PPT Deepa Prahalad BASE FORUM 2013 by lina salazar

Design for the Majority June 6, 2013 II Foro Base Internactional MedellĂn, Colombia

Agenda • How can design empower the BOP? • Why is design important for countries? • How can we build an ecosystem? • Conclusion

Strategic challenges require design

Strategic challenges require design  Co-creation  Consumer Experience  Globalization  Innovation  New Business Model Creation  Human Capital Development

Design changes the game

Three Critical Questions 1. Will it change the conversation? 2. Does it show the opportunity? 3. Will it lead to some action?

Design is a means to connect with people

Convergence of Brand and Design  Brand leaders are design leaders  Brands have a distinct look, feel and experience  This experience must be valued by consumers

Deconstructing Good Design

15 Universal Emotions

The Merging of Design, Emotion and Narrative

Emotion, strategy and design

Design transforms market size

Grassroots Innovation - India

Amphibious Bicycle

Thai Innovators

Colombia â&#x20AC;&#x201C; Mahavir Kmina

Homemade artificial limbs

Young patients at Mahavir Kmina

Akshaya Patra (Nonprofit, India)  High-tech kitchen

 Approach: Mid-day Meals  1.3 M meals/day  9,075 Schools/ 9 states  1 billion total meals served

OLPC (Nonprofit, Global)  $130 laptop

Approach:  Low-cost laptops  2.4 M laptops  40+ countries

Room to Read (Global Nonprofit)  Room to Read Student publication

 Approach

 Libraries/ Schools  1.5K schools, 13.5K libraries  11.5 M books/ 707 published

Nokia Life Tools (Global MNC)  Learning App

 Approach:  Apps for learning  50M downloads for Nokia Life Tools  70 content providers  India’s Most Trusted Brand

New Opportunities and Choices

Meaningful Interventions Mod Roof by Hasit Ganatra

Makeshift Slum Roof

Eco-Friendly Roof Tile with Solar Cells

Modernization/ Storytelling Designs by Abhijit Bansod

Sustainable Design Design by M. Ibnur Rashad

Top 10 Most Innovative Countries (Global Innovation Index) All are high income countries 1 2 3 4 5 6 7 8 9 10

Switzerland Sweden Singapore Finland United Kingdom Netherlands Denmark Hong Kong (China) Ireland USA

Source: INSEAD/ WIPO Global Innovation Index, 2012

68.2 64.8 63.5 61.8 61.2 60.5 59.9 58.7 58.7 57.7 (c) Deepa Prahalad

Other Major Global Players Capacity Building in Key Areas 17. 21. 32. 34. 57. 64. 79.

Israel Republic of Korea Malaysia China Thailand India Mexico

Source: INSEAD/ WIPO Global Innovation Index, 2012 (c) Deepa Prahalad

Top 10 Global Brands 2012 1

Coca-Cola (+8%)

$77,839 M

Apple (+129%)

$76,568 M

IBM (+8%)

$75,532 M

Google (+26%)

$69,726 M

Microsoft (-2%)

$57,853 M

GE (2%)

$43,682 M

McDonald's (+13%)

$40,062 M

Intel (+12%)

$39,385 M

Samsung (+40%)

$32,893 M

10 Toyota (+9%)

Souce: Interbrand Top Global Brands, 2012

$30,280 M

Interbrand Top 100 Global Brands 10 Asian Brands in Top 100 9. Samsung (+40%) 10. Toyota (+9%) 21. Honda (-11%) 30. Canon (+3%) 40. Sony (-8%) 53. Hyundai (+24%) 56. Nintendo (-8%) 65. Panasonic (+14%) 73. Nissan (+30%) 87. Kia (New to list) Source: Interbrand 2012 Rankings

$32,893 M $30,280 M $17,280 M $12,029 M $ 9,111 M $ 7,473 M $ 7,082 M $ 5,765 M $ 4,969 M $ 4,089M

Design as a strategic signal

Transforming the consumer experience: Hyundai First Ad for Hyundai Excel  Began selling low-priced cars in the US 25 years ago  Seen as an alternative to a used car – at $5000  Offered “Best Warranty in America”  Sold 168,000 cars in 1986

Brand Evolution First SUV 1999 Hyundai Santa Fe

First midsize car 2000 XG300

First Luxury Car 2007 Genesis (c) Deepa Prahalad

Design and business models that connect  2008, introduction of Hyundai Assurance program at the beginning of recession - 14% sales increase  Hyundai Genesis voted one of the Best New cars of 2009 (in $32,000 - $37,000 price range)  Goes from 11th to 4th largest carmaker (topped Ford by 400,000 vehicles)  Named No. 1 “upward climbing brand” and top in brand loyalty

Luxury Hyundai Equus Today

A Multibrand Success Story

A Sphere of Influence

Facebook is expected to have more people than China by 2016 (c) Deepa Prahalad

Design as a tool of Social Justice

Communicating Brand Innovation

Seeing the next opportunity

Reimagining the Possibilities

Applying the same principle to different settings

GE: The Magic of Science and Empathy Panda Infant Warmer

 Issues addressed: Reduce fear for parents and children  Friendly imagery, simplified User Interface  Cost of Equipment: $20,000 - $40,000  Cost of Training: 3 day course, $4500 - $5000  Market: Large hospitals, NICU

Non-profit Consortium (CIMIT)  Incubator from car parts

 Issues addressed: high cost of maintaining incubators and scarcity of parts  Project development cost: $150,000  Cost of building unit: $1000  Steady supply of replacement parts worldwide

Updated Image of â&#x20AC;&#x153;Neonurtureâ&#x20AC;? Design that Matters

Embrace: MBA Student Design  A portable solution

 Issues addressed: Many people don’t have access to hospitals or health care  Cost of solution: $100  Designed to be reusable  Maintains constant temp. for 4-6 hours, insert can be reheated with hot water

The market for a low-cost, reusable solution…  Infant mortality in the US the highest in the developed world  46 M Americans with no health care coverage; many more with inadequate benefits  540,000 premature births in US (2005), plus additional low birth-weight children  What about families who want to save on energy?  What about winter clothing and other markets for this solution?

Design transforms market size

Innovations with Global Relevance BOP Design Elements  Lower cost  Ease of use  Sustainability  Scale

New Markets  Elderly/ Fixed Income  Students  Eco-conscious  Unemployed

Create a conversation

Allowing all parties to have a voice

Become an Interpreter

Become an interpreter Object

Experience

Accept Individual Diversity

Conclusion

Building an Ecosystem

Establish standards for social innovation

Case Study: India  Number of NGOs     

1970 – 144,000 1980 - 179,000 1990 – 552,000 2000 – 1,122,000 2009 3,300,000

Source: Indian Express

 HDI Ranking of India

   

2000 – 2005 – 2009 – 2011 –

128 127 132 134

Note: Methodology was changed in 2010 to give greater weight to inequality (c) Deepa Prahalad, 2012

Build/ Maintain Governance Standards Global Innovation Rank 1 2 3 4 5 6 7 8 9 10

Switzerland Sweden Singapore Finland United Kingdom Netherlands Denmark Hong Kong (China) Ireland USA

Transparency International Rank 6 4 5 1 17 9 1 14 25 19

Source: INSEAD/ WIPO Global Innovation Index, 2012, Transparency International . (c) Deepa Prahalad

Intangibles as % of Enterprise Value

Source: The Brand Bubble

Year 1950 1960 1970 1980 1990 2000

Value 30 40 35 43 47 52

What are intangible assets? Brand

Intangible Assets

Brands, customer goodwill, trademarks, company reputation

Market Position

Contracts, licenses, legal monopolies, customer lists

Business System

Organizational models, software investment, proprietary processes, franchise rights

Knowledge

R&D, patents, human capital, IP (c) Deepa Prahalad

Document Existing Innovations India’s Honeybee Network (Prof. Anil Gupta) * Documented over 150,000 grassroots innovations * Categorized by sector, all inventors pictured and credited * National innovation competitions now in place * Information available to entrepreneurs and MNCs * Key components, costs and benefits given * Ideas broken down into “for licensing”, for sale, etc * Commercialization of most promising concepts

Understand Policy Outcomes  India’s first Data Journalism Initiative  Modeled after Sunlight Foundation in US  Seeks to foster transparency and better governance  Aimed at young Indians and improving public debate

Understand Aspirations  Dream:in founded by idiom in Bangalore, India  Trains ‘dreamcatchers’ to document aspirations for individuals, family and country  Dreams are shared with industry and entrepreneurs  Process replicated in Brazil, US

A New Ecosystem can be created

Policy Outcomes

Existing Innovations

Aspirations

Create access to critical design tools

Techshop - the new public library?

Design requires social transformation...

The present extremes…  Vigil outside Apple store

 Occupy Wall Street

The Power of Connections

The Golden Temple, Amritsar India

Worldâ&#x20AC;&#x2122;s largest free lunch program 80,000 people fed each weekday 160,000 people fed on weekends 250K roti, 3.3 tons of dal produced each day

Who would be better off because of this work? CK Prahalad

FOR Q&A Session

Conclusion ď&#x201A;&#x2014; Behavior is as important as income

Conclusion ď&#x201A;&#x2014; Behavior is as important as income ď&#x201A;&#x2014; There is a convergence of quantitative and qualitative data

Conclusion  Behavior is as important as income  There is a convergence of quantitative and qualitative data  Looking at emotions creates obligations for companies

Conclusion  Behavior is as important as income  There is a convergence of quantitative and qualitative data  Looking at emotions creates obligations for companies  A great design still needs a great business model  Looking at emotions lends clarity, not complexity  Good data can be paralyzing for global efforts

The present extremes…  Vigil outside Apple store

 Occupy Wall Street

Poverty Premium is shrinking ď&#x201A;&#x2014; Design is more important

GOOD DESIGN NEEDS CONNECTION “ It’s not how you feel about the design or the experience… It’s how it makes you feel about yourself. ”

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GOOD DESIGN NEEDS CONNECTION Quadrant Mapping: This Psycho-Aesthetics map assesses competitive products for specific market The x-axis represents the interactivity level: the higher the perception of interactivity, the further to the right of the map. The y-axis relates to Maslowâ&#x20AC;&#x2122;s hierarchy, and is a relative measure on how the bottles compare stylistically against one another.

Artistic

Enriched

Basic

Versatile

The prior exercise of finding the Key Attractors should help placing the bottles on the map. There is an interactive mapping feature on the following page.

MINING THE GAPS

Fueled by Psycho-Aesthetics速

MINING THE GAPS Unearthing Opportunities to Create Designs that Connect

The Role of Narrative

We plot out how consumers navigate the marketplace in order to design experiences that create heroic evangelists and generate viral demand

The role of technology No longer “tools”, but new brands 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Coca Cola IBM Microsoft Google GE McDonald's Intel Apple Disney HP

Source: Interbrand Top Global Brands, 2011

Indiaâ&#x20AC;&#x2122;s most trusted brands 2011 Mirroring global trends 1. Colgate 2. Lux 3. Airtel 4. Lifebuoy 5. Nokia 6. Dettol 7. Brittania 8. Vodafone 9. Maggi 10. Closeup

Intangibles as % of Enterprise Value

Year 1950 1960 1970 1980 1990 2000

Value 30 40 35 43 47 52

What are intangible assets? Brand

Intangible Assets

Brands, customer goodwill, trademarks, company reputation

Market Position

Contracts, licenses, legal monopolies, customer lists

Business System

Organizational models, software investment, proprietary processes, franchise rights

Knowledge

R&D, patents, human capital, IP

Intangible value of businesses internationally Value of Intangibles ($Billions)

% Enterprise Value

India

$251

76%

USA

$9,201

71%

Canada

$795

68%

$2,010

66%

Singapore

$92

45%

Total Global

$19,500

62%

Emotional Connections lead to business results 

Firms of Endearment (FOE) performance  Steady over 3 yr. period  Outperform 1.7 to 1 over 5 years  Outperform 3.1 to 1 over 10 years

Lessons from FOE Performance ď&#x201A;&#x2014; Itâ&#x20AC;&#x2122;s possible to add value regardless of sector

Lessons from FOE Performance  It’s possible to add value regardless of sector

 Connecting with consumers is an advantage that grows

Lessons from FOE Performance  It’s possible to add value regardless of sector  Connecting with consumers is an advantage that grows

 There is no single aesthetic or price point for good design

Lessons from FOE Performance  It’s possible to add value regardless of sector  Connecting with consumers is an advantage that grows  There is no single aesthetic or price point for good design

 Frequency of interaction leads to connection

Communicating Brand Innovation

Seeing the next opportunity

Reimagining the Possibilities

Applying the same principle to different settings

GE: The Magic of Science and Empathy

GE: The Magic of Science and Empathy Panda Infant Warmer

Non-profit Consortium (CIMIT) Incubator from car parts

Non-profit Consortium (CIMIT)  Incubator from car parts

Updated Image of â&#x20AC;&#x153;Neonurtureâ&#x20AC;? Design that Matters

Embrace: MBA Student Design

Embrace: MBA Student Design  A portable solution

Three Ways to Enhance the Experience

 Simplify  Enhance  De-risk

FlipCam “Point and Shoot” Video: Simplify

How can I make something easier/ more fun?

Transforming the consumer experience: Enhance TurboTax Snap Tax

How can I take the negative to neutral or positive?

Turbo Tax

Best Buy Buyback Program: De-Risk the Purchase  Allows consumers to “Future Proof” by letting them sell old devices for a guaranteed price when they upgrade

How can I provide comfort to a new adopter? Ease anxiety?

Best Buy Buyback Program

The Role of Narrative

Three Critical Tasks for Companies  Communicate intentions  What are you working on?  Do my ideas matter?

Three Critical Tasks for Companies  Communicate Intentions

 Explain how this will fit into my life  What will it do for me?  How will it make me feel?

Three Critical Tasks for Companies  Communicate Intentions  Explain how this will fit in with the consumer’s life

 Show people what it took you to get here

Merging of Design and Technology to drive adoption

Connections transform strategy

Our approach shapes partnerships  GE: Partners are hospitals and hospital systems, financing institutions  CIMIT: Hospitals, NGOs, Universities, Unicef, WHO, car manufacturers  Embrace: All of the above, and mothers and families

Our approach shapes business model challenges  GE: Financing, Providing adequate training, high maintenance costs  CIMIT: Securing partnerships, training entrepreneurs to build device, distribution/ education  Embrace: Funding, distribution, reducing cost further

Design is a means to connect with people

Apple's Official Mission Statement "Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings."

The Apple Experience

"Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them."

Create a conversation

Allowing all parties to have a voice

Become an Interpreter

Become an interpreter Object

Experience

Accept Individual Diversity

Conclusion

Explaining the role of design

Mapping of Strategy  How is the industry changing?  (Product Map)

 How are consumers evolving?  (Persona Map)

 Where are the emerging opportunities?  (Opportunity Zone)

Transforming the consumer experience: Hyundai First Ad for Hyundai Excel  Began selling low-priced cars in the US 25 years ago  Seen as an alternative to a used car – at $5000  Offered “Best Warranty in America”  Sold 168,000 cars in 1986

Brand Evolution First SUV 1999 Hyundai Santa Fe

First midsize car 2000 XG300

First Luxury Car 2007 Genesis

Connections create new business models  2008, introduction of Hyundai Assurance program at the beginning of recession  Offered to take back car in case of job loss, medical impairment  Departure from rebates and 0% financing  14% increase in sales

 Early start for Cash for Clunkers program

Design that connects ď&#x201A;&#x2014; Hyundai Genesis voted one of the Best New cars of 2009 (in $32,000 - $37,000 price range) ď&#x201A;&#x2014; Firm competition for Ford and Japanese carmakers

Expanding the offerings  2009 sales up 47% over 2008  Introduces Gaslock Program to lock gas prices at $1.49  Goes from 11th to 4th largest carmaker (topped Ford by 400,000 vehicles)  Announces goal of having highest fuel economy in industry by 2012  Named No. 1 “upward climbing brand” and top in brand loyalty

Today  New Equus luxury car has price tag of $58,000  Owners manual installed on an iPad  Winner of multiple safety and design awards

http://www.youtube.com/watch?v=4DjgT4d6GX4

Hyundai

Three Important Questions

 Am I creating Heroes?  Are people telling the story?  Have I shown others the way forward?

Big opportunities for India ď&#x201A;&#x2014; Leverage call center experience to create manifests for new products

Big opportunities for India  Leverage call center experience to create manifests for new products  Leverage diverse population to test usability  Large base of BOP, middle income to RNIs

Big opportunities for India  Leverage call center experience to create manifests for new products  Leverage diverse population to test usability  Large base of BOP, middle income to RNIs  Design business models to reduce fraud and corruption  AMUL, Unique ID, Cell phones

Motivating Behavior Change

151

Social Entrepreneurship is Big…  Top 10 Microfinance Institutions  171.24K employees, 46.1 M borrowers, and $11.57B Portfolio (Source: Devex)

 Social entrepreneurship is a global phenomenon  5.5% of US GDP, 13.5M US workers (10% of workforce)  An estimated $173B value in volunteer work

 New structures emerging  Public-Private partnerships  B Corp: 500 B Corps in 60 industries, $4.2 B in revenue (c) Deepa Prahalad, 2012

152

Companies are adopting the idea  Changing Social Norms  90% of Millenials say that companies should be measured by more than profit (Source: Deloitte)  8,000 companies signed UN Global Compact to promote fair labor standards, sound environmental practices  Almost all of Fortune 500 gives CSR reports  Role Models: Clinton, Gates, Buffet  Intangible value of brands

What are the ingredients of a good design?  Looks/ Appearance

 Usability

 Packaging

 Narrative

 Features

 Emotional Connection

 Differentiation  Retail Setting

15 Universal Emotions

The Merging of Design, Emotion and Narrative

156

The Merging of Design, Emotion and Narrative

157

Emotion, strategy and design

The role of technology No longer “tools”, but new brands 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Coca Cola IBM Microsoft Google GE McDonald's Intel Apple Disney HP

Source: Interbrand Top Global Brands, 2011

Indiaâ&#x20AC;&#x2122;s most trusted brands 2011 Mirroring global trends 1. Colgate 2. Lux 3. Airtel 4. Lifebuoy 5. Nokia 6. Dettol 7. Brittania 8. Vodafone 9. Maggi 10. Closeup