Perspective 2.0

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?

Empties for sale

Cabatuan market, The Phillipines

And not just bottles of various kinds (former packaging) but also rice sacks made of some plastic fibre, thus far more durable and reusable than the original jute sacking are being sold. Be interesting to look at what gaps in the system are filled by this intense "recycling" across the developing world.

India: The corner store's localized innovation

Ashoka Fine Stores, Alaknanda Market, New Delhi January 2009

The Business Standard talks about the changes that the threat (and subsequent whimper) of organized retail in India has inspired in the way smalltime kirana shops operate, challenging them to be more innovative. In light of the recent posts on creativity etc in the informal economy or rather, the unorganized sector as its known in India, I was intrigued to come across this snippet,

Ingenuity is the key here. Pokare, for example, has only studied till standard (grade) four, but talks SMS marketing, home deliveries with customer ID numbers, or even loyalty programmes — all modern trade techniques but in a desi way. A few months ago, Pokare began registering customers who walked into his shop for the SMS service. Today, he has a data base of over 1,500 customers who are fond of beauty treatment products and keeps them informed about offers and discount schemes regularly. “No retail giant can afford to give such intensely personalised services,” Pokare said.

There's a far longer post here that I'll address again about the high hopes with which the potential Indian retail market was eyed just a few short years ago and the very real challenges that have brought them down to earth. Imho, some lessons there for us to make note of, especially if we're wondering how to address the challenge of BoP markets all over. More soon, its Friday afternoon and I'm thirsting for a cold one :)

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...

RE culture: The BoP innovator/entreprenuer's biggest opportunity space is post consumption

Photocredit: Afrigadget

This photograph from Erik's post on "What do you see?" when he takes us through the wide variety of creative solutions to everyday problems in Africa, exemplifies for me, the whole concept of 'innovating under conditions of scarcity'. Would it ever have struck any of us to repurpose the sole of a rubber slipper into hinges for a door? And how well it solves the problem too!

This and many other such observations got me thinking  about the whole RE culture among the BoP. Stepping back, if you take the broad space of REuse, REpurpose, REpair and REcycle (though I'm still debating whether that last quite applies in the same context as we'd expect it to mean in the developed world) - its the low hanging fruit for the BoP entreprenuer's opportunities for income generation. Dave points out in a chat that REpair is an entire professional service area in its own right, perhaps a subset of the opportunity space in the informal economy with varying degrees of skill and ability required.

But coming back to the other three, it seems at first glance that they look to be more or less the same thing i.e. how different is it to reuse a plastic bottle to contain some liquid from recyling it? particularly if the manufacturer had intended for it to be a disposable container? Yet, from the big picture perspective, one can say (and it has been said before) the whole concept of recycling is a cost in the OECD world whereas its actually a source of income, in a myriad ways, among the BoP. So, for the moment and for the purpose of this particular post, I'm going to put a hold on the thought there and instead explore further the meaning of the broader RE space in context of the BoP mindset and worldview.

One of the key differentiators I've used to demonstrate the "values gap" (so to speak) between the "BoP consumer"'s mindset and worldview and mainstream consumer culture's value propositions is,

Recycle and reuse instead of throwaway and replace

That is, the lower income market tends towards maintenance and extending the lifespan of the products (through repair or repurposing it) they purchase rather than disposing it for convenience or replacing it for a trendier style. All very obvious, you say, but its this very same quality that leads to the wide variety of opportunities for the entreprenuerial or the innovative to make some money (or even a living). From the very basic, in terms of skills and ability such as the button repair guy to the complex, such as the mobile phone hacker, all of these services meet an 'unmet need' in the market, an opportunity gap which they can fill.

However, what's interesting about this, and Erik mentions it in his post linked above, is the fact that these opportunities would very rarely be either a) spotted as one in mainstream consumer culture; b) not be a gap per se due to a difference in mindset/worldview OR even c) not be profitable enough, given the comparitive cost of labour vs the price of the product involved. These conditions for making money, and more so, making money that is deemed a valid ROI seem only to be available among the lower income demographic and in the developing world. For a precondition to their success is also a sufficient customer base seeking such a service and their willingness to pay for it,  and that, imho, emerges from their mindset as BoP consumers, one quality of which is their need to Maximise the return on their investment (purchase). This shows up in this context as a wish to REpair, REuse, REsell (for REpurpose or REcycling or whatever along those lines) - I doubt if they've stopped coming by from door to door among the 'consuming classes' in India to buy old bottles, newspapers and other sundry junk. (A sign of development if it stops? I remember how the chap just stopped coming by in Malaysia over the twenty years of its Asian tiger development )

So, at this point, early stages of exploration though it is, one could say that the whole area of "post consumption" consumer practices - most of which have withered away like the appendix in the 'rich' world - forms one major  basis for both products and services, with value addition to varying degrees, in the 'informal economies' of the developing world. 

Worth reading for a different aspect of this conversation is Tim Brown's post "the post consumption economy"

The BoP as creators, producers, innovators ~ some early thoughts

Old Delhi, January 9th 2009

This is the first of a series of posts where I want to start thrashing out the concept of those at the base of the social and economic pyramid as anything other than 'consumers' and/or 'recipients of aid/charity', that is, the other side of the equation where we tend to consider the 'poor' as simply passive recipients or meagre spenders.

By its nature, this will be a rather rambling exploratory post, since I thought I'd start from the beginning - is there, for example, a difference between "the entreprenuer" and "the producer", "the creator" and "the innovator", if at all? And if none, then perhaps start to fill in some few blanks based on our earlier thinking on the BoP "consumer" and their mindset, worldview or value system.

I've looked at jugaad before, the makeshift solution finding that emerges from conditions of material scarcity and expensive resources and Erik Hersman's Afrigadget covers ingenious local solutions observed in Africa everyday. But for the most part, the emphasis up until now has been on the actual tangible products and/or informal services; the ingenious solutions to everyday problems that are due to the challenging conditions, the limitations of infrastructure and systems or other roadblocks requiring workarounds, in the developing  world. The "gaps" one could say, where user's needs go unfulfilled and so, in effect, the opportunity spaces where indigenous solutions rush in to fill the spaces.

But we've not yet begun scratching at the surface of understanding either the challenges or the worldview that lead to these innovations, or so it seems to me. Who is the BoP producer?

One can't travel through the 'third world' without noticing the immense variety of services that one might never see elsewhere - on the streets of New Delhi's administrative center, a man sits with a bag of assorted buttons and his threaded needle, so bureaucrats can always look 'just so' for their next meeting. Convenience has entirely another meaning here. Still, I find myself digressing ;) so back to the point.

I'm not debating here the "BoP as producers" vs "BoP as consumers" so much as I am attempting to evaluate whether all our previous observations and learnings viz., "Life is hard" (the mindset and values of a customer at the BoP particularly one living on an irregular income) can help us begin to understand the other side of the coin, that is, the "innovator" or "creator/maker" or simply, the "informal business owner or service provider" at the BoP.

At this point at least, it seems to me, that rather than quibble about each individual word choice to describe "who" or "what" they are, perhaps we're better off looking at the "why" and "how" - by this I mean, that the driver of motivation is to generate an income stream (the why) and the gaps observed, as mentioned above, are the opportunity spaces (the how). That is, the BoP seem to display more of a tendency towards 'opportunity spotting' (not quite the same as the word opportunists, though that may also apply in many cases or situations), filling the niche quickly with a service or product. Some of these services have arisen spontaneously around the developing world, mobile phone repair comes to top of mind.

It feels as though its a far more active than passive quality - poverty and hardship can be a powerful motivational driver in itself, though we tend to overlook the ingenuity and creativity involved.

After all, would it ever have struck any of us just how lucrative it can be to sit under a tree in a busy business district during a new Delhi winter with a bag of buttons and a needle?

This conversation has barely started...

McLuhan would be so proud

Hotel Torni courtyard, Helsinki, June 23rd 2009

Imagine 'knowing' people for years, in one way or another, through overlapping circles of communities and then finally meeting them in person - McLuhan was the topic du jour when I met Cordy Swope and Adam Greenfield for drinks yesterday.

Core77 of course was something we all had in common but the individual details are a bit fascinating as well since Adam shared with us that he'd been a fan of Cordy's teenage Buddhist punk rock band in Philadelphia in the early eighties, though they'd never quite met as they were doing now in Helsinki. I've known each through seperate communities - Adam was the first person I linked to on Metafilter over three years ago and I've interviewed Cordy for an article even before that, for Core77.

But those are all details, the point is, that there's an entirely new metaphor emerging - one of openness, give and take, sharing, cooperation, information and 'intimacy' - all enabled by the underpinning internetworked world wide web of humanity.

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.