Profit from Music…

I have just finished reading Grown Up Digital and have been trying to relate this with a lot of the changes that are happening with respect to how people are networking. From Sharad who has been looking at the mobile device as a means for recruiting people to Prabhu who has in fact been dabbling with this new revolution for quite some time, there is a paradigm shift in the way people are learning to reach out to what Don Tapscott calls the Net Generation.

So it came as no surprise when Prabhu introduced me to the latest gadget he has been working on "UTVatPlay". A user-customizable radio (called the UDIO) – something that one can configure in three simple steps: Add Music that you like, Add your voice, Save and Launch! So, what's exciting about this? This is an excellent adaptation of the social networking concept to the world of Music. Throw in the ability to customize and personalize your radio (an important criteria for the Net Geners) and I have a powerful medium to reach out to my social network. I have the ability to add my voice, so I can now host my own talk show, or share information with my friends. For example, having just returned from a vacation, I can now talk about how wonderful the holiday was, and why it must be a place that you must go to if you want a quiet holiday…far from the madding crowd. This, surely will have a lot of takers…especially like-minded friends who are looking to get away from the hustle and bustle of their daily hectic lives. So, this now becomes even more powerful than a status message which I put on facebook!

The second important aspect is the ability to bring together a group of people with like tastes and preferences. When I create a radio which contains music of my liking, it is quite likely that I will have some followers (quite similar to the followers of my blog) who will be keen on knowing what kind of music I listen to. More importantly, for someone who is looking at getting a target audience with similar interest profiles, it is quite possible that they will now have a profile of people who apart from belonging to a network have also similar taste in music. I'm sure that's something that is of immense value to someone who is looking for such a niche target market.

The third aspect is that this tends to grow just as any other Social Network. I will soon be linking up to friends and friends of friends who have got something interesting to talk about, or are playing music which I like. And soon enough we'll probably have a group that keeps close tabs on what each other are doing. More importantly, for someone who is tracking all this, it soon becomes quite evident the kind of music that is popular, the radios that have the highest audience, the time and duration that people listen to these radios each day. An advertiser can easily pick the sweet spot for placing his commercial in between songs.

I just hope Sharad gets to read this…for I'm sure he can come up with another million ideas of how to exploit this medium!

And while he does that I'm trying to figure out how this can be used in a knowledge management scenario…especially one that may benefit the microfinance sector!!! Any ideas….leave me a note.

Product demonstration – getting the act right!

Having arrived early for an appointment, I decided to window-shop at the Home Life furniture store. As I walked through the store, I actually found myself looking at how the furniture was arranged and mentally mapping this to a similar requirement at home. I did not find cots on sale – there were bedrooms for sale! Even a simple looking bedspread was looking regal amidst a chest of drawers, a grand mirror and a dressing table – the "room" dressed up in pastel shades!

The product presentation happened to be about a pre-press editing tool. The presenter was, I assumed someone who happened to know all the features of the product – obviously someone very passionate about the product, because soon after introducing herself she launched into a spiel on the product, using jargon which I'm sure none of the editors sitting in the audience could make head or tail of. And then she proceeded to type into the notes section "sldkfsld hfsh sdhfsldh fskld"!!! Here I am watching a product demonstration for a pre-press editing tool, and wondering what the author would make of such a note sent to him! This sadly, seems to be the favorite phrase of most software engineers who make product presentations. Even as I watched this product presentation, I could not help thinking about the neatly organized furniture just two floors below, which gave a wonderful sense of how the furniture would actually 'perform'!

I'm sure the company had done a lot of research on the requirements and had indeed developed a product that may cater to this audience. But somehow, sitting over there, I got the sense that she had lost her audience and was so consumed by the beauty of the product and was totally oblivious to customer perspective. Well, there was cocktail and dinner to follow, so they sat patiently waiting for her to complete before making a beeline to the food counter! I wonder if this lecture-cum-demonstration session yielded any results for this company.

Looking at the whole event in retrospect, I wonder how she might have reached to the audience better:

So what does the customer really want?

Quite often we get so carried away by the product features and its configurability, that we tend to forget what the customer really wants. Any customer would want to see in a product something that will help him in his work, something that fulfills a need – basic or hedonistic. Either way, the more easily he is able to relate to the pain area, the easier it is to get the product features across.

It may actually help to have a homogeneous audience so that you can focus on specific aspects. However, a quick poll should give you an idea of the heterogeneity of the audience, and their broad level of expectation. I believe you will have a good idea of this even before starting your presentation, and that should give you the ability to configure the presentation to meet the expectation of the audience.

A solution for it to be effective should be presented in its natural habitat. Just like the cot which looks completely in place in a bedroom. A bed is an intrinsic part of a bedroom, and therefore is inalienable from the context. And depending on what you want to highlight you can set the environment around it to highlight or make it a subliminal feature; for example, to highlight the feature that the bed may be stowed away, you would then make the bedroom look smaller to drive home the point. Similarly, if I was highlighting the ability to send a clarification request note to the author, I would actually type out something that looks like a clarification (in the context of the passage) which would actually give a better sense of what was actually possible; otherwise all you would be describing is a product feature – you have a text box which accepts 144 characters! Have you ever counted the number of characters when you send out a note to anyone?!! You write as much or as little as you think is necessary to get across your message.

How can I assemble or disassemble the cot? Is this a question I would ask myself when buying a cot? Not unless, I was someone who made a living assembling or disassembling cots. While this is an important feature by itself – it definitely will not be the primary reason for which I would go cot-shopping! Yes, I definitely would keep that on my checklist – How will I get this King-size bed into my bedroom through a 3'X7' door? Or I get kicked out by my landlord every six months, so I better get something that is easy to pack and move. But if these became my top considerations, then I probably would make do with a bedroll or a reed-mat, rather than trouble myself with a king-sized bed! And yet, we as software sellers launch right into these wonderful "master tables" that we have created that will allow you to store data of all shapes and sizes! And better still – can't find a table that meets your requirement – here's a table wizard…click and you are ready to store some more data!!!

I think being able to showcase the product in its natural setting – a business environment is half the battle won. I've seen some RFPs come up with detailed scripts, that it has really made me wonder at the amount of pain the customer has taken to explain his business blueprint! And yet, we ignore all of that and launch into our own spiel. Just getting the message across is half the battle won! Anyone who probably gets down to a detailed nuts-and-bolts analysis, will do so only after he is satisfied with the overall 'basic' requirements; besides someone who is looking at the nuts and bolts is probably a person after your own heart and will be interested in the architecture, platform, configuration capabilities, masters, tables, SQL…ad nauseum…and is also less likely to be the chief decision maker!!!

What else do you think is important for a product demonstration?

Technology and the learning framework

I found this article quite interesting as it has a lot to do with the current work I am engaged in. It also prompted me to write some of my thoughts on the subject and its specific influence in creating knowledge. (http://teachingthursday.org/2009/04/02/technology-and-pedagogy/)

The article talks about how technology can be used in the classroom from various perspectives – as a tool, a medium and a network. The concept of online learning has been gaining ground, especially in the corporate world, with technology playing an enabling role. However, perhaps the most significant aspect of this development is the complete rethinking of the concept of online learning. From trying to replicate a classroom environment, we have now learnt to harness the power of the medium in transforming the manner in which learning happens online. From a position of where content was king, and the classroom provided a mechanism for providing content, the new medium has significantly reduced the prominence we afforded to content. Google has rendered content ubiquitous; it brings to us a veritable cornucopia of content that we seek. In fact, perhaps a trifle too much! How often have we gone beyond the first page of search results that Google throws up?

To paraphrase a verse from one of an ancient Indian text, knowledge was:

Achaaryaath paadam aadatthe paadam sishya swamedhayaa paadam sa brahmachaaribhya sesham kaala kramena cha A fourth of knowledge is obtained from the teacher, a fourth due to the student's own intellect, a fourth from his friends and classmates, and the remaining fourth from experience.

 I think in the current context, we can translate that to the four perspectives of learning – knowledge handed down from scholars, knowledge obtained through study, knowledge obtained through interactions, knowledge gained from experience. Here, the knowledge through self-study comes to us from various sources – the content that is available online; the web 2.0 features are those that enable us interact with peers and classmates, which provide additional insight – blogs, chat, forums etc. The ability to consult the expert is one way of reaching out to scholars. However, perhaps one valuable knowledge that got passed down generations was the wisdom resident with the teachers. And the ability to harness that knowledge is perhaps the access to obtain knowledge from the teacher, and learn from the experience of someone else.

So, perhaps then, we can look at a model where learning becomes a medium for turning content into knowledge.

 As shown in the diagram above, Content gets abstracted into learning modules and through the process of learning, interactions and abstractions, help in generating knowledge. This knowledge goes back into the system as content which again goes through the process of abstraction, refinement and re-generation of knowledge. In each of these cycles, the new experience and learnings are put back into the repository thus creating fresh content, and thence new knowledge.

The ability to arrive at the right tools which will transform this content to learning will perhaps be the key to successful knowledge management systems – one which will not be viewed merely as huge electronic databases, but virtual gurukulams (schools) which will be the fountainhead for knowledge transformation. In the absence of such a process, we are more likely to end up with mere electronic databases which perhaps consume time and energy and result in KM being viewed as ineffective solutions for innovation.

Related article : http://knowledge.wharton.upenn.edu/article.cfm?articleid=1841)

Living on the edge

According to a survey of the Grameen model in Bangladesh, about 5% of all Grameen borrowers managed to get out of poverty each year.  However, what was perhaps more interesting was the fact that infant mortality rates had dropped by over 37%.  This seems to suggest that hygiene, medical care and education levels had also increased in the surveyed group. This trend gives us the hope that the next generation of these borrowers will probably live in better socio-economic conditions.  

One thing that seems to stand out in all such surveys is the fact that mere micro-credit does not necessarily help in alleviating poverty.  In a sense, to use a much-battered term, the "ecosystem" as a whole needs to improve.  The ability to de-risk the ability to earn a livelihood is as much a criterion as others in being able to create a sustainable model for microfinance.  Micro-credit alone, exposes the customer to the risk of default on repayments, thus taking him further into indebtedness.  For instance, death of the bread-winner, or an ailment that leaves the person without an income for a significant period of time can cause untold hardships on the family.  In the current scenario, since micro-credit is given primarily to assist income-generating activities, these people end up borrowing from money lenders or other sources for such unforeseen expenses.  

While covariant risks like floods and storms are difficult to cover, I think basic insurance like medicare should become an integral part of any micro-credit.  In a country like ours, where social security is absent or very poorly administered, micro-insurance to protect the breadwinner can make all the difference between eternal poverty and economic transformation.  Similarly, in the case of death of the bread-winner too, the family can come under severe financial strain; insurance to cover funeral costs, and a cover that will help some other member in the family take over the reins of the family will help in softening the death blow.

I am curious to know if there are any studies which show a correlation between non-payment or default of loan repayments and medical expenses of borrowers.  

The meek might just inherit the earth!

The concluding remarks of Jacques Attali, President of PlaNet Finance summarized the two-day Microfinance and New Technologies Summit '08 very succinctly. "People working in the Microfinance industry need to ask themselves at the end of each day – what have I done today to alleviate poverty?" This should probably be the first tenet that should rule the direction and objective of all microfinance institutions. He then proceeded to caution about the risks – the first is the risk of regulation (or the lack of it). Microfinance is not about just credit – it is about providing financial services towards income generating activities. Only such services can promote transformation among this segment of the market. We have already witnessed the effects of poor regulation in the developed economies (The sub-prime crisis), and to avoid this we need to ensure that appropriate regulation is in place. While, we acknowledge the fact that this is a growing industry and should not be fettered by over-regulation to the point of it becoming unviable to operate the business, we definitely need to have sufficient checks and balances in place, to ensure that the trust reposed by this segment of the people is safe-guarded.

The second aspect of risk is the lack of credit bureaus. We will need to establish credit bureaus in order to be able to identify the good borrowers from the not-so-good ones. Decisioning and disbursement of loans can happen speedily and effectively only when credit bureaus are in place. If we ignore this, then we are likely to witness a phenomenon similar to the sub-prime crisis, where poor quality loans, unchecked, were disbursed. While the volumes or ticket size may not be so high, it is certainly bound to push progress of this sector several steps backwards.

Echoing the sentiments of several Microfinance Institutions, he also cautioned against the indiscriminate and blind faith reposed in technology as a panacea for all the challenges faced by MFIs. Technology is an enabler and an integral part of the overall business strategy…and only so much. No technology is going to compensate for deficiencies of either sub-optimal processes or under-skilled people; any technology implemented in such an environment can likely cause more harm than benefit to the organization. It is very important to understand what technology can do…and what it cannot. Do not implement technology you do not understand. Perhaps the recent crisis triggered by the derivative markets, which was understood only by the nerds who wrote the algorithms for them are an example of the devastating effects of technology being applied blindly.

My own take on this: It certainly has been an eventful two days – not the least because of the networking opportunities it generated. It was interesting to see the kind of work that is happening in the field; and even more heartening to see technology failures being shared so openly – something that very few For-profit companies might venture to do. It was also interesting to see innovation in action in the midst of poverty and resource scarcity….perhaps an indication of why we require skunk-works for innovation and not plush offices!

I also got to see a lot of people with passion – the zeal and commitment for a cause clearly showing in their attitude and actions. There is still hope that the millennium goals might turn out to be a reality.

For those who missed the event, Microfinance Insights – the media sponsor of the event had a very interesting and useful blog going, which captured the day's events in great detail.

The Base of the Pyramid

The Harijans of the financial world have just had their lexicon upgraded. Jerry Rao, at a recent seminar, proposed that the term "Base of the pyramid" be used to refer to the "around the poverty line" clients. IBM's initiative for this sector is called "Banking the unbanked" (a la Untouchables). Whether that makes any difference is a moot point, though. In any case, with the top of the pyramid crumbling and the falling debris impacting the middle of the pyramid too, even the large financial institutions and software players seemed to have suddenly found the base of the pyramid an attractive option. The spotlights are now focused on this segment of the market, which until now had been a rather unattractive option.

Microfinance has seen a gradual shift from a socialistic "not-for-profit" initiative to more recent efforts by organizations that have driven these initiatives quite successfully as capitalistic ventures. With the success of the Nobel prize-winning Grameen Model, microfinance has suddenly found favor among banks and bigger financial institutions as a means of profitably deploying funds. In combination with philanthropic NGOs and Corporate Social Responsibility initiatives by large organizations, microfinance now has a better than never before chance of actually causing socio-economic transformation. As pointed by Prof. Satchidananda Sagala, sustainability is the key to successful transformation for any microfinance institution. As one of the keynote speakers at the Microfinance and New Technologies Summit he remarked: "Unless, an MFI is able to run its programs in a sustainable manner, there is not even a glimmer of hope that we will be able to transform the lives of the people that we wish to serve under these programs". The real question then is whether technology can help in bringing about that sustainability. And for technology to be able to do that, the cost of such technology needs to be affordable.

There have been several initiatives from a technology perspective that have sought to bring down the cost of operations (per-transaction cost) and increase outreach. Some of them are beginning to show signs of pay-offs while others have drifted off into new directions. FINO, for example, which started off by being a pure-play technology company began to realize that this was perhaps a non-starter and transformed itself into a services company. Today, they have begun to see results as a service provider to banks which are implementing Financial Inclusion initiatives and for the National Rural Employment Guarantee Scheme. Technology, as always, has not been very successful in bridging the last mile. In the microfinance world too, the human intervention is becoming inevitable in bridging this gap. Banking correspondents and animators are playing a significantly large role in reaching out to the rural poor.

Another aspect of this problem seems to land us in a catch-22 situation – that of literacy levels. One of the reasons why this segment has not been viewed as commercially viable in the past has been the low levels of literacy among this section, and the consequent cost of training and associated cost of distribution (higher media, marketing and distribution costs). A corollary to this is the lack of knowledge about the customer (lower KYC compliance) resulting in these institutions being unable to assess the risk adequately. I don't know if technology can play a role in this very effectively. There is going to be a cost associated with increasing levels of literacy, and educating this segment about the usage of technology, which in turn can help in lowering the costs of operations. However, there is an upfront capital expenditure involved…and until someone bells this cat, the slow rate of progress is going to be a challenge.

From a software perspective too, the tendency of most players has been to retrofit existing solution to the perceived needs of the market. However, this is unlikely to work because of the above mentioned reasons. Implementation of these solutions will pose huge challenges and the return of investment is quite unlike what is obtainable when implementing solutions for cash-rich financial institutions. The solution will need to be designed and developed to meet the specific market needs of this segment. More importantly, it will need to solve the twin challenges of high ease-of-use (low literacy levels) and low cost (low spending power among MFIs). This is a still-evolving segment, and therefore the processes too are going through various stages of evolution and maturity. Any software, to be successful, will need to accommodate a level of flexibility that reflects this evolution.

Lastly, I think we are still grappling with the issue of what the customer actually wants. The bouquet of products and services that are on offer leave a lot to be desired; and this is inextricably linked to an understanding of the customer's environment. As we get better at acquiring knowledge about the customer and her environment, we stand a better chance of offering appropriate products and services. In the end analysis, if the intention is to cause socio-economic transformation, then it cannot be an isolated effort at just providing him with credit or addressing his economic concerns. To be able to witness a next generation that is truly emancipated, the transformation needs to address social concerns (education, hygiene and medicare are top on my list) along with provision of financial services. Only then can we actually say that this has been a sustainable operation.

Micro-insurance in the Indian context...contd.

After my pilgrimage to Sabarimala (in Kerala), I had to board a bus from Pampa to Nilackal, a place about 25 kilometers from Pampa. All vehicles other than cars and jeeps are required to park at Nilackal; pilgrims after reaching Pampa board a state-run bus to reach Nilackal. I was amazed to see that the conductor was using a hand-held e-POS (Point-of-Sale) terminal for dispensing tickets. I guess the number of trips he had to make up and down ferrying passengers from the banks of the river to this parking lot did not give him time to tot up the tickets sold and reconcile it with the cash in his bag. However, with this handy device he knew exactly how many tickets he had sold, and for what value; handing this amount over to his cashier, he could then proceed almost immediately for his next trip (after a stop-over for a chai at his favorite tea shop, of course)!!! Synchronizing this hand-held device to some accounting system sitting in far-off Trivandrum or Kottayam was probably only a small step away!!!

From pampa, we reached Chengannur; as I sat at the railway station waiting to board the train to Chennai, a news item on Television caught my interest. The Indian Finance Minister, Mr. P Chidambaram was talking at a press conference after a meeting which he had attended; there he was exhorting insurance companies to sell insurance through post-offices and thereby extend the reach of their products and services to the rural segment. This was pretty much along the lines of my previous blog on micro-insurance; I, therefore decided to pursue that line of thought a little further.

With connectivity becoming ubiquitous, infrastructure and technology costs becoming affordable, it is now becoming increasingly possible to address some segments that were previously economically unviable. As is evident from the bus conductor's example, technology is available and affordable too! So what then are the important ingredients for a successful implementation of micro-insurance?

1. Technology
2. Infrastructure
3. Trained resources as correspondents and facilitators
4. Insurance products
5. Insurance underwriters / micro-finance companies
6. Information / knowledge of customers
   

This list is not in any particular order. However, it occurs to me that the information technology provider who has strong product and services capability is probably going to be the linchpin for a successful implementation. In conjunction with an insurance company / micro-finance institution which can provide the financial backbone to this business model, the technology company would play an important role of integrating the various components to make it a seamless offering.

From a technology and infrastructure stand-point, we are looking at a centrally deployed back-end software that can talk to these hand-held POS terminals either online, or offline. In most cases, connectivity would be offline. What would probably work is to have hand-held devices with insurance software products loaded on them. These could then be taken from doorstep to doorstep for collection of premiums (or even settling of claims). At the end of the day, we would have them synchronized with the back end system through a dial-up connection (or even GPRS). The e-POS terminal could also use biometric authentication to identify customers (especially useful in regions where literacy rates or low and as a means of identifying customers uniquely in a country where there is no SSN). A thermal printer attached to the hand-held device could be used to print out receipts (quite similar in concept to the bus ticket on that Pampa-Nilackal bus)! Assuming we have a group insurance scheme where a Self-Help Group is involved, then we can print out one policy covering all the Group members and not have to bother about printing separate schedules and policy covers for each member. In addition, given the irregular income streams of this customer profile, it may be necessary to issue installment premiums (and even probably waive the 64-vb rule). All of this will require the regulator's special approval; in turn insurance companies will need to provide auditable data to ensure compliance with regulations.

In addition to all this, we require relevant and good insurance products that are suitable for this market segment. We also need information about customers; information gap relating to customers, and this market segment is a huge barrier that insurance companies face in being able to offer the right kind of products for this market. With the help of a strong team of facilitators and correspondents, and the right KYC norms in place, it should soon be possible to bridge this information gap. In fact, this is perhaps the most significant role technology will play in this solution.

What is also becoming evident is that the back-end insurance system needs to have a very strong SOA orientation and will be deployed in the SaaS model. The ability to configure products specific to this customer segment is a key capability requirement for this product. Equally important is an open architecture that will allow interface to hand-held devices and be able to integrate with back-end accounting systems, and provide the required compliance-related information to regulators and statutory bodies. In addition, this will have a strong business intelligence module that will be the backbone of all the data analysis and reporting. Ensuring availability of infrastructure, connectivity and software reliability across so many geographically dispersed is a key challenge that needs to be surmounted.

There has been so much interest in micro-finance in the country in recent times. While this is certainly a huge opportunity, it also presents some really daunting challenges; this is not something one company can venture into alone! It will require a strong consortium of like-minded organizations backed by strong technology. And an organization that has the project management skills to get all of these players to work together as one team.

64 V B: In India premiums have to be paid before coverage can begin and the insurer can be 'at risk', a provision under section 64 V B of the Insurance Act.