When Being Disruptive is a Good Thing ? (Part 2)
Editor’s note: The posts in the “When Being Disruptive is a Good Thing” series were originally published as Guest Posts by Mark Beckford, before he joined NextBillion.net’s team as Staff Writer.
In general, the penetration of tech products into emerging markets has not made a significant impact in closing the digital divide, even with higher overall growth rates than typically found in mature market countries (the mobile phone being the exception).Â Â Some argue it is the lack of one or more of the “disruptive” product attributes (affordability, ease of use, value).Â Maybe.Â
Again, looking just at PC affordability specifically, there have been a multitude of ventures that have aimed to close the PC divide by delivering very cheap, and sometimes free, computers.Â None of these ventures have taken off in a large scale, at least those that I am aware of.Â Please point me to any that are successful (e.g., that have shipped millions of units in at least 5 or more countries on different continents).Â Â
I think the key is that the business model strategy is often given a lower priority than product development.Â The business model that is needed in emerging markets is very different than what necessarily works in traditional markets.Â
Disruptive Business Models
Take pricing for example.Â Not the actual price, but how the “pricing model” works.Â One of the reasons mobile phones are so successful is that it meets the qualities of a disruptive innovation and has a business model that allows very poor people to purchase phone service.Â In most emerging markets the prominent method of payment is through pre-paid cards vs. subscriptions.Â Safaricom has disrupted the billing model even more – they bill in seconds vs. minutes.Â
Safaricom is a poster child for a company that seems to understand how to create a successful business in Kenya for the BoP.Â Â I wrote an article here, if you are interested in learning more about Safaricom’s disruptive business practices.
So you’d think that a similar model could work for the PC –Â offer a pay-as-you-go service for the PC through a subscription or pre-paid cards.Â Microsoft introduced such a service called FlexGo in 2006 and it has yet to scale beyond small trials.Â Securing the PC and its components against resale (a PC is an open device with multiple replaceable parts, unlike the mobile phone) and getting banks to offer financing services are just two of the challenges plaguing the project.Â
Bottom line: the business model has to be appropriate for the specific device or solution.
Beyond the pricing model, a disruptive strategy may be needed to think about how a company gets the product to the customer (at Intel, we called this channels).Â Outside the big cities in many developing countries, especially Africa, there are little or no retail outlets for PCs.Â How do you get PCs to a customer when you don’t have a channel?Â
One out-of-the-box idea is to sell PCs through the post office.Â We at Intel looked at doing this in Egypt with a government joint venture to increase PC access in areas outside Cairo and Alexandria, the two major cities in Egypt.Â There are few PC stores in the smaller towns and villages, but there is always a post office.Â We started a project to get PC’s into the post offices where people could purchase the PC directly.Â
Finally, I’d like to stretch the definition of a business model to include how the company is set up and functions.Â Should the company be set up as a for-profit enterprise with the mission to create a successful, high growth venture that brings a return to its investors (e.g., Intel), or should it be setup as a non-profit that depends on donations and grants to fund its operations even when selling an actual product (e.g., OLPC)?Â
I have made the argument that OLPC would be much more successful in achieving its objectives if it was a for-profit enterprise, something I blogged about, which was then picked up by OLPC News.Â By the virtue of the number of comments and their intensity, I clearly struck a nerve.Â Or maybe I’m wrong… maybe the most successful “company” model is a hybrid between a for-profit and nonprofit.Â This is something I would like to explore more in future posts.
I posit that in addition to a disruptive innovation and business model, you need “disruptive leadership.”Â I believe disruptive leadership captures the essence of what it takes to be successful as a business leader that is trying to crack the secret formula of growing in very dynamic emerging markets. I didn’t invent the term “disruptive leadership;” just Google the term and you’ll find interesting articles, like this one by Edward Marx in which he states:
“If I am not upsetting the proverbial apple cart, then I am adding little value. By merely maintaining what has been done in the past, I will bring about little if any gain.Â Don’t misunderstand. This is not about stirring the pot for the sake of stirring the pot. Disruptive leadership must be purposeful and backed by a vision.”
Another good one by Ted Santos talks about how good leaders create problems:
“What separates extraordinary leaders from managers?Â One way to distinguish the difference is to compare the mindset of leaders and managers.Â Managers are great at solving problems.Â Leaders, on the other hand, exude their greatness by creating problems.”
A disruptive leader stirs the pot, thinks out of the box, is willing to challenge the norm, thrives on change and uncertainty, and most importantly of all, can navigate the turbulent political waters that inevitably are created in reaction to the various disruptive strategies and leaders.Â A disruptive leader creates a company culture that embraces all of these concepts.Â
These leaders are few and far between.Â Â I loved a quote from a recent article in the Economist on the career of Subramanian Ramadorai. Mr Ramadorai believes dealing with adversity only makes companies stronger. “If everything is peaceful, you don’t push yourself,” he says.
“Adversity” has negative connotations, just like the word “disruptive.”Â But as Mr. Ramadorai says, “adversity makes you stronger”.Â I think being disruptive does too.