Webuye, December 2015
The Lean Startup methodology and what it means for us in rural Kenya
Welcome back to our blog where we would like to share some more thoughts about methodology.
In November 2015, Bidhaa Sasa was invited to the Lean Startup conference in San Francisco. You may wonder why we attended this particular conference (rather than COP21 in Paris for the photo opp!) and why do we care so much about methodology.
The reason is that Bidhaa Sasa is a startup, even if we’re not developing a new sexy mobile app but a ‘boring’ distribution service. We like the definition of a startup by Eric Ries as “a human institution designed to create a new product or service under conditions of extreme uncertainty” because it hits the nail on the head for us.
Why? Because creating a new service in rural Kenya as we are doing is certainly under extremely uncertain conditions. To name a few of these conditions, we have to deal every day with poor infrastructure (from frequent power cuts to flooding to an under-developed financial sector), willingness of clients to pay back loans without collateral, reliability of products in rural conditions, potential corruption and fraud, inconsistent policy frameworks, teachers’ strikes, erratic farming seasons and more.
So we went to San Francisco to share our experience and learn from others. As an added bonus Rocio was also interviewed by the Lean Start-up founder and guru-in-chief Steve Blank.
You can listen to our conversation to learn why we chose the Lean approach to build our business. To put it very simply: if there is a better chance to succeed applying a tried and tested methodology that can deal better with “extreme uncertainty” than other methodologies, it would be foolish not to try.
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What we heard in the conference presentations plus the conversation with Steve made us reflect a bit more on some of the difficulties we face every day with our startup in terms of methodology.
This blog post is about the difficulties, differences and doubts we have found so far when applying the Lean Startup and Customer Development methodologies in rural Kenya as opposed to a developed-world market. Here the whole interview:
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Abstracting the principles while not being a high tech company based in Silicon Valley requires imagination
We have read and reread Eric and Steve books and had multiple discussions about how to apply the principles in our context. It is sometimes very tempting to dismiss some of the good ideas in the books especially when the examples they have been built on are almost always online or high-tech businesses. For example, what does virality, our holy grail with regards to our engine of growth, mean when your clients are certainly not using social media?
It requires some effort to abstract the principles and apply them to our context. It is also requires some strength not to get discouraged by the raised eyebrows of the ones disappointed by our “lack of innovation” (no, we are not developing an app for the so-called emerging middle classes in ‘Africa’ – that’s mainly a myth anyway, they’re tiny).
No good examples to learn from in Frontier Markets
From what we saw at the conference we have to admit that the Lean Startup movement is slowly expanding into non-tech sectors, at least in the US. However, we are still looking for others like us working in Frontier Markets like rural Kenya.
Despite the buzz of the African startup scene (Silicon Savanah, Silicon Cape…) we fail to see many new businesses adopting the Lean methodology consistently. Yes, people talk a lot about disruptive innovations (In one count there may be more innovation hubs than startups), some even mention pivots and MVPs but one rarely sees analyses about ‘engines of growth’, ‘market positioning strategies’ and ‘experimentation’. And again, most of the new businesses are tech-centred and going after the urban and higher-income markets.
Perhaps this is because doing boring business in the low-income and rural market segments is just too crazy or should be left to the NGOs.
We are, however, seeing more interesting conversations in the development sector as it is slowly moving away from the traditional “give away” charity model and embracing market-based solutions.
We would like to mention the work lead by the education arm of Acumen, +Acumen. They are the first ones to our knowledge that are promoting the same Lean and Customer Development principles from Eric and Steve in social enterprises. We are happy because now we can share our experiences with them. But we shall leave the eternal debate of the definition of a social enterprise for another blog post.
Customer Development is even more powerful when the cultural and societal differences between founders and clients are huge
People often ask us what our major barrier, problem or challenge is that we have experienced so far. This certainly is the understanding of our clients, because we (the founders) are not Kenyan small holder farmers. We are not even Kenyan, and we would need to go back 3 or 4 generations to find a farmer in our family trees.
When the social, economic and cultural gap between our clients and us is so huge, and the literature studying the habits and customs of small holder farmers in Kenya is almost non-existing, all we can do is to follow strictly the Customer Development steps as defined by Steve Blank without taking any short cut. And this is the difficult part because it is so tempting for us, rich and highly educated people, to find the answers before even asking the questions.
How will rural smallholder farmers with uncertain and seasonal incomes pay back for their solar systems? There is surely that prejudice but also we were uncertain despite our believe that without spreading the costs, we wouldn’t sell anything. With Lean you act on the assumptions and test them in real life. So far we still have virtually no defaults, and while 10% are delayed, we also find that currently over half of our expected repayment value has come in early. Especially if you have volatile incomes, you don’t want the burden of a loan hanging over you longer than you need. Moreover, while credit isn’t liked, it has a strong appeal to try the product without overcommitting. OK, this isn’t statistically significant and certainly not academic, but this simply illustrates why Customer Development is such a strong tool for us.
People and culture: some doubts
When in San Francisco, we asked this question several times to different experts: how do you create a Lean culture in your organisation? “Easy: share and explain the principles and make sure employees understand and embrace them.” But then how would you do this when the bulk of your workforce are not highly educated and ambitious engineers?
The problem is not with the values of the company, as few would disagree with values such as Honesty, Transparency, Customers or People First and so on, but with fitting the Lean principles of how to run the business within the culture of the company, which in turns needs to fit within the culture of the region it operates.
For example, we live and breathe experimentation. But experimentation sounds like gambling or not having a clue of what you do. How do we instil a culture based on experimentation and open and transparent communication throughout the organisation while running a tight ship?
Our local culture expects strict hierarchies, respect for the elders and almost fear of the rich and powerful, if we like it or not. Many western-world values such as team work, goal-oriented ambition, constructive and frank criticism are rare in rural Kenya. On top of this, lean concepts such as experimentation, feedback loops, or even admitting we don’t know enough yet and we are still learning, can easily be misinterpreted as weak leadership in an amateurish organisation.
We also have an ethical dilemma derived from the principle of experimentation. By definition things can move really fast in a startup, if the experiment is negative, cut your losses and move on. This rhythm can easily have collateral effects like roles changing and people losing their jobs (not to mention failing to meet expectations amongst our target clients). One would not feel too bad if one engineer or the head of sales in a software company in London has to go, they will find jobs elsewhere.
But in rural Kenya things are less dynamic. Unemployment is really high and skills are really low (of course, there is a link). First, finding new employees is tough but then any new employee needs a disproportionate amount of training, nurturing and looking after. In such places is best to build the human resources of the organisation from within. The last thing you want is to lose people once trained and that is what perhaps your experiment is telling you, wrong product, wrong delivery model, wrong role. How to bring these Silicon Valley ideas on HR effectively into rural Kenya is still work in progress.
Lessons learned
- Someone wise said once: “We all have more in common that we have differences”. Try not to get too distracted with the “contextual” differences and focus on the commonalities; we are all humans after all. Use your imagination to extract the best of the methodologies available: the “this is not for us” is rarely true.
- There is still a lot of work to do for the academics and consultants out there reading this: Non-tech and non-developed world applications or adaptations of Lean; human resources and the Lean cultural fit; just to mention a few.
Favourite Steve Blank’s Manifesto line: “Not all startups are alike”.