We Need to Create Business Models that Deliver Value to Overcome the Digital Divide
December 8, 2015 Editor 0
Huawei recognizes the urgent need to reduce the deepening digital divide between those who benefit from connectivity and the internet, and those who don’t. Our new White Paper, Digital Enablement: Bridging the Digital Divide to Connect People and Society, released recently, shows that sustainable business models which create value extend the benefits of connectivity to more people more effectively than traditional models that give away services free of charge.
We also recognize that finding sustainable business models can be a challenge. We suggest two changes to current development thinking to make the processes easier and the business models more effective:
We need to rethink how we (and others) value connectivity and its benefits.
This requires accepting the premise that a project is unsustainable unless it provides services that are valuable enough for someone to pay for. Most digital enablement programs do not provide such value, and consequently fail to cover their operating costs. To make programs sustainable, organizations must adopt a more commercial, revenue-oriented model. Here are several ideas:
- Monetizing an organization’s assets such as relationships, trust and networks with consumers, as well as distribution channels and data
- Finding new types of payers – from consumer goods advertisers to banks, online content providers and governments
- Accepting payment in installments, or with revenue-sharing arrangements, commissions, cross-subsidies, or freemium models
- Finding faster routes to scale by distributing or selling through agent networks, franchises, mobile network operators, charities or strategic partnerships with other sectors.
Although unconnected populations are often poor, digital enablement projects should not necessarily aim to provide services free of charge. Instead, they should focus on creating services valuable enough that some beneficiary will pay for them. Ideally consumers should pay something, even if the amount is small.
When someone pays, there is a feedback loop. Services are forced to show they are worth paying for, which improves quality. In addition, they get the feedback they need to keep improving the offering. This, in turn, drives further adoption. When we focus keenly on providing worth paying for, we are forced to anticipate market demand; then, as we build a solution, we are forced to ensure that we meet the needs of our target market.
If consumers cannot pay, they should still invest something – time, desire, commitment, movement, behavioral change – to demonstrate that they value the service. If services are paid for by a government or another third party beneficiary, they must be backed up by a model that creates value. This ensures that the services can be funded through a fee-for-service model, and not as a grant.
We must think harder about how connectivity can benefit third parties other than consumers.
For example, connectivity can reduce costs, prevent problems, and create value in other ways. Recognizing this (sometimes not-so-obvious) value is a key to unlocking new funding, partnerships, and business models.
If connectivity enabled electronic voting, for example, the increase in efficiency would save governments time and money by removing the need to send paper ballots to inaccessible populations in remote areas, and then count them by hand. Enabling more payments to take place digitally could also bring new forms of tax revenue, and uncover new data – often in countries where both are sparse.
Connectivity can also improve public health including – lifting vaccination rates, for example, by sending electronic reminders and then monitoring progress by linking with electronic medical records. Such digital systems could prevent deadly outbreaks of disease and reduce treatment costs.
Third-party benefits are intrinsically linked to consumer benefits. Focusing on value creation by all stakeholders ensures that the whole ecosystem benefits, thereby greatly increasing the chances of an ongoing revenue stream and a sustainable business model.
In our Digital Enablement: Bridging the Digital Divide to Connect People and Society White Paper we provide two simple tools that can help organizations develop a sustainable business model and rethink their value proposition to find new sources of revenue. Download it here.
Go to SourceReprinted from ICTWorks
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