The essence of poverty is the asymmetry of information

Right after the previous post, I came across this intriguing conversation in Time, The Creative Capitalism Roundtable, between Bill Gates, CK Prahalad and others sharing their thoughts on poverty, the BoP and creative capitalism. Naturally, Prahalad's thoughts on the cellphone and his extremely insightful, and for me, game changing observation, that the essence of poverty in today's wireless world was the asymmetry of information is what caught my attention. Here's the snippet,

Stengel: C.K., I know that Bill was influenced by, by your work, and one of the questions I have, and I guess it's a question both about creative capitalism and how you see it, is that, when it comes to cell phones for Kenyan farmers for example, isn't this just good old fashion capitalism in the sense that it's a recognition of a market that people hadn't figured out how to profit from, and now, and now they are.

Prahalad: I think it is, but there's a twist to it, and I think it's an important twist. If you look at traditionally how we have looked at all this product and services especially high-tech products like cell phones, we would never have gone to the poor. But, I think that growth opportunity is there, as the cell phones have demonstrated. Also, it is changing the asymmetry of information, be it the farmer, who can now get prices, weather conditions, or someone who can make small transactions with SMS messaging, suddenly the asymmetry of information which is the essence of poverty — that is why people are poor, they don't have access to information — that is changing very, very dramatically. What is happening in the cell phone industry, three billion people are connected for the first time in human history, I think it will be four billion soon. That I think gives me tremendous confidence that we can really take Bill's idea and see it through to its logical conclusion, which, for me, is how to democratize commerce.

So that the challenge for the 21st century for me is: how to make every human being get access to world- class products at affordable prices. A good example is the cell phone. That means we have to change the business models as well as the technology. And the second is how to make everyone a micro-producer.

Now, if one were to do a quick Google of what Nokia, as an exemplar of an emerging markets BoP producer of affordable handsets, is doing, we quickly note out of the many other activities this one standing out, their announcement of opening a Research Lab in Nairobi, Kenya this month.

Mobile phone maker Nokia is set to open a regional research center to study consumer behavior in low income communities. The study is aimed at understanding the need of mobile users in Africa in order to create concepts that address the needs of consumers.

The research Lab dubbed Nokia Research Africa is partnering with a local Non Governmental Organization and local universities. The research team leader Jussi Impio said the research will help Nokia company to design products and services that are relevant and add value to the lives of the users.

"Nokia's expertise is to enable humans communicate via the cell phone, and we want to do it well," he added.

After all, what is it that humans communicate to each other? Information.