From emerging markets’ leapfrog potential to the unintended consequences of bovine digital identity, Grant Cleveland lays out a vision for why innovation programmes need to incorporate individual responsibility into their design criteria.
In 2006, Genesys Venture Capital director, Grant Cleveland, led the launch of MXit.com, which went on to become Africa’s largest social network. It is a success story which gives him a unique insight into how technology and emerging markets can collide. Tomorrow Augmented caught up with him to discuss what lies ahead for emerging markets, and importantly, how best to ensure that we end up with a future that benefits as many people as possible.
Digital technology is rapidly changing the world. But, much of the change is currently being driven by developed economies. Are we likely to see an even greater divide being created as a result, between the developed and developing world?
Grant Cleveland: I think it is likely to be a mix of both scenarios. In my opinion India provides a good example of what could happen. In 2009 the country launched a project to issue all citizens with a unique biometric identity number that can be authenticated by fingerprints and a retina scan. In 2016 the country passed the Aadhaar Act, which gave legislative backing to the project. Today the scheme has registered over 1.1 billion people. While this is not, in and of itself, unique, the fact that it has been backed by a government and rolled out across a population with such dire poverty is remarkable. More importantly, its goal of using it to enable other services to benefit the population is impressive. It has meant that the government has been able to drive banking and mobile phone adoption by allowing anyone with an Aadhaar number to open a simple transactional banking account. They see that as an enabler for driving education and improving financial literacy. The government effectively wants to try and lift the poor out of poverty, by using digital technology as a way to drive education and massive social reform.
The added benefit is that India also has quite a significant portion of GDP trapped in physical assets and the informal economy, which it is likely to be keen to change as well.
Grant Cleveland: Exactly, and what is interesting is that this is one of the first real top-down, country-led initiatives that I have seen which is genuinely trying to use digital technology to drive social change and improve the lives of every person in the population. I think it is a fantastic test-case to watch over the next decade or so and see what the real impact is going to be for that population of people and how, as a result, India might see a step change in its global position, technology wise.
I believe, at a country level, those who do manage to adopt and adapt to technological change are going to create a competitive advantage for themselves which will see them differentiate themselves in the same way that companies have been doing for the past 20 years. Those who fail to adapt will eventually be eclipsed by other, more flexible countries.
Emerging markets often have fewer legacy systems to overcome, when rolling out new technologies. Can this provide an advantage as the country in question is able to move to new technology more easily?
Grant Cleveland: I believe that starting from a blank canvas can often be very advantageous. Just look at the telecommunications sector. These companies have traditionally provided a lot of physical infrastructure to support their networks, which means they have extremely high costs. All of them are now battling to improve their average revenue per user numbers, which is one of their key metrics for profitability and something that is difficult to improve when your fixed cost base is high and everyone has a device. The next step in communications innovation is to provide mobile and internet reception directly via satellite. This is something that four or five companies are working on and something that has massive implications for countries with a large geographical area to cover and low population density. To not have to lay infrastructure to get to those places would be a real win. So, I think there are new technologies coming to market that will be well adopted in countries where they don’t have legacy systems in place.
Other than the satellite internet connectivity, are there other technologies that are likely to do well in this space?
Grant Cleveland: I think the banking and financial services space is ripe for new players to come into the market. There is a massively underserved population within emerging markets who do not currently have access to banking services. These ‘unbanked’ parts of the population are not a priority for incumbent banks with large infrastructure costs and significant branch networks. I do think the newer mobile-first challenger banks that are entering the market at present could do extremely well in emerging markets. I think healthcare and provision of basic services in that category is another space that has not been tapped as much as it could have been.
However I think the biggest impacts within emerging markets are likely to be unintended, to come from the yet-to-be-discovered implementation of technologies. For example, an interesting project with huge emerging markets implications that I have been working on is one that started with two researchers from Imperial College in London. Researchers have identified that a cow’s muzzle has unique markings on it in the same way a human fingerprint does. This means that they are now able to take a photograph of a cow’s muzzle and link it to the tag on a cow’s ear and, in that way, digitally link a cow to a specific identity. In developed countries this has big implications for the meat industry because until now, if there was a problem with a meat supply chain the closest the industry could come to identifying the animal was its herd, which meant that they would often have to destroy the herd, to solve the problem. However in an emerging markets context the implications are far deeper. Cows are often used as a form of trade, they are used to pay dowries, for example and they are a big store of wealth. And, as a result, there are associated theft problems which involve the police services who are responsible for holding cattle until they can be identified and returned to the correct owner. So the ability to correctly identify animals has a huge impact for a range of groups all the way through the value chain. So, digital technologies are now changing seemingly unimportant or low value sectors, which actually affect a wide range of people and the halo effect of that should not be understated.
How does one manage the unintended consequences of technology and ensure they err on the side of positive rather than negative change?
Grant Cleveland: All innovation projects have unintended consequences. It’s how you manage them that counts. I think it comes down to two key points: First, senior leaders in organisations large and small have to recognise that they need to instil a sense of corporate responsibility into their teams. Second, If you have a forward-thinking CEO that recognises the fact that digital innovation is important for the entire organisation and plans into that world view, it is easier for employees within that business to recognise that new and unexpected outcomes may be a threat but could also be an opportunity. As much as there is science involved, I think it is about recognising that the process of digital innovation is also a creative process and is not always a clinical, open-and-shut thing. So, getting very senior buy-in is as important as any technical detail that may be required to get a project right. There is a cultural aspect to it that is perhaps counter to companies with very strong hierarchies and, as a cultural challenge, it requires some work to adapt to that mind set of openness.
Is that why it is important to take an active view of digital developments?
Grant Cleveland: I think it is important for organisations to have a strong sense of their own culture and what their values are. If they are operating purely for profit, then the decision-making about digital projects might be very different in their outcome from, if the company is operating for long-term profitability with customers’ best health as our core priority. Those two sets of values and how well they are communicated both internally and to clients are as much part of an innovation programme as any other factor.
As people become more used to technology, there also seems to be a growing sense that technology companies need to be contributing more than just profits.
Grant Cleveland: I think there are two parts of it, one is to do with scale, the other to do with purpose. In decades gone by, it was difficult to build a multi-national organisation that operated globally. Now you can effectively do so from your computer. The way Uber has grown into one of London’s largest employers and the number of people it employs across multiple cities make them a significant force, but it doesn’t necessarily have a sense of social or corporate responsibility that resonates with people in each industry or location in which it operates. We saw a backlash to this toward the end of 2017. Previously, multinationals would have had more of a local presence, they would have been built by a more local team and would have been more in touch with local values. And, I think it is a requirement for organisations that rapidly achieve such significant scale to recognise that they must be responsible for the communities in which they operate and ensure they are serving to benefit those communities over time otherwise eventually there is push back.
In terms of purpose, because the technology and the products that are developed off the back of it can be scaled so rapidly, organisations need to know quite early on what their purpose is beyond simple profit. My own agenda is to get people to recognise that we all need to move toward taking responsibility for the world we want to create. Very often it is groups of two or three individuals who start a small business that goes on to reach millions of users; that change the future. And, often, this means that these world-changing companies remain then in the control of those same two or three individuals. As a result, I am very much of the opinion that there is a bottom-up mind set shift that needs to occur around ethics and responsibility. There needs to be an understanding of the broader context when businesses are set up to ensure that technology becomes useful for all people, that it benefits everybody.