ICT correlation coeficient with CSV

Transcription

1 ICT correlation coeficient with CSV The Purpose of this paper is to attempt to re-position ICT to the place I believe it deservs to be as a key catalyst and inhibitor of Shared Value. ICT Adoption is known in the past decades to have a high correlation coefficient with GDP Growth hence I believe it is a natural Shared Value creator as was proven empirically. Check below the graph that indicates the higher the ICT Development Index (IDI) the higher the GDP per Capita is. While Shared Value is about the creation of Social and Environmental solutions via the Capitalism Magic/Mechanism of generating value to the shareholder and to the Stake Holders (Employees, Suppliers, community and society), the question to ask is where an investment in Shared Value will yield best results. Apparently within the Shared Value various documentation I have not found as much ICT and/or IDI documentation as I have expected to find. ICT and/or IDI are mentioned mainly incidentally or being pushed to the Appendices. As an example one of the very few places I have found a full paragraph on the ICT contribution to CSV is in the Shared Value in Emerging Market document by FSG ( pdf) Under Appendix B: External Conditions it is said: Penetration of information and communication technology (ICT). The increased availability of low cost wireless networks and access devices enables companies across sectors to create shared value. The use of technology significantly lowers transactional costs and increases access

2 to market information. In Kenya, Safaricom leveraged the presence of mobile phones to provide a money-transfer service through M-PESA. Today, ICT bridges infrastructure gaps in rural areas, linking the informal economy to established markets and providing distribution channels and transaction platform There are various Wellbeing indices (OECD and many more) though seems like that for various reasons, the one most associated with the Shared Value initiative is the Social Progress Index which is also part of the quest to add measurements and quantification means to the Shared Value initiative. The Social Progress Index (SPI) measures the extent to which countries provide for the social and environmental needs of their citizens. While Access to Information and Communications is one of four chapters of the Foundations of Well Being pillar of the SPI (one of three pillars), I was puzzled by the fact that IDI has very high correlation to GDP per Capita and went to check the correlation between IDI and SPI and whether IDI and ICT gets the place I believe they deserve as highly correlated with Creating Shared Value. So my first conclusion is that like seen in the graph below there is a very high Linear correlation coefficient (>0.85) between IDI and SPI. Or in other words investment in ICT will likely to have high contribution to growth of SPI.

3 It is fairly clear that there are three groups of countries the developed countries (a.k.a the western world), the developing countries (mostly Latam, parts of Asia and parts of the Middle East) and the laggards (most of Africa + Bangladesh and India). The correlation between SPI and IDI is leaner which means that throughout the three groups of the countries increase in IDI has more or less the same effect on SPI, this is partially since we are comparing two indices. This is unlike increase of IDI or SPI which has non linear (powered) effect on GDP per Capita as can be seen in the other two graphs below. Note that IDI has slightly higher correlation coefficient on GDP per Capita than SPI has. Note that the GDP per Capita figures are UN Nominal figures (non PPP)

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5 My conclusions: Whether SPI is the best Wellbeing index or not I guess time will tell for now it seems like the most relevant to the Shared Value Initiative. It is clear that ICT/IDI has a very high correlation coefficient with SPI hence in my humble opinion ICT and IDI deserves to be studied much more in the CSV context and get much higher visibility as part of the Shared Value Initiative. Since Creating Shared Value is a lot about Creating Value I am confident that many ICT attributions to the CSV can and should be further analyzed (promise to work on some on my own) also from the Macro to the Micro. Here are few examples: 1. My Calculations shows that if Waze (lately bought by Google) saves in average only 1 minute per employee per day it contributes to the GDP of Israel nearly 0.5%. 2. Coursera which has a unique and impressive model for high education inclusion (reaching the long tail of the students) could not have gone so far without ICT. 3. Various models of Outsourcing (Contact Centers), Crowd sourcing and Crowd funding which has a lot to do with CSV could not have been so efficient without ICT. 4. Various Collaboration technologies (Video and Voice over IP) which were proven to increase productivity hence CSV could not have come to the world without the right ICT adoption as a foundation. A little disclaimer for the due diligence I would say that I am somewhat biased towards the wonders of ICT since I personally have over 15 years of experience in ICT globally ( ~8 years in Cisco), increasing productivity of many via ICT technologies (mobility, collaboration and more) including consulting to C-Level on strategies how to increase value (now Creating Shared Value) via increasing the usage of ICT. Would much appreciate feedbacks and comments please send any to zl.csvadvisors@gmail.com Thanks Zeev Likwornik