Tech Startups and Human Development: Different Worlds?

This is the first post in what will be some sort of a series or at least a recurring theme on what I’ve been thinking about a lot over the past few months. There is way too much to put into a single post and a lot of ideas that I’m not sure exactly how to connect yet so expect a lot more shorter, potentially less coherent and flowing thoughts as I try to piece things together.

Tech startups and human development – in some ways these are the two most opposing worlds I can think of. One is about satisfying the consumer, adding another gadget to the already overflowing box of electronics on the bedside table or building the next viral web service. So many of the icons of the self-centred consumer-driven Western value set that for many people define my generation and the next originate from this world. The other is well-meaning philanthropists trying to solve the problem of extreme poverty, giving people the opportunity to think beyond where the next meal will come from or how to scrape up school fees in the lean season. Different problems, different worlds. Right?

While everything on the surface puts these domains at odds with each other, I think they have a lot more in common than initially meets the eye. The more I read about the challenges of entrepreneurship, the more I see the same patterns contributing towards the development system’s failure in trying to solve the problems of extreme poverty and a lack of opportunity. I’ll try to draw some of those parallels and explore what I think it means for the development sector. Instead of dropping a giant post all at once I’ll be doing more regular updates in smaller chunks – I hope that will make it a little bit easier to digest! This stuff is probably a bit more dense than some of my previous writings.

The foundation of the comparison rests on the types of problems that both entrepreneurs and those in the development sector are trying to solve. By definition entrepreneurs are working in an ambiguous environment where not only is the solution unknown, but the problem (or at least how important that problem is) is unknown as well. I would argue that development is in the same situation. The world is complex whether you’re in business or in development and no one has the answers, nor knows exactly what problems are worth tackling. In development it is especially difficult to pinpoint what the root cause of the broken system is.

Let’s explore exactly what I mean by this. Entrepreneurs often start with a vision – a product or service idea – that they think will be able to turn into a scalable business by providing value to their customers. This vision doesn’t often match reality however, and startups sometimes need to change direction in order to deliver what customers actually need. Startups need to validate that they are actually solving a problem that matters and provides real, lasting value to customers in order to grow their business. Doing this early before spending money on the expensive parts of running a business is a good idea – this reduces risk.

Development is in a similar boat. Development organizations are trying to have scalable impact by providing services or programs that will sustainably benefit the intended recipients of that aid. This is a difficult thing to get right. Most of my thinking and work right now focuses on agriculture. How can the development sector benefit small-holder farmers living in rural Ghana? The general goal is easy to state, but identifying exactly what problem a program is trying to solve and how it will benefit farmers is much trickier.

Let’s say you wanted to help farmers in Bole district increase quality cashew production (your vision). Recognizing and accepting the assumption that cashew farming is in fact a viable money-making venture in Bole, where would you start? The goal (more money for farmers through cashew production) is easy to state, but the actual problems that need to be solved in order to get there are less obvious. Is it training? Training on what? Access to credit? Improved seedling varieties? Access to output markets? There are so many things to learn about in terms of what works and what doesn’t work. The problems and their solutions both need to be tested before scale can be achieved efficiently.

I would argue that the majority of development projects today are not set up to do this. Many of the agricultural projects that I’ve seen are very high budget projects that attempt to operate on a large scale from day one. A project proposal and plan is written in a head office somewhere, is approved for funding, and then the focus is on execution as if the model is perfect. To me the most fundamental flaw with this model is that a scalable approach does not need to be demonstrated before at-scale funding is given. Compare this to the business world where success at a small scale leads to more profits which allows the company to grow based on their ability to perform. Development projects don’t have this feedback cycle. Unproven guesses are funded at scale right from the get-go and successful projects may end after their funding timeline without capturing the lessons learned and how to get it right the next time.

As an interesting comparison, think back to the dot-com crash. Capital was cheap and startups were able to raise huge amounts of money without a proven model or understanding their customers. And guess what, for the most part it didn’t work. It’s possible that the development sector is making similar mistakes today, investing large amounts of money before a proven model exists. The only difference is that a development project or development agency doesn’t go bankrupt. This is a crucial difference.. but I’ll talk more about that in another post.

I hope that this quick (ok, maybe not as quick as I thought) example illustrates some of the similarities between the startup world and development – the problems are not well defined with solutions that are even less clear. Although the differences are many I think the development sector can learn a lot from what has and hasn’t worked in the private sector world of startups. Stay tuned for more comparisons and eventually some implications for what I think this means for me in my work. I’m hoping that this will be the longest of these posts as it’s the intro, but I’m learning to stop making promises like that.

Thanks for reading if you made it this far – would love some feedback. Too dense? Not interesting? Really interesting and make it even denser next time? I realize this is definitely a bit of a departure from my usual style. A big source of inspiration for this thinking has been reading the entrepreneurship articles on Hacker News when they come up and more specifically Steve Blank and his ideas around Customer Development and Eric Ries and his on Lean Startups if you’re interested in further reading.

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8 Responses to Tech Startups and Human Development: Different Worlds?

  1. Majd says:

    Interesting comparison. I think you are right about the feedback cycle: tech startups have very short feedback cycles (due to the nature of technology), whereas the development sector doesn’t have the good feedback due to the many cultural, economic, and technical barriers. That’s what M&E tries to do, but it’s usually targeted towards the donor’s questions as opposed to the beneficiaries.

  2. where’s the darn like button? haha jokes :) nice post.

  3. Tony says:

    Yeah, I totally agree and am so glad to hear this form you! The lean model now in vogue amongst tech startups would apply quite well to human development, I think.

  4. Leah says:

    I’ve been thinking about this lately too … more so about the value of social entrepreneurship vs. non-profit or profit organizations. The article was interesting for me and not too dense – but if there was much more information, it would probably be harder to read. I’m interested to see where this goes, looking forward to the next post!!

  5. Pingback: Common question but no easy answer | Questions to Questions

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  7. Janine says:

    Funnily enough, I didn’t expect the post to end when it did and was confused when you started asking questions about feedback. Maybe a better summary or indication of the end of the thought for next time? I really like the comparison though, and I’m going to share this with a few of my techie friends to see what they think about their relationship to development.

  8. Pingback: Strategy Development in Small-meal-sized Chunks | Engineers Without Borders - Grand River

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