Principled Entrepreneurship Case Study
Grameenphone Case Study
Who:
Iqbal Khadir
Company:
Grameenphone
Background:
One day in 1993, during a power outage, Iqbal Khadir’s productivity plummeted because he was cut off from his computer network. Iqbal had an epiphany. He realized that his connectivity in many ways was his key asset, his “ticket” to work inside his company and, by extension, play in the larger economy. It was necessary both for identity and productivity. Sitting idle reminded him of home, Bangladesh and childhood. He now understood why the productivity back home is lower! Without a network, one is much less than what he or she can be in the economy. This was the genesis of his new dream: bring cell phone service to the people in Bangladesh so that their phones could connect them to each other and allow them to form networks of the economy. Bangladesh was essentially an untapped market of tens of millions of people.
Problem:
There was no infrastructure for cell phones in low-income areas. Many people living in these areas couldn’t afford the service fees, much less a phone, he was told when he first pitched his idea. It took 4 years to convince Telenor, Grameen Bank, and other partners to join him in founding Grameenphone. Experts kept telling him that his efforts would prove futile. The communities he wanted to reach out to were so deeply off the beaten (market) path that Iqbal had to build his own cell towers as well as a distribution and sales network to serve them. “Experts told me that we must first focus on primary needs. In a poor country, food, clothing, shelter, medicine—these are much more important than some high-tech digital phones,” he remembers.
Solutions:
He compared the ownership of a cell phone for many in Bangladesh to the ownership of a car in the US: most people cannot afford to pay for it up front, but having a car enables them to make the necessary money to pay it off over time. Similarly, cell phones would include people in the market economy who had been excluded, integrate them into networks of productivity, and in exchange, give them an online identity, and allow them to compete in the market. In short, if they had phones in their hands, they could earn more, which would give them the ability to pay for their phone service. Iqbal would often say, “Connectivity is productivity!”