Innovators dilemma

Why you should listen Daniel Kahneman is an eminence grise for the Freakonomics crowd.

Innovators dilemma

Teaching Mobile Payments 20 February Daniel Waldron As mobile money spreads across the world, more and more start ups plan to rely on digital payments to reach the holy grail of scale.

Pitch decks talk about engaging clients remotely and transacting digitally, bypassing expensive face-to-face interactions.

Innovators assume they will be able to plug into existing platforms mobile network operators or banks and rely upon their well-developed cash-in-cash-out networks.

But what many entrepreneurs have discovered is that although Innovators dilemma have built payments systems, the hard work of familiarizing Innovators dilemma with this technology has not yet been done — or has not been done well. Safe Water Network This is not true everywhere. In East Africa, businesses have leveraged mature digital finance products to grow quickly e.

The nonprofit organization Safe Water Network is an interesting example of how this work can pay off. Safe Water Network wants to connect millions of rural and peri-urban Ghanaians with clean, affordable water. But for years its payments process was decidedly analog: In front of every water tap sat someone collecting cash.

That person would pass the cash on to an operator, who had to reconcile it with volumes. The operator would then transport the money to a banking point, where it could be remitted to headquarters and reconciled again. It could take nine days before Safe Water Network was able to deploy its revenue, with at least one of those days spent with a senior executive bent over a desk, signing checks as fast as his cramping hand would allow.

It was not hard for Safe Water Network to see the value in adopting mobile money for internal payments. They expect to save 2 percent on their operational expenditures from reduced travel and to pay vendors in one day instead of nine.

But shifting revenue collection to mobile money, as part of a larger shift to prepaid meterswas harder. Users, particularly those who already had wallets, were excited to use mobile money — in theory.

Innovators dilemma

But after a few initial payments, almost everyone reverted to cash. This is not an uncommon story. Although Ghana has almost 24 million registered mobile walletsfewer than 50 percent of the wallets are active, and many people have never used their wallets for more than receiving remittances.

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In some cases, customers can rely on agents to make payments for them, but that approach has risks. Like any new technology, somebody must show customers how mobile payments work. This was not a cheap or easy challenge for a water company.

USSD interfaces are notoriously unfriendly to users, particularly illiterate and older adults. Making a payment requires multiple numbers to be on hand paybill number, account number, PINseven to 12 steps and a certain speediness, lest the whole session time out before completion.

Providers were meant to piggyback on the important work already done by banking agents and mobile money operators.

Innovators dilemma

But most customers do not understand how to pay with their phones because they have never needed to before. It may come as a surprise to companies who want to collect digital payments that they must build this capacity, yet that is the reality of doing business in many areas.

Even in Kenya, many rural customers did not know how to use their M-Pesa accounts before One Acre Fund carried out weekly training sessions on how to make payments. Customers want a human touch: The concern for companies like Safe Water Network is that this level of training will be the death of scale.

How can you hit growth targets when you have to contact a customer repeatedly to reinforce payment lessons? There may be some clever solutions available, such as PEG Africa letting its users initiate transactions over the phone. But in the long-run, this problem illustrates the need for better partnerships and communication between mobile money operators and the service providers that want to use their payments platforms.

And to overcome its revenue collection issues, Safe Water Network did just that.The Innovator's Dilemma has 30, ratings and reviews. Mal said: Chances are, you’re reading this review on an example of disruptive technology.

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Clayton M. Christensen is the Kim B. Clark Professor of Business Administration at Harvard Business School. He is the author of eight critically acclaimed books, including the bestsellers The Innovator’s Solution, How Will You Measure Your Life?, and Disrupting plombier-nemours.comensen is the cofounder of Innosight, a management .

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