What Rhymes with Sustainable Development? Business Models!

What can we do that would make lives better for millions of poor people around the world without getting into their economies in the way that we’re doing by giving huge sums of money to their governments?”. This is the question raised by Nobel prize winner Angus Deaton when looking at the often ineffective, or even harmful, consequences of foreign aid on the economic growth of developing countries – as proposed in figure 1.

In his awarded research, Deaton argues that the model of giving foreign money just does not produce sustainable results, because it changes the relationship between a government and its people: since citizens hold the purse strings, they have a certain amount of control over their government; if leaders don’t deliver the basic services they promise, the people have the power to cut them off. Foreign aid can weaken this relationship, leaving a government less accountable to its people, the congress or parliament, and the courts.

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Figure 1. Aid and Growth in Africa, source: W. Easterly, “Can Foreign Aid Buy Growth?”

An institutional problem is also playing a role: aid agencies are under intense pressure to produce specific, measurable near-term results. Therefore, project managers and funding institutions tend to prefer “cosmetic” reforms to meaningful measures of success in the medium-long term (International Studies Quarterly, 2017).

These are just a few of several arguments that try to explain why foreign aid has oftentimes failed to deliver the expected long-term progress in developing countries. Ironically, “Sustainability” is defined as “the ability to be maintained at a certain rate or level”, suggesting that an initiative should last in time and be, or eventually become, self-sufficient. This is our stimulus to humbly propose a new perspective on sustainable development. This is what triggers Bridge17.

It’s about actionable value logics

With Bridge17 we highlight the essential role of digital business models in generating meaningful and long-lasting solutions for the 17 sustainable development goals. Specifically, we believe that business models are the fundamental trait d’union, or bridge, between potentially impactful digital technologies and pressing world issues.

But what is a business model? And what is so digital about it? A business model originally explains how an organization creates, delivers and captures value. What?! In other words, it describes the core logic of a certain business in generating monetary and non-monetary value for itself and its stakeholders. A business model can be considered as digital when it’s based on the internet and related technologies, such as Internet of Things, Big Data, blockchain, etc. A typical example for a digital business model is UBER, where the novelty is not much in the service but rather in its new business logic: connecting asset (car) owners, the drivers, with people moving from A to B, the passengers. This business model is digital because it’s based on internet, smartphones and cloud technologies as a core (figure 2). By the way, is UBER therefore positively affecting sustainable cities and communities (SDG 11)?

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Figure 2. UBER Business Model, source: www.businessmodel.guru

Basically, designing a digital business model is about finding the best combination of specific technologies that makes all stakeholders happy, from customers to society, from suppliers to public institutions. Taking this to a macro level, if we can design several “small” digital business models for specific world issues, the overall economy benefits and develops. But that’s not all…

Why digital business models matter

…when presenting a solution, we are driven by three main reasons why innovative digital business models are essential for sustainable development.

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Self-sustaining – Design a logic for sustainability

A successful business logic, is a logic that is iteratively designed, that grows in time and that eventually sustains itself. A company does not design a business model for lasting until the next crisis but for adapting, innovating, testing and growing again its business. A company sets a target and a strategy to achieve it but the environment (economy, politics, technology and society) changes, needing the business model to promptly respond. In short, the business model perspective is what can help NGOs, governments, people in need and private sector to design a sustainable and flexible logic for every development initiative.

Explicit – the right technology, the right way

Digital technologies carry the big promise of making the world a better place – see the endless expectations around blockchain to democratize the entire economy. However, the enthusiasm around a technology needs to be translated into value for our life. If not adopted in a strategic way, the technology is likely to fall short. One example that faced the hardships technology adoption was the introduction of the 100 $ laptop (one laptop per child), which held the promise of education for everyone through technology. However, the initiative took a bumpy road and faced headwind pushing from teachers, parents and governments in several countries. For each sustainable development initiative, we need to consider the human factor as it plays out in different dimensions: the people in need, who want to improve their lifestyle; businesses that attempt to grow, governments that want to claim success, and so on. Thus, it is essential to explore and understand the potential impact of a technology on the involved humans and institutions. The business model lens makes this impact very explicit and helps to identify the most fitting and promising logic before large investments.

Holistic – no one is left out

A business model perspective helps to rethink roles, contributions and value of all of the players involved in the development initiative and therefore affected. The dominant idea of sustainable development and foreign aid can be broken down by business models. For each situation faced, a business model helps to understand how a player could contribute by means of capabilities, financials, customer access, regulations, technologies and other resources. In the best case the result is a model where everyone can contribute and be aligned on one goal, because everyone is profiting. Finding the best business model is about reaching the golden medium, where each player can see more gains than pains.

Building bridges

Digital transformation continuously leads to new business models. New business models are disrupting several industries worldwide. But what about sustainable development? As Bridge17, we believe that digital business models are the missing piece to switch from a linear to an exponential impact of current foreign aid.

Bridge17’s approach breaks down institutional barriers found in conventional foreign aid practices and offers an alternative to centralised development efforts which ultimately impede the potential for shared and sustainable solutions. Particularly, we believe that this is the best time to engage the private sector in playing a key, responsible role in helping to reach the sustainable development goals, through financials, technologies and best practices, investing in innovative solutions.

From our side, we commit to build bridges among stakeholders, inviting them to reflect, discuss and act on new points of view. People, governments, NGOs and businesses have the chance to design the next digital business models together, providing 17 answers to Deaton’s question.

 

In the picture, an example of solid, long-lasting bridge: Mehmed Paša Sokolović Bridge, Bosnia and Herzegovina. UNESCO World Heritage 2007 for “the unique elegance of proportion and monumental nobility of the property as a whole bear witness to the greatness of this style of architecture”. 

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