Why we need economic dashboards

May 2, 2009 — 3 Comments

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This is the third of a series of pieces originally posted at Fast Company.

A significant difference between those of us fortunate to be living above the poverty line and those unfortunate enough to be at the “bottom of the pyramid” is that the ‘wealthy’ can afford to consume. Being a “useful” member of a consumer society requires the consumption of products and services not directly necessary to survival. The very poor do not generally have that choice.

I never really appreciated that distinction until I began to understand what was so powerful about the concept behind organizations like Kickstart.

Founded by Martin Fisher and Nick Moon, Kickstart designs and distributes hand and foot-operated water pumps in West Africa. Unlike many organizations dedicated to alleviating poverty in struggling areas, Kickstart does not give the pumps away: it sells them.

Fisher believes that farmers who pay for pumps will have a far greater commitment and will devote a far greater effort to making their fields produce than those who might have received one as a donation. Kickstart’s numbers are amazing. The return on investment for a smallholder farmer can be hundreds or even thousands of dollars in one year–enough to put children through school or build a house. Kickstart has created more than 80,000 new businesses and creates $88M a year in profits for African farmers.

What if every transaction was like that for rich and poor alike? What if we could measure profit across several dimensions, and we engaged in transactions or interactions that clearly provided a profit on one or more? For the poor, those profits are likely to remain in the realm of economic value or the satisfaction of basic needs. For the rest of us, those profits might more appropriately be measured along the dimensions I discussed in my last post: Learning to Measure Participation.

In the West we tend to make a strong distinction between consumption and investing. Consumption only creates value for the minority, while theoretically investing can create value for every investor. If we thought of every interaction as an investment with measurable returns, might we think and act very differently? For example I may pay to subscribe to a community that gave me access to a network of like-minded creative business executives if it meant I could have high quality conversations with that community. There are lots of examples of people doing this already such as the World Economic Forum.

I may take what I learn from my new- found network of creative business executives and develop it into a point of view that I can sell as part of a consulting offering to my clients. I am trading on my knowledge-based capital.

Of course if we think about it, these kinds of transactions and exchanges are going on all the time, except that we don’t keep very good track of them. As I argued in my last post, I think that in an information society we can keep track of them and hence measure the returns we get.

This has some interesting implications. First, we need better tools for keeping track of various kinds of value at an individual, organizational and societal level. This seems like an interesting opportunity for new kinds of products and services–a kind of economic dashboard. Second, this all relies on information transparency. If you can’t see the data, then you can’t measure the returns. We might ask our governments to focus less on information privacy, which seems like a lost cause to me, and more on information access. Why should a corporation know things about me that I don’t know about myself? I wonder whether we would have gotten into such deep trouble in the current recession if we had done a better job of information transparency?

Ultimately managing our own social networks, our reputations, and our influence, and leveraging our ideas won’t just be a cool pastime carried out by the technorati. It will be essential to survival in a participation economy.

Tim Brown

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3 responses to Why we need economic dashboards

  1. No doubt this is an excellent blog with an original POV. The consumption vs investment argument is excellent. But the question is do we always have to measure? Can we really measure quality? And measure the quality of life? Why should we be so obsessed with numbers? Small changes bring about often dramatic and lasting changes. So how do we measure the value of the small change. Haven’t our overriding obsession with numbers brought us to this present crisis?

    The contribution of organisations like Kickstart is noteworthy. But do we mean that a pump would bring economic prosperity to the developing world? How much do we pay for a cup of coffee in Europe? 3 euros. How much do we pay to the farmer (as given in your example) for producing the coffee seeds needed for the same cup of coffee? 0.001 euro. So, who is economically more prosperous? And why?

    So, can such disparity be overcome by the supply of hand and foot pumps and that too at a cost (I of course agree with the committment part against a value)? Isn’t this disparity the fundamental reason for this deadly recession?

    The answer might lie somewhere else!

    This i think is partial design thinking. We have failed to take the ‘whole’ into consideration. Better results might come by doing so. More effort is required for such design thinking.

    regards,
    dibyendu

  2. Hi Tim,

    I love this article.

    Just a reaction on the Kickstart example –

    The popularized notion has been that there’s a huge “Fortune at the Bottom of the Pyramid” — thanks to a thought-provoking book of the same title, something that has definitely influenced a lot of my thinking and the work that i currently do.

    However, it seems to belie the fact that people at the BOP are best-served as consumers, as a large untapped market. But that seems to undermine true social development.

    The best way to view the BOP is to see them not only as consumers, but also as participatory producers. The millions — nay, billions — who make up the poor are not only a market; They should also be empowered to create markets.

    This is what Kickstart does — it sells a concrete product – the pump. But it does so not as something to be consumed, but an investment that will yield returns. The poor not as consumers, but micro-investors — and hence, economic producers.

    Here in the Philippines, the social enterprises i’m a part of are trying to accomplish a similar goal. With Rags2Riches (http://www.rags2riches.ph), we essentially work with a community that resides in a garbage dumpsite in order to upcycle factory-thrown scrap cloth into high-end designer bags and accessories — in so doing, ‘the poor’ are making expensive products loved by ‘the wealthy’. For Hapinoy (http://www.hapinoy.com), we are organizing thousands and thousand of micro-retail shops — known as sari-sari stores here in our country — with the eventual goal of eventually helping out community micro-producers by providing a venue for them to sell their goods.

    I’m glad that this level of conversation on the BOP is also permeating the design thinking world, as evidenced by your post.

  3. the last quarter of 2009 seems promising as we have seen lots of signs of econic recovery against the massive economic recession. i hope that in 2010 all our economies would be back on track. recession really sucks.

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