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.

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

 

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

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.

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.