The value chain in transition

My team and I recently conducted fieldwork in Kenya. The purpose of our stay was to gain a deeper understanding of the use and adoption of information technologies amongst farmers. We aimed to map out the agricultural value chain, so as to grasp the structures and systems of information exchange which underpin its workings.

When we were mapping out the value chain we came to an important realization. The patterns that appeared in our maps did not in any way resemble what we learn from the text books. In our text books we are presented orderly abstracted value chain setups, also referred to as governance configurations in wordy terms.

When mapping out the true system in Kenya, we produced something that appears a lot more messy and complex than the text book would lead us to expect. Kenya appears to have a very decentralized distribution landscape, where there are three types of zones that trade amongst each other, net demand, net supply, and the urban zones. Connections between people in each of these zones are flexible, and reach out to a variety of other connections in other (including more remote) zones.

A market is not just a place where the local buyer meets the local seller. Rather, it is a place where people come in from all over, and where grading, (re)packaging, distribution, forwarding, input purchase, as well as grocery and clothes shopping etc, all happen. The market is a multiple purpose, flexible node in a web of human interaction and exchange of goods, rather than a shackle in the value chain. The picture below captures but a glimpse of this complexity.

Kagio Market

Interestingly we not only encountered this pattern of complexity in Kenya. We also saw it in the context of Maharashtra in India, where we ran a parallel inquiry. It thus appears that we can’t apply the model of a value chain to capture these contexts. The classic, orderly pattern of exchange in value chain form, based on a hierarchy in power residing downstream, has been disrupted.

I was really surprised by the observation, but if you think of it, this change is only the natural result of the ubiquity of (mobile) communication technology, which is expanding the possibilities of coordination for the individual. No longer does the power to coordinate reside exclusively with the downstream players. Small brokers, and farmers now have tools available that can increase their reach to the market, bypassing incumbent trade channels if they prove to be a barrier or insufficient. And, they’re not afraid to use them! New technology has put the landscape in transition, and we now have to tap into a value web to get ourselves organized on the market, rather than a value chain. The prevalent notion of a value chain is a relic from a bygone era of industrial organization.

——————

This is the sixth piece in a continuing series of posts (starting here) on what the role of human-centered design could be in development work. I’m working on this together with Niti Bhan, who will also be posting her observations at her Perspective blog. Posts are categorized as VCD

Niches and mainstreams in our food system

Whenever I attend gatherings in my line of work that address the question how to change the food system for the better, I’m confronted with the recurring pattern of a split in the discussion between niches, developing alternative propositions, and the mainstream, working on improvement of the existing ones. Entrepreneurs that find the space to tinker in a niche are looked upon by the mainstream with slight amusement and bemusement at just how alien that class of innovation is to them. Real change is achieved by a big system making big shifts. Not by gullible projects with cuddly eccentrics, right?

What I would like to point out here is that mainstream forgets itself in this stance. In the mainstream everybody is a good manager, we work by certain protocol towards certain expected outcomes. Everybody participates according to those values. A nested system network, where assembly of the food components fit snuggly like a Matryoshka doll. The emphasis is on execution and optimization of the known business model, not the search for alternative ones. Over longer periods of environmental constants they are unbeatable: a big, efficient, influential, even dominating community.

But when key supports in the business environment start changing, then such value systems become vulnerable. And change is happening, and the rate of it happening is accelerating; whether mainstream likes it or not. The graph below depicts just how fast new technologies diffuse through society. This alone is change enough to radically alter the landscape in which business is done.

Adoption_diffusion_technology

The real question under such turbulence is whether the mainstream is still delivering what the customer wants. Is it still in tune with the customer, and with the empowerment that technological change is providing her? Or is it rather suppressing pressures on the system, for instance, controlling for animal welfare issues by getting activists to shut up, or by downplaying horse meat in beef lasagna is an anomaly? Is the mainstream still in tune? Or, is it practicing elitist technocratic infantilization of the customer, who currently has no real alternative on how to purchase food products?

The reality of our environmental dynamics, combined with the attitude of “how everybody is a good manager”, can now take a whole system down the drain with the same efficiency and speed. One day you might be member of a seemingly robust food security delivery mechanism. The next day, some niche-guy will have figured out how to hack a whole market through empowering customer choice, by actually delivering what costumers really prefer for their basic food requirements. And, trust me, customers simply don’t care if that implies leaving behind a whole industry for another one that provides a better alternative.

My position is that members of the mainstream food network need to revalue the niche. Revaluing the niche, means learning about how what the niche is doing, might apply to the mainstream, instead of doing the opposite. The niche is likely to provide an insanely rich source of actionable customer insights, that the monolith execution network will never discover.

The dichotomy in our discussion is dangerously artificial. It is created by fear, leading to scathing of the tinkerers, with complete disregard of the fact that we’re dealing with competing business organisms in the same ecosystem. What we should have is inspiration leading to the embrace, crediting the tinkerer with the insights they can provide about what factually works and what doesn’t under new circumstances. And, it all starts by treating our tinkerers in the food system in a more inclusive way, not exclusive. As a well known Blankian phrase in Silicon Valley goes:

What do we call a failed entrepreneur? Experienced!

I want to see more of that attitude in food and agriculture.