Maximum Tolerance to Failure v. Idiot-Proof

A wee bit overwrought for you business types

In a meeting with Dunavant, Zambia’s largest cotton producer, the managing director cuts me off in the middle of explaining our mobile payment system to say:

“Just do whatever you want as long as it’s idiot-proof.”

Considering that I was explaining a roll-out of this system to his field staff and shed managers, that could’ve been taken as a bit of a slight. Instead, I take it as a bit of classic business realism: even the simplest things will be screwed up by well-intentioned fools and it pays to be prepared for it.

Nothing mind-blasting here. But the reason it’s so refreshing is because so often the development sector just doesn’t get this. They’re more concerned with possibilities than what they can actually pull off.

This was duly noted by a crusty English development worker, Eric Dudley, when he wrote in his book “The Critical Villager” that development ideas should be engineered for “maximum tolerance to failure”. In effect, he was exhorting his readers to make their designs idiot-proof so as to actually achieve some success instead of swept away in delusions of what could have been.

“Maximum tolerance to failure” v. “idiot-proof”. The second is some much pithier. Leave it to ‘development’ as a whole to over-complicate things. Leave it to business to get things done.

It’s one more reason why the methods of most modern NGOs are hopelessly unsuitable to making things happen: it takes a veteran author coining an elaborate phrase to sum up an idea every mediocre businessperson already knows.

Probably looked better on paper

this probably looked better on paper

Um, ye-ah.

“Well, really, you see the thing is, Sir… we’ve had a down-turn in our last quarter.” 

“A down-turn?”

“Yeah, and, um, well finances have dried up, Sir, for the most part.”

“For the most part?”

“Yes, that’s what I said, for the most part. So, you see, we’ve had to put construction on temporary hold. We’ll refinance our debt, secure new lines of credit, and be back on track next month.”

“Really?”

“Well, actually, no. We’ve flat run out of money from betting the farm on copper prices. Those have tanked. So now I suggest we liquidate assets and get the heck outta dodge. The market for Zambian high-rise office space just fell of a cliff, and it’d be best if we weren’t the last ones to leave the party, if you catch my drift… Sir.”

“Um, ye-ah.”

“Ye-ah, Sir. This whole thing probably looked better on paper, huh?”

What would you do for a paycheck?

Every year thousands of young men in Zambia leave their rural communities, their families, and life on the farm behind to go work in the copper mines.  They choose to work underground, doing physically demanding work in suffocating, claustrophobic environments, where there is a real risk of death.  Why would anyone choose to leave the farm and work in such a place?  Simple: the lure of a regular paycheck.

This is the story Joseph Mutale told me as we travelled together to Lusaka.  He spent 30 years in the mines before retiring to Katete, where he and his wife now manage a small farm and grow vegetables.  Still, most of his income comes from renting out his old house in the Copperbelt and from remittances from his children.  It rings true with my experience: most people I’ve talked with would prefer a steady job to fertilizer subsidies or agricultural extension support.

Life on the farm often means working tremendously hard to coax crops out of increasingly infertile soil, worrying about droughts or floods, and hoping that there will be a market for what does grow.  The seasonality of farming in Zambia leads to farmers getting relatively large influxes of cash once per year.  With a regular income there is greater predictability and forced budgeting, which allow people to make better investments for the future (think about the last time you received a large influx of cash and how much you saved versus how much you spent right away).

Paul Collier comments:

This is not how I see rural Africa: I see not a paradise but a prison. Peasant agriculture offers only a narrow range of economic activities with little scope for sustaining decent livelihoods. In other societies people have escaped poverty by moving out of agriculture. The same is true in Africa: young people want to leave the land; educated people want to work in the cities. Above all, people want jobs: peasants are unavoidably thrust into the role of risk-taking entrepreneurship, a role for which most people are unsuited.

There are many entrepreneurial small-scale farmers who are finding innovative new ways of pushing up their yields and earning higher profits; but these are the minority, just as entrepreneurs (and farmers) are the minority in developed countries.  Most would quickly leave the precarious life of a farmer.  With so much money now pouring into agricultural development, it will be important to remember how far people will go to secure a paycheck.

It’s Independence Day and the power’s out.

It’s Independence Day and the power’s out.

Not a big surprise, really. The load shedding schedule in the newspaper is really just a small fraction of the daily brown outs. Though it does make me wonder on this 45^th birthday of Zambia’s, just how do Zambians connect to this holiday that celebrates the birth of their nation?

Talk to the old timers and you can hear about when crowds flocked to Independence Stadium in the tens of thousands for a raucous celebration with Coke and scones freely handed out to everyone. Bursting with pride and excitement were the Independence Days of back then.

But those are the same old timers that’ll tell me that our neighbourhood’s dusty road used to be paved and lined with streetlights with electricity flowing non-stop like Vic Falls after the rainy season.

A young Zambian co-worker, when I asked her what her Independence weekend plans would be, told me they’d be nothing out of the ordinary. “I don’t really connect with this holiday anymore,” she said. “Not many of my generation do.”

That seemed to sum up the situation in Lusaka today: the nation’s capital was celebrating the nation’s birthday with all the bravado of a laundromat’s Grand Opening. Hardly a flag or a banner to be seen in town, though sure, a few more people than normal were sporting Zambia’s green, black, red and orange. Maybe the bravado of a regular season hockey game.

Though I don’t know the flow of Zambian history like a local does. Did celebrating Independence Day quickly change from lively to not-so-much once copper prices tanked in the 80s? Or was it a gradual decline from exuberance to this? I’m still trying to calibrate—maybe I shouldn’t have such a foreign look of shock at the low-key nature of this national holiday. Maybe the Chez Ntemba dance club will be particularly lively tonight, like July 1^st on Whyte Ave.

For now, though, power’s off, dinner’s on hold, neighbourhood’s quiet, mosquitoes are out—Independence Day, check.

Links We Liked

Graham

Nostalgia in high momentum form.

Forget development–the actual toughest job out there.

Learning about my breakfast cereal of choice.

Thulasy

Interesting debate: An African assessment of African governance versus the academic freedom of Western researchers. I give style points to the former.

Wafer thin margins for those selling old t-shirts (do you miss your “Waco Texas Swim Club” t?) from the US (and Canada) in Liberia.

I wish I were home to see this movie. Sigh.

Hans

Maslow in Africa: A Hierarchy of Opportunity

FSRP paper states the government has not focused on eliminating real “market failures” that small holders face and suggests 7 areas that need attention.

A Cashless Africa

"How much should do you think I should deposit?"

In three words, this describes the vision of Mobile Transactions. I’ve been with them for only a month and a half, but I already see this vision becoming real.

A large client of ours (and a part owner in our company) is Dunavant, a multinational cotton company. Their business model in Zambia uses a network of farmer-agents spread out across cotton growing areas. This network coordinates loans and provision of cotton inputs, and each of these farmer-agents are paid commission for their work.

Until now, this payment was done in cash: armed trucks, men with guns, and long driving distances up and down Zambia. Dunavant now wants to use our mobile money account technology instead. Farmer-agents would have an account on their phone, and Dunavant  would pay them in a single electronic financial transaction, just like sending an SMS. To collect their money the farmer-agents would go to any of our company’s agents, of which there are 70+ spread across all parts of Zambia.

But there was a surprise inside all of this. My Zambian co-worker Sydney and I were out training Dunavant’s farmer-agents about the idea of a mobile money account. As we spoke, and as they asked questions, the whole subject turned from how they would get paid from Dunavant to the possibilities that come with having a “bank” account.

“I can store my money on my phone? I don’t have to take it all out at once?”

Yes.

“How does it stay safe? I’ll have a secret PIN code so I’ll be the only who can access my money?”

Yes.

“You’re saying that I can deposit money as well? So if I sell my maize or soy beans I can go to an agent and deposit, for free?”

Yes.

“And what about the fees? Are there monthly fees? a minimum balance?”

No, the only recurring fee is K1,500 ($0.20) to withdraw money.

It quickly became clear that these were men, good farmers at that, who had never had a bank account, never had a place to store and save their money, and were now being offered exactly that.

All of this adds up to a little less cash, and a little more satisfaction, which is exactly what Mobile Transactions’ vision is all about.

Trust in a Taxi

I was out and about in Lusaka with my favorite taxi driver Eddie. I like him because he’s deliriously funny but also because he’s very fair. I don’t have to negotiate prices with him because I trust that he’ll be reasonable.

Why do I trust him? I never really thought about it until he started talking about lost cell phones. The number one thing people accidently leave in taxis is cell phones. An opportunistic taxi driver would just take them and flip them for some quick cash. But Eddie doesn’t.

“I keep the phone on, and I wait for the owner to call it. When I answer their call, I tell them I’ll bring it back to them. You know why I do this?”

Eddie was being uncharacteristically serious. “Why Eddie?”

“Because after that, they’ll never lose trust in me.”

A lot has been said about the short-sighted nature of business in the developing world. Making money is hard to do in a place like Zambia, so it’s difficult to turn down short-term gains when long-term ones are not guaranteed.

I can see why a taxi driver would take a lost phone and cash-in instead of banking on a random customer’s repeat service. I can also see why a farmer would side-sell to a brief-case buyer instead of fulfilling a contract with an unreliable outgrower. These are rational choices.

At the same time, though, one cannot discount the power of realizing benefits after investing in a relationship. It may take a long time to realize those benefits, and they may not be immediately gratifying, but once you do, I’d say it would be hard for anyone to go back.

Cultivating strong relationships is every good business person’s secret weapon. Eddie actively think about this, that’s why he’s my taxi driver of choice. I wonder how many farmers and agri-businesses do?

Links We Liked

Here’s the first of a new feature for our blog – a run-down of some of the things we read, liked, and wanted to share. Here’s what’s we’ve been reading lately:

Graham

I was looking for money–I’ve got enough ideas. Found this: SoCap 09

Gotta read up on the competition. Innovations in Mobile Banking: The Case of M-Pesa. Oh, Olga.

Mark Hemsworth mentioned it and curiosity got the best of me–it usually does. Craigellachie, BC?

Thulasy

Exactly what I was looking for: balanced reasoning on why Obama deserves the Nobel.

From the man whose witty links-posts inspired this one, Chris Blattman comments on a question started by Wronging Rights: “Who’s afraid of the big, bad market?”

Hans

…is M.I.Burkina.  Last we heard, he was enduring the heat with a new buzz cut and eating a pain au chocolat before heading to a West African hip-hop show.  We’ll try to feel sorry for him.

Just plain wrong, and that’s just okay

I’ve been guilty of my share of blunders. I remember how I used to be convinced that is was better to fill up an ice cube tray with hot water than cold water for the reason that it would freeze faster. I can still remember my mom shaking her head at me and my sister as we lectured her why we steaming hot water in the ice cube tray. The slightest bit of thermodynamics would’ve proved us wrong.

Lucky for my ego, Zambians aren’t any different. There’s a endemic driving error I’ve seen on Zambian roads: minibus highway drivers in Zambia accelerate to high speed, then turn off their engines, coast for a few hundred meters, and do it all over again. The reason?

“I’m saving gas.”

Ok, I’m usually the guy that suspends judgment in a new place, and I’ve only been in Zambia for a month. But this is ridiculous.

Force = mass X acceleration

So when speeding up, a minibus engine has to work hard to provide enough force to accelerate the mass of the vehicle and people. But when maintaining speed, the force needed is only that to overcome wheel friction and air resistance.

F_needed = F_{air resistance} + F_{wheel friction}

This force is scant compared to the force needed for acceleration. That’s why maintaining a constant highway speed is one of the best things you can do for fuel efficiency. These Zambian guys are way, way off the mark. Why? And also, why should I care?

From what I’ve seen, there’s two ways to think about development:

1. Assume the locals know nothing (less popular, these days), or
2. Assume the locals are infinitely rational, but that we just aren’t seeing thing the way they are (more popular).

I don’t agree with the first group, and find myself more at home in the second, but there’s the danger: how do you fit in the local stupidity of turning minibus engines off at highway speeds to save gas?

My answer is to remember that we’re all human here, and as many times I’ve fallen prey to misguided logic, superstition, or just plain stupidity, Zambians have done the same. Keeping this in mind I can tell a farmer that burning crop residues is ignorant of soil mechanics, be confident that witch doctor remedies aren’t the way to go, and scold ridiculous minibus drivers while still respecting all of these people.

After all, putting hot water in the ice cube try is no different.

What can donors do for business?

I just wrapped up a final evaluation for a business-oriented agriculture project that was implemented by a large, international NGO. The gist behind the project was this: Train small scale farmers in drought prone areas to grow a drought tolerant crop, then get them to sell that crop to a large, commercial market.

It sounds so simple when you say it like that. The reality, unsurprisingly, was not so simple.

One of the biggest findings from the evaluation was that implementation was significantly hampered by the NGO’s culture and identity as a relief organization. When farmers saw their land cruisers coming, they expected food aid, not a business opportunity.

The result was an ineffectively implemented project that messily mixed messages of a welfare approach (relief and social protection) with those of a business approach (economic development).

During the findings workshop for the evaluation, where leads for all agriculture and business related programs and projects were present, the prevailing sentiment was that this NGO is having an identity crisis.

Are they a relief organization, or a development organization, or both? What is the biggest need? What are they best at? These are tough questions to ask, and we didn’t leave the meeting with any clear answers.

My main thought is that most NGOs exist because they serve a social need or because they’re gap-filling in lieu of public services. This is an incredibly important role for donors and NGOs to play.

But what about business and economic development? Should donors get involved? What role should they play? Should aid have to play by the bottom-line rules of business? Is that even possible?

What role should donors play in the development of agricultural industries in sub-Saharan Africa?

This post leans to one side of the argument, but I’m on the fence.  I’m trying to figure this out and will re-visit the question on this blog as I do. What do you think?