Heard at a meeting – When IBM invented the tape drive for storing data; Customers resisted the change because they liked to “feel” their data on punch cards!!!
Is this similar to today’s clients wanting to “own” their data as opposed to putting it on a cloud?
As Yogi Berra Said, “It’s déjà vu all over again”
Grameen Bank from Bangladesh brought the concept of Micro Lending to an impoverished nation. The idea was so successful that its founder Mohammed Yunus bagged the Nobel Peace Prize.
Grameen America is its US version. It started operations in New York in January 2008. In a country where the word sub-prime brought the nation to it’s knees, Grameen’s Sub-Sub Prime borrowers turn in a 98% repayment rate. Since 2008, Grameen has lent about 25 Mn$ between 7300 borrowers.
Grameen has stumbled upon a big market segment in the US – the unbanked. The economist has a detailed article on the unbanked class in the United States and the opportunity to serve this group. The size of this segment – 1/4 of all households in the United States.
Here is a link to several examples that highlight the big difference Grameen is making in America.
So, is time for us in the United States to do a re-read of CK Prahlad’s classic – Fortune at the bottom of the pyramid?
His idea was that there are several untapped markets at the bottom of the economic pyramids who would represent a large enough market if companies could innovate and create offerings at low prices. With growing unemployment and poverty in the west, this seems like a good time for companies to start thinking of this market segment.
Another view point could be that it would be easier for several emerging market companies to do this and this could be a big opportunity for them to break into the western markets.
Here are two other potential bottom of the pyramid markets in the US that I could think of:
1. A 3 year college course in Engineering for 25,000$ – potential market – 1 Million high school grads who do not go onto college
2. A private sector low cost healthcare solution – Let’s say a premium of 50$ per person – potential market – 40 Million uninsured Americans
www.tweetcloud.com is a website that creates a simple website where you type in a word and it will scour twitter feeds to create a simple word-cloud based on what is being said about what you searched.
So all you need to do if you want to know what people are saying about your brand/company/country/you etc. is to just plug in the word!!
This is so addictive!
Do you outsource Labor?
Do you outsource Tasks/Work/Process?
Do you outsource Outcome?
In my view; a simple but very effective way of judging maturity of outsourcing spend.
I recently blogged on how our understanding of how people play games can be used to influence behavior.
Zynga’s new acquisition Area/Code has built a spectacular game called Macon Money. This game aims to bring integration between communities living in different area codes in the town of Macon, GA.
Area/Code created Macon Money – basically local currency (coupons) that allow you to buy services at local businesses. To get Macon Money you had to get a Macon Bond from the company – the catch is that you only got half the bond – to complete the bond you had to find the person with that other half. You could use the Macon Money forum, facebook, email – whatever.
The game engaged residents in different area codes(the university and the residents were two distinct groups for example) in the city to interact with each other – a fun way to meet people and a subtle way to create bonds.
Did it work?
1. The main idea was to get people from different areas to meet each other. the distribution of the different colors in the map below clearly point to the evidence that it succeeded in this.
2. What about local businesses?
Mayur Patel of the Knight Foundation has a detailed review . According to him:
Early findings indicate that the game is making a positive contribution to local revitalization efforts in Macon….Interestingly, because players saw their bonds as a “gift” (essentially free money), they were often willing to branch out from their normal consumption habits and visit new local businesses that they wouldn’t otherwise frequent.
The game is based on an age-old percept that common interests build coherent communities. The way they take this insight and use technology is truly amazing.
And yes, they have won awards. Including the future everything award for 2011.
It is exciting to see that social gaming is moving far beyond farmville!!
Every year approximately 4 to 4.5 million houses are sold in the US with an average sale price of $266,000.
For every such sale; agents make about 6% in commissions. This puts the total amount earned by real estate agents at about 80Bn$ annually.
With the US housing market in crisis, house sellers are scrambling to recover the money they put into their house. Any help in reducing transaction costs is very welcome.
The online service www.redfin.com is seizing this opportunity. Their premise is very simple. They break down the house search process into two parts:
1. Searching for a house
2. Closing the deal.
The first part is accelerated by providing the home buyer a very easy to use website that also helps manage the workflow involved in buying a house. Home tours are facilitated by “field-agents” who are less experienced but know enough to open the doors and walk clients through!
Experienced agents come in only during deal closure. This way, Redfin takes the major cost out of home buying and pass on the savings to their customers – Redfin shares 1/2 of their commissions with the buyer.
So, what they are doing is:
1. Break down a process into labor/time intensive and skill intensive parts
2. Use appropriate levels of expertise to each part
3. Create a technology platform to enable a smooth transaction
4. Share the savings with the customer.
In addition to this, they promote a culture of transparency by sharing all agent reviews on their website. This puts their clients in the center of the business and helps win trust.
How are they doing? Redfin has completed more than USD 2 Bn in sales with a 97% satisfaction rating.
The Redfin example is something that can be replicated in many other industries where high transaction costs are waiting as business opportunity!
Henry Ford revolutionized how cars are built with his invention of the assembly line and the use of specialized labor. The simple fact is that when one does a task repeatedly they get better at it!
I was reading an article in the Economist that gives examples of specialist healthcare providers and the benefits they bring:
1. Narayana Hrudayalaya in Bangalore that has reduced the cost of heart surgery to 2000$ – 60% cheaper than even comparable India based hospitals
2. LifeSpring Hospitals, again from India that used standardised procedures as in manufacturing to reduce the cost of delivering a baby to 40$
3. Aravind Eye hospitals in India that performs 70% of the number of eye operations performed by the entire NHS for just 1% of the cost
4. Minute Clinics in the United States (yes! the US!! – exciting stuff happens here as well!!) that specializes in treating simple conditions quickly out of CVS stores.
So; specialist services combined with learning from outside the parent industry – sounds like a good cue for some of our Global IT Services friends!