Posts Tagged ‘framework’

A theoretical approach to Value for Money in aid & development: Optimizing research and design for ‘best fit’ iterative programming

Last year, I briefly touched upon this concept as an approach to cost effective programme design that was still flexible enough to provide room for iteration for best fit.

Today, I want to explore the concept further to evaluate its potential as a framework for incorporating the concurrent shift in development thinking towards Value for Money (DFID) principles, in addition to designing for best fit.

Value for Money as a Process Driver

Value for Money (VfM) is not the same as traditional monitoring and evaluation which seeks to measure impact of a project, and occurs usually after the fact. In many large scale projects, this may not happen until years after inception.

Instead, VfM is defined by the UK’s National Audit Office as ‘the optimal use of resources to achieve intended outcomes’, which in turn, the DFID document contextualizes for their aid programming investments as “We maximise the impact of each pound spent to improve poor people’s lives.”

If this applies to all investments in aid related programme development, then it follows that it must also apply to earliest stage of discovery and exploration that leads to problem framing i.e. the necessary groundwork to write a comprehensive and inclusive design brief for future programming.

Thus, the conceptual approach that I introduced at the beginning of this post, which is taken from the discipline of Operations Research, and seeks to solve the challenge framed so – what is the optimal solution that minimizes resources (inputs) for maximum outputs (value creation) – fits as a potential framework that can theoretically apply from the earliest stages of implementing development strategy, even before inception of any related projects, including early stage research and feasibility studies. After all, the function of Linear Programming is optimization.

Note: Here I will only consider the theoretical aspects from the point of view of programme design research and development, and not the mathematics. That will have to wait until I have gathered enough data for validation.

Design Research for Programme Design Purposes

In this context, the primary function of such an exploratory project is to identify the opportunity spaces for interventions that would together form an integrated programme designed to effect some sort of positive change in the ecosystem within which it would be implemented, and offer a wider (more inclusive) range of cross-cutting benefits.

In the language of product development, we are attempting to build a working prototype. We cannot build and test first prototypes to see if they work, directly, because our room for failure is much less spacious for experimenting with aid related programming, ethically speaking. This is not a laboratory environment but the real world with enough challenges and adversity already existent.

Programmes are not the same as consumer products, nor are they meant to be designed and tested in isolation before being launched for pilot testing in the market. Their very nature is such that innocent people are involved from the start, often with a history of skepticism regarding any number of well meant donor funded projects aimed at improving their lives. This changes the stringency of the early stage requirements for design planning.

At the same time, the nature of the task is such that no first prototype can be expected to be the final design. So, from the very beginning, what we must do is set the objective of the outcome as a Minimal Working Prototype (MWP) that meets all the criteria for an optimal solution, and NOT a Minimal Viable Product (which may or may not work wholly as intended until tested in the field for iteration.)

That is, the first implementation of the iterative programme design must fall within the bounds of the solution space – that which is represented by the shaded area in the diagram above.

The Optimal Solution is the Iterative Programme Design

Thus, what we must be able to do at the end of the discovery phase of research necessary to write the design brief, is tightly constrain the boundary conditions for the solution space within which the MWP can then be iterated. This minimizes the risk of utter failure, and maximizes the chances of discovering the best fit, and all of this within the definitions of Value for Money and it’s guidelines.

There are numerous ways to set the goals for optimization – one can minimize resources and maximize constraints, or minimize risk and maximize return on resources invested. These will guide our testing of this framework in field conditions to validate the robustness of this theoretical approach.

In this way, we can constrain our efforts to discover best fit within predefined limits of tolerance, while retaining the flexibility to adapt to changing real world circumstances and progressive transformation of operating conditions.

Best fit, then, becomes less a matter of experimentation without boundary conditions and more a discovery of which of the many right answers – if we take the entire shaded area as containing “right answers” to the problem at hand – help us meet the goals of intervention in the complex adaptive system in an optimal manner.

The point to note from this conceptual framework is that there is never any ONE right answer, so much as the answer will be that which we discover to the question “What is needed right now for us to meet our goals, given these changes since we last looked at the system?”

It is this aspect that loads the burden of a successful outcome on the front end of the entire research and development process, given that framing the problem correctly at the outset is what drives the research planning and steers the discovery process in the direction of relevant criteria, conditions, constraints, and user needs that will not only form the bounds of our solution space, but also act as waymarkers for monitoring change and evaluating its progression.

The 5C’s of Cashless

The Reserve Bank of India has unveiled their Vision 2018, an ambitious plan to shove the juggernaut into a cashless future. Here are their pithy yet to the point 5C’s, which focus the framework on a set of objectives.

  • Coverage – by enabling wider access to a variety of electronic payment services
  • Convenience – by enhancing user experience through ease of use and of products and processes
  • Confidence – by promoting integrity of systems, security of operations and customer protection
  • Convergence – by ensuring interoperability across service providers
  • Cost – by making services cost effective for users as well as service providers

The full Vision 2018 report can be found here. Smells like Rajan’s legacy as he wanders back to academia in the Fall. I’m very impressed by the framework’s conciseness, and the fact it embeds periodic customer feedback surveys (continuous user research) as part of the design.

A Framework for New Market Entry Strategy

There are two parts to this article: The first is a revision of the lenses through which we assess the landscape within which your new market strategy will be expected to operate; and the second covers your implicit assumptions at inception, as well as gaps in your  mental model.

1. The lenses for innovation need a universe to ground them.

The development of the first generation prototype lenses for identifying the sweet spot of innovation in the operating environment prevalent south of the Sahara desert on the African continent are described here. The evolutionary path from the original lenses (shown below) is described.

ideo modelPeople, Pesa, Place were used to replace the words Users, Marketplace, Technical as a means to provide cues for contextual exploration. However, in practice, this revised Venn Diagram (shown below) was still missing a means to distinguish the very different landscape of an emerging market. That is, it overlooked the need to consider the whole as an ecosystem in its own right.

The formal definition of a Venn Diagram, taken from the Oxford Dictionary is as follows:

A diagram representing mathematical or logical sets pictorially as circles or closed curves within an enclosing rectangle (the universal set), common elements of the sets being represented by intersections of the circles.

Without the universal set being represented in these diagrams, it was difficult to create a cue for identifying and describing the often inaccurate yet implicit assumptions made at the very beginning of a new market strategy formulation. And, this gap often revealed itself in form of cognitive dissonance between the observed marketplace and customers, and the tactics intended to support the strategy.

Here is a revised version of this Venn Diagram, enclosed in the rectangle.

VennInformalBy changing the description of the universal set, as shown below, one is then able to evaluate the entire ecosystem holistically.

VennMCCThere is a chasm that divides the value propositions of the producers (sellers, marketers, MNCs) from mainstream consumer culture and the mindset and worldview of the buyers (erstwhile bottom of the pyramid, or emerging consumers from cash intensive, informal economies), and this chasm is where new market strategies tend to falter, and fail. This is particularly noticeable in the African consumer market, especially when considering the mass majority.

2. Questioning the assumptions underlying your value proposition

By adding the missing universal set to the Venn Diagram, one is then forced to acknowledge the systemic differences between one’s own consumer culture, and the vastly different one in this new market. It may indeed be informal and rural, as shown in the sample above, or, it may be the urban consumer markets in the sprawling cities south of the Sahara. Even then, a significant proportion of the economy falls outside of the formal structured environment prevalent in most of the sophisticated consumer markets of the global economy.

And what tends to happen is that elements or concepts from the formal economic ecosystem are introduced or implemented isolated from the supporting information systems and infrastructure. One or two elements from one ecosystem will not thrive in an entirely different ecosystem if there is not fit or context for them to succeed. A clear example is what happens when financial services and tools are introduced under the guise of inclusion.

By going back to the foundation of one’s assumptions, one can identify where the gaps might lie in the value propositions that make so much sense in one’s own context when considering them for consumer segments who might never have been exposed to the same marketing messages, or conditioned to expect “New” to mean “Improved”.

This exercise also provides a cue to consider the systemic differences between the two operating environments, and to assess whether the value proposition or the solution can be introduced as is without the need for an entire support network surrounding it.

 

 

Note: I have used the African context as the working example, but the basic framework is flexible to use for any set of disparate operating environments.

In sum

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Irregular income streams from a variety of sources pose their own challenges to both buyers and sellers but offer an opportunity through the flexibility designed into business models for the informal economies where this pattern of cash flow tends to be much more prevalent.

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Flexibility is key, as well as the ability to negotiate on “time” – frequency, periodicity, duration and “money” – amount. This works in the highly personalized transactions negotiated in most of the “developing” world but the challenge arises when those dependent on volatile cash flows meet “the system”, which cannot be negotiated with.

Between time and money in the equation of the underlying principle of flexibility is the “trusted network” or human beings. Facetime and financial flexibility have proportionate relationship to the success of a business model in such an environment.

M-PESA and the service innovation framework (review)

A former student of mine just mailed me this article “Extracting Key Lessons in Service Innovation” (pdf) by S.Wooder and S. Baker, recently published in the Journal of Product Innovation Management, January 2012 edition. Here is the abstract of the article:

This paper describes how Sagentia—working with Vodafone, Safaricom, and other organizations—played a significant role in the creation and delivery of a landmark mobile money transfer and payment service for emerging markets, starting in Kenya. In this profile we examine the organization aspects and approach that contributed to the success of the service: the lessons we learned as the technology provider and how the experience has informed and strengthened our service innovation processes.

Reading through, what I found most valuable among the basic principles so simply and clearly articulated, was this insightful description of service innovation, as pertaining to the ways that a human centered design innovation team can work to improve the customer experience for any company, large or small:

What Is Service Innovation? Creating and Delivering Value

We are familiar with service innovation examples such as music download, loyalty programs, franchise chains, ticket/check-in kiosks, and online tax returns.

Service innovation can be described as a combination of technology innovation, business model innovation, social-organizational innovation, and demand innovation, with the objective of improving existing services (incremental innovation), creating new value propositions (offerings), or creating new service systems (radical or transformational innovation) (IfM and IBM, 2008). The key components of service innovation can be distilled down to “participative” value delivery; […]

So if the service is considered to be:

• something that may or may not entail physical product delivery or consumption
• a value delivery mechanism that connects the enterprise to the customer
• the combination of a value proposition, a delivery mechanism, and a customer’s experience

Then service innovation is simply innovation applied to one or more of the following areas:

• new concepts and/or value propositions
• new delivery mechanisms and/or business models
• new experiences

[…] Successful service or product innovation encompasses progress from the creative act (the so-called fuzzy front end) to the commercialization act (execution) and beyond that to sustainability and evolution of the innovation. Our simple framework for service innovation is shown in Figure 3

And they share with us the mapping of MPESA on to this service innovation framework.

The authors conclude their informative article with the following words:

Key lessons that were highlighted by our experience with M-PESA include:

• Learning in a detailed sense the needs of users in new markets and ensuring that it is possible to implement these needs and requirements as part of a pilot process;
• “Keeping it simple”; particularly in the early stages of the service, it is important to focus on a small set of compelling, marketable functions and features;
• Ensure that flexibility and agility, the ability to react and to respond to changes in the business model, are designed into the system; and
• For a service to succeed, it requires a critical mass of users as soon as possible; identifying mechanisms to motivate users to take up the service is an important part of the service innovation process.

The results of the study cannot claim to be generally applicable; however, it has allowed the “usefulness” of the conceptual stages in the service innovation framework to be empirically tested in a real-world example, and the vulnerabilities and strengths are better understood as a result.

This post was published previously in December 2011

M-PESA and the service innovation framework (extract)

A former student of mine just mailed me this article “Extracting Key Lessons in Service Innovation” (pdf) by S.Wooder and S. Baker, recently published in the Journal of Product Innovation Management, January 2012 edition. Here is the abstract of the article:

This paper describes how Sagentia—working with Vodafone, Safaricom, and other organizations—played a significant role in the creation and delivery of a landmark mobile money transfer and payment service for emerging markets, starting in Kenya. In this profile we examine the organization aspects and approach that contributed to the success of the service: the lessons we learned as the technology provider and how the experience has informed and strengthened our service innovation processes.

Reading through, what I found most valuable among the basic principles so simply and clearly articulated, was this insightful description of service innovation, as pertaining to the ways that a human centered design innovation team can work to improve the customer experience for any company, large or small:

What Is Service Innovation?  Creating and Delivering Value

We are familiar with service innovation examples such as music download, loyalty programs, franchise chains, ticket/check-in kiosks, and online tax returns.

Service innovation can be described as a combination of technology innovation, business model innovation, social-organizational innovation, and demand innovation, with the objective of improving existing services (incremental innovation), creating new value propositions (offerings), or creating new service systems (radical or transformational innovation) (IfM and IBM, 2008). The key components of service innovation can be distilled down to “participative” value delivery; […]

So if the service is considered to be:

• something that may or may not entail physical product delivery or consumption
• a value delivery mechanism that connects the enterprise to the customer
• the combination of a value proposition, a delivery mechanism, and a customer’s experience

Then service innovation is simply innovation applied to one or more of the following areas:

• new concepts and/or value propositions
• new delivery mechanisms and/or business models
• new experiences

[…] Successful service or product innovation encompasses progress from the creative act (the so-called fuzzy front end) to the commercialization act (execution) and beyond that to sustainability and evolution of the innovation. Our simple framework for service innovation is shown in Figure 3

Service-Innovation-FrameworkAnd finally, they share with us the mapping of MPESA on to this service innovation framework.

mpesa matrix

The authors conclude their informative article with the following words:

Key lessons that were highlighted by our experience with M-PESA include:

• Learning in a detailed sense the needs of users in new markets and ensuring that it is possible to implement these needs and requirements as part of a pilot process;
• “Keeping it simple”; particularly in the early stages of the service, it is important to focus on a small set of compelling, marketable functions and features;
• Ensure that flexibility and agility, the ability to react and to respond to changes in the business model, are designed into the system; and
• For a service to succeed, it requires a critical mass of users as soon as possible; identifying mechanisms to motivate users to take up the service is an important part of the service innovation process.

The results of the study cannot claim to be generally applicable; however, it has allowed the “usefulness” of the conceptual stages in the service innovation framework to be empirically tested in a real-world example, and the vulnerabilities and strengths are better understood as a result.