December 24, 2012

Mainstreaming REculture into the materials supply chain

In July 2009, I was inspired by my then working space in the Research wing's open office at the Aalto University's Design Factory in Espoo, Finland, to launch a group blog called REculture: Exploring the post-consumption economy of repair, reuse, repurpose and recycle by informal businesses at the Base of the Pyramid

In a post titled RE culture: The BoP innovator's/entrepreneur's biggest opportunity space is post consumption, I explained my concept so:
Stepping back, if you take the broad space of REuse, REpurpose, REpair and REcycle (though I'm still debating whether that last quite applies in the same context as we'd expect it to mean in the developed world) - its the low hanging fruit for the BoP entreprenuer's opportunities for income generation. [...]

... it seems at first glance that they look to be more or less the same thing i.e. how different is it to reuse a plastic bottle to contain some liquid from recyling it? particularly if the manufacturer had intended for it to be a disposable container?

Yet, from the big picture perspective, one can say (and it has been said before) the whole concept of recycling is a cost in the OECD world whereas its actually a source of income, in a myriad ways, among the BoP. 
That is, the lower income market tends towards maintenance and extending the lifespan of the products (through repair or repurposing it) they purchase rather than disposing it for convenience or replacing it for a trendier style.
However, what's interesting about this,  is the fact that these opportunities would
a) very rarely be spotted as one in mainstream consumer culture;
b) not be a gap per se due to a difference in mindset/worldview OR even
c) not be profitable enough, given the comparative cost of labour vs the price of the product involved.

These conditions for making money, and more so, making money that is deemed a valid ROI seem only to be available among the lower income demographic and in the developing world.
So, at this point, early stages of exploration though it is, one could say that the whole area of "post consumption" consumer practices - most of which have withered away like the appendix in the 'rich' world - forms one major basis for both products and services, with value addition to varying degrees, in the 'informal economies' of the developing world.

Earlier last week, however, I received the McKinsey Quarterly and the diagram below caught my attention. Take a closer look at their labels for each stage of the "Supply Circle", formerly known as a supply chain:

Value is created by looping products, components, and material back in to the value chain after they fulfill their utility over the life of the product. Yes, indeed, the leaders in the field are exploring these hitherto unconsidered sources of inspiration for process innovation.

It was this basic insight that led us to the research project among the jua kali of Kenya in August of 2010. Innovation under condition of scarcity  capture our initial findings from the fieldtrip to observe, document and be inspired by the informal manufacturing ecosystem in the resource scarce parts of the developing world. My research associate Mikko Koskinen and I prepared this set of slides showcasing this informal industrial ecosystem whose practices, we believed, could conceivably inspire new ways of manufacturing and material use for a more sustainable future. You'll note in the second last slide the table of research outcomes as they related to business, design and of course, engineering. After all, we were part of the Design Factory, an interdisciplinary experimental platform for innovation. You'll find mention of REculture as a concept for sustainability and value creation here and here, based on my original work in Finland.

Today, the fundamental concept, that of being inspired by those who make do with so little, has gone comfortably mainstream. McKinsey states on their website:
This article offers a practical set of tools to help manufacturers and waste-management companies capture the resource-productivity prize. Manufacturers are likely to achieve the quickest impact if they start by focusing on their areas of core competency. But to secure the full value of their efforts, companies must optimize their operations for resource productivity in four broad areas that cut across their business and industry: production, product design, value recovery, and supply-circle management. By taking a comprehensive approach to resource productivity, companies can improve their economics while strengthening their value propositions to customers and benefiting society as a whole.

December 15, 2012

Lowering barriers: Its about access, not the device

When Vanderbeeken sent me a link yesterday about Nokia working closely with Facebook to get the next billion online, it reminded me of this crude diagram I'd constructed back when I was watching this space far more closely than I do now. Twitter and Facebook are the two big names that weren't even on our radar, although one could argue that neither is a technology provider per se but instead they are the connectors, once people find themselves online.

Reflecting on this diagram now, a full 4 years on, one can see that while there have been bumps in the road for each of the players, they are each still active in this space. Emphasis however has changed. Whereas it used to be more about the mobile operators and the devices i.e. the Nokias and the Vodafones; today its more about the OS and the applications. Particularly of note are Google's activities with Free Zone - their aim to become a global ISP for the next billions, far more than Microsoft who increasingly seems like a passive player in this segment.

The challenge still remains, I believe, to connect everyone coming online, to each other, just the way the internet enables us to communicate and conduct commerce. That is, while social networks like FB are certainly paving the way in the developing world with attempts to help lower the cost of data, the last formal barrier to complete integration of the planet's population has yet to be cracked.

On the other hand, one wonders if  literacy per se, may not be the sole barrier among this demographic as much as the intimidation of user interfaces which maybe unfamiliar or strange. There is a natural barrier of contextual knowledge and textual communication ability that services like Twitter and Facebook contain by virtue of their nature. One sees the efforts to focus on what is known as "the third billion" - women, who make up the largest proportion of the uneducated. And they are the ones who probably need this connectivity and all it implies, the most.

Ken Banks wrote something earlier this week after attending the Vodafone Foundation's invitation only event "Mobile for Good" that highlights a bigger barrier, imo, and that is the approach and attitude of those seeking to serve the overlooked and underserved at the Base of the Pyramid (BoP). Aptly titled An Inconvenient Truth, here are his takeaways from this prestigious seminar in London:
My five takeaways after a day of talks, debates and demonstrations were:
1. Everyone is still excited by the potential of mobile
2. The same projects surface over and over again as proof mobile works
3. Mobile is still largely seen as a solution, not a tool

4. It’s up to the developed world to get mobile working for the poor
5. The top-down mindset is alive and well
Suffice to say, all of these conclusions troubled me as I sat on the train home.
This is true. What is sad is that if I've seen this in the 6 short years I've been observing this space, Ken speaks from longer and deeper experience.

As the diagram above and the activities and changes seen across the developing world demonstrate, we have come a long way, but its not enough. The emphasis has been on the technology and the cost, rather than the people its meant to be used by. Now its time for that to change if we're to leap across the divide. As Vanderbeeken would say, we need to be Putting People First.

/this conversation will continue.

December 11, 2012

User centered design thinking: An approach to problem identification

What is user centered design thinking?

Lets break this phrase down, first into two parts of two words each,

user centered = being user centered means that your frame of reference for creating a system, a product or business model is always the potential or intended 'user'. Immersion in the user's environment, also known as ethnography or user research or user observations or whatever you want to call it, allows one to stand within the constraints and context of the environment in which your audience operates. 

This experience, thus, allows you to gather and collate insights into the context in which your implemented design will work to solve a problem or challenge.  More formal methods of information gathering such as camera studies, interviews and behavioural prototyping add metrics and data that help guide the intuitive response to a possible solution or first prototype of one.  One could say that becoming user centered means to pull oneself out of one's own frame of reference in order to place oneself in another's shoes.

Through this, we come to know the general constraints and outlines of the recommended approach or solution that will be the end deliverable of such an exercise.

Now we come to the infamous and much abused term, design thinking =  It is ultimately yet another attempt to find a name for a whole brain approach to problem solving, one that uses the logical analytical tools and frameworks of the business world as well as the fuzzier, more intuitive ones from the world of design. Key is knowing when to use which metric or tool in order to best communicate the intent of the proposed program, the goals to be achieved or the problem or challenge to be addressed thus providing a roadmap or direction for the prototype that is implemented in the field to be tweaked into or measured up against.

But overall, if the user centered design thinking approach to solving large scale systems design problems is to be successful, the key challenge is to frame the problem correctly at the outset.

Once we are able to frame the problem correctly, addressing the real challenge or the unmet or undiscovered need, as more formal product designers are wont say, the design brief essentially writes itself as there is always that overarching goal that one can measure one's progress and results against. At each stage one asks are we addressing the correct problem or challenge?

Are we solving the right problem?

December 7, 2012

How social media can steal your soul.

In January 2011, I began researching articles on the African economic rise and concurrent opportunities, for a series I was writing for Dirk Knemeyer's GoInvo blog. Having just been introduced to Tumblr, I liked the real time capture ability of the application and the flexibility in tagging, for keeping track of quotes and snippets. I have been missing Delicious ever since the latest design change broke it.

Now, 2 years later, I've got a monster I cannot kill and I must keep feeding it with new articles on Africa. There are more than 25,000 followers and its spotlighted in Tumblr's directory. Even if 90% are spambots thats still a lot of people.

I only ever needed it for 4 months of work!!

December 6, 2012

Interim project report: User centered Agricultural value chain development

My colleague and project leader for the current work in The Netherlands,  Bart Doorneweert has just published an excellent analysis of our workshop on user centered design for a multi stakeholder group invited by the Ministries of Economic Affairs and Foreign Affairs.

Here's a snippet:
Insights on the multi-stakeholder working process
When the break-out groups re-convened after their design exercises, we asked each group to present their ideas, and discuss their assumptions and constraints with the audience. Across all presentations we discovered an interesting pattern. Participants found themselves to be confronted with an inability to associate with the user, deeming that area of the value chain apprehensive for conjecture about farmers’ needs, and too far removed in terms of values. In our attempt to lower the barriers to applying the user-centered approach through a free-form exercise, we apparently raised an inherently imbedded barrier to consider the user. Rather, participants insisted to direct their problem-solving attention to a more abstract, distant level of thinking (the value chain), or a particular part of the value chain that is more closely associated with Western values (working from the perspective of Nespresso, rather than the coffee farmer).  

This inability to associate with the users had impactful implications for ways in which the groups constructed design solutions. The approaches used were vertical in nature, thinking only within the bounds of what would directly associate with production of a particular agricultural commodity. In their thinking on solutions, people diverted to general principles (tea production provides for income, and thus makes the farmers happy), and then divided the relevant principles into disciplinary segments (like finance, training, agronomy, trade, etc).
The System Monster, by Jeroen Meijer, Jam visualdenken

December 4, 2012

Priorities for an internet on the mobile platform for Africa's prepaid economy

Something that Gustav Praekelt said in the news about access to no-cost information being a basic human right at the Mobile Web Africa caught my attention. There is still a gaping void in services accessible to and customized for the needs of the mass majority of mobile phone owners in the world. The next billion has come online but there's potential for a few billion more. Five years ago I said,
Imho, we’re in a transitional phase here when it comes to this next generation world wide web of humanity, on many levels, as the ways and means of access online adapts and reshapes itself to the shifts taking place globally -
1. Technological – from PC boxes to handheld devices – the other billion will demonstrably be requiring entirely different solutions and platforms for access due to environmental, infrastructural and other conditions
2. Social - from ‘people like us’ to ‘whole wide world’ – from those who were computer literate, educated and had resources to buy a computer and connection to virtually anyone who can make a phone call
3. Economic – from ‘models for consumption’ to ‘models for production’ – business models are already changing as the original models based on consumption of infotainment and bandwidth are better suited for those with purchasing power, its a given that the next billion’s patterns of purchase will differ significantly from the first billion’s.
Marketing of data services is the next holy grail for Sub Saharan Africa's telcom providers. As undersea cables increase bandwidth and lower the cost of access, there's a huge opportunity for laying down the foundation of a mobile web, particularly for the African market.

What distinguishes this market distinctly is that its primarily prepaid or pay as you go transaction models, that is, anywhere from 90% to 96% of the mobile subscriber base is not on a contract of any kind.

The data based business models for mobile operators have evolved in the cutting edge of Western Europe's old, established and vibrant GSM market.  Its fitting that today, 3rd December 2012 is the 20th anniversary of the very first SMS sent, and I notice why it took so long for text messaging to get a foothold:
One factor in the slow takeup of SMS was that operators were slow to set up charging systems, especially for prepaid subscribers, 
 Given that 5 years on, its Google, a search engine website on the original internet, that's seeking to lower the barriers to access for the next few billions with albeit in conjunction with an operator:
Google has reportedly launched a service in the Philippines that lets people there access certain websites on their phones without having to pay their operator for mobile data.

The service, named Free Zone, provides free access to any site that the user visits via Google Search, as well as various services from the company such as Gmail, Google+ and, of course, Search. The Philippines is only the first of several territories in which Google intends to launch the service.

According to Reuters, the service was launched in conjunction with local operator Globe Telecom, and targets those who have 'featurephones' rather than smartphones. Featurephones usually have cut-down browsers these days, although their functionality is more geared towards basic voice and text.

"It's aimed at the next billion users of the internet, many of whom will be in emerging markets and encounter the internet first on a mobile phone, without ever owning a PC," Google product manager AbdelKarim Mardini was quoted as saying.
 Their experience will show whether cost of access alone is the only hurdle to be crossed. Not only will things change from country to country, since telco's all have their own business models such as in the Phillippines where your credit for text and voice expires in 24 hours at the lowest price points.

Its a known fact that the vast majority of the n00bs online are arriving via their very first ICT device, a mobile phone but there's a paucity of relevant content, hence the popularity of social networks. User generated content that's relevant is provided by their choices on Twitter or friends and family on Facebook. Its simply another way to communicate and share information and conduct commerce.

Similarly, while donor funded programs attempt a variety of ICT4D initiatives that remain stuck at pilot stage unable to scale, unknown startups can and do become popular in unexpected locations.

This is not to say there has not been progress in the past 5 years towards a mobile web for the BoP, or rather, for prepaid customers who might be rural - the vast majority of the new mobile phone users in this same period. Growth has come from somewhere, as Airtel will inform you.

But given the rapid pace of device and service adoption at the basic level of voice and sms in these 5 years, the concurrent development of a platform for exchange of value - information, goods, commodities, services, barter, trade et al - similar to but not the same as our existing internet usage - has yet to materialize.

If it did, it could be one way to bridge the gap between the formal and the informal, just the way the mobile phone business models themselves are, under the aegis of the operators. 

December 2, 2012

Market Segmentation in the Informal Economy

This table is from "How to profit from Africa's different consumer groups" and the research is from NKC Independent Economists group. There is something lacking in understanding the patterns of purchasing power when segmentation methodology from the formal economy are applied ad hoc to markets which are primarily informal.

As mentioned at the end of the previous post, an alternate method of segmenting the mass majority markets across Sub Sahara might be to cluster by volatility of cash flow. Farmers, for example, will tend to have cash 2 or 3 times a year, based on their crop and their geography, and some of these will be earmarked ahead for farm inputs.

Then, depending on which segment one is targeting and the proportion in that bracket earning a living from a variety of sources rather than a fixed salaried job, one can assess how much adaptation would existing business models and payment plans require for reaching the majority of the target audience.
 This will differ from product to product, the articles breathlessly divulging all about this suddenly recognized African consumer market are still focusing on the creamy layer at the top of the income pyramid with their mentions of ice cream and caviar.

The old way focused on amounts of periodic cash flow, that is, income, as a means to segment people by disposable income available for consumption. The new way might have to look at their basket of groceries and then decide based on purchasing patterns.

The challenge arises when obsolete methods from a wholly different operating environment are applied out of context and the results interpreted in the same way as though there are no fundamental differences in the population and their mindset. There must be a reason why 96% of the hundreds of millions of mobile phone users across the continent are on prepaid or pay as you go plans.