Tag: network

Food Systems, Economies, and Ecosystems

What We Are Doing

Over the past three months several of us have made presentations to various groups providing an overview about the recently awarded USDA-SCRI grant proposal and our general strategy for the ensuing program. Our primary purpose is to facilitate the continuing development of local and regional food systems as a viable and sustainable counterbalance to the predominate global food system. Ideally, local and regional food systems work seamlessly with the global food system to form a total food system that provides the overall advantages of price, variety, and quality while contributing to community health, vitality, and well-being.

Local and regional food systems, together with renewable energy and distributed manufacturing, are an integral part of local and regional economies. The interdependence of these three features prominently in the design of our strategy. While the mission of our USDA-SCRI initiative is focused on food systems, when seen in the bigger picture these systems become a platform by which local and regional economies are established, strengthened, and grown. Building local and regional economies is our broader agenda.

A local or regional economy is shaped by the social, political, cultural, and geographic context and conditions in which it exists. Such an economy is defined by complex webs of interwoven interrelationships and behavior patterns. Because of this characteristic, our understanding of them is benefited by adopting an ecological perspective or seeing them as part of ecosystems.

There are several types of ecosystems: natural, human, urban, etc. Each of them is characterized by several factors such as participants, source – sink dynamics and flow, and landscape patterns. Using these factors to inform an ecosystem health index and provide insight on how well an ecosystem is functioning is of particular interest.

Such an index is especially helpful when determining which course of action among several alternatives achieves the imperative at hand with the least amount of collateral damage and unintended consequences or side-effects. An obvious instance is with agriculture because of its pervasiveness and the degree of environmental impact its practice has on a local, regional, and global scale. Under the aegis of the USDA-SCRI grant there will be ample opportunities to apply the metrics of agroecosystem health in helping local and regional food systems become more efficient, effective, and less disruptive counterparts to the global food system.

The Business Ecosystem

Adopting an ecosystems view is also helpful within a business context. In the mid-1990’s, Jim Moore observed the dynamics of natural ecosystems and noted the similarities they have with those in a business setting. He coined the term business ecosystem to label the dense webs of interrelationships among suppliers, service providers, customers, competitors, communities within a social, political, and economic environment in which any given business starts, survives, and is sustained.

Moore’s “business ecosystems” thinking has led to a unique and powerful understanding about business strategy and in so doing significantly expanded the business development repertoire. It has also encouraged the growth of small and medium-sized enterprises (SMEs) in several areas. Perhaps the greatest experimentation with this approach has been Europe where the European Commission (EC) linked Moore’s concept business ecosystems concept with Information and Communications Technology (ICT) to form digital business ecosystems. The primary purpose at the outset was to establish networks of connectivity among participants in SME ecosystems in order to stop the decline in the numbers of SMEs in several European countries. Early results show this strategy is successful as indicated by a reversal in the decline of SMEs complemented by signs of an increase in their numbers across the Continent.

Business Ecosystems in the Context of the USDA-SCRI Grant

Fundamentally, the strategy underscoring the USDA-SCRI grant proposal is the digital business ecosystems approach applied to local and regional food systems. The graphic below illustrates the flow dynamics among ecosystem participants in the interconnected regions across the upper-Midwest and mid-Atlantic states:

Social network facilitation, as part of the ICT backbone for the project, catalyzes regional networks and convenes leaders within them to prompt the formation of business ecosystems.

Business ecosystem particants conduct research, deliver education and training, and launch pilot projects directed toward building local food systems within given regions.

Local food systems development links with complementary efforts in renewable energy and distributed manufacturing systems to drive relocalization. This heightens participation at local levels which increases the experience base among players and drives changes in the formulae for land use practices, inclusion, workforce development, and government collaboration. The net effect is that the rules are rewritten so they facilitate the rise of functional and sustained local and regional economies.

Healthy, vibrant, adaptive, and innovative local and regional economies offer a constructive counterbalance to the global economy; they become attractors for new business start-ups and the expansion of existing businesses. Glocalization results as fully-functioning local and regional economies mitigate the downsides of the global economy and position the total economy for sustainable growth. Successful glocalization feeds larger regional networks of players and leadership of business ecosystems providing the wherewithal to fuel additional research, education, and pilot projects. This closed-loop cycling generates AND reinvests resources within the same local and regional economies which relieves the dependency on outside funding, like the USDA-SCRI grant, to spur local and regional economic sustainability and vitality.

A Broader Vision

The bottom line is that with thriving, interconnected business ecosytems, local and regional economies capable of maintaining themselves while spurring business growth and community well-being will result. Although the USDA-SCRI grant is directed toward social networks and local food systems, these are milestones along the path to a broader claim. Our vision is of capable local and regional economies operating in concert with the global economy to provide people with the means to enjoy a reasonable quality of life in communities assured of survival and sustainability. For us, this is the ultimate goal of the grant proposal. Thanks in advance for your participation over the next three years to make the vision a reality!

Originally posted to Local Food Systems by Steve Bosserman on December 27, 2008 17:04

Distribution Channels for Agriculture Equipment Systems in India

Overview

The long run of substantial growth in the Indian economy since liberalization in 1991 spread opportunities for business expansion and entrepreneurial start-ups in all commercial sectors, including agriculture. During the past decade and a half, noticeable gains in the purchasing power occurred for some Indian farmers. Their economic circumstances improved through the expansion and strengthening of infrastructure, rapid farm consolidation to take advantage of economies of scale, adoption of genetically modified cropping, and utilization of more productive agriculture equipment systems. However, there are 700 million farmers in India – the second largest block in the world behind China – and clearly, not all enjoyed the same level of benefit from the blistering economy as evidenced by the article, “India on Fire” in the current issue of The Economist.

Regardless of economic strata and chosen agricultural practices, all farmers are dependent on some type of agriculture equipment system to conduct their farming operations. The range of different equipment systems is quite broad, extending from low-investment handheld tools moved by draft animals to extensive, high-investment “packages” of machinery, computer systems, integrated software, and global communication networks. As with any complex marketing landscape, matching solutions with opportunities to make a difference for the customer and the company is essential.

The following graphic illustrates the interrelationships of the number of farmers, farm size, and market potential for sales of agriculture equipment systems.

The distribution clearly shows that 695 million farmers hold 80% of the arable land in India on farm sizes that are less than 2 hectares, approximately 5 acres, each. In fact, estimates suggest that 600 million farmers work on lot sizes that are each less than 1.5 hectares, or slightly less than 4 acres. This distribution is significant for several reasons, but one that features prominently when considering a marketing distribution channel strategy in India is population, both in terms of density and migration. As evident by the sheer number of people involved, unchecked farm consolidation, such as what occurred in North America and Europe since WWII, is not a viable course.

The infrastructures of urban areas in India would be quickly overwhelmed if even 25-30 % of the 700 million farmers scattered across India abandoned their rural homes in hopes of brighter futures in the cities. The challenge facing India, then, is to improve agriculture practices, increase output, and raise the quality of life for 700 million farmers so they choose to stay put. Not an easy mandate to meet.

Such distribution coupled with a wide variance in farming conditions within India’s agricultural regions and a diversity of farming methods and crop portfolios in each creates a complex marketing space that is anything but homogeneous. Developing a distribution channel strategy under these circumstances is problematic unless due consideration is given to the segmentation scheme and the value propositions for those segments.

Channel Design and Infrastructure

Regardless of segment, the design of distribution channels is dictated by the reach, capability, and capacity of three fundamental systems of infrastructure: information / communication technologies, electrical power, and roadways / waterways.

1) Farmers, no matter how remote, have to communicate: among themselves, with suppliers, downstream processors and retailers, government agencies, and financiers. The more direct the connections without brokers and middlemen the better. ITC has carried this point further than many through the implementation of their trademarked e-Choupal system. Comprised of self-contained solar-powered kiosks, satellite downlink stations and cellular microwave towers, and computers, nearly 4 million farmers throughout India are able to communicate by phone, access the information from the Internet, conduct online transactions, and make daily decisions about their farming operations.

A successful channel strategy begins with the virtualization of the products, services, and solutions so they flow through the information and communication networks to current and prospective customers. This constitutes a clear value proposition through improved decision making. It also establishes the first level of trust that the relationship between provider and customer is not exploitative, but mutually beneficial.

2) It takes electrical power for a farming operation to function, despite where it is located or what is in its business portfolio. Currently, India imports 100 million tonnes of crude oil per annum and is projected to import 300 million tonnes per year by 2030. In addition, India possesses the fourth largest coal reserves in the world. However, consuming it to generate electrical power in an environmentally sound manner is problematic and costly to resolve. To continue aggressive economic growth while not compromising the environment or being held hostage, politically, by unfriendly, oil-rich nations, India must develop alternative energy sources. In a press release earlier this week, Indian president, Dr. A.P.J. Abdul Kalam, committed to put India on the path toward energy independence by 2030. Furthering the use of electrical power generated through renewable energy sources like wind, solar, geo-thermal, and biomass / methane is central to India meeting this long-term energy goal.

A successful channel strategy contributes to this in a two-fold manner. First, it discourages more dependence on oil by delivering agriculture equipment systems that do not require fossil fuels to operate. Second, it encourages the development, commercialization, and adoption of alternative energy sources to generate electrical power for agriculture. This enables farmers in rural areas where the electrical grid does not reach to have the technologies available to generate the electrical power they need. Also, as the grid becomes available they have the opportunity to draw from it as needed and transfer surplus power they generate onto it for revenue. This posits a value proposition that reduces the cost of farming operations and improves productivity and profitability. Furthermore, fostering an alignment of business interests with government intentions and policies establishes a second level of trust between the provider and customer.

3) As farm productivity increases so do variety and volume of inputs and outputs. Moving, storing, applying, and disposing of more and more material within the same block of time drives the food system to hit the limits of capability and capacity preventing it from working efficiently and effectively. India has a number of critical initiatives underway that target an overburdened infrastructure for receipt of more resources and assistance as evidenced in “Priorities for The New Millennium” by the Asian Development Bank. This is complemented by a continuing effort to setup Special Economic Zones (SEZ) that, in part, facilitates the building of critical infrastructure. It also has a dampening effect on population migration due to farm consolidation by creating jobs that can be filled by those who are displaced from farming operations. A speculative argument by Indian development economist, Atanu Dey, and Vinod Khosla advances a concept called Rural Infrastructure Services Common (RISC), that addresses rural population, infrastructure, and economic improvement. While not necessarily the answer, it does offer insight into the degree with which people of influence and power in India are aware of the issues and are searching for answers.

A successful channel strategy distributes information, methodologies, and capabilities to people engaged in agriculture so that they can work through or around infrastructure deficiencies or build-up the infrastructure so that it is no longer an impediment to growth. Of particular importance is the delivery of product and service packages primarily intended for agricultural operations but can serve a dual purpose in building, upgrading, or maintaining physical infrastructure such as roads and waterways. This establishes a value proposition based on multi-use applications for basic equipment systems thereby leveraging the investments by farmers and contributing to additional growth opportunities. Because such an approach does not place the farmer in a bad situation where the benefits promised by increased productivity are cancelled through losses due to infrastructure weaknesses, a third level of trust that speaks to a long term commitment by the provider to the customer.

To design a distribution channel strategy for agriculture equipment systems in India, it is a critical to first understand information / communication technology, electrical power, and roadway / waterway infrastructures then, respond to the business context established by them. As the graphic below suggests, the rate of adoption for various agriculture equipment systems varies from one segment to another depending on the size of the farming operation, the ability of farmers to take advantage of available opportunities, and the potential for sustaining the business. Projecting across a ten-year period, greater adoption, market share, and revenue will go to the provider of systems that span across the full landscape of Indian farming operations.

To try to sustain a growth strategy by ignoring the bottom-of-the-pyramid (BOP) representing the vast majority of farmers and tapping the upper-end who lead the adoption curve and have the most resources to invest will yield short-lived and unsatisfactory results. Accusations of exploitation of the masses will take its toll on reputation, incite resistance, and drag down sales performance as reflected in numerous press articles (“Farm Widows in India Fear Crop of Creditors,” by Aparna Pallavi and “The Tale of Three Widows,” by Jaideep Hardikar in India Together online magazine) and research papers (“Biotechnology and Suicide in India,” by Glenn Davis Stone) about increases in farmer suicides.

Moving Forward with a Distribution Channel

Given these dynamics, there are three steps in initiating, expanding, and sustaining a distribution channel for agriculture equipment systems in India:

  1. Take advantage of existing or supplement information and communication networks to disseminate valued information about agriculture in an Indian context to prospective customers. This is a low-price, high-value service with low entry barriers and costs that quickly establishes a first level of trust upon which additional value can be delivered.
  2. Expand upon the initial business information to include knowledge about the larger Indian economic and political “system” in relationship to technological developments and the realities of community life to deliver product and service packages that make a difference for the agricultural businesses, environmental conditions, and community stability. This is a moderately priced, high-value package of services and products from different providers that collectively leverages the investment of the customer while providing an acceptable return for the providers.
  3. Engage major players from industry, government, academe, and the community to affect larger, more capital-intensive projects that serve broader objectives to build more capacity and further improve productivity. This is a higher priced, high-value package of services, products, and solution management from a wide range of providers.

Essentially, this is an “infrastructure first” approach that endears the company to the people by putting in their hands the information, knowledge, and resources they need to be successful. This is the key differentiator among equals. It builds a trusting relationship based on the clarity of motive, integrity in deed, and delivery of what works for the majority before moving into more extensive and riskier endeavors that may exceed the customer’s boundaries of healthy speculation. This means that the marketers, the dealers, and the sales force must know their customers so they can keep them positioned for sustained success without overrunning their headlights. And this brings us back to best approach for partnering with the Indian farmer: focus on improving the infrastructure – it is THE winning strategy!

Originally posted to New Media Explorer by Steve Bosserman on Saturday, February 3, 2007

Localize – Link – Globalize: A Closer Look at India

In my previous posting about Mukesh Ambani’s ambitious plans for Reliance Retail, Ltd., he intends to “revolutionize” two sectors: farming and retail in the process of establishing this new business. His plan to “invest more than $5 billion by 2011 to put both the farms and the stores on the road to modernity, connect them through a distribution system guided by the latest logistics technology, and create enough of a surplus to generate $20 billion in agricultural exports annually” is a bold statement of the speed, scope, and degree to which he will attack the prevailing system. No doubt this will have an impact – revolution does that, although there are often unintended consequences!

Usually, “revolutionize” in the context of agriculture means introducing labor-saving, automated, integrated mechanical and biological systems that eliminate the need for human participation. This accomplishes three things: reduces the cost of the operation by taking people out of the equation; displaces people who are no longer needed in support of agriculture so that they are compelled to do something else; and lengthens the distance between the point of agricultural production and the point of consumption of food, feed, fiber, or fuel. This approach was effective during the last century in those areas of the world where human labor was needed to power the growth of the industrial sector. In fact, the mechanization of agriculture and the subsequent displacement of people from farming and rural areas was a perfect complement to the growth of industries in the urban centers. Is the world ready for more of that?

The last thing countries with the most populous cities in the world need is more people migrating from the less populated rural areas to the urban areas. Further overcrowding of already overwhelmed infrastructures helps no one and contributes further to decline in the quality and even sustainability of life. Still, with nowhere else to go and no hope where they are, relocation to the cities is often the only recourse people have in these circumstances.

The question is: how can technology be applied in the farming sector such that the people whose welfare is dependent on agriculture are able to have sufficient quality of life centered around the principles and values they hold dear at their local community level yet be able to scale their output to meet the demand of more distant communities in need of what they produce?

One way to begin to answer this is through the e-Choupal system introduced by ITC, Ltd. to farmers throughout rural India.

ITC describes e-choupal as a system that…

…leverages Information Technology to virtually cluster all the value chain participants, delivering the same benefits as vertical integration does in mature agricultural economies like the USA.

‘e-Choupal’ makes use of the physical transmission capabilities of current intermediaries – aggregation, logistics, counter-party risk and bridge financing – while disintermediating them from the chain of information flow and market signals.

With a judicious blend of click & mortar capabilities, village internet kiosks managed by farmers – called sanchalaks – themselves, enable the agricultural community access ready information in their local language on the weather & market prices, disseminate knowledge on scientific farm practices & risk management, facilitate the sale of farm inputs (now with embedded knowledge) and purchase farm produce from the farmers’ doorsteps (decision making is now information-based).

Real-time information and customised knowledge provided by ‘e-Choupal’ enhance the ability of farmers to take decisions and align their farm output with market demand and secure quality & productivity. The aggregation of the demand for farm inputs from individual farmers gives them access to high quality inputs from established and reputed manufacturers at fair prices. As a direct marketing channel, virtually linked to the ‘mandi’ system for price discovery, ‘e-Choupal’ eliminates wasteful intermediation and multiple handling. Thereby it significantly reduces transaction costs.

‘e-Choupal’ ensures world-class quality in delivering all these goods & services through several product / service specific partnerships with the leaders in the respective fields, in addition to ITC’s own expertise.

While the farmers benefit through enhanced farm productivity and higher farm gate prices, ITC benefits from the lower net cost of procurement (despite offering better prices to the farmer) having eliminated costs in the supply chain that do not add value.”

Of course, for ITC to make this work requires a dedication to growing its business by engaging farmers as partners in making their businesses successful. ITC’s sustainability policies are based on a deep and unwavering commitment to the people of rural India: to help them improve the quality of their lives, provide them with the wherewithal to keep their families intact and grounded, and contribute fully to the betterment and sustainability of their local communities.

The effectiveness of this program on multiple fronts has not gone unnoticed. ITC has garnered several awards for the e-Choupal program namely, the Corporate Social Responsibility Award in 2004 from the Tata Energy and Resources Institute (TERI), the Wharton Infosys Business Transformation Award (WIBTA) in 2004, and most recently the Stockholm Challenge Award in May 2006.

The goal of e-Choupal is to sustain, strengthen, and scale the operations of farmers with small agricultural holdings throughout rural India. The success of this system is earmarked by farmers staying in business, improving their operations, caring for their families, and contributing to the welfare of their local communities. This outcome scores well in following the sequence of localize, link, and globalize mentioned in last week’s posting by the same title.

And there is room for more! In a country of one billion people, three-quarters of which live in rural areas the efforts of ITC and e-Choupal only touch a narrow few. Reliance Retail, Ltd. is branching out with farming and retail and is committed to build an infrastructure that stabilizes small scale farming operations rather than destroy them; in direct competition to Reliance Retail, ITC is introducing Choupal Fresh.

Then, there are companies like Bharti that partnered with the Rothschild Group to form FieldFresh Foods. They are entering the next stage of scaling up agricultural production in rural India to supply global markets. Are Indian farmers sufficiently stabilized in their newfound capabilities to remain sustainable as small businesses in light of this rapid scaling?

Andy Mukherjee writing for Bloomberg.com paints companies Reliance, ITC, and Bharti with a common brush regarding their intentions for the Indian farmers in light of a worse fate – Wal-Mart. The title of his article “Indian Food Trade Lures Reliance, Bars Wal-Mart,”1 suggests that a preferred strategy is keeping Wal-Mart at bay. Unfortunately, there are many paths that lead to premature globalization of food production at the farm level – even a seemingly healthy alliance between Bharti and Rothschild is fraught with difficulties!

Clearly, a Wal-Mart excursion into India would have a significant impact on the economics of farming and retailing in India. It poses a dilemma in whether to keep expanding the agricultural sector globally by building from a firm foundation of localized – linked – globalized farming operations, or prematurely opening the floodgates to global markets, compromising the system at local levels, and either becoming non-competitive due to excessive cost or entering the slippery slope of farm consolidation.

The title of a Knowledge@Wharton article, “Will Wal-Mart Succeed in India? Perhaps…But It Won’t Be Easy,”2 suggests imminent conflict with Indian retail chains and the Indian government in their unwillingness to allow direct foreign investment into the retail industry. In response, Wal-Mart has formed a joint venture with Bharti. Will that be enough to overcome native resistance? And in “Wal-Mart Pushing India to Lift Ban on Global Chain Stores” published in The Hometown Advantage by The New Rules Project, the argument is raised that large non-Indian retailers like Wal-Mart are not good for the local Indian economy because their realm of interest is with absentee shareholders, not the people of India at the local level. Proceeding further while carrying this lack of concern for the impact one’s business model has on people whose livelihoods are placed squarely at risk is catamount to unethical business practice. In this case, it reverses the preferred approach of localize – link – globalize to drive globalization first and align linkages to suck profits and resources away without stabilizing the local economies first.

The world has endured this “global first” extraction / domination model for centuries. It doesn’t work. It’s time to give it up!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, September 3, 2006

  1. Original Bloomberg article, “Indian Food Trade Lures Reliance, Bars Wal-Mart,” is no longer available online ↩
  2. Original Asia Media article, “Terms of Engagement for Wal-Mart India,” is no longer available online. ↩

Localize – Link – Globalize

In the 17 July 2006 issue of Newsweek International, an article by Ron Moreau and Sudip Mazumdar entitled, “Bigger, Faster, Better: India’s top tycoon hopes to kick the country’s nascent boom into hyperdrive by remaking its stores, farms and even its biggest cities,” provides a compelling twist in corporate social responsibility. Earlier this year, Mukesh Ambani, chairman of Reliance Industries, Ltd, announced the creation of a new, major business venture under the Reliance umbrella, Reliance Retail, Ltd. This is only one step in Mr. Ambani’s far-reaching vision in retailing that seeks to bring broad-sweeping changes in agricultural production and retailing across India as well as how people live in urban areas:

…Ambani, 49, has finalized plans to invest more than $11 billion over the next decade to build two new satellite cities outside creaking, overcrowded Mumbai and Delhi. He foresees these metropolises emerging within just four years, each with a population of 5 million people making $5,000 a year, on average (or seven times India’s norm), and hosting top multinational companies. And that is all pretty simple – a development on steroids – compared with the idea that really gets Ambani going.

Ambani’s favorite scheme aims to revolutionize in one swoop two of India’s largest but most backward sectors: farming and retail. Despite boom times, India is still a nation where 100 million mostly small farmers work with ox and plow, where 96 percent of retail stores are mom-and-pop shops and most of the roads between farm and store are mud tracks. Ambani plans to invest $5 billion by 2011 to put both the farms and the stores on the road to modernity, connect them through a distribution system guided by the latest logistics technology, and create enough of a surplus to generate $20 billion in agricultural exports annually.

I don’t have a clue whether Mr. Ambani will be successful in achieving what he envisions. Actually, that is not the point. What is significant, though, is that he apparently understands the connections between the circumstances surrounding those who produce food, and food production, logistics, and retail sales to consumers; he is willing to challenge the inadequacies and deficiencies in the current system; and even more, he is taking no small risks in making a significant play to install an alternative system that is more respectful, efficient, and sustainable for those who participate at the “ground level,” so to speak.

Basically, Mr. Ambani is addressing the problem by taking an approach that runs backwards from the conventional wisdom of a globalized model. He is, first, raising the capability and capacity of the farmer / producer, establishing an infrastructure to move productive output swiftly and safely to downstream stages in the value-chain, and providing fair compensation for the farmer / producer to assure sustainability:

To transform Indian farmers into quality suppliers for his new retail chain, Ambani plans to create 1,600 farm-supply hubs across India, providing technical know-how and credit, selling seeds, fertilizer and fuel, and buying produce.

Then, he is scaling the output of the farmer / producer to exceed local demands for food stuff and move the overage into the global market:

He also plans to build some 85 logistics centers to move food to retail outlets and to ports and airports for export. Reliance is gearing up to train tens of thousands of new employees in the next six to eight months to do everything from erecting prefab warehouses to transporting fresh produce. Even Reliance’s admirers note that with little experience in farming or retail, Ambani is taking his biggest risks yet. “There will be mistakes,” Ambani admits. “But we are not scared. We will correct our mistakes fast and move on.”

This is opposite to the typical globalizing business model that strips output from agricultural producers for a pittance and pumps it into the global market at the outset without regard or interest in the sustainability of the producer’s business or preserving the sanctity of the local community. The consequence of the more typical approach is farm consolidation, loss of livelihood and location, and dependence on globalized agriculture for local food supplies – not a good position to be in if supply chains are disrupted.

The critical path is to stabilize the producer / provider at the individual / family / community level; link producers / providers with others through flexible and dynamic networks capable of moving information, goods, and services in response to demand AT A LOCAL LEVEL; and lastly, scale the operations to match output with fluctuations in demand on a global level. This simple three-step formula – localize, link, and globalize – is a useful scorecard to measure the validity of any strategy aimed at utilizing natural resources or leveraging human resources in particular areas. If it strives to globalize first or prematurely, the approach is exploitative at best and unconscionable at worst!

Originally posted to New Media Explorer by Steve Bosserman on Sunday, August 27, 2006

Adding Value and Receiving Fair Compensation

There are three ways to add value: make something others need / want; provide a service others value, but not enough to do it themselves; and, deliver a totally satisfying experience around a package of something(s) made and services provided.

When I entered the business world in the U.S. some forty-plus years ago, it was all about exploiting natural resources elsewhere and making things in highly, vertically-integrated production enterprises. Over the last 25 years, there has been a distinct split between making things and providing services others would rather not spend their time doing, vertically-integrated firms were decentralized and distributed, and U.S. businesses have “gone global” in an effort to exploit human resources elsewhere. During the last 10 years, there has been a significant uptick in melding a particular desired experience with things and services to provide an integrated, experiential package. The work I currently do with businesses and non-profit organizations focuses on helping them take advantage of this shift and get more efficient and effective at doing the integration and promoting the anticipated experience with customers.

The process Andrius Kulikauskas followed in the Chocolate Project to collect and compile information about the chocolate industry yielded a potential goldmine of business opportunities. These include:

  1. Making things – beans, nibs, cocoa liquor, cocoa butter, cocoa powder, finished chocolate products ready for retail – up and down the value chain
  2. Providing services such as logistics, inventory management, quality assurance, traceability, trading, etc.
  3. Developing integrated, experiential packages using chocolate as the centerpiece -a posting from Idziak Waclaw outlined ways to think about such possibilities

For that matter, the process, tools, and techniques Andrius used for the project can be replicated in other projects where there is a similar opportunity to merge openness with the proprietary in ways that “do no harm.” Some of the approaches Andrius used in the Chocolate Project include the following:

  1. Working openly / working in parallel wiki where all the information gathered was categorized and posted for the world to look over the participants’ shoulders and see
  2. Focused moderation to keep collaborative energies and efforts in the spaces where the value would be greatest for the sponsor
  3. Direct correspondence with the sponsor to assure that proprietary boundaries are honored

No doubt there are more. The point isn’t to be exhaustively philosophical in what they are, but to apply the ones we can do elsewhere for broader benefit. As an example, currently, I am floating the concept of a wiki to a private sector client wherein key questions related to the business are posed by the moderator. The wiki is organized to “catch” the responses in ways that prompt more questions and accelerate the exploration of those strategic spaces where the client’s business will be heavily influenced over the next 5-10 years.

As another example, several colleagues and I are completing a grant proposal which will be submitted later this month that explores characteristics of leadership in institutional contexts where the key objective is to prompt a higher rate of adaptation and responsiveness within non-profit organizations. One of the major elements of the strategy we are proposing is the use of a moderated wiki a la the Chocolate Project. Our intent is to create an extensive library of information on the wiki about leadership that is open to all, yet we are able to extract and compile specific content into publications that target particular audiences within the non-profit arena.

The bottom line is that this approach can be leveraged / applied over and over again to generate an enormous amount of information on a particular subject, identify potential candidates to participate in a supportive broad-based network, and develop opportunities to add value. However, adding value is only half of the equation:

On New Year’s Day, there was a posting on the Yahoo! Group, Cyfranogi from Stephen DeMeulenaere, about the organization he represents – Complementary Currency Resource Center. It makes a strong connection between adding value and receiving fair compensation. When people are compensated, in part, with a complementary currency that remains in the local community where it was earned, its expenditure continuhttps://www.linkedin.com/in/stephendemeulenaere/es to benefit the community. The bulk of mainstream financial systems used to compensate people for value-add are extensions of hierarchical and global political / economic systems. They are organized to concentrate power and wealth in the hands of a few. As a result, when people are compensated solely by these global, federally-backed currencies their expenditures remove the purchasing power from the community to a place far afield from the point of value-add.

Unfortunately, there is no system we can devise that escapes this reality – inequalities among people drive inequalities in access to power and wealth. What we can do, though, is experiment with more locally-based, complementary currency systems that mitigate the forces of concentrating wealth on the global level from draining creativity, energy, and resources from local communities. Andrius’ approach to blending federally-backed compensation with home-grown complementary currency compensation on the Chocolate Project is a start. As this blending is pursued on other projects, the experience base will be broadened and the mettle of the emerging complementary currency systems tested so the combination between the two becomes more robust, scalable, and, ultimately, effective.

Projects born in a social network are only as good as there are participants representing a wide and comprehensive set of perspectives about the topics under consideration. People are attracted to these efforts within a social network by a variety of reasons: alignment on the values the project leader and other participants hold dear and readily espouse; affinity for and commitment to the cause being advanced by the project; recognition for performance which can be carried into other opportunities where more compensation is available; and, fair compensation for value-add. Obviously, the more of these a project offers the higher the likelihood of widespread participation. For this reason, if an alternative to federally-backed currencies can be offered which fairly compensates people for the value their contributions add then, the chances are substantially increased that the creative talent, skill, and expertise in the social network can be tapped. The challenge is to know that we are nowhere close to where we need to be and to keep trying!

Originally posted to New Media Explorer by Steve Bosserman on Tuesday, January 3, 2006

Ground Truth and Social Sensors

Ground truth is the unfettered and unfiltered relating of people’s experiences within a human social system. It can be associated with a specific event at a particular point in time, such as personal interviews with survivors on December 26, 2004 in Sri Lanka shortly after the devastating tsunami struck. It can be the review of a series of experiences across a period of time such as follow-up interviews with those same Sri Lankans who were interviewed originally to understand how their circumstances are changing. It can be the stories told about how members of a social system, who experienced a catastrophe like the tsunami, adapted their social, political, and economic structures in response; namely, what worked, what didn’t, and what changes to make. Ground truth is given when people speak for themselves. It is the ONLY way a human social system knows what is REALLY going on.

People who deliver their ground truth are acting as well-functioning “social sensors” in a broader social system. They draw upon a wide range of information and communication technologies (ICT) e.g., websites, email, blogs, wikis, with land-line, cellular, and satellite connections from locations throughout the world, no matter how remote, to relate their experiences instantaneously and continuously. Social sensing parallels similar functions within mechanical and biological systems. In fact, there is a point of convergence between scientific and social sensor development paths that establishes the possibility of two working together in a highly interrelated manner that enables large, complex systems to be better managed.

Sensor technology, too, has it roots in ICT. The earliest application of ICT during its commercial development was data collection. People would make manual entries into databases of data they and others collected utilizing various measuring devices at certain points within factory or office operations. The computer would use programs to analyze those data and put them into an informational format that could help interpret what was occurring and develop responses to improve the processes or procedures.

One of the first areas where ICT quickly developed in the 1970s and 1980s was in sensor technology. With increased capability and reliability, sensor technology contributed significantly to the replacement of humans as the means through which data was collected and entered into databases. Further developments over the last 15-20 years greatly reduced the size and power requirements for sensors, and increased the sophistication and range of type and capability of sensor technology. Now, sensors are pervasive; they influence almost every aspect of our lives and endeavors. And they continue to displace people from those activities where consistency, repetitiveness, quality, and reliability are essential for effective and efficient operations.

Of particular significance in these developments and displacement is the degree of integration and compatibility between what is being sensed and what is doing the sensing. Today, extensive sensor networks are carefully nested within all manner of systems: mechanical, chemical, optical, biological, and social. Regardless of application, these sensor networks monitor and evaluate conditions which become feedback in larger, adaptive systems that devise corrective strategies and take appropriate actions in response. The key to their success is the accuracy and timeliness of their input as well as the pervasiveness and comprehensiveness of their coverage.

In many ways, the human body is a complex web of sensor networks. Millions of nerve receptors of different types and functions are distributed throughout the body and send continuous signals through the central nervous system to the brain where they are processed and given responses. And like any sensor network, the quality of the response is tied directly to the quality of the input.

Despite highly evolved and elaborate redundancies that function effectively the vast majority of the time, our senses can be fooled: hot can feel cold and vice-versa; we see mirages we believe are real; we hear sounds when there is silence; odors we smell and taste evoke memories that do not accurately reflect what we are experiencing in the moment. And as in the interplay between sensor networks and the larger systems they help regulate, there are different ways of analyzing and processing input with each eliciting different responses. Furthermore, we can ignore sensory input or respond in ways that override evidence suggesting a more appropriate course of action. So, regardless of how well-designed the system and how well-refined the processes, the arbitrariness and irrationality of our decision-making have the potential to bring it to naught.

Like the human body, human social systems are vast sensor networks. Each member of the system is a “sensor” who “reports” on conditions as they are experienced. The system – comprised of hierarchical political, economic, and social structures that operate according to sets of self-serving rules – sorts, aggregates, and analyzes data entries from sensory members in an effort to understand, interpret, determine response possibilities, consider alternatives, and decide on a course of action. Of course when considered on a global scale there are myriad social systems in play simultaneously. Members of one social system can concurrently be members of others. Interpretation of sensory input in one social system can elicit a different response compared to what happens in response by another social system. The key determinants are rank, status, and position in the formal structure and presence, voice, and passion in the informal structures.

Human social systems are analogous to the human body in other ways. There are over 6 million people in the world. The human body consists of billions of cells. Thousands of people die and thousands more are born every day. Millions of cells in the human body die daily and millions more are regenerated. Of the thousands who are born, live, and die each day, I have the opportunity to know only a handful. I know my body, in general, through its organization by function, role, and relationship of one part or system to another. Most of it I will never see and I don’t have to; I trust that it will do what it should without my deliberate attention if I follow simple rules of good health in terms of diet, nutrition, exercise, and rest. Similarly, most people in the world obey the rules of the social system to which they belong. These rules present choices and people decide in ways that permit them to adapt to current circumstances, but preserve the integrity of the system. Behavior is managed and people stick by the intent of their roles, responsibilities, and relationships.

What happens when taking care and following the rules is not enough? Even when we do our best to prevent it, inevitably, our bodies get sick. Sensory cells we seldom hear from send messages that indicate they or the systems to which they belong are in trouble. Depending on the nature of the condition they are signaling there is a wide array of prescriptive treatments from which we can select. These can be non-invasive wherein normal functions of the cells and systems are restored through medications; or invasive through the repair, removal, or replacement of tissue. The same phenomenon occurs in social systems. People in their “sensory roles” relate experiences wherein the system – no matter how well-designed the rules and how noble the principles and ideals that frame them – fails to respond within an acceptable range. Functions break down; remedies are required. In some instances a simple reinterpretation of an existing rule is all that is needed. Other times, though, more radical steps are in order such as rescinding laws and enacting new ones, closing operations and opening others, and eliminating products or canceling services and offering of others.

Oftentimes, we do not heed the early warning signals from our bodies indicating something is amiss and what was once easily restored must now be repaired, removed, or replaced. The sensory networks did not fail, but we chose through our heads or hearts to ignore the input, e.g., “I don’t feel any pain” or “I don’t see any bruises” or to not give the input appropriate attention, e.g., “It will go away” or It’s nothing.” Because the human body is marvelously adaptive, this approach works to some degree, but the performance of the whole and the cellular arrangement and functioning that comprise it are compromised. We live with it in a compromised state or we take more radical steps to correct or reverse the damage.

Again, there is a clear parallel within human social systems. Billions of people in the world have a nearly infinite variety of experiences daily. How do these experiences fit the frameworks of the social systems to which people are members? Where are there anomalies between expectations and experiences? Do these differentials drive responses? Is the system stretched beyond its limits to adequately respond and more deliberate and protracted strategies are needed to spur deeper adaptation? To know the answers requires being attentive to the “sensors.” It means getting to “ground truth” with people in the system about their circumstances.

Establishing ground truth is a three-step process:

  1. Ask people for the truth about their realities and encourage them to tell their stories openly
  2. Hear their truth, once offered, understand it; and commit to respond with appropriate action
  3. Follow-up afterward to confirm that the responses were, indeed, appropriate and that the current situation is corrected and steps are underway for longer term changes in the system preventing recurrence of the problems

Just as we do not heed messages within our bodies we do the same in social systems. To know what is really going on requires ground truth. To not ask, listen, comprehend, and take action are just as effective in shutting down responsiveness and adaptation in the social system as it is with our bodies. Much of time it is for the same reasons: “don’t confuse me with the facts” and “if I am ignorant I cannot be held accountable.” Typically, we do not like change even though circumstances warrant it. In addition, we do not like to know about circumstances where change is needed because we will be challenged to take action – in other words, make it happen. Either way we claim we will lose focus and be distracted from the mission we are locked into at the time.

Just as the health of our bodies is compromised when warning signals are ignored or overridden, social systems become corrupted when the ground truth of members is not heard or heeded. Social systems can continue to function, in general, despite certain levels of corruption, albeit their effectiveness and efficiency are significantly reduced depending on the type, degree, and pervasiveness of the corruption. Change is particularly problematic in established social systems. Power concentrates in the tops of the ruling hierarchies, corruption increases, and along with it an aversion to change that might disrupt the structure, grows. As a result, these hierarchies uphold tenets and “rules” that support the dominant culture remaining dominant.

Ruling minorities become increasingly distant from their ruled majorities. In so doing they become increasingly cut-off from what is really happening within the social systems they are charged to “protect and serve.” Ground truth exists in the heads, hearts, and souls of social system members whether it is sought after and cared for or not. People and their truth, like life itself, will find a way to express itself, even it means setting in motion disruptive patterns of behavior that threaten to totally transform the system in which they exist. David Brooks, in his editorial entitled, “Trade, Oppression, Revenge,” published in the NY Times on December 25, 2005, illustrates this point through a very recent example. The native Indian people of Bolivia, who comprise 65% of the population, dominated for years by a ruling white elite representing 3% of the population and controlling almost all of the resources in the country, used the democratic process to elect an Indian president. What is in store for the ruling minority of Bolivia and their repressive, exploitative policies? Something not nearly as pleasant as it could have been had the ground truth been spoken, heard, understood, heeded, and the outcomes confirmed.

Therein lays the challenge with respect to ground truth: some have to want to hear, some have to be willing to say, and others still have to respond to what the truth means about the design of the system and make changes accordingly. For any sensor to work effectively, regardless of type or application, its input signal must be captured, processed, and acted upon. This certainly pertains to people as social sensors in human social systems: their input is in the form of valuable stories to tell and their experiences constitute important feedback in regulating the function and adaptation of these same systems. Are you asking…and listening?

Originally posted to New Media Explorer by Steve Bosserman on Monday, December 26, 2005

Ménière’s Disease: Requiem for My Left Ear

This past Friday, my doctor told me I have Ménière’s disease. These two words explained a week of incessant, high-pitched ringing and pulse-throbbing pressure in my left ear, an unsteady gait when walking, and a counter-clockwise swirling of the room following any rapid movement of my head. The only action that seemed to curb it was sleeping, which is what I did. While there was much to be done, I felt like doing NOTHING!

Of course, I indulged in self-diagnosis in between waves of vertigo. Was it the result of too much coffee? Too little down-time? A simple case of the flu? I settled on three possibilities: an inoperable brain tumor (in deference to my mother – may God rest her soul – who believed in establishing an extremely severe alternative no matter how unlikely so that almost any diagnosis made by the doctor would be good news in comparison); an ear infection (where my bets were placed); and wax build-up in the ear canal (I knew this one was a long-shot, but it at least served as a balance to the first choice). Ménière’s disease?! Never heard of it!

“What is it?” I asked. The doctor offered an explanation: no one knows what causes it…could be genetic…could be a virus…there is no cure…it comes and goes unpredictably…you have atypical vestibular Ménière’s disease because you are not experiencing hearing loss in the left ear…long term prognosis is that you probably will have total, permanent hearing loss…severe vertigo can be incapacitating due to nausea and vomiting…can only treat the symptoms…surgery works in some cases to lessen vertigo. In the meantime, here is a prescription for 25mg of Meclizine to reduce dizziness…the side-effects include feeling lightheaded, sleepy, having blurred vision, change in thinking clearly…avoid driving, doing other tasks or activities that require alertness or clear vision. Anything else I can do for you?

I entered into the privacy of the doctor’s office aware of my very real, but unspecified condition. It was real because I physically and mentally experienced its consequences. And in that moment it was mine alone. No one else knew what I had or how I was affected by it, not even my wife who accompanied me. However, the doctor gave it a name. He now knew, my wife knew, and I knew and I was no longer alone with the unknowable.

The mere fact that it was symbolized with letters gave it a virtual existence extending far beyond me and touching the millions of others who have the same condition. This virtualization gives me access to the experiences, knowledge, empathy, and understanding of others; and they to mine. Because of a name, Ménière’s disease, such widespread connectedness becomes a powerful way for me to learn about myself and the result may carry far beyond the bounds of the condition. So, to start…

A Google search on the term, “Ménière’s disease” yields 667,000 results. A search of Amazon generates two pages of books, journals, magazines, even herbal medicines. There are 28 Yahoo! Groups and 3 Google Groups and almost 2700 groups across the Internet dedicated to the Ménière’s-related topics such as tinnitus, vertigo / dizziness, vestibular virus, etc. There are countless variations on how Ménière’s manifests itself and what people who have it do in response. The choices are many, ranging from pharmacological prescriptions to alternative medicines, and from low-salt diets to surgery.

It is almost impossible NOT to get connected. Clearly, I don’t know what’s next for me with Ménière’s — I could have another episode tomorrow or I could never have another one. At the moment I have no vertigo, no hearing loss, no spinning computer screen, no pressure in the ear, only a slight ringing. The prescription for Meclizine is filled, but unused. So in the moment, I go on reading more, asking more, learning more. And even if I don’t have call to use this knowledge for myself, I have it at hand in case others I meet or know are afflicted with similar symptoms and diagnoses. This potential for learning together in the future marks a distinct value of virtualization. If and when Ménière’s strikes again and the realization of the condition hits me hard, I thank all of you in the vast global network in advance for imparting your knowledge and wisdom and making me a better person for it!

Originally posted to New Media Explorer by Steve Bosserman on Saturday, October 22, 2005 and updated on Monday, October 24, 2005

A Wedding Framework

Last week, I had the distinct pleasure of participating in my daughter’s wedding. As typical for fathers of brides, I just showed up and did as I was told so as to contribute as best I could to her having the complete experience she wanted. Obviously, my participation fulfilled an essential role within a “wedding framework” my daughter spent years envisioning. However, it became obvious as the day unfolded that my role was only one of many within a complex blend of activities and sub-routines among people, businesses, and processes over the previous six months that led to the wedding framework “realization” we shared at that time.

This speaks volumes for the necessity of an envisioned framework upon which to define and queue critical activities. It is also a classic example of what happens along a virtualization — realization continuum as a total solution is put into play. As they began their wedding plans, my daughter and her then fiancé chose to get married in a small town along the coast of Maine even though they lived in the Kansas City area. I found out later this is called a “destination wedding,” or as a friend of mine termed it an “announced elopement.” In their case, neither of them lived in Maine, had been to Maine, nor knew anyone in Maine; but that was no deterrent. Enter virtualization!

Successful virtualization relies on three key elements: presence – visibility on websites, blogsites, profiles, and listings wherein a person, business, or organization can be found through routine searches; networking – chatter, buzz, references made by others that corroborate what a person, business, organization claims about themselves; and interactivity – responses in timing and content to emails, voice mails, site comments, etc.

My daughter and son-in-law brought these three elements into play right from the start of their planning. First, they tapped into their personal networks and searched the Internet for information about Maine. Their particular interest was the coast of Maine then small towns on the coast that have white churches in stereotypical settings of rural New England, followed by requisite splashes of fall colors dotting the countryside in early October. A combination of affirmative statements from family, friends, co-workers, and others within their trusted networks who had realized experiences in Maine, what they gleaned from online sources, and what was learned in exchanges of email and phone conversations with people in Maine, the destination was targeted – Camden.

Finding the location was only half the challenge. The second step entailed populating the envisioned overall “wedding framework” with virtualized pieces that nested together to create a whole virtual experience of the total solution. The same networking — web-surfing — loop-closing communication patterns used to find the location were repeated several times over the course of the six-month planning horizon with one critical difference – secondary trusted networks were available.

One of the outcomes of the initial round of site selection was the discovery, “testing,” and subsequent addition of those who passed the test into their trusted networks. These new members were local to Camden. Of course, those Camden locals knew others in their trusted networks who had the necessary qualifications and availability to fill-in the missing blanks on the wedding framework. As a result, church, pastor, bed and breakfast rooms for guests, photographer, baker, florist, marriage license office, etc. were found, their roles clarified, and their commitments sealed – the virtualized total solution was completed slightly ahead of the realized form. As a backup, the local trusted networks had sufficient redundancy that in the event of failure with one of the contracted parties another was quickly available to step in at the moment of realization to assure success.

My daughter and son-in-law had a wedding framework in mind from the start. They went through the steps necessary to find and integrate the people, businesses, and organizations required to first virtualize, then realize their “total wedding solution.” Such an integration role is central in putting together and carrying out any complex project or initiative. Successful “integrators” build new, penetrate existing, and connect interrelated networks. This skill enables them to take a framework of their or another’s making, organize it into a latticework of interconnected cells, and then pull from dense webs of resource networks to “fill” each cell with multiple layers of possible responses. It is a skill that is becoming THE key differentiator among those who are seemingly equals. It is one that my daughter and son-in-law executed flawlessly.

Just as “beauty is in the eyes of the beholder,” my description of a virtualization — realization process that was wonderfully done means nothing unless the one it is about agrees with the result! When describing the experience as her wedding day was winding down, my daughter said, “It was PERFECT!” There is nothing sweeter to the ear for a dad than to hear his daughter say this. So, indeed, it WAS perfect!

Originally posted to New Media Explorer by Steve Bosserman on Friday, October 14, 2005