Innovation
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The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) hosts this invitation-only roundtable with two research pioneers Charles Eesley and Shai Bernstein at Stanford University on drivers for innovation and entrepreneurship of Silicon Valley.

This roundtable is designed to bring together a small circle of the Valley's leading executives, entrepreneurs, investors, service providers, and Stanford faculty for an in-depth, off-the-record conversation.

Knight Management Center, Stanford Graduate School of Business

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NAIROBI, Kenya – Single-room shacks with mud walls, metal roofs and dirt floors sleep families of eight here. Plastic bags filled with human waste are thrown into unpaved streets, earning the nickname “flying toilets." Trash piles up in front of homes and storefronts. The flies are everywhere. People struggle to survive but the appetite for change is strong.

This is Kibera, Nairobi’s largest slum home to hundreds of thousands packed onto one square mile of land. Kibera's population is a matter of debate – and politics – with unofficial estimates ranging from 250,000 to 1 million.

And it is next door to some of the city's wealthiest neighborhoods. On its edge lies a golf course serving the elite, the lush green grass a stark contrast to the rusted metal roofs that clutter Kibera's skyline.

More than half of Nairobi's residents live in human settlements like Kibera.
Photo Credit: Sarina Beges

The government says those who live here are illegal squatters, and officials withhold basic public services like electricity, sewage and waste collection. Health care and education are expensive and out of reach for those struggling to find steady employment amid the rising price of food and fuel. Water is scarce here – a resource turned on and off by the government and a commodity overpriced by a handful of private dealers.

But mobile phones are so cheap and easy to access that more than 70 percent of people living in Kibera have one. Harnessing the potential of technology for development, an innovative course at Stanford is designing mobile phone applications to improve living conditions in Kenya's slums.

Incubating ideas

Stanford professors Joshua Cohen and Terry Winograd created Stanford's Designing Liberation Technologies course, which is taught at the Hasso Plattner Institute of Design (d.school) each spring. Grounded in the principle that an effective product cannot be designed without participation from the local community, the course pairs student teams with NGOs to co-create technology platforms.

"We started with the belief that by combining emerging mobile technologies with human-centered design, our students could find new opportunities to change people's lives for the better," says Winograd, a computer scientist. "We were fortunate to develop connections with strong local organizations that could guide our understanding of the needs and provide a vehicle for turning our students' ideas into real programs."

The course is part of the Program on Liberation Technology at the Center on Democracy, Development, and the Rule of Law (CDDRL) at Stanford’s Freeman Spogli Institute. Cohen and Winograd helped launch the program in 2009 with CDDRL Director Larry Diamond to explore how technology is being used to advance change in the developing world.

Originally funded with support by Nokia Research Center in Africa, the course is now supported by the Silicon Valley-based Omidyar Network.

One of the first ideas to come out of the class is M-Maji, which means “mobile water” in Swahili. M-Maji is a mobile application that uses a two-way SMS system to provide users with accurate and up-to-date information on the location, price and quality of one of Kibera's most precious resources – water.

Water economics

Water is scarce, expensive and can often be contaminated in Kibera. The government supplies water to Kibera just two or three days a week. When the water flows, vendors fill large hundred-gallon plastic storage tanks that tower imposingly from the rooftops.

A water tank sits atop a water vending station.
Photo Credit: Sarina Beges

Water is collected from kiosks housed in storefronts along dusty streets and open gutters. Young girls pour water from rusty faucets into large jerrycans and struggle to carry the containers through Kibera's pock-marked streets. They spend about two hours a day collecting water for drinking, cooking, cleaning and bathing.

"On a good day they can go to their normal spot to find water, but on a bad day they have to keep walking around until they find a source," says M-Maji co-founder Sangick Jeon, a Stanford PhD student.

Jeon explains that water has turned into a big business in Kibera and large cartels deemed "the big five" control the price and availability of water, shutting out the smaller vendors from the marketplace. That means Kibera's residents pay more than double the cost for water than their rich neighbors on the other side of the golf course.

Water quality is always a concern.

"Most water is contaminated because steel pipes are stolen and they use above ground plastic pipes that break off and flying toilets can seep into the pipes," Jeon says.

Jeon is researching conflict and cooperation in Africa. He took the course taught by Cohen and Winograd two years ago and has stayed invested in M-Maji. He says Kibera is a fascinating place for a political scientist to work, but also points to the strong partnerships that have allowed the project to take root.

When asked about how the M-Maji technology works, Jeon laughs.

"I am just a political scientist," he says. "The guys at Umande Trust are doing it all."

Dialing for water

Kelvin Lugaka is a young Kenyan water specialist at Umande Trust who leads the M-Maji project. He implements the technology and gets people to use it. Lugaka grew up in Kibera and is proud of his childhood home that he calls a human settlement, not a slum. His parents and siblings still live here, and he knows all the water vendors in the five villages where the technology is being piloted.

Walking through Kibera, Lugaka shows how M-Maji works on a very basic Nokia mobile phone – the kind that costs the equivalent of $15 on the second-hand market. The technology was developed by a local team of Kenyans working for Wezatele, a Nairobi-based startup located at the iHub technology incubator.

Lugaka dials *778# onto the phone's large buttons. A few seconds later, a SMS message pops up on the phone's small screen prompting him to press "1" for water, "2" to sell water or "3" to file a complaint. He presses "1" and a list of villages appear that have water available that day. Next to each landmark is the cost of water that day.

Because there are no street signs in Kibera, the M-Maji team had to use popular landmarks – schools, health clinics and churches – to identify water vendors locations.

"M-Maji is going to have the coordinates for water vendors, which will allow people to find out information about water and the cost of water today, so people can move to a different water vendor (if the price is too high)," says Lugaka.

Each morning the registered water vendors are responsible for entering the price of water at their kiosks into the M-Maji system. Lagaka currently has 45 water vendors registered in the system but would like that number to grow to 100.

A unique partnership

Josiah Omotto is one of Umande Trust's original founders. Raised in Kibera, Omotto has devoted his work to improving water and sanitation conditions in the community.

He has a booming voice and commanding presence. When he speaks, everyone in the room listens.

"Umande Trust implies that you wake up in the morning with a new perspective on the world," Omotto says. "We work on projects that do not recycle the ideas or biases of yesterday."

The power of technology to advance change has always been part of Omotto's vision for development in Kibera and before working with Stanford he claims there were no other mobile phone-based projects here.

"Access to information is power and technology represents the future potential to transfer and share information," he says.

Over a lunch of rice, vegetables and bits of meat, Omotto talks about the unique partnership with Stanford. It’s unusual to see student researchers in the field translating knowledge into practice and impact, he says. Other researchers have showed up at Umande Trust to collect data for their surveys. But they rarely stay long enough for lunch or a walk through Kibera.

Before the course starts, students spend over a week in Kenya meeting with local NGO partners, conducting needs assessments with the community and developing the ideas that will turn into their design projects.

Some of the prototypes created have used mobile phones for reproductive health counseling, to coordinate a system of community foot patrols, provide legal advice, report violent crime, and incentivize savings, among others. With the ease of a mobile device, they attempt to break the information divide that exists in Nairobi's poorest communities to connect users directly to medical, health and legal professionals.

Not all the projects succeed. But M-Maji seems to be defying the odds.

Leveling the playing field

A female water vendor hopes the M-Maji service will increase business at her kiosk.
Photo Credit: Sarina Beges

Standing outside in the hot afternoon sun as water trickled from the tap into the muddy street, one of Kibera's few female water vendors enthusiastically endorsed the M-Maji service. She’s optimistic that the service would drive more customers to her smaller kiosk that struggles to compete with the larger vendors in Kibera.

At her station, a teenage girl rinses her clothes in bright red plastic basins of soapy water as young children run through the narrow streets filling small tin cups. As they drink, dogs fight over scraps of garbage.

"M-Maji allows the poorer water vendor to enter the marketplace," Omotto says. "The larger water vendors are well known, they control the water supply and are connected to big political players and the government. The moment you make this information open you liberalize the system."

M-Maji's co-founder agrees.

"The system will put downward pressure on the water prices so if you are selling water for five shillings when it is only worth two shillings, then someone else will sell it for four and people will go there," Jeon says.

In discussing the politics of water, Omotto says water is one of the few areas the Kenyan government has been making an effort to improve in Kibera.

"The government does not invest in informal settlements," he says. "Resources are typically channeled outside the city into rural areas or spent on defense and the police."

Omotto shrugs his shoulders when asked why water policy has improved in Kibera and suggests that the new Kenyan constitution – which contains provisions for water rights – might be the answer. Or he just chalks it up to politics, suggesting that it may have to do with the political ambitions of the current water minister. Not surprising in a country where resource allocation and politics go hand-in-hand.

Scaling the service

As the project grows, water quality testing is going to be an important component. M-Maji is planning to do periodic tests on the water quality and would eventually like to employ infographics technology to visually plot the sources of contaminated water for residents. Jeon is hoping to work with the U.S. Centers for Disease Control and Prevention's office in Kibera on water quality testing.

While M-Maji is gearing up for a full launch of the service this year, they expressed concern about the sustainability of the project. For the pilot they received small grants through the Freeman Spogli Institute's Global Underdevelopment Action Fund and the Center for Innovation in Global Health. But it is uncertain where the funding will come from going forward.

M-Maji does not charge people to use the service, which is equivalent to the cost of sending a text message, but will be unable to subsidize the service indefinitely.

"The cost of sending a message through M-Maji is the cost of one vegetable or liter of water," Omotto says, underscoring the trade-offs that will force the M-Maji team to work hard to prove the utility of the service to the community and vendors.

Umande Trust has already received 400 calls from community members interested in the service and believes M-Maji will have traction on the ground once it is fully launched. Lugaka has been busy working with the local radio station in Kibera to develop advertisements for M-Maji as part of a larger community outreach strategy.

The problem of water availability and quality are not unique to Kibera. If the project takes off it has the potential to scale to other human settlements across Africa and the world.

"If the technology works perfectly then Kibera is just the start,” Jeon says.

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Kibera is Kenya's largest human settlement or "slum" where water is expensive and sometimes hard to find.
Sarina Beges
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The Stanford Program on Regions of Innovation and Entrepreneurship (SPRIE) cordially invites you and your guests to an invitation-only roundtable with two research pioneers at Stanford University on drivers for innovation and entrepreneurship of Silicon Valley.

This roundtable is designed to bring together a small circle of the Valley's leading executives, entrepreneurs, investors, service providers, and Stanford faculty for an in-depth, off-the-record  conversation.  Your participation and insights  will inform future research at Stanford on topics relevant for the future sustainability of the Valley.

CHARLES EESLEY
Assistant Professor
Department of Managament Sciences and Engineering
Stanford University

Charles Eesley, Assistant Professor, Dept. of Management Sciences and Engineering, Stanford University

SHAI BERNSTEIN
Assistant Professor of Finance
Stanford Graduate School of Business

Shai Bernstein, Assistant Professor of Finance, Stanford Graduate School of Business

8:30AM: Welcome and Introductions

8:40AM-9:30AM: "Stanford University’s Economic Impact via Innovation and Entrepreneurship"

Topic for discussion:

  • How do various key institutions of the Valley's ecosystem, such as Stanford, contribute to real economic outcomes in innovation and entrepreneurship?
  • How can they be measured? What has been Stanford's economic impact?
  • How has it changed over time? What light does this new analysis shed on changes and vulnerabilities for the Valley going forward?

Charles Eesley will share the results of a newly-released study that puts into perspective the sheer scale of Stanford's economic impact. In this systematic survey of Stanford alumni and faculty conducted by Eesley and SPRIE co-director William F. Miller, it is estimated that companies formed by Stanford entrepreneurs generate world revenue of $2.7 trillion annually and have created 5.4 million jobs since the 1930s. In addition to quantifying Stanford’s economic impact, the report examines Stanford’s role in fostering entrepreneurship and describes how the university creates an ecosystem that encourages creativity and entrepreneurship across schools and disciplines.

Moderator: William F. Miller, SPRIE Co-director; Herbert Hoover Professor of Public and Private Management Emeritus, Stanford Graduate School of Business

Discussant: Dixon Doll, Co-Founder and General Partner, DCM

Roundtable Discussion: All

9:30AM - 10:20AM: "Does Going Public Affect Innovation?"

After going public, how do firms perform in innovative activities, such as internal innovative projects, inventors' turnover, and reliance on acquisition of external technologies? Is the overall"IPO effect" positive or negative for a firms' innovation? Why? What implications does this have for innovation strategies in Silicon Valley?

Shai Bernstein will share his new findings on the "IPO effect" by comparing the long-run innovation of …firms that completed their filing and went public with that of …firms that withdrew their filing and remained private due to exogenous reasons. Using standard patent-based metrics, the results illustrate that the quality of internal innovation of public firms declines by 40 percent relative to …firms that remained private. He will discuss the reasons why and public leads firms to change their strategies in pursuing innovation.

Moderator: Henry S. Rowen, SPRIE Co-director; Senior Fellow, Hoover Institution, Stanford University

Discussant: Bob Pavey, Partner, Morgenthaler Ventures

Roundtable Discussion: All

10:20AM-10:30AM: Wrap-up Discussion

All participants should RSVP by Wednesday, October 31.

Any further questions, please contact Yan Mei at yanmei@stanford.edu, or 650.725.1885.

Oberndorf Event Center, 3rd Floor, North Building, Knight Management Center, 641 Knight Way, Stanford Graduate School of Business, Stanford, CA 94305-7298

Panel Discussions
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About the seminar

Does labor mobility matter for innovation more in some countries than in others? Based on theoretical considerations of the economic systems literature we argue that labor flexibility has different innovation effects depending on national-level institutions. This talk further argues that institutional constraints may be encountered by creating functional equivalents. The analysis is based on career histories in the videogames industry. The videogames industry is structured differently between the best performing countries U.S. and Japan. This raises two issues on human capital diversity: How does composition of human capital affect innovation? How do people react towards institutional constraints in the labor market? Contrasting approaches on the systematic relations between the structure of labor markets and the dynamics of innovation is first introduced, the seminar will then present an empirical case which is based on the career histories of 39.439 videogame developers between 1999 and 2009.

This talk is part of the seminar series hosted by by the Stanford Project on Japanese Entrepreneurship (STAJE) at Stanford Program on Regions of Innovation and Entrepreneurship, Stanford Graduate School of Business, and sponsored by The Miner Foundation.

About the speaker

Cornelia Storz is Professor for the Study of Economic Institutions and East Asian Development at the University of Frankfurt, Faculty of Economics and Business Administration, and affiliated to the Interdisciplinary Centre for East Asian Studies (IZO). She is associate researcher of the EHESS, Paris.

Her research focuses on comparative institutional analysis, innovation and industry emergence. With scholarships of JSPS, JILPT, BMBF and others she has been invited to the University of Tokyo, the Japan Institute for Labour Policy and Training, the RIETI at METI, the Hitotsubashi University, the Stanford Graduate Business School and others. She was granted research funds by the Federal Ministry of Education and Research, the Wolfgang Ritter Foundation, the Japan Foundation and others.

Recent papers have been published in Research Policy, ZfB and Social Science Japan Journal. She is co-editing a special section of Research Policy on “Path Dependence and Emergence of New Industries” and a special issue of Socio Economic Review on “Asian Capitalism” (both forthcoming). She is co-author of Institutional Diversity and Innovation. Continuing and Emerging Patterns in Japan and China  (Routledge, 2011) and co-editor of Institutional Variety in East Asia. Formal and informal patterns of coordination (Edward Elgar, 2011). She is co-organiser of the SASE network “Asian Capitalisms” and member of executive committee of the European Research Network EJARN, based at the Stockholm Schools of Economics.

SE107, First Floor, Serra East Building, Knight Management Center, Stanford Graduate School of Business, Stanford, CA94305-7298

Cornelia Storz Professor for the Study of Economic Institutions and East Asian Development Speaker University of Frankfurt
William F. Miller Moderator
Seminars
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About the seminar

This talk will describe new research showing that bankruptcy law reforms affect the rate of founding by well-educated and older entrepreneurs and the performance of their ventures.

The seminar will show the results of a natural experiment in Japan where changes to bankruptcy laws reduced the consequences of closing a company to find that:

  1. likelihood of bankruptcy increases, especially for firms founded by elite entrepreneurs
  2. elite entrepreneurs form an increasing proportion of the new firms
  3. new firm performance increases as these elite entrepreneurs are more likely to found higher performing firms.

While prior research emphasizes the lowering of entry barriers, our work suggests that reducing the "barriers to failure" can stimulate venture formation among elite individuals leading to higher performing firms. Overall, we find that legal reforms that reduce failure barriers encourage "better", not just 'more", entrepreneurs to found ventures.

This talk is part of the seminar series hosted by the Stanford Project on Japanese Entrepreneurship (STAJE) at Stanford Program on Regions of Innovation and Entrepreneruship, Stanford Graduate School of Business, and sponsored by The Miner Foundation.

M105, McCelleand Building, Knight Management Center, Stanford Graduate School of Business

Robert Eberhart Speaker
William F. Miller Moderator
Seminars
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Paul Collier will talk about how to manage the difference between helpful and damaging commercialisation, and puts forth three arguments. First, we need to face the tough reality that African food production has failed to keep pace with demand over the course of several decades, suggesting that there is a deep problem with respect to innovation and investment given the way African agriculture has been organised. Second, we need to accept that climate change, population growth, and income gains from natural resources will all stress this imbalance further: the prospect is for widening food deficits with business as usual. Third, two major changes are afoot. Globally, the model of commercial tropical agriculture pioneered in Brazil has demonstrated that output can be raised very substantially by changing the mode of organisation. Africa is now starting to open land markets to large foreign management. Superficially this looks like Brazil2, but it may instead be a wave of speculative acquisitions triggered by the price peaks of 2008.

Collier is the Director of the Centre for the Study of African Economies and Professor of Economics and Public Policy at the Blavatnik School of Government, Oxford University. He is currently Advisor to the Strategy and Policy Department of the IMF, advisor to the Africa Region of the World Bank; and he has advised the British Government on its recent White Paper on economic development policy. He has been writing a monthly column for the Independent, and also writes for the New York Times, the Financial Times, the Wall Street Journal, and the Washington Post. His research covers the causes and consequences of civil war; the effects of aid and the problems of democracy in low-income and natural-resources rich societies.

Derek Byerlee's talk will lay out a number of models of inclusive agribusiness growth, grouped into three categories (i) institutional arrangements for improving productivity of smallholders operating in spot markets, (ii) various types of contract farming arrangements, and (iii) large-scale farms that generate jobs and/or include community equity shares. The institutional and policy context as well as commodity characteristics that favor these models are discussed within a simple transactions cost framework. He will also discuss cross-cutting policy priorities to enable the growth of commercial agriculture and agribusiness. These include continuing reforms to liberalize product and input markets, access to technology and skills, stimulating financial and risks markets, securing land rights, and investment in infrastructure through public-private partnerships. 

Byerlee has dedicated his career to agriculture in developing countries, as a teacher, researcher, administrator and policy advisor. He has lived and worked for a total of 20 years in the three major developing regions-Africa, Asia, and Latin America. After beginning in academia at Michigan State University, he spent the bulk of his career at the International Maize and Wheat Improvement Center (CIMMYT). There as a economist and research manager he made notable contributions in forging a new spirit of collaboration between scientists, economists and farmers. He also published widely on efficiency of research systems, spillovers, and sustaining productivity in post green revolution agriculture. After joining the World Bank in 1994, he has applied his experience of research systems to finding innovative approaches to funding and organizing agricultural research, including emerging challenges in biotechnology policy. Since 2003, he has provided strategic direction and led policy world for the agricultural and rural sector in the World Bank.

 

Bechtel Conference Center

Paul Collier Director, Centre for the Study of African Economies, Oxford University Speaker
Derek Byerlee Independent Scholar, Director, 2008 World Development Report Speaker
Symposiums

Walter H. Shorenstein
Asia-Pacific Research Center
Encina Hall, Room E301
616 Serra St.
Stanford, CA 94305-6055

(650) 724-5647 (650) 723-6530
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Takahashi Pre-doctoral Fellow
Huiyu_Li_3x4.jpg

Huiyu Li is the 2012–13 Takahashi Pre-doctoral Fellow at the Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC). She is a PhD candidate in the Department of Economics at Stanford University, expecting to graduate in 2014. Prior coming to Stanford, she attended high school in Australia and graduated with the State Ministerial Award for her performance in the state-wide high school certificate examination. She then received a BA and an MA in economics from the University of Tokyo, where she was awarded the university's Presidential Award for her academic achievements in undergraduate studies. Li also held the Japanese Government Scholarship and the Japan Society for the Promotion of Science Research Fellowship for Young Scientists. She is fluent in Chinese, English, and Japanese. 

Her research interests are: 1) the impact of firm bankruptcy procedures on macroeconomic performances and the design of efficient procedures; 2) the impact of financial frictions on innovation and long-run economic growth; and 3) the interaction between economic development and the entry costs of firms. At Shorenstein APARC, she will be working on a comparative study of bankruptcy procedures and macroeconomic performance in China, Japan, and the United States.

Li has presented at many major economic conferences, such as the 10th World Congress of the Econometric Society. She has also co-authored work with researchers at the Federal Reserve Bank of Atlanta. Her research on computational economics has been published in Mathematics of Operations Research.

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