As reported in Big Think, South America's most centrist governments are merging their stock markets. Peru, Colombia and Chile have announced the merger of their stock markets to improve market liquidity and access to capital for local companies. In the run up to the Peruvian presidential elections, this announcement and its timing raises interesting issues for front runner Ollanta Humala. Humala is backed by former President Lugo of Brazil and President Chavez of Venezuela and would be expected to be against such a pro-business merger. Comments against the merger would increase concerns in the business community and abroad about a future Humala government. My guess is that Humala will remain silent on the issue until after the elections.
I seem to be on a short series of posts about "transnational". The last blog post on Al Jazeera focused on transnational and last week's trip to Mexico brings up another example. I visited with government officials whose Mexican state borders on the U.S. Their citizens spend $6 million per day in the U.S. This represent about 1 percent of the total GDP of the U.S. state most frequently visited and about 10 percent of the GDP of the Mexican state. This trade flow is significant to both states regardless of the national border between the two states. Perhaps we should consider fostering this trade rather than focusing on limiting immigration.
Researchers supported by Stanford University are trying to model successful startups in the web space. Their report is here. Findings show four types of web startups, each of which develop in a different manner that is documented based on interviews with over 600 startups. Will probably incorporate the study in the curriculum for my masters level course in entrepreneurship this fall.
A sample finding with respect to capital raising and mentors is shown below. Mentors have an appreciable effect on capital raising if they participate or advise on funding.
Another interesting graphic (below) shows how the type of revenue changes as the company passes through the first four phases of development.
The report is chuck full of other interesting findings and should be a must read for any aspiring entrepreneur interested in the web space.
I found the report on Steve Blank's blog, which is an excellent source of info on entrepreneurship, the "lean startup" methodology and the Stanford entrepreneurship community. Steve's post also provides a more detailed summary of the report.
For all of the readers who think I only cite research from HBS, today's post was inspired by a story in Big Think about research at Ohio State University. Researchers at OSU found that frequent viewers of the Al Jazeera cable network identified themselves more often as Moslems rather than as Arabs or by country of birth or residence. The report states:
"Because networks like Al Jazeera are transnational – focusing on events of interest across the region rather than those in any one country – they may encourage viewers to see themselves in broader terms than simply residents of a particular nation, the researchers said."
While I have not seen the raw data, I think the researchers may have drawn a less insightful conclusion. I do not think that Al Jeezera "encourages" viewers towards a transnational self-image. I think that Al Jazeera is intentionally positioned as transnational and therefore attracts such viewers. In other words, Al Jazeera is not transforming the image of its viewers but rather addressing the need of the transnational audience. With the increase in peer to peer social relationships, the growth of mega-cities, increased globalization and a host of other factors, we should all probably be considering whether we are transnational.
Another point from the report is worth mentioning. The report states:
“If there’s a growing transnational Muslim identity, the United State will have to reevaluate traditional foreign policy strategies that are currently based on dealing with individual countries,” Nisbet said. “It will make diplomacy more complex.”
Hopefully the diplomatic strategies of the U.S already incorporate the increasing trend toward transnationalism and recognize that this trend extends beyond simply the Middle East and the Moslems.
My second book deals with social entrepreneurship and uses examples from my time with OLPC . After Grameen Bank, OLPC may be the next largest company using the social entrepreneurship model. Social entrepreneurship is in its infancy as a concept and deserves further explanation. The need is all the more important now that Michael Porter's concept of "shared value" is getting so much publicity. I am about 3/4 of the way through writing the book and should finish it this summer or as soon as I stop traveling nearly every week.
I am also thinking about a third book on assumptions and their role in innovation. Anyone interested in helping with the research should contact me.
For years I have been trying to introduce into common English usage the word "bozette". A bozette is a female "bozo". I have had little success but never the less I carry on. Now to "Civets".
Civets are the group of six emerging market countries just below the BRIC countries in terms of economic attractiveness. The countries include Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. According to this story in the FT, the term "Civets" was coined by Michael Geoghegan, former chief executive of HSBC, to define an investment product for this country grouping.
Yesterday I had one of the most enjoyable mornings in a long while. I attended the University of Miami Center for Hemispheric Policy conference--Poverty Alleviation in Latin America--and spoke on one of the panels about OLPC. The management of the event was exceptional and the attendee list was noteworthy with a great mix of academics and practioners.
Framing the "debate" for the morning, I would say that the economists and development bankers came out in favor of big, federal government solutions and we practitioners consistently advocated regional and local programs that support individual empowerment. Setting aside the philosophical differences, the real question is whether either approach can achieve scale and meaningful sustainable results. Of course, perhaps the best solution is a federally funded independent agency such as Plan Ceibal in Uruguay. Such an approach separates the politics from the implementation and day-to-day management and allows for quality, shared resources to benefit the project at the local level. I like this approach but most governments cannot attract the high quality people (from the private sector) to run an independent agency. Therefore, I prefer state and city level projects or, for example, the Catholic Church approach using communities. I think there is a higher degree of accountability for social projects the greater the local input.
I encourage all of you to attend events sponsored by the Center for Hemispheric Policy. Even if you do not speak, it will be educational and fun.
The original post was edited to make clearer that I thought everything about the event was fantastic.
Last week was quite an interesting week, with four very important articles on education.
The Noble Laureate Carl Wieman published an article in Science Magazine in which an experiment he conducted demonstrated that the method using technology in the classroom is more important than the teacher. This idea is of course at the heart of what OLPC stands for. Neither Professor Wieman nor OLPC is against teachers; they both just want to change the way the teacher uses technology.
A working paper was released at HBS that analyzed the history of education in the four BRIC countries. Two findings were interesting: (a) The more homogenous the group the faster improvements in education are adopted. (b) The more regional the responsibility for education the faster the improvement
Plan Ceibal released its formal findings for 2010 on the OLPC project. Three interesting findings:
(a) Measurable improvement in language skills, writing and social skills but not yet in math
(b) Students are using a much wider range of Sugar applications and more sophisticated applications such as programming, which is exactly what the OLPC pedagogy would predict
(c) The teachers acknowledge that they find using the computer motivates them in their work
The report also states that the machines are broken too often. One can interpret this as the machines are not rugged enough, but repairs are much higher for the poorer students. May just be that the poorer students need more education on the care of consumer electronics. Report is here Download Plan Ceibal 2010 .
The last of the four articles is a blog post by Mel Chua on opensource.com entitled Education in 2030: Open Source and Community Based. She believes that education will evolve to be organized in a manner similar to an open source community such as Mozilla or Fedora. What caught my attention was her idea that the rapid expansion of digital information will change the role of the teacher and lead to a more student centric way of learning. If one is interested in evolving a 21st century theory of education I think this article is well worth reading.
I have been in Cartagena for three days speaking and participating in Filantropia Transformada, the Give to Colombia annual conference on philanthropy in Colombia. The conference was very well organized with 10 hour days of presentations and discussions. Almost all of the largest foundations in Colombia attended along with many consultants and representatives from several large U.S. foundations such as The Nature Conservancy. A large contingent from Chile added to the mix.
Highlight of the conference was a speech by Sammy Azout, Presidential Advisor for Social Development Programs. Sammy was a very successful retailer in Colombia who sold his business and after a Masters from Harvard dedicated himself full time to developing new solutions to the social issues in Colombia for President Santos. Sammy's plan involves bringing together private sector, non-profit and government resources to address social needs. I expect that Sammy's results will lead to his model being adopted by other countries.
Sammy's thinking on addressing social problems is all the more impressive because it is quite obvious after three days that few analysts have figured out how to address social problems at the country level. Everybody can identify the problems but the thinking on solutions appears very much in the formative stages. This is not a comment on philanthrophy in Colombia, which is quite practical and successful, but rather a comment on the consultants and development bankers at the conference.
Many people would define collaboration as the bringing together of resources through formal or informal networks. Many thinkers believe that in the 21st century collaboration will be critical to solve the increasingly more complex social, environmental and economic problems ahead. Fortunately technology is helping to facilitate collaboration, but there is another trend that may also help.
Living space is becoming more densely populated as a result of population growth and increased urbanization. Colombia and Bangladesh are the same size in square kilometers, but Bangladesh has a population of 180 million and Colombia has 44 million. In which country is greater collaboration required. Of course, the answer is Bangladesh just because of the very high population density. Collaboration is a natural force in areas of high population density. Today the collaboration may just be focused on survival but with education these natural collaborators become a real force for change.
Many of the highest population densities in the world are in Asia, such as the city of Shanghai, the island of Java in Indonesia and of course Bangladesh. As we consider the future of the U.S. we need to recognize that certain places in the world foster natural collaborators. We in the U.S. need to embrace collaboration more aggressively, and especially in our schools, because many of the competitors are natural collaborators.
GIGAOM is reporting that Microsoft will buy Skype for $8.5 billion. The acquisition makes no sense to me for several reasons:
Microsoft's core competency in software will do little to enhance the Sykpe service
I question whether Microsoft could not have built a comparable service for less cash
At this stage Skype is a customer acquisition play and this is not a core competency of Microsoft in the consumer sector
Microsoft needs to be a viable alternative on the cell phone and a VOIP acquisition does nothing to address that issue
However, what really upsets me is that now I will have to stop using Skype. I refuse to use Microsoft products for a whole host of reasons, not the least of which is horrible user interfaces. Hopefully a lot of my contacts feel the same way and we can all move to a Google product.
One of the interesting outcomes from using the iPad is that I have greater appreciation for Google products and the way they are integrated to each other and to third party products. I dislike that DropBox and Evernote, two key applications for me, do not work very well on the iPad. Increasingly, I want a hardware platform that allows me to bundle together the applications I want and have them work well together. Skype under Microsoft over time will not be such a product.
In a thoughtful comment on the post Economic Development and Education a reader raised the question of how to define the "public good" and the contentious nature of this task.
Some guidance on this question comes from a remark that Nicholas Negroponte made to me. He said that non-profits should take on the projects where the risk is too great for the private sector. In other words, if the risk-return of an opportunity does not justify investment, the private sector will pass on the opportunity. I agree with Nicholas and think it frames the role of the private sector appropriately in a way that Milton Friedman would also accept. Interpreting further, it would allow the private sector to offer any product or service where the economic returns are acceptable. This leaves us with a definition of the public good as "the projects where the private sector will not participate".
Taking this idea further we realize that public good becomes the projects where the consumer or citizen lacks the money to pay for a product/service from the private sector. One quickly realizes that this situation applies to the really poor people in a community or population. In the developing world this situation can apply to a very large percentage of the population given that food and shelter are the highest priorities for spending and survival. Little discretionary income may be left for healthcare, education and other basic needs. I would feel comfortable as defining the public good as the basic needs that cannot be afforded through personal payments to private sector providers.
The battle then becomes defining "basic needs". I would define basic needs as food, water, healthcare and education. I think the definition becomes contentious when economic development gets thrown into the question of public good and basic needs. Here I think a compromise solves the problem. Let's take roads as an example. If the government cannot find a private sector developer for a road system, then the government can build a road but there would be two conditions that need to be met:
The education, healthcare and food and water programs would need to be fully funded in each annual budget before economic development programs could be funded
Any economic development project would be subject to sale by auction every five years with a minimum bid required based on an agreed upon return on investment to the government
The government would be forced to seek outside capital from private sector sources or multi-lateral agencies for economic development and to fill shortfalls in basic needs spending. Governments would focus on capital raising, which is the key shortage in most developing countries.
I would allow some government spending on defense, administration, judiciary, customs and tax collection, which would also be paid for before economic development spending.
Such an approach would be combined with a very unencumbered private sector that would be free to pursue opportunities provided they were legal and did not have dramatic environmental consequences. "If it is not prohibited, it is permitted" would be the concept for the legal system, thus permitting individual empowerment to solve problems and satisfy market needs. Such a legal system would allow entrepreneurship to flourish and become the engine for economic development. In this way people could advance economically to the point where they no longer needed government assistance and they would have the incentive to do so. We might also need to borrow a lesson from President Lula in Brazil and require children to be in school for families to receive food or require minimum child vaccinations to receive food.
My recent posts on economic development were inspired by a quandary. I could not understand why so much of education terminology was couched in terms from economic development theory. To answer this question I began reading the classic texts on economic development. I immediately noted that the thinking on economic development is incredibly complicated and incorporates the entire socio-economic-political system. This degree of complexity immediately made me suspicious. The notion that education is just another social problem along with poverty or social exclusion also gave me cause for concern. My suspicion or belief is that education is a more fundamental issue upon which the solutions to the other problems are derived. Implicit in this view of education is the notion that education permits individual empowerment, which allows the individual to solve the other social or economic issues with little or no assistance from a government. This view of the role of education is based on an inherent belief that the role of government should be small and that individuals and markets can better solve problems if there is no government interference.
Now this is only my view of economic development and education and to take on the luminaries at the multi-national banks, I needed some intellectual backing. I found that intellectual backing through George Soros, who made reference to Friedrich Hayek in a recent article in Politico.com. Hayek is probably the most unknown economist to win a Nobel Prize and a pillar of the Austrian school of economics. I should have started my research on economic development with the Austrian school writers. Every semester I have my students read Israel Kirzner's Competition and Entrepreneurship. Kirzner is another member of the Austrian school and his book highlights many themes in entrepreneurship and most importantly the idea of "asymetry of information".
Much of Hayek's writings were around the time of WWII. Hayek believed that the role of a bigger government, popularized by his contemporary John Maynard Keynes, was actually an extension of wartime centralized planning in the peace that followed WWII. Hayek's dislike of big government is summarized in this quote.
"To accept the exigencies of wartime planning in peacetime is to start down the road which leads to fascist dictatorship, and ends the freedom of individuals."
OK, so Hayek agrees with me on the role of government--smaller is better--but how does that help us understand education. Another idea from Hayek moves us forward in a meaningful way and also speaks to my concern about the complexity of economic development thinking.
"Hayek argues that state intervention, the welfare state, socialism, fascism, bureaucracies, all share the same fallacy: that the human mind is capable of integrating the needs of the populace into a plan which can be executed by government." Source.
Governments cannot develop integrated plans to serve the needs of the populace. Therefore, complex, multi-dimensional plans for economic development are a fallacy. We have just rejected traditional economic planning by multi-lateral banks and the governments of most countries. All we had to do is reject Keynes and embrace Hayek.
Most would think that Hayek would side with Milton Friedman and see education as a market responsibility rather than a government responsibility. However, here is where Hayek really impressed me (because he agreed with me). Hayek argued that a minimum amount of education for the population is a public good that should be provided by government and probably protected by statute law (so a subsequent government could not change it). The recent legislation in Uruguay, Paraguay and Peru to make education a constitutional right suggests support for Hayek's ideas.
Based on Hayek I think that economic development should make a distinction between public good and other types of projects (provided they do not violate the notion of small government). Included in public good would be education, food and water and perhaps minimal healthcare and nothing else. The start and perhaps the end of government directed public good would include only the three pillars of public good--education, food and water and minimal healthcare. Individuals with these three needs satisfied can solve all their other problems that so taunt the economic development theorists. Interesting that the popular and successful President Lula of Brazil focused on these three needs. Focusing on these three basic needs simplifies economic development to the point where the human mind can tackle the problems. Now, if the Keynesians and multi-lateral bankers would just stop trying to complicate it we could fix education in the developing world.
The views expressed herein are my personal views and do not reflect the views of any organization with whom I am affiliated.
In response to my last post on the iPad and user interface, a reader wrote on the Facebook version of this blog and asked "Do you think the network effect is diminishing the value of spoken conversation?
I think that the proliferation of social media, beginning with email, has greatly diminsihed the use of spoken conversation. A recent study of FB showed that the use of FB increased the self-esteem of men but not women. So in some ways FB is providing us men with the social rewards from having to talk to people but in a much more efficient way. I am sure that studies of Twitter or Quora would show the same thing. Social media provides the social rewards previously only available through voice (in person or by phone) but by being more impersonal it proves more efficient.
The question that needs to be asked is why we need this increased level of efficiency. The answer is the proliferation of information we are forced to deal with. If I look at the start to a typical morning I need 2-3 hours to manage email, read my RSS feeds, check FB, review Quora, check that my blog is working, scan Twitter and generate a blog post. Most people do not get up at 4 or 5 am to fit this information management into their day, but rather deal with it during normal work hours. Consequently most people spend the whole day managing information, which is interspersed with work activities. Effectively, almost everybody now has two full-time jobs--information management and work. With this increased "workload" voice has become too inefficient.
The only times I consistently use voice are to progress or close a transaction, for board meetings or if there is a crisis. I use voice for transactions because it is more efficient to explain a complex idea by voice, but many people do not have this skill. Board meetings are done by voice because the people on most boards would not be comfortable using text chat. Crises require voice because it is a more efficient way to communicate emotion to a large group.
The one other place where I use voice is in face to face meetings with new business prospects, but this usage is actually diminishing. I apparently have sufficient web presence that some people have considered hiring me without a meeting. Again, social media is proving to be more efficient for prospects.
Should a reader ever want to speak to me use Skype. Contact name is rhhfla.
