April 30, 2012

Nielson puts the African opportunity in perspective

Nielson have released a new report called The Diverse Peoples of Africa covering 7 countries. While they focus on urban and peri-urban consumers, mostly earning USD200 a month and above, there is some fascinating information available in there nonetheless. This is one of them - the visual puts the facts in context, the emerging consumer market opportunity in Africa is larger than that of India and China, albeit harder to crack. They say:
As the tactics and strategies needed to reach consumers across Africa require different approaches due to varied beliefs and behaviors, each country also requires a unique strategy. To succeed in Africa, it is important to not only ensure distribution in an unorganized market, but it is just as critical to confront the challenge of delivering an affordable product that gains consumer trust through offering quality and value.

Fresh look at India's consumer market



This report (PDF) by Yoshihiko Iwadare of Nomura Research Institute is only 15 pages long but manages to overturn conventional business strategy on its head in its framing and approach to new market entry for India's emerging consumer markets.

For more on the Indian consumer market today.

April 29, 2012

The hidden digital divide: Energy consumption and infrastructure

Photocredit: Niti Bhan, Maua, Kenya Feb 2012
This is an ironbox. It is heated by placing glowing embers of charcoal inside and securing the lid. When hot, it is used to iron clothes. Variations of this design can be seen in use across India's urban centers where the isteriwallah plies his trade, ironing clothes for a few paise a piece or available for sale in shops in Iloilo City, The Phillipines. The concept remains the same.

This ironbox caught my eye in the North Meru town of Maua in Kenya. It was available for sale at an electrical and electronics store which otherwise displayed colour television sets, home stereo systems and more. Why would a charcoal powered primitive device like this be sold in a modern store like that?

For one, the most common source of electricity to power the home are solar systems and the energy source is far too weak to run a regular iron. And if there's electricity, then power consuming appliances like irons and immersion water heaters are avoided to save money on the bill.

I've covered this aspect of gaps in the infrastructure before but as a driver for innovation. Today, this scarcity acts as a barrier to growth for high tech innovation, an aspect better captured by this interview with a Ghanaian startup founder:

What are some of the challenges you face running a startup in Africa?
  1. Inadequate infrastructural base. For software startups, internet connectivity is inadequate compared to the U.S. This means entrepreneurs have to spend more time doing research and software programming. Even where there is internet, it’s expensive and comes with low bandwidth.
  2. Shortage in energy supply. Startups that can’t afford standby energy generators lose productive hours anytime there is power outage (which is consistent in most countries in Africa).
  3. Low capital investment. Bootstrapping in Africa is not easy and angel investor funding is non-existent. There are a few venture funds but they aren’t adequate enough to meet the demand of startups. In addition, the terms are not favorable for most startups who want to access these funds. Worst of all, financial institutions like the banks charge high interest rates for loans making it difficult for startups to have financial stability.
When something so basic as to be taken for granted by startup founders most everywhere else in the world is considered a challenging barrier for African entreprenuers, it may as well be a digital chasm.

April 26, 2012

Lessons from working with Social Enterprises

Aisle Manager at Nakumatt
By the end of my most recent project, I was convinced that the label "Bottom of the Pyramid" (or Base of the Pyramid) also known as "the BoP" was one of the biggest barriers for organizations seeking to serve these emerging consumer markets in the informal economies of the developing world.

The alternative long and descriptive sentence is not as snappy as the BoP and I struggle with this everyday as I try to capture the characteristics and qualities of this market. But the problem with the label is that it has come to be closely associated with poverty alleviation rather than an emerging market opportunity, and thus gets loaded with the detritus of the aid and development industry. If you are to be a sustainable business, you need to generate revenue if not make a little profit and for that you need to consider your target audience as your customer, not your beneficiary.

The peculiarities of social enterprises seeking to serve the poor include the existential struggle between doing good and good business. But the emphasis on the BoP as the poor, the underserved and overlooked (by myself included) diverts us from taking them seriously as financially shrewd even if economically challenged customers in their own right. We barely know where they shop and why, how they make their decisions to purchase and how they plan to pay for them, in fact there's little or no serious consumer research on these segments of the population. No wonder if they are not considered serious consumers to be wooed and won over like any other.

"Should we be profiting from the poor?" ask a plethora of well intentioned articles when those who do business with each other in the informal, cash based economies have no such compunction when doubling the price of kerosene as a premium for the convenience of transporting it 10km closer to their customers.

If we took away this well meaning yet now increasingly problematic label (with all the associations of poverty and helplessness), we'd perceive a diverse group of people with varying needs, aspirations, cash flows and consumption habits. We'd be segmenting them with the same rigour of a Unilever or attempting to reach them wherever they shop like Coca Cola. We would not be sitting around measuring impact of the soda or wondering how to scale. I'm going to wrestle with this wicked problem further but in the meantime, here are some collected thoughts from my observations in field recently:

Questioning the value of the term Base or Bottom of the Pyramid aka the BoP
But why aren’t they buying my fantastic life saving product?
Assessing social impact vs financial sustainability for BoP business models
Why so much “BoP” marketing fails in the developing world


Social enterprises and the target audience for their value propositions
What does it mean when Chinese manufacturers enter the social enterprise space?
Systems thinking and the mobile for economic impact and wealth creation
Raising some concerns about urban user research insights being applied to design for rural markets



Navigating the African market opportunity
Caution: The emerging African market PDF stampede
Cracking the informal markets in Sub Saharan Africa: the need for strategic improvisation
Insights from the South African low income market (BoP) opportunity
The ingenuity economy: grassroots social enterprises abound

April 23, 2012

Forced changes: Gmail and Google

I came here to write. Instead, I've been sitting here watching the screen, stopped in my tracks by the completely unfamiliar interface. The same thing happened yesterday in Gmail, as I found myself stockstill as my brain and fingers froze while racing to find the delete button.

Don't snatch away the familiar and comfortable without any options.

I used to feel a certain sci-fi "sense of wonder" about design; design doesn’t lack for flashy theatrical histrionics — but what I’ve really come to treasure about it is that sense of *engagement.*  Design isn’t science and it isn’t fiction, but it’s is a way of knowledge and a method of action; [...] it’s a path into the poetry of things. ~ Bruce Sterling, 2007


[On preview] I'm sitting here wondering where the publish button is...

April 19, 2012

Putting people first: the difference between "what" and "why"

Pondering the topic of contracts and creativity in yesterday's post made me think about problem areas, how they’re identified and how they may be deconstructed. In simpler terms, the difference between the “what” and the “why”.

Take two regions in a country, one far more fertile and having a better overall economy than the other. Yet both areas face the same lack or unmet need. Take a product which fills this need. Yet it’s sales in the far more economically challenged area are more than double that of the first region. Why?

The numbers gave the company a means to identify a problem but are not able to provide any explanation for the discrepancy. It was these very same metrics that originally identified the first region as one which would be a good location to launch a product – average income was higher, unmet need was felt by almost 90% of the population, retail outlets were numerous etc.

This is where the need for exploratory user observations in the field, in order to understand the customer base and their behaviour made sense, as the company's sales data (contradictory to initial performance estimates) needed explanation that only the people generating those same numbers could answer themselves.

Data, charts, graphs, metrics and numbers all have a role to play but when they are about human beings (and not just the number of cars per minute produced in an automated factory line) I believe that role is a supporting one, not the Oscar winning star of the show.

April 18, 2012

The problem with contracts: rigid agreements trying to predict a creative process

The title of this post has been lifted from an email conversation with Dirk Knemeyer, where I was sharing my frustrations with a recent challenge I faced during the course of my work. I want to explore this further in writing, particularly since tweeting about it for the past couple of days helped me feel better but there's never enough characters to wholly articulate the problem. I think its one that comes up for many in the creative fields, particularly those tending to push the envelope of the 'fuzzy front end'.
The issue clearly is related to working against a ToR that is fixed in terms of methodology and deliverables, which is easy to do upfront, whereas the real value is to deliver ultimate value (which cannot be foreseen upfront – otherwise why hire you!).Your proposal needs to refer to a methodology that mentions the empathy, fuzziness, ambiguity and chaos situation, and the resulting need for flexibility. There also needs to be an explicit reference to providing ‘answers’ rather than the following of a methodology which in itself is just doing something, whereas the point is finding (substantiated) answers.
This is a quote from another email conversation which I think better captures the situation than anything I could have written. The challenge ahead is now to work out the articulation and framing of either a new or hybrid methodology or a way to capture the contingencies in the original proposals themselves.

The question I'd tweeted was posed so:
Can you successfully solve the problem and yet fail contractually or meet the specs of the contract yet fail to solve the problem?
because the situation I'd faced was an interesting, if complicated one. My client had a problem in the field. They suspected it might be something to do with one area and proceeded to create terms of reference for a research project based on their hypothesis. My proposal was a response to that hypothesis and framing of the problem area but as it was a 'Bottom of the pyramid' or BoP focused project, I expanded the scope to include a broader, more exploratory study. Prior experience has shown me that since the BoP markets are still very 'new' and thus have never been studied as deeply as the mainstream consumer markets of the developed world, one was better off exploring a broader context in order to ensure the problem had been framed correctly in the original hypothesis than simply assuming it was so.

And I was right. The solution space turned out to be vastly more complicated than the original hypothesis or terms of reference for the project, requiring flexibility of vision in order to synthesize the whole in terms of insights that the client could act upon in order to improve their chances of success (i.e. "solve" their original problem).

This meant that while my final recommendations certainly fit within the original objectives, the path and process followed meandered, in some cases quite significantly, from that originally proposed in the contract.

Thus the conundrum of having "solved the client's problem" but falling short of meeting the metrics of success.

Thus, I'm now in the situation where I need to find new ways to frame my methodology and approach - my 'offering' if you will - in a manner that allows for flexibility and ambiguity while assuring confidence that the outcome will provide value.

I'll wrestle this out here on the blog since I find that much of it draws upon the original pondering I'd done when I first began looking at the ways the tools from the field of design integrated with the needs of business and strategy. Since then I have gain practical experience in the field and the time seems right to reflect upon those original and early thoughts and refine them, or rather, its time to iterate the prototype based on user feedback from the field ;p

April 9, 2012

Mobile phones, social media and the Maasai: Time to refresh the image

At first, I did not know what these two young men were upto during an enforced halt on our way to Kisii at the end of February this year. The road had been blocked by the local community demonstrating about land rights just a few kilometres outside of Narok, in the heart of Maasailand and the driver pulled the car back and to the side to park out of reach of any rocks if they were going to be thrown. Soon enough the traffic was backed up and a little community sprung up during the few hours we were there, waiting for the road to open up. While waiting I noticed these two in action.

First, one took the stage, expounding at length on what was going on and emphatically giving his opinion on what needed to be done by the government and the leaders of the community, while the other captured this on video (a smartphone obviously). Then they would review the video snippet,


carefully, while laughing and making jokes - I did hear the word Facebook being mentioned a few times - before the other took his place and shared his views loudly.

But the most amusing part was when they convinced a little girl to give her opinion, which she did, to the laughter of the crowd that had gathered,

"This road belongs to all of us, it is not their grandfather's road, so why are they blocking us from using it to continue our journey".

These few minutes, gratefully captured on camera, exemplify to me what is the current day situation in rural Kenya when it comes to everything we write and talk about the way smartphones and social media are enabling an information revolution in Sub Saharan Africa. Their response to being confronted with an unexpected political demonstration was no different from anywhere in the world today - whip out your smartphone and capture it on video.

Their intent however was one step ahead of simply uploading the action on YouTube - by adding their own commentary on the situation and capturing the 'common man's' opinion, they quickly turned this opportunity into an exemplar of citizen journalism, to be shared freely on social networks like Facebook.


Perhaps its time we refresh these images to capture the impact of the mobile phone on the young moran from Maasailand than continue using the tired and stale imagery that we all recognize.

April 3, 2012

Taking the long view - an emerging markets perspective

I read somewhere recently about the difference between those driven by quarterly earnings and Wall Street valuations and those taking the long view on business returns. The latter tended to have a more cohesive strategy and patience to create a market and demand - so very applicable to the challenges of addressing the lower income customer segment in developing countries, while the former were under pressure to show returns before they had even figured out which way to turn.

Emerging markets are back on the radar again I note as increasing numbers of articles and media bits bubble up to the top. After years, concepts like 'reverse innovation', 'jugaad', even the 'tyranny of dominant logic' are being bandied about by the likes of The Economist.

But is this something to get excited about? I don't know, I've been looking at emerging markets since the beginning of 2006, when the BRICS were news and BusinessWeek was a real magazine putting India and China on the over in turns. Jugaad innovation started that year as well, soon to die an ignoble death by early 2007.

Reading all these words again suddenly makes me feel like I missed the bus, by being some few years too early. But as a client of mine recently confessed, he's ready to go back to the drawing board for ideas he may have had too early for the landscape to receive them. Since it might end up being his 4th or 5th business venture, its worth pondering his words.

Perhaps one can see what will be right around the corner but like those odd tricks of light, that corner may just be a little further away than they seemed. I suspect I'll be back to muse upon these concepts once again... or as I used to say, this conversation will continue.