Our World

Fat vs. Lean Markets

I’ve always struggled with what word to use when describing poor markets. There’s the developed and the developing world. There’s the bottom or, a little better, base of the pyramid. There’s the emerging or frontier market, which evokes an image of covered wagons heading west—Manifest Destiny and all that. The UN classifies them as LDC, or Least Developed Countries. The problem with all these is that they define people by how much money they make and set the Western way of life as the ultimate goal—if you develop, climb the pyramid, and emerge, you’ll be like us, which is obviously what you want to do. It grades people based on purchasing power, which has always felt dehumanizing to me.

In manufacturing there’s a concept called Lean Manufacturing, which at a high level represents a philosophy of “maximizing value while minimizing waste.” Eric Reis has taken these ideas and applied them to startups, something he calls the Lean Startup. As I met one amazing entrepreneur after another last week in Kenya with Acumen Fund, I thought, what better word to describe the environment they operate in than “lean.” These guys are all about maximizing value and minimizing waste—they have to be. They’re capital-constrained, they face a shortage of skilled labor, their customers have little disposable income, and they are often at odds with state-backed incumbents or even the government itself. They operate in a lean market, and yet they are succeeding. I think back to a scene I saw earlier this year in China: two women were fighting over a discarded plastic bottle for the recycling refund. Now that’s a lean market.

The constraints of these markets breed innovation—it’s the reason startups beat incumbents. It’s why the Nokia 1100 cell phone with it’s monochrome screen and $20 price tag is the world’s best selling cell phone. It’s why Tata can build a car for $2,200 and why Visa’s mobile banking platform was developed in Africa and imported to the US and Europe. It’s why 37signals is so successful and why the Lean Startup methodology is being ever more widely adopted.

So if these markets are lean, I guess that makes us fat, and, really, is this so far off the mark? We have the highest obesity rate of any country in the world—about 30%. We consume more energy per capita than almost anyone else (the exception being a handful of very hot Middle Eastern countries). We have the shortest school year. We drive the largest cars and build the biggest houses. It’s hard to be innovative when you have everything you could possibly need, and thus we’ve become fat. On top of that, we’ve taken on a mountain of debt to pay for it all. From the World Economic Forum’s Global Risks 2010 Report:

According to IMF, by 2014, the average debt-to-GDP ratio of advanced economies that are members of the G20 is expected to climb from 2007 pre-crisis levels of 78% to 118% [various academic work has shown that a ratio above 90% becomes a serious head-wind to growth]. In sharp contrast, emerging economies, with smaller governments and lower exposure to the baning crisis, kept their fiscal houses in order. According to the same IMF analysis, between 2007 and 2014 the average debt-to-gdp ratio fo emerging countries that are members of the G20 will never exceed 40%. For once, and in contrast to the 1980s and 1990s, emerging economies are not the causal to global fiscal crisis.

So who emerges as the winner here? In a world of debt, who out performs? And what market do you want to emulate—the one that excels when faced with every constraint imaginable or the one that has everything? Which one figures out the environmental problems first—the one where waste is valuable or the one that can afford to ship and dump it? The one with the longer school day and year or the one with the shortest of both? The lean startup or the incumbent? Which one is your money on?

What you call a market matters—it frames the discussion—and in this case, we may want to reevaluate who is aspiring to what.

This post originally appeared on Nate Laurell’s blog, New Frontier: Solutions for an Accelerating World, where he writes on energy and the application of markets to various social issues. Nate is a board member and advisor to several technology-driven financial firms and recently joined the Acumen Fund Global Advisory Board.

Comments

Questions for Aspiring Leaders

Bavidra Mohan, Acumen’s India Fellows Manager, attended this years Aspen IDEAS festival as a Scholar. The Scholarship program was established to invite guests from around the world to bring a diverse set of experiences, voices and perspectives to the rich conversations that take place at the IDEAS festival each year. [Read More]

10 Books We’re Reading This Summer

What are you reading? It is a common question here at Acumen, an organization full of avid readers constantly trading favorite book titles that discuss leadership, impact, development and branding. Here are 10 stellar books we’re reading this summer. These books and others provide a framework of thinking, a spark of new ideas, a platform for debate. So, what are you reading? [Read More]

How Acumen Brought Back my Fire

Eda is an East Africa Regional Fellow from Nairobi, Kenya and is the Founder and Director of Halisi Trust, an organization that seeks to challenge the vices that plague society and encourage transformational development in Kenya’s youth. When Eda applied for the East Africa Fellows Program, she felt disillusioned and stuck. Below, Eda discusses how Acumen’s Regional Fellowship Program brought back her fire. Now, Eda has engaged nearly 6,000 people through outreach events and the Mkenya Halisi movement continues to grow. Acumen is currently accepting applications for the next class of East Africa Fellows. APPLY TODAY! [Read More]

Imagining the world as it could be

Christine Gitau is an East Africa Fellow and an enterprise coach at Craft Afrika, which provides business support services to craft entrepreneurs, enabling them build viable and thriving businesses in Kenya. At Acumen we often use the term “Moral Imagination” when talking about leadership. Christine wrote a reflection on how this concept has shifted her thinking. We could not be more proud of what she is building! [Read More]

How two Acumen Fellows are disrupting the education model in India

Whether its running youth soccer programs, providing vocational training services, or transforming the education system in India, Acumen India Fellows are driving real change in their communities.  Abbas Dadla and Abhilasha Sinha are India Fellows who are addressing the teacher shortage in India through the use of technology and peer collaboration. Find out what they are building below.  If you have grit, resilience and a commitment to creating change in your community in India, East Africa or Pakistan, we encourage you to apply for the Regional Fellowship Program! [Read More]

Meet Manjushree Patil, Founder of Aatman Academy

This month saw violent tragedies in Pakistan and Kenya, regions where Acumen works and which five classes of Acumen regional fellows call home. Among them there are dedicated teachers like Acumen India Fellow Manjushree Patil, crusaders against sex trafficking, builders of government, creators of liberating mobile medical technologies, and curators of slum sports programs. The need for strengthening the connections between those who are working for positive change against seemingly impossible odds has never been greater. We at Acumen have never been prouder to be the thread tying together these courageous individuals. Read more about Manjushree and how she is changing her community in India below! [Read More]

No, not silence again!

The Acumen Fellowship’s Cambridge Leadership Associates (CLA) training is notorious for digging deep, breaking Fellows down to reveal their deepest fears, identifying the sources of resilience that will fuel them with the tenacity to continue along the path to social change. Kahabi G. Isangula is an East Africa Regional Fellow living in Tanzania and recently participated in our CLA training. Get an idea of what it is like, below!  [Read More]

Announcing the Class of 2015 Acumen Global Fellows

Acumen Global Fellows are architects for the impact sector. They are innovators, game changers, visionaries, with various professional experiences looking to make substantial change in the world. They have thrived in companies such as Google; they have started their own companies in Sri Lanka, Canada and Malaysia.  They are choosing the challenge of working alongside our portfolio companies and immersing themselves in a rigorous leadership training. [Read More]