Sandra Vandermerwe: “You don’t have innovation and transformation unless someone sees a crisis.”

23.02.2012, 15:54
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How can we influence policy makers, stakeholders and planners to make a case for change? How can the concept of sharing be reinvented in a post-Soviet society? Students from the Megacity theme Ricardo Pinho and Lam Le-Nguyen addressed these questions to Sandra Vandermerwe who specializes in the customer-centric approach to business. 

R. Is it common for you to work with architects and present your model to them?

S. I’ve worked with all sorts of people all over the world. The important thing is to use the principles from business and transfer them to other environments, other professions. The foundation principles are the same if you talk about lawyers, or doctors, or architects, or NGOs. The skill is to adapt them to your circumstances.

The idea of frugal innovation — the idea that products and services must be affordable but still desirable and relevant — is a universal idea today. A lot of this kind of innovation is coming from emerging countries; they are trying to give quality and access to the mass market to those who can’t afford luxury.

L. But necessity is the mother of invention.

S. You don’t have innovation and transformation unless someone sees a crisis. This is either a crisis of opportunity  (there’s something out there we want to get, otherwise we miss out) or a crisis of threat (if we don’t do it, we’re in trouble, whatever that trouble may be). But somebody has to have a sense of urgency and passion about something. And then you need the tools and the processes to be able to make the case and persuade and engage the right people and take it through the various steps that make it happen. Otherwise transformation doesn’t take place.

R. Do you think that Moscow and Russia have exactly this momentum for the implementation of new innovative solutions for low-cost housing?

S. My understanding as an outsider of what’s happening in Russia is that it is renewing itself, it is becoming a global power, it is becoming more influential in the world. Being more competitive is a natural part of that process. Productivity, health, leisure, environment — all those issues, I would imagine, are as important here and as important to low-cost housing, as they are anywhere else in the world. These are universal things that are happening as we speak. So, I believe that as Russia reinvents itself and reestablishes its place in the world, the ability to be productive and competitive and innovative is crucial.

R. When we are speaking about Russia, we cannot forget the historical past of this country. Your Track 2 model is applying mostly to the free market. Do you think that customers are prepared for such a model of companies? They’re not used to the value of certain activities.

S. My responsibility to you is to make you think about the future. That is why I am here. There’s a set of existing values that people have and there are emerging values one expects are either happening or will happen soon. I can’t imagine that any consumer doesn’t want safety or an ecological friendly and healthy environment, or doesn’t think about prevention of disease, or doesn’t value quality service and saving time. Translating them into the Russian context may be slightly different from other countries. But the free market is a way of thinking and there are fundamental principles that drive it in a modern setting. When I talk about Track 2 companies I talk about free market thinking and behaviour. By that I mean that people who believe in something have the ability and desire to make it happen. Track 1 is about serving the company; Track 2 is about serving the citizen as a customer, as well as communities and country. In other words, creating value for all.

L. A lot of what we have discovered in Russia is that there’s a lack of empowerment here, a lack of trust in the system that generates a somewhat individual life.

I believe in the power of the individual. Look at Africa, for example. There is a company is Ghana, called UT Bank which is giving loans to entrepreneurs quickly and easily, because the CEO believes that that will empower people. Empower them not only economically, but socially, which means less reliance on government. There is a company in Kenya called Healthcare that is a franchise of many stores getting high quality drugs to millions of rural people who had no access to them before or went into government clinics only to find they were badly diagnosed or the drugs were out of stock. These two examples are simple ideas made real by individuals who have the vision and courage to do what they believe is needed by a market. I believe that is what ultimately drives change.

R. One thing we discussed during our workshop, in terms of low-cost and affordable housing, is the idea of sharing space. Not just for the economical benefit, but also to improve the efficiency of the resources. In the past, sharing was common for the Soviet society. How do you think today we are going to teach this new customer that sharing is profitable for him?

S. When we say sharing, what do we mean? We mean sharing to the mutual benefit of everybody. So sharing could mean we don’t all have to own a car — we can share a car. Sharing could mean we don’t all have to have skis — we could share them. So more and more we’re talking about people who do not own everything, but who have access to things. So it’s not a question of being less well off because you’re sharing; it’s a question of being better off because you’re sharing.

Now we’re getting into the area of semantics. If the word “sharing” has bad connotations, you may have to have another concept. But the concept of flexible spaces, multiple-use for spaces, time-efficient and smart spaces, shared spaces and shared responsibility – these are all things driving new economies. We are hoping that through our teaching you will feel strongly enough about it to be able to influence the policy makers, because it’s good for everyone and that’s the point. It means good for the citizens, good for the society, good for the community, good for the planner. By ‘good’ I mean that it costs less and you get more value. That’s when we know we’re on the right track. It costs less and we’re getting superior value. We don’t have to trade off those two things.

R. It’s interesting that, according to you, we need to influence politicians. As urbanists and architects we know that there needs to be work done. Can we try to involve all the stakeholders in this new model of housing?

The sad reality is that most people understand figures and finance. The quickest way of influencing people is to make a case for change based on the fact that it’s going to be more cost-effective. But over the long term. Now, how long that is based on whatever you choose. But my point is that it’s not just the cost of a building or the cost of entry/buying. It’s the cost of use, cost of replacement. What’s the point of having a low cost if you have to replace everything, or pay high maintenance costs, or get ill from toxic waste, or get headaches from cheap paint and stay away from work. So we may, for example, have smart appliances that cost more now but may use less energy — it’s better for us and better for the planet and more cost-effective. You have to be able to quantify benefits. We are good at quantifying costs, but poor at quantifying benefits. You must make a case for change based on these facts if you want to make people change. There are two sets of raw materials to choose from — this one costs X and that one X+, so we’ve got to choose the cheaper one. We have to make a case for what’s best because it’s better in many different ways, all of which ultimately lead to low-cost, or higher productivity, or higher taxes, or longer and better life, however one measures it.

R. But definitely there are interactions in many-many fields of this system that is a city. So how do we put every stakeholder on the same level to have this kind of discussion?

You can never persuade everybody. One of the things that kill innovation is trying to get consensus. I believe personally, I may be 100% wrong, but part of Japan’s problem was trying to get consensus. It causes delay, it causes duplication, it causes complacency. People can’t move because they want everybody to be happy. You have to do it in such a way that you choose very carefully at the beginning what you’re going to do and with whom you’re going to do it. And when you’ve proved that it works, you start to get more and more people and more and more stakeholders involved engaged and helping you make the case.

If you try to appeal to everyone at the beginning – it’s not going to work, because you’re going to be so busy dealing with resistance, you’ll put your whole energy into resistance instead of putting your energy into the job. So you have to be very careful to choose which stakeholders — the most innovative stakeholders — make a very strong case for change and then you begin to prove that it works and show testimony and data and case studies of how it’s working.  And then the others will follow. That’s how transformation works. It’s a cumulative process.