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September 26, 2006
Innovation in unlikely places
On the Business Week blog - Learning from Informal Urban Economies: "If necessity is the mother of invention, then the residents of squatter cities will have much to teach us about resourcefulness and innovation."
From a conversation with Stewart Brand on innovation in squatter cities:
Have you witnessed a business actually tapping into a squatter city and devising an innovative product or service as a result?
Yes. The AES Corporation, a leading power company, asked me to give a talk in Latin America. While I was there, I learned that squatter cities steal their power…there are illegal power chords siphoning electricity strung for miles. In Buenos Aires, stolen power is better than no power, but it has problems. It's dirty power because it's not regulated. It can be too strong and fry a fridge or a TV. The power is flaky. And dangerous. In Caracas, four people a month are killed stealing power.
So AES sent people into the field. They wanted to see how to convert thieves into customers. They realized there are consumers in squatter cities. And people were interested in getting clean power regularly. The problem was that squatters' incomes are burst-y: They have some weeks with no money coming in, or others when they suddenly have it.
So paying a bill monthly doesn't work. So AES came up with a token system, and squatters could use power meters fed by tokens. Folks can buy power tokens when they can. This system is now in progress. And squatters are now part of the formal economy in parts of Latin America.
By the way, the electricity by token system is an old idea - and was still in use in England when I encountered it a decade ago. Sometimes, reviving an old idea is a great innovation in a new context.
Posted by Ken Jarboe at September 26, 2006 8:24 AM
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