September 30, 2012

Reflecting on my work here in rural Holland

Wageningen is not your average small town of pop. 30,000 in rural Holland. It has a very well known research university in the Biological Sciences, particularly the needs of agriculture and food.

This changes the character of the town's thinking, being far more aware of the world and what chaos' butterfly wing in another part of the globe means in the local and personal level.

The overemphasis in the English language internet on the Eurocrisis in Europe overlooks the reality that Europe is also a continent, not a country. Just like there are rotten parts to India's growing economy, there are similar challenges in parts of the Eurozone, but is it really the end of the world as the media makes it sound?

Not really. Nowhere even close.

Like any other social network, the countries that choose to use the eurodollar as their primary currency of choice, now have a higher barrier to switching away from the euro or reverting back to dimly recalled national currencies.

Transacting in the euro is so easy across cultural and regional barriers that it makes the effort worth while. I myself am already banking on it.

September 25, 2012

Amsterdam Street View

September 21st 2012

Market creation is built on a foundation of communications

Strategic conversations is a concept I learnt from Dina Mehta, over the phone, recently and I just recognized a clear cut case of it. The World Bank has just launched a platform for conversations to happen around the wicked problems of the day. Re-aligning the flow between intent and action is much easier with a core mission or vision at the top. This will indeed be fascinating to watch.

September 20, 2012

"Life is Hard" - Original slides with written speech, BxD 2008

This is more or less the written version of my Life is Hard presentation (slides,video, reference) as first given in October 2008 in Providence, Rhode Island at the Better World by Design conference held at Brown University. Some of the details have become more nuanced since then, some parts have spun off into blogs, projects, grant funded research and more. But the fundamentals remain. Of that I'm glad, as it implies that the basic principles are sound while additional observations in numerous countries since then have only fleshed out the details even more. This is original work and the slides have never been shared previously outside of a presentation environment. Note: This talk has primarily addressed audiences living and working in the first world's mainstream consumer culture and is given  from that frame of reference.

Life is Hard. 

Without systems that work, inadequate infrastructure, little or no social security or welfare, and general chaos, life is hard at the bottom of the social and economic pyramid in developing countries. If you have survived to functional adulthood while growing up in the slums and shanties of Africa or South Asia, you've come of age experiencing life as adversity and challenge.

The only certainty is uncertainty.

Natural disasters or random riots, anything can happen at any time. Planning for the future, much less tomorrow, can be challenging and a sudden shock can spiral the whole family into destitution.

Uncertainty of time and uncertainty of money. 

Uncertain Incomes

Not knowing how many shoes you will shine today or whether you'll have a call for daily wage labour means you have no way to predict or plan based on your cash flow. You rarely know how much you make each month, and are more likely to be living hand to mouth, getting by with the cash you earned that day.

Inadequate Infrastructure

When systems are lacking or insufficient, they add to inability to plan. You're waiting for water, or a shared toilet, you're walking two hours to catch a bus, there's not enough light or the power is out - it all adds up to uncertainty of time. And is out of your control.

A different worldview

So this life of adversity and uncertainty, surviving (and thriving) in challenging conditions of scarcity, leads to a different worldview than what we're familiar with. Buyer behaviour and purchasing patterns on irregular incomes are very different, as is the mindset and what is value.

There is daily juggling of income versus expenses, a complex processing of whom to pay for what, and when and for how much. People are familiar with all the financial tools of loans, barter, credit, debit, trade and interest rates, though they may not always call it the same names or be aware of sophisticated financial terminology or use tools like ATMs, credit cards and banks.

The BoP as Customers are strategic money managers

Every decision to spend money – with the exception of an impulse buy of sweets or a newspaper when there is some change available – made by those who manage on uncertain incomes at the base of the pyramid could be said to be analogous to making an investment. Usually in their future, in some way or the other. Whether the decision is a tradeoff between purchasing shoes for a school going child and meat for a meal or choosing to buy some airtime instead of a meal, each of these is an investment – in the child’s future, in future income if work is dependent on being accessible by phone or simply, the next meal.

 How best do we optimize the return on our investment in this single shopping basket with this amount of money available today?

Trade offs are a fact of life.

Purchasing patterns on irregular and unpredictable incomes

When income is irregular and unpredictable, both in amount and frequency, such as it is for the majority at the bottom of the pyramid, buying behavior is not quite the same as for mainstream consumers. At least four patterns emerge based on a combination of need and money available.
  1. Bought in bulk – Usually food staples or something you cannot live without would be purchased in this manner, either when there is a sudden influx of cash or a payment at the end of manual labour or if managing on a fixed amount each month such as remittances from abroad. This ensures that there is something to eat even if money runs out before the next payment might be due. If its a sudden influx of cash for someone not on a pension or remittance then these are the funds that often go towards a consumer durable purchase or big ticket item of some kind.
  2. Paid for in advance – Usually a service which can be used or consumed over time can be purchased in advance when funds are available and then made to last as long as possible. The best known example of course is prepaid airtime.
  3. Sachets or single portions – A form of on demand purchase. Interestingly, I came across this working paper by Anand Kumar Jaiswal at IIM, saying that sales results in rural India seemed to imply that only shampoos and razor blades were more successful in sachet form, whereas things like milkpowder, jam etc sold more in the larger size. The author cautions against assuming all sachets will sell. I believe it could be based on the usage pattern of the product in question or its nature – what if you packaged a perishable item in single servings that didn’t need refrigeration until opened?
  4. On demand or daily purchase – mostly perishables like bread, eggs, fresh vegetables purchased for the day’s needs. Partly cultural but also influenced by availability of cash in hand. Cigarettes sold loose or two slices of bread and an egg are some examples we’ve seen. Indian vegetable vendors are also willing to sell you a small portion of a larger vegetable either by weight or by price. You can buy 50p worth of cabbage for a single meal. Minimizes wastage whether you’re cooking for one or have no fridge. This is also the most common pattern if you earn small amounts daily, like the vegetable vendor, shelling out what you have for what you need and then if there’s some change, debating what do with it.

What is the buyer behaviour observed among BoP "consumers"? 
  1. Maximizing the return on their investment - When you have a limited amount to spend, usually at the end of each day, you’re seeking to minimize risk and maximize the value of your investment. From our observations in the field, we have seen some core values emerge in the pattern of buyer behaviour at the BoP in the way they think about and use their possessions or the products and brands they choose to buy.
  2. Repair and renew – Limited incomes mean there is no wriggle room for the easy convenience so beloved of consumer product manufacturers of ‘just throwaway and replace’. Products must be durable and are treated as such – whether its renewing the old mobile phone with a new keyboard after the numbers fade from prolonged use or continued repair of 20 year old cars using spare parts that may not be new themselves.
  3. Maintain and extend – How long will this bar of soap last me? I’m willing to pay a little more if this bar will wash more clothes for my family than that cheaper bar that quickly dissolves into a puddle of soapy goo. Let me tape some plastic sheeting over the television that occupies the pride of place in our one room shack, it will last much longer and still look shiny and new. Cobblers repair sandals with bits of tires and small nails while someone will offer to make like new the grinding stone worn too smooth from constant use.
  4. Recycle and reuse – Nothing ever goes to waste, not even old plastic bottles dug up from rubbish heaps. But even those who are not rag pickers think twice about throwing away something that could be used elsewhere or put to another purpose.

A different mindset, a different worldview

All of these qualities are part of the BoP consumer’s mindset, although many seem obvious or familiar to us. The critical difference, imho, is that while we have the wriggle room for experimenting with the ‘new and improved’ or rather then untried and unproven, those at the BoP cannot take the risk. Proof of performance over time is what establishes the brand’s reputation and trustworthiness. And this influences the messaging that resonates with their values when responding to information about products and services. This is where the ‘sensitive bullshit meter’; the skepticism about marketer’s claims comes into play. The ‘tried and true’ carries weight as Coca Cola, Toyota or Tata can tell you.

We may find that a soap lasts a long time after we’ve purchased it and its advertising message maybe based on nuanced lifestyle messaging, usually a beauty queen lathering up in the shower and then shown on the arm of a rockstar or some such. But when targeting the market at the BoP, these qualities must become easy to confirm and identify, they form the core values which are at the foundation of every purchase decision. What’s on sale must be not only be easy to use but also easy to choose.

(smile at draft)

September 18, 2012

Minimizing risk: buyer behaviour among the BoP confirmed by Nielson

The South African Shopper Trends report by Nielson highlights some aspects of the township customer's mindset and buyer behaviour, as demonstrated by the following snippet from this analysis:
How we make purchasing decisions
We make decisions based on what other people say, as well as how we experience a product. There is a major fear amongst consumers (especially in the township) of wasting money on a product that may fail on delivering - hence why 92% of consumers cite word of mouth as the best source for new product ideas. This results in very little initial experimentation, with consumers rather sticking to what they know and trust. For example, many people would rather walk for 20 minutes to buy airtime from Pep than buy immediately from a trader on the roadside. If there is a problem with the airtime, they know Pep will solve it, but the trader won't - so there's effectively too much of a risk to not buy from Pep.
Lack of willingness to take a risk on an unknown brand or service, minimizing the risk by the tried and true over something ostensibly 'new and improved'. Proof of performance is critical as is getting the maximum value for their money i.e. the return on their investment. Reading these two articles linked reminds me so strongly of the purchasing patterns and buyer behaviour observed among BoP customers - the very first time in the townships of South Africa back in January of 2008, that I think I'm going to finally get around to sharing my Life is Hard presentation, and write up my accompanying talk to go along with the slideset. Soon.

September 17, 2012

September 16, 2012

Questioning the narrative of extreme affordability for mobile phones

Yesterday I had a long conversation with someone whose job is related closely to mobile phone design. You'd recognize his employer's name very easily. He asked me about extremely affordable phones for the low income segment in emerging markets. Late in the year of 2012, I found myself hesitating before answering immediately with a resounding "Yes" to support the concept of low cost mobile phones for the BoP customer in India, Africa or wherever.

That was enough to make me reflect on why I hesitated. After all, wasn't this the default aspirational outcome for these demanding customers?

It was, indeed. But the narrative has not yet caught up with the reality on the ground. For citations, lets go to Alexis Madrigal's article on The Phone of 2022, where he mentions:
No one has tracked these market shifts better than Horace Dediu at Asymco. He's documented what he calls "a tale of two disruptions," one from above in Apple and one from below in cheap Chinese and Indian manufacturers. In just the last five years, Nokia, LG, and RIM have seen their market shares and profits collapse due to this pincer movement.
This disruption from below has changed the mobile phone landscape for the lower income segments everywhere. Suddenly, their aspirations are affordable and the trade offs they make are now between a cheap fake with all the trimmings and a more expensive brand with less features, not between a phone and no phone at all.

For branded manufacturers of mobile phones, going after this low cost segment simply does not make sense anymore. Their own cost structure will never support what a Bird or a Tecno is able to provide for quite the same price. The low end mobile phone market is now a commodity market, where even the repairmen tell you that people don't bother to get their phones fixed anymore because a Chinese replacement is cheaper than the branded spare parts. Furthermore, mobiles are a personal asset and one worth saving up for - why not aspire to the best possible you can afford?

Thus you'll find a taxi driver in Nairobi flashing his iPhone or the security guard with Blackberry curve. The "smart" aspect of the phone may not always have to do with the innards of the device.

Human beings are aspirational. This shift in the consumer's perception and choice in response to the larger shifts as documented in the snippet above includes the reality of increased choice. Even 4 years ago, it was difficult for a poor farmer to contemplate the purchase of a mobile, seeming as it did a shiny shiny way outside his grasp. Today's market forces have brought it home to him, well within his reach, as any beachboy surfing Facebook will inform you.

The old emerging market for mobile phones narrative is a dangerous one for the big global brands. The emerging stories are now the Tecno's and the MicroMax's. Yes, there is a lowest income bracket or those 2 remaining families without a phone, but that market has now spun out of reach. The digital divide is being bridged by names you've never heard of and the discards of those who've gone on ahead.

Far better to take a step back from the fray and think about where the dots are with regard to the mass majority markets of the world. The internet experience. The window to the wider world. The global social network. The aspirations that the commodities cannot fulfill as easily. Far, far better to offer a stairway up than a dumbing down. Nobody aspires to be the bottom of anything.

September 15, 2012

Emerging evolution of global BoP markets by mindset and income

 Japan's Nomura Research Institute have an interesting take on the evolution of the existing global population currently demarcated as the BoP (Base or Bottom of the Pyramid). While it is not surprising that income levels are expected to increase, given the signals already observed in frontier markets and rapidly growing economies, what was intriguing was their assertion that the newly emerging "Middle of the Pyramid" (or rather, emerging global middle class since that's a diamond not a pyramid) will display an entirely different sense of value i.e. a different mindset, from mainstream consumer culture prevalent today.

This values gap between the customers at the BoP and those immersed in the global mainstream is something I've written extensively about previously, having identified and framed it in "Design for the next billion customers" back in 2008. It is one thing, however, to describe my observations of differences in mindset and buyer behaviour, and another, to see this aspect in terms of population and income, that too, taking the increasing upward mobility into account.

That is, what this diagram is saying is that not only is there a difference in value (and thus, mindset) between the BoP customer and his brethren higher up on the social and economic pyramid, but even as their income rises and they evolve into 'middle income' customers, their mindset is more likely to remain the same as when they were classified as BoP than to suddenly shift into the mindset and values of those in the higher income brackets.

That these emerging global middle classes will continue to have more in common with their rural cousins and their BoP roots.

Yes. This makes perfect sense. And to see it visualized like so offers valuable insight into the emerging consumer markets of the near and medium term future.

September 14, 2012

Boundary spanners, hybrid teams and thinking innovatively

Hybrid Organizations as a Strategy for Supporting New Product Development is the title of a research paper by Alison Rieple, Adrian Haberberg, and Jon Gander of the University of Westminster. A summary of their findings:

This article focuses on strategic alliances, in which one firm (normally a large, multi-product corporation) obtains critical product-development resources, such as design or technological know-how, from an independent firm (normally a smaller and more specialized design consultancy or a technology developer). The two firms develop a fairly close relationship—perhaps only for the period of a specific assignment, but often over a longer period spanning several projects. These hybrid relationships are governed through informal means, such as unwritten agreements between key individuals, as much as through the more usual form of legal contracts.

Crucial to the success of a hybrid are “boundary-spanners.” These are members of the partner organizations who are able to move freely within both, translating the requirements of each into language and behavior that is acceptable to, and understandable by, the other. Trust between the senior managers who set up a hybrid in the first place, and the boundary spanners who maintain the relationship subsequently, is a critical factor. Trust lowers cost and raises productivity. Cooperation increases under conditions of trust, because with trust such costly barriers as formal contracts and detailed monitoring can be removed. The resulting less-formal specifications can also allow the parties to respond more rapidly to any changes in circumstances.

Hybrids protect the smaller firm from the stifling effects of the larger firm, while allowing its creative knowledge to be exploited. This happens through what is, in effect, a “semi-permeable membrane” in which certain features are blocked from movement while others are transferred.

Boundary-spanners, or bridgers, as they are sometimes described, are people who move between both organizations, translating the norms of each into language and behavior that are acceptable to, and understandable by, the other. There is almost no research on the role that boundary-spanners have in hybrid organizational structures, and yet they are likely to be one of the most important factors in the success of those structures. After all, new product development is a social-, collaborative-, and interaction- intensive process involving experimentation and negotiation over the lifecycle of the new product’s evolving form, bringing together knowledge, expertise, and technologies from different sources into a whole. Learning involves the negotiated resolution of constraints and generates new knowledge, which may then be embedded in the design of new technologies, products, or processes. Thus boundary-spanners need to be skilled first of all in the nuances of creating a new product.

A perfect example of successful boundary spanners can be found in an article written by Tom Mulhern and Dave Lathrop, of Conifer Research and Steelcase Inc., respectively. Their article,“Building and Tending Bridges: Rethinking How Consultants Support Change,” detailed the way in which design consultant Conifer Research used its methodological expertise in furniture and workspace design to improve Steelcase’s product innovation and organizational performance. Although Mulhern and Lathrop had not worked together before, they had “worked around each other” and knew a lot of the same people. They were both part of an established network of relationships and reputation, and this is likely to have facilitated the development of trust between the two organizational boundary-spanners.

Mulhern and Lathrop also epitomize the internal boundary-spanner role. Steelcase had previously gone out of its way to seek external perspectives from a “host of brilliant, innovative, but generally outside resources, with the outcome generally packaged as a ‘deliverable.’” But in order to achieve the impact they sought, Mulhern and Lathrop recognized that their job would be to inspire insiders to take up the cause. They described this process as developing “experience bridges.” The bridges they established linked people, information, and process and thereby “dramatically accelerated” progress through the development of shared understanding.

In conclusion, it seems as though a strategic alliance between a large corporation and a small creative house works effectively for product innovation, with the role of the boundary spanner being crucial to the success of this approach.

First published June 3 2005

September 13, 2012

Case study of design strategy failure: Whirlpool World Washer for emerging markets

This is a comprehensive study of the introduction of an automatic washing machine, the World Washer, into the Indian market, by Whirlpool Corporation in 1990. Conceived as an important part of Whirlpool’s global strategy in the late nineteen eighties, it was designed for the emerging markets of Mexico, Brazil and India. It failed dramatically and resulted in Whirlpool having to purchase obsolete twin tub technology from Korea for their next product launch in India.

This paper attempts to describe the existing market at the time of the launch 1988-1990; Whirlpool’s global strategy and the part played by their design departments; the intersection of strategy and design; and, to analyze the reasons for the World Washer’s failure.

"First, you have to ascertain which standards have already been established by the competition. The product won’t be accepted if it doesn’t live up to those standards. Secondly, you have to look at the environment in which the product will be used.” ~ Dr Pia Honold, Center for User Interface Design, Siemens AG

September 12, 2012

End of the era of "Business as War" metaphors?

My recent nostalgic meanderings and reflections on the thinking and writing about design that I was doing 6 years ago led me to realize that there might have been a significant shift that has taken place in the language of design and of business. Or at least, in the language of business and strategy.

The prevalence of the metaphors from "Business as War", where those such as Clausewitz and Sun Tzu were upheld as examples of critical reading for corporate executive seem finally to be on the wane. One barely comes across such language anymore and the sense is that the attempts to incorporate a more customer centric perspective into an "Empathy Economy" have finally, over the intervening years, made a difference.

What do you think?

CK Prahalad on the BoP market creation: user driven innovation process

Here is a PDF of what is probably C.K. Prahalad's last published article "Bottom of the Pyramid as a Source of Breakthrough Innovations" from the January 2012 issue of the Journal of Product Innovation Management. What catches my attention in this article are the process diagrams he shares:

Note that immersion in the BoP environment is the starting point and that the end point is not simply the design of a product or a service but an ecosystem, while the process itself is for the development of business model design. When we map it on to the human centered design approach, we see that the only difference, really, is the language used to describe this - that of business management and strategy, Prof Prahalad's domain, rather than that of user centered design innovation.

And he adds, towards the end, that there is already sign of the upward mobility towards "middle class" markets, by the erstwhile BOP consumer demographic, that in the future these lessons on constraint driven innovation in business models, products and services, will have value for a far larger market than that being assumed at the moment:
There will be a major move toward “middle class”orientation to businesses. This is not to say that some luxuries will not exist as businesses, but the process of moving to the middle will prevail. It is estimated thatover 60% of the world population in 2020 will describe themselves as middle class, and 60% of these 2.6 billion will live in emerging markets. What we are witnessing in BOP is just the early indicator of a systematic structural change.
In other words, the characteristics of the current day informal economy's buyer behaviour and purchasing patterns are those of the emerging global middle classes.

September 11, 2012

M-PESA and the service innovation framework (review)

A former student of mine just mailed me this article “Extracting Key Lessons in Service Innovation” (pdf) by S.Wooder and S. Baker, recently published in the Journal of Product Innovation Management, January 2012 edition. Here is the abstract of the article:

This paper describes how Sagentia—working with Vodafone, Safaricom, and other organizations—played a significant role in the creation and delivery of a landmark mobile money transfer and payment service for emerging markets, starting in Kenya. In this profile we examine the organization aspects and approach that contributed to the success of the service: the lessons we learned as the technology provider and how the experience has informed and strengthened our service innovation processes.

Reading through, what I found most valuable among the basic principles so simply and clearly articulated, was this insightful description of service innovation, as pertaining to the ways that a human centered design innovation team can work to improve the customer experience for any company, large or small:

What Is Service Innovation? Creating and Delivering Value

We are familiar with service innovation examples such as music download, loyalty programs, franchise chains, ticket/check-in kiosks, and online tax returns.

Service innovation can be described as a combination of technology innovation, business model innovation, social-organizational innovation, and demand innovation, with the objective of improving existing services (incremental innovation), creating new value propositions (offerings), or creating new service systems (radical or transformational innovation) (IfM and IBM, 2008). The key components of service innovation can be distilled down to “participative” value delivery; [...]

So if the service is considered to be:

• something that may or may not entail physical product delivery or consumption
• a value delivery mechanism that connects the enterprise to the customer
• the combination of a value proposition, a delivery mechanism, and a customer’s experience

Then service innovation is simply innovation applied to one or more of the following areas:

• new concepts and/or value propositions
• new delivery mechanisms and/or business models
• new experiences

[...] Successful service or product innovation encompasses progress from the creative act (the so-called fuzzy front end) to the commercialization act (execution) and beyond that to sustainability and evolution of the innovation. Our simple framework for service innovation is shown in Figure 3

And they share with us the mapping of MPESA on to this service innovation framework.

The authors conclude their informative article with the following words:

Key lessons that were highlighted by our experience with M-PESA include:

• Learning in a detailed sense the needs of users in new markets and ensuring that it is possible to implement these needs and requirements as part of a pilot process;
• “Keeping it simple”; particularly in the early stages of the service, it is important to focus on a small set of compelling, marketable functions and features;
• Ensure that flexibility and agility, the ability to react and to respond to changes in the business model, are designed into the system; and
• For a service to succeed, it requires a critical mass of users as soon as possible; identifying mechanisms to motivate users to take up the service is an important part of the service innovation process.

The results of the study cannot claim to be generally applicable; however, it has allowed the “usefulness” of the conceptual stages in the service innovation framework to be empirically tested in a real-world example, and the vulnerabilities and strengths are better understood as a result.

This post was published previously in December 2011

September 10, 2012

Lessons from the Amul brand for grassroots enterprises

We also mourn the passing of Dr Verghese Kurien this weekend. The man behind India's Operation Flood - a grassroots social enterprise based on dairy farmer's cooperatives that grew into India's biggest FMCG brand - Amul - while becoming the replicable model for converting India from a net milk importer to the world's largest producer. Operation Flood is the world's largest dairy development project. From his speech on the history of the Amul brand and the reasons for its success, I am going to pull out key snippets and look at them from the point of view of the timeless lessons to be learnt from those who have gone on before us:
The brand name AMUL, from the Sanskrit Amoolya, meaning priceless, was suggested by a quality control expert in Anand. The first products with the Amul brand name were launched in 1955. Since then, they have been in use in millions of homes in all parts of India, and beyond. Today Amul is a symbol of many things: Of high quality products sold at reasonable prices, of availability, of service.

There is something more, though, that makes the Amul brand special and that something is the reason for our commitment to quality and value for money. Amul is the brand name of 2 million farmers, members of 10,000 village dairy cooperative societies throughout Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so special about the Amul saga.
You will appreciate that when the lives of lakhs of farmers depend on a brand, and when your history is grounded in the Independence movement, when not only competitors but even your own government questions you, then your resolve to be the best is like the finest steel.

Amul, therefore, is a brand with a difference. That difference manifests itself in a larger than life purpose. The purpose – freedom to farmers by giving total control over procurement, production and marketing. Amul and all other milk products produced by cooperatives were born in struggle. It was the producers’ struggle for command over the resources that they create, a struggle to obtain equitable returns and a struggle for liberation from dependence on middlemen. It was a struggle against exploitation. A refusal to be cowed down in the face of what others believed to be the impossible.

Amul’s birth was thus a harbinger of the economic independence of our farmer brethren. Amul’s mission was the development of farmers, nutrition to the nation, and heart in heart, the real development of India.
This led to replication of the Anand pattern through the Operation Flood programme which has, amongst others, three major achievements to its credit, namely: making dairying India’s largest self-sustainable rural employment programme, bringing India close to self-sufficiency in milk production, and trebling the nation’s milk production within a span of two and a half decades to make India the world’s largest milk producer.
Over the course of Operation Flood, milk has been transformed from a commodity into a brand, from insufficient production to self sufficient production, from rationing to plentiful availability, from loose, unhygienic milk to milk that is pure and sure, from subjugation to a symbol of farmer’s economic independence, to being the consumer’s greatest insurance policy for good health.
There is also something very special about milk, something which requires that any brand for milk and milk products to act not simply as a seller, but as a trustee. Milk is not a white good or a brown good. It is not something people save their entire lives in order to buy – like a car, or a house. Milk is not a status symbol; rather it is the symbol of nutrition. Milk is a nearly complete food, providing protein, vitamins, minerals and other nutrients so essential to maintaining good health.
Our commitment to the producer, and our contract with the consumer are the reasons we are confident that cooperative brands, like Amul, will have an even bigger role to play in the next fifty years. Resources need to be deployed with a purpose and a commitment to deliver better results. There is no limit for a marketing exercise then. It must build India and its culture a second time round.
When I began this exercise, I noticed first the issues of quality, distribution, brand promise and cooperation that he starts his speech with. Aha, I said, these are the lessons that social enterprises seeking to serve the BoP (or whatever you want to call them) could learn from but when I read further, I realized that the true story was no less than one which was about scale, about nation building and financial independence, about a brand which emerged from the farms and fields of rural India to reach grocery stores in every country I've been in. (Asian groceries, mind you, as we seek our "taste of India").

What then is the real lesson to be learnt here? And where is the mention of Amul's success, much less Operation Flood's, in the case studies of social enterprise we so often come across? Maybe the answer can be found by going back in time to analyze the reasons for its success, and ability to scale.

Remembering Bill Moggridge, a different era in design

Tonight I heard that Bill Moggridge had passed away last night. Or rather, I learnt it from a kind reply to my shocked question. I came here thinking I'd be able to write about my last distinct memory of him, having lunch with me in the sun, outside the Gallery Cafe in San Francisco, that looks across at the Cable Car Museum. It was May 2007 and I was leaving the country. He thought I should stay but I wasn't in a headspace to listen to him back then. In fact, all those times I turned him down are regretfully flitting through my mind now. He was a generous, courtly and kind man. A friendly face when sometimes it felt like there was none. I will mourn his passing. And since I find myself struggling for words with which to honour him with, here are my original thoughts from the very first time that I met with him. I had a sprained ankle. He held an umbrella over me.

Today I had lunch with Bill Moggridge followed by an hour of rampant brainstorming with David Kelley at IDEO, Palo Alto. The funny part is that these were two seperate meetings set up for two entirely different reasons. It just so happened that when I sprained my ankle badly last Saturday (the 1st of April, Fool that I was…) I had to reschedule the meeting Bill Moggridge had requested.

Meeting two such personages (there’s no other word, really) in the industry in which you live and breathe in can be overwhelming. Especially when it’s such an adventure! My biggest surprise, though why it should be one, I don’t know, was just how nice and kind they were. Here I am, a cog in the grand wheel, and they, at least the gears that direct the motion yet their courtesy and down to earth sheer niceness was what blew me away.

After being exposed to the phenomena of rockstar designers, it is eye opening to meet with the real stars of design.

September 9, 2012

Metadesign and designing culture

Two extremely thought provoking pieces of writing found their way to me recently. The first was Designing Culture by Colin McSwiggen, where he writes about the role that material artefacts play in society and culture's embedded messaging:
This is a big deal because one of the main ways that people are socialized is through using, observing and contemplating material objects. The idea that people learn their places in society by engaging with the physical stuff around them has a long history in anthropology, but it was finally cemented into the theoretical mainstream in 1972 when Pierre Bourdieu published his Outline of a Theory of Practice. Bourdieu makes the case that we come to internalize the expectations of our particular social group by analogy with categories, orders and relations of things. Spatial arrangements of objects in the home, for example, or the use of different farming tools at different times of year, come to stand for intangible relationships between genders, social strata and the like, thereby anchoring abstract ideas about social organization to the physical world.
and the other article was by Prof John Wood, titled "Why User Centered Design is not Enough" where he writes:
What is remarkable about smart people today is how pliable and impressionable we become when the system puts us at the centre of our emotional universe. This is an aspect of 'humanism' that can be traced back to the ancient Greeks and the early Christians. However, while it has many admirable qualities, humanism is an incomplete way to understand how things work. If we could see humanism as a picture, people and money might be shown in bright colours, whereas Nature, the universe and God would probably be in faint grey. It has made us confident about ourselves, but, in combination with consumer-driven technologies, it has turned us into babbling infants who are never satisfied. This is paradoxical. In the 21st century, never have so many people have had so much access to so much information. Yet, by manipulating and dumbing-down our perceptions of what is happening, our species has, increasingly, become disconnected from the complex ecosystem that nourishes and sustains it. What should worry designers, in particular, is that they played a major part in creating this artificial, user-centred world.
What we have here, by taking together two seemingly unconnected articles, is an interesting phenomena. Asking design to indulge in teh navel gazing they are so fond of, but this time from a macro systems level overview of the impact of their own design work. Design for social impact is so popular now, but tends to be focused on the needs of the poor and downtrodden, whereas if indeed we are defined by our choice of material good, is it not the case then that designers are defining the material standing of the poor?

And resource scarcity is one condition which defines the operating environment of this lower income demographic.

On the other hand, the premiums paid on greener products and an eco friendly, homemade, handmade lifestyle seem to imply the way sustainability issues have been co-opted into consumption driven design initiatives after all.

Is there a way out or is it a vicious cycle?

Are we saying "Ok, stop designing" or are we saying "Wait a minute, lets look at what we're enabling (consumption) even as we apply our energies to create products that the poor will want to consume"

And if so, is the solution as simple as leaving them to their kerosene and candles and wood burning stoves, or then, is the moral imperative of environmental protection require substitution with better products?

There is as much of tension inherent in good design but from which context and on the continuum of consumption, as there is in the business models continuum of profit maximisation alone through to triple bottomline.

What will changing design itself, as Wood wants to do, solve?

September 6, 2012

Self centered design vs user centered design: Its good, but in what context?

I started this train of thought last night on Twitter with the title of this post, that arrogance did not make for good human centered designers if they thought they knew better than their end users and were not listening to them. Dirk Knemeyer encouraged me to write it all out in more than 140 characters.

Apple is a popular example held up of this self centered approach to design, that customers were unlikely to know what they wanted so it was upto the powers that be to provide them with the latest greatest, shiny toy to drool over.

Apple's target audience is more like themselves than disparate in incomes or infrastructure. Think about that for a minute. That has nothing to do with geography. Apple is an aspirational symbol of disposable income.

The price point, business model and distribution geography alone clearly demonstrates this focus. Certainly, anecdata points to the Kenyan taxi driver with an iPhone. All of the above characteristics create the aura of exclusivity, thus status symbolism for the common man on the street.

You have secure and daily access to electricity, the visible ownership of this product communicates, or at least have the money to pay for charging services.

Indubitably, Apple's product design is "good", if not "great" or "superfantastic", but who is good for? And in which context?

"Good" in design (UCD) is not disconnected from context of customer's needs, lives and environment. If it is, its art.

Industrial design's roots are in commercial application and increasing saleability of product. Else, why invest in making something desirable?

If you find yourself answering "To make it desirable for its own sake", distinguish that answer from "What is art?" as a question.

How many examples of "good" design award winners are we aware of that never made an splash in their intended market, much less a ripple?

The OLPC won design accolades. The LifeStraw won design awards. The d.light is in the British Museum. The Hippo Roller was going to change women's work.

Where are they now?

5 lessons from design planning for the bottom of the pyramid

1. Consider the design of the entire ecosystem in a holistic manner rather than the product alone

The majority of industrial designers in studios and corporate departments around the world are tasked with the design of a specific product or application, isolated contextually, for the most part, from the larger ecosystem of the market primarily due to their experience of and immersion in the existing sophisticated marketing infrastructure. They have the luxury of access to information flows on packaging, distribution, supply chains and retail outlets as well as competing designs and this lets them focus on refining a particular product, package or UI.

This situation is almost reversed when it comes to the BoP consumer and the BoP markets. The paucity of information does not only hamper the BoP themselves but also those who seek to serve them. Furthermore, much of the market infrastructure is non existent or of a vastly different quality than that experienced in richer markets. Factors such as income streams that are irregular and lack of financial tools such as consumer credit available for outright purchase are issues rarely considered during the design process but can and do influence the final outcome.

Products designed in isolation may win awards but may never quite impact the quality of life in the manner they were designed to do so if their business model, pricing or payment plans, much less distribution or usage do not reflect the conditions of the operating environment.

2. Price as a rigorous design constraint, not simply a data point or the sole criteria for reverse engineering

The issue of pricing then, becomes mission critical in the design brief but not as a reason to compromise the design. That is, if the traditional MNC approach is top down, stripping features and degrading quality and lifespan achieve no purpose except risking the brand’s reputation. Instead, maximizing the constraints while minimizing utilized resources can be seen as a way to innovate for this demanding consumer segment by providing value through elegant design solutions that appeal yet offer a return on their investment.

3. Being aware of and questioning assumptions made

Whether its as basic as availability of electricity and running water or as subtle as the design interpretation of such underlying value propositions as “convenience”, the assumptions made about consumer buying behaviour, purchasing patterns and decision making or choice of brand or product cannot go undebated or unquestioned. A challenging environment, conditions of uncertainty or scarcity and the hardships of daily life managed on irregular incomes all serve to influence the value system and mindset of the target audience in ways we are not always able to immediately discern if we don’t flag our implicit assumptions as a potential stumbling point.

4. Nuances of local culture and society matter

These markets are not the already saturated mature ones of the “global village” with a blase attitude towards such throwaway things as the use of religious iconography on lunchboxes and t-shirts, still preferring to stand on their dignity and self respect over the sophisticated acceptance of perceived disrespect. Thus, nuances observed during user research that may be overlooked when considering different regions within the developed world may in fact be far more important in the context of BoP consumer markets and influence the user acceptance and adoption rate of the product or service.

Choice of colours, features, tone and style of communication are some of the design elements so affected. Choosing to tread as delicately as a newcomer never hurts. Respect matters.

5. Think of them as your most demanding customer, not the helpless poor in need

September 5, 2012

Understanding at the bottom of the design pyramid


Before we can give form – and it does not have to be a tangible product but could even be a service, a business model or a strategy – to what we wish to do, its not enough to step back to just the function level, one must step even further back to envision the whole before one can even begin to pinpoint what the requirements are.

And before we can envision the potential solution space within which the requirements can be framed for the ultimate manifestation in the form of design, we must understand not only the what and how but also the why, when and where.The most powerful concept in this diagram, imho, is the fundamental importance given to ‘understanding’.

Without understanding – which in this sense could be seen as ‘grasping or grappling with the big picture’ – one cannot begin to envision or see what the possible directions or paths that ‘form’ or ‘function’ can take. Without the big picture view, the perspective into which all the disparate bits fall into – if not falling into place, then at least within understanding or at least coming to terms with – we cannot see far enough ahead in order to shape or manifest tangibly any plan of action or even, next steps.

I have said before that I believe that design is inherently a philosophy or a system of values first, and it’s implementation, in whatever form, second. Understanding the ecosystem in which your actions will take form comes first, which then leads to vision – only then can you begin to get down to the brasstacks of framing requirements and finally the design. We very often jump straight to the design – or the action – and this hierarchy of the steps required prior to any design is a useful reminder of the other 90% of the iceberg.

This approach has been the basis of my work in the little known geographies and the uncertain conditions of the emerging consumer markets of the developing world.

25 years of interacting with a computer

I’m still surprised that I’m the closing speaker at the 25th anniversary of the computer human interaction society’s conference in San Jose this year on May 3rd 2007. Personally, I don’t have a clue about how one goes about all this technical stuff, I’m just a user and probably classify as an internet addict. Though that’s an odd thing to say about those of us whose work day begins in front the screen and includes coordinating with and connecting to people all around the world who may just be waking up. Are you an iPod addict?

I entered the 12th grade in the Fall semester of 1982 and my choice of classes included Computer 1 and later in the Spring, Computer 2. Twenty five years ago, I first sat down in front of a computer monitor, a cpu and a keyboard. There were two 5 and a quarter inch disk drives – one to load DOS 1.0 with and the other to hold our homework. Oh yes, remember those vivid fuschia Verbatim floppy covers? Remember when leaving floppies in the back seat of the car was guaranteed to give you a gooey mess? I just bought a Pentium 4 a couple of years ago and paid extra for a 3.5" drive. I was mocked and laughed at but at least I can access all my old data, sometimes.

On my 26th birthday, I asked for and received an incomparable birthday gift from my father [who complained to my mom about the price and mom said "well who asked you to say yes to her?"]. It was an IPC laptop – black & white, 486 DSX [that meant it didn't need a math co-processor], 120 MB HDD and 20MB Ram. Wow! And it still WORKS! I have it at home right now, it runs Windows 3.1 and file manager and I don’t need to turn on Windows to run Pagemaker on it. My how times have changed!

At 29, I bought a grey market built to order 486 loaded games machine, I’d recently launched the Multimedia Kit from Creative Labs in India as their local distributor was my client at Result:McCann and through that hard work was able to purchase a kit at cost price for my machine. I bought it with my savings and paid cash Rupees 80,000 [my monthly salary at that time was Rs 6,000 and then doubled by McCann to Rs 12000 a month] for this machine – it was purely to play games on. I am to this day an inverterate gamer. After all, once you’ve played Galaxian, Frogger, Space Invaders, PacMan or even Prince of Persia, Doom, Castle Wolfenstien, graduating along with the evolution of the games themselves upto Age of Empires and Civilization, you can see the history of the games industry flash right before your eyes. Any one remember Chip? the 64 levels of chip picking torture using the four arrow keys driving you to distraction?

At 30, I was introduced to the internet – almost simultaneously dad got a Pine internet account – the entry level offered by VSNL with only text based browsing and I joined Hewlett Packard India where we had our own satellite broadband bandwidth to surf the tcp/ip universe. Talk about experiencing the evolution and growth of the internet. I still remind Stu Constantine at Core77 that I first stumbled onto Core77 in 1996 or 1997 from India. Core77 was launched in 1995. Stu and I recently came reluctantly to the conclusion that we may not be wholly in tune with was current in popular culture online amongst undergraduate students. Very reluctantly.

Next saturday I will be 41 – ideally while sampling suitable single malt scotch in Scotland – nice alliteration that! ;p and what is my experience as a human interacting with the computer?

And more importantly, when I look up from my screen, and my eyes lose focus and soften into that dreamy look that accompanies deep pondering thoughts, what do I see when I look ahead to the next 25 years?

Human interaction, I recently read on a blog somewhere. I wish I could find it. The concept was important, it said, it isn’t human computer interaction or computer human interaction. It was human interaction. Do we have phone human interaction? No, we assume the phone is tool to facilitate communication between two or more human beings. Yes?

So is not this blog post but one minute example of a tool that facilitates communication between two or more humans? Is not flickr? What about gmail and chat? Skype – phone, video, chat or files? What about all of them – then we begin to see the limitations. Perhaps that is why we yearn for the iPhone or Jeff Han’s intuitive powerful full handed movements that allow him to feel as though he is truly delving the depths of cybermedia and cyberspace?

I was saying to someone just yesterday that it won’t be any one single computer that will be the most powerful computer in the world but in fact this was already there – the cyberbrain. Here’s an example, call it a back cpu or massively parallel processing or whatever – but the combination of human beings interacting with each other using the tools of the connectivity that broadband gives us gave rise to the social web. the rise of the missing sense of community that we as social beings, as human animals need. And the more we connect and see and share the more we realize that people all over the world have the same hopes and dreams and aspirations as we do, they just look a bit funny. But so what, don’t we, in our own mirrors, each day?

Now I must reach beyond and see what lies yonder…

First published 17th March 2007 on a blog called Jugaad

September 4, 2012

Time to plan the obsolescence of consumerism

Consumers did not exist prior to WW2. People did.

It was after the postwar boom in the United States that a variety of existing professions evolved and morphed to meet the needs of Big Business as industrial production and wealth increased. Consumers were created to meet the unmet needs of the producers.

The Waste Makers, published in 1960, states that inventories in post war industrial America were piling up as the durable goods, cars and services were saturating markets even as people were not buying or replacing their possessions that frequently. They’d not thought of entering other markets yet. That would wait for another 20 years before Theodore Levitt wrote his "Globalization of markets".

Advertising, marketing, promotions and products were all swept up in an integrated national attempt to encourage the American consumer to buy more. [BusinessWeek 1955 cover story on Planned Obsolescence in the auto industry broke the news!] The industrial designer Brookes Stevens coined the term "planned obsolescence" where products would be designed to go "out of style". This concept spread widely amongst the giant manufacturing sectors of automotives and white good in the fifties. Even in the 30′s and 40′s GE had specified that their bulbs be designed to burn out hundreds of hours sooner than could actually be designed and built.

"Consumer culture" and "the good life" and its specifications built on consumption of goods and services spread outwards from the US but its reach and thinking not as embedded in other parts of the world or restricted to the top 10-20% of the population. Or, in the case of countries with large numbers of the underprivileged, there was always someone who could use an old pair of shoes or would buy your empty bottles from you along with the newspapers for recycling.

This cycle of consumption, dispose or throw away, buy anew, rinse repeat refresh has gotten shorter and shorter, and not entirely due to Wall Street’s insistence on monthly and quarterly earnings reports. Its also heavily conditioned society in three or more generations of exposure to mass media on the largest scale around the world in recorded history.

Giles Slade wrote the book on the history of planned obsolescence "Made to Break" in 2006, where he said:

"This was a significant development in the history of product obsolescence," he writes. "As a throwaway culture emerged, the ethic of durability, of thrift, of what the consumer historian Susan Strasser calls 'the stewardship of objects,' was slowly modified. At first, people just threw their paper products into the fire. But as the disposable trend continued, it became culturally permissible to throw away objects that could not simply and conveniently be consumed by flames."

People started filling landfills with things like old vacuum cleaners so that, as time went on, "disposable" came to mean nearly everything, not just old paper collars.

Where are we today with regard the culture we are crafting anew, if at all? How does the conversation shift towards considering the triple bottomline of people, profit and planet if maximizing profit is still the underlying design principle of the existing system? Can we dispose of the now obviously "disposable"?

Why is design important?

Design is first and foremost a philosophy, based on a system of values, which seeks to solve problems. What are we creating? Why and for whom? Are we correctly framing the problem to be solved? These are the questions to which the answers are then manifested tangibly in the form of a new product, service or business model.

Human-centered design approaches the task of problem solving by always seeking to understand the end-user’s needs and aspirations, goals and the environmental conditions and constraints in which they live. When we can design a product or solution that meets an unmet need or challenge successfully that becomes good design.

These qualities are what make design a powerful tool for not only increasing value for corporations but also benefiting their customers by providing elegant yet effective products, services and business models. Often the biggest challenge is to identify the real problem that must be solved, this where using design research methods and tools can help businesses at their early stage strategic planning.

Design thinking in business takes this problem solving aspect one step further. Now the tools and techniques from the field of design such as ethnographic research, rapid prototyping and conceptual brainstorming integrate with the pragmatic business frameworks of strategy, analysis and metrics to create and provide roadmaps for business innovation and competitive advantage. In this context, design has evolved away from traditional form giving to becoming an integral part of corporate strategy.

How and where can it be applied?

When you’re looking for new market opportunities – You know your company’s strengths and are looking for inspiration and insights for innovation within your existing product line or think there might be a new product category you’d like to explore. You know the market opportunity you want to target, such as “seniors or youth market” or “wish to expand to a new culture or country ” but need help to define the product or product category that would allow you to take maximum advantage of this opportunity.

Or when your business is facing a very specific challenge, but doesn’t really know why and needs to take a look not only at their products and services but their business system to see what can be tweaked. Often companies who need an innovative new product concept to become a global design “hit” will face this fuzzy problem. This is where design tools such as exploratory research and insights can lead to clear articulation of opportunity spaces and as yet unmet consumer needs, communicating visually through concept sketches as well as creating a strong business case for a particular design direction by supporting market analyses and metrics.

Design has the tools for visualizing complex large scale systems and the insights thus derived can be applied to improving the quality of the customer’s experience, improve the efficiency of the process and offer benefits across the spectrum of applications. For example, the UK has hired a senior designer to help improve the patient experience and the processes at the National Health Service. Bringing design’s empathy and user centered approach to process innovation adds intangible value to systems which were otherwise focused on efficiency and profits alone.

So design is extremely important. The nature of the field allows it to add empathy, insights, innovative approaches to problem solving to traditional means of addressing the same challenges. It creates value and enhances the user experience; it gives meaning to lifeless objects and can touch human emotions on a fundamental level.

First published

Rural India: On the tipping point of a boom or tremors of historic change?

copyright niti bhan

It seems 2012 will be the year of Rural India's ascendancy over the ubiquitous metros and urban elite in the minds of market makers and strategists alike. I was in New Delhi this last week of August and on my return I thought I'd write an update on my impressions of urban India today, starting with the visible rise of the "emerging global middle classes". A quick search online however changed my tune when I came across headlines highlighting recent findings from Crisil, the Indian subsidiary of Standard & Poor’s.

The Financial Times puts it succinctly:
Rural India spent $67.4bn more over that period, compared to $53.8bn for urban India.
It’s no surprise that rural India – where around 65 per cent of India’s 1.2bn people live in mostly dire circumstances – spend more on goods and services, thanks to their greater numbers. But the economic reforms of the early 1990s disproportionately benefited the urban, elite and already rich, boosting growth in those areas beyond that of rural areas. That has changed, Roopa Kudva, Crisil managing director, said in a release, because of increased rural incomes and government intervention.

“Underpinning this growth in rural consumption is a strong increase in rural incomes due to rising non-farm employment opportunities and the government’s rural focus through employment generation schemes,” Kudva said.

For instance, the Mahatma Gandhi National Rural Employment Guarantee Act that guarantees 100 days of unskilled non-farming paid work to one member of every rural family injected $9bn in the last fiscal year, benefiting 55m households, according to official data.
The Hindu, extracted August 30th 2012
The Hindu goes on to inform us that increasing migration and rising incomes are, however, unevenly distributed:
One of the outcomes of the higher level of income has been an increase in discretionary spends, a marked departure from the earlier trend of need-based consumption. About one in every two rural households across the country now owns a mobile phone, though in the case of states such as Bihar and Orissa, the ratio is about one phone for every three households. What is more, nearly 42 per cent of rural households owned a television set (up from 26 per cent five years before) and 14 per cent had a two-wheeler for conveyance (twice the level seen in 2004-05). In fact, more than half of India’s stock of consumer durables such as electric fans, TV sets and two-wheelers is now in rural areas.
However, the higher incomes in rich states do seem to skew the all-India average figures. For example, while one in two households in rural Punjab has a two or four-wheeler, a ratio higher than even urban Maharashtra and Karnataka, only six per cent of Bihar’s villagers own a two-or four-wheeler. 
But this is simply the tip of the rural iceberg. Deeper changes are afoot.

Not only is consumption on the rise in rural India, its complexion is also changing, rapidly, due to the influence of aspirational messages, telecommunications in addition to rising incomes and increased migration and thus, remittances:
"Rural shoppers are much more connected than they were 3 years back. Better employment opportunities, more money flowing back into the villages, awareness of large format retail has meant increased exposure and awareness (to the urban way of living)."
In Gupte's view, "The rural audience no longer wants to be seen as poor second cousins of their urban counterparts. They have the money and they are willing to experiment."
Yet the story of India, as the most recent findings emerging from India's Census 2011 "Houses, Household Amenities and Assets," report, summarized so carefully by  The Atlantic Cities shows, is still that of lack and scarcity:
  • 46.5 percent have mud floors
  • 39.4 percent are one-room households
  • 43.5 percent of households have tap water (though 26.5 percent of those are receiving water from untreated sources)
  • 33.5 percent of households get their water from handpumps
  • 67.2 percent of households have electric lighting (in urban households, that rate is 92.7 percent)
  • 31.4 percent rely on kerosene for lighting
  • 53.1 percent of households have no latrine facilities. 49.8 percent of households are left with no option but to urinate and defecate in the open
demonstrating that opportunities still abound for those seeking to serve the bottom, however, it seems as though the challenges have changed. Finding relevant and appropriate ways and means to serve this potential market profitably will take a shift in perception of who this customer actually is, in the context of the 21st century. Its the rural boat that's been lifting all others.

Already we see that not only is mobile phone use still growing at a fast clip, but Bharat (as rural India tends to be fondly called by marketing researchers and advertising agencies) is rapidly going online primarily for fun and entertainment. All they lack is local language content and the plethora of services we've gotten accustomed to on our English language internet.

At this point, all I can say is that the numbers are in and if they don't show the genuine upward mobility of the vast majority of the Indian population i.e economic development, in real and absolute numbers, Great Galloping Global Recession or no, then I suffer to think of what will. This elephant has taken one step forward, and I'm looking forward to understanding what it all means. For 2/3 of India lives in her villages and its all very informal, economically speaking, over there.

September 3, 2012

Smells like?

Gurgaon, India - August 24th 2012

Why have I been getting so grumpy about well meaning social enterprise?

Yesterday's post deconstructing The Economist article on the promise of solar lighting for the millions of poor living without electricity made me question my strongly worded response. Another recent one is from well meaning Guardian, whose first of the 15 innovations they claim will change lives in Africa is the now forgotten Hippo Roller. Even the designer behind that project prefers not to talk about it, but trust the media to dig it up in order to flesh out their content. Theirs is the third Africa specific section to be launched in the recent weeks and yes, there's a dearth of information for the armchair journalist.

Why do articles like this make me cranky?

Because they do more harm than they help. By inaccurately portraying the market and its opportunities - whether its the lower income demographic in Africa or India - they inspire well meaning but fundamentally unsound business plans and social entrepreneurs to sink valuable time and effort into ineffectual social goodness. It is irresponsible journalism.

Writing such slapdash articles only serve to create a rosy view, blurring into fuzzy altruistic goodness, which overlooks the hardcore realities of establishing profitable business enterprises in these challenging markets in order to serve the most demanding customers successfully. They leave you with the impression that all you have to do is ensure your product reaches every supermarket shelf and it'll simply sell like hotcakes.

If it were still only the beginning of the "fortune seeking at the bottom of the pyramid" era, when companies and startups had to be encouraged to look at this market, then this overblown hype and hoopla might be understandable. Today, some half a decade or more later, it simply serves to underline the ignorant arrogance with which these populations are viewed.

September 2, 2012

Mobile services for ICICI Bank

New Delhi Aug 30th 2011

Deconstructing the solar lighting market hype

Nairobi solar lantern shop, July 12th 2012
The Economist's Q3 2012 Technology Quarterly has a paean on the promise of solar lanterns replacing nasty, stinky kerosene once and for all. Of note is the careful mention of MKopa, a Nairobi based startup founded by Nick Hughes of MPesa fame, until now conducting pilot tests in stealth mode. But the rest of the article is still the usual rehash of the immense promise of solar lighting to finally get rid of that incumbent fossil fuel, something social enterprises like d.light have been attempting to fulfill for some 4 or 5 years now.

Why isn't anyone asking what's taking so long for this mythical promise to bear fruit? I'd like to start by deconstructing the article and identifying the implicit underlying assumptions that tend to trip the promise keepers.
As previously happened with mobile phones, solar lighting is falling in price, improving in quality and benefiting from new business models that make it more accessible and affordable to those at the bottom of the pyramid. And its spread is sustainable because it is being driven by market forces, not charity.
Show me the case study of a successful example of this product becoming a sustainable business proposition. Every company mentioned in the article is either in pilot testing new business models or talking about their performance and brightness, even while distributing via NGOs. If this is a consumer product business for patient capital then why aren't the Chinese brands waiting (or mentioned, for that matter)?

Phones spread quickly because they provided a substitute for travel and poor infrastructure, helped traders find better prices and boosted entrepreneurship. For a fisherman or a farmer, buying a mobile phone made sense because it paid for itself within a few months. The economic case for solar lighting is even clearer: buying a lamp that charges in the sun during the day, and then produces light at night, can eliminate spending on the kerosene that fuels conventional lamps.

 The economic case might be clearer but the reality is far more complex than that. Lets compare the market entry strategies of mobile manufacturers in their pioneering heydays and the solar lantern makers. Where is the user research and consumer insight on existing household energy usage and purchasing patterns that might shed a light on this ongoing multi-year promise?

The mobile phone is a personal asset. Most people put aside bits and bobs of cash towards their purchase of their phone. It belongs to them and there is prideful ownership and status involved with models and brands.

The solar lantern is not a personal asset. It belongs to and will be used by the entire household. There may be more than one adult earning member of such households. The decision making involved is one of group dynamics, never as simple or easy as that of an individual purchase.

Eliminating spending on kerosene is not the same as generating income by the way of the phone.

Additionally, the phone has become a 'must have' and is aspirational, in addition to connecting you instantly to your social network. Small and portable solar lanterns are not yet status symbols nor aspirational in anyway, given that much of the marketing communication places emphasis on saving money on kerosene. Whooptydoo, says the subsistence farmer whose dreams might include TV sets and radios, to be added over time, in modular fashion, to the solar home system.
In an informal test of solar lights carried out by The Economist in Africa, users grumbled about the soapy quality of light and lantern-style design. But the company has won plaudits for its other models: its largest lamp, the S250, was included by the British Museum in its “History of the World in 100 Objects” exhibition as the 100th object. .
I mean, really, The Economist? That is weaselling out of accurate consumer feedback isn't it, if you state that users (the people who are going to sustain the businesses remember by purchasing the devices) don't like the lanterns but hey, look, the British Museum likes it. Remember the design awards granted to the LifeStraw? Look at what happens to them:

 Carefully hidden away in case someone comes to check up on the beneficiaries of generous charity. When asked why it wasn't in daily use, the response was that it was far too difficult and took too much time when it was easier to pour a 20 cent bottle of purifier into a bucket.

The article ends with a product that's a concept developed in a studio. Who is hoping and how that this designer device will magically obtain a viable business plan with effective distribution and sales? The Economist might have been better off focusing on MKopa and Eight19's efforts to experiment with new pay as you go business models, though I can already see their solution's limitations particularly in the Kenyan market's context. They could have talked about Econet Solar or Angaza or MeraGao in India, in the same vein of experimental business models instead of defaulting to the hopeful batteries and museum pieces that will grace the dusty shelves of retail outlets.

Btw, that SunKing you bought in an African supermarket? How many rural low income BoP customers shop there, do you know? 

September 1, 2012

Published! Pathways Out of Poverty by iBoPAsia Project

Innovating with the BoP in Southeast Asia.

The iBoP Asia Project has published the complete set of small grants funding innovation projects for those at the Bottom of the Pyramid in the ASEAN region. One of the first projects to win the Small Grants competition in 2008 was The Prepaid Economy Project: Understanding BoP household financial management.