Value proposition, and value delivery in emerging markets through trust

Life is hard for people with low and irregular income streams in developing countries. Under these circumstances, opportunity cost for your time and money weighs in heavily. The implications of losing time, or losing money usually mean that you are not able to buy food for the day, or worse even that you need to somehow expand your debt to be able to survive. With such a burden of consequences, you can imagine that the prevalent uncertainty fundamentally influences the way in which this demographic makes its choices.

One of the affected key factors in making a choice on spending time and money, or supporting choice making, is trust. Just taking someone’s word that something will turn out well is probably not a good bet. This is because the uncertainty of something not turning out as expected comes fully at your own expense. This burden won’t be shared. Hence trust is hard to come by.

Lack of trust has huge implications for delivering value in the markets we’re discussing. Products or services should be sure to deliver exactly on the promised value in line with what the customer would expect. If they don’t, then you won’t be a business. Companies seeking to target these customers need to put a lot of effort in to mitigate uncertainty to the consequences of the customer’s choice, way more than we’re used to in predictable developed countries.

Trust, what is it good for?
An example of a successful business, which leverages trust is the Baricho Farmers Store in Karatina, Kenya (One stop supermarket for farmers), which I recently visited. The lady running the store told me that when she gets new varieties of seed, she will test them on her own farm herself first.

Baricho Farmers Store

The Baricho Farmers Store in Karatina, Kenya

An example of this test and its result is the picture below, where she displays a laminated picture of the Faida Seeds maize plant variety. In the back you see the maize plant’s corn cobs hanging upside down from the shelf. Farmers can have a look for themselves and get assurance that they will be getting what they pay for: the cobs can really get that big! This store was reputed as one of the best running agro-input businesses in the area, which is no wonder, given the various sources for creating assurance and trust on display

 Faida Seeds

Corn cobs on display of new varieties of seed in the store

So what would we need to take into consideration when creating trust on delivering value as effectively as the Baricho Farmers Store?

Radical usability and applicability are important. These ensure that customers get what they pay for, which in itself provides for a basis of trust. Under the assurance of usability and applicability, customers might even pay a premium if a really relevant problem is solved (again the Farmers Store is a case in point for this; not the cheapest, but it is the best).

But usability, and applicability are product factors, and thus not the only factors to take into account for value delivery. My conjecture is that successful, widely adopted products or services in emerging markets, also offer the customer multiple sources for verification of a product’s potential value: multiple testing points to assure that customers will be getting what they pay for. From a collection of my observations during my last field visit in Kenya, like the Farmers Store, I would suggest that providing multiple sources of verification implies that:

  • the point of sale is personal, allowing for two-way interaction in communication
  • reputation (accumulated trust) is backing the transaction, like a (personal) brand
  • the customer has access to, and is informed through independent and ubiquitous -visual/audio- information resources

If you provide these sources of verification, and customers get what they pay for, then you’re effectively creating trust. In the worst case your customers will be able to discuss defective products with neighbors as a check (“Did you see the picture and the cobs in the store?”,  “How are those seeds working out for you?”, etc) These sources of verification will thus ensure that lemons are sorted from the market as swiftly as possible. Under such levels of verification, the resulting trust might even bear witness to customers knowingly forgoing a meal to acquire the value of your product or service.

Conclusion
Lack of trust and its origin is rarely recognized enough when marketing products and services to people with irregular income streams, living under conditions of uncertainty. I would conjecture even that lack of exhibiting trust is the factor which most often causes failure in value delivery in emerging markets, even if the proposition itself, in essence, would be perfect.

What this means for organizations like (social venture) startups, multinational corporations, and development projects, seeking for a position with the lower income brackets in emerging markets, is that they need to design new business models that convey trust by allowing customers to easily verify a product’s value through multiple channels. Positive intent alone will not suffice.

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This is the fifth 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

Embracing ambiguity

In our times of markets on the move, and tectonic shifts of power in the world, project organization, whether business, development or otherwise, is increasingly confronted with uncertainty. The problem with environmental ambiguity in organization is that there is often not enough information available upfront, inside the building, to determine what needs to be done and how to do it. Most organizations don’t have a solution to deal with this constraint to decision making.

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.

Gone are the days that we could do this….

Adoption requires a sniff of self-evidence
Instead of defining for the world what the menu of choice is and the relative benefits of choice outcomes are, we are arriving to a realization that behavioral change can better be evoked by understanding problems. This understanding can be used to create solutions that are so superior to the existing ones applied, that they would be adopted by free will, or want even. We would for example prefer to give our sick relative a call over the mobile phone to ask if our visit would be appreciated, rather than walking 10 miles to ask the same; one type of behavior and spending time is substituted by another over-convincingly more optimal alternative.

The capacities of humans to design convincing superior solutions is age-old. This was documented succinctly by Adam Smith, with his example of the boy and the steam engine valve.

“In the first fire engines, a boy was constantly employed to open and shut alternatively the communication between the boiler and the cylinder, according as the piston either ascended or descended. One of those boys, who loved to play with his companions observed that, by tying a string from the handle of the valve which opened this communication to another part of the machine, the valve would open and shut without his assistance, and leave him at liberty to divert himself with his play-fellows. One of the greatest improvements that has been upon this machine, since it was first invented, was in this manner of discovery of a boy who wanted to save his own labour”

-Chapter 1: Division of Labour

Immersion and reducing barriers to adoption
I find Smith’a example so intriguing because it is an example of innovation adoption in pure form: a self-invented solution for a self-identified problem. Organization differs from the example above, because it has more distance to the people who own the problems, and are intended to adopt a solution. Organization’s challenge, rather, is to impose a crafted solution to its intended users from at a distance. This demands a conscious act to deal with this constraint of distance.

Immersion is practiced (most often by designers and entrepreneurs) to do just that. 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. (just think if you were the first and only person on earth to see a shooting star, and waking up your friend in the middle of the night to watch the sky)

There! You see it?

Organization as it currently is, has an over-disposition to objectivity, and thereby tends to overlook the important value of immersion plainly due to its subjective nature. Immersion is otherworldly for the safe domain of objectivity and verifiable decision making under more certain conditions. It is also abhorred even by knowledge resources that could support organization to improve their function, like science and the mainstream of business or public administration methods.

So rather than searching for new patterns to come to grips with change and uncertainty, organization defaults to existing decision making frameworks, and increased levels of detail in recording and analyzing data to make decisions. But with increased amounts of data and social environment volatility, detail has become such an over-supplied commodity that it’s actually losing its relevance as a basis for decision making. So, it’s not lack of detail that causes ambiguity, but rather the absence actionable insights which have become scarce in circumstances of change.

In conclusion
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. The boy who invented the piston-to-lever attachment is spending his time developing the electric car, or training to become a top-class football player, and needs help in getting there. Using immersion to arrive at new insights is gaining market value, and needs to be adopted in project planning to keep the organization relevant to supply the world with solutions that relate to actual, current, problems.

Take-aways:

  • There is much uncertainty in the operating environment of organizations like business and government.
  • People can always be convinced to change behavior through superior design solutions to their actual problems
  • Superior solutions stem from understanding behavioral patterns that reveal actionable insights, not from recording and analyzing data in more detail.
  • It is when patterns start to appear frequently, or are replicated, that they become objective, and verifiable by others, hence usable by organization
  • Immersion is an invaluable act to identify such patterns and mitigate uncertainty in decisionmaking for organizations. Deal with it.

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This is the second 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 will be categorized appropriately in the coming time