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Why it is time to look at design, human centric approaches and “embedded solution development”

A lot has been said and written about the scaling challenges of startups, especially those aiming to address underserved segments of society in emerging markets.[1] While the number of impact startups in ecosystems like India, Kenya or Indonesia are flourishing, the number of solutions that have scaled is still small. At the same time, the excitement for “Base of the Pyramid” innovations and business models has never been greater among investors, donor agencies, philanthropists and governments – with hardly any month passing in which not a new business plan competition or challenge is being launched to find business solutions that target low income population. This enthusiasm can be explained by

  • Growing importance given to private sector-led approaches to solve global challenges as outlined in the Sustainable Development Goals and the estimated business opportunity of USD 12 trillion (BSDC 2017)
  • Continued criticism and skepticism towards traditional approaches to addressing poverty, especially by stakeholders in developing and emerging markets[2]
  • Changing modalities of aid for donor agencies in many countries and emphasis of returnable capital strategies that give rise to investment approaches into business solutions
  • Increased corporate interest to develop solutions and business models for ‘base of the pyramid’ mass markets and interest to collaborate with more agile innovators to tap into new market opportunities

Against rising expectations, the sector must prove its ability to generate scalable solutions, which is why increased emphasis is given on creating an ecosystem that nurtures and supports impact startups and addresses scaling barriers. Commonly identified scaling barriers on various levels include the following:

  • First, scaling challenges that occur on the level of the founder & entrepreneur, his managerial capabilities, ability to build a strong leadership team, scale his vision and lead his organization towards growth
  • Second, scaling challenges that occur on the level of the organization, its business model as well as financial capital and non-financial capital such as team, culture, and capabilities to deliver
  • Third, scaling challenges that occur on the level of the industry or sector, where markets don’t function, customer awareness is limited, or distribution channels are missing
  • Fourth, scaling challenges to do with government laws and regulations, policies and macroeconomic framework conditions

Most attention is given to capital as the major scaling barrier for impact ventures, with most ecosystem support going into providing incubation, investment readiness and capital support. Lesser attention is given to the other scaling barriers, such as leadership, talent and organizational health. Least attention is given to the question why the intended solutions don’t work.

Re-look at scaling-challenges

Design Thinking and human centric approaches have become state-of the art approaches in the business mainstream, where an increasing number of corporates like GE or IBM are embracing principles like empathy, prototyping, and agility in solution development processes.[3] These principles are increasingly being applied to solve so called ‘wicked problems’, complex, intangible issues – for example how different customers experience a service.

In recent years, Acumen and Ideo.org have played a critical role in bringing Human Centric Design into the context of startups and social innovation by helping to build capabilities. However, design thinking, human centric and generative approaches involve principles such as empathy and curiosity that have a much broader potential to help address scaling barriers and to

  1. Contribute to leadership development of founders and senior management. Innovation, creativity and organizational culture is driven from the top. Great leaders find great teams, empower them to find innovative solutions and create an environment in which teams can cultivate their creative energies and grow their potential. Human-centric approaches can help founders to build organizational capacity to create and execute new ideas, but also to develop strategies that help to thrive in today’s increasingly volatile world.[4] An example of an institution aiming to strengthen creative leadership of startup founders is Amani Institute, which helps founders in Kenya and Brazil through a range of creative leadership skills.
  2. Strengthen the organization’s ability to make sense of context, market, consumers, and needs that are to be addressed, the behavioral change that is to be triggered and to identify the appropriate target segment for their solution. Human centric approaches and participatory design help organizations to understand the desirability of their solutions and to co-create products and services together with the end-user. Design companies like Ideo have spearheaded this service offering for corporates, but there is a vacuum of service providers offering affordable design support to startups and impact ventures.
  3. Identify the solution that best fits industry and sector demands through helping understand levers for influencing user behavior through the wider system. Human-centric approaches bring in the human perspective to complex systems. They help to create customer, producer or channel awareness, critical for creating markets. Traditional development sector players like USAID, GIZ, DFID or UN agencies have in the past led interventions around designing systemic change interventions. Initiatives such as GIZ’s Labs of Tomorrow show how design thinking is integrated to identify solutions to nudge whole systems and value chains.
  4. Reimagine government and policy framing by leveraging human centric approaches and system thinking to develop more holistic and cohesive policy interventions. Denmark is on the forefront to use human centric approaches in policy design, with Mindlab spearheading initiatives to help public sector to design services and make legislative changes.

“Embedded solutioning” – Towards a holistic approach to creating scalable high impact solutions

It is time for business, governments, and other stakeholders in developing and emerging economies like India to broaden the methodology box for developing high impact solutions that can scale. The job is not done by applying design thinking as a linear blueprint process and ‘by-the-book’ methodology.

Instead, we need a solution development that truly makes sense of the “embeddedness” of economic action in social contexts, structures and networks, but also class and power relations, institutions, and culture.[5] Economies are shaped by these factors and shape how economic actors including consumers, producers, channel partners and other intermediaries behave in the market place:

  • Structural embeddedness affects users’ ability to access resources such as money or knowledge; networks and “social capital” affects ability of users to act.
  • Cognitive embeddedness influences how people process information around us.
  • Cultural embeddedness shapes how people conceive, define and rationalize decisions, categories, assumptions, routines and rituals
  • Institutional embeddedness includes the rules and roles that shape the cost of action and set categories of how people think and interpret their social worlds; they are produced by and reproduce structures and culture
  • Political Embeddedness refers to the relations and motives of power that influence distribution of resources

Making sense of the market context hence requires a deep understanding of low income consumers and their social worlds. Whether we call it design thinking, human centric approaches or generative research, what is needed is a truly immersive approach to solution development that is able to make sense of the embeddedness of economic action. Building on Intellecap’s 15 years of working with entrepreneurs and innovators in low income environments, I am leading a team that is working towards a holistic approach to developing scalable high impact solutions, combining skills from business and strategy advisory with ethnographic research, empathy, systems thinking and participatory design approaches and prototyping. We help leaders, entrepreneurs and their teams to make sense of the contexts in which they are operating and develop solutions that take the complexities of low income markets into account. Now it is my task to work with partners to understand that human centric design cannot be achieved through a series of three day workshops and that there is no short-cut to an immersive and participatory approach.

On this blog, I will share some of my personal reflections on this journey. This is a personal record of working 15 years as an anthropologist with innovators, startups, corporates, development organizations and governments to develop scalable high impact solutions in developing and emerging economies in Asia and Africa. The first article touched on a lot of topics and I will dive deeper into many of the issues mentioned here in following posts, providing case studies, discussing methodologies, sharing experiences of what worked and what didn’t. The core ethos of this blog is to combine knowledge, information, learnings, and inspiration for startup founders, businesses and other organizations looking for the human dimension in high impact solution development. The intent is to bring in a cross-disciplinary perspective, inspired by anthropology, design, psychology and behavioral science, organizational theory and more. If you find this interesting and want to engage in a conversation, drop me a line Stefanie.bauer.de@gmail.com.

[1] See for example FSG 2014: Beyond the Pioneer

[2] Among the most popular critics William Easterly 2014: The Tyranny of the Experts and Dambisa Moyo 2009: Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa

[3] For more see here Jon Kolko 2015: Design Thinking comes of age, HBR Sept 2015

[4] Tim Brown 2016: Leaders can turn Creativity into Competitive Advantage, HBR November 2016

[5] See Granovetter 1985: Economic Action and Social Structure. The Problem of Embeddedness. American Journal of Sociology. Volume 91, Issue 3, p. 481 – 510