Posts Tagged ‘user research’

Innovation, Ingenuity and Opportunity under Conditions of Scarcity (Download PDF)

coverIn July 2009, I was inspired by working in the Research wing of the Aalto University’s Design Factory in Espoo, Finland, to launch a group blog called REculture: Exploring the post-consumption economy of repair, reuse, repurpose and recycle by informal businesses at the Base of the Pyramid*.

Within a year, this research interest evolved into a multidisciplinary look at the culture of innovation and invention under conditions of scarcity and it’s lessons for sustainable manufacturing and industry for us in the context of more industrialized nations.

reculture research bed

Emerging Futures Lab, July 2010 (Aalto Design Factory)

As a preliminary exploration, my research associate Mikko Koskinen and I timed our visit to Kenya to coincide with the Maker Faire Africa to be held on the grounds of the University of Nairobi in August 2010.

This photographic record of our discoveries (PDF 6MB) among the jua kali artisans and workshops of Nairobi, Nakuru, Thika, and Kithengela, guided by biogas inventor and innovator Dominic Wanjihia captures the essence of the creativity and ingenuity it takes to create without ample resources and adequate infrastructure.

A synopsis of our analysis is available here.

 

* The publishing platform, Posterous, died a short while later and we lost years of work. I’m looking into reincarnating REculture on Tumblr soon.

 

Seasonality as an element of contextual planning for emerging consumer markets

livestock flows eac fewsnetGrowing up as a Hindu expat in multicultural ‘West Malaysia’ of the 1970s and 80s, it was a matter of course that every festival would be a big occasion. We had Christmas in December, and Chinese New Year soon after, to be followed by Hari Raya (Eid) and Deepawali – each of them deserving of TV specials and decorations on the streets.

Seasonality of cash flows and income streams in the informal and rural economy translated in the urban areas as festivals triggered a boom in consumer sales. India’s formal economy still keeps watch on the onset of the annual monsoons, as those rains will have documented impact on their 3rd quarter sales in the peak festival season of October and November, leading into the wedding season.

In Eastern Africa, this seasonality is seen, among other things, in the lives of pastoralists and livestock farmers. As Eid Al Adhar approaches in a few days, livestock sales for the annual sacrifice are reaching their peak. Trade in meat is one of the staple income sources in the arid lands and the Port of Mombasa is one of the keys to the distribution networks.

The livestock trade to the Middle East accounts for 60 percent of Somaliland’s gross domestic product and 70 percent of its jobs.

This, however, is changing, as the Port of Berbera will soon receive millions of dollars of investment in improved infrastructure. The element of seasonal cycles over the course of the natural year, however, will not change. And this is worth noting for those considering the emerging consumer markets in the developing world.

Beyond word of mouth, however, it is hard to get a proper idea about the economic impact of Ramadan. Perhaps because of sensitivities around dealing with a religious institution, international organisations such as the World Bank, International Monetary Fund and United Nations Development Programme have not conducted research on the precise economic impact of the custom.

FMCG majors already feeling the pinch of shrinking domestic markets are finally taking note of this entire opportunity space. In Indonesia, Unilever, Beiersdorf and L’Oreal are making halal face creams and shampoos to court Muslims as sales in Western markets taper off.

There are patterns of trade around major holidays in each region, be it Chinese New Year or Dussehra, and the informal sector prepares for, and relies upon, these expected bumper ‘harvests’ in their cash flow. It will be interesting to watch what happens in the context of the African consumer market as the Asian giants begin to eye it seriously as the last frontier for significant growth.

Borderland Biashara: Mapping the Cross Border, National and Regional Trade in the East African Informal Economy

efl research team

Rinku Gajera & Michael Kimani, Malaba Border, Kenya, January 2016. Photo: Niti Bhan

And, we’re back! With apologies for the long delay in posting on the blog, we’d been busy wrapping up our groundbreaking design research for development programming project for Trade Mark East Africa this past month or so. As you can imagine, the last few weeks of any project suck all the bandwidth out and leave little for blogging or writing.

Let me be the first to say that this project could not have been executed or completed without a rockstar research team – Rinku Gajera, Research Lead, and Michael Kimani, Research Associate, together put in gruelling hours in the sun, and on Skype, to help increase our understanding of the informal economy in East Africa, particularly the informal trade sector – cross border, national, and regional. Emerging Futures Lab has been immersed in design and development of pioneering methodology for mapping the informal trade ecosystem – henceforward known as biashara, at the borderlands of the East African Community, since November 2015.

tmeaFor this opportunity, I must thank the CEO of Trade Mark East Africa, Frank Matsaert, who saw our passion and our belief in the worth and value of the informal sector, and recognized the need to understand the traders, their business practices, and their aspirations, as the first step necessary for the design of interventions that are not only people-centered, but cost effective and impactful.  We were granted creative license to colour outside the box of the terms of reference with our designer’s empathy and exploratory mindset, and frame this project as an exercise in developing the understanding necessary for the design of human centered methods, tools and frameworks for development programming. You can be sure that there will be more on this topic published soon on this blog, so grab the RSS feed now, or sign up for inboxed posts.

Download the Borderland Biashara Ecosystem Mapping project at the Kenya/Uganda border at Busia and Malaba.

Nov 2015Inception report Informal Economy, Kenya/East Africa/Uganda
Jan 2016Literature Review on Informal Cross Border Trade in the East African Community (EAC), the DRC and South Sudan
May 2016Final Report, General Public – Borderland Biashara, by Emerging Futures Lab

Customer-Centric Business Model Design for Financial Inclusion

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The Challenge

Digital financial services (DFS) seek to bridge the chasm between the structures, policies and institutions of the formal economy, and the cash intensive informal and rural economy. Current day approaches tend to take the perspective of the service providers when assessing the market opportunity and the needs of the intended customers. And so the research to inform the design of products and services focuses on the behaviour of the end users apart from their context, and isolates their unmet needs within the narrow bounds of a specific project or purpose.

Given that the user researchers, the concept developers and the service providers, are mostly from the formal operating environment and/or first world contexts, they tend to consider consumer behaviour without the explicit acknowledgement that these user responses to the introduction of digital financial services (DFS) are emerging from the context of very different conditions than they themselves are immersed in. That is, there are implicit assumptions tacitly being made regarding the market and its opportunities, which, if left unquestioned, may obscure the underlying causes of the problem. And, thus, may inadvertently act as intangible barriers themselves.

 

A Framework for Approaching this Challenge – Pasteur’s Quadrant

The cash intensive informal and rural economies of the African continent are a very different operating environment from the formal, structured economy of banks, service providers and institutions. This chasm in context, and thus customer worldview, is particularly wide for the vast majority who tend to be defined as financially excluded. They manage their household expenses on irregular income streams from a variety of sources, not regular and predictable paychecks.

This means that many of the market assessment frameworks and tools anchored in the characteristics of the formal, calender based economy may not apply directly to a wholly different context with entirely different conditions and criteria, and their use without adaptation or acknowledgement may skew the resulting insights and concepts. Most of the available research tends to fall into either pure social science or design driven user research. As we have seen, when it comes to making markets work for the poor, neither approach alone is enough to make sense of the opportunity.

pasteur

We are inspired by what is known as Pasteur’s Quadrant – a hybrid approach that integrates the need to understand the context with the pragmatic goal of immediately useful and relevant information.  Our objective is identify strategies that lower the barriers to adoption, whilst minimizing the dropout rate. That is, our goal is to craft sustainable concepts that work for the target audience within the contexts and conditions of their own operating environment and daily life. This approach increases the success rate of a business model. We have been inspired by the way the prepaid airtime model bridges this same chasm for telecommunication giants around the world.

 

Grounding Insights in the context of Informal and Rural Ecosystems

Taking a systemic view of the untapped market for digital financial services, thus, would ground the market observations and the customer insights within the frame of reference of the target audience’s own operating environment. Among the financially excluded, particularly on the African continent, this can safely be said to be the informal sector which contributes a significant proportion of each nation’s GDP and employment, regardless of industry.

Framing the essence of the challenge in the form of these critical questions,

  • What are the barriers to adoption of DFS ?
  • What can be done to lower these barriers to adoption?

permits us to take a systemic approach to identifying barriers to DFS adoption, balancing the need for understanding the unknown with the insights required for conceptual design.

The following questions demonstrate the way we can drill down for comprehensive understanding for a particular customer segment or region in a viable manner:

1. What are the common characteristics of the cash intensive informal economy in which this population resides?
2. What are their current means to manage their household expenses – urban vs rural
2a. What are their current options for financial services – which all do they have access to and which all do they actually use – informal AND formal
2b. Why do they use what they use? And why don’t they use what they’re not using but have access to?
3. What are the market forces acting upon the existing DFS market in their region – regulatory, policy, prices, interoperability, tech of the solution, type of phone etc
4.  What are the assumptions these DFS are making wrt their target audience needs, behaviour, usage patterns and capabilities? How do these assumptions fall short of the real world context and usage behaviour in the context of their cash intensive operating environment?

And thus, the starting point for business model design are the answers we are able to synthesize from the insights gathered above, in order to answer the following question:

What is necessary in order to bridge the gap between the DFS and the intended target audience?

 

Our approach offers a pragmatic diagnosis of the situation, from the perspective of the informal economy and the poor, within the conditions and constraints of the current day regulatory and policy environment. It clearly identifies the gaps in the existing system and describes the opportunity space for new business models that would offer value and resonate with the target audience’s needs and context.

We recommend giving technology a backseat and approaching the solution development process from a more holistic perspective of people, their operating environment and their existing financial behaviour.

Read more on these interdisciplinary lenses for innovating for the informal economies of the developing world’s emerging consumer markets.

New Market Analysis: It all boils down to Interpretation

This isn’t a new diagram for anyone familiar with my writing. Its a diagram I’ve been using to explain where my work fits into the innovation development process since I first saw it on Luke Wroblewski’s blog back in 2006. However, I’ve just been struck forcibly by the realization that there’s a very important piece of this process that’s missing. And that is Interpretation.

What do I mean by Interpretation? 

Lets start by taking a look at the ever popular user centered design process, simplified in linear form, although we all know there are numerous feedback loops and iterations constantly happening in real time.

The understanding we seek in order to conceptualize and design emerges from the immersion in the new operating environment we wish to enter. This where we go and meet people and talk to them and watch and listen and learn. Its when we get back and analyse our findings that our aim is to synthesize them in the form of actionable insights that can drive the design and development of a new product, service or business model. The space between Insights and Design is when and where we conceive the ideas we wish to develop into workable constructs. Its a given that the process isn’t as linear as diagrammed and ideas and concepts occur much earlier but what is critical, and this is what I realized today, is in how we interpret our findings from the field.

This is the bit I’ve circled in red.

This is where our assumptions, especially those we don’t recognize, and our presumptions, are most likely to let us down. Two people, present in the same user observation study, meeting and listening to the same people, can interpret the raw data in very different ways. So much of this has to do with our preconceived ideas of the target audience not to mention especially important when you’re looking at such a study in a culture and society very different from your own, that its no wonder specialists in the field of design ethnography or user research keep emphasizing the need to able to step outside of yourself in order to observe and understand someone else.

While this is naturally important in all kinds of human interaction, it becomes far more crucial in the context of a professional user research project.

That’s why there are any number of case studies and examples of products and services that fail to match people’s needs or meet expectations *even* after extensive and expensive exploratory user research studies.

Did we manage to interpret our findings correctly? Did we understand what someone was saying in the context of their own culture and mindset and society? Or did we interpret their words and actions from the perspective of our own frame of reference?

I’ll end this with a simple example that comes to mind as I write this. A couple of years ago I was in the field for a small solar power manufacturer who could not comprehend why the very sensible decision of being able to save oodles of money on kerosene by investing in an affordable solar lamp was not being made by his intended target audience. Why were they not purchasing this product even though it made so much sense to do so?

In fact, it turned out, the real question was, did it make sense to the potential customer in the context of their own cash flow, income stream and household management?

Part 3: Synthesis and Insights from original research on rural economic behaviour

broad_prepaid
One can conclude from synthesizing the data collected across the geographies and the range of “BoP” income levels that rural households demonstrated similar patterns of behaviour in their management of household expenses on irregular income streams. These are:

  • the rapid conversion of cash into tangible assets such as goods or livestock,
  • the  subsequent storage of wealth in this form,
  • the ability to conduct cashless transactions by mechanisms both simple and sophisticated
  • shared or cooperative financial tools such as investments, loans, purchases and savings
  • the use of multiple resources allocated by cost and usage
  • knowledge and experience of seasonal ebb and flow influencing cash flow management

The irregularity of cash flow or income over time in the households studied can be said to be a combination of the known – such as the ebb and flow of income over the course of the year, either directly due to the natural seasons or due to other unnatural but predictable factors such as Christmas or vacations; and the unknown –  either the truly unpredictable such as a natural disaster or the simply random, such as not knowing how many customers will make a purchase on any given day.

The known component or the “reasonably predictable through experience”, is less a matter of the actual amount of income earned and more about knowing when to expect peaks and lows in cash flow. This element of seasonality would be a critical component of knowledge pertaining to a particular region or market for BoP ventures seeking to create value through successful introductions of products or services.

For example, in the rural region of The Philippines, January to approximately April or May (or until the rains begin) is considered the annual “summer” or “dry” season – unless a farm is very lucky to have access to sufficient water for rice growing regardless of rain, the farmers can only start planting when the rains arrive and are dependent on it for their second harvest as well. So overall, whether its tiny sari-sari1 stores supplying everyday essentials, snacks and cold drinks or some other business – even those selling necessities like food, all consider this a lean period.

Those who earn daily wages  helping farmers plant the rice have little work, farmers live on their stockpiled rice, everyone tends to spend less but along with the rains all of this changes and the pattern of spending increases until the annual Christmas peak. For some, wholly dependent on what they can earn locally (receiving no remittances from relatives abroad) this can mean a difference of 100% in their weekly earnings between the “wet” and the “dry” season.

The Indians and the Malawians were influenced in similar ways, only the actual timings varied due to geography. Whatever the reasons in any particular region, when evaluating the purchasing power of those who manage with irregular and unpredictable income, the first question to ask is if there are any known patterns of ebb and flow in their cash flow.

It is the unknown component that creates the unpredictable volatility that those on irregular income streams must deal with in order to manage their household expenses with any degree of control. The behaviours observed listed above, taken together, can be summarized to state that each household managed what could be called a “portfolio of investments” that acted as deposits maturing over time.

They either maintained multiple sources of income simultaneously since available cash was often converted into these investments, spreading the risk of any one source failing when needed or stored their wealth accordingly.  Maximizing available resources based on their cost and intended usage along with the tendency towards minimizing the need for cash based transactions all worked together  to smoothen the volatility of the household‘s income.

For example, one family in Malawi reared pigs for sales (or food in emergencies), grew vegetables and maize for their own needs, distilled wine from sugar cane for cash sales and also kept bees with a cooperative for annual harvest of honey. Cash was thus available in varying amounts from a variety of sources at different points of time.

In the Philippines, an extended household living together in one compound pooled their resources from a kitchen garden, stored fuel in the form of bamboo and dried coconut husk, kept chickens and occasionally a pig, as well managed on the small amounts of cash earned daily through running at small sari-sari store on the premises.

While in the Indian village, even the silversmith who made ornaments only during the harvest peak, used his metalworking skills and workshop the rest of the year to make doors, windows and grillwork.

This portfolio management approach to household expenses* implies the manipulation of their span of control over elements of time such as periodicity and frequency as well as currency, i.e. cash or goods, in order to decrease the volatility of their cash flow, improve their ability to plan and while decreasing the variance between expenses and income.

Across the board, the particular characteristic that most stood out during conversations with the rural populace in India and The Philippines, echoing  prior experience in the field elsewhere, was their undeniable pride in their degree of self reliance, and thus, their level of independence from the formal or cash based economy.

Over and over, people would proudly point to assets like firewood, livestock, kitchen gardens etc and emphasize that these resources were ‘free’ and didn’t need to be purchased for cash, often in the same breath pointing out how everything needed to be bought if you lived in the city. Whether it was a nanny goat kept just to provide the daily cup of milk for morning tea or an extra sack of rice held back from the harvest sales, there was a distinct sense of achievement for every penny that didn’t have to be spent.

This trait of minimizing the need for actual cash money also cropped up in other patterns of behaviour including the storage of wealth in the form of ‘kind’ or ‘goods’ (that could be liquidated when and if required); cashless transactions within the community, from the simple to the sophisticated; and the rapid conversion of surplus cash into goods or ‘kind’ (livestock, for example, as investment or planned savings in the form of silver or bricks for a future house).

Expensive resources that required cash outlays such as fuel – diesel for irrigation pumps; liquid petroleum gas cylinders for cooking; or airtime minutes purchased on prepaid plans for the ubiquitous mobile phone, would be stretched out for as long as possible before the need for replenishment. For example, a common behaviour was the choice of cheaper or ’free’ fuel such as firewood or dried cow dung for cooking food which took a long time to cook such as beans or stews, saving the use of the more expensive gas stove for fast cooking items.

All of these behaviours, taken together, imply a challenge for businesses seeking to serve rural populations effectively since their relative lack of liquidity places them in a challenging position as future customers. Conventional business development methods include the use of market research to evaluate the disposable income or purchasing power of the target audience. When considering rural BoP households, these tools may not supply any meaningful data, skewing the perceived income levels or earnings of those studied.

In sum, it can be concluded that the challenges for value creation can be quite different for BoP ventures interested in addressing the rural markets. From the observations made in the field, we can highlight three key implications for business development. These are:

1. Seasonality – with the exception of the salaried, everyone else in the sample pool was able to identify times of abundance and scarcity over the course of natural year in their earnings. Identification of a particular region or market’s local pattern of seasonality would benefit the design of payment schedules, timing of entry or new product and service launch, for example.

2. Relative lack of liquidity – The majority of the rural households observed tended to ‘store wealth’ in the form of goods, livestock or natural resources, relying on a variety of cashless transactions within the community for a number of needs. Conventional business development strategies need to be reformulated to take this into account as these patterns of behaviour may reflect the household’s purchasing power or income level inaccurately.

3. Increasing the customer’s span of control over the timing, frequency and amount of cash required – Since the availability and amount of cash cannot be predicted on calendar time, this implication is best reflected by the success of the prepaid mobile phone subscriptions in these same markets. When some cash is available, it can be used to purchase airtime minutes for text or voice calls, when there is no money, the phone can still receive incoming calls. Models which impose an external schedule of  periodicity, frequency and amount of cash required may not always be successful in matching the volatile cash flow particular to each household’s sources of income.

Conclusion

Broadly speaking, there was evidence of far more sophisticated cash flow management than has either been expected or assumed among the rural BoP households in the sample pool. In fact, one future task would be to parse out whether the terms ‘irregular’ or ‘unpredictable’ can be be applied. Certainly, income was not as predictable and regular as a salary, but on the other hand, neither were they totally random and unknown. At this point, it seems far more accurate to say that the rural BoP households do not manage their expenses on a “fixed amount arriving on a known day or date”.

Also to be reconsidered is whether those in the rural communities in developing countries should simply be lumped together with their urban brethren as an undifferentiated mass called “the BoP” or “the poor” – for one, living on $2 a day has an entirely different meaning where much of the hyper local economy may not even be based on cash transactions, or else, few daily requirements need to be purchased.

If we’re to seriously evaluate business development for BoP ventures, then a far more nuanced understanding of local culture, buyer behaviour and segmentation of these emerging consumer markets is required.

* Given the similiarities in findings, it should be noted that these insights emerged from a workshop conducted in Helsinki, Finland in April 2009, prior to the release of the now famous book, Portfolios of the Poor.

Exploratory User Research in the Rural Economy

When I first began developing the attributes by which to select representative user profiles for the original fieldwork to begin understanding the “prepaid economy”, that is, household financial management in rural India, The Philippines and Malawi, it was based on people’s ability to plan and budget.

Sustainable Value Chain 8

One can plan best when one is certain of the amount of money incoming and its date of arrival, thus one is best able to manage household expenses on a regular salary on a periodic calender based schedule.  If we cluster rural residents by their ability to accurately estimate the amount of money against its arrival, then the salaried employee is at one of the continuum of certainty. He or she knows exactly how much they will receive and on which date. The other end, however, is the most uncertain, such as the case of the daily wages labourer who may or may not be called for work on a particular day or week.

The farmer, if experienced, tends to fall in between these two points, as they are usually able to look at their crops and estimate approximately the yield and readiness of the harvest. This simple framework of time and money allowed for a reasonably representative sample of any particular region where geography is responsible for the climate and the seasons. The uncertainties faced by local farmers were broadly the same.

Now, we hope to take a closer look at this segmentation model to better refine our understanding of rural economies. At which point did a farm transition from mere subsistence towards aspirations? How? What distinguished a member of the global emerging middle class (GEMs) from one who was barely able to hold house and hearth together? Which other actors were critical to the rural economy, delineated in this case as the last mile of the agricultural value chain, and who were the supporting cast ? All farmers in a region are not alike – how would we begin to cluster sub-segments and which additional attributes would help us?

As a starting point, here are some of the key insights that have already been consistently identified:

  1. The greater the span of control the end user had over their time and money in a payment plan – the amount, whether it was in cash or kind; and its timing i.e. the frequency, periodicity and duration, the greater the likelihood of its success.
  2. Seasonality was a fact of life and cash flows over the course of the natural year reflected this aspect. High seasons and low; wet seasons and dry – the rural economy was closely tied to the land, the ebb and flows of income affecting everyone in the farming community, from shopkeepers to truck drivers.
  3. Liquidity does not reflect wealth, nor cash expenditures a signal of purchasing power.
  4. Affordability is less a matter of absolute price and more dependent on the flexibility of the payment pattern.
  5. In the majority of the developing world, the rural economy is flexible, informal, local, social and interdependent. Trusted social networks were the basis of looking upon the community as insurance in bad times and resilience in the face of uncertainty and adversity a recurring characteristic.

Exploring the concept of user inspired policy planning

Getting up close and personal with Farmer Pedro at the Minbuza

Since late September I’ve been collaborating with Bart Doorneweert on an exploratory project for the Dutch government, taking a closer look at the design process for policy and planning related to private sector development of sustainable agriculture value chains. We’ve been thinking a lot about the user, the end user or the producer, that little guy at the bottom of the pyramid and where and how he fits into the grand scheme of things.

Bart’s most recent posts have been giving me much food for thought as they articulate the familiar (user centred design process, planning and thinking) in a wholly new way and I’d like to share some key snippets here:

Immersion is a project development time allowance for identifying patterns of behavior and capturing unpolluted data, which explain current behavior (also called exploratory user research).Even before you start working on developing a potential solution, you begin with finding focus by asking what would define the problem you are trying to solve.Immersion is a form of subjective inference: something, which depends entirely on an individual’s perception. However, if patterns check out and tend to repeat themselves in other circumstances, or replicate concisely, then subjective judgment is compounded to a more objective phenomenon, and becomes verifiable by others.It is then, when actionable insight appears, because the pattern has provided an insight and become a structure that organization can use to craft solutions.
[…]
The purpose of immersion is to discover patterns, which can evolve to a new basis for objective decision making.

Immersion can be seen as a mechanism for mitigating the constraint that uncertainty imposes on organizational decision-making.

With the pace of change accelerating, the immersion exercise increases in value and in necessity. It will need to be done more widely and frequently to update our current objective decision making frameworks, and prevent them from becoming an obsolete representation of the actual world.

What I liked about the way he’s framed this activity of Immersion (call it exploratory user research or simply fieldwork), the first phase in the user centered design process, is how he has connected its relevance to dealing with the challenge of uncertainty and rapid change.

Uncertainty is the only certainty, I’ve often said, when it comes to the conditions in the operating environment at the Bottom of the Pyramid, and strategies demand flexibility and responsiveness in order to cope effectively with the perceived chaos of the developing world.  But what he’s added here is this little insight from the perspective of policy and planning for sustainable development programmes:

It was once the wish of social engineering to control for uncertainty in the social environment. The premise was that you could make decisions based on a certain desired outcome, and hedge against the risk of it turning out otherwise. But through a couple of decades of iterating on the concept of social engineering we now know that it can only achieve so much. The power to coerce people to choose one type of behavior over another dissipates under change and uncertainty. The framework has shown to be ineffective, or too costly at best, and the social environment has increased in dynamics thereby making it less controllable.

It has been said that 96% of innovations fail and much of it is a hit and miss spaghetti on the wall affair. Human centered design planning has claimed to increase the success rate of the new – whether a product or service – by starting with understanding the intended target audience i.e. user research, exploratory and broadly focused, in order to identify opportunity spaces (and unmet needs) for design and development of products or services that offer value and resonate with users’ worldview.  This is critical for ensuring that relevant, appropriate and affordable solutions are ultimately designed for the intended target audience. The aim, naturally, is to lower the barriers to adoption and decrease the dropout rate.

Conceptually we can take this thought one step further by applying the same approach to solution development for policy and planning of sustainable programmes for development in the agricultural value chain. We can begin our user centered approach by questioning and validating our assumptions about Farmer Pedro and refreshing our perceptions of his current day status, situation and aspirations, as much as any multinational mobile manufacturer, but in practice, how would this work in an arena that has traditionally been top down and on a grand scale?

Is it enough to be inspired by the human centered process, in a complex multi-stakeholder context such as this, to simply remember his presence in the meeting rooms of the first world, or is there a way to add his voice, far away though he may be, to the design and development process?

As Bart has written, too many programmes fail to continue once donor support is withdrawn i.e. they are not sustainable in and of themselves:

Rather than focusing on the results of a project, I propose to take a different perspective on the purpose of private sector development. The task of a private sector development project is to create a temporary organizational vehicle, which is geared to search for the new business model that will deliver replicable and scalable ppp impact. In other words, it’s not the impact itself we’re after, it’s the business model that will deliver the impact. Private sector development, as a complementary coalition of for-profit, and non-profits, should limit its resources to validating such a model, ie. a feasible, viable, and desirable model.Exit comes after such validation.

Prioritizing whom you put at the center of the strategy and why

The tacit mandate for companies interested in the BoP market is that your product or service must either fill an ‘unmet’ need (of which the poor have many), or provide a way for them to enhance their livelihood or quality of life. Why else would they divert their limited and hard-earned cash for your product or service? So the fundamental consideration before design would be to focus on the benefit to the BoP: Is there an opportunity for social or economic development?

Next, the solution must be well designed—contextually relevant, appropriate, and of course, affordable. But the best designed product or service in the world will not sell if your customer is unable to find it. Since logistics and transportation is as much of an infrastructural challenge in the developing world, distribution becomes critical in ensuring the availability of the product. The entire supply chain might have to be built from scratch.

Once you’ve made the right product and got it out to where its needs to be, are your customers aware of its existence, what benefits it may provide for them, and the reasons why they should think about purchasing it? Is there a demand for this product, or can one be created? Does the value proposition of your offer resonate with the value system and worldview of those at the BoP?

And finally, the whole offering must cohesively hinge upon preserving and ensuring the dignity of your new customers. The poor are not looking for handouts, but rather opportunities; providing them with such products or services through a filter of ‘charity’ or ‘social work’ serves no one.

Our work in the field observing those at the base of the pyramid had led us to conclude that their life of adversity—managing in challenging conditions—evidenced a very different value system and worldview from what is commonly considered mainstream consumer culture. Their buying behaviour and decision-making criteria imply that those in the lower income strata—particularly in the developing world—are not ‘consumers’ but in fact extremely careful ‘money managers’ for whom an expense is often an investment whose return must be maximized. They tend to be risk averse and seek greater value from their purchases.
So an integrated strategy—one that looks beyond the design of the product or service for the other 90% but also takes distribution, demand, development and dignity into account while touching the core values of the BoP customer—could be considered a framework for best practice. ~ The 5Ds of BoP Marketing: Touchpoints for a holistic, human centered strategy

Why?

 

Lets take the example of your average social enterprise seeking to sell a cookstove or solar lamp to the erstwhile BoP customer. Do you know where he or she goes shopping? If you’re targeting rural customers in Sub Saharan Africa or South Asia, what are the odds of there being formal retail within accessible distance?

What are the odds of your subsistence farmer dropping by a supermarket when he’s in town next for market day? What kind of a difference will it make to your distribution strategy or demand creation and customer awareness program if it were designed from the point of view of your intended customers and their daily life, environment and buyer behaviour?

What if these assumptions were validated prior to investing thousands of dollars in setting up traditional distribution channels, per the conventional product introduction strategies as developed in the more sophisticated mainstream consumer markets?

Most social impact programs, whether they offer a new product or a service, or a program for socio-economic development of some sort, tend to focus their efforts on meeting the perceived needs of their most visible stakeholders. Rarely are these the intended recipients or end users, that is, the customers who would be purchasing the product or participating in the program or service.

Thus, when when there is little or no traction in sales and/or use of product or service, its always a head-scratching surprise. No wonder, when marketing may focus on value propositions that attract funders or changes in design are based on intermediary feedback, with little or no resonance with the actual needs or challenges faced by those among the intended target audience.

Human centered design, which inspires this holistic approach to the design of a strategy or plan, provides us with an approach which prioritizes the needs and challenges of the people considered most important for success or failure. Over and over, we learn expensive lessons when little or no impact is observed. Experience shows that the most dangerous assumption at the start of planning a program or crafting a strategy is that there is no difference in context between BoP markets and mainstream ones.

Whom do you choose to respond to? 

Prioritizing a particular user group allows for more relevant design and development. Iteration after initial implementation, that is, testing the prototypes in the field, need to be based on accurate feedback and if this aspect is not considered critically, then strategies get misaligned as multiple voices may offer conflicting or indirect information.

What do you choose to focus on?

Time and money are not unlimited. Prioritizing which set of voices to listen to and what context or needs your service or program is meant to serve helps increase the focus of the efforts and the resources.

As our most recent experience with agricultural value chain innovation in the context of social and economic development for Bottom of the Pyramid markets shows us, the lack of clarity and understanding of who exactly is the “User” ie. not having a specific focal point for planning and for program design leads to a cascading series of challenges from initial implementation through to end result, and thus, impact.

What essential aspects of the approach, philosophy and methodology from human centered design can offer value to such program development for donors?

Putting people first: the difference between “what” and “why”

Pondering the topic of contracts and creativity in yesterday’s post made me think about problem areas, how they’re identified and how they may be deconstructed. In simpler terms, the difference between the “what” and the “why”.

Take two regions in a country, one far more fertile and having a better overall economy than the other. Yet both areas face the same lack or unmet need. Take a product which fills this need. Yet it’s sales in the far more economically challenged area are more than double that of the first region. Why?

The numbers gave the company a means to identify a problem but are not able to provide any explanation for the discrepancy. It was these very same metrics that originally identified the first region as one which would be a good location to launch a product – average income was higher, unmet need was felt by almost 90% of the population, retail outlets were numerous etc.

This is where the need for exploratory user observations in the field, in order to understand the customer base and their behaviour made sense, as the company’s sales data (contradictory to initial performance estimates) needed explanation that only the people generating those same numbers could answer themselves.

Data, charts, graphs, metrics and numbers all have a role to play but when they are about human beings (and not just the number of cars per minute produced in an automated factory line) I believe that role is a supporting one, not the Oscar winning star of the show.