TelarIdeas

Thoughts on trust, models and the future of markets

Stuart Gannes from RDVP pointed to "an interesting discussion taking place at the site WorldChanging.com over the pros and cons of the global distribution of artesan products. Check out http://www.worldchanging.com/ and be sure to read the comments.  The discussion surfaced a few thoughts I will share below:

1. The art of Trust.
A trusted brand is key for these kind of enterprises. There is a lot semantics involved in the home pages of the different alternative to Worldstock.com linking values, commerce and communities. Quite an art.

2. What is local?
It is very interesting how internet is redefining the boundaries of what used to be a local market. Internet is creating a global market aggregation and coordination machine connecting the local microproducers to the wealth of the first world. This is inevitable and it is understandable that the first experimenting with it are the nonprofits. Nonprofits is a popular way to bring these new models that still present high risks to forprofit minds.

3. Cross-subsidizing it!
One of the most popular business models happening in various levels is the cross-subsidizing from an overpriced product to a underpriced product, from an overpriced service to an underpriced service, from a forprofit to a parent nonprofit, from rich government to poor government, and in this case from first world market to developing world markets.

4. The inevitable present, the inevitable future.
The comments about the global shipping of products present a number of reasonable sustainability questions. It is funny that in any systemic functional analysis, the transportation functions are always the first candidates to trim and eliminate from the system to increase its value. They add the least value in the chain. As in any evolutionary process, the presence of these transport/shipping functions and so their inefficiencies in the world commercial system are inevitable for some time. But I believe they will eventually disappear in a large degree.

I foresee a future of tangibles going through the same process the paper mail is going through with the email. In my view of the future, I see art-craftman and women creating and shipping digital documents to local 3D printers of different media who would print parts, products, textiles, ceramics, etc for their local buyers. It is already happening.

Cheers,
Jose

For people For profit For many reasons...

The following is my comment to the post by Erik Sundelof 's "Is a for-profit social venture impossible?" at the Reuters Digital Vision program blog

I think there may be many reasons why we are better off being a for-profit as an alternative to a nonprofit in the pursuit of wide and deep social impact. In my building of TAVOS, I realized through the business planning of the social enterprise that there were two ways to cover the high costs of a Latin American-scale deployment: either dedicate my life and one of the others to fundraising and not work directly with the people I want to serve or look for income-generation strategies to make every community unit of the initiative sustainable. I decided for the latter. Some of my reasons were:

1. I rather devote myself to care of the people I want to serve and let the market dynamics push my organization to listen, than devoting my life to fundraising to end up detached from the end beneficiaries.

2. The communities I am trying to serve are highly entrepreneurial. 50-60% of the economy in Latin America is informal. That means that Francisco in Catia, a low-income suburban neighborhood in Caracas, wakes up every morning thinking how he will make it to bring food to the table the next day. Francisco and 100 million other Latin Americans are better served by bringing opportunities they could use to tap into their spirit than by bringing charity that will leave them highly vulnerable if the funding gets dry.

3. A for-profit will make the social impact sustainable and scalable if we are serving well the needs of the target population. If we are failing, the market will tell.

4. Embedded in my last comment, the for-profit approach forces better learnings of the market and customers than the nonprofit approach.

I do agree that there is a challenge in leading and executing with integrity a hybrid social/business-mission venture. But I think that it holds true for any enterprise today. There is also an interesting discussion about for-profits with organizational and governance structures that "lock" their social mission, for example: a parent nonprofit or member association. But that is a whole new discussion.

Cheers,
jose