Search Results for ‘life is hard’

“Life is Hard” – Original slides with written speech, BxD 2008

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

Life is Hard. 

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

The only certainty is uncertainty.

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

Uncertainty of time and uncertainty of money. 

Uncertain Incomes

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

Inadequate Infrastructure

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

A different worldview

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

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

The BoP as Customers are strategic money managers

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

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

Trade offs are a fact of life.

Purchasing patterns on irregular and unpredictable incomes

When income is irregular and unpredictable, both in amount and frequency, such as it is for the majority at the bottom of the pyramid, buying behavior is not quite the same as for mainstream consumers. At least four patterns emerge based on a combination of need and money available.

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

What is the buyer behaviour observed among BoP “consumers”? 

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

A different mindset, a different worldview

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

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

(smile at draft)

Designers as Leaders, by Richard Farson

Design is one of the few professions dominated by its clientele. Compared to physicians, attorneys, and academics, designers are inclined to do what they’re told. That posture is so widely accepted among designers it sometimes seems that the only ones who can occasionally insist on having things their way are the superstars of design.

Of course, having one’s way is hardly the ideal manner in which to conduct a professional relationship. Nevertheless, design judgment, even in matters of social responsibility such as health and safety, let alone matters of esthetics, efficiency, productivity and visual impact, is often subordinated to the client’s or employer’s wishes.

That is such an old story among designers that perhaps it is small wonder that designers tend not see themselves as leaders. If they have learned not to expect their professional judgements to sway clients or employers, how can they imagine leading corporations or communities, to say nothing of exercising leadership in the developing global arena? It is simply impossible for most designers to think of themselves as having a place in high councils of decision making.

But that is where designers are most needed—at the top. It is a travesty that the only professionals close to the CEO’s are lawyers and accountants. Designers have more to offer, because increasingly our organizations need to be design driven, not just market driven. To truly prosper, our global society must have its needs met, not just its wants.

Instead, designers who work in organizations worry about not being appreciated, worry that their work is not understood by top management. As a result they spend an inordinate amount of time trying to educate the CEO about the benefits of design consciousness, not realizing that every other department is also trying to educate the CEO about the potential contribution it could make, because its members feel similarly misunderstood and unappreciated.

The truth is that CEO’s don’t understand any of the professions or groups represented in the organization—and never will. Because things change so fast, they don’t even understand the departments they came from. They have other concerns. They have to see the big picture. Most of their time is spent on matters having nothing to do with the internal operations of the organizations they head—industry wide issues, government relations, community needs, raising capital, and so on.

The better strategy for designers would be to regard the current effort to educate the CEO about how designers see the world as a lost cause, and instead try to educate themselves on how the CEO sees the world. Is it possible for designers to try to gain that top leadership perspective? If and when they do, they can become the indispensable people occupying chairs at the directors’ table.

Read On…

But why aren’t they buying my fantastic life saving product?

DSC02432

An all too common a question blurted out in frustration by well intentioned social enterprises attempting to crack the code of the informal economy at the base of the pyramid, usually ending with the rejoinder “when they can spend double the amount on a phone!”

So why aren’t people sensibly rushing out with their hard earned shillings or kwacha or rupee to bring home that life saving potable water gadget or heart warming bit of solar sunshine to add to their clean and efficient cookstove in their kitchens?

There are two separate questions being conflated in that exasperation.  One of the fundamental errors in evaluating this dilemma lies in assuming the mobile phone as an object of ownership equals any one of these artifacts i.e. you’re comparing apples to oranges. You may as well ask why someone could spend money on medication for a sick child instead of on your [insert BoP product here].

What seems like a very long time ago, back  in 2006 when I first started pondering the BoP and their consumer habits more closely, an online colleague who blogs as niblettes put forth an answer. I’m yet to find a better explanation than his  – from a December 2006 post titled “Wealth flow key to BoP product success“:

For instance, cell phones are an incredibly popular product in developing countries, despite the fact that their cost relative to income makes them very expensive. Certainly part of the reason is a lacking wireline communication infrastructure. But this is only helps explain demand, not their capacity to pay for a cell phone nor the high priority placed on cell phone ownership.

What allows people in developing countries to afford the high relative cost of a cell phone is the fact that these devices provide an actual return on investment–they make money. Cell phones do this by accelerating the flow of existing wealth within an economy.

If you have $1 it takes a year from the day you spend it for it to come back to you (you buy a loaf of bread from a baker who buys some wheat form from a farmer who buys the charcoal from you), you will not be in a hurry to spend that $1. However if it takes only a day for the $1 to come back, you won’t think twice about spending it.

Now, what makes cell phone ownership a high priority for people of limited capacity? Cell phones accelerate the flow of wealth which grows purchasing power without having to first increase the total money supply in the economy. This gets into all sorts of arcane macro economics, so lets keep this practical. Imagine you live in a part of the world where it can take weeks just to negotiate a replacement part for your broken tractor. It costs you the same price for the part, but getting it this part tomorrow means harveting your crops on time, while getting it in three weeks means getting a lower price for over ripe produce.

Accelerating the flow of wealth like this is almost like getting something for nothing: increased purchasing power with no foreign direct investment, no charity and no bloating work hours.

Toothpaste, dvd players, and even dishwashers will not have this same kind of direct and immediate effect on an economy. So while folks in bottom of the pyramid market may want such things, they can neither pay for nor will they prioritize such purchases because these kinds of products don’t repay their investment price the way a cell phone does.

Distinguishing products this way (those that accelerate the flow of wealth vs. those that don’t) seems to provide a lot of insight into what kinds of new products will and won’t succeed in bottom of the pyramid markets. However, like i warned, this theory is still pretty fresh (it may even have to go back in the oven for a while).

Well, I think its time to bring this idea out of the oven now – I can attest to this finding after having looked at how those at the BoP managed their household incomes on uncertain income streams – their cellphones did indeed help them accelerate their decision making and the responses i.e. accelerate the cash flow, primarily because they increased their span of control over time – periodicity and frequency or money – in cash or kind.

There are of course numerous other nuances at play in choice of purchases including social status, but sadly, in the case of social enterprises, the majority of their offerings tend not fall under the category of “bling”. But at the very least, we would be doing ourselves a disservice if we consider a mobile phone just another consumer product, at least on this side of the planet.

The other issue, or question, is then “Why aren’t they buying X or Y, when X will save more money for them in the long run and emit less smoke/more light/clean the windows/prevent diarrhea?”

Embedded in this question are frames of reference and as yet undiscovered value judgments – from our perspective, it seems like it should be common sense to make this sensible purchase – I hesitate to call them subtle patronization even though in some cases that may also be a factor.

One of the elements that had emerged from the Prepaid Economy work was the concept of “willingness to pay” vs. “ability to pay” – that is, we should not assume that the ability to pay for a product implies a willingness to pay for it. Conventional frameworks such as disposable income and whatnot operate on this implicit assumption, but once we tease out the underlying influence of mainstream consumer culture, so carefully cultivated over three or more generations, we can take a clearer look across the ‘values gap’ into the BoP consumer’s mindset and values, as a discerning and demanding customer in his or her own right who is making ends meet and a better life for their children in very challenging environments.

I believe framing it this way would then allow for an indepth look at  the area of “Demand” – not demand creation, which implies an artificial stimulus of ‘want’ rather than ‘need’ but instead the existing patterns of behaviour, tradeoffs made, the Why behind the decisions to continue to use something instead of replacing it with the socially beneficial solution. One can then see why there is no demand, or if the demand exists, what are the barriers to purchase.  In plain English, what’s really going on if we are not to simply assume entire populations lack the common sense of the product’s creators.

Using Ethnographic Research To Learn About Life at the BoP

The expected deliverable of the iBoP Asia grant project is that we create a new payment strategy or business model for purchasing a shared resource within a Bottom of the Pyramid (BoP) community. Recognizing that no member of our research team has grown up in a community considered to be at the BoP, we can’t assume that we have all the answers concerning what payment strategies are appropriate for the economic and social pressures that these individuals face on a daily basis. So, we have to start at the beginning, collecting insights about what it’s like to live on small, irregular and unpredictable incomes.

To collect this information, we’re leveraging the methodology of Ethnographic Research. In its purest form, Ethnographic Research is about entering the natural habitats of your users, seeking to understand through participation, listening and observation the behaviors, values and motivations of a culture. We plan to use the behavioral and values-based data that’s been collected during fieldwork–in the Philippines and in India–as the foundation for our ideation efforts concerning new payment strategies for the BoP.

Using Ethnographic Research in grant work is unique
We’re learning that the use of Ethnographic Research in grant-funded work is a bit unconventional, as the exploratory nature of the methodology is non-directed and unscripted. This challenges all norms associated with how grant money is traditionally awarded, as we don’t have the answer before we’ve begun. We aren’t studying some of the poorest neighborhoods in the Philippines and in India to validate a hypothesis, but rather, using Ethnography to gain a comprehensive understanding of the individuals intended to benefit from the outcomes of our work.

Additionally, we’ve intentionally scoped our research to be more “broad” in focus versus “narrow,” which seems to be a point of contention among some as our results will be more “abstract” versus “concrete.” Yet, from our perspective, “abstract” is good…in this case.

An exploratory, “broad” research approach offers context for development

When it comes to doing research for purposes of product development or strategy, one of the first questions you must ask yourself is, “What does this research need to inform?” Once you’ve answered this question you now know what your project’s “level of focus” needs to be.

You determine “level of focus” by considering both the scope and the expected outcomes of an initiative. For instance, if you hope to understand the socio-historical context of which a product or service will be part, you scope your project to be “broad” in focus, as we have. This “broad focus” will give insight into the values of the sub-culture in which you hope to introduce your new offering. Additionally, you’ll gain knowledge regarding some of the likely barriers to acceptance in the marketplace that your offering may have once introduced. On the other hand, if you need to see and understand the detailed interactions that a user has with a product or its interface, a “narrow focused” study is more appropriate. A “narrow focused” study will result in “concrete” recommendations about how to improve the customer experience associated with a product or service.

The “broader” that a project’s focus is, the more “abstract” the outcomes of that research will be. “Abstract,” in this case, means that you’ll be able to create high-level conceptual descriptions of a new product, service or business model, but shouldn’t plan for an immediate market launch of your new offering. You’ll likely need to take the concept through more “narrow focused” studies to iron out the details.

You might question, “So, what’s the value in starting with a ‘broad focused’ research initiative? Why not just jump in at the ‘narrow focused’ level?” The reason is, the more “narrow focused” you are in your research, the more likely it is that you’ll miss some fundamental truths about your user group that could dramatically impact the acceptance of your offering in the marketplace.

Most people have heard a story or two about focus groups gone wrong. Usually the story goes something like this: “We did the study. All our participants loved the product, told us they’d buy it. The price point seemed to be right on target. And then nothing…we have two customers.”

Sure, there are lots of things that could be questioned about the design of that focus group. Yet, more than likely what went wrong was that the product didn’t offer enough value to these people’s lives to warrant their hard earned money. It’s not as if participants in the focus group intentionally lied. They gave their truthful opinions about the product as was asked. It’s what wasn’t asked and explored that became the downfall of the product. The product had no place in its intended users’ lives. It didn’t fit with their behavior patterns and values. Behavior patterns and values are the things that “broad” focused, exploratory research uncovers.

It’s these behavioral patterns and values that we think are critical to understand before we can confidently propose a new payment strategy or business model for purchasing a shared resource, such as water harvesting equipment, in a BoP community. Past experience has shown us that an upfront investment in customer understanding goes a long way for saving time, costs and resources in solution development and implementation. I suspect that we’ll find the same to be true here as well.

Our next steps
To date, the fieldwork for the iBoP Asia grant has been done in both the Philippines and in India. We’ve pulled together a multi-disciplinary team comprised of ethnographers, design strategists, BoP specialists, and economists. We’ll meet in Helsinki in April at the Helsinki School of Economics. Methods of Design Ethnography will be leveraged in a 10-day workshop, as we seek to translate this behavioral and values-based data collected about our user group into tangible constraints and criteria for the payment strategy that we deliver as an outcome of this grant. These constraints and criteria will offer the fodder required to support our team’s ideation efforts and ensure that payment strategies proposed are all grounded in the reality of what it’s like to live in the BoP.

The payment strategies for purchasing a shared resource that emerge from our workshop in April will be conceptual in nature. I don’t expect any of these ideas to be ready for implementation. Instead, we’ll work next on developing one or more prototypes of these payment strategies. We’ll then seek additional grant money to do the next step of “narrow focused” research.

Niti Bhan’s Talks and Articles

 

 

TEDGlobal 2017, Arusha, Tanzania
The Hidden Opportunities in the Informal Economy

 

 

Lecture on Technology and Inequality, BankInter Foundation, Madrid, Spain, November 2016
Transcript

 

 

Future Trends Forum, BankInter Foundation, Spain, June 2016

 

 

African Development Bank Innovation Weekend, Abidjan, Cote D’Ivoire, October 2015

 

How Africa is Challenging Marketing – Harvard Business Review, June 2014

Mobile Money is Driving Africa’s Cashless Future – Harvard Business Review, September 2014

 

 

Videos

 

Informal Economy Symposium, Barcelona, Spain, October 2012
More or Less: The Fundamental Principle of Flexibility” – Understanding the underpinnings of financial and social contracts in the informal economy

 

A Better World by Design, Inaugural conference 2008, Brown University, Providence, USA
Life is Hard” – Understanding the consumer behaviour and purchasing patterns at the Base of the Pyramid

This segment of the Imagining the Internet site include interviews conducted in 2005 with forward-thinking people who had gathered at the Accelerating Change Conference at Stanford University. Listen, view and download files in which Douglas Engelbart, Vernor Vinge, George Gilder and others hold forth.

This was recorded at Stanford University in Palo Alto, California, in the spring of 2005 at the Accelerating Change Conference. Recorded by the Imagining the Internet Center, a non-profit, global-good initiative of Elon University, located in North Carolina, USA, http://www.imaginingtheinternet.org

Podcasts
The Digital Life: mHealth in Africa

Older public appearances and publications in design and business magazines.

The Informal Industrial Ecosystem: An Introduction to REculture

The Art of Seeing Beauty in Garbage, Kenya, September 2010

This article introduces and explains some things I’ve been seeing in the informal industrial ecosystem in the developing world context for almost a decade now. First noticed in 2009, I then named it REculture, a neologism to capture the vast and complex ecosystem I saw in the revenue generating facility of recycle, replace, repurpose, reuse and resale. Given contemporary interest in developed country concepts such as the circular economy, and other sustainable and ecological initiatives, I thought it timely to sit down and attempt to synthesize the past work before proceeding to write more on current events.

What is REculture?

I thought I’d start from the beginning – is there, for example, a difference between “the entrepreneur” 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.~ June 2009

In July 2009, I was inspired by my observation of a man sitting under a tree in the administrative district of New Delhi with a visibly large bag of buttons by his side. His service, to the civil servants rushing to and fro from important governmental meetings, was to quickly repair a missing button from their suit jacket or shirt. Not unlike a shoeshine boy, this gentleman’s service was on demand, while you waited, his fingers flying rapidly with the needle as he sewed a reasonable facsimile of your missing button back on for you.

Look at the unusual yet welcome niche he had found for himself! A repair service that could only work in this part of the city where the common uniform was a suit and tie and important visitors the norm.

Once he opened my eyes to what it was I was seeing on the streets – the entrepreneurial opportunities squeezed out of the margins of daily life – I began noticing such services more and more. Repair, re-use, re-purposing, resale, and, in their own inimitable way, recycling of used up or abandoned products of industrialization were turning out to provide a significant chunk of the revenue streams of many of the informal sector’s service providers who now became visible to me.

In June 2009, I wrote:

…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 – its the low hanging fruit for the BoP entrepreneur’s opportunities for income generation. In fact, 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.

The second thing that struck me, when I pondered these signs of a post-consumption economic ecosystem, was that the actors in the informal sector – whom we now discuss as traders, fabricators, service providers – were still then thought of as the “Bottom of the Pyramid” or the BoP – the economically vulnerable, the marginalized, the low income barely making ends meet on a dollar or two a day. There was no attempt at segmentation, this was the lumpen mass of the next 4 billion. Even though the late CK Prahalad had called them out as micro-producers, creators, and innovators, in his seminal book The Fortune at the Bottom of the Pyramid, those who had grabbed the label with both hands and run with it were still thinking in terms of consumption. “How do we make products profitably for the poor?”

What about the creators, the makers, the innovators, and the producers in the informal economic ecosystem?

Again, back in June 2009, I wrote:

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.

That is, back then, just over 9 years ago, I connected the dots I was seeing in this space – the mindset and values of the low income customers and their post consumption behaviours, taken together with the “RE” space where visibly they were earning income – and framed it so:

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 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 comparative cost of labour vs the price of the product involved. These conditions for making money, and more so, making money that is deemed a valid ROI seem only to be available among the lower income demographic and in the developing world.

For the 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?)

Once I could “see” the entire post consumption entrepreneurial activity in the informal sector, I went back to my research documentation conducted in rural Philippines and India for the original ‘prepaid’ economy work, and pulled out the patterns seen in the photographs that, when fitted together, showed all the evidence of an entire industrial ecosystem. As a working title for this seemingly vast economic space within the informal economy across Asia and Africa, I had called it REculture – the group blog went on spawn a magazine.

An entire industrial ecosystem within the informal economy based on the discards of the consumer lifestyle

A discarded Kraft cream cheese bottle would be picked out of the garbage by a waste picker and sold to an intermediary who would clean and sort these by colour and size and sell them on to a fabricator, who in turn, would convert these into affordable – and handmade mass produced – kerosene lamps, completed with spot welded wick tube.

An entire industrial life cycle from “raw material” through to “mass production” supported by distribution and retail. The only difference? The informal nature of the entire value chain and the post consumption adaptation of the materials and discards.

My concluding thoughts at the stage in which I’d left my explorations almost a decade ago can be summed up thus:

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.

There are insights to be teased out here on flexible, adaptable, ‘on demand’ business models ~ but applied outside the virtual world. Scarcity of resources and circumstance force lean overheads and inventory. Constraints of demand and customer purchasing power create their own flows in the chaos. Is there a pattern to the flow of the informal after all?

What next?

I summed up this history so as to provide me with the foundation and backdrop to pick up the threads of this conversation, now with the added insights of the past decade, and the increasingly sophisticated frameworks of framing the informal economy as a commercial environment in its own right, populated with entrepreneurs and niches that the mainstream overlooks.

As the topics of sustainability, resource conservation, and the circular economy become top of mind and critical, the early lessons from the developing world will only become more important going forward. I’ll be writing more under the category and tag “REculture” for old times’ sake.

Samsung took its commitment to the African market very seriously

This article in the Financial Times caught my attention first for it’s mention of Samsung’s seemingly innovative adaptation to the harsh operating environment prevalent across the African continent. It reminded me of the very first exploratory user research programme I had been part of, for Samsung, back in early 2008. That was a seminal trip for me, 3 weeks by Landy through the bleakest parts of rural South Africa, in search of how people lived, worked, and played with their mobile phones.

Mobile phone repairman, Elizabeth, Eastern Cape, South Africa, January 2008 (Photo: Niti Bhan)

We discovered what I would now look back and recognize as a whole new world. This fieldtrip was the turning point in my career, and the prepaid economy project was the outcome of questioning many of the assumptions around what were then called “Bottom of the Pyramid” markets, which had been shattered, in my eyes, by this journey’s end.

Life is hard” became my mantra for the next couple of years, as I illustrated the vast chasm between the mainstream consumer market’s mindset of credit driven consumerism, and the cash intensive hitherto ignored reality of the townships and informal settlements. The article I wrote on the mindset and values of Africans in their guise as customers for consumer goods – who had not been conditioned by generations of advertising messaging since the poor (the BoP, the bottom of the pyramid)- went on to be cited by the late CK Prahalad himself in the revised 2010 Introduction to his seminal The Fortune at the Bottom of the Pyramid.

Next came the development of a holistic strategy to reach these untapped opportunities, with a semblance of a value system rather than be driven by the pure profit motive alone.

The core values, then and now, for a consumer appliance, device, or hardware, any durable really, was the following:

Simple
Easy
Endurance
Survivor/al
Commitment

If Samsung is established in its foothold in Africa today, and their appliances are designed to survive the environment and meet the needs of their African customers, then I am very pleased to read it.

That first photograph is of the slider that Samsung models being sold at that time had. And in Africa, as the repair guru holding the part was showing us – and two of Samsung’s own mobile design team members – was the weakest point of failure in their phones. Grit would get in and jam the part, and most such phones came in for repair within a few months of their purchase date.

Later, in London, where the Samsung Design Europe office was located, we walked into one of their phone shops – somewhere near Harrods, if I recall correctly, and asked about the longevity of their slider phones. The salesman gave us a long song and dance about how these parts had been tested to “slide” a thousand times before each model went on sale. Yes, I mused to myself, it had. In the dustfree laboratory conditions of their engineering unit, or the less harsh environment of London or Seoul. What about upcountry South Africa? Or Senegal or Kenya or even, India?

The 2009 models introduced for emerging market opportunities, such as those on the African continent almost a decade ago, were all candybars.

As for me, I’ve never stopped using a good oldfashioned “dumb” Nokia that stolid Finnish engineering and product development ensured would survive and endure anything – even being run over by a truck.

My Articles and Archives

University and Councils Network for Inclusive Development in Southeast Asia (UNIID-SEA)

Understanding the Rural Economy to Create Successful Ventures (2013)
Pathways Out of Poverty: Innovating with the BoP in Southeast Asia (2012)
Source: iBoP Asia;Date Published: July 2012  Download Book

Opportunities in Digital Africa 2011
Article series for Involution Studios, Boston

Africa: The Next Frontier
From OLPC to VC: Africa leapfrogs the digital divide
Challenges present opportunities: innovation in Africa
Mobile in Africa: from SMS to Android
Software in Africa: More, better, different
Investing in Africa: Challenges and constraints

Afrinnovator

Systems Thinking Applied To Why M-Pesa’s Economic Impact and Wealth Creation Lessons Affects the Ecosystem and Not Just the Bottom of the Pyramid
Looking Forward: Where Next Generation Innovation is Coming From
Africa: Opportunity Waits

Podcasts

The Digital Life is an online radio show that explores important, timely topics in the world of digital design and technology. Created by Involution Studios, a top software design agency whose clients include Apple, Microsoft and Oracle.

episode 23
April 26th, 2011

Technology and Emerging Markets. Special Guests Joshua Kauffman and Niti Bhan. Bull Session and It’s News to Me.

Video

Life is Hard – A Better World by Design conference 2008 (21 mins)
More or Less: The Fundamental Principle of Flexibility” – Informal Economy Symposium 2012 (15 mins)

More From Niti Bhan’s library:-

Core77Design magazine and resource

Emerging Markets as a Source of Disruptive Innovation: 5 Case Studies – February 2010
The 5D’s of BoP Marketing: Touchpoints for a holistic, human-centered strategy – January 2009
Design for the Next Billion Customers (with Dave Tait) – April 2008
Ecodesign, Ecolabels and the Environment: How Europe is redesigning our footprint on earth – August 2007
Putting the “Desi” in Design: Why Indian designers are uniquely equipped for emerging markets – February 2006
Shopping for Innovation: Hiring a design firm – A primer (with Steve Portigal) – November 2005
Seismic Shift: Rethinking the Design Industry – April 2005
While you were out: changes in the global design industry – December 2004
also, clogging on the main page since 2004 ~ view all posts here

AIGA Gain Journal of Business & Design, ICOGRADA, AGDA and ReBrand.com

Lessons from Walmart: 5 common mistakes when brands cross borders (with Manuel Toscano) – Late 2006
PDF version from ReBrand100.com

NextBillion.netDevelopment through Enterprise

Guest Author ~ view all articles here

BusinessWeekbusiness magazine

India, A New Frontier For Innovation And Design – speech draft for CII/NID Design Summit – November, 2006 (republished by Bruce Nussbaum on Design)
Brand Magic in India (with Brad Nemer) – May 2006
A Competitive Nation, by Design – December 2005

New Design Magazine, UK (print publication)

From Top to Bottom (with Dave Tait) – February 2008 (Emerging Markets special issue)
Changing Times (PDF partial) – 2006 (commissioned for fee) courtesy the Daily Dump

Effective Executive, India (print)

The Fortune at the Bottom of the Pyramid Begins with Understanding : Targeting the BoP Customer (PDF)

Blogs

Founder, RECulture – a global group blog documenting the informal economy based on recycle, reuse, repurpose, resell and repair around the developing world.

Co-Founder, Does Size Matter? 2005 -2007 – started as thinking grounds with co-author Steve Portigal for the “Shopping for Innovation” article linked above in Core77. Grew into group blog which gave its description so:

A conversation on the business of design, design firms, collaboration, whether large full service companies are better than smaller specialized firms in a loosely knit alliance, sourcing design, innovation, strategy and the answer to “Where do we go to buy some innovation?”

Founder and owner, Perspective, Jugaad, Perspective 2.0 2005 – 2010 ~ originally available as www.nitibhan.com

Contributor, CPH127 2005 – 2006

Community member, Core77 and nextbillion.net

On twitter, @prepaid_africa

Others.

(this page is a work in progress, bookmark for ongoing updates)

Minimizing risk: buyer behaviour among the BoP confirmed by Nielson

The South African Shopper Trends report by Nielson highlights some aspects of the township customer’s mindset and buyer behaviour, as demonstrated by the following snippet from this analysis:

How we make purchasing decisions
We make decisions based on what other people say, as well as how we experience a product. There is a major fear amongst consumers (especially in the township) of wasting money on a product that may fail on delivering – hence why 92% of consumers cite word of mouth as the best source for new product ideas. This results in very little initial experimentation, with consumers rather sticking to what they know and trust. For example, many people would rather walk for 20 minutes to buy airtime from Pep than buy immediately from a trader on the roadside. If there is a problem with the airtime, they know Pep will solve it, but the trader won’t – so there’s effectively too much of a risk to not buy from Pep.

Lack of willingness to take a risk on an unknown brand or service, minimizing the risk by the tried and true over something ostensibly ‘new and improved’. Proof of performance is critical as is getting the maximum value for their money i.e. the return on their investment. Reading these two articles linked reminds me so strongly of the purchasing patterns and buyer behaviour observed among BoP customers – the very first time in the townships of South Africa back in January of 2008, that I think I’m going to finally get around to sharing my Life is Hard presentation, and my accompanying talk to go along with the slideset.

Pondering the possibilities

DSC05202
Iloilo Province, The Phillipines, 21st February 2009

I'm back online after my sojourn in rural Iloilo province and still digesting the whole experience of being immersed in BoP/rural life for (me) such an extended period. As impressions and images are still juggling into place, few insights emerge at this time other than an overall sense of optimism and industry. My faith in human nature and its indomitable courage, goodwill and sense of community is slowly coming back to life.

While I'll certainly share some basic stories about the people that I met with just like I did during my Indian trip, expect postings to go a bit slower for a while as I have a sense that there is more here than meets the eye at first glance.

A part of me is tempted – even before I've finished pondering – to leap forward and say, you know, there is no such thing as the base or bottom of any pyramid. There is simply the challenge of managing livelihoods, securing futures, uncovering opportunities and living life – circumstances and situations simply create different challenges for different people.

Of all the people in the world, there are some of us who have jobs with fixed salaries that arrive predictably and periodically and there are more of us who manage on cash flows that are not always predictable or regular. The amounts vary – greatly – but one can still say that for the great majority in the world, the shock of the unexpected expense or an emergency or even simply redundancy, can be as much of a stressful challenge regardless of how much you earn, how you earn it and where you live.

And yet, as one perceives the flow of life among these close knit and usually related communities, one sees a greater strength in the ability to withstand the shocks with some measure of equanimity. After all, with life comes the sudden tempest of a typhoon, and years of hard work may disappear in a day. One carries on. Rebuild and renew because that is what the cycle of nature and life is all about. Resilience is a new term that I would add to my existing impression of the "BoP" – this is with reference to my previous writing on "Life is hard". That's about all I'm ready to say at this point though. I still need more time to figure things out.

This field visit was a learning experience in more ways than one, that is, beyond the professional interest there was also a personal journey. But that's a story for another blog.