Posts Tagged ‘innovation’

10 years later: Will buying Lunar Design make McKinsey more nimble?

project1Around 10 years ago, I’d made this rough sketch of the innovation consulting landscape as I saw it at the time. The overlap of business and design was the topic du jour, and IDEO had just begun seeding the media with stories of the Empathy Economy and the magic of “design thinking”.

Today*, peterme’s blogpost woke me up with the news that McKinsey had purchased Lunar Design. If you’re not familiar with the ID landscape in the US, particularly on the West Coast, then a few words on Lunar will help with context. Afaik, they’ve always been a most respected medium sized industrial design studio – I have a vague recollection of meeting John Edson in some social gathering related to my work with Core77. Besides, back in the day, before social media came along to completely fragment what was left of the interwebs, the design world was a much smaller place.

Once I’d released my first impressions on Twitter (one of the reasons there’s a lot less blogging these days is how much of our pondering ends up being diffused through those addictive 140 character bursts), I recalled the diagram I’d created in September 2005. That was the period when I’d immersed myself wholly and completely in exploring the interstitial spaces between “Business” and “Design”, developing much of the foundation of my consulting practice.  You can see the seeds of today’s hybrid research driven consumer-centric strategies and the evolution of the traditional methods and frameworks to suit the needs of the informal sector in the explorations of a decade ago.

Ten years to respond to changes in the environment

Enough indulgence in the circumlocutions of yore, lets take a step back and look at the diagram again, this time with today’s news layered on top (as crudely drawn as the original).

project10That red box marks the spot of the combined Lunar+ McKinsey offer. Does this acquisition stretch McKinsey in a continuum (heh) across the entire bottom half of this position map? Or will Lunar Design hold that space for them while they keep their corner on the bottom right?

Given they’ve had a digital design department in some affordable corner of the universe, I’m assuming they’d managed to stretch their service offering and client deliverable capabilities as far they could without actually stepping fully fledged into the hard core world of industrial design. Their lack of strategic design planning was obvious.

FANcase

You’ll note that their earlier attempts to discuss product design tend to emphasize the B-School approach of conjoint analysis and elements from industrial engineering such as value analysis. Having debated the pros and cons of conjoint analysis vociferously in product development as taught in an MBA program as well as taken electives in value engineering during my engineering undergrad, I can recognize the clumsiness of the design strategy for competitive advantage approach in this case study. Its incremental.

Design catapulted itself into the boardroom in the meantime

This is not to say that the gurus at McKinsey were wrong. Business has, since the beginning of organizational management of mass production and practice, considered industrial design as a line item. Its place in the hierarchy of business was clear – marketing and finance and sales would inform the designers and the engineers what they had to do and how to do it.

Business schools emphasize analytical thinking while strategy teaches us frameworks and methods for analysis, after the fact. NPV will let you forecast returns but the method requires you to know exactly what you plan to do, in order to cost it, at the outset. There is no room built into the system for either experimentation or iteration. Brainstorming is a carefully curated meeting and free association or wild guesses frowned upon by middle management. The bottomline is a numbers game. And that’s a game that McKinsey’s designed to win.

The ‘magic’ of design

Yet as Steve Jobs would have shown you, there’s an intuitive leap in vision and innovation that happens (by magic) for which there’s no careful step by step replicable process to follow. Synthesizing the vast variety of data and distilling it down into a visualized whole – a concept to be manifested in the form of a prototype or rendering – is often a post it covered version of a pub brawl. Sure, there are a 101 Methods, as Vijay will remind you but the reality is one of scribbles, sketches, whiteboards, foolscap sheets and Lego.

The eureka moment is in the conversations – brainstorming – a phase built into the design process at least once if not more. This space in time is critical to the design (and of course, innovation yada yada) process. Business processes don’t really have this space built in – brainstorming and discussions become management by walking around and watercooler discussions – moments to be captured in the interstitial spaces between powerpoints and presentations and slidesets of excel spreadsheets.

And so you have design case studies which inform you that the removal of half an inch of spindle will save you 0.7% of your cost.

Can the black turtlenecks help the suits be nimble?

Much has already been said in the past 10 years about the value of design’s approach to problem solving and the insights it can bring to bear on business strategy and decision making. Very quickly, some key points that come to mind, are:

Comfort with ambiguity and chaos – we don’t know what we’ll find or what we’re going to make and we’re okay with this not knowing long enough to figure out what to do.

Experimental & Iterative – “Let’s see what works” is the unspoken yet universally understood mantra when there are enough design enthusiasts in the room. You don’t have to be guy who makes it to understand we might have to break it a few times to see what happens. Ask Dyson.

Flexible, Responsive, Nimble – The very nature of the design process, with its multiple iterations and lack of attachment to the one right answer implies that design teams tend to be flexible, nimble and responsive to results, data or shifts in the environment.

Willing to leap first and look later – which brings us to this last point since innovation, or even a new toothbrush design, often means there aren’t any citations or numbers available to point the way. The much maligned inarticulate concept sketches that emerge from the gut of an industrial designer (and especially award winning ones, like Lunar) often can’t justify their existence with metrics, measurements and excel forecast sheets though they could probably craft a well reasoned argument for a particular design direction.

Will this chaotic creativity be integrated into McKinsey’s offering and deliverables or will it be one more service to be discretely sold?

This is the make or break question. McKinsey’s current state of mind can be inferred from this snippet taken from their new book:

Our intuition has been formed by a set of experiences and ideas about how things worked during a time when changes were incremental and somewhat predictable. Globalization benefited the well established and well connected, opening up new markets with relative ease. Labor markets functioned quite reliably. Resource prices fell. But that’s not how things are working now—and it’s not how they are likely to work in the future. If we look at the world through a rearview mirror and make decisions on the basis of the intuition built on our experience, we could well be wrong. In the new world, executives, policy makers, and individuals all need to scrutinize their intuitions from first principles and boldly reset them if necessary. This is especially true for organizations that have enjoyed great success.

Does this questioning of the underpinnings of their traditional methods and conventional frameworks imply greater integration, in an effort to catch up with the leapfrogging of innovation as peterme would have it?

There is an urgent imperative to adjust to these new realities. Yet, for all the ingenuity, inventiveness, and imagination of the human race, we tend to be slow to adapt to change. There is a powerful human tendency to want the future to look much like the recent past. On these shoals, huge corporate vessels have repeatedly foundered. Revisiting our assumptions about the world we live in—and doing nothing—will leave many of us highly vulnerable. Gaining a clear-eyed perspective on how to negotiate the changing landscape will help us prepare to succeed.

Or, is this just an attempt to buy ‘cool’ more than a decade after the fact? Only time will tell.

 

Postscript: There’s another post here which needs to look at what this means for the design industry.

Labour saving African kitchen appliances: Market opportunity for product design and social innovation

Mama making ugali (nsima) over a 3 stone fire in Kisii, Kenya (Photo Credit: Niti Bhan)

After watching their Mamas spending hours over an open fire, sweating over the daily dish of ugali or nsima or fufu – the African kitchen’s favourite carbohydrate – inventors and innovators across the continent are taking the initiative to ease her burden with nifty, new kitchen appliances.

While culinary details differ from region to region – West Africa’s fufu is cassava based, while East Africa’s ugali is made of maize – the essential element in common is the time and effort involved in cooking the stiff, sticky, starchy staple.

The latest is from a young man in Malawi, who, after 3 years of tinkering that’s reminiscent of Dyson’s obsessive iteration, has successfully prototyped an nsima (or ugali) cooker. It makes the perfect maize porridge of the type you see Mama stirring in the photograph in just 36 unsupervised minutes.

Opening-the-nsima-cooker-600x450And that’s where he’s at with the product, which can also be started remotely by the ubiquitous mobile phone.

On the other end of the continent, however, Togolese electronics engineer Logou Minsob has gone much further with his award winning invention, the FouFouMix. It converts pre-cooked cassava into fufu in less than 10 minutes.

Fufu or foufou is made from pounded yam also known as cassava. The tuber is cooked and then pounded into a particular sticky consistency. This article from Ghana, whose myths claim it as a food for the gods, describes the entire back-breaking process taking many hours and many hands to get just right.

youmomentumslideThis visualization of the process is his older model – there’s already a new model in production and the factory is in full swing. Why I find it interesting however is due to its similarity with this visual of yet another indigenous invention, the idli maker – the idli is a South Indian steamed rice cake.

2As you can see, those wheels are made of granite – considered the only way to grind the soaked and fermented rice into the right consistency to be steamed in specially designed pans.

There’s a pattern of arduous consistency being translated into convenient time saving mechanisms.  Backbreaking labour is inspiring invention.

vintage-ad-kenmore-washing-machine This is exactly how the giants of home appliances began their global brands, through the invention of washing machines and dishwashers and vacuum cleaners – all the things that made life easier for the industrial era’s housewives. Domestic appliances revolutionized daily life, minimized the need for servants and opened up a world of learning and leisure for women in the industrialized world.

Yet, neither of these appliances are commonly found in superstores anywhere in the world, nor are they products that any of the big name brands would think to develop. While the Indian product is certainly meant for a regional niche, unlike a pressure cooker, say, the African devices newly being invented are not. Each have potential across their entire regions.

Indigenous product innovation and opportunity

And this potential new market opportunity goes beyond product innovation or category creation. Just like the labour saving devices of the previous century, these have the potential to truly liberate women from the hours spent on the most basic household chore – cooking the daily meal.

Unlike the social enterprise attempts to focus on health benefits of smokeless stoves or solar lamps, these have emerged organically from local inventors spotting an opportunity for genuine innovation. The demand certainly exists, and its one that is independent of the household’s income range.

There’s a whole new market opportunity to be tapped, by these and other such similar inventions, if only consumer brands would take a moment to notice.

The curious case of Google’s Beba Pay: a mobile payment app that users refuse to adopt

This week, news from Nairobi, that hotbed of mobile money innovation, opened up a Pandora’s box of reflections on payment plans, service design issues and the challenge of technology adoption in the mass markets of the African informal economy. None of these are ‘bad’ things in their own right, but taken together, they have resulted in a perfect storm for innovation planning.

Standard Digital published an article on the 23rd of February, titled “Matatu operators opposed BebaPay“, viz.,

Matatu operators are opposed to the BebaPay — a cashless payment system for commuters. The platform, launched last April by Equity Bank in conjunction with Google, is facing challenges.

A single sentence. Yet when parsed further, it contains many implications for what exactly has been happening in the informal transport sector in Kenya and the potential opportunities as well as possible repercussions for players in the mobile payments space.

The Background

Back in September 2013, the Kenyan government announced a ban on all cash payments for bus fares and this will go into effect on July 1st, 2014.  By January of this year, there were debates by reputed  bloggers on whether this move was even one that could conceivably be implemented realistically speaking, given that top down imposition of a technology has rarely prospered. Kachwanya said,

Yes cashless payment is much better and I personally have campaigned for it  for years. But you can’t say you outlaw cash payment. There things which are good and need to be done but the society needs to evolve before going out right into some of those things. At this point in time cashless payment will be great for some in Kenya, but unfortunately majority of Kenyans are still not ready for such drastic shift. To start with, this should be left for market forces to determine the time and speed of adopting cashless mode of payment and not some sort of directive from the Government.

This is a move to formalize a sector of the informal economy, and conceptually a worthy one where benefits to multiple stakeholders – transport business owners, banks, payment service providers, the tax authorities and the government – are immediate and obvious.  The real world challenges of attempting to bridge the formal and informal economies I will cover in a subsequent blogpost.

The Business Case 

This has the potential to become an extremely lucrative opportunity for service providers and application platform owners, not to mention the intermediary banks. The formalization of an entire industry, public transport, has meant a new scramble for this legislated pie. Safaricom, the service provider behind MPesa, didn’t need investment in developing new services and simply started signing up bus operators and here are the numbers on the potential ROI,

The Economic Survey 2013 values Kenya’s road passenger transport business, which is dominated by matatus, buses, motorcycles (boda bodas) and three-wheelers popularly known as tuk tuks, at Sh205 billion. This means that providers of electronic payment systems as demanded by the Safaricom and Equity Bank stand to potentially earn upwards of Sh2 billion annually assuming a transaction processing fee of one per cent for payments.

And for Google and Equity Bank, who launched their product 6 months earlier, the opportunity is manifold:

Equity Bank said it is targeting the more than 1.5 million Nairobi residents who use public transport daily.

“This system will help eliminate the cost and risk of handling cash. It will also help formalisation of the transport sector because as banks, we can now fund this sector without fear since we will have the financial status statements of the industry players at hand,” said Equity Bank CEO James Mwangi.

The public transport sector is a key economic driver whose growth could power the economy, but has been held back by the disorderly nature of the industry.

Furthermore, stakeholders such as the matatu owners, are said to be pleased with the aspect of the payment system directly depositing passenger fares into their bank accounts, bypassing the crew of the matatu, eliminating opportunity for fraud, theft, corruption and loss of income.

The Technology and Process

From the same article linked above, here are the relevant snippets about BebaPay:

Equity Bank has partnered with global IT giant Google to introduce a cashless commuter fare payment system that involves the use of pre-paid plastic cards to settle public transport bills. The partnership marks Google’s first introduction in Kenya of its Near Field Communication (NFC) technology, which it has been promoting in some developed economies.

The card-based system dubbed BebaPay is based on Google’s NFC technology, which runs on the Android mobile phone operating system. Users will swipe pre-paid cards against android-based smart phones [with a special app] that will be given to public transport customer attendants.

The cards, Mr Mwangi said, will be available free of charge at Equity Bank service agents, where they can also be loaded with money. The cards can also be reloaded with cash through the bank’s mobile banking platform, without incurring additional cost, or through M-Pesa Paybill.

Matatu owners will be able to access the money paid by commuters immediately, and can access records of their bank accounts in real time through a system interface, allowing them to track the inflows from their vehicles.

The public service vehicle operators will be required to have the BebaPay application on smart phones in order to accept payment from commuters. Commuters on their part will receive free SMS receipts once they make payments.

On the look of its, given the context of the regulatory changes in the operating environment, the lucrative opportunity for a successful service and the ease of use and accessibility of the technology, the solution seems like a no brainer. In fact, both MasterCard and Family Bank have announced the impending launches of their own solutions during this past month as well. A scramble in a teacup, one could say.

The Discussion

So why does the news that matatu operators are unhappy with the system continue to make me hesitate to state that its just a matter of time and people are always unhappy with change and everybody will settle down and stop complaining and get used to it by the time the deadline in July rolls around?

The original article quotes some matatu operators as saying that the system leaves them with no cash in hand at the end of the day, or that they end up in the lockup due to some unhappy cop. Additionally, some are ‘losing’ their android smartphones as a way to revert back to cash transactions.

These are all ‘bad’ things – I use the air quotes deliberately as I am not in the habit of making value judgements on observed and existing user behaviour, merely documenting them as elements of the operating environment in which this system must succeed – and from the matatu owner’s perspective, per the article, the new payment systems will eliminate them.

Matatu Owners Association chairman Simon Kimutai, speaking during the launch of the card in April 2013, said the cashless system would help investors in the industry to control their cash flows and reduce losses that they incur from theft by matatu crews.

Yet, in an aside to a tweet by Emrys Schoemaker requesting a comparison of news articles against reality, one does note how everyone seems to be saying the same key talking points. Whether its the public relations person quoted in the very first article, or other major stakeholders in the subsequent ones, the benefits stated are not only all sounding alike but none of them benefit either of the end users – the operators of the transport vehicles and the commuters.

Where is the user’s voice in this huge shift that will impact their daily bread? And what is the benefit to commuter?

This all too common oversight in traditional approaches to product and service innovation, based as they are on opportunities created by top down regulations, is what has been bothering me all day about the news. The implications throughout have been that because commuters will have no choice but to adopt this new system of payment, all the various providers have to do is throw their services out there and make a big fanfare around the launch whilst signing up as many routes as possible.

The reality, which Kachwanya highlights,

There things which are good and need to be done but the society needs to evolve before going out right into some of those things. At this point in time cashless payment will be great for some in Kenya, but unfortunately majority of Kenyans are still not ready for such drastic shift.

is that even while the public transport industry might be regulated into the formal economy using the technology of mobile payments, there is still the rest of the informal economy, on which the majority of the commuter’s depend upon for their income, to take into consideration. And this one, which is being regulated, is one of the main arteries pumping blood into the that system, as matatus transport those informal business women and men to their markets, transport goods and materials and act as a conduit to the hubbub of the hustle.

Should a Google be thinking of phasing in the payment plan, taking behavioural change and the economic operating environment of the majority of those who must use their service into account?

Have these prepaid commuter card services given a thought to the way cash flows in the informal economy and the purchasing patterns of those who make their living within it?

If the matatu operators are refusing to adopt these services, were any alternatives offered in the system to replace the benefits that the existing cash based offered them?

You instantly remove all flexibility from an ecosystem, leaving it rigid and non-negotiable viz.,

“With the system, you cannot be left with some cash at the end of the day to even buy milk since we depend on salary,” said Peter Mwangi, a conductor on Route 33.

Despite aggressive marketing, BebaPay is still struggling with few matatus embracing it. Normally, the conductors and drivers only remit the amount collected from people who board the matatus at initial departure points.

Flexibility* in time and money is the characteristic that distinguishes the informal economy from teh formal for those who manage on irregular income streams from a variety of sources, and this is also why the prepaid business model is adopted by 96% of all mobile phone users on the African continent.*

Given the stakeholders are the government, the banks, the transport owners and the mobile payment service providers, whose responsibility is it to understand the elements of the informal economy that make it work and seek to identify the touchpoints to bridge the gap between the formal and informal successfully?

When a service fails to be adopted, such as BebaPay, is it the fault of Google’s service design process or Equity Bank’s? Is the problem with marketing or is it with “corruption in the system”?

Or, as I see it, are those the easy answers to this problem and  a goodly dose of contextual understanding and user research to support the desk research and boardroom strategies could have offered insights on how to introduce formalization to a hitherto informal yet extremely critical industry?

I’ll explore both the issues from the point of view of the informal (or prepaid economy) and service design and innovation for these environments in subsequent posts.

*From my 5 years of user research documented here.

Reach Beyond: the CHI 25th Anniversary Conference in San Jose, May 2007

Today I realize that I had been struck dumb by the myriads of visions dancing in front of my eyes when I went up on stage to share the Closing Plenary at the CHI2007 conference back in San Jose, CA in the first week of May 2007.

May 3rd, 2007 in San Jose CA Photo Credit: anikarenina Flickr

Have 6 years passed so suddenly?

This seems like a timely moment to look back at where we are now on our journey towards an internetworked worldwide web of humanity, enabled by technology, encouraging trustful and cooperative commerce, connectivity and communication. 

/I feel like a broken record sometimes ;p

The pros and cons of Kenya’s role as technology pioneer and East African frontier market

Rural Kenyan schoolhouse, somewhere near Kisii, March 2012

Only two years have passed since the publication of the Emerging Africa series of articles for Dirk Knemeyer’s GoInvo blog starting in February 2011. Since then I’ve had a much closer look at Kenya’s current state of the art when it comes to internet diffusion, renewable energy and of course, the mobile platform technology. I spent most of the time from September 2011 to August 2012 in Kenya, immersing myself at the cutting edge of what tomorrow would bring for some of us.

The emerging global middle classes, that the OECD described as being very different from the middle class as understood in Europe, can however be said to be exemplified by the aspiring, ambitious Kenyan. Where everyone seeks to be the next president, and why not, they dream, after all, it was within one of Kenya’s grandsons.

Just a quick *ahem* Google search on technology and Kenya brings to light such delicacies as Eric Schmidt, Google’s own CEO, proclaiming Nairobi to be the next global tech hub (though I do wonder what it means that the visit is to Kenya after North Korea or are the trips alphabetically planned? ;p) and the groundbreaking ceremony for Konza high tech city on the outskirts of Nairobi. The scent of rain in the air that Will Mutua once sensed as he wrote A Quiet Storm is brewing on Afrinnovator’s About pages only 3 or so years ago has become the sounds of a torrential thundershower.

Very quickly, Kenya has become the bellweather of tech innovation for Sub Saharan Africa. Though now I’d like to discuss the challenges acting as market forces upon the East African region.  If we take Kenya as the path where technology will trend towards in 1-2 years time for East Africa, followed by 3 or more for the rest of Sub Sahara, what is the downside of this framework?

The only danger that I can see would be that the other countries in the region do not ape Kenya’s model without assessing which aspects and factors fit within their own cultures and which need adaptation for local needs and relevance.

Airtel Africa has already faced this problem after Bharti bought out Zain in 16 or 17 Sub Saharan countries. Not only does the Indian model not port over directly but each country really needs its own market creation strategy.

Segmentation of the vast and undifferentiated “next billion” is critical if we are to refine and improve our business models and market entry strategies. Unlike India and China where their “next billion” markets are in their own backyards, thus not entirely unfamiliar, Sub Saharan Africa’s vast emerging middle classes are unique creatures in their own right, but for some similarities in household financial management. After all, its not fluke that 96% of all the mobile subscriptions across the entire continent is pay as you go or prepaid. And where better than Kenya, home of critical mass MPesa, that allows for testing innovation at enterprise and social levels, but with the caveat that results are not really generalizable.

That’s the unpredictable aspect for multi-country plans based on just a local sampling here and there, unless they are in a unique situation like mobile phone manufacturers. Even for something as basic to the household as a solar lantern, business models themselves had to adapt to the local operating environment.

Kenya is easily the most competitive market in the region with a legion of savvy, informed and heavily networked afripolitans ready to voice their opinion on the world stage. Erik Hersman once wrote that if it works in Africa, it will work anywhere. The mobile operators of the EU are yet to figure this out but the one that does will create a whole new market.

Intel has taken the decision to launch their first smartphone called Yolo through an alliance with Safaricom while HCL Infosystems has brought in a range of Android tablets in the 10,000 Ksh price band. Will the Yolo do better than the IDEOS? Only time (duration of the battery ;p) will tell.

Innovations in transport business models across Europe

Spotted outside the Zuid Park Business Center in Amsterdam, this is a taxi stand cum charging station for electric vehicles. And its not the only one, as I saw the same taxis waiting at Schiphol airport. They were asking half the price of a regular taxi for the trip to the center of town.

In the same parking lot, I also noticed these Smart cars from the Car2Go service, a pay for use rental car service. A similar service is also becoming popular in Tallinn, Estonia where you can access the vehicle directly via your mobile phone. Rent instead of purchase business models are popping up all over. Below is the line of bicycles waiting for customers in Barcelona – the only downside here is that registration for this service is limited only to ID holding residents of the city.

Mind you, the urban pay as you use bicycle concept is not new, though ubiquitious but the cafe/bar below is certainly different even though it won’t get you anywhere ;p

Boundary spanners, hybrid teams and thinking innovatively

Hybrid Organizations as a Strategy for Supporting New Product Development is the title of a research paper by Alison Rieple, Adrian Haberberg, and Jon Gander of the University of Westminster. A summary of their findings:

This article focuses on strategic alliances, in which one firm (normally a large, multi-product corporation) obtains critical product-development resources, such as design or technological know-how, from an independent firm (normally a smaller and more specialized design consultancy or a technology developer). The two firms develop a fairly close relationship—perhaps only for the period of a specific assignment, but often over a longer period spanning several projects. These hybrid relationships are governed through informal means, such as unwritten agreements between key individuals, as much as through the more usual form of legal contracts.

Crucial to the success of a hybrid are “boundary-spanners.” These are members of the partner organizations who are able to move freely within both, translating the requirements of each into language and behavior that is acceptable to, and understandable by, the other. Trust between the senior managers who set up a hybrid in the first place, and the boundary spanners who maintain the relationship subsequently, is a critical factor. Trust lowers cost and raises productivity. Cooperation increases under conditions of trust, because with trust such costly barriers as formal contracts and detailed monitoring can be removed. The resulting less-formal specifications can also allow the parties to respond more rapidly to any changes in circumstances.

Hybrids protect the smaller firm from the stifling effects of the larger firm, while allowing its creative knowledge to be exploited. This happens through what is, in effect, a “semi-permeable membrane” in which certain features are blocked from movement while others are transferred.

Boundary-spanners, or bridgers, as they are sometimes described, are people who move between both organizations, translating the norms of each into language and behavior that are acceptable to, and understandable by, the other. There is almost no research on the role that boundary-spanners have in hybrid organizational structures, and yet they are likely to be one of the most important factors in the success of those structures. After all, new product development is a social-, collaborative-, and interaction- intensive process involving experimentation and negotiation over the lifecycle of the new product’s evolving form, bringing together knowledge, expertise, and technologies from different sources into a whole. Learning involves the negotiated resolution of constraints and generates new knowledge, which may then be embedded in the design of new technologies, products, or processes. Thus boundary-spanners need to be skilled first of all in the nuances of creating a new product.

A perfect example of successful boundary spanners can be found in an article written by Tom Mulhern and Dave Lathrop, of Conifer Research and Steelcase Inc., respectively. Their article,“Building and Tending Bridges: Rethinking How Consultants Support Change,” detailed the way in which design consultant Conifer Research used its methodological expertise in furniture and workspace design to improve Steelcase’s product innovation and organizational performance. Although Mulhern and Lathrop had not worked together before, they had “worked around each other” and knew a lot of the same people. They were both part of an established network of relationships and reputation, and this is likely to have facilitated the development of trust between the two organizational boundary-spanners.

Mulhern and Lathrop also epitomize the internal boundary-spanner role. Steelcase had previously gone out of its way to seek external perspectives from a “host of brilliant, innovative, but generally outside resources, with the outcome generally packaged as a ‘deliverable.’” But in order to achieve the impact they sought, Mulhern and Lathrop recognized that their job would be to inspire insiders to take up the cause. They described this process as developing “experience bridges.” The bridges they established linked people, information, and process and thereby “dramatically accelerated” progress through the development of shared understanding.

In conclusion, it seems as though a strategic alliance between a large corporation and a small creative house works effectively for product innovation, with the role of the boundary spanner being crucial to the success of this approach.

First published June 3 2005

Bridging the gap: boundary spanners in the informal economy

My recent diversion into exploring the increasing visibility of the informal economy in the developed world has been providing much food for thought on the perceived boundary between the formal and the informal. More so, than in Europe, does the need exist among the most economically challenged across the still developing world for ways and means the grassroots entrepreneurs can aspire to their economic ambitions.

This though then reminded me of some articles on the topic of boundary spanners – while they look specifically at different types of organizations, it struck me that the same concept could be used a lens by which to assess the ‘borderlands’ between the formal and the informal economy, especially in the developing world where a very significant proportion of the population earns a living from the unorganized sectors of society including subsistence farming.

What are some of the existing ‘bridges’ that I’ve seen?

Prepaid airtime for mobile phones
As the business model that made mobile phone ownership and usage viable, feasible and desirable for the mass majority in the developing world, this is the best known example of a transaction model that bridges the informal economy and the formal. Even subsistence farmers and daily wage labourers, living on a pittance, can purchase a service from some of the largest and most profitable companies in the world.

The flexibility inherent in this model transfers the control over time and money to the enduser, not imposing a payment amount and deadline like a monthly phone bill does.

Informal trade networks
Whether it is television sales in a rural African market or the initerant hawker with sachets of FMCG brands of consumables like coffee or dry cell batteries, when products are sourced from the erstwhile formal manufacturers in China or elsewhere, there is a natural bridge that spans the boundary between the two.

What are the touchpoints where this occurs and how and when it works is an entire area that needs a closer look in order to understand what works and why.

Small scale industrial (SSI) value chains
From agarbatti makers in rural India to artisans making crafts for sale in Kenya, this is the reverse situation from the above, yet again offering a bridge for cash flow between the formal and the informal. A well known example is the Amul brand of dairy products, which can be traced back to the cowherd in his village.

If a cooperative has reached formal status, does it naturally and automatically transfer that to each of the members or will the subsistence farmer or village entrepreneur still be considered an unseen member of the vast unorganized sector?

Essentially, it seems as though that at point point in the distribution network or supply chain, the locus of activity shifts emphasis from one to the other.  And at some point the red tape that separates the two begins to act as a barrier.  At least in much of the developing world, such as in India where close to 90% of those employed are classified to be working in the unorganized sector, this red tape comes with additional social and economic hurdles which seem too challenging to be crossed.

How then can the concept of boundary spanners help in this case? By framing them as those who go back and forth between the rigid and the flexible or as a semi-permeable membrane that can offer benefits to either side? This line of thinking will continue to be pursued.

Senegalese research on innovation processes in their informal ICT sector

I came across some excellent research by Dr Almamy Konte and Mariama Ndong of Senegal. While I’m sure the original working paper in French must be far better than this drafted English translation, their key points are nonetheless something to make us sit up and listen, particularly with regards to innovation in the informal economy.

Research has shown that the informal sector of ICT is a sector that has recently developed (since 2000). This sector has evolved to meet the specific needs of the ICT society. Coping mechanisms in this sector spend by taking into account the social and economic populations.

Taking into account these social realities is the basis innovations noted in the sector. These innovations (social innovation, organizational innovation, and marketing innovation) are a reflection of the Senegalese society and its organization. These innovations are based on values and thus Senegalese distributive logic versus the logic of profit prevails in the capitalist system. ~ from their abstract

They have found that the innovations observed among the informal ICT sector (covering all aspects of information and communication technology such as the repair and repurposing of old equipment, sales of new and refurbished including scratch cards and accessories etc) are those that have emerged in response to cultural and social needs inherent in Senegalese society and many of the core values of the businessmen reflect this localization.

A snippet from page 10:

In Senegal, the informal sector provides enormous potential and capacity for innovation that justifies his place in the Senegalese economy. The emphasis is on using knowledge rather than the production of knowledge. Innovation has always been viewed as a transgressive action individually or in groups to improve unsatisfactory situations, or at least solve problems.

However, innovation is not a simple problem solving but it contains within itself the seeds of creativity and originality, it acts on the margins of freedom of the actors when dealing with operations increasingly demanding control (CROS, 2007, 9). Any characteristic of the informal sector in Senegal who works in the “lack of structure”, but who is under enormous pressure and intense competition in the modern sector.

Innovation is meeting a need (real or potential), a market and workable solutions. It is important to link the needs to the requirements because the informal sector in Senegal follows the demand and adapts itself. It has a great capacity for innovation and responsiveness that the modern sector itself has not.

I have highlighted the sentences that stood out for me – while I had not been able to comprehensively address this topic as well as the authors have managed to do – it was back in the Autumn of 2010 that we’d conducted a field study among the jua kali workers in Kenya to take a closer look at innovation under conditions of scarcity among the informal manufacturers and fabricators based on the same logic.

That here, the informal sector’s responsiveness to customer needs was of a level entirely different to that of the formal industry – that their inventiveness and ingenuity was partly a demonstration of their ability to make and offer for sale exactly what their market wanted. There was little or no scope for errors in an environment of resource scarcity and irregular incomes. Products sold were incomes earned, a direct correlation that Konte and Ndong observed as well:

we try to show that the innovational act in this area is beyond the theories of innovation. Indeed, here the imaginative character of the actor is based on a sense of survival. With a highly developed competition, the human being must be creative and resourceful to get a place in the economic market.

While the PDF as a whole is a treasure trove on the informal ICT sector in Senegal and related literature, this last part from their sampling exercise did also stand out for me. It is the identification of the core values that helped increase their revenues, by the participants of the study, that is the informal ICT business owners:

Social values that contribute most to the increase in turnover of UPI are honesty (Jub ak ngor), courage (Diom), solidarity (ndimbaleunté) and hospitality (téranga). Indeed, the arguments advanced by respondents in the UPI to justify the choice of social values are numerous.

Honesty for these IPU (Informal Production Unit) respondents is the value that leads to success. It helps to establish trust, to secure and retain customers. An insured customer always comes back and you can even get other customers.

Courage is an essential value for a person who seeks a horizon. For them person must be selfless in order to survive in this business. It is not easy to get up early and be present every day for a long duration (12 years for some). Thus, only the courage and perseverance can help them to move forward.

Solidarity for them is a national value, Senegalese, because Senegalese feel affection for helping each other. It serves to reinforce the links in the sense that these UPI are family so everything happens in families. This solidarity is reflected in contributions, loans among themselves and participation in happy events as unfortunate. Furthermore, this solidarity allows IPU meets their limits by complementarily. Solidarity also fixes and maintains customers (make loans). This social value is often instilled in them their religious associations(Dahira).

Hospitality is value of any good Senegalese in their opinion; some of them had to receive it in their career. A welcome to the customer saves his confidence by putting them at ease and that sometimes happens with a smile, buying fruit drinks to customers. Therefore, a client welcomed, always returns.

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.