Posts Tagged ‘ecosystems’

Systems thinking and the mobile platform for economic impact and wealth creation

I have been meaning to write this post for quite some time now, percolating as it has in the back of my mind but it was Mark Kaigwa who finally spurred this writing. This is not all about MPesa, though it will take a look at some of the issues why its runaway success in Kenya has not yet been duplicated elsewhere, beyond the obvious brought up in most articles of “its the banking regulations” or “its the distribution network”.

Much credit of the fundamental thinking that will underlie this post’s premise must go to Wambura Kimunyu with whom I’ve discussed these issues on Twitter.  Furthermore, I believe that if we can frame the problem (and thus the potential solution) correctly, we may be onto something that could in fact make a big difference to the many ways  we attempt to enable and support social and economic development.

Some background

The topic today is the mobile phone (which I’ll also refer to as the mobile platform, since the phone aspect is but a feature of this handheld device) and its role among what is popularly known as the BoP or those at the Base or Bottom of the Pyramid, yet when I think about the very many pilot programs and attempts to spur development via the mobile platform or, as in the case of MPesa, to launch game changing mobile money transfer et al systems elsewhere, what immediately comes to my mind is a reflection on the issues that plagued the analysis of the success of Asus’ eeePC when it was first launched back in late 2007.

We take very affordable and very portable netbooks for granted today but back then in time, the category did not exist until Asus launched their 7″ linux based, open source, rugged and durable beauty for around USD 400.  It was referred to as a “subnotebook” back then and caused much head scratching among the developed world’s leading lights, even as it spurred all manner of competitors to focus on the two most obvious elements of its perceived success criteria – “price” and “form factor”.  Whereas I argued, that what made the Asus eeePC so successful was its fundamental premise – to be an easy to use affordable device squarely aimed at emerging markets and how it was this positioning that drove every other element, including its form factor and price. By focusing only on the obvious, without taking the holistic thinking and underlying value proposition into consideration, competitors were overlooking many of the details that supported its initial success.

Some framing

I see something similar happening with one of the most obvious success stories in the “Mobile as a platform for economic development of the BoP” bandwagon.  MPesa shows up in most analyses of “Business models or mobile thingies that are helping the poor” reports churned out so faithfully by researchers everywhere, yet the question arises, should it be even considered in that sandbox of things that help the poor in the first place? And by doing so, are we overlooking some of the factors of what makes it work so well in Kenya as well as misinterpreting that it was meant to be used only by the poor?

When the first reports of MPesa’s hiccups in South Africa came to light, it was then that Wambura first tweeted about the lack of the banked that were critical to spur the unbanked and thus the overall uptake of the service.  That is, if the MPesa ecosystem did not have enough banked people with money to circulate, then there wouldn’t be enough unbanked nor would there be enough money to circulate etc etc leading to the challenges that they are facing in South Africa now.  You needed the banked to bank the unbanked.  It sounded counter intuitive to me back then but over time as I observed many different facets of this activity across different strata in Kenya it came to me just how much sense this made and also how relevant this aspect was for the success of anything that should be considered as a means to improve incomes among the BoP when using the mobile platform (or otherwise, to be honest).

Why so?

Some systems thinking

That is, for any solution designed to enable the flow of wealth – mobile money transfer for example – or improve wealth creation at the BoP – it was not enough to simply target the poor alone. It would not work as a “Solution for the BoP” primarily because the BoP do not have any liquidity,  even if they do indeed have assets especially in rural areas, or they do not have the cash for it to flow through the system in the first place. Thus solutions aimed at improving economic activity for the poor needed ‘non poor’ actors in the ecosystem in order to inject cash into the system and thus make it flow (and one hopes, grow).

Taking this thought one step further, MPesa – assessed as a holistic ecosystem for financial transactions – has been so very obviously successful in the Kenyan context primarily because it is used by everyone, regardless of their economic standing or bankedness (if I may coin a non word).  In fact I believe that the number of banked actually surpasses the number of the unbanked – there is a link there that right now is not in the scope of this post but we can look at it later.

And thus, when ‘Solutions on the mobile to help the BoP or poor’ are considered, they should be looked at in terms of the complete ecosystem including the critical question of Where will the money come from into the system in the first place?  Without which, they will limp along as a cash poor system with little wealth to circulate, achieving nothing for the BoP in question. Look at this article on MPesa repositioning itself in South Africa towards higher income brackets and away from the original target audience of poor rural women. QED.

Solutions meant to improve economic conditions for the BoP cannot be focused only on the BoP.

Rather the focus needs to shift to complete ecosystems that fill a vacuum of need – usually in infrastructure or services – that include actors from differing socio economic strata in order to make a viable difference to larger population involved.  Not only is MPesa a clear example of this framing – it filled the vacuum of “how to securely and affordably send money” – but it did so for everyone and anyone who wanted to do so.

Similarly, when I consider my favourite example of the Mumias Sugar Company and their payroll management pilot program for their daily wage sugar cane cutters, I see the same potential for a greater impact on social and economic development for the lower income demographic involved in this system. The solution is one that is win win for all stake holders – from the company who doesn’t need to send armed guards with cash into the fields to the workers who now not only have savings accounts but don’t need to carry lumpsums of cash around with them on payday.

I also hear that real time inventory management and other enterprise level solutions for supply chain management are also moving onto the MPesa/mobile platform in Kenya – again involving the tiniest duka as well as the big name manufacturers or distributors.  Again we can see the potential impact on inventory management and thus, cash flow, even at the bottom of the retail pyramid, where its most critically needed and we can project the potential that it will improve the economic standing or at least help smoothen the variability of income streams that these smallest players in the informal economy require.

Will all stakeholders benefit? Yes. And will the members of the ecosystem who happen to fall into the so called BoP category benefit? Most likely. And more likely than if only the lowest segment was involved in a system of this sort rather than participating in the larger ecosystem of buyers and sellers.

Bottom line

Bringing all this back to the framing of the solution space or rather, the analysis of the success factors, I believe that a simple shift away from seeing only the obvious – mobiles! money! BoP! –  system level solutions that fill critical infrastructural and service gaps in locales where there are few or inadequate alternates and that serve many including the BoP can and will do far better to improve the economic wellbeing across the board of society that those that focus on one demographic alone.

Note: This was the original post that inspired the editor’s version published on Afrinnovator.

Consuming the future: a wide angled perspective

This was written at the end of August 2007; how far have we progressed?

Even as I have just written about sustainable design and ecodesign, I find myself pondering the larger issues at stake. I didn’t set out to go green and I’m not wholly sure what my outlook is on this topic as yet. There’s a sense of something much bigger than just design or a product or material or whatever here. Its almost as though we – the global we of humanity – are poised at an inflexion point. Is it a precipice sloping down towards utter disaster as some might argue and there is no point doing anything about it? Or are we instead reaching some a point on a natural trend curve that signals the end of an era – one based on massive growth, consumption and the pinnacle of the industrial revolution? Either way, it leaves me feeling like an ant contemplating the proverbial brickwall.

The first inklings of a greater shift in outlook and perspective came during a visit earlier this year to the north of England. For a little more than two weeks, I was a houseguest in an English home in a small village, with a family whose lifestyle choices and purchasing decisions were as diametrically different from any I’d ever seen, in all my continent hopping life. My hostess chose locally produced organic milk sold in containers made from recyclable plastic though it was not as easy to find in the local supermarket which also sold organic milk that was cheaper. Her reasons were logical and manifold – from helping local producers who received a fair price to the fact that supermarket milk came in packaging that wasn’t as easy to recycle. She used cotton nappies on principle, washing them each night in eco-friendly detergent and then choosing to air dry them over the convenience of the clothes dryer or the simplicity of disposable diapers. Every scrap of organic kitchen waste was composted – even her choice of location to purchase vegetables was based on the fact that they provided compostable plastic packaging.  Fair trade and sustainability over convenience and cost, each decision could be rationally justified and defended. My eyes were opened.

While intellectually aware of the problems facing the environment, the issues of poverty and quality of life at the bottom of the pyramid and the link between design and a sustainable future – all topics I’d written extensively about – I’d never been exposed to an entire way of life based on these principles – in a developed country.

That fact was crucial in opening my eyes to the extent that the design of systems play a part in the challenges facing the earth’s future.

For in India, where I lived and worked during my twenties, many of the situations that require extensive municipal systems – recycling of waste, garbage disposal, composting of organic matter and food waste, reuse of containers, conserving energy and water consumption – were either ‘taken care of’ or an ingrained habit developed in an environment of scarcity. Let me explain.

Leftover food was rarely thrown away – there was always someone who needed it more. Ragpickers made a living picking over garbage heaps for scraps of cloth, paper, plastic, metal and anything else that could be resold for some money. Everything was reused, recycled, resold or refurbished. Equipment, appliances and other consumer durables were expected to either last a lifetime or could be repaired or resold – they were never to be thrown away. Scarcity of water and frequent shortages meant rationing, storage and conservation. Throughout my college years in Bangalore – where water in the taps rarely flowed for more than two hours a day from the city’s supply – this meant learning to bathe in one bucket of water, remembering to fill buckets and tubs at 6am, washing clothes by hand and boiling and filtering for potability. Ditto electricity.

On the other hand, growing up as I had abroad, luxury was going home to my parents in Singapore where the comforts of a full shower, uninterrupted power supply and abundant shiny shops were the norm. Who would want to go back to scrimping and saving, if they had a choice?

My friend in England would and did. And we had long talks about her reasons for doing so, especially when – to my eyes – she didn’t have to be as stringent in her lifestyle as she undoubtedly was. It was this new awareness that suddenly opened my eyes to the systems around me. You could call it the global industrial ecosystem, but basically its all that goes into producing, making, creating and doing to support and sustain our lives in the manner to which we are accustomed – those of us who can afford it.  It was a system designed for consumption, and to a certain degree, waste. It is a system based on the principle of abundance. Availability. Choice. It is a system whose future is untenable at most, precarious at best.

Ethical consumption, sharing, conserving what we have, managing it and harvesting it with an eye to the future – systems which echo nature’s systems are not new or untouched subjects.  While I may be the least educated and experienced  on the  subject, its cast a wholly new feel to the way I perceive the future. And the way I’ve analyzed business, design and strategy in the past. Its as though a filter has been changed in my perception of the systems I see. It is this nascent perceptual change of the world around me that I will be exploring further. I don’t know where this journey will take me but it should get interesting, at the very least.

Design ecosystem for new and emerging market opportunities

I recently had cause to discuss the design ecosystem as a holistic approach to entering a new market or addressing the needs of a customer demographic that was unfamiliar or very different. I’d touched upon this earlier this year in a post I wrote summarizing my learnings from the field when considering the markets at the base or the bottom of the pyramid, but this time I want to take a deeper look at the basic concept of taking a systems approach to the design of products, services and business models. I’ll start with the paragraph from the earlier post, for some background and then explore this area further:

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

This situation is almost reversed when it comes to  the BoP consumer  and the BoP markets. The paucity of information does  not only hamper  the BoP themselves but also those who seek to serve  them. Furthermore,  much of the market infrastructure is non existent or  of a vastly  different quality than that experienced in richer markets. Factors  such as income streams that are irregular and lack of financial tools  such as consumer credit available for outright purchase are issues  rarely considered during the design process but can and do  influence  the final outcome. Products designed in isolation may win awards but may never quite impact the quality of life in the manner they were  designed to do so if their business model, pricing or payment plans, much less distribution or usage do not reflect the conditions of the  operating environment.

With so much uncertainty, can a systems approach provide the flexibility and adaptability to respond to rapid changes that the global flow of information is influencing in customer demographics and markets around the world?  Perhaps it may do so, if the entire approach to a new or emerging market opportunity is addressed holistically. This snippet caught my eye today, from an article in the news:

Engineers and architects are taught that when something doesn’t work you should see if its fundamental design — the collection of ideas believed to be true when the system was first set up — might be obsolete. Engineers and architects are taught that — in order to make a system work — you must replace those ideas which may have been true in the past but are no longer true today. This is called “redesigning the system.”

In this case,  the critical aspect is the foundation on which the system has been designed viz.,

fundamental design — the collection of ideas believed to be true when the system was first set up

and here, we can take the phrase “the collection of ideas believed to be true” as being equivalent to the assumptions we make, the criteria we define or the constraints which bound the solution space.  Thus,  in the example of the lower income (BoP) markets given above, we begin from the premise that the emerging markets in the informal economy are vastly different from those in mainstream consumer culture and thus we address them accordingly.

Now taking the thought a step further, when we consider uncertain contexts or situations, how then can we address the challenge if a significant proportion of the variables are in flux or unknown? Can we identify and articulate the various elements involved that influence the design of the whole ecosystem, leaving the actual answers to be answered from observations in the field? Or can we find patterns that allow us to extrapolate environmental conditions given that some sets of variables will be similar or the same as other better known situations? And given this, can flexibility of response be built into the systems design itself, using the basis of design thinking which is iterating the solution based on feedback from end users and the environment, as long as we know which elements are fixed and which are mutable?

At this point, it makes me stop and wonder if there are lessons from the informal economy where uncertainty and chaos seem to be the norm and where income is irregular, that could conceivably be applied to enhance the design of business models, products and services to increase or improve their flexibility and adaptability, in general terms?