Bus. Std: Transforming Rural India, the Hub Way

My latest column in Business Standard:

If there was one message which rang out loud and clear in the recent elections, it was that the poor of India want a better life. They voted for change dispensing with those in power. This was not so much about anti-incumbency as anti-incompetency. Even as India makes strides in some sectors, much of the country and its people remain frozen in time. They will have to make do with the promise of free electricity if the state governments ever get around to generating it. Bharat wants its own revolution one built around development and opportunities, not handouts and freebies.

So, let’s play a game of strategy. You are the Indian Chief Minister who has just won the local mandate. Success is defined as getting re-elected in five years time (let us assume there are no mid-term polls). How do you do it?

A look at the history books offers no relief. Eminent reform-minded brethren of yours like Digvijay Singh in Madhya Pradesh, Chandrababu Naidu in Andhra Pradesh, SM Krishna in Karnataka all failed in the last round of the game which took place. Do you think reform or do you think populism? Do you think short-term or long-term? Do you think caste politics or computer policies? Do you think social development or infrastructure development?

As you think, let me give you my thoughts. The need of the hour in India is, very clearly, the transformation of rural India not between two generations, but between two elections. Agreed, this is not something which can be done overnight. But let us remember, that there is five year’s time that you have. The right steps taken in the beginning can make a big difference in that period. The problem in India has been that few are willing to think that far ahead as they caught up in day-to-day politics and month-by-month survival.

What you need to do is to create a platform for rural development. It is not about providing free food and electricity which will only sap the economy further, but about creating a framework in which peoples incomes increase to a point where they can pay for food and electricity. To use an old adage, Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime.

Rural India needs affordable services from education to market access, from telecom to healthcare, from financial intermediation to entertainment. The key issue in rural India is the non-availability of the services at affordable prices. Linked to this is the lack of perceived opportunities in rural areas. These twin factors create a situation in which few want to do business in rural India. It also leads to the exodus of people from rural areas into urban slums, which stretch the resources in the cities and towns even further. In other words, rural India is caught in a trap that it seems difficult to get out of. Which meansare you doomed to lose the next elections?

No! There is an alternative and for that we have to turn to a model proposed by Atanu Dey and Vinod Khosla. This model, called Rural Infrastructure and Services Commons (RISC), holds the potential to transform rural India for a capital investment (not necessarily by the government) of no more than Rs 200 per person. The model recognises the fact that resources are limited, and we can get the maximum leverage by concentrating investment rather than by distributing it at uneconomical levels.

What Dey and Khosla propose is the creation of 5,000 rural hubs across India, each catering to a population of about 100,000 or about 100 villages, such that the hub is no more than a bicycle-commute distance away for people in the villages. These hubs are about 10,000 square foot in size, built at a cost of about Rs 2 crore each. They have state-of-the-art infrastructure including 24×7 electricity, broadband connectivity, security and sanitation.

This standardised infrastructure reduces the costs of operation for service providers in rural India. From the point of view of the rural populace, there is one place in which they can get multiple services services which were hitherto not available or too expensive. This also creates the platform for budding entrepreneurs to make rural supply and demand chains more efficient, much the same way as the programming interface of an operating system allows software developers to build higher-level constructs without worrying about the low-level plumbing.

Says Atanu Dey: Fundamentally, the specific market failure that RISC addresses is that of coordination failure. RISC is designed to coordinate the activities of a host of entitiescommercial, governmental, NGOs. It synchronises investment decisions so as to reduce risk. It essentially acts as a catalyst that starts off a virtuous cycle of introducing efficient modern technology to improve productivity that increases incomes and thus the ability of users to pay for the services, and so on. It creates a mechanism that reduces transaction costs and therefore improves the functions of markets.

The total investment of about Rs 10,000 crores is very little money in the Indian context today. The multiplier effect that it can have on rural India is dramatic. More importantly, it will get you elected. We all win, right?

You can download the paper via a link from the Deeshaa website.

Future Devices

Always-On Network has comments made by SRI CEO Curt Carlson:

At SRI, we look for what we call “colliding exponentials,” where, for example, computing runs into communications and creates the Internet. So we focus on the real important problems that result when that type of intersection happens, because usually, when it does happen, it changes the ecosystem. It breaks things apart and creates lots of new opportunities, both for technology and also for licensing and venture deals and basic research.

So in the IT space, one thing that we’re excited about is what’s happening in portable devices. We now have memory, storage, communications, and bandwidth; and we have wireless intersecting with that. We have the possibility of the devices being ad hoc; there can be a node on the network that makes that happen. The battery technologies are also being revolutionized, so you can think about a whole new generation of products in that space.

Underneath that there are two enabling technologies that after 20 years of research are finally coming home. One is speech recognition and the other is natural language. You can now begin to imagine a fully connected, always-on device that will do away with the keyboard (because obviously that’s not a friendly way to interact with a device) and would be so valuable and so functional that it would be like your watcha device that you would never leave home without. If you walked out the door and you realized you didn’t have thisI call it “Radar O’Reilly meets Dick Tracy” watchyou would go back and get it, because it would be your continuous connection to your friends, your work, your database services. Everything would be connected.

This device would give the ability to form ad hoc groups, and it would be the form factor that people want to use. Not only are there lots of commercial applications for this, but we also see it migrating into the home, because a lot of folks don’t want to use a keyboard, they just want to talk. So we see this as a transformative moment where this becomes the platform of choice for everybody in the market. It will be much, much bigger than PCs.

IBM’s On Demand Initiative

As part of a special report on IBM, News.com has an article on its on demand computing iniitative:

[IBM CEO Sam] Palmisano is pushing to complete IBM’s transformation from primarily a hardware company to one led by software and services. The idea is that customers want bundled “solutions” of software, hardware and services tailored to specific industries, rather than a catalog of products.

“Sam Palmisano talks to the business side of the customer and other IBM people talk to the technical end of the customers,” said Amy Wohl, an analyst and president of Wohl Associates. “Technology vendors have learned their lessons that if you’re going to talk to the CEO, you’d better talk about the business value.”

According to IBM, “on demand” means:

  • Better access to computer systems and data, within and between companies, via Internet technologies.
  • Integrated business processes for easier information sharing among employees and business partners.
  • Quicker response times, helping companies react “on demand” to business changes.

    Big Blue further defines the transition to an “on-demand business”:

    1. Access: Use Internet technologies to obtain information.

    2. Integrate: Share data among systems and divisions, such as manufacturing and finance, linking some business processes.

    3. Enable on-demand action: Connect corporate processes end to end, enabling systems to share information among employees and with partners. Computer systems will be responsive enough to help companies react quickly to changes such as competitive threats or new business opportunities.

    the definition of on-demand remains inexact to almost everyone outside IBM. Some customers associate it with other industry trends and jargon, such as “utility computing” or “hosted outsourcing services.” Those most skeptical of the concept reduce it to little more than a repackaging of existing goods and services.

    “On-demand reminds me of the emperor with no clothes–there’s nothing there that’s new or different,” said Michael Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “It’s mostly hand waving on the part of a few technology companies that are trying to get people to buy hardware and services.”

    IBM managers concede that on-demand is an attempt to redefine the market for computing. The opportunities to make money on smaller-scale jobs, such as PC networks or back-office applications, have largely dried up. Tech companies now sell goods to automate processes that touch many points across a corporation.

    In May, IBM launched an initiative called Workplace, which has relatively simple applications that can be delivered via a Web browser from a network server.

    Workplace demonstrates IBM’s technology strategy in a nutshell. The entire package draws on several components already in IBM’s arsenal, including its Lotus collaboration software and Eclipse open-source technology. IBM’s strategy is to mix and match the components–whether they’re processors, software programs or business process templates used in consulting–to tailor products for specific industries.

  • Targeted Advertising

    Excite News (via AP) writes about the future of web advertising:

    While search engines had success tailoring ads based on what visitors sought, behavioral targeting goes further. Users who check airline prices are obviously travelers. Visit an auto section, and you’re considered a potential car buyer.

    The technology’s power is its ability to let advertisers follow visitors around as they click through Web journals, dating services and social networking sites like Friendster – destinations where freeform conversations can be difficult to categorize.

    Here’s how targeting technologies generally work:

    – They place a data file known as a cookie to identify visitors and keep track of visits to specific content areas, gauging the intensity and timing of the visit (It may take multiple visits within a certain number of days to trigger related ads).

    – The cookie data are sometimes combined with the user’s location and demographic data obtained during registration.

    – The numeric Internet address can also carry clues about the visitor’s employer or line of work.

    Advertisers pay extra for targeting – amounts cited range from 25 percent to 10 times the normal rates – but they get better response from fewer ads.

    The companies involved in the behavioral targeting business include Revenue Science, Tacoda Systems and AlmondNet.

    Marc Andressen Comments

    Excerpts from a Washington Post online chat with Marc Andressen (ex-Netscape, now Opsware):

    [RSS] is *a* future of distributing information :-). It’s a very useful approach (this is the idea that you read “feeds” of content that are pushed to you, rather than browsing and searching). It’s kind of Pointcast done right, for those of us who remember the late, not-much-lamented Pointcast from the late 90’s. Plus the approach will work for a lot of other things too like being notified of auction results, new products, new classified ad listings, or whatever. It will work very well and lots of people will use it and the aggregators and software that are designed to support it but it won’t replace browsing or searching, I don’t think…It’s a good example of how the Internet keeps changing — since the Internet is built on software, a new software approach like RSS can change how we think of the Internet without requiring anyone to rewire any networks. That’s what I really like about the Internet. First it was email, then web, then IM, then Napster/Kazaa, then Apple iChat, now RSS… one thing after another after another…

    I think in the long run Opsware might be as important as Netscape. Opsware is all about helping people who run — or want to run — big Internet sites, services, systems, applications do that at large scale, with a utility computing model, with a much higher level of quality and reliability and much lower cost. As a result our customers (media companies, banks, Internet companies, government agencies, outsourcers) are able to run a lot more Internet services for a lot more people for much less money. Because of that, we think our approach can help the Internet grow a lot faster over the next 10 years than it would otherwise.

    I think the key is that there’s no such thing as “tech” anymore — it’s really a matter of individual markets and individual products…My point is that even though you know that happened, you still can’t draw any useful conclusions about what’s happening in technology without looking at individual products and markets. Look at what’s happened in the last 5 years…
    * 400+ million new people on the Internet
    * Tens of millions of new people on broadband in the US alone
    * Mobile phone sales have risen dramatically to 600 million units/year, and mobile phones have become color, with cameras, with MP3 players, wireless data access, etc.
    * Linux has become real and widely adopted
    * Open source as a whole has taken off dramatically
    * GOOGLE
    * Salesforce.com has proven out a whole new model of delivering software to businesses
    * WIFI
    * IPOD
    etc. etc. etc.

    If you don’t look at the individual product categories and markets, you miss what’s actually going on….

    TECH TALK: A Train Journey: Triage

    Making computing a utility in the lives of Indians is the next big challenge. While we can wait for top-down action, that is unlikely to happen. What we need is to seed enough of the ecosystem to enable a bottom-up revolution that makes computing access available everywhere across India. Of course, one can argue that this is a silly discussion in a country where hundreds of millions of people live below the poverty line, do not have access to clean drinking water or two daily meals, have lives dominated either by landlords or the monsoon. My counterpoint (influenced by Atanu Dey) is that we need to first focus on people on the margin lets help those who need the least help in moving to self-sufficiency from a state of dependency, rather than trying to distribute limited resources to everyone.

    This is the principle of triage. Matthew Streger explains:

    If you have limited resources, you will need to determine how to most efficiently use them. This is the foundation for triage. Triage, from the French verb trier, means to sort. Triage is used on every call. With one patient, we make decisions like whether to establish an IV or if the patient needs to be transported using lights and sirens. When we have more patients than available resources, we need to decide where those resources will be best utilized.

    Our goal is to maximize the number of patients who will survive the incident. We want to do the most good for the most people. Some patients will live no matter what medical care they receive, and some will die regardless of the circumstances. Others die unless they receive medical care immediately. We don’t want to utilize valuable resources on people who are certain to die, nor do we want to use these resources on people who will survive without medical care. Our goal is to identify who will survive the event with immediate care.

    For the people on the margin much of middle-class India and small- and medium-sized enterprises, access to computing can be the force that helps them take control of their own futures. They are the ones who can then transform the lives of others through innovation and entrepreneurship.

    There are four barriers that need to be tackled in making computing available to this mass market in India: accessibility, affordability, manageability and desirability. Accessibility means making it available close to where people are. This could be their homes, schools, colleges, offices or factories or neighbourhood computing centres which provide shared access to a common set of resources. Affordability is about making the price such that they can easily pay for it either on a subscription basis, or a usage basis. Put another way, we need to bring the price points of a phone to a computer. Manageability means making computing as hassle-free to use as a telephone. Desirability means creating relevant content and applications that can make a difference to people and their businesses.

    These are the challenges that we need to tackle with computing in India. It is not about solving one of the problems it is about removing all the four barriers simultaneously. It is about creating a complete computing ecosystem to catalyse the development of the country. India has too many gaps in its various systems and this is where the right computing infrastructure can make a difference.

    The train journey helped consolidate and organise a lot of my thinking of the recent past. It brought me face to face with people whom I normally do not encounter during my work or personal life. It is these lives that we have to touch and transform. The train journey was, for me, a signal to start a new, personal odyssey.

    Tomorrow: Gandhis Journeys

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