September 25, 2010

An Ambitious New Initiative to Reduce Smoke Exposure in Developing Nations

According to the World Health Organization (WHO), nearly two million people die prematurely each year because of exposure to smoke from traditional cookstoves and open fires; that is nearly one death every 16 seconds. Furthermore, three billion people, nearly half of the world’s population, are affected by exposure to smoke from traditional cookstoves and open fires and WHO estimates that exposure to smoke from traditional cookstoves accounts as one of the top five worst overall health risk factors in developing countries. Given the adverse impact of cookstoves and open fires predominately on women and children, I am encouraged by the formation of the Global Alliance for Clean Cookstoves, a US$60 million dollar public-private partnership to save lives, improve livelihoods, empower women and combat climate change by creating a thriving global market for clean and efficient household cooking solutions.

The announcement of the Alliance’s formation was made by United States Secretary of State Hillary Rodham Clinton at the Clinton Global Initiative’s 2010 Annual Meeting. Outlining the problem, Secretary Clinton said, “As many as three billion people are gathering around open fires or old and inefficient stoves in small kitchens and poorly ventilated houses. Many of the women have labored over these hearths for hours, often with their infant babies strapped to their backs, and they have spent many more hours gathering the fuel. The food they prepare is different on every continent, but the air they breathe is shockingly similar: a toxic mix of chemicals released by burning wood or other solid fuel that can reach 200 times the amount that our EPA considers safe for breathing.” Moreover, explained Mrs. Clinton, “As the women cook, smoke fills their lungs and the toxins begin poisoning them and their children. The results of daily exposure can be devastating: Pneumonia, the number one killer of children worldwide, chronic respiratory diseases, lung cancer, and a range of other health problems are the consequence.”

The Alliance’s ‘100 by 20’ goal calls for 100 million homes to adopt clean and efficient stoves and fuels by 2020, which will be achieved by a collaborative effort among public, private, and non-profit partners to help overcome the market barriers that currently impede the production, deployment, and use of clean cookstoves in the developing world. Led by the United Nations Foundation, the Alliance will bring together leading foundations, non-profit organizations, academic institutions, corporate leaders, governments and UN agencies to help overcome current barriers and stimulate a thriving global market for clean cookstoves.

Why launch this initiative in 2010? The Alliance explains that several factors are aligning as never before to put the sector within reach of a “tipping point” for adopting clean cookstoves at scale. These factors include:
  • Recent advances in clean cookstove design, testing, and monitoring;
  • Compelling new research on the health and environmental benefits of clean cookstove;
  • Recent commercial success and development of a number of business models in the field;
  • The advent of national cookstove programs in India, Mexico, Peru and elsewhere;
  • The increasing need for effective near- and long-term action to address climate change at the local and regional level; and
  • The potential for carbon finance to fund stove initiatives at greater scale.

September 21, 2010

What can Governments and NGOs Learn from Coca-Cola?

The purpose of the TEDxChange forum was to promote public awareness of and support for the Millennium Development Goals (MDGs), which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. The MDGs are to be achieved by a collaboration of all the world’s governments and nongovernmental organizations (NGOs). The September 20, 2010 forum included a few speakers and a performance by Bajah + The Dry Eye Crew, a hip-hop group originally from Sierra Leone that is known for speaking out against political and social injustices. Melinda Gates, co-chair of the Seattle, Washington-based Bill and Melinda Gates Foundation, was one of the speakers and there are certain aspects of her speech worth discussing on this blog.

Mrs. Gates spoke about the worldwide presence of Atlanta, Georgia-based Coca-Cola Company, even in most underdeveloped regions of the world. This is in stark comparison to the items underserved populations are lacking such as condoms, vaccinations for curable diseases, and educational materials for malaria prevention and prenatal care. "Coke is everywhere," said Mrs. Gates. “In fact, when I travel in the developing work, Coke feels ubiquitous." Moreover, "Coke's success makes you wonder how they are able to get to these far-flung places." If Coke is so successful in delivering their product worldwide, "then why can't governments and NGOs do the same thing?”

Mrs. Gates explained that if the international development community wishes to achieve the Millennium Development Goals prescribed by the United States by 2015, “we need to learn from the innovators and those innovators come from every single sector. I feel that if we can understand what makes Coke ubiquitous, we can apply those lessons to the public good. Coke’s success is relevant because if we can analyze and learn from it, then we can save lives.” Mrs. Gates continued to explain that there are three things the international development community can learn from Coca-Cola: “Real-time data and immediate feed it back into the product, tap into local entrepreneurial talent, and they do incredible marketing.”

Coca-Cola takes immediate data to measure progress. This is different to development organizations where evaluation comes at the very end of the project and by then, it is too late to use the data. Mrs. Gates uses bowling in the dark as an example of the flawed system governments and NGOs use, “You roll the ball, you hear some pins go down, it’s dark and you cannot see which pins go down until the lights come on, then you see your impact. Real-time data turns on the lights.”

In order to reach distant markets in developing nations, Coca-Cola recognized that it had to change its distribution model that worked so effectively in industrialized nations. Observing that some people in Africa were buying Coca-Cola products in bulk and reselling it in rural villages, the beverage company created 3,000 created micro-distribution centers in Africa since 1990, which now employs 15,000 entrepreneurs. In Tanzania and Uganda, micro-distribution centers represent 90 percent of Coka-Cola sales.

How can governments and NGOs learn from Coca-Cola? "Governments and NGOs need to tap into that local entrepreneurial spirit as well because locals know how to reach the very hard to serve places and they also know their neighbors and what motivates them to make changes," remarked Mrs. Gates. She cites Ethiopia’s new health extension program as an example where the Ethiopian government noticed that so many people resided long distances from medical centers that prevented them from seeking immediate medical care. In 2003, using a similar model used in the Indian state of Kerala, the Ethiopian government trained 35,000 health extension workers to deliver medical care directly to the people in rural areas. In five years, this program increased the number of workers from one per 30,000 to one worker for every 2,500 Ethiopians.

Mrs. Gates continued to explain that "health extension workers can help with so many things whether it is family planning, prenatal care, immunizations for the children, or advising the woman to get to the facility on-time for an on-time delivery. That is having real impact in a country like Ethiopia and it's why you see their child mortality numbers coming down 25 percent from 2000 to 2008. In Ethiopia, there are hundreds of thousands of children living because of the health extension program."

With respect to marketing, Coca-Cola's successful strategy lies in localizing their brand and advertising on a country or region basis. I have witnessed this during my travels. Whether it is in Uganda, Brazil or China, Coca-Cola creates advertisements using local people and in the local language, which gives the impression that the beverage company is locally-based. Everyone knows that Coca-Cola is a large American conglomerate, but their marketing strategy reflects a localized feel to the product. Governments and NGOs need to incorporate similar marketing strategies whether it is condom distribution to eradicate AIDS/HIV or promoting sanitary behavior like washing hands after defecating or linking toilets to courtship like a northern India state did to save lives caused by dysentery. Mrs. Gates said that if governments and NGOs “begin to understand what people want in health and development, then we can change communities and whole nations.”

You can watch the Mrs. Gates' speech in its entirety in the video below or through this web link:

September 3, 2010

Observations from the 12th Annual Seattle University Business Plan Competition

This past spring, I observed the tradeshow and final round of the 12th Annual Harriet Stephenson Business Plan Competition hosted by my alma matter, Seattle University (SU). 23 teams competed for over $20,000 in prize money. I was very impressed by the broad spectrum of sectors represented and the creativity of the business strategies presented. There are certain observations from the presentations that are worth discussing.

I receive plans from businesses at different stages looking for funding and many of these plans lack a comprehensive competitive strategy. The contestants at this year’s competition are no exception. Too many businesses outlined competitive strategy by saying “there are no competitors.” As an entrepreneur and business advisor, I promise you that no matter how unique a business idea may be, someone out there in the world is thinking the same thing. I recall when Yahoo! Inc. launched its web portal in 1995 when very few competitors existed. When Yahoo became a publicly-traded company in 1996, the Sunnyvale, California-based company was in the position to be the market leader for years to come. Then a little unknown company called Google Inc. was launched in 1998 and within just a few years, Yahoo quickly lost its competitive advantage to the Mountain View, California-based company. Yahoo continues to struggle in finding its niche in the marketplace. (For disclosure purposes, I am a shareholder of Google.)

Another example I like to use in how a market leader can find itself in trouble by losing sight of its competitive advantage is Palm, Inc. While Palm was not the first to introduce touchscreen smartphones, it was the first to produce this innovative product at a competitive price. When I purchased my Palm Treo in 2005, there no product such as the Apple iPhone or Google Droid (Research in Motion’s BlackBerry was Palm’s primary competitor in the smartphone sector at the time). Fast forward five years and not only did Palm not stay ahead of the competition, but the Sunnyvale, California-based company was acquired by Hewlett-Packard on July 1, 2010.

The point here is that while an entrepreneur may think his or her business idea is truly unique, the reality is that a comparable service or product will enter the market sooner than most entrepreneurs realize or anticipate. How will your company remain a leader as competitors enter the market?

Another common mistake is that some competitors possessed gaps in their management team. I was mystified to see a few contestants lacking people in key roles such as Chief Executive Officer or General Manager. I understand that some people may be the creative leader of the company, how can they expect to receive financial support from an investor if there is no one to lead the company? I can attest that value of any company is not the service or product per se, but the people leading the day-to-day operations. One point I often stress in my entrepreneurship seminars is that investors invest in people more than they invest in ideas. Whether we realize it or not, each one of us has million (or billion) dollar ideas. However, very few people in the world have the ability (and a little luck) to implement their ideas.

Each team presenting at the tradeshow provided a one-page handout outlining the company’s mission, deliverable, value proposition, financial strategy including amount sought from investors, and other pertinent information. This is a small issue, but I am surprised by the number of competitors who failed to provide their contact information (phone number, email address or website) on their handout.

I am pleased to see Seattle University support entrepreneurs through this worthwhile competition. Information about the 2011 competition may be found here. Any enrolled SU students or alumni can participate in the competition and a team participating in the competition can consist of one or more contestants and include non-students. However, there must be at least one SU student or alumnus on each team. The winners of the 2010 competition are:
  • Grand prize ($10,000): Greenstone International (pictured above);
  • First runner-up ($2,500): Safety Innovation;
  • Second runner-up ($1,250): Sweet Stache Brewery & Alehouse;
  • Second runner-up ($1,250): Broadspeak;
  • Social Impact Award ($2,500): Authentic-i;
  • Small Business Award ($2,500): Past & Present; and
  • Community Choice Award ($250): Past & Present.