Innovations Technology Governance Globalization (Innovations )

Publisher: George Mason University. Center for Science and Technology Policy; Belfer Center for Science and International Affairs


Innovations is about entrepreneurial solutions to global challenges. The journal features cases authored by exceptional innovators; commentary and research from leading academics; and essays from globally recognized executives and political leaders. The journal is jointly hosted at George Mason University's School of Public Policy, Harvard's Kennedy School of Government, and MIT's Legatum Center for Development and Entrepreneurship.

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Publications in this journal

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    ABSTRACT: Despite our current age of unprecedented global wealth, billions of people worldwide still live in poverty. Over the past decade, however, governments, the nonprofit sector, and the business world have explored the ability of small and growing businesses (SGBs) to reduce poverty, particularly in emerging markets. The promise of finding market-based solutions to social problems has generated a good deal of excitement about impact investing—an investment strategy that seeks social/environmental returns in addition to financial returns. According to a 2013 study by J. P. Morgan and the Global Impact Investing Network (GIIN), a total of $17 billion is expected to be deployed into socially beneficial sectors in 2012-2013. However, this capital is not yet reaching many of the innovative small and growing businesses that can help to alleviate poverty through the jobs they create and the products and services they provide. While social enterprises continue to emerge—Village Capital alone has seen over 5,000 applications from impact-focused entrepreneurs worldwide over the last three years—many innovative companies in their early stages have had difficulty getting off the ground. They are still not able to access and take advantage this new flow of capital, or the other types of support and resources they need to succeed. A 2012 report from Monitor-Deloitte and the Acumen Fund highlights this paradox: The Pioneer Gap: While there are thousands of early-stage innovators seeking to launch companies that can drive social change worldwide, very few are able to build the teams, find the customer base, or raise the investment necessary to scale. The so-called pioneer gap specifically refers to the burden shouldered by enterprises that are pioneering new business models for social change. Monitor and Acumen identify four stages that these firms typically go through, from the blueprint stage to validation, preparation, and, finally, scale. The pioneer gap occurs in the early stages of an enterprise’s growth, when it is not yet considered investable by many impact investors. The pioneer gap hypothesis is supported by additional research on the social impact sector. In an industry survey conducted by Village Capital in 2012, of more than 300 self-described impact investment funds, fewer than 10 invested, at less than $250,000 per company. Additionally, a Monitor study of African impact investors found that only 6 of 84 invested in companies still in the early stages. According to a 2013 GIIN/J. P. Morgan report, impact investors cite a “lack of appropriate capital across the spectrum” and a “lack of investable enterprises” as the top two barriers to deploying more impact investment, which suggests that the bottleneck of (a) not enough quality companies in the early stage and (b) not enough effective support to produce later stage investable companies is thwarting the growth of this sector. Over the past several years, actors in the impact investing sector have developed a growing recognition that early stage support—specifically in the form of business incubators and accelerators—is a key intervention for addressing the pioneer gap. Business incubators and accelerators support early stage entrepreneurs by providing them with (a) business development support (e.g., consulting, technology assistance); (b) infrastructure support (e.g., access to office space, shared backoffice services); (c) network support (e.g., access to potential customers, investors, mentors); and (d) financial support (in the form of grants/investments). This study surveys 52 impact-focused accelerators worldwide in order to understand their characteristics, operations, and performance more fully. This research is particularly timely, as the number of accelerators has grown significantly over the past five years—in fact, 73 percent of accelerators surveyed are fewer than five years old. While the role accelerators play in entrepreneurship has been studied to some extent (we review the existing literature in the next section), existing studies are largely limited to those focused on technology companies in developed markets—that is, the U.S. and Europe. There is little research on accelerator activity in emerging markets and almost none on the role of accelerators focused on impact investment. With over 40 impact-focused accelerators founded in the last half-decade, we need an accurate assessment of what accelerators are...
    Innovations Technology Governance Globalization 07/2013; 8(3):105-137.
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    ABSTRACT: In the outskirts of Medellin, Colombia, impoverished rural schoolchildren have cause for hope. The Colombian Coffee Growers’ Association wants to hire them. Why? Because these children have developed the independent thinking, communication, and work skills that will make them an asset to the industry. They developed these skills in their multigrade primary schools, where children do most of their learning in competence-based groups, while the teacher functions as guide and coach. In Kenya, a teenage boy is also celebrating. A primary school dropout who once survived outside the law, he now runs his own small business, lives on his own, and even helps support his family financially. He learned the skills he needed in a 12-week entrepreneurship program offered to youth living on the streets in the heart of one of Africa’s largest slums. The life-changing economic opportunities now available to these children are the direct result of the unique quality of their schooling, which has had a direct and positive impact on their immediate circumstances. In other words, these children’s schooling was made relevant to their current life experiences and those they will later encounter. These children’s stories unfortunately are not common. Currently, the dominant view in both developed and developing countries is that education quality is synonymous with content mastery. A Western model of education usually dominates the content of and the approach to both primary and secondary education. School systems evaluate students’ performance based on their ability to achieve international standards in language, math, science, and social studies. As a result, although the life trajectories of students in various locations and circumstances vary dramatically, there is significant overlap across the curricula prescribed for schools in elite North American and European cities and those prescribed for schools in rural African villages. It may seem obvious that, beyond basic literacy, numeracy, and critical thinking skills, the schooling students receive must vary according to their vastly different environments and life trajectories, but that is not the prevailing practice. Children living in impoverished regions need knowledge and tools that will give them the best chance to escape the cycle of poverty. They need to develop daily behaviors and health habits that will help them maintain a good quality of life and ensure their ability to work. For the longer term, children need to develop the capacity to generate an income that meets their basic needs—food, shelter, health care, security. In regions where jobs are available, children must learn the basic skills that enable them to work productively for and with others. However, since impoverished regions have few paid employment opportunities, most children in the developing world must be able to generate their own livelihoods. Thus they need the marketplace and entrepreneurial skills that will enable them to identify, pursue, and produce economic opportunities successfully. Traditional perspectives assume that education plays a positive role in economic development and that universal access to primary schooling plays a critical role in breaking the cycle of poverty (Levine & Birdsall, 2005). However, the benefits of education never materialize for most children in impoverished regions. Even as access to schooling expands dramatically, few children are able to make significant changes in their life opportunities, and their communities remain impoverished. As a result, the pursuit of a higher education seems irrelevant for most children living in poverty. Statistics bear out the expectations that most impoverished children won’t reach college or even secondary school. In Rwanda, for example, in 2007, 2.15 million students were enrolled in primary school, 267,000 in secondary school, and 26,400 at the college level (EFA Report, 2008). In sub-Saharan Africa, gross enrollment rates for primary and secondary schools were 74 percent and 26 percent, respectively, and only 6 percent of students attend college, most of whom are from wealthy families (EFA Report, 2008). Many factors contribute to this problem, two of which are well known and have been addressed extensively—the problems of access and quality. A third problem—the relevance of schooling to the lives of the children—has been largely overlooked. Education lays a foundation for reducing poverty and...
    Innovations Technology Governance Globalization 07/2013; 8(3):197-211.
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    ABSTRACT: Happy new year sir . . . just wanted to let you know that the cinema business did not work out. Here in the city, no one cares about what one does. Last year December, my team was to have an event under our newly registered company, but it never [was] held because no one was willing to sponsor. This year, we are still planning on the event. We moved it to Easter Sunday, which is March 31st, we have submitted [a] couple of proposal letters but nothing is really encouraging. Right now we are thinking of raising funds ourselves without relying on sponsors but we can’t think of any idea on how to go about this. Please I need your advice because I am about to quit. It’s not funny. I await your reply. Thanks a lot. Since the economic collapse in 2008, youth unemployment has presented a major crisis for policymakers worldwide. Many observers see the notably large youth unemployment rates from sub-Saharan Africa to Spain to the United States as an ominous problem; however, I see this view as a mistake in the orientation of their perspective. Of course there are risks associated with high youth unemployment, but within great risk lies enormous opportunity. This article is about what can be achieved with a labor force that is young, dynamic, mobile, and digital. While the youth labor force worldwide is growing, youth unemployment also is increasing. Over the last decade, the global youth labor force grew from 577 million to 602 million, an increase of 4.3 percent, and it is projected to grow another 55 million by 2015. Most of the world’s youth labor force lives in developing economies, with the highest growth in the Middle East (35 percent), followed by sub-Saharan Africa (29 percent). The youth unemployment rate stood at 13.4 percent in 2009, for a total of 82.7 million young people without work, a 12.5 percent increase over 1999. If youth unemployment continues to grow at the current rate, the global youth unemployment rate will be 15.5 percent by 2015, with 102 million young people out of work. Demographics indicate that most developing nations are experiencing a bulging youth population. According to the UN Population Division, “Young people account for 12 percent of the population in high-income countries and in Europe, whereas they make up about 20 percent of the population of low-income countries and in Africa.” Today, “Africa is home to 17.5 percent of the world’s adolescents and young adults . . . Africa’s share of the world’s adolescents is projected to grow to 31.3 percent, while Asia’s is projected to drop [from 61.9 percent] to 50.4 percent.” The fastest growth of 15- to 24-year-olds will take place in sub-Saharan Africa—Niger, Zambia, Tanzania, Uganda, and Malawi. Innumerable changes must occur to create a society in which young people are empowered and able to find gainful employment. Rule of law, transparent government, peace, health care, and access to a quality education all contribute to human development. Rapid transformational change lies in increasing youth employability. I argue that specific disruptive innovations could lead to massive skill development among the youth population, which will result in higher youth employment and help to reverse social instability and reduce violent conflict, poverty, crime, and substance abuse. Mobile banking essentially has rendered brick-and-mortar banks unnecessary. We must learn from this extraordinary success and what it has done for one-to-one financial transactions. The example of M-PESA is breathtaking. M-PESA is a service offered by Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania, that allows users with a national ID card or passport to deposit, withdraw, and transfer money with a mobile device. Using technology in a similar manner to revolutionize education could produce equally impressive results. The growth of the mobile sector has already led to job creation in sub-Saharan Africa. It is estimated that, in 2011, mobile operators created more than 3.5 million jobs across both the formal and informal sectors. While...
    Innovations Technology Governance Globalization 07/2013; 8(3):213-217.
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    ABSTRACT: More and more, business incubators resemble the roadside wildflowers that bloom in the Texas spring—they seem to be popping up everywhere. Generally considered beneficial, they are often seeded by governments to promote economic activity. However, while the economic impact of wildflower tourism has been well documented, the economic and social impact of business incubators is far more opaque. Given the crucial need to support entrepreneurial ventures both domestically and in the developing world, it is critical to establish an approach based on holistic evidence that will leverage the potential of incubators to propel the small and growing business (SGB) sector most effectively. Business incubators are programs designed to support early stage entrepreneurs by providing them with an array of business development services and access to potential investors. While all incubators have the common goal of supporting and launching viable SGBs into the economy, there is a wide variety of incubation models and a wider variety of business development services provided to participating firms. These services may include but are not limited to access to office space, connections to potential customers and investors, access to legal and accounting services, and business management advice. Over the past decade, the business incubation field has experienced precipitous growth. A survey of business incubators showed that there were approximately two thousand incubators worldwide in 1998 and nearly seven thousand today. The majority of them are in North America and Europe, but businesses incubators in the developing world are growing rapidly. While no comprehensive studies are available, some estimate the annual growth rate of business incubators in the developing world to be over 20 percent. Much of the growth stems from heavy public-sector investment in these incubators, which are, for the most part, nonprofit. For example, 54 percent of Brazilian incubators received financial support from the Ministry of Industry Development and Commerce, and the Indian government recently seeded a $6 million science and technology incubator as part of a larger project that aims to create many such incubators across the country. Infodev, the World Bank Group program designed to support incubators, was launched in 2002. This expanding program supports 242 incubators via its Incubator Support Center (iDisc) and provides research and direct funding to emerging-market incubators. Despite the rapid growth of these incubation programs, there is still little consensus about how successful they have been in catalyzing the growth and development of local entrepreneurs, let alone how this success should be defined and measured. Most incubators in developing countries are nonprofit, thus traditional measures of financial success are ill-suited to evaluate their performance. Many scholars suggest the use of goal-oriented performance metrics, meaning that success can be defined by the extent to which an organization meets its goals. While this approach offers obvious benefits over financial metrics, it is subject to a deluge of semantic disagreements: What is the goal of an incubator? Do all incubators have the same goal? How do you compare a variety of incubation programs that have incongruent missions, models, and funding mechanisms? Even the most common performance statistic—survival of the incubated firms—can be problematic. According to some, the early termination of unsustainable businesses that are participating in incubation programs is beneficial to the economy, as resources will not be siphoned away from higher performing SGBs. Even if appropriate performance metrics can be established and it can be determined that incubators are generally performing well, the relative cost of these programs must be evaluated in order to determine if they are worthy of funding from the public and philanthropic sectors. Research focused on the public cost of incubators in the United States has been relatively inconclusive. Various studies have found the public cost per job created to be anywhere from $150to $12,000, but it is unclear how these figures would translate to a developing economy context. Given the lack of consistent findings and the lack of data available from emerging markets, much more research is required before we can claim that incubators are a worthwhile investment. Finally, assuming that some incubators are successful and cost effective, it is important to understand why, and also to examine which factors may contribute the success of some...
    Innovations Technology Governance Globalization 07/2013; 8(3):3-6.
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    ABSTRACT: Over the past several years, a number of hubs, incubators, accelerators, and startup garages have sprung up along the Ngong corridor in Nairobi to service the city’s emerging startup ecosystem, which has led The Economist to dub the city “Silicon Savannah” (“Upwardly mobile,” 2012). Caffeine-fueled hack-a-thons and events sponsored by blue-chip IT companies have become recurrent meeting places for “who’s who” on the Kenyan technology scene. Although some in the industry are fatigued by the hype, the excitement at competitions, at informal meetings over coffee at Pete’s, and among the young founders of technology companies remains contagious, as many believe mobile technology has the potential to solve some of Africa’s most pressing problems. While still nascent, Kenya’s rapidly growing mobile technology scene already has produced several success stories. Unfortunately, entrepreneurs in Kenya struggle harder to bring their startup ventures to market or to scale than those in advanced innovation hubs, such as California’s Silicon Valley or Israel, which sometimes is referred to as the “start-up nation” (Senor & Singer, 2009). As ever more young technology entrepreneurs emerge, impact investment and development funds are becoming increasingly interested in sector-driven approaches that focus on scaling entire industries and ecosystem-driven approaches that support cross-sector development in the private sector (Ayrikyan & Lee, 2013; Bannick & Goldman, 2012; Koh, Karamchandani, & Katz, 2012). This new tack reflects a convergence of issues, interests, and solutions in the developing world, and while probably the right approach, it requires a significant amount of funding and substantial collaboration. As noted by Bauer et al. (Bauer, Lang, & Schneider, 2012), coordinating the formulation and implementation of policy even in commercially viable sectors requires managing a challenging and diverse set of stakeholders. In the developing world, the situation is especially difficult, in that core pieces of the ecosystem are often absent and public support is needed until market dynamics can take over. A policy dialogue is emerging regarding the potential of mobile services developed by entrepreneurs to have an impact on end-users at the bottom of the economic pyramid (BOP). Many of the discussions are about resolving the barriers entrepreneurs are facing, such as access to financing, lack of mentorship, and the ability to monetize. Ideas for implementation that are being piloted in various locations range from building developer toolkits to sponsoring hack-a-thons to creating Silicon Valley-style incubators and accelerators. However, before donors and policymakers finalize their strategies to support mobile entrepreneurs in the developing world, it would be worthwhile to clarify the pathways that are enabling end-users living in poverty to realize social benefits from mobile services. This paper proposes a theory of change in terms of how entrepreneurs working in partnership with the mobile industry can deliver these benefits to people with low incomes, especially those at the BOP. We begin with our theory of change hypothesis and describe the enabling factors that make it possible to scale impact using mobile technology. We then introduce several policy approaches to addressing barriers in the entrepreneurship ecosystem that will help to accelerate the development of mobile services that reach the BOP. A 2011 paper by Accenture, the global consulting company, (Bulloch, Lacy, & Jurgens, 2011) presents the increasing reality of and desire for collaboration among donors, private sector, and government on a converging set of issues, interests, and solutions in the developing world. The theory of change we posit in this chapter describes how cross-sector convergence among the mobile industry, the entrepreneurship ecosystem, and development interests can scale mobile services for BOP end-users. As illustrated in Figure 1, we see three important enablers: Mobile networks’ economies of scope has lowered the transaction cost for servicing BOP segments. Mobile user digital identity enables transactions through the mobile network as trusted parties, without limitations of location and time. Open innovation provides a collaborative framework for tapping into consumer needs and providing creative talent to help address those needs. As noted by Hodge and Weeks (2006), large economies of scope exist within mobile networks because creating network infrastructure has a high fixed cost, while providing access to the network...
    Innovations Technology Governance Globalization 07/2013; 8(3):169-187.
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    ABSTRACT: In lieu of an abstract, here is a brief excerpt of the content: What do accelerators do? Broadly speaking, they help ventures define and build their initial products, identify promising customer segments, and secure resources, including capital and employees. More specifically, accelerator programs are programs of limited-duration—lasting about three months—that help cohorts of startups with the new venture process. They usually provide a small amount of seed capital, plus working space. They also offer a plethora of networking opportunities, with both peer ventures and mentors, who might be successful entrepreneurs, program graduates, venture capitalists, angel investors, or even corporate executives. Finally, most programs end with a grand event, a “demo day” where ventures pitch to a large audience of qualified investors. You may think this all sounds familiar. After all, don’t incubators and angel investors help nascent ventures? Accelerators certainly are similar to incubators and angel investors. Like them, accelerators aim to help nascent ventures during the formation stage. Thus we might expect that many of the activities provided by accelerators would also be provided by angels and incubators. But accelerators differ in several ways. Perhaps the most fundamental difference is the limited duration of accelerator programs as compared to the continuous nature of incubators and angel investments. This one small difference leads to many other differences, as I discuss in more detail below. (See table 1 for a summary of the differences between incubators, angel investors, and accelerators.) Incubators and Angel Investors According to the National Business Incubation Association, incubators shelter vulnerable nascent businesses, allowing them to become stronger before becoming independent. According to the association’s website, 93 percent of all incubators are nonprofit organizations focused on economic development, and roughly a third are affiliated with a university. While no two incubators are exactly the same, in general, incubators receive rent and fees from tenant firms in exchange for office space and administrative support services. Several incubators also provide introductions to financiers, and connections to legal, technology transfer, and accounting consultants. When they are affiliated with a university, they may also provide services related to intellectual property; the university may also use them to transfer knowledge from faculty members to firms that are commercializing the university’s intellectual property. Click for larger view Table 1. Key Differences between Incubators, Investors, and Accelerators Some of what incubators provide to entrepreneurs, however, might not be consistent with what the nascent firms actually need. For example, ventures might develop in a way that allows them to survive inside of an incubator, but not outside of it, and thus in a manner that is not optimal for the market. Some firms may survive longer in an incubator than they would otherwise. Survival may seem attractive, but if the firm will inevitably fail, then the resources it is consuming might be better used by other, more fruitful endeavors. Moreover, if ventures are being shielded from market forces, they might be missing out on important feedback that could enable them to adapt. Early adaptation is critical for early-stage firms before they become more rigid with age, which occurs naturally. Angel investors also aim to help fledging ventures. Angels are individual investors, or groups of individual investors, who provide seed capital and varying amounts of advice to young firms. According to the Center for Venture Research, 28,590 entrepreneurial ventures received $9.7 billion in investment during the first quarter of 2013. Clearly, angel investors are an important part of the entrepreneurial ecosystem. Often, but not always, they are entrepreneurs who want to help the next generation of entrepreneurs. They also may be friends or family members who provide financial investment. Angel investors help their portfolio firms in a unstructured manner, often providing advice and introductions as needed. The lack of structure often translates into limited involvement and mentorship. Comparing Accelerators and Incubators Accelerators also help fledging nascent ventures. Philosophically, incubators tend to nurture nascent ventures by buffering them from the environment to give them room to grow. In contrast, whereas accelerators speed up market interactions in order to help nascent ventures adapt quickly and learn. Practically, accelerators and incubators differ in four key ways. Duration The limited duration of accelerators, usually three months, is the characteristic that most clearly defines accelerator programs...
    Innovations Technology Governance Globalization 07/2013; 8(3):19-25.
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    ABSTRACT: Innovation can be anywhere. While most people in the entrepreneurial world define innovation as the products and services that entrepreneurs are selling, Village Capital’s core innovation—peer-allocated capital—transforms the way that investment capital builds companies. Ultimately, our peer-selection model changes the power dynamic between entrepreneurs and capital providers in a way that leverages the comparative advantage of each actor, and enables them to create more value together. Since 2010, Village Capital has launched 22 programs in seven countries and made over 30 peer-selected investments. Through these programs, we have served over 350 ventures worldwide, building disruptive innovations in energy, environmental sustainability, agriculture, health, and education. Enterprises started by program graduates have raised more than $40 million in follow-on funding to date, creating 5,000 jobs and serving five million customers worldwide. While the entrepreneurs and programming have changed significantly over time, one question has always been at the core of Village Capital: What if entrepreneurs could invest in each other? In this case I describe how we developed the Village Capital peer-selection model as a disruptive approach to building and developing ventures: the model’s origin, evolution, results to date, and implications for funding innovations worldwide more efficiently Entrepreneurs need cash—in the form of either revenue or investment—to fuel the growth of their businesses. Historically, when teams launch a business, they are working hard on one side to discover customers, while simultaneously meeting with angel investors, foundations, venture capital firms, and banks. At their best, these processes work together, but all too often the two kinds of activities create wildly different messages for the entrepreneur. The primary reason a firm should raise money is that the current revenue (and underlying demand) from customers is not strong enough—yet—to support the expenses of the company, constraining its operations and growth. Entrepreneurs often need time to find the right product and the right market—and in these early stages, investors typically fund the cost of this discovery. This process can take years. For example,, founded in 1994, did not turn its first profit until 2001, but two years earlier, in 1999, Jeff Bezos, its founder and CEO, was already being named Time Man of the Year. So, on the business side, entrepreneurs are discovering exactly what products or services their customers want, but on the financial side they are looking for the cash they need to deliver those products or services. In theory, these two processes should be linked, but in practice entrepreneurs often face a harmful dissonance. While both activities are equally important, entrepreneurs often find themselves spending more time on raising capital, believing that injecting more cash will ease their operations and facilitate growth more than customer validation could on its own. Too often, “getting funded” is their primary goal, rather than finding authentic demand from real customers. Because of this situation, investors have tremendous power to dictate which enterprises get a shot, and which don’t. This power dynamic is most detrimental to the most innovative businesses that have the potential to be revolutionary but are considered too high-risk. Why? Two reasons. First, banks have little ability, mandate, or incentive to lend to higher-risk concepts, no matter how transformative they may be. Second, because venture capital firms have become more professionalized over the past 25 years, investors are now looking for quick wins, specifically, IT-based consumer technology that can be acquired or go to an IPO in three to five years. As a result, in their early days, entrepreneurs cannot adequately finance their businesses just from customer revenue, and they have a very specific incentive to build the type of business that investors want so they can get the necessary cash from them. I entered the investment world not from a traditional finance background but as an entrepreneur. In 2009, I went to work for a mentor of mine, Bob Pattillo, at First Light Ventures, an independent seed fund affiliated with Gray Ghost Ventures, a large impact investment firm that Bob had created. Bob, a successful entrepreneur...
    Innovations Technology Governance Globalization 07/2013; 8(3):55-70.
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    ABSTRACT: Despite the positive economic news and encouraging trends that have emerged from Africa over the past decade, the troubling reality remains that the everyday livelihoods of Africans have not kept pace with macroeconomic growth, and per-capita GDPs on the continent persistently lag behind the rest of the world. We submit that entrepreneurship can address this stubborn income gap in Africa if—and only if—it is able to evolve beyond its current state of necessity-based informality into one that is vibrant and robust enough to promote sustained economic growth and generate long-term, viable livelihoods across the continent. To gain understanding of the state of entrepreneurship in Africa, Omidyar Network launched the Accelerating Entrepreneurship in Africa Initiative in 2012. To execute this multiphase research project, we partnered with Monitor Deloitte South Africa (formerly Monitor Group). We set out together to identify the challenges facing African entrepreneurs and to pinpoint the most trenchant barriers inhibiting high-impact entrepreneurship. The first phase of the initiative began with a survey of 582 entrepreneurs in six sub-Saharan African countries: Ethiopia, Ghana, Kenya, Nigeria, South Africa, and Tanzania. The survey was augmented by 72 in-depth interviews and then benchmarked against 19 global peers. The survey focused on four critical aspects of entrepreneurial environments: • Entrepreneurship assets: financing, skills and talent, and infrastructure • Business support: government programs and incubators • Policy accelerators: legislation and administrative burdens • Motivation and mindset: legitimacy, attitudes, and culture The initiative’s second phase brought together business, government, and thought leaders to analyze the survey findings and to examine the state of entrepreneurship in Africa more closely. The sessions were held in October 2012 at the inaugural Entrepreneurship in Africa Summit in Accra, Ghana. Convened by Omidyar Network in collaboration with the African Leadership Network and Monitor Deloitte South Africa, the summit drew more than 300 relevant leaders from both private and public sectors to participate in a solutions-driven dialogue on fostering high-impact entrepreneurship across the continent. This article presents the findings of the entrepreneur survey, the outcomes of the workshops in Accra, and the conclusions of the third and final phase of the initiative: the recommended actions needed to accelerate entrepreneurship on the continent. Self finance and family loans are the main sources of funding. We are pleased to report that a culture of entrepreneurship is growing in sub-Saharan Africa, with indicators related to entrepreneurial motivation on par with or higher than global peers. However, despite these positive signs, the business landscape in the region presents a number of challenges that prospective entrepreneurs must transcend. We outline the opportunities and challenges Africa’s entrepreneurial ecosystem is facing, and the key practices that we believe will spur the continent forward. A supply of and access to capital are critical to stimulating entrepreneurship and economic growth. The International Finance Corporation estimates that up to 84 percent of small and midsize enterprises (SMEs) in Africa are either unserved or underserved, representing a value gap in credit financing of US$140-$170 billion. In the Monitor survey, challenges related to accessing finance drew mixed perceptions from the demand and supply sides. Seventy-one percent of respondents believe that not enough equity capital exists to start new firms, but while many “Afro-entrepreneurs” bemoan a limited supply of capital, financiers point out that many projects simply are not fundable. Of the six countries surveyed, Kenya seems to fare the best in terms of capital supply, given that only 52 percent of Kenyan respondents highlight this as a challenge. The cost of accessing capital is prohibitive. Currently, the main sources of capital for small and growing enterprises are retained earnings, credit cards, loan associations, and investments from family and friends. Forty-five percent of Afro-entrepreneurs report that they used family loans to finance their business, and 19 percent say they used private equity (see figure 1). However, once these sources are exhausted, entrepreneurs face the challenge of tapping other sources of capital. The following section explores the constraints facing funders and entrepreneurs, as well as various frameworks that banks, venture...
    Innovations Technology Governance Globalization 07/2013; 8(3):149-168.
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    ABSTRACT: Extraordinary changes have taken place in the United States since the mid-1980s, when the passage of the Bayh/Dole Act, which allowed research institutions to license inventions coming out of federally funded grants, and the creation of the Small Business Innovation and Research (SBIR) program helped unleash an unprecedented era of innovation and entrepreneurship across the country. It is clear that the larger environment in which entrepreneurial enterprises emerge is critically important to the incubation, growth, and sustainability of wealth- and job-creating companies. We have a long history in this country of celebrating heroes, pioneers, and individual entrepreneurs, based on our deep belief in the power of the individual over his or her environment. However, increasing evidence suggests that environment, timing, and support can either enable or inhibit individual achievements, including successful entrepreneurship. The 21st-century environment for innovation and entrepreneurship has become globally interdependent in terms of inventions, innovations, markets, production, and talent. Discretionary resources are dispersed, rather than being concentrated in the hands of a few individuals or companies. Thus, many of the policies and practices vis-à-vis incentivizing and accelerating entrepreneurship in the 1980s may be insufficient for the challenges of the 21st century. It may be time to rethink what it takes to accelerate innovation and entrepreneurship in a global knowledge economy. My experience working in a community that completely reinvented itself over a 30-year period suggests that accelerating entrepreneurship is as much about community transformation as it is about helping individual entrepreneurs. Enhancing community capacity as it simultaneously supported entrepreneurs was at the core of San Diego’s strategy, especially the University of California, San Diego’s innovative CONNECT organization, which was created to be a catalyst for technology entrepreneurship. Started in 1984, just as the larger environment that enabled more localized innovation and entrepreneurship was unleashed by less restrictive intellectual property and financial policies, CONNECT began with an explicit commitment to enhance community capacity as it simultaneously provided support to individual entrepreneurs. In a nutshell, well into the 1970s, San Diego’s economy had benefited from and leveraged federal relationships while supporting four wars—World Wars I and II, the Korean War, and the Vietnam War—and from the expanding military industrial complex that emerged in the late 1940s and 1950s. The military’s growing appetite for advanced technologies built on good basic science, especially in the naval and aviation arenas, drove the growth of a major R&D sector. All of this activity was animated by concerns about defending democracy in the world and protecting national security on the home front. The remainder of San Diego’s economy consisted of small businesses and booming real estate and tourism sectors. The result is that San Diego’s economy throughout the 20th century and even in today’s “new economy” has been and remains significantly dependent on military expenditures, which were close to 50 percent of the economy during the major wars and is approximately 25 percent today because of the installations and R&D activities going on in the region. However, the city’s business culture has consisted of diverse small enterprises that collaborate and co-invest in a variety of initiatives, among which was assuring continued federal investment in the region. The extent to which the military, and now the federal government more generally, has been the driver of economic prosperity in the San Diego region is the subject of a book I published with my colleague, historian Abe Shragge, Invention and Reinvention: The Evolution of San Diego’s Innovation Economy (Walshok and Schragge, 2013). The story line, which is extremely relevant to contemporary discussions about accelerating entrepreneurship, highlights how important collaborative mechanisms, as well as an ambitious and adaptive civic culture, were to San Diego in its journey to becoming a major innovation hub. Supporting the development of new technology clusters and edgy, risky entrepreneurial enterprises, along with leveraging assets, especially land, has been a key component of the region’s DNA for more than a century. A distinguishing feature of San Diego’s economic character is the fact that it has relatively few Fortune 500 companies, no significant history of...
    Innovations Technology Governance Globalization 07/2013; 8(3):7-17.
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    ABSTRACT: Researchers have generally found that entrepreneurs are more optimistic and more confident than non-entrepreneurs. While it may help entrepreneurs persevere in the face of potential business failure, we cannot mistake their confidence for always knowing what to do with their business idea. Entrepreneurs in fact seek out mentors and other useful connections to help them succeed throughout the growth of their businesses, particularly at the start. Many entrepreneurs seek advice informally and in a piecemeal manner, but some seek more formal assistance through structured or semi-structured entrepreneurship programs. Indeed, we currently are witnessing the rise of the “support ecosystem,” which offers a plethora of entrepreneurship education and training programs. These programs vary in their design and operation; some, for example, are run by universities and colleges, some are offered by nonprofits or the government, and others are offered by for-profit entities. They might operate just a weekend in length, or last several months or years. The scope of a program’s intervention and how closely it works with each entrepreneur or startup varies widely. With this increase in the number and scope of program offerings, we wonder if adoption is outpacing evidence of their effectiveness. In this article, we examine various types of programs, with a primary focus on the accelerator, provide some context for current research and research concepts in this area, and discuss some implications of collecting data for program operators and policymakers. We begin by defining the accelerator: Accelerators are organizations that provide cohorts of selected nascent ventures seed-investment, usually in exchange for equity, and limited-duration educational programming, including extensive mentorship and structured educational components. These programs typically culminate in “demo days” where the ventures make pitches to an audience of qualified investors. For the purpose of this article, we distinguish between accelerators and incubators. While some use the two terms interchangeably, we see them as distinct categories. Incubators lack a mentoring component and have been around for much longer than accelerators. Like other education and training programs, accelerators are also on the rise. We argue that research is lacking in entrepreneurship education generally, and specifically on accelerators, which means from a research perspective we cannot say many definitive things about this type of program. We don’t have concrete evidence of their value. This does not mean we seek to deride accelerators or other entrepreneurship programs as “bad,” or conversely, promote them as “good.” It means at present we are at best ambiguous about the overall effects accelerators have on entrepreneurs. To help entrepreneurs, program operators, and funders of programs, we therefore call for studies that examine what accelerators do well and what they don’t do well. Finally, we review the concepts of treatment and control groups and randomization. One of our primary arguments is that control and treatment groups are necessary to explain the counterfactual—that is, what would have happened to an entrepreneur/startup if it had not participated in a program—and that they are overlooked by both researchers and practitioners. With any given entrepreneurship education program, there are individuals who receive the treatment of the program, and there are individuals who do not receive it. Following these two groups enable researchers to compare results and establish a counterfactual outcome. How the control and treatment groups are constructed determines the strength of any findings. Consider the people an entrepreneurship program attracts. The decision to enter a program not only identifies someone as an entrepreneur, but as an entrepreneur who seeks formal assistance through a program, which is a distinct subset of entrepreneurs. This choice of actively seeking assistance could be associated with a number of factors. For example, we might imagine that someone who feels they could benefit from structured assistance in the startup process has greater potential than someone who lacks such foresight and planning skills. Conversely, the entrepreneur who needs structured assistance could have less potential than someone who perseveres without it. Therefore, this treatment group cannot be compared to just any individual or group of entrepreneurs, as the control group must have characteristics that are highly similar to the treatment group, including the desire to enter a program. Compounding the issue is that many...
    Innovations Technology Governance Globalization 07/2013; 8(3):139-148.
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    ABSTRACT: Interest in social innovation is growing, and that’s great news. Meanwhile, our societies are facing extraordinary challenges: increasing inequality, unstable economies, climate change, and a raft of other issues. But, just as social and environmental concerns are reaching a frightening crescendo, technological advances, activism 2.0, and market transformations are changing the world, mostly for the better. The challenges may be daunting, but they offer precisely the right conditions for social innovation to emerge and for social entrepreneurs to thrive. No matter what drives innovation—necessity, altruism, or financial reward—the case for social innovation should be clear enough. The more interesting question is how best to catalyze and support social innovation and entrepreneurship. The Centre for Social Innovation (CSI) accelerates the impact of social enterprises through its powerful theory of change. Our model is entirely focused on catalyzing social innovation, but the lessons we have learned in our work are relevant to entrepreneurship more broadly. CSI is a coworking space, community, and launchpad for people who intend to change the world, with three locations in Toronto and one in New York City. CSI operates nearly 100,000 square feet of space and supports more than 1,500 members by providing the spaces and tools they need to succeed more quickly and to have a far greater impact. Coworking refers to working in shared office spaces using economies of scale to give tenants access to amenities and facilities they otherwise would not be able to afford. Coworking spaces connect diverse organizations and individuals, giving them the chance to collaborate, share knowledge, and develop systemic solutions to the issues they are trying to address. Unlike many other accelerators, CSI is focused on keeping our arms wide open to a broad and diverse range of people working for change. We do not assume that bigger is better. We don’t limit our investments to the projects that seem most likely to succeed. Instead we see ourselves as a platform, as building a community where our members can connect to the people, tools, learning, and resources they need to succeed. CSI theory of change For us, social innovation means creating new strategies, concepts, ideas, and organizations that address social, environmental, cultural, and economic challenges in order to extend and strengthen civil society. Social innovations come from individuals, groups, or organizations working for the public good in the for-profit, nonprofit, citizen, and public sectors. Increasingly, innovations are happening in the spaces between these sectors as their perspectives collide to spark new ways of thinking. Intentional innovation is the conscious effort to develop a more systematic approach to innovation. Rather than wait for social innovations to appear, practitioners and organizations around the world are working to understand and establish methods, frameworks, and processes that can stimulate social innovation and improve the chances that it will succeed. This is an important development. Still, something in the very nature of innovation resists the linearity imposed by many traditional frameworks. It is important to pursue more structured approaches, but innovators should also find ways to embrace the unique and magical quality of emergent innovation. Many researchers acknowledge that social innovation needs the appropriate conditions, but they rarely tell us what those conditions should be. At CSI, our on-the-ground experience with a diverse range of organizations and companies provides unique insights into how to create the conditions that will enable social innovation to emerge. As figure 1 shows, CSI’s theory of change is best understood as a pyramid based on three distinct but integrated levels. • Space is the foundation, and the platform for everything that happens. • Community develops as people occupy the space and form relationships. • Innovation emerges from the connections that people form in the space and in the community. Together, space and community increase the likelihood that social innovation will emerge. Not all spaces are created equal, and some spaces are more clearly conducive to creativity and innovation than others. A space created to foster social innovation must be designed as a social space, and it must have features that encourage people to generate new ideas and connections. CSI’s...
    Innovations Technology Governance Globalization 07/2013; 8(3):189-195.
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    ABSTRACT: One of the abiding ironies of business education is the now decades-old teaching of industry "best practices" to improve the performance of any organization, including how to improve the innovative capacity of a profit-seeking firm. For the uninitiated, this concept is as simple as its name suggests. To improve your company's performance, you look for the organization that does something better than everyone else and then copy it. If Procter & Gamble runs its packing line better than you do, by all means, copy its practice. Such thinking may be a reason we are concerned about the slowing rate of innovation in America. If today's best practice is the standard for emulating, do any firms feel comfortable out on some "better than best" frontier? The very notion of "best practices" suggests the acceptance of a grand average. Except, of course, for those firms that are deemed the best practitioners of "innovation." In a recent book, Inside Real Innovation , Gene Fitzgerald and Andreas Wankerl and I argue that most older and larger firms forget how to innovate, a finding suggested long ago by Max Weber. Perhaps this is why we have, over the last three decades, intuitively embraced entrepreneurship as a way to bring more innovation to our economy. Indeed, as I have detailed elsewhere, it was the resurgence of entrepreneurial capitalism in the 1980s that got us out of the prolonged recession that characterized the Carter years. But the word "entrepreneurship" is beginning to sound a little like the concept of best practices—a phrase that is valued for its inchoate sense of being logical and a self-evidently valuable pursuit. What we mean when we speak of entrepreneur-ship appears to evade definition. Of course, entrepreneurship is connected to creating new profit-seeking firms. That's what might be called the conventional or "economic" meaning. But common usage permits non-profits to claim that they are entrepreneurial (indeed, many college students want to be "social entrepreneurs"); faculty members doing research self-proclaim that they are "intellectual entrepreneurs," and, my favorite, "bureaucratic entrepreneurs," is a classification for innovative public employees thinking up new programs that cost taxpayers more money. The risk in all this is that when everything is entrepreneurial perhaps nothing is. Is it time to speak with a new term? Maybe those who undertake the risks of starting a new for-profit company are really in the business of "firm formation." After all, as Daniel Spulber suggests, real entrepreneurs know the special skill of objectifying an idea into the productive realm of commerce. They can bring forth a new concept in a manner so concrete that it can be tested in a market context — people will pay for it in a pecuniary exchange? The business of firm formation is not for scaredy cats. There is no gloss of higher motive that many social entrepreneurs implicitly seek as they go about seeking donative funding—a market test of an entirely different nature. The promiscuous use of the terms "entrepreneur" and "entrepreneurship" in the face of unsettled questions relating to the critical experience of creating new firms seems hardly to bother experts who are absolutely certain that they know just how to teach people to start them. Among this population are government policymakers, venture and angel investors, a plethora of mentor/investors who run new business "incubators" all over the country, and many academics who profess with certainty how the process unfolds as if starting a businesses yields to a prescribed and predictable path. The typical university course introducing students to entrepreneurship is taught as if it were a settled, path-specific process, one that might parallel a surgeon's knowledge of how best to resect an appendix. In fact, there really is no settled knowledge of how firms are formed and become successful and achieve what Robert Litan and I call "scale growth." Notwithstanding the fact that at least six thousand professors teach and do research in the field, there is no fully developed canon of actionable insight. A process that is essentially creative should be considered in, say, the model of how we teach musical composition. It cannot be done apart from writing music. Entrepreneurship...
    Innovations Technology Governance Globalization 01/2013; 8(1):35-39.
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    ABSTRACT: Twenty-four years ago, I fell in love for the first time—with a Macintosh Plus computer. It had a tiny 9-inch screen, an 8-MHz processor, 1 MB of RAM, and no hard disk. It was the computer for “the rest of us,” and it profoundly altered the course of my life. As Steve Jobs said, you can only connect the dots looking backwards, and I now realize how significant the Mac was in shaping my anti-establishment, anti-war, pro-freedom worldview. The Mac became a portal into myriad subcultures, from beat poetry to the Yippies, fueled by the dark meanderings of Pink Floyd. My mother, Mahenaz, stoked my socialist tendencies, and my mentor Zak, who was in attendance at Woodstock, introduced me to Lenny Bruce, Abbie Hoffman, The Whole Earth Catalog, and a host of revolutionary Urdu poets. I slipped into a solitary stupor for a couple of years and taught myself programming and the essentials of graphic design, while living the counterculture dream in my head. Who needed people when one had MacPaint, MacDraw, MacWrite, Tetris, Pink Floyd, and Party Slims Chili Chips (Karachi’s equivalent of Jolt Cola)? I spent my college years, the early 1990s, valiantly trying to drop out. Just about everything, however mundane, was more exciting than the stifling confines of a classroom. Around this time, I started developing a conscious, virulent distaste for traditional education. I wrote a lot of bad poetry and started getting involved in protest movements. Whenever I returned to Karachi from Lahore, I’d run straight to Solutions Unlimited, an Apple Computer dealership where I learned how to solder wires, install hard drives, and swap motherboards, for intellectual respite and rejuvenation. Zak would further corrupt my mind and make me believe that it was entirely possible to recreate the hippie movement of the 1960s in Karachi. After college, I spent the next several years developing multimedia products and exploring the intersection between technology, art, literature, and music. The dotcom boom brought with it a deranged sense of empowerment that led me to believe that anarchism could work and that the Internet would enable us to topple corporations. Then many bubbles burst and reality set in. I built websites by day and picketed by night. But, by the mid-2000s, consumed by my awareness of the military-industrial complex, I was getting increasingly restless. Karachi was a cesspool of chaos, “clean-up operations,” and fragmentation. People were leaving in droves, our politicians continued to make promises they had no intention of fulfilling, and the country lurched from one military dictatorship to another. People had become apathetic and a sense of hopelessness engulfed the city. All my friends had gone to university abroad and had chosen not to return. I began to wonder why I was wasting “the best years of my life” helping behemoths like Unilever and Shell peddle toothpaste and motor oil. It was a depressing time and I experienced my first existential crisis. I accepted an offer to move to Delhi to oversee web strategy for a public interest journalism initiative. While waiting for my visa to come through, I started fantasizing about creating a public space for free speech and creative expression. I had long conversations with myself: How could we become agents of social change if our theater practitioners had no rehearsal spaces, if our underground musicians had no venues to perform in, if our emerging artists had nowhere to hang their work? How could creative dissidents even learn of each other’s existence, let alone build and cultivate a community, without physical spaces where people could talk politics? In fact, years of military rule, terrible violence, and a range of other events had stripped people of their political will and the desire to be the change they wished to see. I had grown up hearing stories about Pakistan’s teahouses where poets and revolutionaries would gather, and I had seen countless photographs of inspirational leaders from the women’s movement being tear-gassed for demanding their rights. What would it take to create a space that espoused liberal, secular values through its programming and projects? I wondered if I...
    Innovations Technology Governance Globalization 01/2013; 8(3):27-41.
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    ABSTRACT: With a strong culture of giving instilled by Microsoft’s cofounders, Bill Gates and Paul Allen, corporate citizenship and philanthropy have always been a part of our DNA. With the founders’ involvement more than 30 years ago, Microsoft started an employee matching gifts program, which so far has raised more than $1 billion. Fast-forward to the start of the new millennium, when Microsoft was just 25 years old. We were already investing in a wide range of corporate citizenship projects around the world. Each project was making an impact, but the efforts were decentralized and not able to take full advantage of Microsoft’s broad expertise, acumen, and resources. To expand the effectiveness of these initiatives, we began exploring how to unite our efforts around a central strategy and audience and to align Microsoft’s corporate giving programs more effectively around the company’s core competencies. At the time, the international technology community was becoming increasingly aware that simply providing access to technology, or bridging the “digital divide,” was not enough. Beyond learning to use computers and the Internet, people needed the knowledge to apply those skills in ways that were relevant to their lives and economic needs. We were adamant then, and still are today, that technology in itself is not a means to an end but a tool. If we could create an approach for our corporate philanthropy that focused on teaching technology skills that people could apply to improve their own communities, we felt we could begin driving real and lasting change. Aligning our philanthropic efforts to reach more specific goals also would allow Microsoft to respond more effectively to local leaders’ expectations and needs. In 2003, Microsoft announced the first round of grants of a new global initiative, Microsoft Unlimited Potential (UP), which donated cash and software to 82 nonprofit organizations around the world. UP focused on providing people of all ages and abilities with free or low-cost access to technology skills training that enabled them to develop job-related technology skills, explore new careers, further their education, and become more connected in their community. Microsoft invested more than $80 million in cash and software grants during the first 12 months of the program. Ultimately, UP donated more than $400 million in cash and software to establish 70,000 community technology learning centers in at least 100 countries, working in partnership with more than 1,000 nonprofit organizations. Over its decade of existence, the key to UP’s strength has been its unified, strategic approach that has enabled people to succeed using technology. UP gave underserved rural and urban communities access to information technology (IT) for the first time. Where an Internet connection was available, communities leveraged this access for both economic and personal benefit. Many used the Internet to obtain market prices for their products or to sell their art and crafts outside their communities. Women were learning to use IT as an empowerment tool or to interact in new ways with their children, some of whom were learning to use computers and the Internet at school. Studies from the University of Washington detail how, in Europe, immigrant women were trained and empowered through the access to information the UP centers provided. In Asia, women, girls, and boys rescued from trafficking operations were able to train through our UP centers and then work from the safety of their homes, earning an income doing such things as designing business cards and letterheads for small companies. In Australia, the aboriginal community was able to preserve its traditions by linking elders to the younger generation through technology. We saw that people in underserved communities around the globe were using IT to gain social and economic benefits in ways we never imagined. As we had hoped, access to technology and the Internet was opening up a whole new world of information and opportunity. One key lesson from UP was that we could help people and communities even more effectively if we structured our work to align with their core business objectives and competencies. This understanding helped us become more effective at running programs and communicating our objectives and outcomes to communities, governments, schools, and other constituencies.
    Innovations Technology Governance Globalization 01/2013; 8(1):189-201.
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    ABSTRACT: Innovations Case Narrative: Fundación Paraguaya Over the past few years, my team at Fundación Paraguaya (a 28-year-old nonprofit development organization that works in Latin America and Africa) and I have been developing a practical methodology and tool that allows poor families to self-diagnose their level of poverty as a first step in developing a personalized strategy to lift themselves permanently out of poverty. We call it the "Poverty Stoplight" approach to eliminating multidimensional poverty. Our tool uses stoplight colors (i.e., red, yellow, green), photographs, maps, electronic tablets, and simple software to create innovative maps that enable the poor to see and understand the ways in which they are poor. The methodology and tool also allow businesses, nonprofits, and governments to support families' efforts to pull themselves out of poverty in efficient, targeted ways. Our 20-minute visual survey methodology simplifies gathering data on poor families while encouraging and facilitating a focus on the gaps these families need to close to overcome their various poverty-related challenges. Not only the poor stand to benefit from this social innovation; governments and other actors in the field, such as businesses and social-minded software developers, can benefit as well. This tool also can be useful and cost effective for microfinance institutions that are in the business of fighting poverty but often find it difficult to address the chronic social problems affecting their clients. In December 2008, right after the evening graduation ceremony held at our self-sufficient agricultural high school in rural Paraguay, I witnessed an event that would change the way I thought about development and social change. On the school patio, under the mango trees and surrounded by classrooms and dorms, the 50 students had, on their own initiative, set up a gala dinner: 50 tables were covered with white cloths and set with wine glasses, silverware, and plates for the main course and bread. Led by valedictorian Liz Marina Gonzalez, the students, their parents, and their guests promenaded out of the chapel where the graduates had received their high school diplomas, while the master of ceremonies asked the public to sit at designated tables. As the afternoon gave way to a pleasant summer evening, the recently graduated students appeared wearing dark suits and long dresses. The loudspeakers began playing a waltz, and the students walked to their parents and invited them to dance. As strains of "The Blue Danube" waltz surrounded us, I couldn't help but think how far these students had come. Most of them had arrived at our school essentially barefoot and hungry merely three years earlier, cashless and owning only the clothes on their backs. Most had barely finished ninth grade in a precarious rural school. Now they were performing ("mimicking" is probably a better word) a typical middle-class tradition in Paraguay, turning a graduation celebration into a prom. Of course, no one on the floor that evening—neither the students nor their parents—had ever participated in such an event before. Most likely they had seen something similar on Paraguayan TV or in the Sunday paper. But there they all were, dancing in formal dress. Liz Marina, who graduated first in her class and would become first a teacher at the Curuguaty Agricultural School and then an agricultural extension agent for the Ministry of Agriculture and Livestock, danced with her father. Maricel Merlo, who had arrived penniless three years earlier from the San Pedro region and would become a microfinance and "village bank" microcredit advisor after graduation, danced with her brother. Sebastian Escobar, a member of the indigenous Enxlet tribe, who would return to his community and develop his family's farm, danced with his mother. These were a group of extraordinary achievers born to poor farmers. If there is one precondition to being poor in a country like Paraguay, it is to be born a campesino , or rural peasant. Being an adolescent girl or a member of a native indigenous community practically ensures this outcome. And yet, these young people had overcome the odds and were off to a promising future. I was reminded of a TED talk in which Sir Ken Robinson explained that, for...
    Innovations Technology Governance Globalization 01/2013; 8(1):47-67.
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    ABSTRACT: New Ventures México (NVM) started out almost 10 years ago as a small dream, when I was recruited to start a local chapter of the New Ventures program, the brainchild of the World Resources Institute (WRI), a think tank based in Washington, D.C. The program’s purpose was to involve the private sector in the funding of environmental enterprises to achieve large-scale impact. The challenge was daunting: no one even spoke of social or environmental companies in Mexico at the time, let alone supporting or funding them in any way. Nevertheless, it was a challenge I was eager to take on. At first we supported environmental businesses through an acceleration program, but we quickly built a dynamic team that had contagious entrepreneurial energy, which resulted in something much greater. Our acceleration program is now sustained by the integrated platform we’ve developed, which includes a series of initiatives such as Las Paginas Verdes (LPV), the Latin American Impact Investment Forum, and Adobe Capital. NVM has grown alongside Mexico’s green business ecosystem, and in the process we have learned to adapt to external changes while sticking to our core mission and values. This strategic approach accounts for the progress we’ve made so far. I hope my story and that of NVM can shed some light on how we transitioned from a local chapter of a think tank to a business platform that is sustainable and scalable, attracts top-tier talent, and is an important catalyst in the region. I also hope my personal story will add to the growing momentum behind the idea that it is possible to do good while doing well, and that the private sector can have a positive impact on problems that were once considered exclusively the responsibility of the nonprofit and government sectors. The story begins in 2004, when I was fresh from my MBA program and looking for a job back in Mexico. With my creative and restless character, I knew I could never be part of a large corporation, thus I had to find something flexible and challenging. I somehow stumbled upon the WRI and its nascent project, New Ventures, and immediately fell in love with its mission: to create and showcase successful environmental and (later) social businesses, to demonstrate their viability, and generate a demonstration effect that inspires other environmental and social entrepreneurs and attracts investors to these companies and strengthens the ecosystem. After four years of accounting studies at Tec de Monterrey University, three years of work in accounting and finance, and then a two-year MBA program at Australia’s Royal Melbourne Institute of Technology, it was exhilarating to apply my accumulated technical knowledge to something so different from the kind of work I had envisioned myself doing for the rest of my life. I also realized that I wanted to rescue the essence of the entrepreneurial self I had manifested as a child. If I had graduated from high school when entrepreneurship was flourishing, I never would have been an accountant and would have been able to thrive doing what I enjoyed at an earlier age. Therefore, the position I was offered as founder and director of NVM was an invaluable opportunity to take my career in a new direction. Looking back at my childhood, I now realize that I always had an entrepreneurial spirit. As a kid I organized small-scale businesses that I thought would make me rich, such as hunting and selling grasshoppers, organizing fairs with my friends and charging an entrance fee, buying toy cars from one friend to sell them for a profit to my schoolmates, and giving rides to my neighbors in supermarket carts and charging their parents for the service. This entrepreneurial spirit, along with an insatiable desire to shake things up and do something different, led me to accept the position at NVM. Oddly, I took on the position without having had a desire previously to be actively involved in solving social and environmental issues. It was not something I had manifested early on, as I had my entrepreneurial spirit. I cannot even say that I was drawn to taking courses on these...
    Innovations Technology Governance Globalization 01/2013; 8(3):93-104.
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    ABSTRACT: Why do all of us as social entrepreneurs do this work? Because I believe from the bottom of my heart that poverty is simply unnecessary, and that we could end it in our generation—and that’s what we work towards every single day. Africa is in the midst of a social, political, and economic transformation that has brought economic growth, some newfound political stability, and increased foreign investment. A burgeoning movement of African-led entrepreneurs and institutions is emerging in a diverse array of sectors, including finance, transportation, telecommunications, and agriculture. A recent McKinsey Global Institute report looked at Africa’s economic growth patterns and designated it the second-fastest growing region in the world over the past 12 years. This is all taking place on the world’s demographically youngest continent. Of the one billion people now living in Africa, 600 million are under the age of 25. By 2045, that number will double, representing an enormous demographic group who will be in charge of leading the continent. However, Africa also shoulders the highest burden of poverty, particularly in rural areas where the majority of the poor reside. Moreover, nearly 80 percent of the African population lacks access to formal banking services, and secondary and higher education enrolment are the lowest in the world. These are societal norms that also need to be transformed. The present level of youth unemployment in Africa is alarming. It has reached crisis levels in certain regions, and African governments have been struggling to develop and adopt timely solutions within the existing system. Not surprisingly, entrepreneurship has surfaced as an important force on the continent, and its role in job creation and economic growth is being increasingly acknowledged. In light of this, more young people in Africa than in other regions are choosing entrepreneurship as a profession. Challenges to entrepreneurship can be particularly strong in Africa, where the norms for young entrepreneurs include having limited access to finance, unreliable electricity and Internet, and a host of bureaucratic obstacles that lay in their paths before starting a business. Other norms, such as high operating costs and a lack of business support services, present additional challenges for young African entrepreneurs. For all of these reasons, The MasterCard Foundation, which invests in youth learning and microfinance, has made sub-Saharan Africa a strategic geographic focus. It has committed to work with partners who are closely engaged with young people in Africa as they transition to the workforce, either as employees, entrepreneurs, or leaders. Africa is now part of a world that is evolving at an ever more rapid pace. To solve problems quickly and creatively, today’s youth will require a new set of skills. To that end, over the past five years the Foundation has created partnerships with a range of organizations that promote financial inclusion and expand access to quality education for young people. By the end of 2012, the Foundation had committed $830 million to 74 projects that serve close to five million people in 49 countries. By 2020, The MasterCard Foundation will expand its area of activity to impact 20 million people living in poverty. At the end of 2011, the Foundation forged a partnership with Ashoka, the world’s largest association of social entrepreneurs. This partnership is part of a larger effort to influence factors that will increase youth employment levels by connecting young people to the education and skills training they need to find jobs, either as employees or entrepreneurs. Ashoka’s aims are to identify and support entrepreneurs whose ideas have the most potential to have a significant impact in the areas where they work and eventually around the globe. In sub-Saharan Africa, Ashoka has already identified more than three hundred new-generation entrepreneurs whose ideas both promote economic growth and advance society as a whole. These social entrepreneurs, recognized as Ashoka Fellows, were elected because of their strong ethical fiber and their innovative and scalable ideas. Together they have the drive and tenacity to disrupt current beliefs and systems. Ashoka and its Fellows in Africa are currently reexamining their theory of change around “Youth Years,” the critical ages for human...
    Innovations Technology Governance Globalization 01/2013; 8(1):247-257.
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    ABSTRACT: On March 29, 2010, we watched the birth of our first calf conceived using modern technology. As she entered the world, I was struck by how quickly she managed to stand on her feet. For such a delicate animal—when she lay in the grass her skinny legs looked like a pile of sticks—she was impressively strong. Our new addition was a breath of fresh air, but more than that, she was the tangible result of the several years I’d spent conducting research on the internet and reading articles about animal husbandry— studies that no one in my family had thought to undertake before that. She represented a progression toward greater self-sufficiency and more dependable revenue for the farm, and thus toward greater stability for those of us who depend on the land. A year earlier, we had lost my heifer to East Coast fever, a common disease affecting farm animals in my home region of Kayunga, Uganda. It’s hard for anyone who did not grow up on a small family farm to understand how much loss and devastation such a death causes in terms of potential income generated from the farm, and all the effort expended in taking care of the animals. Also, it greatly affects the family’s ability to pay school fees, which come through the sale of farm animals. We agonized over the details. Which warning signs did we miss? Could we have intervened if we had recognized them? No doubt this sort of unpredictable stress, a hallmark of farming life, is the reason many of my peers sought paths to more “professional” careers in sectors like technology, government, banking, and business. At 25, I am one of the very few in my age group who want to stay on the farm. Though my family has managed the farm—troubleshooting and performing daily crisis interventions—for three generations, my grandfather and father still lacked the expertise to respond to East Coast fever. They fit into a wider culture of local farmers who fail to see the opportunities offered by agribusiness practices. I don’t blame them for this shortsightedness; if I’ve learned anything about entrepreneurship, it’s that not all entrepreneurs are “born entrepreneurs.” Entrepreneurial farm owners like myself are a product of the right environment: one that inspires, and that nurtures imaginative interpretations of “what could be.” And, in most cases, this current of innovative ideas must be injected into a community. My father and I beamed over our newborn calf, relieved that our first experiment had succeeded. The farm’s newfound vitality wobbled tenuously, as if balanced upon scrawny legs itself, but this first step proved our resilience. And it was an argument, however small, that perhaps I was onto something in believing that my generation could and should pursue innovative, business-savvy farming as a stable livelihood. It is difficult to translate the word “entrepreneur” into my native tongue, Luganda. Most of my friends come from farming families, but few of them have any interest in managing their farms for a living. Agribusiness skills aren’t taught in local schools, though our population is overwhelmingly agrarian; instead, most young people aspire to an education that will lead to respected professional jobs. This avenue is widely viewed as the best choice for a well-educated young man, as so few people are aware of the economic potential presented by the land. I was privileged and grateful to be sent to a good local boarding school. This was possible because my dad had established himself in Kampala, the capital, where he could spend a few days each week repairing automobile electrical systems. That extra income meant he could afford to send my siblings and me to boarding school. The annual cost for us to attend boarding school was 3,000,000 Uganda shillings or approximately $1,200 US. During vacations from school, I recall biking from my family’s home to the farm each morning to milk the cows; this always felt like dull maintenance work, as the indigenous cows we had at that time yielded so little milk. It was just one of...
    Innovations Technology Governance Globalization 01/2013; 8(1):5-10.
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    ABSTRACT: Sheba Achieng Otieno and her siblings were raised by a single mother in a house made of sheet metal in one of Nairobi’s massive urban slums. Sheba has one wish: to create a better life for her and her siblings than the one they were born into. Sabun Ou dreams of becoming a lawyer and helping to end corruption in Cambodia. Born into a farming family and living with a physical disability, Sabun wants a life that takes him beyond his rural childhood and the constant teasing he received. Syna Haung’s family makes baskets. Her father ascends the mountains of Cambodia’s Kampot Province three times a week to gather bamboo, which her mother weaves into baskets and sells, earning just enough to subsist on day by day. Syna studies marketing at university now and plans to start her own company. These three young, motivated, and determined people are our colleagues. We work together at Digital Divide Data (DDD), a digital services company that spans three continents, Asia, Africa, and North America. Our company’s purpose is to offer these talented youth a chance to connect to the global economy, to explore their personal and professional interests, to join a community of other young professionals, and to achieve their dream of living fulfilling and rewarding lives. In the United States we would call Sheba, Sabun, and Syna young professionals, noting that they are the first generation in their families to go to college. However, the international development community is more likely to see them as part of the “youth bulge”—that is, the largest generation with the lowest employment rate the developing world has ever seen. Through our work in Southeast Asia and East Africa, we see firsthand the critical global development challenge presented by youth unemployment. Half of today’s world population is under 25 years of age; 90 percent of these young people live in poor countries and about 88 million do not have work. Many are growing up in slums and rural areas where there are very few jobs, and most jobs that exist are in the informal sector. According to the International Labor Organization, another 152 million youth subsist on jobs that offer no real path out of poverty. Policymakers, governments, and nongovernmental organizations (NGOs) are addressing the problem because a sizable youth cohort can quickly become a source of instability if youth unemployment is not addressed. Equally important is the fact that so many young people are missing the opportunity work provides for personal development and for having a sense of purpose at a critical time in their lives. Sheba, Sabun, Syna, and our other young colleagues in Cambodia, Laos, and Kenya have shown us that one solution to these challenges is impact sourcing, which is a way to leverage a $300 billion industry known as business process outsourcing (BPO) to create jobs and opportunity. As co-founders of Digital Divide Data, one of the pioneers of impact sourcing, we’ve seen how a private sector approach to development is succeeding where international aid often fails. We are tremendously excited by the potential of impact sourcing to build young people’s knowledge and skills and promote their long-term success, to develop talent in growing economies, and to drive economic growth. Yet we know that jobs alone are not enough. Impact sourcing can create large-scale opportunity for youth from poor families to develop themselves through education and employment, thus enabling them to build careers and lives that far surpass their childhood experiences of day-to-day survival. We envision a world in which members of the youth bulge can thrive and lead and create a better future for themselves, their families, and our planet. The BPO industry, which involves contracting business functions out to third-party service providers, can serve as a catalyst for the young generation. Although some see it as an industry that chases low-cost labor, the sector employs several million people worldwide, especially in countries such as India, the Philippines, and China. In India alone, the BPO industry has grown from 1.2 percent of gross domestic product in 1998 to 6.4 percent in 2011. In the...
    Innovations Technology Governance Globalization 01/2013; 8(1):177-187.
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    ABSTRACT: Innovations Case Narrative: University of the People If everyone actually had the opportunity to obtain a university education, the world would be a different place. I believe this so strongly that, though I could have retired in 2009, I chose instead to found University of the People (UoPeople): the world’s tuition-free, nonprofit, online, degree-granting academic institution dedicated to opening access to higher education globally. UoPeople is specifically designed to provide access to college studies for qualified high school graduates, despite financial, geographic, societal, or personal constraints. We are proud to say that our institution has eliminated almost the entire cost of higher education. Three key innovations allow us to function effectively on a limited budget without sacrificing the quality of education: we embrace collaborative learning, we use Open Educational Resources and open source technology, and we get excellent assistance from approximately 3,000 registered volunteers. By opening the gates of higher education to a globalized student body while limiting operating costs, we are building a scalable model that can be duplicated by governments and universities to show that delivering quality education to masses of people need not be expensive. This model is especially relevant for governments in developing countries that want to reach citizens who would otherwise be left uneducated. Instead of building a traditional brick-and-mortar institution, an elite equivalent to Harvard, developing country governments can turn to quality online education based on resources like ours and thus serve thousands of individuals, offering the courses, especially in computer science and business administration, which will help them find good jobs. UoPeople’s financial model is simple. While our institution is tuition-free, we do ask students to make modest financial contributions to their education. In our tuition-free model, we do not charge for the cost of instruction, books, teachers, or annual enrolment. All we ask of our students is that they cover the cost of processing their applications ($50) and examinations ($100 per end-of-course exam). There are no other costs whatsoever. For those who cannot afford even these nominal fees, UoPeople offers scholarships such as the Hewlett-Packard Women Scholarship Fund, the Intel Haitian Women Scholarship Fund, and the Micro-Scholarship Portal, the first of its kind at any university, which facilitates micro-donations from the public. We offer all of these scholarships to remain consistent with our mission and ensure that no qualified student is excluded for financial reasons. Our mission is to offer higher education to all, and to ensure that all qualified students have the opportunity to study towards an academic degree, whatever their financial situation. Since we launched in 2009, UoPeople has partnered with Yale University to conduct research, New York University to accept our students for further study, and Hewlett-Packard, as part of its Catalyst Initiative, for internships. To date, we have admitted more than 1,500 students from 136 countries around the world; many had no other alternative. The University has gained the support of leading academics; among them are New York University President John Sexton, Academy of Paris Rector Emeritus Mrs. Michèle Gendreau-Massaloux, Indian Institute of Technology (ITT) Bombay Director Devang Khakhar, Oxford Vice-Chancellor Sir Colin Lucas, Rhode Island School of Design President Emeritus Roger Mandle, Barnard College President Emeritus Judith R. Shapiro, and George Washington President Emeritus Stephen Joel Trachtenberg. They all serve on our President’s Council. UoPeople has amassed over 1,250,000 followers on Facebook and garnered media coverage throughout the world. Student satisfaction is high. Each term, we ask students if they would recommend UoPeople to a peer—and 95% say yes. Thus, we have created a viable solution to the pervasive problem of access to education. The problem of educational access knows no country borders and is found in every region on earth as financial, geographic, placement, social, and personal constraints are widespread and youth populations grow. According to UNESCO, given the growth of youth populations worldwide, by 2025, an estimated 98 million youth will be hoping for places in universities that simply do not exist. This narrative informs the successful launch and implementation of a solution to a pressing world crisis. Not only has it...
    Innovations Technology Governance Globalization 01/2013; 8(1):101-116.