Perspective 2.0

India: Emerging Leader

Recently, Niti Bhan pointed me in the direction of a blog post by Grant McCracken in which he argues that China is to India as Wal-Mart is to Target.  So I got to thinking about this old debate.

Of all the emerging economies, China and India seem to be compared most frequently, primarily because of their rapid rate of growth and potential for future leadership on the world stage. China has established herself as a formidable power in the manufacturing of mass market consumer goods, hence the comparison to America's Wal-Mart. While this has brought immediate economic success, I and plenty of others question how sustainable this model of fast cheap production really is and what it is that India brings to the table that China does not.

I have always felt that India has greater potential for meaningful success and leadership of world change than China, but the barriers to realising that potential are held systemically within Indian culture. India has a long history of sensitive questioning,  re-intepreting the tangible and the intangible to find new ways of looking at the world and surviving in it. This adaptability, in my opinion, is the key ingredient for successful innovation and leadership. The ability to respond to challenges and seize opportunities with intellectual sensitivity lends itself to thoughtful solutions in design and business to meet the needs of a wide range of audiences at home and, perhaps, abroad.

But, after living in India for some time, I struggle to reconcile the corruption there and the cultural forces in India that keep some advancing in life and others down. This is as great a barrier to successful leadership as innovative thinking is to enabling success. More importantly, it prevents a lot of good work from being completed or even seeing the light of day. I have asked myself why I care so much and if I am imposing my Western view of 'fairness' on a situation where it is neither relevant nor appropriate. Perhaps India's unwritten system works just fine as an ecosystem of its own. And who am I to say it should be otherwise and impose my own solution when there is plenty wrong with my own country?

Part of what's wrong with my own country is that it is a shell of a society that is no longer able to produce necessities to sustain itself. England always relied in the Empire, fair enough. But America once could take care of itself. Now it is a nation of foreign consumers and most of them don't think twice about where their stuff comes from. So, are Target consumers any more concerned with where or what their purchases come from than Wal-Mart consumers?

Applied Design Thinking

DF conversation with Lassi A Liikanen, circa 3rd February 2010

This post will continue but lets start the conversation on practice of design thinking instead of definition. Great, we wanna do it. Now what? Comments? Thoughts? Your perspective, experiences and/or point of view? Lets cocreate this conversation/observation.

Essence encapsulated 2010

Holistic solutions for the collective future will require a multidisciplinary approach and a flexible mindset. One that is open to new ways of making, doing, creating. One that is willing to seek solutions from any and all sources, allowing for the give and take of knowledge. One that will look for solutions that can address the needs of people and the planet not simply the profits that are crucial to every business. ~ Design for an Emerging World, July 2007, written for the Torino World Design Capital 2008 website

On Design's responsibility to our collective future

Reading Chris Blow's recent thoughts on the responsibility involved in the work he and all the codemeisters and hackers worldwide are doing in the name of Haiti, made me think about the importance of taking a moment to reflect before moving into action.

I think that what we have witnessed in terms of global cooperation and coordination among those with their heads in the cloud, so to speak, is no different than Google's attempt to extend their brand into the real world. Oh help, the Internet has run amok :p

Now, back to design and why did I think about the responsibility that Design has globally to start thinking seriously about their own as well as the world's collective future.

Its not enough to be cutting edge if the world is flat. You'll fall off without noticing. Allan Chochinov captures this essential blind spot in his short pointed essay on Adobe's Inspire site where he says that this year's design trends and focus have already come down predigested.

But is that what we want, or we see ourselves taking steps towards what Allan has said so well,

Indeed, the definitions of "best" (and, appropriately in this case, "good" design) have changed over the decade, embracing sustainability, accessibility, systems thinking, labor practices, and energy flows into the criteria that flesh things out beyond mere form and function. I'm all for that. But a whole decade's worth of the best examples?

Does this mean that a year after embracing all of this or talking about it for the past ten, we have nothing to show for the talk, the products are still based on dominant logics of consumption and individual ownership, underwritten by waste?

The BoP and technology - what next? Cocreation workshop, Helsinki January 26th 2010

Scott Smith of Changeist LLC and progenitor of the Some Observers blog will be in Helsinki next week to facilitate a workshop on emerging technologies and emerging customers, with a focus on the next 5 billion. Yours truly gets to interject, chime in and interrupt, albeit not that frequently, over the course of the day. Here's our invite to you,

Exploring the BoPNet: Developing Future Technology Solutions for the Next 5 Billion

Emerging consumer markets in developing countries, many whom fall into the so-called Bottom of the
Pyramid (BoP) category, represent much of the future of communications technologies and services we have come to rely on today as a driver of modern societies. Likewise, many observers say the future of
transportation is in inexpensive city cars for the growing megacities that house the BoP, and future health, environmental and education services we all use will be significantly defined by their needs.

The list goes on: more and more technologies will in future be used by, and shaped by, consumers who
today earn between 2 to 5 euros a day — but who are rapidly emerging as tomorrow’s primary consumer cultures.

To explore more deeply the interaction of trends driving the growth of the BoP, its convergence or
divergence from the developed world, and the shape of its future users’ needs, we have designed a unique one-day workshop that allows participants to interact with and shape possible future solutions for the BoP—products and services that suit its unique dynamics.

Content and structure
We will mix exploration with interactive team based exercises to probe deeper into the emerging BoP
technology ecosystem, which we are calling the BoPNet for now. We will focus on defining future users'
needs, system dynamics of the ecosystem, how technologies might evolve differently, and what new
strategies and partnerships might be appropriate in this world.

Benefits
• Learn more about the dynamics of the BoP, focusing on both the human side and its technology
behaviours.
• Opportunity to interact with visuals, trends and artifacts
• Use unique rapid ideation techniques to create future scenarios and user-centered solutions.
• Explore the implications and interactions of these scenarios.
• Help further define the dynamics of the BoPNet as they see it.
• Takeaway information and knowledge shared and co-created during the workshop that could be
applied to existing developed world technologies or solutions.

Who Should Attend
All those with an interest in innovative strategy, product development and design can test their own
assumptions, uncover new insights, and more deeply explore the needs and requirements of the fastest growing and most demanding consumer segment of the next 25 years: the next 5 billion customers.

Venue and Date
January 26th 2010 (Tuesday) at the Aalto Venture Park, Otaniemi (Betonimiehenkuja 3), Espoo.

Registration
Contact kalevi(dot)ekman(at) tkk.fi to register, free admission, first come first served, RSVP by 22.1.2010 – (only 13 spaces available)

Can big business save the world? It depends...

Jared Diamond's op ed in the NYT struck me with the question he posed, which is whether big business can save the world. Diamond went on to use Walmart, Chevron and Coca Cola as examples. I leave  it to you to decide, but my preferred choice of three in answer to that question would be Tata, Nokia and the brand called you.

You wouldn't be reading this otherwise.

But I'm not a big business you'd say... true, by the metrics used by the behemoths above, but all of you out there (whether you read this or not) working to save the earth add up to the biggest business of all, dont you?

I sure hope so.

*This* is a design revolution

Reading Helen Walter's review of Emily Pilloton's book Design Revolution in Businessweek titled "This is a design revolution?" made me wonder what would happen if we approached doing business with the BoP without the filter of "social impact" or "doing good" or other fuzzy wuzziness etc? What if the design of a product or service was simply considered the same way one would for any other demographic? And metrics of profitability, viability and sustainability of the revenue model applied to the decision to enter a new market, regardless of whether they were "the poor" or simply humans? How does this influence the success of the product or service in the market and, critically, how does it influence design?

It seems to me that this is what Tata is doing when they consider the overlooked and the underserved that comprise the majority of their domestic market. This week, Ratan Tata launched the Tata Swach, a water purifier designed and developed to serve the base of the pyramid market in India. A snippet from the news,

“The whole group has been fired with the view of how can we create products which were earlier not within reach of the vast number of people through innovation and technology, not just stripping down the value of the product,” Tata Sons chairman Ratan Tata said.
[...]
The Swach, a pet project of Ratan Tata, is the group's bet that the private sector can offer a better, consumer-based solution to one of the world's most persistent health problems than most governments in the developing world can.

This is interesting because the product is one which is not really in line with any of the TATA Group's current line up, and the water purifier market in India is currently a battleground. Hindustan Unilever, yet another firm with no history of consumer products of this sort has its Pureit - the first mover in the BoP segment, is facing challenges from the incumbent water purifier maker Eureka Forbes, who only recently woke up to the potential of the lower income demographic. One would think that in this situation the timing of the Tata Swach's launch would be a disadvantage but apparently not if this input is anything to go by,

Tata will sell two versions of the 19-litre Swach container, priced at 749 rupees ($16.11) and 999 rupees ($21.48), depending on the material. The filter itself costs 299 rupees ($6.43). It will purify 800 gallons (3,000 liters) of water – enough for a family of five for a year – before it automatically shuts down.

 Hindustan Unilever's Pureit filter, which also does not require access to running water or electricity, costs 2,000 rupees ($43.01), with a replaceable battery kit that costs 365 rupees ($7.85) and can purify 1,500 litreof water.
[...]
The Tata Swach – Hindi for “clean” – meets U.S. Environmental Protection Agency standards, and doesn't require running water, electricity, or boiling, executives said. It's cheaper than boiling water, cheaper than bottled water, and 2.5 times less expensive than Hindustan Unilever's low-cost Pureit filter, according to data provided by the companies.

This implies that Tata has applied the lessons learnt from developing the Nano, as  well as approached the whole market entry strategy as carefully and as rigorously as it would in any segment. Their primary criteria - as a business - for the design and development of this product was to take the concept of the Bottom of the Pyramid as a viable demographic to serve, setting the design criteria and constraints for both the product itself as well as their revenue model and pricing structure accordingly. The fact that it will "do good" or "improve life" is as important but this aspect has not been permitted to overshadow the need for the product to be competitively priced and attractive to the consumer, offering value for their hard earned rupee, even as it prevents their children from suffering from diarrhea.

This interview with the product's designer, award winning NID alum, Satish Gokhale, quotes him accordingly,

"Once the technology was finalised and tested, we were mandated to design the container and other features," recounts Satish Gokhale. "The most important part of our brief was the target selling price of Rs 999. The design had to therefore be simple in construction, easy to manufacture and easy to use.''

Most details about the materials and methodology that went into manufacture of Swach is under wraps, but Gokhale said there was the dual need of using right priced material without compromising on the strength of the unit and its usability with the ultimate aim of making it affordable to everyone who drinks water in the country.

This sounds more like design for a demanding client, no aspect of "social impact" or "doing good" being allowed to overshadow business needs. After the three year long project has finally seen the light of day, Gokhale's wife is quoted as saying,

"It was a tiring journey of dozens of sketches, and renderings and e-mails going back and forth," Falguni Gokhale told TOI, adding that Tatas wanted a perfect product and nothing half-baked would do.

Meanwhile back at the ranch, Unilever's response to the "water purifier for the BoP market" marketing war, from the previously linked article throws up this interesting nugget,

HUL says it has subsidised the machine as it knows it can bank on making money through the replacement of battery kits that cost Rs 365.

Compare the difference in approach and in framing of the problem (market entry strategy for low income demographic) between Tata and Hindustan Unilever (HUL). No subsidies for Tata, no compromises and from all that one can read and find, greater value for the rupee offered to the discriminating investor that is the BoP consumer. To quote our own marketing ;p "Price is simply a design constraint, not the sole criteria".

Yet one can already see that when the market awareness and education of the poor user has created the demand, this latecomer to the product category will walk away with the lion's share of the sales. Tata is a global brand, poised apparently to become the Nokia of drinking water, since their next goal is entering the African market with the Swach.

Now bringing this whole blather back to the questions posed in the beginning of the post, what if "BoP Design" was approached from the same perspective as  design for business and not design for social impact or doing good or any number of heart warming phrases that seek to imply improving the lives and livelihoods of the poor.

Is there any doubt that better quality water would do all of the above? And is there any doubt that this shows all the signs of being a successful commercial product for Tata?

This is just good design doing its job - making stuff that people want to buy. (For the BoP are people too)

Women at the BoP: what does it mean when your money belongs to you?

Photocredit: WSJ slideshow

I came across the following anecdote from the CGAP blog referencing biometric identification technology as a means for financial services to serve their BoP customers and it gives rise to some food for thought. Here's the snippet from Claudia McKay's post,

I remember encountering an elderly man arguing with a teller.  His son had died, leaving a widow and three children, and he wanted his daughter-in-law’s savings. It is tradition that all of the family’s possessions belong to the husband’s parents, regardless of the wife’s contribution.  The wife had accumulated about $150 in her savings account, but because her account required her fingerprint, the man was denied access. The next day the wife came to the bank, filled with gratitude that she still had the money she needed to support her children. 

This incident repeated itself many times and before long, standard marriage advice to brides included opening an Opportunity Bank account that offered ‘magic’ protection from drunken husbands and desperate in-laws. Others called the ATMs a tool of Satan that scanned your soul through your fingerprints.

Connecting some dots here, such as the future biometric ID cards to be made for all of India, not to mention the rural banking services now being made available, what will be the influence of "owning your own money" be on the women at the BoP? I'll focus for a moment on India, since my own experience makes it easier for me to ponder the consequences.

[Takes a moment to reflect on drunken husbands and desperate in-laws.]

Wow.

Already we're seeing a sense of pride, accomplishment and empowerment among women in India, particularly outside the urban metros. And the ladies I interviewed at Dastkar Ranthambhore for the Prepaid project talked about the sense of power that their income gave them, enabling their evolution from passive daughters in law to decision makers in control of their own lives.

Now, if technology can prevent fraud, misuse or forgeries, and one hopes does NOT give rise to incidences of fingerchopping (akin, I imagine to dowry deaths and bride burning), then truly, its influence will be felt in the patriarchal hierarchies of rural Indian households far beyond what the actual earnings or income may provide to women who work for their livelihoods.

Photoblogging: Stocking up inventory in BoP retail

All photographs taken by the author on 20th February 2009 in Januiay, Iloilo, The Philippines.

Reflecting on managing retail at the BoP (Prepaid Economy project)

Ma Fe's sari sari shop, The Philippines, March 1st, 2009

When I think about my time in the filipino village earlier this year, the most significant learnings from the field are the ones I never really wrote about or pondered deeply at that time. They were too specific to retail, I felt, or business management, and while this shop was one of the sources of income for the household I was living with, was it crucial for cash flow or simply something for Fe to do in her spare time?

I had lots of time in the evenings since there was no internet access nor much to do here in the village and I thought I'd entertain myself by evaluating the inventory management, pricing and profit margins for the shop. After all, it wasn't part of the main focus on the research but could provide insights into what it was like to run a shop like this.

Accompanying Fe to the nearest town where she stocked up on supplies at retail prices was an eyeopener. Sachets and single serve packages, small tins of food or even diapers - none of them was priced to be beneficial to the final reseller, instead their pricing was calculated on the assumption that whoever bought the product at the end of the manufacturers supply chain was the actual end user or household consumer. They are also buying here directly, sure, but I would wonder at the percentage of sales actually being made by sari sari, spaza or kirana type shops which are so ubiquitious among the BoP.

I found that standard practice is to simply add an affordable 2 to 3 peso markup to the product, rather than basing it on any percentage of the cost of the item or total cost of purchase. After all, when we went to stock up this shop, it cost us 7 peso each to reach the town, then spend another 15 or 20 hiring a modified motorcycle tricycle taxi to bring us back with the shopping all the way off the main road into the cluster of houses in the rice fields.

The shop was not making any money at all and just about staying in the black. It was a diversion for Fe, and I suspect a disillusioning dissapointment as well, since she'd gone to the trouble of taking out a microfinance loan to start it up. Although in this case, I'd arrived in late February and the region was still recovering economically and socially from the worst typhoon in 80 years which hit the previous June in 2008.

Analysing the situation I found that while she'd had first mover advantage in the walkable distance with her shop and also priced competitively with the main road shops further away, neighbours saw her success and rapidly copied. There were two other shops within hailing distance, neither of which was critical to their owner as a source of income. There's a subtle hierarchy developing in this part of the The Philipines, based on the status of the migrant worker supporting the local family - was your remittence coming from a merchant seaman or a domestic servant?

Then I looked at the products themselves, trying to find a markup on the cost that would not only be reasonable and even attractive compared to "competition" but still offer some returns on the investment. That's when I found that there was no rational basis for the pricing of sachets by P&G or Nestle vis a vis quantity available and purchasing frequency patterns of the local populace.

 There were maximum constraints on pricing purely due to the "closed" customer base and their cash flow and income, so how else to discover a cost advantage? I looked for an "economic order quantity". I found that shampoos and coffee sachets could be bought 6 at a time, sold with a reasonable markup and covered the cost of all 6 by the time 4 were sold. So these 6/4 sachets became group A and were primarily fast moving. Then you got the powdered milk and diapers, you could only afford to buy 4 at a time and were only able to cover the cost of all 4 when you sold 3 sachets. And so on and so forth.

But after all that, the bottomline didn't change much, it might have only eased the cash flow/inventory purchase cycle but there really wasn't anyway to generate a significant increase in income as it was.

At this point I want to say that if MNC brands like Nestle and Proctor & Gamble really want to effect positive change among the BoP, one thing that they can do is design their sachets, pricing and sales material to target the BoP small shopkeeper, not just the retailers and traders within their existing sales and distribution channel. Literally a few cents difference in pricing here or there, along with an increased focus on the shopkeeper - training, pricing, margins - could make a signicant difference in their livelihood and income.

BoP market segmentation: a chicken and egg dilemma?

The idea that has captured my imagination for the past couple of day is the question I've attempted to pose in the title of this post. "Consumers" do not exist, they are not a human archetype like hunter, hero, traveler or savior. This I'm sure is an area better covered already by experts in myth making, advertising, marketing and the field of human communications.

Now, continuing on my thinking from yesterday's post on ethics, I wonder if the need to create demand, thus marketing within the BoP constraints and conditions implies the creation of consumer segments or discovering existing ones, who may or may not resemble far better known consumer persona stereotypes from mainstream global culture.

I know that I've often said the BoP is the great unknown and must first be understood as a market in its own right with a different value system in play due to challenges of both income as well operating environment. Today I wish someone was holding a flashlight for me.

Creating a market among the BoP: my ethical struggles online

Its interesting for me to note that the category "Ethics" has been a part of this blog from its inception although I'll confess to not really knowing why I was adding it to the list. I've the least amount of posts in this category but here is what just might be a longish one.

I've been thinking. So what's new? That's what this blog is all about isn't it?

So anyway, I've been thinking about the ethics of creating the vestiges of consumerism among the BoP and struggling with what seems to be an immutable fact that we may need to do just that if we're to use market forces to alleviate poverty. Which this BoP thing is all about, isn't it? Otherwise we'd just be calling them the "poor" and still donating away?

Feed Africa or give Africa some disposable airtime and see what happens?

The challenge we face is that in order to offer empowering products like the Kickstart waterpump say, we need to create the market for it. People don't just suddenly figure out what's available for sale and what's good or beneficial and how to buy it, you have to show them first. And that means elements of mainsteam consumer culture must transfer across the value gap to the bop mindset too. Oh dear, and here I'd already made the assumption that the bop consumer mindset was based on values that were far more enduring than the mainstream throwaway consumer culture we sometimes notice we are in.

Where do we draw the line? And how deeply?

Lessons from the BoP 10: Life is hard; make it easy to use, easy to choose

Photo credit: Goverdhan Meena, Rawal village, Rajasthan India Jan 2009

When Goverdhan, my local fixer in Sawai Madhopur shared these photos he'd taken in his village back in January when I was doing the prepaid reserach in rural India, I was amused. Note the heavy duty environmental protection due to the heat and the dust of Rajasthan and also note the brand preferance. Endurance? Survival? Simple? Easy? and wholly and completely committed to the BoP customer's challenging needs.

Just yesterday I came across this news article that states, although I do add a caveat that the actual report is a little mangled when it comes to making sense of the data.

Simplicity of handsets and tariff plans are the main drivers for mobile telephony in rural areas, according to a research by consulting firm Accenture. Besides simplicity, a rural subscriber is concerned about the ongoing cost of a connection.

The BoP and their "Africa" price

Our good friend John Lumbe writes in from Malawi that the price of a loaf of bread is 100 Kwacha and an egg can cost between 18 and 20 kwacha. Not half a dozen or a dozen, they buy eggs as single treats. Imagine if a minute's phonecall to a person using a different network is 70 kwacha worth - that's a lot of food to give up for a conversation. Most of us are watching the development of the Fair Mobile initiative that Steve Song has begun focusing on over at the Shuttleworth Foundation in Cape Town but that's not what I'm writing about here.

I just came across this article that talks about the high price that Africans pay for basic services, here's a snippet,

Utilities providers shortchange Africans as they pay more for basic services compared to people elsewhere in the world. Africans pay 12 dollars monthly compared to two dollars by South Asians for mobile telephone services. This was contained in a report, "Africa's Infrastructure: A Time For Transformation", a release from the Accra Office of the World Bank said at the weekend.

Is there something turning out to be the BoP's "Africa price" just the way in some industries they talk about the "China price" or "India price" ?

What does it mean to be an African consumer, paying a premium for quality of life?

Lessons from the BoP 9: Uncertainty is the only certainty

How do you communicate the concept of "being comfortable with ambiguous, uncertain working conditions" across the vast cultural divide of the absolute North and the easily adaptable East?

I, myself, have just had my assumptions about the BoP, in context of consumer marketing, jolted from their very foundations. Reading this post by Maneno, where he points out the obvious now that he's shown it to us, which is:

It does indeed seem like it's a good idea, doesn't it? But how will this really help people? Issues in Africa aren't due to a lack of information for people living there, as that is spread quite readily, but more due to a lack of outside communication. It's a one-sided, one-way communication for some group from Norther America or Europe to dump something like this on a people.

The issue is that it's short term, scatter shot thinking to just send a device like this to Africa. Yes, it could give knowledge to the next William Kamkwamba, but it is much better if someone comes from the continent, sees the device, thinks it is indeed a good idea and takes one back to share with people. Others see it, agree and have more sent in. That is more of what is needed, Africans making the decision as to which technology they think is appropriate for them. I believe the term often used is, "supply and demand". I know, it's revolutionary.

It struck me that there's a missing skillset of creative information technology hacking required to adapt the products to the local market or create indigenously designed innovative solutions. Or so we assumed, until Maneno pointed out the obvious. Nobody ever asked the poor African or Indian children whether they wanted a laptop at all?

If innovation happens at the edges, does that make the BoP the fringe of the global economy?

Just curious and wondering.

This question emerged from a conversation I'd just had over the phone with a young woman doing her PhD at the Hanken School in the broad space between marketing, the BoP and human rights. She's going into the field next week to do what we'd done earlier in India, except that its in Tanzania. They say mPesa is finally on the uptake there, must ask her to bring back some photos of mPesa advertising from Dar es Salaam.

Lessons from the BoP 8: Assumptions of contextual knowledge questioned to lower barriers to acceptance

Quite a few people, all quite wellknown in their fields, mostly from high tech industries, have said the equivalent regarding the BoP - "just give them the technology and they'll figure everything else out, look how creative they are etc" when it comes to introducing new products and services.

And, with world class researchers and user centered designers, they can create some great works of art, technologically speaking, that you couldn't argue with as being well designed for the BoP. However, there's a step further that's missing, the one after the introduction of the technology. And that is what I call the mysterious fuzzy factor ;p

Basically, we need to start from scratch when considering the basic user profile for whom to design said product or service for - not in terms of features, looks and style - more basic than that, which is what is your target audience's contextual knowledge of that general product category?

Let me give you an example, its a generalized one that attempts to describe the basic gap in contextual, immersive knowledge (kinda like the "dialing phone number by muscle memory home" thing where we couldnt actually tell you the number without counting our fingers) between the great majority at the base of the social and economic pyramid and mainstream consumer culture across the globe. 

Lets start with financial services alone, since that's a topic that's been buzzing around my little corner of the interwebs of late - mobile money in all shapes, forms and brands, all aimed at the underserved (not undeserved ;p). You and I, for the most part, if we're reading and writing on here, know how what is expected of us when a cashier type person hands us a little device with our credit card sticking halfway out of it and the flashing signal seeking answers from us. Or what - more or less - to do at an ATM regardless of whether the two languages offered are suomi and Svenska and we ourselves are stuck with Hindi and English. Imagine if it were kanji?  Or the difference between a credit card and a debit card and just how helpless you are as a traveller without one?

So, anyway, the point is that if there is a vast swathe of people that were hitherto unbanked, it could be said that they were also lacking in many of the subtle nuances of information and knowledge we process everyday. We must not assume that this knowledge exists - true, many in these demographics we consider the "BoP" may have had exposure to many of these things we take for granted, but there is a greater likelihood, once you combine the challenges of isolation rural residents face, that this contextual knowledge is missing.

Now, framing your future design solution in this way, how would you go about designing a new product or service for the BoP?

Banking on the future of mobile financial transactions

Espoo, Finland on 6th November 2009

Bo Harald of Tieto Corporation shared a vision of the future that his company has been working on along with many other stakehholders. They are already in the process of implementating eInvoicing, part of something they call the Real Time Economy of financial transactions around the world. And they're making the basic part of this executable by a basic mobile phone. That means that even Ramu the teawallah, if he has to collect his accounts receivable from the MNC employees every month, they could eventually conceivably simply transfer it to his account. From what I could gather there is a finnish bank involved with the prototype and the Finns have been asked to set the standards for the EU wide system.

That is the now.

But what does it mean for the future if all transactions are eventually to be standardized over the mobile phone, regardless of the location? Would Nokia Money be part of this? And if so, what would it mean in terms of disruptive innovation? Here's another slide.

Mobile money services, contextually designed biz models for the BoP

Dave Tait shared this press release today from FNB South Africa who have just announced a very sensitively designed system for remittance across urban and rural South Africa. On the other hand is the World Money announcement by Vodafone, who are desperately trying to position their "World Money bank account required" mobile money transfer system as something to benefit billions, well maybe, but billions in dollars not people at the base of the pyramid. Here's a snippet, then lets discuss,

“Honestly, it may not be a big business for us in terms of margins because of the small transaction fee. But it will be an incredibly powerful tool for economic development, reducing social divide because it helps the underbanked and non-banked people around the world, as we have seen in Kenya,” Colao said.

Starting with that very first word, something isn't quite right if the above is supported by the below description,

It is not mandatory that the sender and recipient have standard bank accounts.
However, a potential beneficiary has to have a World Money Account with a local bank, which will be independent of one’s standard bank account. There must be sufficient credit in the account concerned to facilitate money transfer on mobile phone.
“We will help them open the World Money Account, which is currently an option for Vodafone customers. Since we have tied up our post-pay and pre-pay segments with bank accounts, it becomes easier to set up a World Money Account,” Maher explained.
Vodafone will set up a Trust to operate the World Money service and manage the accounts in the bank. All World Money customers will be beneficiaries of that trust.

This system will only make sense if the bank account that the beneficiaries are supposed to set up in local banks can be opened without the regulatory paperwork required by the bank itself to  open a standard account. Also, how will it work in villages where there may not be a physical bank, as seems to be implied by this description.

There's a lot of information about banks and money movement and mobile phones online today, @whiteafrican linked to this article on whether MPesa's success can be replicated outside of Kenya which I think seems to tie in nicely with the rest of the data points.

Lessons from the BoP 7: the challenge of establishing trust, a last mile problem

Wallpainted advertising, near Kanpur, India, September 12th 2009

Along with cost, the second biggest challenge at the base of the pyramid markets is building "trust" in the community, the local equivalent of building a brand.

First, find out which media people trust the most and aim to be on three of them, the highest ranked you can afford. For TV and Radio are the most respected across the BoP world but few companies choosing to address them can afford that kind of advertising.

Second, find out how information flows by word of mouth in the community or region you seek to serve. There may be rural and urban differences, for example, in a "static" community like the factory shopfloor your maintenance men are the "movers of knowledge" or infomediaries, but in a village or market, it would be the one with a fixed location yet highly central, like the local paanwallah, Chotu.

Third, enlist the support of these individuals, giving them special status in the community, perhaps, look at how this NGO which is sharing information on nutrition and health is organizing their infomediaries.

Further reference can  be found here, on the Role of Mobile Infomediaries among BoP and of course, the brand aspect is quite well documented already.

Keeping my promise to Ben

During a Skype conference with Ben Lyon, executive director of FrontlineSMS: Credit, I said I'd write about what I was seeing in today's twenty something generation. Keep in mind, ladies and gentlemen, that Mr Lyon is but 22 and a half years old or thereabouts.

I wish I'd had the opportunities, technologies and shifting ideologies happen back when I was in my early twenties in the late 1980's, when my idealistic yearnings of making a better world to live in were stifled in silence, today I can share it with you.

Whether it was Steven B Daniels who conceived of A Better World by Design, with a little help from the VC partners, or Ben Lyon who initiated  what perhaps we'd all been sitting around and waiting  for someone to make ha5ppen, these kids are changing their world. For the better, thank you ver much, you Oldsters.

I think we should be listening to what they may have to say...

Just an observation, btw

Kanpur back streets, September 15th 2009, India

The mobile as a platform for social and economic development at the base of the pyramid around the developing world, as per The Economist, couldn't have happened without Finnish engineering standards and Indian ingenuity working around scarcity. Imagine the bop mobile space without Nokia, and think about it for a moment. Or to quote @changeist, pondering, not pushing. Nokia meri jaan is not a joke in India, but its not enough for a sustainable future. On the other side of the coin, Bharti Airtel is doing so well and the MTN talks are stumbling again, one wonders why Bharti can't merge with Nokia for emerging services markets globally speaking?

Open letter to Seth Godin

Hi there :)

I just wanted to say that I was struck by the realization that I finally understood, in a flash of understanding, what your whole story on Tribes is about. I must confess, to be honest, that I've always read gurus with a touch of skepticism, can't help it, am an argumentative indian, what to do, we are like that only ;p

So as I was saying, I realized that tribes are those people who are in your networks, real or virtual, who hang around together and seem to all hold similar values, or at least similar outlooks. I won't say worldview, for that is a very individual thing as Tom Guarriello informed me on Twitter the other day, but perhaps its a similar enough mindset that there's a resonance of like minded energies that can then be collectively directed towards the greatest good, ergo 'your' tribe.

(ed's note: Hmm, must write shorter sentences. sorry  ;p and don't alliterate like that either ;p)

One never uses one's Tribe, nor can one ask them to do anything for you. They must be convinced of the validity of your plan before they will do anything to support it, but if you are lucky enough to hold up to a bunch of questions ranging from finance to marketing to organizational structure not to mention business metrics adn success criteria, well then who knows what might happen, right?

What have I learnt from my work?

 

I'm sitting here hungry, having gone without my dinner, just a minute after midnight, after four straight days finishing the research paper for the "Impact of Base of the Pyramid Ventures" conference in Delft, The Netherlands that will be held in November 2009. The deadline is Friday, so I'll let it sit for a while before taking another look just prior to submission. In the meantime I must begin reformulating my thoughts again for the iBoP Asia project report that follows an entirely different template. Bla bla bla, what's the point here?

This post was started to capture some fleeting thoughts on my work and what I've learnt, about both, it  and myself, over the course of this wordy marathon. The first thing I learnt was the degree of my naivete when I began the prepaid project, attempting to use exploratory user research from the field of design, in order to understand economics. Heh. My logic went so - that if indeed, design thinking was a blend of the best of the worlds of design and business, providing us with a powerful new way to deal with the unknown etc etc etc then this proposal should work. The original outcome required by the grant was a payment strategy for irregular incomes, the ideal would be a paper prototype of a transaction model by which a community could pay for a shared asset or resource, with the expectation that some time in the future, one would get an opportunity to prototype this model in the real world, with a rural community somewhere, tweaking and testing it until a final working version could be shared with the world. A replicable one, if not scalable too. Just like one would, if were one designing a new product.

Today, as I finished up my 'learnings from the field and their implications for business' section of the paper, it struck me just how much more there was to learn. That I'd barely scratched the surface, that the lessons learnt weren't enough to say or do anything etc etc etc (note that being hungry in the middle of the night will  tend to influence one's mood ;p)

On the other hand, I am now fairly confident that this experimental attempt to practice design thinking was successful. That regardless of how much or how little I learnt, the method worked. And without even consciously realizing it, how much of this experience I have subsequently used to plan the far more complex fieldwork for the Finnish project. One that includes a large team, not just me, myself and I, as it were, for the prepaid field trips in the spring. (It was a very small grant after all ;p)

So, here I am, in an interesting position today - I feel more confident about 'design thinking' than the 'BoP' - I hesitate to add a qualifier such as 'knowledge', 'skills' or even 'expertise'. Lets just say "area of interest" for now. Does this mean I'll stop working with the BoP? I don't know, if I am honest, but I do know that they are the ones who need everything that I may have to offer the most. Can one then say that I continue to practice design thinking, only that I choose to apply it to this niche market of just 5 billion people? Perhaps, if they let me or if we can find the right citation ;p

Yes, that last snark is a post I'm saving up for another day - commercial consultant meets rarefied academia. Disruption ensues...

K, time to go eat.

The Manda Wilderness vision: A successful sustainable business co-creating local community development

Patrick Simkin, co-founder, Manda Wilderness Project

Last night, I found myself at a Yorkshire wedding banquet  seated next to the groom's cousin, Patrick Simkin. Polite dinner conversation led to a request for an impromptu interview of sorts today at the barbecue, when it emerged that Patrick was General Manager at the Nkwichi Lodge in Mozambique, part of a sustainable business coupled with nature conservancy held in trust together with the local community. This partnership of a for profit business and a not for profit community trust is the tangible manifestation of a unique vision that emerged during a brainstorming session with his brother some 15 or so years ago (in a pub, where the most creative ideas are often formed). Growing up in the aid world (their father was with the UNDP) the brothers knew that they wanted to find a way that made a positive and real impact by linking conservation, the local community, social and economic development along with a profitable business (tourism). The Manda Wilderness Project was born.

The websites don't really convey the essence of the original vision imho, seeing as how they are - very naturally - geared towards the tourist trade.  It was when I was listening to Patrick's story that I realized that their whole concept was centered around the critical decision that their choice of location would be wholly dependent on the commitment and buy in of the local community. Everything that the Trust does is either an initiative or request by the local community, with their whole hearted cooperation and involvement. This project, which has been running for some 11 years now, is based on the now of-quoted principles of participatory design and co-creation of projects. Even the conservation area is co-owned by the population of the whole region, hence the name 'community trust' rather than simply another wildlife park or nature reserve. Nkwichi Lodge maybe an award-winning premium eco-tourism destination but the real story is that of the Manda Wilderness Community Trust, selected by the Ford Foundation as a case study for best practice in development work.

Each project I heard about sounded like a case study of finding and developing locally relevant solutions for local challenges and the whole, an example of a successful sustainable business model that managed a win-win partnership that supported the social and economic development of the entire region. An achievement worth looking into further, to see what we can learn that could conceivably be applied elsewhere as businesses seek serve the BoP markets in an inclusive manner. But then again, making a real world impact could just turn out to be a family trait - Patrick's brother went on to marry Pauline Vaughn, head of MPesa at Safaricom.

The elephant is always there

Chotu and family, Alaknanda Market, New Delhi January 2009

Reading Ken Banks' latest post "The elephant in the room" made me think. This post is an attempt to capture some of those fuzzy and complex thoughts.

I've seen Chotu, the corner paanwallah, grow old over the last 20 some years since the first time I went to buy cigarettes from him. Early this year, I went to pay my respects to him after my arrival in Delhi although I had a supply of duty free cigarettes of the brand I preferred. Visiting him whenever I am in the country has become as much a part of my "must do's" as going to see my nephew. This year, the influence of the vast and unseen effects of being connected by trade to the rest of the world were felt in his family, that's his brother with the black hat, standing behind his younger son, laid off now from his factory job in Faridabad as 'orders' slow down in step with weakening demand. Chotu asked me if I could do anything for him, a mark of respect I realized much later, as he'd never ask anything of me, knowing that I would not find it easy to refuse. If that complex concept comes through with clarity. I knew I couldn't actually do much, not having lived in India for the past decade or so means that I have few connections left. I told him Sanjay would be coming over and he too worked at a factory, perhaps he might have some news.

Sanjay in the balconey, Alaknanda, New Delhi January 2009

Sanjay came to live with my parents around the same time they used to live in New Delhi in the very late eighties, I believe he was with us for about 7 years. A tiny little boy of 9 or 10, he was the eldest of three or four children when his father died and suddenly he found himself the head of a household. His uncle used to work for my grandfather and he brought Sanjay to New Delhi to find him some work. I often wonder how his life would have turned if he'd gone to some other household, for my parents, unaccustomed to household help, having lived abroad since 1970, would set time aside for play as well coach him in the 3 Rs. Is it child labour or oppression, since all he ever did back then was the running up and down the three stories for my mother who is asthmatic? What would be the alternative for him back in a village in Bihar, one of the most backward states in India? Or his mother and younger siblings, to whom we sent a monthly stipend on his behalf, along with clothes and other sundry goods?

After he reached his mid teens he said he didn't want to continue in the domestic line as he'd discovered an innate talent for electrical and electronic repair following my father around (dad is the ultimate early adopter geek). So we sent him off to be trained as an electrician at my uncle's factory where today he's the head of maintenance. He's around 30 and proudly shows me how he's found he's a dab hand at mobile phone repair, which he does on the side as a paying hobby. His next ambition is to go to one of the mobile phone repair training centres cropping up around lower income locales across the country. I told him about Chotu's brother's dilemma and asked him if he could help, or at least, since I'd promised Chotu, and thus my good word depended on it, would he pop down to the market and say hello? He said he would but doubted if any good could be done, too many factories were laying off the workers due to the slowdown in export orders.

There is no social security, no unemployment, nothing but your goodwill among your network as insurance. Complex webs of relationships, sometimes multigenerational (Sanjay's granduncle drove my grandfather to work in Calcutta in the seventies) mostly within extended families, or biradaries, or clans, villages and neighbourhoods, knit together a social network as security system.

I can recall no sense of ever becoming aware of "poverty", no distinct turning point of awareness as mentioned in Ken's post that started this rambling post of mine. And yet I feel as though I've always known/not known that we were privileged, and thus, we were obliged (that's not quite the right word) to do what was right, i believe, but I'm not wholly sure, the word just might be dharm. It was a knowing thing, yet one that can, I'm ashamed to say, be cast aside quite easily when one lives in India. Else the overpowering elephant will bear heavily down on your chest with his foot until you can hardly breathe. One must learn to find a middle path between the knowing/not knowing of the disparity right outside the threshold in order to stay sane enough to survive. I believe you become more deaf and blind to it the longer you are immersed in it, contextually, this complexity just maybe a post for another day.

Today I'll simply recall one day in Calcutta when it struck me that I would never have the capacity to be a "Mother Theresa" - someone who selflessly devotes their life for the destitute (you cannot be from Calcutta and not go through that crisis of conscience, methinks, be it at 9 or 19) and spent the next 20 years just being 'normal' in the context of my place in life. How I found my way back to doing what I do now, I really do not know - it would be nice to have a snappy life changing anecdote to share or heartwarming transformation to tell, but no, I fear it might actually have simply been an innate sense of niti.

Lessons from the BoP 2: Assume that you can make no assumptions

Across Asian nations, the BoP (Base or Bottom of the Pyramid) is the majority of the market while in the Nordic countries, its quite the opposite. Infrastructure and environmental conditions are very different too, not just the society and culture.  In addition, challenges such as language and literacy as well as means of information access imply that this majority has not been as conditioned by mainstream consumer culture as have markets across the OECD world.

Corporations and institutions seeking to enter this region, whether for profit, as a business offering products, services or applications or as development agencies working on social and economic improvement programs, need to increase their understanding of the local worldview, mindset and value systems if they're to serve these emerging consumer markets effectively (and profitably). Its not enough to simply assume that customer attitudes and insights remain the same, simply challenges of infrastructure and pricing remain to be addressed. There's a larger gap than that and its one that encompasses the entirety of life under conditions of scarcity, adversity and uncertainty. It also influences the success or failure of products, services, communications or even programmes introduced into these markets. Price alone is not the sole criteria when it comes to low income markets.

For example, products for these markets must take variability of infrastructure such as power supply or water into account, harsher environmental conditions, availability of spare parts and maintenance skills; services need to be relevant to local cultures and social norms, such as differing views on interpersonal privacy or space, sharing and cooperative networks; and programs or communications must resonate with the worldview and mindset of the local populace. All of these and more ensure that barriers to adoption are as low as possible, thus improving the potential for sustainable business development.

But this kind of knowledge is rarely measurable nor can it be effectively communicated by standard consumer metrics, when the frame of reference for these consumer markets is so fundamentally different to begin with. The need exists for the study of these emerging consumers as a wholly new and unknown demographic in its own right, starting with the assumption that no assumptions can be made.

Lessons from the BoP - 1

Somewhere in Eastern Cape, South Africa  January 2008

Thinking about yesterday's post on "What can we learn from the BoP?" made me wonder about where would one start, if one were looking for answers. And the best place, I thought, would be attempting to capture here, first, the various different bits and bobs of observations/ insights that I've written about already. Lets see what might possibly emerge from that starting point?

Maximising the value of their investment (post consumption behaviour)
Purchasing patterns on unpredictable incomes (buyer behaviour)
What are the next billion customer's expectations? (core values framing their perspective)
How the next billion (or two) customers will influence industrial design (influenced of core values and purchasing patterns and decision making on design)
Design for the next billion customers (core values related to product design examples from the field)
Banking on airtime, transaction models, informal economies (mainstream assumptions and the informal (yet real) BoP economy)

Should we assume that rural markets = BoP markets? (rural and urban BoP will tend to show differences)

Financial behaviour patterns observed among rural BoP household
What makes "pay as you go" or prepaid plans so successful among the BoP ?(rural)
Insights on the role of observed behaviours for managing cash flow among rural BoP households
What  might be making the mobile phone so effective in improving household finances based on observations of rural BoP households?

Simply the exercise of going back through these thoughts that emerged over the past year and a half has given me much food for thought, but nothing is at the moment striking me enough to say anything right here at this very moment. On the other hand, I do hope we can all start a conversation on this and I would love to hear your thoughts on this topic as this exploration continues.

What can we learn from the Bop?

During the course of our conversation yesterday, WhiteAfrican's Erik Hersman posed a very interesting challenge to me. What could we say would be the lessons we can learn from the BoP, at least as far as the observations and insights gathered from fieldwork up until now?

I had contacted him for his insights on the inventors and creators that populate Afrigadget since my posts last week on RE culture will now form the basis of a much larger research proposal in the near future and I thought it best to start with the source :) It was then that he pointed out just how much value we overlook when we think of the BoP as the "poor" rather than creative, ingenious individuals in their own right - how true that seems - with their worldview and mindset influenced by conditions of adversity and scarcity that most of us sitting at our computer tables can barely imagine.

What then could we in fact learn from those who live at the base of the social and economic pyramid?

My 2 rupees worth on doing business profitably with the poor

How do you find out if a product or service is truly user centered or not? You let the user decide. For, the logic goes, if the product or service was designed from the user's perspective, thus meeting their needs (unmet or less efficiently met), it would be a return on any investment (purchase price) they would make in it. Yes?

Inspired by this debate going on over at WhiteAfrican's website on Google's premium SMS service and should one make profits from offering a service to the poor etc, it struck me that the most powerful indicator of the success of an invention is its adoption by the users. Otherwise its just a Segway ;p

Jokes aside, by allowing market forces (without entering the discussion on high telco costs in Africa well covered already) to give you feedback, a metric well understood and used by Google, you are better able to evaluate if your service meets their needs and/or if there are sufficient customers in the targeted market.

The other side of the coin, which I'm sure those of you across the African continent are probably better aware of, are the programs and services enabled by monies not directly linked to sales or customer satisfaction. Thus, were this to be a charity, CSR or aid funded program (so as not to profit from the poor, to argue on that side of the debate) we'd have no way to evaluate whether the service was

a) useful or relevant

b) well designed and appropriate or even

c) of any value to the customers.

It  would continue to limp along or litter the various villages along with other well meant products, programs and services meant to alleviate the suffering of the poor. Oh yeah, isn't it time that the free market allowed the poor to strike back? To decide if this service or product was worth their hard earned rupee or shilling or kwacha?

Just a thought...

What do I care about?

Suomenlinna Island, Finland June 20th 2009

There's a couple of things I want to see happen in my life time. One, which I'll toss off right now since its the second one that I want to muse upon, is the tangible manifestation of the "interweb" among those at the BoP across the developing world. As much as the internet has become a part of our daily life and as much as those of us who spend a significant amount of our time online have come to depend on it, I'd like to see something similar happen for those who live, mostly overlooked and outside of this "real world reality". That is all.

The second thing that I'd like to see happening, and perhaps this is one that drives me even in my daily work today is the increase in understanding of "the other". I'm not specifying here whether its the BoP, or the poor or the rural or the whathaveyou, I'm distilling it down to its basic essence. If we can put aside the veils of our own perceptions, the filters and assumptions that our social conditioning, our dominant logic or culture - all that colours the way we see and interpret the world, and simply learn to step back and observe, listen and understand, well, there'd be peace on earth wouldn't there? (rueful smile)

But idealism aside, where I was going with this thought is that the same concept is underlying the foundation of the work that we do here at the Emerging Futures Lab. What's the basic description?

a multidisciplinary research and consulting team focused on understanding the people at the base of the pyramid in order to improve the success rate of new ventures, products and services across the developing world.

I've not put a label on things, I'm neither an ethnographer nor a design researcher, although I do use tools and methods from those fields. I guess I'm a design thinker, in the way I've defined it here,

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.

for I have done all of the above and continue to do so, all with the goal of bridging the gap of understanding that keeps cultures and peoples apart in their isolated worldviews.

It strikes me as I write this post, an effort to answer the question I posed myself in the title, that what I'm attempting to do with my life (or life's work, as the case may be) sounds idealistic and romantic in a way, but the other side of that coin is the constant battle against cynicism and a culture of detached "coolness". I'd rather be a dork who cares, and cares deeply and emphatically about my own self set mission and vision in life than live up to some undefinable metric of worldly  success. Heh. The point is, if one were to step back and take a big picture view of the whole, a perspective if you will, I am simply trying to manifest my ideals in tangible form.

There's a fundamental peace in that, I find, and I have been sleeping at night. Deep dreamless sleep that leaves me refreshed for the day I spend, alive, in the sun, on this earth.

Entering the BoP market: Profit vs triple bottom line approach

Just yesterday I heard about a well designed product that would have really made a difference for those at the BoP being  killed off at a very late stage of the development cycle although the  prototypes worked great. The reason was that it would not have made enough money per piece to deem it a profit making product in the eyes of the organization. In fact, their worldview was that it should cover the costs of a very expensive local office and the attendant staff who were on world class salaries.

That, imho, is expecting a tad too much from a product meant for the low income markets. You'll never make high margins on BoP products (unless you're selling illegal drugs or some such) and to kill it off for this reason was a saddening thing to hear.

It made me think about the values of the company and what they perceived as their bottomline. You could say that this seems to demonstrate the difference between "doing business profitably with the poor" and the triple bottomline (people, profits,  planet) approach. Yes a business has to make money to be sustainable, its not in the business of charity. However, the solution to the challenge so easily depends on the orientation of the bottomline or the way the problem is framed.

Consider the Tata Nano as an example. There was no question that pricing a car at 2500 dollars or Rupees 100,000 was going to be extremely difficult to pull off and margins were certainly going to be tight. But since the decision was based on ensuring the product reached the market at that price - that is, the non negotiable was that the product must be released and made available to customers - the company looked at their entire supply chain, business model and back end operations in order to solve the problem of making it a profitable enterprise.

Had they said just like the company I heard about yesterday that "oh dear, this car can't support an organization the size of Tata" or some such and killed the product in development, we would never have the disruption that the Nano is creating in the automobile market.

For the first company, getting the product, which indeed would have made a difference to the wellbeing and safety of the low income customer, and benefited the planet, was a negotiable. Their existing administrative costs, operating structure and acceptable profit margins were the non negotiable, thus resulting in the decision to kill the product and close down the local office. Who loses in the end? The BoP as usual.

In the short run. Imho, in the long run, its the company that loses out, giving up so easily an opportunity to innovate on a fundamental level and make a difference in the world.

If you're going to do business with the poor, then you must be sure that meeting their needs is your non negotiable, and change your operating paradigm to ensure that your business can not only meet their needs at a price they can afford but also sustain your business profitably. Otherwise, don't even go there. You're wasting your time and theirs.

Competing and/or collaborating: a look at two value systems

	Either / Or	Both / And
Value System	Competitive	Collaborative
Type of Outcome Expected	Win / Lose	Win / Win
Attitude toward “Winning”	To the victor goes the spoils	Your success is my success
Attitude toward “Losing”	Someone has to lose	If somebody loses everybody loses
Attitude toward minority opinions	Get with the program	Everyone has a piece of the truth
Why explore differences between competing opinions?	To search for bargaining chips, in preparation for horsetrading and compromise.	To build a shared framework of understanding, in preparation for mutual creative thinking.
Essential Mental Activity	Analyse: break wholes into parts	Synthesise: integrate parts into wholes
How long it takes	It’s usually faster in the short run	It’s usually faster in the long run
Underlying philosophy	Survival of the fittest	Interdependence of all things

This table is from Steve Song's post "African women and American academics" referencing two modes of problem solving explored in Sam Kaner’s book Facilitator’s Guide to Participatory Decision Making. 

While Song uses it to make a point about the need for compassion in the arguments going on today regarding aid and development in Africa, it struck me that this table made the values gap between these two systems very obvious and very clear.

Its for that reason that I've borrowed it to share, since I write so much about the gap in value systems and worldview between customers at the BoP and the value propositions of the multinationals that have sought to serve them. At this point, I do not know if these are the value systems that apply to either party nor do I know what the equivalent comparable systems in that context would be. Its a task that needs to be started, based on existing research and then built upon as our understanding grows in the future. But at the very least this helps us imagine what the inherent conflict looks like, when two value systems are brought side by side for comparison.

Its also helped me realize how firmly I believe in win/win as the outcome of problem solving, and why, perhaps, sometimes, I've faced challenges with close collaborators.

It reminded me that compassion and critical thinking will take you a lot further in the social construction of knowledge than critical thinking alone. ~ Steve Song

Pasteur's Quadrant: A BoP design researcher's dilemma

I was introduced to this diagram by Prof Kaj Sturbacka during the kickoff meeting for a consumer driven research project last week. One look and I knew that I had finally found a way to articulate the dilemma that I'd felt after my very first exploratory research trip among the BoP in southern Africa early last year.

You see, it was after that trip that I came to realize that the values and mindset of the BoP consumer could not simply assumed to be those that would necessarily resonate with the value propositions offered by multinationals seeking to enter the low income markets. That the BoP, was in fact, a great unknown, particularly from the point of view of marketing, consumer insights and sales. And the logic went, if this were so, then we needed to study this emerging consumer market in its own right, from scratch, without the preconceptions and prejudices that had kept them 'below the radar' until now. That we couldn't simply apply the 'conventional wisdoms' of marketing or even design directly when seeking to serve them, effectively and profitably.

This point of view began to pose a dilemma for me, as on one hand, clients would wish to understand these users in order to develop products and services but on the other, these projects were limited in their scope and scale, since the underlying assumption was simply that these customers had shallower pockets but there wasn't any other fundamental difference. Sure, they may face infrastructural challenges or those posed by lack of education, but those were tangible differences that could be addressed by design. It didn't seem as though we were looking beyond the obvious there.

So, how could one pursue the basic research required in order to increase our understanding of the BoP as rightful customers in their own right within the constraints and conditions of corporate work, I pondered, and where did this mash up fit? For pure research on the poor has been done for years and there is an entire body of work on this, it is only of late that they've been referred to as the BoP, that is, a market perspective towards development, thus requiring research results - that is, insights, that business can use immediately in their development of services and products meant to serve the underserved, delivered in a manner they  can afford.

So when I saw the quadrant named Pasteur's taken from a book of the same name by Donald Stokes I truly felt like Archimedes in his bathtub :) Talk about an "Aha!" moment, now, it seemed, there was finally a way to describe what needs to be done for these new markets, bringing together the work that tends to happen in academia (Bohr's) with that more likely to be done by a design ethnographer for a company (Edison). What a great experiment to try this approach instead, a middle path, one could say, that is attempting to balance the often conflicting outcomes of each individual approach.

openness and sharing leads to innovation and growth

Nokia intends to give away all the IP that it doesn't plan to use, for free and with no expectations of anything in return. Oodles of time and money spent on R&D, innovation, fieldwork and strategy will simply be shared openly and willingly in order to enable greater innovation and substantial growth of the Finnish ICT industry.

Those are the bare bones - the concept is something else again. My first thought, after struggling over the title of this post, since nothing can quite capture the magnitude and meaning of this announcement, was OMG have they gone Hindu? ;p  This will certainly take their good karma points up an exponential notch or two. Then it was the realization that here is CSR (corporate social responsiblity) interpreted entirely differently - from 'recycling of ideas' to ' giving back to the community'.

And finally, I am reminded of the words of a young Finnish designer who told me just last month before he left for a short project at Stanford, that the biggest difference he felt between the 'innovation/design' environment in the US and here in Finland was the attitude of ownership towards Intellectual Property, thus ideas and concepts. That sharing an idea openly among the community, if you were not planning to use it, was second nature here and one simply thought that some day it would come around to you (karma) whereas he'd observed that in Silicon Valley, the sharing of an idea was considered a transaction and that IP was jealously protected, regardless of whether you meant to use it yourself or not (i.e. it was still worth money).

So, lets take a look now, in this context, what is being shared and why, from the press release:

"We feel it's important to support the birth and growth of Finnish companies that base their offering on technology and service innovations and aim to build internationally competitive businesses," said Mr. Esko Aho, Nokia's Executive Vice President, Corporate Relations and Responsibility. "As we will not take all of the innovations generated by our R&D into production, we are happy to give other competent companies the opportunity to turn these innovations into success stories."

"Speeding up the economy calls for a new degree of openness. We hope that the Nokia Technopolis Innovation Mill sets an example that companies across other sectors will follow. The current economic climate is just right for a critical evaluation of intellectual property portfolios and the release of the innovations that are more suitable for others to exploit," continued Aho.

The innovations released by Nokia are in areas such as environmental and energy-related solutions, location based services and advertising, near field communication, mobile security, health care applications and future internet services, among others. The objective is to evaluate the thousands of available innovations and select around one hundred to be matched with a company which demonstrates the best ability to exploit them, and which is then granted funding for further development and commercialization.

"More efficient utilization of existing innovations is a novel and interesting perspective in boosting R&D and innovation," said Mr. Martti af Heurlin, Deputy Director General of Tekes."The Nokia Technopolis Innovation Mill is fully aligned with the Finnish national strategic intent to develop new knowledge intensive ventures. Ideally, the initiative will create significant volumes of new international business."

"Nokia is demonstrating exceptional corporate responsibility by releasing innovations for further development and use without compensation," said Mr. Keith Silverang, CEO of Technopolis. "In economically challenging times we need these kinds of collaborative initiatives that benefit the community as a whole. On top of the innovation and financial support, the participating companies will be offered a wide range of Technopolis business development services to help them ramp-up their businesses swiftly."

Right, how to kickstart an explosion of growth and innovation in an entire sector of the economy. Musingly she says, its the mobile as an innovation platform for social and economic development, even if its not always for the BoP. 

Seeing some patterns in irregular income flow

Continuing on from yesterday's post referencing the book "Portfolios of the Poor: Financial Diaries of the Bottom Billion" and Seth Nemeroff's account of attending the book discussion on nextbillion.net, here's another snippet that caught my attention:

These examples are used to back up some of the major lessons of the book; to understand that those living on $2 a day maintain financial lives because they are poor not in spite of being poor. The main conclusion of the book was presented as the poor suffer from the irregularity and instability of their incomes. One of the best ways to alleviate this problem would be to offer better financial services including more options for those living with the volatility of these income streams.

If you were to look at a chart of their weekly/monthly income it will average out to this number of $2 per day, but with many peaks and valleys that need the help of financial services to smooth out these bumps. This is the area of the market being underserved and offers significant opportunity for improvement.

This brought to mind a rough diagram I'd attempted in order to capture the sense of this volatility and identify the key times when external financial services could in fact provide timely help in order to ensure that the households didn't slip into the 'danger zone' of utter devastation.

If you take the horizontal axis as the minimum (daily or weekly) income required to meet basic expenses, you'll find that that its not really an absolute so much as an approximate with a margin of safety (lower right hand diagram) within which the daily fluctuations are manageable.

Point A is when cash flow dips below the required minimum - but only for a short while. For example, one of the people interviewed in Malawi breaks rocks for construction for a living and hammered his thumb, putting him out of commission for 4 days. His friends helped out but he says that if it were for a longer period he doubts they'd be able to manage. Or a cosmetician in New Delhi offers to give a couple of future facials for free to her regular client if she would only advance her some cash immediately. These are some ways that social networks and trust play a part in the 'smoothening' process.

Point D, on the other hand, is when cash flow dries up, for some reason or the other, for a longer duration. Depending on the length of time (marked B) - due to illness, a death or some other calamity, in one case the theft of a mobile phone with all client contacts - this is the dangerous period. What happens after all sources of help from family and friends are exhausted? This is when external financial tools would be of critical support, if they were available to the household within the challenges and constraints of their situation. Would they get a loan without formal definitions of security and collateral? How would risk be evaluated for the business offering such a service? In the informal economy, risk is mitigated by trusted recommendations, long established personal reputations (social capital) and resilient community ties.

Otoh, point C could be an opportunity space - its when there is a lump sum of cash available. This could be random or unpredictable - a large construction project or job (more likely to be urban), or expected - harvesting honey from the beehives or even under the control of the individual (more likely to be rural) such as selling a full grown pig or cow. Here is when appropriate financial services could assist in a way that could alleviate the challenges of a future point D, by providing a cushion or insurance of cash against future need.

But even here some things need to be kept in mind, will this cash be accessible on demand? The village moneylender can be woken up at night if mother falls ill and needs to be taken to hospital. Can an institution of any kind provide this kind of 'security', particularly in rural areas?

Access, the ability to control timing and amounts, trust and social capital are the intangible elements of the BoP's financial management system; they form the basis of the means to manage the volatility of their income streams. Addressing these value elements would be critical for the success of any business wishing to do business with the 'poor' profitably.

Mashing services to create new business models for the BoP

I've been meaning to write this post for quite some time now but what with the packing for the move to Finland at the end of the week, its been a bit of rush. It was after reading this article in the Financial Times titled "Brazil microfinance off to a rocky start" which I can't quote from at the moment since I've surpassed my free access for the month and then coming across this website sent to me on the Marketplace Literacy project that the idea of mashed up business models struck me.

For context, here's a key snippet from a different FT article, again on microfinance/lending in Latin America, that echoes what I would have said from the other article, basically, emphasizing the need for indepth "knowing your customer" and handholding that ensures the real success of the start up BoP entreprenuers that these financial models seek to provide, viz.,

It sounds like banking from a lost age. “The way to build business is to go and see the customer,” says Jeronimo Ramos, a director at Banco Real in São Paulo. “A good interview is a whole day spent visiting the customer’s business and talking to their neighbours.”

However, Mr Ramos is not talking about the majority of customers at Banco Real, part of Spain’s Santander group since 2007. Real’s mostly middle-class customers, should they apply for a loan, will be sized up by the bank’s automated credit risk systems.

Mr Ramos is talking about customers of Real Microcrédito, a division of the bank which lends money to people running small and very small businesses, mostly in the shanty towns of Brazil’s big southern cities and in poor communities in the country’s less developed northeast.

As the global banking system sinks into its worst crisis since the 1930s, this kind of “relationship banking” appears better-prepared than most to ride out the downturn.

[...]

Where lenders in this sector know their customers well – for example, when they are customers of a retail chain that goes into banking – results have been good. When banks have launched themselves into a largely unknown market, they have often run into trouble.

On one hand we see the need for understanding and the sharing of skills and knowledge that these first time entreprenuers at the BoP require in order to maximise the ROI of the loans they take out from various microfinance schemes.

On the other, is the fact that until I saw what the Marketplace Literacy project was doing, is the fact that few, if any, such programs have any systemic means of imparting awareness, training and education on the basics of doing business to the poor (and often illiterate). Here's the key snippet from their website,

Our mission in India is fourfold:

(i) to provide entrepreneurial and consumer literacy education for low-literate, low-income adults in urban and rural Tamil Nadu,

(ii) to develop and implement an e-educational platform to provide entrepreneurial and consumer literacy education for low-literate, low-income adults in urban and rural India,

(iii) to train non-profit organizations in India to provide entrepreneurial and consumer literacy education,

(iv) to disseminate educational materials and guidelines for entrepreneurial and consumer literacy in different Indian languages.

The only question I ask, at the end of all these snippets, is why must an NGO be attempting to do this on their own in one location? Why can't such a programme be incorporated into the business models of all the up and coming microfinance institutions and other social entreprenuerial ventures that one hears so much about? Its a critical gap in knowledge and one, which if addressed, can add true value to the real ROI of such ventures.

Is it time to start mashing up the various fragmented attempts across the world that address the different steps in this path to development into far more comprehensive and cohesive strategies for success?

Reflecting on Nokia and their laptop business

Last night's post on Nokia's announced interest in entering the laptop market reminded me today of somethings I'd written on Nokia's future strategy back in May 2007. I've not got the time right now to enter into a long rambling ponder on this but just thought to repost from back then for your reading pleasure,

May 19, 2007

Pondering Nokia's tomorrow, part three

Going back to the visions inspired by Michael Mace's post in the first place, I'd like to share the snippet that caught my eye,

The message really hit home last month, when I heard it from Nokia CTO Tero Ojanpera and Bob Iannucci, head of Nokia Research Center, at a Nokia strategy briefing in Silicon Valley. Iannucci pointed out that Nokia started as a paper mill and has a history of completely changing its industry from time to time -- from rubber boots to monitors to mobile phones. He said it is once again "a company in transition to the next phase." That next phase is mobile computing.

Not smartphones, not converged devices, but full-on mobile computers intended to replace both PCs and mobile phones. Nokia says it expects these devices to eventually sell in the billions of units, and to become the world's dominant means of accessing the Internet.

Even though these future devices will still be mobile, if you take all of Nokia's statements at face value the changes from mobile phones will be so extensive that it's fair to call it a new business.
[...]
Now Nokia's talking about how it will put the PC industry out to pasture, and oh by the way take over the Internet as well.

Yes! Yes! Yes! Let's get on with the good stuff already! Way to go Nokia! This is what I see going forward as I ponder, google and write about the mobile phone - the mobile as a post industrial platform for innovation, the role of the mobile phone as a powerful tool for social and economic development particularly for the bottom of the pyramid segments of emerging markets and developing nations.

This new "Internet" - it needs a new name - this web that will bridge the digital divide, connecting the have-nots, giving them a platform on which they too can conduct commerce, collaborate and communicate, connect to the digital world, providing them with the opportunities to contemplate health, wealth and the freedom to choose.

<very large snip>

Two years ago I was simply going on about the potential for everyone to connect to the cloud, today, while I'm not skeptical, I'm far more pragmatic about the need to lay the cobblestones down before we start wandering down the yellow brick road to global connectivity. Bridging the digital divide doesn't necessarily have to be via the cloud in the early stages so much as enabling the access to technology in a context friendly manner in the first place.

There is an interim thought here - a transition stage if you will - that's almost on its way to being articulated but just as any other concept, its still evolving and each of these posts is an attempt to lay another cobblestone down.

Reference: A phone doesn't always need a signal to give value for money well spent

Going back to the visions inspired by Michael Mace's post in the first place, I'd like to share the snippet that caught my eye,

The message really hit home last month, when I heard it from Nokia CTO Tero Ojanpera and Bob Iannucci, head of Nokia Research Center, at a Nokia strategy briefing in Silicon Valley. Iannucci pointed out that Nokia started as a paper mill and has a history of completely changing its industry from time to time -- from rubber boots to monitors to mobile phones. He said it is once again "a company in transition to the next phase." That next phase is mobile computing.

Not smartphones, not converged devices, but full-on mobile computers intended to replace both PCs and mobile phones. Nokia says it expects these devices to eventually sell in the billions of units, and to become the world's dominant means of accessing the Internet.

Even though these future devices will still be mobile, if you take all of Nokia's statements at face value the changes from mobile phones will be so extensive that it's fair to call it a new business.
[...]
Now Nokia's talking about how it will put the PC industry out to pasture, and oh by the way take over the Internet as well.

Yes! Yes! Yes! Let's get on with the good stuff already! Way to go Nokia! This is what I see going forward as I ponder, google and write about the mobile phone - the mobile as a post industrial platform for innovation, the role of the mobile phone as a powerful tool for social and economic development particularly for the bottom of the pyramid segments of emerging markets and developing nations.

This new "Internet" - it needs a new name - this web that will bridge the digital divide, connecting the have-nots, giving them a platform on which they too can conduct commerce, collaborate and communicate, connect to the digital world, providing them with the opportunities to contemplate health, wealth and the freedom to choose.

<very large snip>

It hasn't even hit the streets, its already becoming a byword

Yes we know, its going to be worse than the iPod or iPhone isn't it? Though just as cute. Reminds me of the eeePC really. Anyway, my point wasn't to blather on about the car but the fact that I noticed myself bring it up as an example twice in conversations today. An example of what?

Call it disruptive innovation. Call it overturning dominant logic. A lean mean business model and strategy to support the price tag. All geared for the BoP markets. Or call it one man's dream, to quote Neelakantan, who put it very well,

Being a Ratan is not easy. You have to fight status quo, change belief systems, break paradigms, get your teams to believe in your vision and execute it and then you get to change the world. And if you succeed, you get a product that completely changes existing belief systems and leaves the world gaping.

The other choice is a simple one. You just need to oppose and harangue all the Ratans in your world. But there wont be too many of them. Just one at the most. And if you all gang up, you can easily bury Ratan and his cohorts and their ambitions. (You can take cheap potshots too.)

Does it matter what you call it?

The point is that here's a transition defining moment if there was one. And one that just happens to be embodied in good design ;p too which doesn't hurt the case. Here's a snippet from the comments in The TimesOnline.co.uk article linked above,

Perfect really, i just wish more manufacturers would design and build what some customers want - ie cheap, reliable , basic , simple, easy to maintain transport.

Nah, there'll never be an iPod for the masses but the Nano will become a byword for BoP design.

Can we design a user centered economy?

Just a quick thought that struck me as I surf the interwebs today. First, via Bruce Sterling's blog is this link to an opinion in the Financial Times by Brazil's President titled "The future of human beings is what matters" and here's the snippet that caught my eye,

As I said at the outset, I do not give much importance to abstract concepts.

I am not worried about the name to be given to the economic and social order that will come after the crisis, so long as its central concern is with human beings.

followed by coming across this post by IDEO's Tim Brown titled "A post consumption economy", naturally I couldn't help but think about the user centered design process.

I wonder:  If we put people at the center of the system, whether what we'll be designing would be the user-centered economy?

(rather than the producer centered)

If so, how would that play out? What would change? What would it look like? And critically, what would the metrics of success be in this case since "growth" would imply unchecked population growth?

Core values: business models meant to serve the BoP

The biggest shock for me in the Phillippines was learning that airtime minutes purchased on a prepaid plan came with an expiry date. The smaller the amount the faster the expiration. For example, the lowest amounts of "load" that can be purchased are 10 or 20 pesos (about 25 USD cents) and they are valid for either text or voice or a combination of both for just 24 hours.

As usual, nobody in the rural area had heard about GCash or used it, much less transferred airtime to pay for anything, although anecdotal reports seem to imply that this was the case. While my observations are naturally based on the interactions in one barangay in one province on one of over 7000 islands, it does make me wonder if by creating a perishable product, the local telco's might inadvertently be hampering the uptick of a host of grassroots workarounds and innovative uses? It also makes me wonder if the observed and documented phenomena of Filipinos having the highest usage of SMS might have something to do with the fact that you have to consume the 20 peso worth (100) sms in 24 hours or lose your money?

"But people are in the habit of only buying what they consume daily" said someone in the city when I brought up this fact out of curiosity. True, to a degree. On the other side of the coin was a small business owner who is forced to load 30 peso worth every three days simply to keep his phone operational since it is a critical part of his business operations and allows him to stay in touch with customers. Do high volumes/small margins at the BoP necessarily imply forced consumption?

Another eye opener was hearing the story about a microfinance loan for enabling local women to start their own small businesses. The woman in question runs a sari sari store as seen in the photograph above in a small cluster of houses. She participated in the program about 4 years ago and took out a loan of 5000 pesos to start the shop. It was based on the Bangladesh model according to her memory of the introductory seminar by the loan officers and they would be required to pay it back over a period of 25 weeks (6 months). The experience made her so unhappy that she will never take out such a loan again, poor woman entreprenuer or no. 

The first payment was due exactly one week after the loan was disbursed - she'd barely set up her shop, bought inventory of stocks, figured out pricing and what to do, already she was under pressure to start repaying. She used the capital to pay the interest and wished that there had been a grace period to get the business up and running. After all, it was not a cow or a mobile phone, something that could conceivably start earning money in the first week after purchase. A shop needed time to start generating cash flow as people in the neighbourhood discovered the location and spread her prices (the lowest in the walkable distance) by word of mouth. The pressure was intense and created tremendous ongoing tension every week. It just wasn't worth it and she was glad to have gotten out from under the cloud.

Others, she says, are still trapped in the ongoing cycle of taking out constant loans for working capital and repaying back, never quite earning enough to buy a decent amount of inventory and thus earn enough to get their heads above water. Was this bridge between "poverty and progress" meant to drown the BoP in consumer debt? The whole experience sounded like a vicious downward spiral for the new business owner/entreprenuers.

There's much much more to this story of course and after spending a significant amount of time in the shop, doing inventory shopping, checking the prices at the outlet store in the nearest town 5 km away, the affordable markup on the products back in the village and the subsequent analysis, it makes me wonder if it were possible for business models meant to the serve the BoP could be designed to be as flexible and adaptable as the informal economy itself?

For example, the most popular 'sausage' seller in the area is a woman who sells them door to door. Her prices are naturally a tad higher than what you'd get at the markets in town but her USP or unique selling proposition for the majority of her customers - she has about 50 households on her regular weekly walking route - is that she extends them a week's credit to pay her for the 'frozen foods' as they are called locally. Hotdogs, chorizos, longganisa and other preserved meats. Naturally, given the choice between needing to have cash upfront when shopping for the same (bright red above) or being able to account for it over the period of a week, they prefer buying from her. Besides, she's a cousin and they don't have any remittence coming in at home.

All of this makes me wonder what is it about the set up that workarounds are inevitably required by those who live on irregular and unpredictable incomes in order to navigate their way through these systems and processes?  In some cases, ironically, even those meant to improve their lives.

Whether its the chap who would rather sell his much loved motorcycle to start his own business than to risk taking out a microfinance loan meant just for people like him (because his income flow is so different from the payment schedules) or the woman who sends her about to expire airtime to her son and he sends it back to her again ( passaload costing just 2 pesos) so that the clock ticking on expiry turns back to zero, these are all jugaad ways or workarounds to cope with the inability of the systems to meet the unmet needs of the customers for whom they are meant.

How and where do we begin to meet the basic needs, if we are indeed to do business sustainably with the poor, not just profitably?

Balancing act: attempting to maintain the status quo

The latest edition of The Economist has a special report on the global middle classes and a couple of things really stood out. The first is something that deserves a post on its own but that can wait until I've figured out whether its better suited for the Prepaid Economy blog or here. Its simply the fact that one cannot define the middle class using absolute numbers since purchasing power parity differs from country to country. Instead they say that there are two middle classes - a global one, those whose earnings would place them in this category anywhere in the world and an emerging markets/developing country version, poor by hard currency standards but emerging out of poverty in their own countries.

The other observation that struck me as I read through all the various articles in this Special Report was the undercurrent of concern whether this demographic would be aspiring towards more Western consumer goods and what would be the result of their recent, if shaky, rise into elements of mainstream consumer culture be in the context of today's global economy. Here are some relevant snippets,

With the global economy facing the biggest slump since the 1930s, the World Bank says that “a new engine of private demand growth will be needed, and we see a likely candidate in the still largely untapped consumption potential of the rapidly expanding middle classes in the large emerging-market countries.”

This special report will assess these expectations. It will argue that many of them are broadly justified; that there is indeed something special about the contribution the middle classes make to economic development that goes beyond providing a market for Western consumer goods.

And also this, an extremely difficult task to find the right short paragraph since the whole article is worth quoting, what I'll do is share the comment made on The Economist's website first,

cantbrico wrote:                                February 13, 2009 23:17

To consider that people earning between $2-$13 a day across all countries makes them part of the middle class is highly arguable. Thirteen dollars a day in Mexico, Brazil, Singapore or Hong Kong for example –where in purchasing-power-parity terms the cost of living is 65%, 54%, 66% and 74% of the cost of living in the U.S. respectively– will not make any person with this income enjoy a decent life. Thirteen dollars a day is roughly $1,62 an hour. According to this logic, if a person in Brazil earns $13 a day and the PPP cost of living is 54% of the U.S., then a person earning $24,07 in the United States should then be consider part of the middle class. However, $24,07 constitutes an hourly wage of $3,01 in the U.S. Yet the U.S. Minimum wage beginning in July 2009 will be $7,25 an hour. Nobody earning the U.S. Minimum wage can consider him or herself to belong to the middle class. In fact, nobody in the U.S. would consider the official minimum wage a living wage. This makes people in the U.S. earning $24,07 a day, or $13 dollars a day in at least all emerging markets poor, for they endure at least one kind of poverty (food, healthcare, adequate housing, clothing education, leisure...). If you endure at least one kind of poverty you are not part of a middle class anywhere in the world. In contrast, $13 dollars a day in the least developed countries of the world would probably allow a person to enjoy a middle class quality of life. Yet I doubt that many in these countries earn $13 a day. Therefore, your argument and the World Bank’s argument are wrong and highly deceiving. According to the UNDP, inequality has steadily grown in the last decades on behalf of a tiny elite, contrary to what you argue. In the case of Mexico for example, the middle class has been shrinking steadily for at least two decades. The $13 dollars argument is just a trick that attempts to justify the Darwinian capitalism of the last three decades.

While the article argued that overall the status quo would be maintained, even through the effects of the recession that may come upon these 'developing middle classes' such as,

In contrast, the middle class faces problems across the board: jobs (its members are more likely than the poor to be employed by companies that depend on exports or outsourcing); assets (they have invested in property and shares but house prices and stockmarkets have crashed); and finance (they have put their money in banks or have borrowed from credit companies that are exposed to global markets).

reading through the entire series has made me wonder about the status quo in the first place and thus the subsequent short term attempts to maintain it. When you look at some of the elements of a larger global  zeitgeist - Kofi Annan's excellent piece on the need for balance in the world, David Cameron's similar thoughts for business and these words put into action, call it "disruptive innovation" in the global pharma industryby Glaxo SmithKline viz.,

In a major change of strategy, the new head of GlaxoSmithKline, Andrew Witty, has told the Guardian he will slash prices on all medicines in the poorest countries, give back profits to be spent on hospitals and clinics and – most ground-breaking of all – share knowledge about potential drugs that are currently protected by patents.

you see what does sound like a major shift in perspective right there. An attempt to redress the imbalance and in doing so, shaking up the status quo or dominant logic of the way the industry has always functioned.

So if this shift towards regaining an equilibrium is underway, albeit one that won't result in the status quo, so to speak, what is the ROI of holding on to the way things were done before? Can we not let the new dream emerge unhindered? Feels like efforts to bail the Titanic with a bucket instead of knowing when to jump ship.

I am reminded of something I read long ago, "most people hate change. change doesn't much care"

Taking experience design too far?

William Easterly, author of White Man's Burden (reviewed previously here) has just started blogging with a bang. He tells us about "Davos Man" and the "Refugee Run" planned for today, I do wonder if we'll find blog reports online gushing over this thrilling event?

Here's the image of the invitation from his post and a choice snippet,

What do you think of the Davos rich and powerful going through the “Refugee Run” theme park re-enactment of life in a refugee camp?

Can Davos man empathize with refugees when he or she is not in danger and is going back to a luxury banquet and hotel room afterwards? Isn’t this just a tad different from the life of an actual refugee, at risk of all too real rape, murder, hunger, and disease?

Did the words “insensitive,” “dehumanizing,” or “disrespectful” (not to mention “ludicrous”) ever come up in discussing the plans for “Refugee Run”?

The Prepaid Economy Blog

The Prepaid Economy blog is now default on www.emergingfutureslab.com, please do take a look, feedback, tips, tweaks and suggestions solicited! Welcome!

The 5D's of BoP marketing

Photo credit: Goverdhan Meena, India 2009

The premise of the fortune at the base of the pyramid (BoP) is based on the notion of how to profitably do business with the poor. But few such endeavours have become sustainable businesses, falling prey to bad assumptions, misguided marketing, or poor research. Ken Banks of kiwanja.net wrote recently:

Progress in the social mobile field will come only when we think more about best practices in the thinking and design of mobile projects and applications, rather than obsessing over the end products themselves. By then most of the damage has usually already been done. In my experience, many social mobile projects fail in the early stages. Lack of basic reality-checking and a tendency to make major assumptions are lead culprits, yet they are relatively easy to avoid.

I would argue that this observation can be applied for any product or service meant for the BoP in the developing world, not just for the mobile industry. So how can we apply this understanding in order to design strategies to serve these untapped markets far more successfully?

Buying behaviour and decision-making criteria imply that those in the lower income strata—particularly in the developing world—are not 'consumers' but in fact extremely careful 'money managers' for whom an expense is often an investment whose return must be maximized.

The tacit mandate for companies interested in the BoP market is that your product or service must either fill an 'unmet' need (of which the poor have many), or provide a way for them to enhance their livelihood or quality of life. Why else would they divert their limited and hard-earned cash for your product or service? So the fundamental consideration before design would be to focus on the benefit to the BoP: Is there an opportunity for social or economic development?

Next, the solution must be well designed—contextually relevant, appropriate, and of course, affordable. But the best designed product or service in the world will not sell if your customer is unable to find it. Since logistics and transportation is as much of an infrastructural challenge in the developing world, distribution becomes critical in ensuring the availability of the product. The entire supply chain might have to be built from scratch.

Once you've made the right product and got it out to where its needs to be, are your customers aware of its existence, what benefits it may provide for them, and the reasons why they should think about purchasing it? Is there a demand for this product, or can one be created? Does the value proposition of your offer resonate with the value system and worldview of those at the BoP?

And finally, the whole offering must cohesively hinge upon preserving and ensuring the dignity of your new customers. The poor are not looking for handouts, but rather opportunities; providing them with such products or services through a filter of 'charity' or 'social work' serves no one.

Read the rest of the article published today on Core77

Where a pack of beedis costs half a kilo of wheat

Raawal Village, Rajasthan, India, January 4th 2009

This tiny shop (with a little more stuff inside) is one of a dozen or so little shops in this village of 3000 people, mostly farmers. Narsi Meena, the shopkeeper is the only one for whom this is his sole source of income. You see, my local guide told me, he was stricken by polio as a child and so cannot go to the fields, he must sit here and earn his bread somehow. As you can imagine, in a closely knit community like this, where the majority are subsistence farmers and the rest either working in a variety of jobs in the nearby town or artisans serving the local community like the carpenter, he is the most popular shopkeeper.

He sells beedis, betel nut and tobacco, boiled sweets and candy, some necessities like sugar or tea leaves. He accepts cash money as well as whole wheat grain which he weighs on his scale right there in front of his shop just like a cash register. Regardless of the daily fluctuation in wheat price at the mandi, he has fixed his exchange rate at Rs 7 to the kilo. So that packet of beedis can go for half a kilo or thereabouts. By the end of the month he has about two or three sacks of wheat for the buyer to convert into cash. Sometimes when he needs to top up his shop's inventory he needs cash and the buyer may not be buying wheat that day so he'll say, listen, give me Rs 500 against the next sack of wheat you buy from me. And takes the cash to the town for supplies. 

There's another shop in the village, a proper grocery store with everything you could possibly need including dry fruits, but he discourages wheat based transactions and prefers cash. But, adds my guide, he charges a rupee a kilo less for sugar.

The carpenter/woodworking artisan (he made this door) actually works on retainer. He has no land of his own and woodwork is all he does. Farmers know they need a variety of woodwork throughout the year, so about 30 or 40 of them decide to retain the carpenter for the year and promise him 50 or whatever negotiated number of sacks of wheat at harvest time. They supply the materials, this is only for his time and effort i.e. workmanship. 

Now I wonder how many sacks of wheat it takes to buy that 4 goat Nokia?

Life is harder

Photo: Goverdhan Meena, January 3rd 2009

On the other side of the veil,life is harder, yet if all is well with one's world, it is joyous too. The "missus" sits here (Mrs Meena, my guide's wife), in a shady spot in the fields, watching the few goats while she practices her sewing (there is a ladies' cooperative that buys these pieces). She is here to look after the needs of the three or four small fields of mustard.

Raawal village, Rajasthan, January 3rd 2009

These golden yellow flowers dry up and turn into mustard seeds. I don't need to water this field anymore, we just ran water for these fields, hiring the neighbour's engine at the well for Rs 100 an hour. Now we will simply wait for harvest in March.

I have to make my own chulha, we build it out of mud and water then decorate it as we like. I use it for all my cooking. The fuel we use is cow dung mixed with bran into patties then left to dry. We make the whole year's supply of fuel in the winter, the dung is needed for manure in the summer and its too wet during the monsoons. I also make the storage containers for my flour as well as a pantry for keeping my oil and ghee and milk. This goat I keep for her milk for our tea and for the children. My elder son is with my parents, this boy is still with me. He never gives me money and doesn't know how to shop, she laughs as she looks up at my guide (her husband, who has a salaried job). He will buy Surf for his clothes for Rs 10 and it just lasts for three or four washes, if he bought the larger pack for Rs 20 it would be cheaper and last me longer. (Why don't you take her shopping, I said, she seems to manage money better than you can?)

Life is hard

Photo credit: Goverdhan Meena, January 3rd 2009

We have two harvests a year. One near Deepawali (Oct/Nov) and one near Holi (March). This one is our expensive one, I've planted wheat, mustard and horsegram.

Wheat take 5 parts of water compared  to 2 parts for mustard and only one part for the lentils. The cost of running the diesel engine to irrigate my land from the pump has been rising and rising due to the cost of diesel. I have to run this pump, just for my land alone for 36 hours a month and it can cost upto Rs 100 an hour.

We look to feed ourselves first before we sell anything. I keep sacks of wheat in the house, I'm educating a son in college (in a town 50km away) and a daughter in high school with my aunt (in another village). See here, my son has come home because he needs flour for his daily bread and also fees - I will sell a sack now for some cash. We plan our year around the two harvests. Of course, only He knows if the harvest will be good, whether the rains will come and if insects get into the fields but this year it seems it will be a good harvest. We plan marriages and other big expenses around the harvest. Those are the only times of the year we have the money. The rest of the time we simply manage, if an emergency arises, I'll take a loan and let the monthly interest accrue until the next harvest.

Why are you educating your daughter?  What is your thinking how book learning will help her as a farmer's wife?

See here, my mother and wife are illiterate. You see how they are unable to even communicate with you, I have some book learning so I can talk to you in proper language (Hindi, rather than the local Rajasthani dialect). They cannot go anywhere alone, they are unable to make out even what the signs say at the train station or bus stop. Education means that my daughter will not always need someone there with her, she will be able to understand and make her own way, understand the medicines the children might need and so many other things. Times are changing, the young men are not farmers anymore. I don't want my son to be a farmer like me, no, I will never sell this land, it has been in our family for generations, but it can always be sharecropped. He is studying Commerce, a bachelor's degree, it will make him eligible for good jobs. We will look for a literate wife for him, so in turn, my daughter too should be educated, no?

Yes, we have a mobile phone, so does my son. We can stay in touch. Incoming calls are free and I just fill airtime when I have an important call to make or there is some reason, otherwise it just stays at it is. Its made a difference, we can stay in touch with our community and the village, before sometimes months would pass before news of a death or birth would reach us.

No, there are no profits to be made as a farmer. I am self sufficient, I can feed and clothe and educate my family but there is little left over once all the seeds, the fertilizers, the diesel and all have been bought. We do actually have another harvest, the one near Deepawali, which we call the "free one" - we grow various grains that don't require as much water or fuel or fertilizer and are easier to grow and sell. Those profits are the little extra cash we make each year. This upcoming harvest with the wheat and the mustard, its our investment harvest, it costs a lot but the wheat is our staple and our savings. It is our "gold".

Where does flour come from?

This is the source of one man's income. Its a flour mill, where wheat is ground into flour. In the village, there is no supermarket where one can go and pick up a 5lb sack of flour. One has to harvest one's wheat field first, then take the golden grains to the 'chakki' to be ground. And flour spoils quickly, insects get into it, so you can't grind a large amount either, or so say the villagers, so they only prepare for a week or so at a time.

There are numerous costs in running this rig, diesel is needed for the motor and its constantly rising price has been cutting into any profits to be made for some time now. Any emergency, such as this particular machine whose engine needed Rs 1300 worth of repairs overnight, can eat up the entire month's income. The owner estimates his monthly income to be around 1500 or so after paying for the diesel, the man to help lift 10 and 20 kg sacks of grain and the rent for the space. He charges about Rs 10 a kilo of wheat (although others say they know where you can get it done for Rs 5 a kilo).

So what happened when the machine died the other day, how did you arrange for its repair?

I had to run around and ask my neighbours to see who had some money to lend me. I managed to find a guy with the Rs 1300 to spare and he loaned it to me for 2% interest. I told him I'd pay him back over time from the earnings everyday when the machine was up and running again. Then I had to go and negotiate for the parts from the shop, arrange for the engine mechanic to show up and get this thing up and running as soon as possible.

Is it normal to arrange such loans within the community or extended social network? Are there any bad feelings if a close relative asks for interest on a loan?

Oh no, not at all. Its quite the custom. After all its a matter of money and only someone who knows you and trusts you to repay is going to lend to you. And of course interest is a part of that deal. Though I remember back when I'd first lost my job at  the factory, some twenty years ago, nobody would loan me money, not even at 3% because they had no gaurantee, now that I didn't have a regular paycheck, that I would be able to pay it back. Even people who knew me well and had been happy to lend me money when I used to get a regular paycheck hesitated when I lost the job. Today of course I have this source of income and they know it in the village so I am again able to get a quick loan for an emergency. I can pay it back with each day's earnings.

Yes, adds another man, this can be a problem, getting a loan if your source of income is not known or certain, even if everyone knows you very well. Its not enough to have had a (credit rating) for years, you have to have a pretty obvious means of repaying the lender before they'll consider loaning anything to you.

What about the bank? Well, I went to the bank when I was first buying this set up here, because it cost a total of Rs 16,000 and nobody had that kind of money available (except perhaps in harvest season) so the bank saw it was an investment in an income generation facility and extended me a loan against my land and house. Of course I paid that back as soon as I could.

Its been a difficult transition to make for us, I used to have a good job at the local factory and get a regular paycheck. Back in those days we even had a bank account and a landline at home, I took my mud hovel and was able to construct a brick house around it. I could buy groceries for the month, oil, flour, dhal but today we have to buy what we can afford when we have the cash in hand. We have learnt to live in the 'now', thinking of today or tomorrow, not like before when we could think for the whole month or the future, maybe even put away a little saving in the post office.

the story of one man's mobile

This multilingual phone belongs to a young man working with an environmental NGO. It is his 5th phone in 5 years but two were simply week long flings. He was the first person in his village of 3000 people to buy a mobile phone 5 years ago - the Nokia 1100 for a grand sum of Rupees 3000.

Therein lies a story.

Five years ago, he tells me, he was on a visit to an old and beloved friend who was then working in the big city of Jaipur as an artisan making statues out of stone when he noticed his friend cupping his hand to his ear and talking out loud. Curious, he discovered that there was something called a "mobile" and wonder of wonders, it allowed one to speak on the telephone without wires! He knew then and there that he too had to have this marvel for his very own. At that time, he was on a salary of Rupees 2500 and had a young wife to support.

So he gathered up his intent and went to see a friend who owned a mobile phone shop in the town near his village. From the many models available he selected the 1100 - to be honest he said, it felt solid and was the cheapest phone available then. And he handed over his entire month's pay packet with the promise to return the following month with the balance of Rs 500. He didn't even have enough for a SIM card he said laughing at his own youthful determination.

Then, he went back to his father's house, where he and wife lived along with his mother and two younger brothers (and now, his own two young sons) and showed his purchase (and empty pockets) to his father, the head of the household since he was now unable to contribute his share to their joint household expenses. He managed on a very tight budget until his next paycheck where again a significant chunk went to pay off the balance payment as well as purchase a prepaid SIM card.

Yes, he laughs, my expenses have increased since I became a mobile phone owner. Airtime? I just have 5 rupees on the phone. But I was the first in my village, ahead of even the big shots with their landlines (there are 3 or 4 landlines in the village) and now almost two thirds of the people have a mobile phone.

After the first year and a half, he thought he really should upgrade - mobiles were now available with all kinds of things, cameras, radios and that little wire thing you stick in your ears, you know? So I went to the shop and the most affordable model (Rs 2950) with a radio was a Motorola phone, that slim one - the one with the very big text, I asked him? (the Motofone, designed specifically for rural India and other BoP markets) Yes, he said that one. But it didn't last long, I gave it away, the battery wouldn't last the whole day, look my Nokia can go upto 5 days without charging, I mean we have electricity wiring in our home but you know how it is. Then my brother tried to charge it or whatever and burnt out the socket so when the repair guy told me it would cost me 600 rupees to fix it I thought to myself I may as well buy another phone. 

He splurged 5000 (paying only half upfront) on a fancy LG phone with a camera and all but he returned it within 3 days and bought a Nokia 1200. He said I couldn't bring myself to contemplate the kind of money I was paying for it and anyway, later I bought myself a digital camera. I like photography, I can take the digital camera down to a shop in the town and they download stuff for me and send it to Jaipur and the very next day I get prints! Rs 20 per photograph for a full colour print.

Finally he did end up giving the 1200 away (it only had a colour screen, no radio or anything) and bought his current phone which has FM radio early in the spring in 2008. It feels very nice and I'm happy with it he says. You know, there's folks in the village who have no clue what a mobile is and what it does but they all know that if you buy one, its gotta be a Nokia.

I had to grin at that. The Nokia tribe is spread out across continents methinks.

Last year or the year before he thought that it was time now to buy a motorcycle (one could almost say that purchasing that very first mobile phone successfully sparked something upwardly mobile in his psyche - I have often thought that for all the hullabaloo about the monetary gains that mobiles have brought amongst the BoP in the developing world what is often overlooked is the very real intangible benefits that they seem to inflict almost as a by the way side effect) What was interesting was that he borrowed 25% of the cash for the motorbike and then paid the rest off quickly with the largest installments that he could afford as soon as possible. Why, I asked him, when you could have taken a lot longer and had a little more disposable income available each month?

Because I'd only spend that cash and I'd also have debt hanging over me for a lot longer. This was the money is going towards a capital purchase and I'm paying it off so I own it completely much faster. Now I also bought a television set and a satellite dish but you know, i have no idea how I'm going to pay the Rs 200 a month subscription charges. (I've a feeling that DishTV is on its way back to the dealer)