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Bill Gates’s bold Davos challenge to the world’s capitalists last week should have come with equally bold footnotes. "There are billions of people who need the great inventions of the computer age," he asserted. "Breakthroughs change lives only where people can afford to buy them."

With any luck it will mean that the emerging nations will finally complete the promise of a failed computing experiment played out by a team of French and American computer scientists in Senegal a quarter of a century ago. The original idea was that computing technology would make it possible to skip a stage of economic development, with people in developing nations quickly joining the information society without having to undergo industrialization.

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If you go to the official Tata Nano website and check out the bottom left corner, it says "inclusive innovation." Click on that and you get to a discussion on the kinds of innovations that Nano represents.

One is called "frugal engineering" by Renault-Nissans’s chief Carlos Ghosen, referring to the simple and inexpensive way the car was developed. It is a methodology you see all over India—in health care, telecom, drug development and now car manufacturing. I prefer to call it "Frugal Innovation." And I expect India to be exporting this form of process innovation all around the world, just as the Japanese exported Quality Manufacturing.

The other is called "inclusive innovation" because the inexpensive process produces an inexpensive product that people, even at the Bottom of the Pyramid, can afford. Again, products sold as sachets, mobile communication service sold by the minute, cataract operations that cost a fraction of those in the West--all these are Indian business model innovations.

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By Martha Legace

Entrepreneurship in the world's 2 most populous nations, China and India, has through modern times been somewhat asleep. But now, says HBS professor Tarun Khanna in a new book, both societies "have woken up," and the results could reshape business, politics, and society worldwide.

"In some sense people in these societies are running faster than their rules and laws can keep up. So they are creating the rules as they go along. And entrepreneurship is, after all, doing things in new ways, ahead of social norms and customs, and establishing the rules and laws. In both countries, these processes are unfolding not just in the mainstream business sector but in society writ large and even in politics and civil society," says Khanna.

Khanna's book Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours will be published by Harvard Business School Press on February 1. Each chapter compares China and India on a broad range of factors in entrepreneurship, including access to capital, freedom and reliability of information, governmental involvement, and infrastructure. Khanna examines the landscape of big, medium, and small entrepreneurship, including rural health-care initiatives and even Bollywood.

As Khanna explained to HBS Working Knowledge, "One can see China clearly when juxtaposed against India, a neighbor that, like China, is a large, populous, and ancient country that chose a different path. The difference is stark. The same is true when we look at India with China as a backdrop. That's why I wrote a comparative book."

In our interview Khanna outlines the business landscape in both countries. He also describes how indigenous and foreign entrepreneurs could get a foothold, how China and India relate to their own diasporas, and how entrepreneurial activity is reshaping both countries for the better.

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By Rob Walker

Over the last few months, some visitors to the Web site of Kiva, a nonprofit that lets users make interest-free "microloans" to entrepreneurs in low-development (that is, poor) countries all over the world, were greeted with a surprising message. "Thanks Kiva Lenders!" it began. "You’ve funded EVERY business on the site!!" Has a charity ever announced that it had enough money? Would-be lenders were dumbstruck, says Kiva’s public-relations director, Fiona Ramsey: "They’re stunned for a second — ‘Here I am, I have money, I want to help someone, and you’re telling me that I can’t?’ " The note encouraged the visitor to check back soon, as a new batch of loan-seeking entrepreneurs will often appear mere minutes later. But still, Kiva is a philanthropic organization facing an extremely unusual challenge: maintaining adequate supply (people who need help) to meet demand (people who want to give it). "We don’t want people coming to the Web site who want to make a loan and there’s no one to loan to," Ramsey says.

Kiva has attracted more than $19.5 million worth of loans, from more than 220,000 individuals. You may already be familiar with the project, which has received a phenomenal amount of glowing attention — and that’s one reason demand is so high. The site presents a photo of each loan seeker and a short summary of who and where they are and what they want the money for. A restaurant owner in Nigeria needs $450; a small farmer in Samoa needs $330. With a few clicks you can help someone on the other side of the world and play a part in solving the problems of global inequality that so often seem insurmountable. While it can be hard for charitable givers to really know where their money goes and whom it helps, Kiva lenders receive updates from the loan recipients. And they almost always see their loans repaid. (The default rate to date is 0.16 percent.)

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Indian scooter and motorcycle manufacturer Bajaj Auto plans to increase its stake in Austrian motorcycle maker KTM Power Sports by 25% to 30% over the next few months, said Managing Director Rajiv Bajaj.

In November, Bajaj Auto acquired 14.5% of KTM for about $76 million, and subsequently increased that to 20.9%. "When we move into a more up-market two wheeler scenario, we will brand the vehicles as KTM, as that is what will be right for consumers," Rajiv told Forbes.com.

As domestic automakers compete with global brands in the rapidly growing Indian market, Rajiv said his strategy was to continue building the brand name. "Ultimately it is brands that profit, products only sell. What we see is an industry where companies put out products all the time--mindlessly. They try to be everything to everyone, with no brand identity of their own," he said.

"I would like to position Bajaj as a manufacturer of light vehicles in the volume space in the world. We don’t want to compete on price," said Rajiv, whose company plans to launch a small car over the next two to four years, in an alliance with Nissan (nasdaq: NSANY - news - people ) Motors and Renault (other-otc: RNSDY - news - people ). The vehicle, which Nissan and Renault chief Carlos Ghosn said he wanted to price around $3,000, will likely offer competition to the ultracheap Nano from Tata Motors (nyse: TTM - news - people).

Bajaj and Tata showcased their models at an auto expo this month, but the Nano hits the roads much earlier--in September (See: "Tata Shows Off Its $2,500 Car At New Delhi Auto Expo")

India’s second-largest motorcycle maker plans to produce its small car at a plant in Chakan in the western state of Maharashtra. Rajiv said the initial investment would be nearly $180 million.

"Getting the price of the product down is good, but it is not critical for success. We want to sell a car that will give double the mileage the most fuel efficient car on Indian roads gives today," he said.

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Translated literally, Sankara Nethralaya means the temple of eyes. The 30-year-old super speciality ophthalmic institution has lived up to its grand name and become synonymous with quality and affordable eye care in the country. Its 1,500 healthcare personnel cater to nearly 1,500 patients daily, performing more than 100 surgeries. When Dr Sengamedu Srinivasa Badrinath founded it in Chennai 1978, it was for missionary purposes. The objectives included practising quality eye care, training and teaching, and pursuing research in ophthalmology. Today the institution is not only self-sustaining, but also flourishing. It has also become a case study for the bottom of the pyramid concept. Dr Badrinath, now chairman emeritus, talks to FE’s Rajiv Tikoo about the hospital, state of the eye care in the country and his concept of quality and affordable healthcare. Excerpts from the interview:

How fit is our healthcare system?

There is a rural-urban divide in the healthcare sector. Unfortunately, people in rural areas do seem to face difficulty in getting quality healthcare that is affordable. When they go to large corporate hospitals many a times, the expenses are so enormous that they have to sell their properties to seek treatment. I don’t think it should be like that.

Do you mean to say that there should be free healthcare?

Let us not be mistaken about it. Nothing comes without money. It costs money to provide quality healthcare. When you spend money, you need to get it back.

So, what is the way out?

We should have a situation where we take care of people from the lower economic sections of the society as well as people who can afford to pay. It should be a sort of balancing act. The key is to provide quality and affordable healthcare.

How are you able to do it?

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(Click for here English translation)

В этом месяце АФК "Система" наконец прорвалась в страну, знаменитую своими нищими. Холдинг получил контроль над индийским телекоммуникационным оператором Shyam Telelink Ltd и вскоре сможет работать на рынке, где впроголодь живут 680 млн человек. Ясно, что инвестора интересуют не они, а те 200 млн, которые составляют высший и средний класс Индии. Но заработать можно и на прослойке, которая худо-бедно сводит концы с концами, а это еще почти 250 млн потенциальных клиентов. Нужно только найти к ним подход.

Людей, занимающих на социальной лестнице ступеньку между откровенно бедствующими и благополучными, аналитики обозначают выражением "следующий миллиард". Этот термин появился четыре года назад, и сегодня им пользуются не только американское и британское агентства международного развития USAID и British Department for International Development, но и частные корпорации. "Несколько крупнейших транснациональных компаний используют понятие "следующего миллиарда" в составлении своих 3-5-летних планов по вхождению на рынки развивающихся стран, - говорит ведущий специалист вашингтонского World Resources Institute (WRI) Роберт Кац. - Например, Visa International, Intel, Microsoft, Shell, Vodafone, Amway".

"Следующий" - потому что до недавнего времени большинство крупных компаний "затачивали" свои товары и услуги под покупателей с доходами среднего и высшего уровней. Таких в мире, по данным The Boston Consulting Group (BCG), 2,5 млрд человек. Но исследователи утверждают, что бизнес может дотянуться и до кошельков группы населения, совокупный доход которой в мире составляет $2,55 трлн в год по паритету покупательной способности (ППС). На самом деле их немного больше миллиарда - 1,11 млрд, по данным WRI. И если уверить их в глубочайшем к ним почтении, они с удовольствием обеспечат доходность не ниже той, что приносит торговля в более высоких сегментах.

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By Chuck Bartels

A $42.8 million grant from the Bill & Melinda Gates Foundation that was announced Friday will enable Heifer International to expand a program designed to reduce poverty among 1 million people living on rural dairy farms in three East African countries.

An important focus of the effort will be bringing more women into positions of responsibility, both on family farms and at regional milk chilling plants.

The grant is for parts of Kenya, Rwanda and Uganda, where 179,000 families are to receive assistance.

Heifer intends to provide 169,000 head of cattle - better livestock than the cows now on the small family farms - and get another 10,000 families able to provide forage for the animals, said Sahr Lebbie, Heifer vice president for its Africa Program.

Lebbie said that the program has already succeeded on a smaller scale, and that women are a key part of managing the farms.

"The cow goes to the family unit. The man and the woman sign the contract," Lebbie said. "We have found out women-led cooperatives are led better than the men."

The quantity of milk that farmers in the region can now sell is small because of spoilage, Lebbie said.

Heifer will develop 30 collection points where farmers will be able to bring their milk, where it can be chilled before being sold. Farmer associations will own the chilling plants, as organized by Heifer. The project will be carried out with two other organizations: U.S.-based TechnoServe, which encourages business development as a way out of poverty, and the International Livestock Research Institute, an animal research group based in Nairobi, Kenya.

The project will help the farmers produce and sell their milk in a manner that is more profitable.

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By Nicholas D. Kristof

With the American presidential campaign in full swing, the obvious way to change the world might seem to be through politics.

But growing numbers of young people are leaping into the fray and doing the job themselves. These are the social entrepreneurs, the 21st-century answer to the student protesters of the 1960s, and they are some of the most interesting people here at the World Economic Forum (not only because they’re half the age of everyone else).

Andrew Klaber, a 26-year-old playing hooky from Harvard Business School to come here (don’t tell his professors!), is an example of the social entrepreneur. He spent the summer after his sophomore year in college in Thailand and was aghast to see teenage girls being forced into prostitution after their parents had died of AIDS.

So he started Orphans Against AIDS (www.orphansagainstaids.org), which pays school-related expenses for hundreds of children who have been orphaned or otherwise affected by AIDS in poor countries. He and his friends volunteer their time and pay administrative costs out of their own pockets so that every penny goes to the children.

Mr. Klaber was able to expand the nonprofit organization in Africa through introductions made by Jennifer Staple, who was a year ahead of him when they were in college. When she was a sophomore, Ms. Staple founded an organization in her dorm room to collect old reading glasses in the United States and ship them to poor countries. That group, Unite for Sight, has ballooned, and last year it provided eye care to 200,000 people (www.uniteforsight.org).

In the ’60s, perhaps the most remarkable Americans were the civil rights workers and antiwar protesters who started movements that transformed the country. In the 1980s, the most fascinating people were entrepreneurs like Steve Jobs and Bill Gates, who started companies and ended up revolutionizing the way we use technology.

Today the most remarkable young people are the social entrepreneurs, those who see a problem in society and roll up their sleeves to address it in new ways. Bill Drayton, the chief executive of an organization called Ashoka that supports social entrepreneurs, likes to say that such people neither hand out fish nor teach people to fish; their aim is to revolutionize the fishing industry. If that sounds insanely ambitious, it is. John Elkington and Pamela Hartigan title their new book on social entrepreneurs "The Power of Unreasonable People."

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If Tata is so powerful, why have so few Americans heard of it? In large part, because so much of its fortune has been made selling to its home market and to other developing countries, rather than to the U.S. and Europe. Historically, developing-country firms that have become global powerhouses—like Japanese companies decades ago or, more recently, Korean companies like Samsung—were companies that, in addition to dominating their domestic markets, were heavily oriented toward exports to the West. Tata—with some exceptions, such as its steel and consulting businesses—has taken a very different approach, becoming tremendously rich while selling to people who are still pretty poor.

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