Great post, Nkem. I’ve shopped on ASOS many a time to get the convenient shopping experience of a mall while avoiding the hellish, miserable experience of an actual mall full of real life humans. Not just humans – shoppers. The worst kind. I digress.
As I moved away from the UK, I was happily surprised to see that ASOS delivers worldwide and I was once again spared from the malls. But my question to you is this – how the heck (and why) do they do this? Shipping to more countries than Amazon (and for free) just doesn’t make sense to me – there are a lot of tiny markets where courier services are the only viable logistics solution, and yet they still ship there. Are there any other aspects to their operating model that makes this possible? Or does the reason stem from their business model: perhaps they are cross-subsidizing these smaller markets because the image of being a globally present one-stop-shop gives them brand equity worth more than the associated inconveniences?
Thanks for the comment Ameya!
I use failure as a relative (and, I guess, deliberately inflammatory) term. The WBG’s unrivalled combination of financial and human capital in the development finance space mean that they are expected to enable large public projects in developing countries that would not have happened without their involvement. And they’re still doing this, driving projects like the Grand Inga Dam forward in D.R. Congo, which if completed would be twice the size of the next biggest power plant in the world.
But, in my humble opinion, they are currently working well within their capabilities and could achieve much more with the same resources. To do so, I think the accountability issue you bring up with regards to the existing operational model is absolutely paramount, and this is why I believe all reforms taken to date have merely scratched the surface.
Great post, Z. I’ve also been eagerly following Bridge Academies for a while (you can guess why, based on the list of investors). As you say, they’re targeting 10m students by 2025 and currently have around 100k, and I think this target is based on necessity as much as ambition. So there is still a long way to go to benefit from the kind of economies of scale they need to make operations profitable at such low fee rates, and in the meantime they’re relying on a lot of development financing.
What’s interesting here is that their business model is to compete with universal public schooling, rather than targeting middle-income families where value might be more straightforward to capture. But the existing public system has a wide range of inefficiencies that a more dynamic, streamlined private institution can save costs on. As a result they can potentially provide a better service at current or expanded enrolment rates for the same cost (close to zero) due to the operational innovations you mentioned – particularly standardization and vertical integration. I’m less concerned with KylaWilkes’ above point, because Bridge Academies’ business plan is to marry such innovations with the existing pool of teachers, rather than creating or finding a new pool of highly skilled ones (which would indeed by hard).
So my question is this – is there a case for international donors to be diverting money away from governments and towards private social sector providers if they can offer such inclusive access? Could governments save resources by focusing on regulating these private providers, and handing over service provision itself? In which case, should Bridge Academies continue to support growth through development finance and worry less about turning a “true” profit in the near term?
Great post. As a passionate fan of the sport, it still worries me that FIFA has a reserve in excess of $2bn that could be used for essential development projects right now. Any truly non-profit organization could never justify that to its stakeholders. This links with some of the other comments.
On the one hand, it must be extremely difficult to scale operations in line with the exponential growth in revenues, which has come in particular from TV broadcasting rights. Perhaps they’re doing as much as they can. But to me, and as you mention, the plethora of scandals have exposed some massive holes in the operating model. In particular, the archaic organizational structures, shady processes (such as voting on the World Cup, and voting for the President) and really weak subsidiaries (regional football federations) distance the organization from its true shareholders – the fans.
For far too long it was a gentleman’s club that wasn’t really accountable to anyone – it lacked a business model – and this fostered corrupt operations. They’ve now redefined their business model, but it has been far more difficult to change their operating model accordingly.