Posts Tagged ‘systems thinking’

Systemic design thinking and complex adaptive systems

Going back to first principles has been a refreshing exercise. Even as our work has taken us into some wholly new places, there’s comfort in knowing that others have thought deeply about the concepts, though not in our context. I’m a firm believer in not re-inventing the wheel. Consider it a working prototype to be tested in a new environment, rather like I’ve been doing with Vijay Kumar’s innovation methods.

Here’s the context of the thinking I’d been doing on iterative programming for complex, adaptive systems – that is, taking on the wicked problem space of international development where the operating environment is rather greatly different from the predictable regularity of the developed world:

People-centered systems design thinking for complexity
Pivoting from “best practice” to “best fit”: An interdisciplinary perspective (Intro)
An Interdisciplinary Approach to “Best Fit” for International Development: Process and Tools (Part 1)
Enabling development’s paradigm shift from ‘best practice’ to ‘best fit’(Part 2)

Thus, it was with pleasure that I dived into exploring Peter Jones’ publications on social transformation. Two, especially, caught my attention.
The first lays the groundwork in the work of bringing together the two disciplines – systems thinking and design.  From the abstract of his Systemic Design Principles for Complex Social Systems:

Systems theory and design thinking both share a common orientation to the desired outcomes of complex problems, which is to effect highly-leveraged, well-reasoned, and preferred changes in situations of concern.Systems thinking (resulting from its theoretical bias) promotes the understanding of complex problem situations independently of solutions, and demonstrates an analytical bias. Design disciplines demonstrate an action-oriented or generative bias toward creative solutions, but design often ignores deep understanding as irrelevant to future-oriented change.While many practitioners believe there to be compatibility between design and systems theory,the literature shows very few examples of their resolution in theoretical explanation or first principles. This work presents a reasoned attempt to reconcile the shared essential principles common to both fundamental systems theories and design theories, based on meta-analyses and a synthesis of shared principles. An argument developed on current and historical scholarly perspectives is illuminated by relevant complex system cases demonstrating the shared principles. While primarily oriented to complex social systems, the shared systemic design principles apply to all complex design outcomes, product and service systems, information systems, and social organizational systems.

And once I noted there was a bit of an overlap between the references I’d drawn on for my initial exploration of design planning as the discipline from which to source methods to address the challenge of complex, adaptive systems as currently explored in the development space, I was relieved to see that I was on the right path for our own theoretical evolution.

This paper is a great starting point for our methods development for the context of the informal sector in the East Africa, particularly outside the urban centers. And, a second paper by Jones – Design Research Methods in Systemic Design validates many of our assumptions while working with only the methods and systems thinking from one school of thought – the Institute of Design’s philosophy and approach.

In future blogposts, I will attempt to triangulate the thinking from all of these disciplines – design planning, human centered design, systems thinking, and international development. There’s a paper I’m hoping to write by the Autumn, if all goes well and the abstract accepted for a conference at the end of the year.

How the African movable assets bill can unleash innovation opportunities for the rural economy

Somewhere in Kenya, 4th June 2012 (Photo: Niti Bhan)

As Kenya joins Zambia and Zimbabwe in ratifying a Movable Property Security Rights Act, there’s a sense that the floodgates to innovation in access to finance might be taking place in rural Africa, south of the Sahara and north of South Africa.

Kenya’s law also goes beyond the cows and goats and allows a borrower to collateralise future receivables arising from contractual relationships.

How it ends up being implemented will set the stage for the next big disruption in financial inclusion. In the meantime, let’s take a closer look at the opportunity space for innovation in the informal and rural economy that dominates these operating environments.

 

1. A whole new bank, designed to meet the needs of rural Africa

Last night, a tweet by Charles Onyango-Obbo struck me forcibly, and reminded me of our Banking the Unbanked proposal crafted for ICICI back in January of 2007.

The very fact that contemporary thoughtleaders in the Kenyan banking industry are unable to take the concept of livestock as collateral for loans seriously, taken together with the deeply embedded assumptions of the formal economy’s financial structure leaves the door wide open to disruption.

It would not be too difficult to conceptualize a rural, co-operative bank custom designed for the local operating environment. In Kenya, where the mobile platform provides clear evidence of the viability, feasibility, and desirability of innovative financial tools and services that work for irregular income streams and provide the flexibility, reciprocity, and negotiability inherent in the cooperative local economies, such a bank could change the social and economic development landscape overnight.

In fact, one could conceivably foresee this “bank for rural Africa” scaling far beyond Kenya’s borders.

 

2. Insurance sector must respond to banking disruption

The domino effect of disruption in the banking sector should kickstart the stagnant insurance industry that has been ineffectually attempting to scale outside of the formal economy’s neatly defined boundaries. Bankers willing to take livestock as collateral for loans will therefore require insurance on their movable asset as a surety against the risk of disease, or drought.

Current products tend to emerge from the international aid industry, seeking to insure smallholder farmers against the shock of losing their livestock to climate related disasters such as prolonged drought, or an epidemic of illness. There is a dearth of relevant and appropriately designed insurance products from the private sector targeting the needs of the rural economy. For all the talk of African urbanization, even the most optimistic projections show that East Africa’s rural population will continue to dominate.

Thus, this an opportunity ripe for the plucking, given the right mix of product, pricing, and promotional messaging.

 

3. Disrupting assumptions of Poverty and Purchasing Power

Whether it is Kenya’s significant non profit sector or the nascent consumer oriented markets, the redrawn lines defining assets, collateral, and the floodgates of access to finance will require a complete overhaul in the way the population is segmented and measured.

Once these hundreds of movable assets have been valued, insured, and registered officially, even the most reluctant banker must now count the pastoralist among his wealthiest local clientele, able to draw a line of credit against his true wealth to the tune of thousands of dollars without feeling the pinch.

 

4. Triggering a rural investment and consumption boom

From mabati for a new roof and simti for the backyard wall, to the latest model smartphone or pickup truck, the concurrent boom in investments and consumption provides an ample playing ground for new products and services tailored for the contextual needs upcountry. Finally, Farmer Joe can install that solar powered irrigation pump for his orange groves in time to reap the next big harvest. And Mama Mercy can think of building up a nest egg of investments faster from the income provided by her farmyard animals.

Kagio Produce Market, Kenya, April 2013 (photo: Niti Bhan)

This might turn out to mean upgrading to a breed of high yield milch cows or being able to provide them with better quality feeds and medicines, but the financial bridge that a well designed strategy leveraging this movable assets bill and it’s timely implementation could mean the difference between the brass ring or treading water.

 

5. Trade and Commerce will open new markets

Given that the Kenyan Movable Property Security Rights Act 2017 goes beyond livestock to include other stores of wealth and value creation, there will be an undeniable impact on regional and cross border trade. No trader will give up the opportunity to leverage their existing inventory if it qualifies for additional credit that can be plowed back into the business.

On the road to Bungoma, Western Kenya, February 2016 (Photo: Niti Bhan)

Trader’s mindset and the documented biashara growth strategies already in evidence point clearly to the productive economic use of this access to finance rather than passive consumption alone. As their business grows, they will require a whole slew of tools and services tailored to their needs. This could be as simple as a basic book keeping app or as complex as customized commodity (assets, livestock, non perishable foodstuffs, grains and cereals) exchange platforms that integrate the disruptive new services percolating through the entire ecosystem.

 

In conclusion

These few steps outlined above are only the beginning of laying the foundation for disrupting the current social and economic development trajectory of small town and rural Kenya. I see immense potential for both direct to consumer as well as business to business segments for forward looking organizations seeking a foothold in the burgeoning East African markets.

We, at Emerging Futures Lab, would be pleased to offer you customized white papers on the opportunities for new products, services, and even business models, based on this emerging financial environment recently signed into law by President Kenyatta. Contact us for an exploratory conversation on the scope and scale of your particular industry’s needs. Our experienced team can help you maximize these opportunities from concept design and prototyping all the way through to path to market strategies.

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.

National design and innovation policies: a user centered perspective

I’ve been chewing over Tim Brown’s post on Design Nations since I came across it for the first time yesterday morning.  He touches upon Aalto University and Finland in his musings viz.,

Finland is a great example of a country that has done many of the right things. It has an integrated design and innovation policy and has created new institutions like Aalto University to facilitate greater cross-disciplinary collaboration. What is not clear is whether this is actually generating increased numbers of innovative companies or increased economic growth.

Sitting here in Helsinki, on the inside of Aalto’s spearhead project to facilitate greater cross-disciplinary collaboration, the beloved Design Factory, how can I help but be tempted to respond with my 2 euros worth?

My first thought is to observe that since Aalto only came into being in the January of this year, its far too early to tell what its impact will be on the national economy. But some clarification is required,  Aalto University is at once a new institution and a very old and established one, in that it was formed from the merger of three of the most respected local institutions – the Helsinki University of Technology, the Helsinki School of Art and Design and the Helsinki School of Economics, each with decades of history, achievement and alumni.

My second thought is to ponder on the metrics of success by which Tim is assessing Aalto’s impact – increased numbers of innovative companies (was that one of Aalto’s goals?) or increased economic growth (how would we define that?)

On the other hand, he states that Aalto was created to facilitate greater cross-disciplinary collaboration, and this I can certainly attest to, having been immersed here in this environment since the April of 2009.  I’ve also met with those responsible for the publication of the 2010 National Innovation Policy with its emphasis on user driven and demand driven innovation but would like to hold back my thoughts until I’ve framed the situation from Tim’s post with more clarity.

Comparing apples to oranges

My objective is not to defend Finland’s initiatives so much as explore and evaluate comparative approaches to boosting national innovation and design capabilities.  As part of John Heskett’s Design Policy class back in ID-IIT Chicago, I undertook the analysis of Singapore’s National Design (and Innovation) policy. Finland and Singapore are comparative nations, in terms of size and resources, so lets go back to the question Tim is musing upon:

There seems to be a group of small to medium size countries that are committed to building innovation infrastructure to drive economic growth and I wonder what are the key elements for success in this endeavor?

At this point, Brown seems to lose his focus as he compares these apples to the oranges that are cities or regions, that too in countries like India and China, which while comparable to each other (a billion and some creative minds each for arguments sake) are on an astronomically different scale from Singapore’s city state of 4.25 million or Finland’s almost 6 million. Mumbai and Shanghai have neighbourhoods larger than this…

I have been wondering whether top down government policy is what really makes the difference or whether instead there are emergent characteristics that determine a nation or region’s success in the global innovation economy. When I look at places that have generated significant innovation in the past- London, New York, Paris, Silicon Valley, Florence, Rome, they all seem to have been successful ‘fusion cities’ (or regions) that benefited from ideas flowing in from the outside and the interaction of diverse populations. That’s why I think cities like Singapore, Shanghai and Mumbai may one day be seen as equally productive innovation hotspots.

What is being overlooked here is the extensive support systems and infrastructure, not to mention population pool of the hinterlands that each of these cities and regions have and a place like Singapore doesn’t. (Or Finland for that matter, unless you consider pine trees and reindeer and lakes as innovation resources). We should in fact take a comparative look at what has been happening in India, China and the United States perhaps?

Lets take a moment to step back to 4 to 5 years ago, when the first stirrings of India’s National Design policy were heard and our hopes were high. Whatever has happened since then has been moving at a glacial pace, elephants and juggernauts do not tend to be nimble and responsive, but yes, they do indeed reach their destination eventually. It was around this same time that China focused on design education and thousands of new schools opened up around the country – I remember this well as we were observing the impact from far away with awe. Its been 5 years and we’re seeing the economic end results even now.

Top down, bottom up or user centered?

Coming back to our small and medium sized countries and the question of impact of national innovation policies, from this perspective, it seems to me that the issue isn’t about whether a top down approach is better than an organic bottom up approach. Its about assessing how can the two work together. And whether its a mandate from on high, with metrics and goals that must be met, or whether its taking a user centered approach by assessing the needs and opportunities of the end users of the innovation policy?

Look at this recent article in BusinessWeek decrying the failure of Okinawa’s innovation policy attempts even before they’ve been implemented (Rule number one in creative brainstorming is don’t kill the idea before its even been allowed to bloom). I found this snippet intriguing and one that gives me hope that there’s more here that could be possible.

[… ] into a “prosperous island full of hope and dynamism.”

It plans to do this by creating info tech, biotech, and environmental science clusters controlled by the government. It has already built a magnificent university campus and recruited world-renowned faculty and researchers to OIST. In addition, the government will create a sizable venture capital fund and assign its specialists to be intermediaries between OIST and local companies. The government specialists will decide what R&D to fund and help small and midsize companies decide on what markets to enter; negotiate financing; form partnerships with other companies; do business development; and modernize their facilities.

Even as the author goes on to categorically state that this is all wrong, I’m stopped in my tracks by the resemblance to Singapore’s National Policy for a Creative Economy. Eh? What gives? If indeed government mandated innovation “is all wrong” then by what metric is Singapore’s current success being evaluated as successful? The recent spate of investment in major global design events, big brand name speakers and splashy conferences or a genuine opportunity to feel safe enough to experiment and dare failure that’s being upheld as the hallmark of genuine innovation enabling? Are they focusing on the needs of the users or on external criteria? My parents live there and so I feel the responsibility to stop my assessment right here.

On the other hand, when I look at what the article states as the key problem identified by the Japanese government,

Kiyoyuki Shimizu, head of the cluster initiative in Japan’s Gifu Prefecture, explained that the government believed its previous investments didn’t lead to innovative products because the ties between academia, which was performing the research it funded, and industry, which needed to build businesses around this, were weak. So it needs to fill this void.

and then look at what the author states is the “right way to do this”,

Clusters happen where like-minded entrepreneurs congregate, start risky ventures, and learn from one another other by networking. Innovation is a by-product of this synergy and experimentation. What is needed is less government control, not more.

and reflect upon my observations here in the midst of Finland’s Aalto and user driven approach, it highlights something interesting. The issue is “control” not “government” or “policy”. Look at the words Vanderbeeken has chosen to share in his post,

The aim of user-driven innovation policy is to raise market actors’ awareness of new innovation tools. It also seeks to create a social infrastructure supporting user-driven innovation while removing obstacles to and boosting incentives for innovation activity.

I’m not hearing mandates or directives here, I’m hearing support and infrastructure that informs and enables, thus supporting the economic boost that becoming more user oriented can give to an organization. Who here can argue against the government becoming more user centered in their approach to the delivery of services and products?

Reframing the issues

Lets do a thought experiment for a moment, given all of these myriad bits of opinion and information and the current operating environment as well as a timid look at the emerging future.

  • What if its not entrepreneurship = startups but entrepreneurial = mindset?
  • What if the policy mandates becoming more observant of customer needs and thus more responsive rather than meeting arbitrary goals of number of new companies or industries or patents as a metric of success?
  • What if opportunity means identifying new strategies for revenue generation rather than driving economic growth?

What if we said, listen the system itself needs to be redesigned so lets start over?

Lets reframe the metrics of success and the criteria for boosting the creativity and knowledge of society, lets become more user centered and responsive, lets see what happens then.

Lets experiment.

Systems design lessons from challenging and demanding environments

The most common question posed by designers (at the Design Factory, in Finland) has been “What is different about designing for the BoP from the way I already design for mainstream consumers?”

Its a good question to ask, because it takes a systemic view of the user centered design process and methods being taught to them rather than focusing only on differences in features and attributes of tangible artifacts. This post is an attempt to grapple with developing a possible answer to their question and  starts with CK Prahalad’s framing of the traditional MNC approach vs his suggestions for the BoP approach.

The quality, efficacy, potency, and usability of solutions developed for the BOP markets are very attractive for the top of the pyramid. The traditional MNC approach and the approach suggested here—top of the pyramid to BOP and from the BOP to the top of the pyramid—are shown (above)

As the (foregoing) examples illustrate, the demands of the BOP markets can lead MNCs to focus on next practices. The BOP can be a source of innovations for not only products and processes, but business models as well. Let us start with the growth opportunities in local, stand-alone BOP markets first. ~ CK Prahalad via

Interpreting this in the context of design:

1. Consider the design of the entire ecosystem in a holistic manner rather than the product alone

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.

2. Price as a rigorous design constraint, not simply a data point or the sole criteria for reverse engineering

The issue of pricing then, becomes mission critical in the design brief but not as a reason to compromise the design. That is, if the traditional MNC approach is top down, stripping features and degrading quality and lifespan achieve no purpose except risking the brand’s reputation. Instead, maximizing the constraints while minimizing utilized resources can be seen as a way to innovate for this demanding consumer segment by providing value through elegant design solutions that appeal yet offer a return on their investment.

3. Being aware of and questioning assumptions made

Whether its as basic as availability of electricity and running water or as subtle as the design interpretation of such underlying value propositions as “convenience”, the assumptions made about consumer buying behaviour, purchasing patterns and decision making or choice of brand or product cannot go undebated or unquestioned. A challenging environment, conditions of uncertainty or scarcity and the hardships of daily life managed on irregular incomes all serve to influence the value system and mindset of the target audience in ways we are not always able to immediately discern if we don’t flag our implicit assumptions as a potential stumbling point.

4. Nuances of local culture and society matter

These markets are not the already saturated mature ones of the “global village” with a blase attitude towards such throwaway things as the use of religious iconography on lunchboxes and t-shirts, still preferring to stand on their dignity and self respect over the sophisticated acceptance of perceived disrespect. Thus, nuances observed during user research that may be overlooked when considering different regions within the developed world may in fact be far more important in the context of BoP consumer markets and influence the user acceptance and adoption rate of the product or service. Choice of colours, features, tone and style of communication are some of the design elements so affected. Choosing to tread as delicately as a newcomer never hurts.

5. Think of them as your most demanding customer, not the helpless poor in need

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