How To Connect More Users

Even though mobile phones are almost global, only about 12 percent of people in emerging economies have data connection. What is even more surprising is that 4.3 billion people still do not have access to the Internet.

These unconnected people are living in countries that have underdeveloped economies with digital infrastructure that is lacking as well. However, there is huge growth potential if there could only be connectivity. I believe that with the right ICT and strong policies that are in support of innovation and fair competition, these countries can connect their people to the rest of the word and narrow the digital divide.

download (2)Most importantly, a broadband infrastructure with wider coverage and faster speeds must be developed. These countries need to see that broadband is the critical foundation of national infrastructure that will only increase economic growth and raise the standard of living.

One way that the infrastructure could be built is by Public-Private Partnerships (PPPs). Malaysia has already done this – regulators created a framework that ensured competition with equal access. The result? The cost of digital entry for citizens was decreased, fostering innovation and competition among service providers – very successful, in my opinion.

While these networks are being launched, telecom operators need to keep costs low. They could do this by sharing optical fiber and infrastructure with power and utility companies. When you take a look at the deployment cost, burying the fiber optic cables and conduits underground is usually 40 percent, but can be up to 70 percent of the total cost. These high costs make the Internet access more expensive to its end users.

There should also be new mechanisms for allocating radio spectrum that can increase supply while also reducing the cost. This is actually a very important issue because most of these countries will have to increase their available spectrum (the basis for high-speed mobile broadband) from 50 to 100 percent over the next five years.

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Something else that would help are the development of more applications to aid their lifestyle. Apps are what drive the demand for connectivity and create new business models. M-KOPA for example, allows Kenyan households with no electricity to purchase their very own solar power system and make daily micro-payments. If the government can create a level playing field that lets entrepreneurs to devise new solutions without having to worry about monopolistic competitors or too much regulation, there could be great benefits to local users.

It will take governments, operators, technology providers and application developers, but we can connect everyone in the world and we will.

How Chinese Companies Win the Customer

China’s greatest success has been in industries that are very customer-focused such as household appliances (39 pdownloadercent global revenue), Internet software (15 percent) and smart phones (10 percent). In these sectors, the majority of the growth is from local market sales – the size of China makes domestic leaders, global leaders.

Based on the enormous size of the Chinese consumer market, appliance makers like Haier and Internet companies like Tencent, Alibaba and Baidu have grown to be world leaders. However, the Chinese consumer market is also quickly moving. The disposable income of its consumers has risen by 10 percent every year for over a decade and now 85 million households have joined the consuming class. In the Chinese market, innovations are rapidly scaled up and commercialized. So, Chinese companies have learned how to adapt global products by tweaking designs and better addressing the consumer needs. A new generation of Chinese entrepreneurs have been solving consumer problems in a unique way – the Chinese way.

China has a highly fragmented retail industry and this harshly limits decent choices for consumers if they are outside of major cities. However, Chinese entrepreneurs saw this as an opportunity and build a world-leading e-commerce industry, Alibaba. It has grown to be the world’s largest online market place based on the value of the merchandise sold – $349 billion last year. Further innovations by Alibaba is Alipay, a payments system and Ali Finance which helps to finance small scale suppliers that don’t have a traditional banking system.

Rethink Business Models

Chinese entrepreneurs greatest flair has been inventing business models. To understand, I’ll let you know that in most parts of the world, 60 to 90 percent of revenue for online businesses comes from advertising. In China, this is not the case; their advertising industry is actually only about a quarter the size of the US industry. Chinese companies needed to create new business models to monetize the web traffic. One company, Tencent generates 90 percent of its revenue from online games, sales of virtual items on social platforms and e-commerce. The result? The average revenue per use is $16 compared to Facebook’s $10.download (1)

Cheaper, but Better

China is known for creating products for about half of what other countries charged, but only at about 80 percent of the quality. With the rise of a wealthy class in China, now they have to create cheaper, but better products to win their consumers. A Beijing-based market phone maker, Ziaomi has become one of the world’s most successful startups. Xiaomi phones usually cost half of what top products of global brands cost for the same and even better hardware features. How do they do it? Ziaomi has achieved this by embracing business model innovations like online only sales and risk sharing with supplier. Now, Xiaomi is the largest smart phone player in China and is preparing to enter foreign markets.

Interns – Our Disruptive Innovators

“Compared to other generations, millennials tend to be more collaborative, are accustomed to working in teams & have a passion for pressure.”
 Joanie ConnellFlying Without a Helicopter: How to Prepare Young People for Work and Life

I rememdownload (3)ber when I was younger how my dad would carry conversations with those younger than him. He always had a great deal of life in him and could easily embrace and relate to anyone. The way that he connected to college students, new graduates and those that have been out in the workforce for a few years made an impression on me – I wanted to be able to connect with them like that at his age too.

The time of the year that I look forward to most is the summer – when I get to work with interns; many of which are millennials and of the iGeneration. Some white-collar folks see internships just as obligations or society; others only give interns very specific business operational projects that have already been started for them. However, I don’t think that either is beneficial to them and they really aren’t the most beneficial for me either. What I like to get out of interns is their freshness of their minds.

Throughout life, we are encouraged to strive towards key objectives that maximize outcome and minimize waste. However, we get comfortable and learn to make decisions that ensure safety, but still progression within these valley walls. We get used to it and are left to circle in this local thought process without the idea to push outside or further.

This is why millenials are so special – they don’t feel the gravity of the same constraints that we fall accustomed to. Their minds can help to lead companies to exceptionally innovative practical solutions, a certain entrepreneurial quality. So, I try to work with them to frame the business challenge enough so they understand and then get out of their way. The end result will always be surprising, from an angle that never occurred to you before.

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The best word to describe each new generation of the work force is “disruptive innovative” that was coined by Harvard Professor, Clayton Christensen. The diagram to the right demonstrates this concept. The blue line is companies with people that are experienced with status quo and work with constraints. They are the kings of sustaining innovation. The green line is companies that enter into the market without experience like the blue chips, but still manage to disrupt the market like interns in big organizations. Think about the electric utility industry. For each cash cow that goes back centuries, there are new green lines like Nest, Tendril, oPower and many more that are not traditional in any way.

Take interns seriously because in my opinion, they are a business opportunity. They have sculpted a new global view that I or you may not have dreamed of yet. Be thankful for their work they do for you and never take them for granted. A special thank you to all of the interns that I have worked with at http://www.advisorabbate.com/

Digital Technology and a Healthy Global Economy

Boston University School of Management - IT

A substantial contribution to the overall growth of the global economy could come from the increased use of digital technologies. The greatest impact would be realized by emerging markets, but the growth would have a reach across many countries, with a $1.36 trillion output to be realized by 2020.

According to a recent study conducted by Accenture and Oxford Economics, digital is defined through an array of strategies, which include the volume of transactions conducted online, the use of cloud or other technologies to streamline processes, the pervasiveness of technology skills in a company, or an economy’s acceptance of new digitally driven business models. Organizations who transition to fully digital platforms, essentially decide to implement “digital at the heart of their strategy and enterprise to transform every part of their operations, including R&D, supply chains, and the use of cloud, analytics and CRM technologies.”

While digital technology is extremely vital to the growth that could be realized in the next three to five years, it shouldn’t be seen as the only opportunity for growth. This is evident in the estimated numbers, as the growth realized in dollars is less than two percent of the global gross world product. This doesn’t diminish the amount of growth, it merely means there is an enormous amount of room for other driving factors. Innovation is extremely vital. It’s in the DNA of any effort towards growth. But with it comes the demand of education, new skills and training. This is oftentimes the contrast to growth, regardless of the platform. Simply put, it’s out with the old and in with the new and unfortunately this type of change isn’t easily implemented nor embraced.

Source: Accenture

Source: Accenture

Digital technology is a part of our everyday lives. When you break it down between personal and business, it’s easy to see how much of an impact it already makes and how this impact draws a clear line to what the future could hold. It’s a part of what we read and how we choose to access this information. It’s in where and how we shop and the processes in place to pay for those purchases. For businesses, it’s in the collaboration opportunities and knowledge sharing. It’s in market penetration, trend analysis, process improvements and overall cost savings. There is truly no end to how digital technology could continue to improve the economy.

The growth behind the digital technologies movement isn’t merely about automating processes. Of course this method would have impact on productivity, as well as overall performance and efficiency. But with the evolution of digital and the undeniable role it plays across various facets of business, organizations will essentially have to transform their overall operations. They will have to embrace digital in every aspect of their business, in order to remain a viable competitor within their key markets. This is why it’s important to note, when it comes to theorizing the impact of digital technology on global economy, that the perspective centers around one keyword – could.

Enough Oil to Make a Country Completely Self-Reliant

The price for oil has fallen at a somewhat rapid pace over the past seven months, causing the Energy sector to take quite a hit in revenue. That said, there is no denying the multitude of benefits to both consumers and many businesses. Consumers are able to save more money. Businesses are experiencing lower energy costs and realizing an increase in their profits, thus paving the way for governments to benefit from more taxes being paid. This also could open the floor up to M&A opportunities for some companies.

There is no denying that the underlying cause in the declining prices is partly due to the struggling economic growth, which in turn reduces the demand. But the other obvious factor is self-production and that’s what has benefited the US.  For nearly four years, oil prices around the world have held at about $110 a barrel. Both Brent and US crude oil have fallen below $50 a barrel which is a first since May 2009. The supply from America is up roughly four million barrels a day, since 2009. This increased supply, coupled with banned crude exports and plummeted American imports, has contributed to an overwhelming glut on world markets.

The interesting side of it is that many exporting countries have decided against curbing their production, as a means to keep prices high. Many would argue, however, that this might not be such a wise move. The increased American supply is no doubt largely attributed to innovative techniques for fracking and drilling. Shale production methods that are flexible undoubtedly make it easily responsive to price changes. All this coming together would indicate continuous gains in productivity, with no definitive end in sight.

Crude Oil - Barrel price. Reuters

Crude Oil – Barrel price. Reuters

Though major exporters have remained steadfast on their refusal to cut supplies, the International Energy Agency (IEA) monthly report says continued US production and falling prices could finally force their hand. “On the face of it, the oil price appears to be stabilizing. What a precarious balance it is, however,” the report said. “Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly.”

The real question remains to be can the US become self-sufficient in the midst of the oil debate? Though a simple question, the answer isn’t quite as easy. Yes, the US is testing their oil storage capacities to the limit. Yes, there is a clear line of connection between the falling prices and the boost in the economy. But the reality is that the trend of increased daily barrel production would have to continue for the next decade for the US to become energy self-sufficient. Though a very ideal situation, it might be fair to say that the optimism far outweighs the reality.

From Entrepreneur to Business Owner – Surviving the Transition

Entrepreneurs are masters of economic art. They are most often resourceful and able to turn ideas into successful products or services. Business owners are more of a capitalist mentality. They are calculating when it comes to risk, focusing on the real objective rather than the creative idea. To transition, from one to the other, you must be able to do both. To put it simply, a successful business owner must approach the development of their business and their strategies with an entrepreneurial mindset. Otherwise they might not see their idea come to fruition.

Having a diverse set of skills could be considered textbook when it comes to being a well-rounded business person. However, it becomes vital to overall success during the growth and transition. Not only must you have the desire to take things to the next level, you must have the attitude and the discipline. There is a point in every business journey, where things start to become a bit grey, in terms of direction and decision-making. This is usually where you start to see the separation of the businesses that might be successful in the end and those that end up failing. This is where the risky entrepreneurial side has to trump the stable, small business side.  In order to experience a continuation of growth, you must continuously take on certain amounts of risk. When there is an unwillingness to do so, there is an almost certain guarantee that you have stifled your business’s opportunity for success.

Source: Huffington Post

Source: Huffington Post

Some experts say that you must choose to be one or the other, answering the question: “are you a business owner or an entrepreneur?” Others will say it is the individual who inevitably decide that one path defines them better than the other. Their passion for new ideas, versus their desire to nurture just one and be a part of its growth and day-to-day, could be their answer. But then there are those who have taken an idea, built a plan, made the investment and sacrifice, took the risks and in the end, had the most rewarding experience of surviving the transition from entrepreneurial idea to successful business owner. These are the people who were able to submit to and endure the mindset change that is required to go from creating the idea to building the business and then ultimately maintaining it successfully.

There are a number of entrepreneurs who have survived. They have seen their innovative idea successfully evolve into a self-sustaining business. These business owners completed the journey from entrepreneur and are either happy to stay where they are or eager to pass the baton and start down the path to their next big idea.