Skip to main contentSkip to navigationSkip to navigation
Woman Speaks On mobile phone
Mobile phone banking has spread fast around Africa and transformed millions of lives. Photograph: Per-Anders Pettersson/Getty Images
Mobile phone banking has spread fast around Africa and transformed millions of lives. Photograph: Per-Anders Pettersson/Getty Images

Reverse innovation brings social solutions to developed countries

This article is more than 11 years old
Products designed for developing countries could provide models for microfinance and healthcare in developed nations

Social entrepreneurship often focuses on finding solutions to problems in the developing world. But, as the European Union battles with the ongoing recession and the US experiences rising levels of poverty, social enterprise solutions are increasingly appropriate in advanced industrial countries as well.

Thane Kreiner, executive director of the Centre for Science, Technology, and Society at Santa Clara University, says that reverse innovation could one day "help us fix what's broken in our own backyard."

"Some innovations that social entrepreneurs are bringing to the developing world help alleviate conditions of poverty, like lack of access to electricity for lighting. But some of the solutions would be extremely beneficial for us to adopt in the developed world," he says.

"If you can serve the poor profitably, you can disrupt existing markets."

Healthcare has great potential for reverse innovation, especially as costs soar ever higher, says Kreiner.

"The kind of learning that we see can inform ways that could really transform delivery of services and goods that right now are quite expensive."

The US government spends more than any other OECD country on its healthcare system, even though the World Health Organisation has ranked it 37th in performance.

The Aravind Eye Care System established by Govindappa Venkatswamy in India in 1976, has performed 4 million operations thanks to its "McDonald's-style" high volume assembly, says Kreiner.

Aravind also developed the intra-ocular lens, manufactured by its subsidiary, Aurolab, at a fraction of the cost of imports.

SalaUno, a for-profit social enterprise based in San Francisco, has now replicated the Aravind model in Mexico. Over the past year, SalaUno has carried out 133 cataract operations a month - free of charge for those who cannot afford the treatment.

SalaUno is one of 160 social enterprises in the global social benefit incubator (GSBI) programme based at Santa Clara University in the heart of Silicon Valley.

Last week, 19 social entrepreneurs arrived at the university for intensive in-residence coaching and lectures from some of Silicon Valley's big names such as Geoffrey Moore, author of the tech entrepreneur's rulebook, Crossing the Chasm.

Since the programme began 10 years ago, 90% of the social enterprises are still going and have benefited about 74 million people, says Kreiner.

"Social benefit is a necessary predecessor to economic growth," he says. "Almost always it provides employment opportunities for people in those communities and acts as nuclei for economic growth."

GSBI is funded by a Skoll Foundation grant and corporate gifts from Deloitte, Microsoft and Applied Materials. But the real "secret sauce" is the pool of high-calibre mentors from Silicon Valley, says Kreiner.

Executives from blue chip companies such as Cisco and Intel volunteer their coaching services for the social entrepreneurs in the four months leading up to the Clara University residency.

Ten out of the 19 on the GSBI programme are women, part of an encouraging trend, says Kreiner.

"The rise of women in social entrepreneurship and leadership is striking. We're also seeing more sophistication, higher levels of education."

Shivani Siroya founded InVenture, an SMS-based accounting tool for
low-income individuals and businesses and pioneered a credit-scoring standard for clients that conventional financial institutions would deem unbankable.

InVenture now has more than 5,000 users and has made 2,000 loans with an average size of $2,000 (£1,200). It is now expanding operations in Africa, where another SMS-based service, M-Pesa in Kenya, now processes 25% of the country's GDP via text message, bypassing conventional banks.

Such ventures enable the poor to access services that would otherwise be price prohibitive, says Kreiner.

"Even in the US, one of the most ridiculous "poverty premiums" is for loans where it becomes too expensive to borrow money to lift yourself out of poverty," he says.

Other examples of "reverse innovation" on microfinance enterprises that started in the developing world and then identified a similar need in the US are Kiva, Grameen and Samasource, which is launching SamaUSA later this year.

"The poverty level in the US continues to climb, and Europe suffers from an ongoing recession," says Kreiner. "As we search for avenues out of the economic crisis, the innovations of social enterprises like Samasource, Kiva and Grameen and their experiences of developing world poverty could help us fix what's broken in our own backyard."

This content is brought to you by Guardian Professional. Become a GSB member to get more stories like this direct to your inbox

Comments (…)

Sign in or create your Guardian account to join the discussion

Most viewed

Most viewed