Whatcha Gonna Do With That Duck?: And Other Provocations, 2006-2012 (53 page)

Most of that money is spent on traditional items purchased in traditional ways. Kerosene. Rice. Basic medicines if you can afford them, or if death is the only alternative. And almost all of these purchases are inefficient. There’s lack of information, there are high costs because of a lack of choice, and most of all, there is a lack of innovation.

There are two significant impacts here: first, the inefficiency is a tax on the people who can least afford it. Second, the side effects of poor products are dangerous. Kerosene kills, and so does dirty water.

PART 2: THE BOTTOM IS AN OPPORTUNITY (FOR BOTH BUYER AND SELLER)

If a business can offer a better product—one that’s more efficient, provides better information, increases productivity, is safer, cleaner, faster, or otherwise improved—it has the ability to change the world.

Change the world? Sure. Because capitalism and markets scale. If you can make money selling someone a safer item, you’ll make more. And more. Until you’ve sold all you can. At the same time, you’ve enriched the purchaser, who bought something of her own free will because it made things better.

Not only that, but engaging in the marketplace empowers the purchaser. If you’ve got a wagon full of rice as food aid, you can just dump it in the town square and drive away. You have all the power. But if you have to sell something in order to succeed, it moves the power from the seller to the buyer. Quality and service and engagement have to continually improve, or the buyer moves on.

The cell phone, for example, has revolutionized the lives of billions in the developing world. If you have a cell phone, you can determine the best price for the wheat you want to sell. You can find out if the part for your tractor has come in, without spending two days to walk to town to find out. And you can be alerted to weather, and so on. Productivity booms. There’s no way the cell phone could have taken off as quickly or efficiently as a form of aid, but once someone started engaging with this market, the volume was so huge it just scaled. And the market now competes to be ever more efficient.

PART 3: IT’S NOT AS EASY AS IT LOOKS

And here’s the kicker: if you’re a tenth-generation subsistence farmer, your point of view is different from that of someone working in an R&D lab in Palo Alto.
The Moral Economy of the Peasant
makes this argument quite clearly. Imagine standing in water up to your chin. The only thing you’re prepared to focus on is whether the water is going to rise four more inches. Your penchant for risk is close to zero. One mistake and the game is over.

As a result, it’s extremely difficult to sell innovation to this consumer. The line around the block to get into the Apple Store is an insane concept in this community. A promise from a marketer is meaningless because the marketer isn’t part of the town, the marketer will move away, and the marketer is, of course, a liar.

Let me add one more easily overlooked point: Western-style consumers have been taught from birth the power of the package. We see the new iPod nano or the new Porsche or the new convertible note on a venture deal, and we can easily do the math: [new thing] + [me] = [happier]. We’ve been taught that an object can make our lives better, that a purchase can make us happier, that the color of the Tiffany’s box or the ringing of a phone might/will bring us joy.

That’s not true for someone who hasn’t bought a new kind of consumer good in a year or two or three or maybe ever. As a result, stores in the developing world tend to be stocked with the classic, the tried and true, because people buy refills of previous purchases, not the new.

No subsistence farmer walks into a store or stall, saying, “I wonder
what’s new today. I wonder if there’s a new way for me to solve my problems.” Every day, people in the West say that very thing as they engage in shopping as a hobby.

You can’t simply put something new in front of people in this market and expect them to buy it, no matter how great, no matter how well packaged, no matter how well sold.

So you see the paradox. A new product and approach and innovation could dramatically improve the life and income of a billion people, but those people have been conditioned to ignore the very tools that are a reflex of marketers that might sell it to them. Fear of loss is greater than fear of gain. Advertising is inefficient and ineffective. And the worldview of the shoppers is that they’re not shoppers. They’re in search of refills.

The answer, it turns out, is in connecting and leading tribes. It lies in engaging directly and experientially with individuals, not in getting distribution in front of markets. Figure out how to use direct selling in just one village, and then do it in ten, and then in a hundred. The broad, mass-market approach of a Western marketer is foolish because there is no mass market in places where villages
are
the market.

THE (EVENTUAL) POWER OF THE EARLY ADOPTER

On a trip to Berelli, India, I met this man. He is a swami, a leader in his village. He owns a d.light lantern—he purchased it from his savings and uses it to replace the dangerous, expensive kerosene lantern he used to use. Why did he take the risk and buy a new technology? He could fit all
his worldly positions into a Rollaboard, and yet he owns a solar lantern, and he’s the first man in his village to buy one.

For him, at least this one time, he liked the way it felt to be seen as a leader, to go first, to do an experiment. Perhaps his followers contributed enough that the purchase didn’t feel risky. Perhaps the person he bought it from was a friend or was somehow trusted. It doesn’t really matter, other than understanding that he’s rare.

After he got the lantern, he set it up in front of his house. Every night for six months, his followers would meet in his front yard to talk, to connect and, yes, to wonder how long it would be before the lantern would burn out. Six months later, the jury is still out.

One day, months or years from now, the lantern will be seen as obvious and trusted and a safe purchase. But it won’t happen as fast as it would happen in Buffalo or Paris. The imperative is simple: find the early adopters, embrace them, adore them, support them, don’t go away, don’t let them down. And then be patient and persistent. Mass-market acceptance is rare. Viral connections based on experience are the only reliable way to spread new ideas in communities that aren’t traditionally focused on the cult of the new.

This situation raises the bar for customer service and for exceptional longevity, value, and design. It means that the only way to successfully engage this market is with relentless focus on the conversations that tribe leaders and early adopters choose to have with their peers. All the tools of the Western mass market are useless here.

Just because it is going to take longer than it should doesn’t mean we should walk away. There are big opportunities here, for all of us. It’s going to take some time, but it’s worth it. [More info: acumenfund.org]

Digital media expand. Digital isn’t like paper; it can get bigger.

As digital marketers seek to increase profits, they almost always make the same mistake. They continue to add more clutter, messaging, and offers because hey, it’s free.

One more link, one more banner, one more side deal on the Groupon page.

Economics tells us that the right thing to do is run the factory until the last item produced is being sold at marginal cost. In other words, keep adding until it doesn’t work anymore.

In fact, human behavior tells us that this is a more permanent effect than we realize. Once you overload the users, you train them not to pay attention. More clutter isn’t free. In fact, more clutter is a permanent shift, a desensitization to
all
the information, not just to the last bit.

And it’s hard to go backward.

More is not always better. In fact, more is almost never better.

If the farmer and the baker make a trade, both win. The farmer benefits from having someone turn his wheat into flour and bake it, and the baker gets money from the bread he sells that he can use to buy things he needs (like food).

This sample math of the transaction (Pareto, et al) created the world we live in. It also is connected to the idea of a favor.

A favor is the first half of a transaction.
I ask you to do something for me today, something where I will probably benefit a lot in exchange for a small effort on your part. Inherent in the idea of a favor, though, is that one day soon, the transaction will be completed. One day, I will do something for you that gives you a benefit.

As Pareto and any economist will tell you, we willfully engage in this transaction because we’ll benefit. Maybe not right now, but soon.

By spreading the idea of the trade over time, the favor makes trades more likely to occur, and also makes sure that they are even more efficient. If I’m already holding open the heavy door, holding it two more seconds for you is easy for me. And then, the next time you’re holding open the door, you’ll be more likely to hold it for me.

If I recommend you for a job, it doesn’t take much effort on my part, but you might get three years of gainful employment out of it. And of course, you’re happy to complete that transaction as soon as you can, because no one wants to walk around owing favors.

The efficiency caused by this sort of exchange is so extraordinary
that we built it into the social contract. I’m not just selfish if I let the door slam as you walk toward the elevator—I’m rude. I’m risking becoming an outcast.

Favors are so ingrained that the next step was inevitable: mass symmetrical favors. Halloween is a great example: how else to explain a hundred million people buying half a billion Snickers bars? We give away the candy because it’s expected, and because people gave us candy when we were kids, and because people are giving our kids candy as well. To opt out is uncivilized.

School taxes create a similar obligation. If you don’t pay when you’re childless, there will be no one to pay when your kids are in school. (And you have to live in a world with uneducated people.) And so the transactions are spread out over time, with everyone giving and taking, not so much keeping score as knowing that a key part of civil society is to participate in these mass fungible favors.

But!

There’s a big “but.” The Internet and other connecting tools now make it easy to create the asymmetrical mass favor—in which one person can ask a
large
number of people, some of them strangers, some friendlies, some friends—for an accommodation that may very well never be repaid.

The simple example is the person running for the Metro North commuter train that leaves at 5:20. She’s only 2 minutes late. If she misses it, she’s delayed half an hour. Surely the people on the train can wait 120 seconds.

Not really. Not if there are 300 people on the train. That’s a ten-hour penalty on the passengers, and if there’s no reasonable expectation of each of them somehow finishing the transaction one day in the future, the entire system will fall apart. No, in the abstract, we WANT the conductor to say “sorry.”

It gets far more dramatic when we think about spamming 10,000 or 100,000 people with your résumé or plea for help.

The problem is that under the cover of the social contract, under the guise of doing what’s civilized, what some people are doing is beginning exchanges that they and those they engage with
know
will never be consummated. She’s not transacting, she’s taking.

And people resent her for it. “It can’t hurt to ask” is almost never
true, but here, especially, it hurts a lot. The person looking for the favor is undoing the tacit agreement we all live by, by seeking a favor when the recipient has no real (social) choice in the matter.

The favor is too important to be discarded, but the Internet is making things that look like favors (but are actually asymmetrical takings) more and more common. It’s putting pressure on people who are usually open to a favor to do the difficult thing and just say no.

Worth a thought: the alternative, the good news that comes with the bad, is the
massive asymmetrical gift
.

A gift is not a favor, because no recompense is implied or expected. A gift is just from me to you, that’s it.

The Internet makes it easy to give gifts to large numbers of people at very, very low cost.
Editing a Wikipedia article, for example, is a gift for the ages, one that might be seen by a million people over three years.

This kind of gift leads to a new clause in the social contract. In this environment, we expect that civilized participants will give. Just because. Because they can. Because the gift makes all of it work better.

While mass favors have to fade (too easy to ask for, too unfair at scale), mass gifts show up to change the equation. Gifts are easy to scale, so now the more generous, the better. For all of us.

New polling out this week shows that Americans are frustrated with the world and pessimistic about the future. They’re losing patience with the economy, with their prospects, with their leaders (of both parties).