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On November 20, 2016, CTI commented on Rolls-Royce: Embracing IoT on a wing and a prayer :

Great post! This got me excited. A few years ago, while at GE, I studied Rolls-Royce Servicization model. This essentially offers a product (jet engine) as a service (flying time). The TotalCare (“Power by the Hour”) offers complete engine and accessory replacement services for a fixed cost based on utilization for jet engines. This helped Rolls-Royce to minimize the risk of unplanned maintenance events for the customer. In return, Rolls-Royce and the customer share the risks and benefits by capitalizing on the core competencies of both companies.

On November 20, 2016, CTI commented on Is TAG Heuer Out of Time? :

Jgilortiz, I like your point about the iPhone platform being closed. This is a major barrier. Apple has been able to lock people into its ecosystem. Most of my buddies who use Apple watches do so because they use iPhones (and Macbooks and iPads). I agree with Hugo that the high-end watch brands would not lose much market share to the likes of Apple. From my observation, it’s the Swatches and Fossils that lose. All Apple has to do is make it tough for other watch brands to connect with iPhones.

Personally, I’m not excited about the trend to connect multiple devices. To Amelia’s point, there seems to be many people who don’t see watches (and phones, and so on) as opportunities to show individuality. This has made it expensive to make stuff for people like me. (This comes from a guy who still uses a BlackBerry.)

The network effect is so important these days. People are happy to use the exact same phones or watches as everyone else. Companies such as Apple and Google are well-positioned to exploit this. For BlackBerry, not having the most important apps (because developers don’t have the incentives to develop apps for BlackBerry) has made it so tough to use a BlackBerry.

Finally, to Hugo’s point, it would be wise for TAG to create a new line for the smartwatches. It can preserve its legacy brand value while allowing it to dabble in the smartwatch space.

On November 20, 2016, CTI commented on M-Pesa: Transforming Kenya with Mobile Money :

Ksong, thank you for this. I’m a big admirer of M-Pesa. A few years ago, I did some research to figure out why mobile money has struggled to catch on in Nigeria, where I’m from, and many other emerging markets. Kenya is somewhat unique.

Regulation favored mobile in Kenya. The regulation has lagged this sort of innovation with regulators trying not to impede on progress. In Nigeria, there is a big debate on whether mobile money is a banking service or telco service. The Nigerian regulators believe it’s a banking service. For this reason, they has forced mobile money firms to partner with banks. Essentially, in Nigeria, only banks are allowed to offer mobile money services. Compare this to Kenya’s case where Safaricom, a telco with close to a monopoly, was allowed to offer mobile money.

There are other factors that made Kenya right for mobile money compared to other markets such as Nigeria. Kenya, unlike Nigeria, had a national identification system. In fact, Nigeria, until a few years ago, did not even register sim cards. The mobile money alternatives in Nigeria are quite cheap, unlike those in Kenya.

Further reading:

On November 20, 2016, CTI commented on Payments in Africa’s largest market :

TOMchallenged, thank you for the post. Having used Interswitch in Lagos, I understand that there would be major switching costs for Interswitch’s current customers. It would be nice to learn about the barriers to entry, for, let’s say international players. Are there regulations that put international players at a disadvantage (even if they have the economies of scale to drive costs down)?

On November 20, 2016, CTI commented on GE’s Quirky Idea :

It’s great to see a post about Quirky! While at GE, I studied the Aros air conditioner. Aros received decent reviews by various experts with excitement about its fantastic design, smart features and potential for energy cost savings. It was a good match: Aros combined traditional GE air conditioner technology with integrated smartphone application and the internet of things.

However, experts and consumers were disappointed by a few things: the loud noise, gap caused by ventilation flaps, glitches in smart functions, inconvenience to remove air filter for cleaning, and absence of remote control set.

Carina, I appreciate the post. It is unfortunate that some of the most vulnerable people to climate change have been the least contributors to emissions.

The primary aim of the recent Paris agreement is to hold the increase in the global average temperature to under 2 degrees Celsius above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels, particularly through reduction in greenhouse gas emissions [1]. For the Paris agreement, each of the 195 participating countries submitted its plan (INDC) to reduce emissions based on its circumstances. Unfortunately, the agreement relies on political pressure to enforce pledges rather than international law as there are no enforcement mechanisms [2]. There is a process to review each country’s progress against emission targets regularly.

By 2020, advanced countries pledged to contribute $100 billion per year to a fund, called Green Climate Fund, to support the efforts of developing countries to cope with the effects of climate change and reduce emissions [3]. The Maldives should lobby to draw from the Green Climate Fund to fund some of its climate change programs. The Maldives should also explore other innovative sources of financing. For example, Brazil taxes airline tickets to support some of its social programs [4].

[1] UN, 2015. Adoption of the Paris Agreement, Paris: Framework Convention on Climate Change (FCCC).
[2] Levi, M. A., 2015. Was the Paris climate deal a success. Newsweek, 14 December.
[3] Manolas, E., 2016. The Paris climate change agreement. International Journal of Environmental Studies, 73(2), pp. 167-169.
[4] UNITAID, 2010. Annual Report, Geneva: UNITAID.

I like PG&E’s Plan of Action 1. Energy efficiency programs allow customers to use less energy while receiving the same level of end service, for example, by replacing an old refrigerator with a more energy efficient model [1]. Demand side management has been shown to cut energy consumption by up to 18 percent with a benefit-to-cost ratio of up to six [2]. Smart grid technology is one way to improve energy efficiency. Smart grid technology allows customers to make informed decisions about energy consumption by altering the timing and quantity of their electricity use [3].

However, scaling such programs will require significant investment. The United States is estimated to need up to $476 billion investment ($24 billion per year) in smart grid technology and demand side management to generate $2 trillion in benefit over the next 20 years [4].

[1] McKinsey, 2010. The smart grid and the promise of demand-side management, New York: McKinsey & Company.
[2] EPRI, 2011. Estimating the Costs and Benefits of the Smart Grid, Palo Alto: Electric Power Research Institute.
[3] McKinsey, 2010. The smart grid and the promise of demand-side management, New York: McKinsey & Company.
[4] EPRI, 2011. Estimating the Costs and Benefits of the Smart Grid, Palo Alto: Electric Power Research Institute.

On November 7, 2016, CTI commented on Uber: Climate Change Hero, or Villain? :

In the US, 23 percent of emissions are from cars, trucks and buses [1]. If every brand new car purchased was the most fuel efficient option within its class and price range, emissions from new cars could be reduced by 24 percent [2]. Alternative fuels that reduce emissions in vehicles tend to be costly [3].

I’m interested in Uber’s business model in emerging markets. My buddy is the Operations Manager for Uber in Lagos (Nigeria), my hometown. His team had to downgrade the vehicle age requirement by two years (year of manufacture of 2008 to 2006) earlier this summer [4]. Majority of the cars in Nigeria, like in most developing countries, are used cars. Uber quickly found that asking its drivers for cars younger than eight years old was onerous. For emerging markets, Uber may offer extra margins to its drivers for newer and more environmentally-friendly cars.

Additionally, services such as uberPOOL are not available in Lagos. I wonder whether Uber will consider offering POOL as it gets more popular in the city. I suspect that there may be cultural barriers. I don’t think Nigerians will be welcoming to the idea of picking strangers up via POOL considering the security issues in the city. At this time, I’ll say that we Lagosians use Uber as an alternative to driving our cars or using taxis.

I agree with Lindsey: Uber customers, even in the US, may use Uber as a substitute for walking or using public transportation. I’m guilty of this. Whenever I’m lazy, I use Uber to get around Cambridge.

[1] Center For Global Development, 2014. How Can Nigeria Cut CO2 Emissions by 63%. [Online] Available at: http://www.cgdev.org/blog/how-can-nigeria-cut-co2-emissions-63-build-more-power-plants.
[2] DfT, 2008. Carbon pricing, London: UK Department for Transportation.
[3] Pew Center, 2003. Reducing Greenhouse Gas Emissions from US Transportation, Arlington, VA: Pew Center on Global Climate Change.
[4] http://www.ubernigeria.com/accepted-vehicles/

On November 7, 2016, CTI commented on Pampers (P&G) use of wood pulp :

Alexandros, thank you for the post. I wonder whether P&G may approach sustainability differently depending on the region. I imagine that consumers in developed countries are more willing to pay a premium for more sustainable products than those in emerging markets. Should P&G commit significant capital to R&D on more environmentally-friendly Pampers with the hope that consumers will reward it for such a move? I would love to hear more from P&G about its plans to improve other brands to be more sustainable.

At this point, firms such as P&G should be designing for sustainability. The R&D and product development processes should incorporate sustainability as a key pillar. As more consumers begin to demand more environmentally-friendly products, such a strategy will yield returns.

Leah, thank you for the post. I learned a lot from it. I have looked into climate change and food security in Nigeria and see some similarities with the situation in Rwanda.

Rwanda may use public-private partnerships to, for example, develop irrigation systems for farm land dependent on rain-fed agriculture. To ensure that Rwandans properly understand climate change, the Ministry of Education may include mandatory classes on climate change in the school curriculum. Ideally, Rwanda should have a fund to support climate change research in agriculture and food security. The private sector should be properly engaged to contribute to such a fund.

In Nigeria, I found that climate change and food security programs sometimes were mutually antagonistic with government programs. I wonder whether this is the same in Rwanda. If so, a monitoring and deliver unit may be created to coordinate the activities of climate change and food security programs to maximize effectiveness and minimize redundancy.