Mitchell Kapor Foundation, several Unitus board members and alumni (including its founder, Mike Murray), the Peery Foundation, and a number of top-level Amazon executives.  Additionally, they count as advisors a number of top-level executives and founders from technology and microfinance companies like Amazon, Real Networks, Kiva, Unitus and Apple.

With such a sharp and well-defined business model and powerful supporters, this organization may be well on its way to making a significant impact in the world of microfinance. It may also represent a way forward for the next generation in microfinance in which networked MFIs jointly develop particular learning hubs devoted to specific products as a way of tackling more pervasive social ills (MFIs representatives interested in hearing more about what Vittana may have to offer are welcome to contact the organization through questions@vittana.org). Additionally, the partnership blueprint developed between Vittana and other MFIs represents an interesting model for other knowledge centers in developed countries, such as research institutions or public/private investors, for gaining access and leveraging their skills in the field. I advise our readers to keep a close watch on Vittana – I am sure we will hear more about them in the near future.

It's Friday in the 2009 Global Entrepreneurship Week! 20,000 events involving 5 million people around the globe are taking place this week lasting from November 16-22.

On Monday, here in Washington, IFC held a one-day conference addressing the issue of achieving scale in entrepreneurship. The conference featured representatives from IFC and World Bank, the White House, the US Department of State, Kauffman Foundation as well as entrepreneurs. Michael Fairbanks from the OTF Group and Iqbal Quadir, founder of GrameenPhone and the MIT Legatum Center, were prominent guests who shared their experiences. Panels and presentations revolved around the importance of an enabling environment on the one hand and on governance structures within the enterprise on the other hand.

Adding to this more practical perspective on entrepreneurship, the political perspective was discussed as well. A representative from the Department of State talked about the importance of entrepreneurship and economic stability as a basis for political stability and security. In his Cairo speech, President Obama emphasized his commitment to entrepreneurship not only in the private sector, but also within communities in general.

Hillary Clinton was also featured (at least virtually) talking about the importance and potential of entrepreneurship:

The U.S. administration is currently organizing an Entrepreneurship Summit for the first quarter of 2010. With a focus on promoting entrepreneurship in Muslim countries, the summit will bring together 150 delegates including entrepreneurs, leaders of entrepreneurship networks, investors, and academics. The idea is to initiate a momentum in advancing entrepreneurship that begins before the summit and lasts after the summit has concluded. Information may be viewed on the summit website. The specific dates for the summit are to be announced soon.

An Afterthought

The growing interest of the public sector opens up a new question on the relationship between entrepreneurship promotion and government. Looking at the entrepreneurship.gov website (set up by a public-private partnership between the Kauffman Foundation and the U.S. Commerce Department’s International Trade Administration), is there a risk that entrepreneurship promotion becomes politicized?

On the one hand, it is certainly positive to see that actors from all sectors - public, private and citizen - become more open for collaboration across sectors. On the other hand, should entrepreneurship be promoted with political and national security considerations in mind? What is the role of the state in entrepreneurship promotion? Will it increase or decrease the credibility of other intermediaries?

2 days, 2600 participants and over 350 speakers on more than 100 panels - those are some of the stats of this year’s Net Impact conference. One thing is for sure: It was an intense and inspiring conference!

Clean Technology at the Base of the Pyramid

One of the two keynotes on the second day focused on clean technology at the Base of the Pyramid and featured Stuart Hart from Cornell University. He argued that there is still not enough attention paid to the commercialization and distribution of clean technology products and services for low-income communities. Incremental sustainability strategies such as eco-efficiency and corporate social responsibility do not suffice. Rather new “blue ocean” strategies are required to adequately address social and environmental challenges with breakthrough innovation. Essentially, there needs to be a “great convergence”, as Stuart puts it, of the clean technology and the base of the pyramid world to make a “green leap” forward.

Both, Kevin McGovern from The Water Initiative (TWI) and Yogesh Cahnder Deveshwar from ITC Limited, added a practical perspective to the issue. Kevin described how he and his team work as ‘pro-bono capitalists’ aiming to “build an army of micro-entrepreneurs around the globe who solve the problems themselves.” TWI is a field project providing access to safe drinking water at the base of the pyramid. It has been set-up in the framework of the BoP Protocol and emphasizes the potential of a “deep dialog” between companies and communities to drive innovation processes.

Yogesh described the various initiatives ITC has implemented to create societal value. Each of them is integrated in the ITC business model and driven by business competitiveness and ITC’s core values. A prime example is eChoupal – an internet-based solution integrating rural famers into supply chains and increasing efficiency of the agricultural system.

Maintaining a Social Mission While Growing to Scale

To wrap up two days of Net Impact, Joe Sibilia, CEO of Meadowbrook Lane Capital and CSRWire.com, moderated an insightful and very entertaining keynote panel on “Selling Up or Selling Out: Maintaining a Social Mission While Growing to Scale”. Panelists Seth Goldman - Founder and TeaEO of Honest Tea, Lisa Lorimer - Founder of Vermont Bread Company, as well as Jeff Furman - Board Member of Ben & Jerry’s, shared their experience from initiating their respective enterprise in the garage, a barn or the kitchen, to scaling up and eventually collaborating with or selling to large corporations.

It was interesting to see how each panelist viewed the issue of how one should go to scale. Ben & Jerry’s was bought by Unilever, Vermont Bread Company consolidated to a national company, and Honest Tea is closely collaborating with Coke. Despite being on the verge of becoming fully incorporated by a large multinational, the panelists stressed the importance of sticking to core values. Jeff took a more practical stand point with a Coke pin on the one side of his fleece jacket and an organic pin on the other side; Coke has enabled Honest Tea to reach scale by sharing their distribution system. Jeff, on the other hand, didn’t seem as excited about the partnership with Unilever. When asked if he had considered the potential impact to Ben & Jerry's brand in selling to Unilever, he responded: “We did! That’s why we didn’t want to do it!”

Wrapping Up

Joe Sibilia argued that we are witnessing a very “influential period” and that “there has been no other time in history when we were able to make such an impact as now” (of course not considering the period when cavemen learned to control fire or the invention of the wheel, etc.). The Net Impact conference certainly provided a great source of inspiration to work on sustainable business solutions and live the change! If you missed the conference, catch up and have a look at NextBillion’s coverage:

• Career Paths at the Base of the Pyramid
• Emerging Markets Investment - Beyond Aid
• Design for Extreme Affordability: Driptech and ClickDiagnostics
• Beyond Microfinance - New Knowledge and Models for Development
• Social Impact Measurement Frameworks
• Lighting the Base of the Pyramid with OSRAM Energy Hubs
• Enabling Access to Clean Water – Top Down Vs. Bottom Up Approaches
• ICT in Emerging Markets is an Enabler of Good Things, Not a Cure-All

It will be interesting to see what progress will have been made and how discussions will be shaped next year. With the conference growing to new dimensions, a little more structure in the agenda would certainly help participants to stay on top of things.

The University of Michigan will take on the responsibility and opportunity to prepare the next Net Impact conference in 2010. See you in Ann Arbor!