On not getting by in the sharing economy

A very good,and very long, article by Sarah Kessler in FastCompany examined the realities of doing tasks for TaskRabbit, Fiverr, Uber etc. She found that making a living in the “gig-economy” is not easy at all.

For 4 weeks she tried to make money by using all the sharing economy services she could – from walking dogs, tutoring kids, and delivering packages to wrapping gifts.

It’s an excellent piece of journalism.

Along the way she experienced a lot of weird and worrying situation and she got a first hand view of what life is like when you surviving from one small gig to another.

Anyone interested in the collaborative economy should be aware that there is a very harsh competetive economy alongside the warm and friendly sharing of resources among people who have something to spare.

Here are a couple of quotes from Sarah Kesslers article, Pixel and Dimed – on (not) getting byin the sharing economy:

“Because of the way TaskRabbit works, job posters can easily find the people willing to work for the least amount of money. A user with the screen-name BaubleBar (the name of an online jewelry vendor that has raised $6 million to date) creates a task for $40. "We need 10 TaskRabbits to help us pack and check the quality of merchandise, and add labels to merchandise tags," it says. "PLEASE NOTE: We cannot allow frequent cell phone use during this task, so if you need to be on your phone often, this is not the task for you. This job will take approximately 8 hours. From 8am to 4pm."

“Setting up a full day of gigs--or even a gig in a target free period--isn't easy, and it often takes as much effort as applying for a regular economy job. I get rejected from about five tasks for every one I win. Sometimes I hold spots in my calendar that I could fill with other tasks for jobs I've bid on but haven't heard from. I'm essentially competing for every hour of my employment.

Even if I land a gig with a decent hourly wage, it typically looks like nothing once I factor in the time spent looking for jobs and commuting between them. Despite the oft-repeated promise of the gig economy, in fact I have no control over when I work, because the only way to get gigs is to be available sporadically and often without much notice. For example, the only people who respond to my DogVacay profile want a dog sitter over Christmas, when I am also out of town”.

“I have come to realize that one of the cruel ironies of the gig economy is that even though it's geared almost exclusively to serve urban markets, the kind of densely packed cities where space is at a premium, one needs a car to have a shot at the cream of the work that's available. Even worse, the universe of gig economy startups is mostly relying on young people and others who are underemployed--exactly the people whom are least likely to be able to afford a car in a city. Or have an extra bedroom. Or a parking space. Or designer clothes. Or handyman skills”.

Indlæg om mobile banking og nøjsomme løsninger i DR2 Dagen

DR2 Dagen havde igår en sektion om brugen af mobile banking, og jeg var en tur inde og fortælle om brugen af mobiler i U-lande, og om forskellen på almindelig vestlig innovation og nøjsomme løsninger ala MPESA.
Indslaget starter 38:35 minutter inde i udsendelsen med et interview med direktøren for centralbanken i BanglaDesh, så kommer jeg på ved 45:20.

Datsun is too cheap for India

It seems that Nissan's attempt to create a low cost car for emerging markets under the Datsun brand name is not succeeding. According to Business week, Nissan is making the same mistake that Tata motors did with the Nano; marketing a car as cheap, without realizing that most aspiring people don't want to be seen as driving cheap. 
The point seems to be that affordability is not enough, the product needs to be attractive, too. 

Business week reports: 
"In India, where the Datsun Go went on sale on March 19, deliveries through August totaled 9,557, according to the Society of Indian Automobile Manufacturers. By comparison, Maruti Suzuki India (MSIL:IN), the country’s top-selling carmaker, sells just as many of its similarly priced Alto hatchbacks every couple of weeks. Only 607 Datsuns were sold in July, falling 77 percent from their peak in April and dipping below sales of Tata’s Nano, though they rebounded and exceeded Nano sales in August, according to SIAM data."

Waves innovation exhibition opens in Paris - 5 currents of the new economy

The Waves innovation exhibition has opened in La Villette in Paris. It presents 5 currents, which are changing the economy and opening up new types of value creation: Sharing, co-creation, the maker movement, Social enterprise and the circular economy – in my opinion, a set of approaches, which are hard NOT to see as parts of the normal future economy. It's exactly the topic of the We-economy project here in Denmark.

The main content are 20 case-stories from around the world, illustrated with wonderful photographic artwork. The exhibition is housed in an elegant and organic purpose-built 500 square meter pavilion.

For me it has been a great pleasure to work with the team at BNP, to contribute ideas, research and texts – and the result is fabulous, IMHO!

The exhibition will stay in Paris till October 5, and will then travel on around the world, and in France. There is a comprehensive website for the exhibition as well. 

Sharing city Seoul - a good overview

An article from the Shareable website gives a good overview of the many initiatives in the ambitious strategy to make Seoul a sharing city. Amazing how much is going on!

Here's a quote: 

"Taken together, it's obvious there's a pressing need to reinvent the city. Seoul is certainly not the only city with these issues. It is, however, fertile ground for the sharing economy to take root. Seoul has built world-class IT and civic infrastructure; it has the highest fiber optic broadband penetration and fastest Internet in the world; it offers free WiFi service in all outdoor spaces; and has the highest smartphone penetration rate in the world at over 67 percent. It also has one of the best subway systems, also wired for high speed Internet.

Using this infrastructure, in addition to strong public-private partnerships, the Sharing City project is working to connect people to sharing services and each other, recover a sense of trust and community, reduce waste and over-consumption, and activate the local economy".

Can sharing expand the economy?

Interesting observation in an interview with Arjun Sundararajan: 

"...when a technological change comes along that makes “production” more efficient, it eventually grows the economy because it creates new opportunities.

The mortgage example is exactly that. It’s more likely that I’ll be able to afford a larger space if I can explicitly factor in the revenue stream that I’ll get from renting it out during the ten days that I’m traveling.  And that is expansive for the economy, not recessionary, because I’m probably going to get more space. People are going to use that space when I’m not there, and that generates commercial activity as well".

Robert Reich on Inequality for all

Robert Reich continues to deliver some of the most lucid analysis of the economic development. In this funny and thought provoking speech in the Commonwealth club of California he discusses the theme of his recent film, Inequality for all.
You ought to hear it. 

CEO of GE Healthcare discusses the need for frugal innovation

The CEO of GE division for healthcare, John Dineen, gave a very interesting keynote speech at the recent World Innovation Summit for Healthcare in Qatar. You can see the videorecording at the WISH website.

Among his observations were that GE traditionally has focused on taking their devices to the next level technically. But now they need to be as concerned about bringing costs down and making their products accessable in emerging markets. The coming years will be about Quality, cost and access, Dineen said. He also said that GE needs to be both clinically and economically relevant.

An example of a lower cost product from GE is a new orthopaedic MR scanner, which only scans limbs, so patients are not completely inserted in the scanner. It’s much more compact, less intimidating to the patients, and the price is $500.000 – rather than $2 million for a full blown MR scanner.

Another example is the smartphone sized V-scan, a battery driven, handheld and extremely easy to operate scanner, which sells for around 8.000 euros. It’s sold to doctors that do house calls in Japan, as well as to midwives working in African villages.

John Dineen observed, that selling to emerging markets means that GE needs to change their business model from simply selling devices, to taking part in creating an entire local eco-system of trained personal, maintenance, electrical charging etc.

No growth for them: 40% of Britons are falling behind

The Economist published an informative article, describing how any economic recovery so far has only benefited the wealthy. Wages have barely risen since 2000, but living costs are 35% higher.
52% of Britons are struggling to keep up with the bills. 
Makes you wonder how far the polarization of income will go, before the trend reverses?

Frugal solutions presention at AOM 2013 in Orlando

I presented the frugal solutions project at the Academy of Management annual conference in Orlando. The presentation focused on why frugal innovation is highly relevant for Western markets.
You can see the slides and listen to the 15 minute presentation here.

Datsun - the un-Nano

Nissan has launched their low cost car made for India and other emerging markets using the old Datsun brand. It's an entry level car, but the positioning is not about getting a cheap car. 
There's not a word about low prices. Instead its about "the risers".

Quote from the Datsun website: 
"The return of Datsun didn't start with what cars to launch, but with the people, the Risers. Young Risers in high-growth markets who are ahead of the curve. Waiting for that one chance that will propel his career and future. For the young risers, mobility is both physical and social access to opportunities."

Bottom-up tweaking – or top-down defeaturing?

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Here is an article from the most recent newsletter of the Suitable for Growth project at the Universe Foundation. You can read the rest of the newsletter here. 

Is it possible to defeature a product created for a developed world market – a top-down approach – or should you start bottom up? Or put in another way: Is it in fact possible to change a high-end product solution to a mid-market product solution?

This is a critical question when a Danish company sets out to target the Chinese mid-market.

Western companies are trying to lower their prices in order to compete in the Chinese mid-market. Chinese companies are trying to raise the quality of their products to compete with imported brands. The prices and quality of Western and Chinese products are converging – but they arrived at the same level from different directions.

A western company that wishes to adapt or change its existing product to make it better suited for a lower cost market – in emerging markets or in the West – often finds this difficult, painful and not sufficient to lower prices substantially.

“Transplanting” a western product 1:1 for production in China can give some savings due to lower cost of manual labor, etc., but often not enough to compete in the local mid-market.

Defeaturing the product by removing specific nice-to-have features and functionalities can bring down costs further, but likely still not enough for the product to become competitive in the Chinese mid-market, where prices are typically 50% lower than in the high-end segment.

One reason could be that the original product and the entire value chain, which surrounds it, are ”native” high end. The functionality, the quality, the supply chain, the marketing, and the development efforts are all rooted in the Western culture and economy, and the various elements have been optimized as a system for this context.

Individual elements may not be easily removed, and even if they are, the result may not affect costs substantially.

What’s really needed is a radical re-engineering of the product and the processes to eliminate the things that don’t add value, while keeping or even adding functionalities and features that customers are willing to pay for.

However, such radical cost innovation can be rather difficult to execute on its own for a Danish SME, as it can be costly and it also challenges the organizational mindset and culture.

Starting from bottom instead

Re-designing an existing product, which was originally developed for the Western market and for manufacturing in the West can be described as a “top-down” product development – and as described, this approach tends to be both difficult and insuffiicient for reaching the Chinese mid-market.

Instead, companies might consider using a “bottom up” approach – as one of the participants in the SfG project did.

They found a local manufacturer, which had developed a solution for matching a certain set of functions and a level of quality, which could be suitable for the particular low-end customers that the company was trying to target.

Then the company added a number of tweaks that raised the functionality to a level where the product had positive differences compared to competitors, and which added a certain feel and functionality that lifted it beyond being merely ”good enough” to a level where the company felt comfortable lending their name to it.

This allowed them to offer a new line of products at 50% of the price of their high-end products.

One could call this approach ”tweaking from the bottom”.  It offers some interesting potential advantages over a ”defeaturing from the top” strategy.

Just like a product developed in the West is ”native” high-end, a Chinese product will be ”native” low cost, in the sense that the way it was developed, the components used and the manufacturing process is grounded in Chinese circumstances. Likewise, the features it offers and its level of quality are based on the local producers’ knowledge of the market.

The bottom up approach makes full use of this local knowledge.

Doing what you are best at

One of the greatest obstacles to the top-down defeaturing is culture.

Western engineers may not have the inclination to take away features and essentially making a great product less great. Also, they don’t likely have the insights to prioritize on behalf of customers in a low-cost market.

In contrast, the bottom-up tweaking approach gives the Western engineers a chance to do what they are best at: developing solutions that are better. By tweaking something that is not quite up to Western standard and adding a few selected touches make a real difference.

For an SME company, it is demanding and risky to develop a completely new solution that is radical enough to create the cost reductions that are needed to compete in the Chinese mid-market. Indeed, radical innovation is in itself a very western and high-end approach, compared to the incremental, market driven way, Chinese companies typically use.

By starting from an existing, locally developed solution, the investment in innovation from the SME is limited to the tweaking of the product – and for this, the company can typically draw on knowledge from its high-end products.

This also indicates that as markets, production and development become more globalized, Danish engineers and designers could find an important role – and employment - specifically focusing on tweaking and improving low-cost designs to lift them beyond being merely “good enough”..  

5 approaches to cost reduction

1)      Local production in China: Manufacturing of the same product 1:1. cost reduction mainly achieved through reduction in labor costs, transportation costs and import tax

2)      Defeaturing: Removing nice-to-have features and functionality. Costs reduction achieved through lower product (material) and process costs.

3)      Cost innovation: Re-engineering the product and processes. More fundamental changes of product and manufacturing processes adapted to the local situation. Costs reduction achieved through lower product (material) and process costs.

4)      Radical innovation: Start from scratch. Clean slate development of new product, based on deep knowledge and insights into customers need and local manufacturing processes and competences.

5)        Tweaking bottom up. Building on the inherent low cost of a Chinese designed product, and adding value by tweaking up some features to make the product stand out in the market.

Fremtidens innovation: fra Dubai eller Mumbai?

Kontrasten kan dårligt blive større. At tage fra mylderet i Mumbai’s største slumkvarter Dharavi til de funklende skyskrabere og endeløse shoppingcentre i Dubai er som at bevæge sig til en helt anden virkelighed – men der er under to en halv times flyvning.

Jeg prøvede turen for nylig. Som sidste punkt på programmet af nogle ugers research i Indien, hyrede jeg en lokal guide til at tage mig på en lang vandretur rundt i Dharavi slummen. Der bor over en million mennesker på under to kvadratkilometer. Der er mangel på vand, på toiletter, på plads – der er i det hele taget mangel. I nogle kvarterer bor folk ubegribeligt tæt, man dykker ind i en labyrint af mørke gyder, hvor man kun akkurat kan passere hinanden, med en åben rende af spildevand i midten mellem blikskure i tre etager. Det er ikke for de klaustrofobiske. 

Fra Dharavi slummen tog jeg direkte til Mumbais lufthavn og fløj til Dubai. Og vupti, så skifter logikken unægteligt.

I Dubai er der rigeligt af alt: penge, biler, luksus. Alt er nyt, rent, skinnende. Man må lige sunde sig lidt over hvor forskellig verden kan være, når man står udenfor det enorme shoppingcenter Mall of Dubai og kigger henover en kæmpe kunstig sø, op på det sølvskinnende Burj Khalifa, der med sine 828 meter er verdens højeste bygning.

Årsagen til at jeg var taget til Indien, var at jeg arbejder på et projekt med titlen “Nøjsommme Løsninger”. Ideen er at finde eksempler på virksomheder, der forstår at udvikle produkter, der passer godt til deres kunders behov, men som koster langt mindre end vi er vant til.

Efterspørgslen efter billige produkter, der kan opfylde dagligdagens behov, er enorm i den voksende middelklasse i udviklingslandenes storbyer – og indtil videre har danske virksomheder haft meget svært ved at tilbyde noget til priser, der er lave nok til at være bredt tilgængelige.

Jeg var i Indien for at undersøge nærmere, hvordan indiske virksomheder udvikler den type “nøjsomme” løsninger, som eksempelvis Tata Nano, verdens billigste bil, eller de private hospitalskæder, der kan tilbyde hjerteoperationer for 2.000 dollars.

Der er en særlig indisk opfindsomhed, som ofte kaldes “jugaad”. Den er drevet af mangel, og den fører til løsninger, der får løst et behov med et absolut minimum af ressourcer.

Det er en form for innovation, der udmærker sig ved at gøre livet lettere og behageligere for masser af mennesker, der kun netop er kommet ud af fattigdommen, og nu får mulighed for at opleve lidt af forbrugersamfundets goder.

Når metoderne bag nøjsomme løsninger er interessante at forstå for danske virksomheder, er det fordi lave priser er en forudsætning, hvis vi skal kunne eksportere i stor skala til de markeder, hvor der i disse år er allermest gang i væksten. Men nøjsomme løsninger kan også vise sig at være et krav fra de stadigt flere, stadig mere økonomisk trængte forbrugere herhjemme og i vores nabolande. Arbejdsløshed, faldende realløn og truende gæld får forbrugerne til at vælge de billigste varer – og de kommer sjældent fra Danmark. Derimod vil de i stigende grad blive tilbudt af nye globale producenter fra Kina og Indien. Om få år vil vestens forbrugere formentlig være langt bedre bekendte med varemærker som Haier, Huawei, Tata og Godrej, hvis produkter er udviklet til at konkurrere under helt andre prisforhold end her.

Forskellen mellem forbruget i Mumbai og Dubai viser med fuldkommen tydelighed, hvordan opfindsomheden er helt anderledes, når man skal udvikle nøjsomme løsninger. 

Både i Mumbai og i Dubai er der en vældig foretagsomhed. I Dharavis slum sidder folk ikke og hænger. Der er ingen tiggere, alle lader til at have travlt med at arbejde – om end det arbejde så er ekstremt beskidt, usundt og dårligt lønnet. Alt genbruges og repareres, husene (eller skurene er det vel snarere) er som fuglereder, bygget af forhåndenværende materialer, med improviserede løsninger fra døre til lamper og satellitantenner.

Folk kæmper for at få adgang til goder, som vi i Vesten, ser som fuldstændigt grundlæggende, og hvis nogen kan levere det til en tilstrækkelig lav pris, er der et kæmpe uopfyldt behov at forsyne.

For virksomheder handler det om at sælge med meget lille fortjeneste på den enkelte vare – til gengæld kan man sælge til millioner og atter millioner af stræbsomme forbrugere. 

 

I Dubai er det lige omvendt: Her har folk rigeligt i forvejen. I de overdådige butikker og shopping malls handler det om overbevise folk om at de skal udskifte det, de allerede har, med nye modeller, i et flottere design og med endnu flere fancy funktioner.

Der er godt at sige om begge typer innovation. Dubai-modellen fører videre i retning af det ypperste og mest forfinede i alle detaljer: Mod højere kvalitet i udførelsen, bedre materialer, avanceret teknologi, større bekvemmelighed – og funktioner, man ikke anede, at man kunne have brug for.

Det er en form for udvikling, der ligger godt til den danske industri: Design, højt vidensindhold, banebrydende teknologi, og høje priser, der kan retfærdiggøre vores høje lønninger. I mange tilfælde er det produkter, hvor selve det funktionelle er underordnet: Det er en selvfølgelighed, at produktet virker godt. I stedet konkurrerer man om kunderne igennem de drømme, som produktet repræsenterer. Man sælger status, historier, og oplevelser til kunder, der forlængst har fået stort set alt i adskillige eksemplarer.

I Mumbai handler det om at skabe løsninger, der billigt og effektivt løser et konkret, grundlæggende behov, hvad enten det er transport, bolig, tøjvask eller sundhed. Det må selvfølgelig også gerne se smart ud og være nemt at bruge - men det skal først og fremmest være billigt.

Kort sagt: I Dubai er udviklingen drevet af rigelighed, I Mumbai er det knaphed, der former løsningerne.

Spørgsmålet er selvfølgelig, hvilken form for løsninger, der bliver mest behov fremover? Hvad skal vi leve af at levere?

Svaret er vel: Begge dele. Men pointen er, at vi i øjeblikket kun er gode til Dubai-typen af løsninger. Vi er gode til det eksklusive, niche-prægede, det holdbare og smukke. Men det er ikke nok, for det er ikke dér, væksten og dynamikken ligger idag. Vi kan ikke i længden leve af at sælge til de øverste få procent af markedet, og vi kan ikke opnå tilstrækkelig omsætning til at finansiere den udvikling, der er brug for, hvis vi skal kunne konkurrere med alle de nye og hastigt voksende global spillere på verdensmarkedet.

Danmarks industri er nødt til at forny sin relevans, og derfor er udfordringen at lære at tænke anderledes på hvad kvalitet og innovation vil sige. Det nytter ikke, hvis den eneste form for kvalitet, vi kan skabe, er så dyr, at vi dårligt nok selv har råd til den.

Danske virksomheder får det svært, hvis vi ikke evner at tilbyde løsninger til den globale middelklasse i udviklingslandene. I praksis svarer det til at ignorere over en milliard forbrugere, hvis indkomst vokser med 5-10% årligt.

I vores nabolag viser Eurostats seneste opgørelse, at 120 millioner mennesker i EU lever under fattigdomsgrænsen. Om man opfatter dem som reelt fattige eller ej, så er det afgørende, at en meget stor og desværre voksende del af Europas forbrugere er hårdt klemt økonomisk. De køber nok ikke varer fra Dubai-segmentet.

Derfor: Hvis vi er så dygtige i Danmark, kunne vi så ikke udvikle løsninger på dagligdagens behov, der er smukke, som fungerer godt, er nemme at bruge, billige i drift, miljøvenlige, genanvendelige – og til at betale?

Det er hårde krav, beklager, men det er det, der skal til. Det kræver, at vi begynder at tænke anderledes: At vi fokuserer mere på hvad kunden er nødt til at have, snarere end hvad der kunne være rart at have. At vi lærer at forenkle. At vi bruger masser af computerkraft og data til at spare på råmaterialer og energi. At vi er gode til at udnytte viden udefra, så vi ikke selv skal opfinde alting. At vi begynder at inddrage brugerne i at skabe noget af værdien…

Måske kan vi lære noget af opfindsomheden i Dharavi? Ellers bliver der ihvertfald ikke råd til at tage Dubai fremover, hvis det er det, vi vil. 

Smarter innovation project at the Universe Foundation

At the Universe Foundation, where I work, we are just starting up a new project in collaboration with the Danish Industrial Foundation – it’s called SMART.

The idea is to assist and follow a handful of Danish 5 medium sized companies as they try to lower their costs and prices in order to adapt to an increasing pressure on prices in the European market.

What’s important is that the reduction in cost should not cause a reduction in utility and satsifaction for the end-user. Ideally, we are looking for ways to increase the experience quality in new wasy that do not add cost.

From our research over the past year with “suitable” innovation in Shanghai and with “frugal solutions” in India and in the West, we have learned that it’s very hard for companies to move downwards in prices – particularly for established companies, that are operating in the main export markets in Europe, where price used to be less of an issue.

We are trying hard to lower the threshold for the companies to get started, so were are specifically not attempting radical innovation, but rather applying a systematic, incremental approach of understanding customers needs exactly and modifying products to deliver just the utility and quality that really matters to end-users.

We have just launched a website for the project at: www.smarterinnovation.org

Too cheap: booking a Ryanair ticket

I just ordered a ticket with Ryanair and the main impression that I came away with was one of feeling almost unclean, after dealing with someone a bit too sleazy for comfort. I acknowledge that they have been pioneers in changing the level of prices for air travel – but to me they are pushing it too far now. I’m glad I’m not an employee there, but even as a customer, you get a sense that they are trying to trick you.

The moment I enter the website, I am on alert, because I know that unless I move very carefully, I will either spend more money than I thought I would – or I will waste a lot of time, before finally quitting in frustration and protest.

The first thing I want to know is whether they have a departure that fits my plans. But in order to search for flights, I have to declare that I have read and accepted the conditions. I don’t have the patience for that, so I accept – with a slight unease: what am I accepting that they do with the information about me?

 


The design of the website is explicitly cheap, Typography and colors are LOUD, pop up windows appear, ads for all sorts of additional stuff is everywhere – they’re even selling ad-space for competing airlines. 
The box that asks for permission to keep spamming me with offers has a intriguing backwards phrasing:

 

Obviously they are very eager to sell additional services – like insurance:

Not only does this big and loud sales pitch come up, but for every extra item they offer – airtime for phoning (…), sightseeing tours, luggage – you must specifically click no or scroll all the way down to the ”not interested” option. 

  
It goes on for several screens, including one for rental cars, and finally one for some sort of lottery - which you must also explicity reject:

 

Finally you get your total price – I noticed an extra charge for paying with my credit card, of course.

Then they send you a confirmation and itinerary. Again, filled with colorful ads for extra service. For me as a customer, I would like a simple document, that didn’t force me to spend precious color ink on printing ads for stuff I don’t need.

So, now I’m ready. I just have to remember, that when I check in from home, I must print out the boarding card. Otherwise Ryan air will charge me 70 pounds to print one!

It’s the only departure that fits my schedule for this travel. And it’s cheap – but maybe a bit too cheap.

Nøjsomme løsninger i Radio24syvs kina program

Jeg fortalte om vores konklusioner i projektet om nøjsomme løsninger i Globus, Radio24syvs ugentlige program om Kina.
Du kan høre indslaget her - det starter ved 11:42 og varer 11 minutter:

Frugal solutions – Our brief new pamphlet

At the Universe Foundation we've just published a short, easy to read pamphlet which describes why we see a need for companies to develop more "frugal solutions".

It also features  a toolbox of methods that companies may consider if they want to try lowering prices without comprising the utility for end-users. 

You can download it here.

Obviously, there’s an extensive website as well.

In English - and in Danish