12 Mar 2001  Research & Ideas

Digital Designs on the Inner City

Bridging the digital divide, at least in inner cities, requires a lot more than computer power — although more computers would certainly be nice. According to business and political leaders who focus their efforts on empowering residents of urban areas, access is only one rung on the ladder. Stated one Harlem entrepreneur, "It's more so about attitude." And attitudes, panelists noted, can be shaped by exposure to the wonders of technology.

 

An increasing number of inner city residents own computers and have online access, but government agencies and private companies need to do more to bridge the digital divide that still exists among income groups, according to business and political leaders at the conference.

Bringing technology to the inner city will require a commitment not only by the government, but also by the private sector, a five-member panel, moderated by Randal Pinkett of the MIT Media Laboratory, told HBS students and alumni. And once the inner city is infused with technology, more opportunities will be available for the creation of jobs and wealth among urban families.

photo of Randal Pinkett
Moderator Randall Pinkett
of M.I.T. Laboratory

Anne Habiby, executive vice president of the Initiative for a Competitive Inner City, a national nonprofit founded by HBS professor Michael E. Porter that identifies market-based growth opportunities in inner city businesses, said surveys show a general increase in computer ownership and online access among inner city families. Even so, she pointed out, computer use in the inner city remains significantly lower than in other areas.

For example, online access among African-American families in the inner city increased from 16 percent in 1997 to 23 percent in 1999, according to a survey by PricewaterhouseCoopers. However, that 23 percent is still less than half the 51 percent of residents surveyed outside the city who had online access in 1999.

"The good news is that we have something to build on that's pretty strong,'' Habiby said. "The bad news is that the gap is still quite large."

Plugging into power

One of the challenges in bridging that gap is showing inner city residents how technology can improve their lives.

Rahsaan Harris, executive director of Playing2Win, the country's first public access technology center established in an inner city, said the center has 26 computers plus video and music editing equipment, and offers residents classes in computer programming. The center is conspicuously located in Harlem to send a message to its residents: Your lives can be better.

"The digital divide isn't just about access. It's more so about attitude," Harris said. "Everyone wants opportunity. So if we can go into inner cities like we are in Playing2Win, and have a presence on the street that everyone can see and pass by, then folks are possibly going to change their attitudes about what they think their lives can be."

Yet Harris doesn't wait for residents to come to him. Instead, he has reached out to inner city business owners, helping them write competitive business plans that integrate the Internet. He also has taken a laptop and projector into the churches, community centers, and schools of Harlem to show residents the goods and services available on the Internet.

"We're trying to show them that this stuff is relevant to you because you can find a way to get your crying baby to be quiet, you can find job opportunities, you might find scholarships for your kids to go to school,'' he said.

We're trying to show them that this stuff is relevant to you because you can find a way to get your crying baby to be quiet, you can find job opportunities, you might find scholarships for your kids to go to school.
—Rahsaan Harris, of Playing2Win

Technology can also be used to bridge the asset gap and drive down the cost of programs designed to help low-income families, said HBS professor Peter Tufano (HBS MBA '84), who teaches financial management. Tufano noted that 10,000 families have established Individual Development Accounts, allowing them to save money and receive matching funds. However, since 40 million families are eligible, 10,000 is a drop in the bucket, he said. Part of the problem inherent in expanding the programs is money; the cost of running the programs is substantial.

But that's where technology can help, he said.

Proposed cuts in federal technology funding are also expected to hamper the efforts of those trying to bridge the digital divide, panelists said. However, in addition to needing legislation and government money, inner city residents could use help from the private sector as well.

Harris said companies can help entrepreneurs get started by showing them where to go for a small loan or coaching them on how to dress.

New success stories

Habiby said companies can also serve as models for aspiring entrepreneurs. Before setting out on their own, people hoping to start their own businesses can benefit from working for a company and observing how the company sets prices and adjusts to market changes.

"One of the biggest destroyers of wealth is somebody who starts a business too soon, without the proper grounding. We need to start thinking of the company as a universe of change,'' she said.

photo of J. Paul Brownridge
J. Paul Brownridge,
candidate for L.A. City Controller

In addition, successful business leaders can act as powerful role models for those aspiring to success. Habiby cited the example of Willie Woods (HBS MBA '93), who worked on Wall Street and made a "certain fortune," she said, before her organization recruited him to work on helping inner city businesses. Woods and his management team started a venture fund and have raised $125 million to invest in inner city and minority-owned companies.

"His hope is not only to make an egregious amount of money,'' Habiby said. "He will unblock the market. He will be able to prove that profit is possible and that many others should follow in his footsteps. We have to think not only about getting people into the pipeline that Willie went through, but about finding [more] Willie Woods and pulling them off Wall Street because [they] have the education, the network, and the experience to make it work."

J. Paul Brownridge, former Los Angeles city treasurer and candidate for Los Angeles city controller, noted that African-Americans controlled 0.5 percent of the wealth in this country 135 years ago; today they still have only 1.5 percent, he said, which "would not be considered real progress.'' He believes those numbers can grow, but said it's going to take a commitment on the part of society as a whole.

"We're in this cycle where, unless we get the critical mass of people to say that we have to make a shift, we have to make a change for the good of the whole, we'll be discussing this problem 30 years from now," he said.

"The divide will, in my opinion, become great unless we manage it,'' Brownridge added.

Photos by Martha Lagace