Partner self-selection and amplifying behaviors
In the third blog of the series, the authors focus in on some very important lessons from their application of systems thinking to improving housing outcomes. Maybe the most important lesson is that working in complex systems requires practitioners to take more of science-based approach or an approach that starts with a hypothesis or a theory of change that is then tested via interventions. It should be expected that in most cases the theory of change will not be correct either wholly or in some way. While the blog presents this as a failure, from a systems-thinking perspective it is just part of a required learning process. This learning process is critical to allowing practitioners to develop a more nuanced understanding of complexity housing systems over time. The second important lesson is that from a systems-thinking perspective, the market actor that is receiving support from a project/practitioner is not really the key element, but what is central is that certain behaviors and mindsets emerge and become normalized in targeted housing systems. In this context, TCIS has started to frame its interventions as partnering with certain behaviors in the form of business strategies and tactics that are central to delivering increasing value over time to incremental builders. Central to both lessons is an understanding that in addition to specific near-term improvements like the use of a better brick, TCIS is also focused on catalyzing systemic change so that housing systems are increasingly more influenced by/responsive to the needs and interests of incremental builders.
CHENGALPATTU, INDIA (02/20/2022) –Lokesh Rajkumar, a worker is seen using Excel CoolCoat product in a house in Chengalpattu. The coating is done using Excel Cool Coat to keep the rooms cool in Summer....Excel CoolCoat is a heat reflective coating and water-proofing paint like product.Excel CoolCoat has the ability to reduce the heat penetration by 50%, and helps in reducing the overall temperature of the house by around 10 degrees Celsius. The tiny ceramic micro spheres present in the EXCEL Coatings paints produce a radiant barrier when dry, which reflects heat away from the home.. Excel Coatings is a manufacturer of heat reflective coating and water-proofing solutions. Their product Excel CoolCoat has the ability to reduce the heat penetration by 50%, and helps in reducing the overall temperature of the house by around 10 degrees Celsius. The Terwilliger Center has been working with Excel Coatings to promote the development and usage of energy efficient solutions for affordable housing. TCIS and Excel coatings collaborated with Habitat India to install CoolCoat on a number of Habitat homes, which improved indoor temperatures and provided key opportunities for data collection to validate the product’s impact.
Over the years we have learned to be pragmatic in our choice of partners. We want to amplify behaviors that create value for low-income consumers, and we want to collaborate with partners who are already doing this and recognize that we have an alignment of interests.
We see that our resource footprint is small relative to the size of the housing market in the countries where we work, and as such we can get the best results if we bolster the efforts of innovative market players. One example of such an innovative player is Consultorio Arquitectonico para Vivenda or CAVI (Architectural Consulting for Housing) in Mexico.
Amplifying interventions costing as little as $1.50
Twenty years ago, architect David Mora found a way to bring architectural services within the reach of low-income households who would usually never engage an architect in their own home construction. Mora took time to study the needs of his client base and engage them by partnering with locals whom homeowners already trusted, such as the local priest, tortilla makers and mail carriers. CAVI cultivated an active social media presence and developed a catalog to show examples of services and help households understand the importance of design.
Mora has since developed a three-tier service offering. For $1.50, CAVI answers specific building questions, such as how many bags of cement are needed for certain jobs or explaining the process of getting land tenure. For $15, Mora will conduct a site visit to the client’s building project, help supervise masons, and provide an architectural perspective on any necessary modifications. For $150, CAVI provides formal blueprints and a comprehensive design plan. This is based on a client’s needs, including the need to build incrementally, or to a specific budget.
CAVI’s services and approach are exactly the kind of market behavior that the Terwilliger Center seeks to amplify. Not only do low-income households benefit, so do architects, because there are more career opportunities, especially for recent graduates. However, when we first engaged Mora, he was hesitant. He had had negative experiences collaborating with businesspeople who tried to replicate his business model. We recognized his business model was idiosyncratic and not easy to copy. What we wanted others to copy was his belief that you could provide architectural services to low-income households, not the specific business model.
Over time, the relationship with CAVI grew, and Mora became interested in partnering with us because we wanted others to learn from CAVI’s behavior, demonstrate demand within the low-income homebuilder segment, and inspire new business models with their needs at the center rather than copying what works for CAVI. This has included presenting the CAVI model in an event with more than 250 students at the School of Architecture of the Universidad Anáhuac, to expose students to more options for professional development and show that housing for low-income families can be a profitable market. To bring this knowledge not only to students, but also to companies and architects, we documented the lessons learned from a joint investigation with CAVI through a book, which describes the process that CAVI went through, and the lessons learned, as well as the recommendations for serving this segment. This included a video documentary containing testimonies of families and housing experts. Universities, chambers, and professional associations of architects will promote these materials.
The connection with CAVI is unusual in that it is an example of a relationship that started with us approaching the partner, but what we found to be most successful is partner self-selection, as CAVI continued to voluntarily deepen the partnership without prompting from us.
Guardian Constructor (GC) in Peru is another case in point. The Terwilliger Center developed GC to boost the quality of incrementally constructed homes while de-risking the construction process for product and service providers, as well as for middle- and lower-income households. GC’s open-source network on-boards firms at every stage of the construction process and facilitates connections. Its Partner Onboarding Tool helps partners and GC discern if they are ready to get behind GC’s value proposition of centering the needs and wants of low- and middle-income households in their business strategies.
Another good example of partner self-selection is Excel Coatings in Tamil Nadu, India. The firm has been selling heat reflective coatings for a decade, focused on business-to-business and online sales, as well as exports. They cater to urbanized areas and were conspicuous by their absence in the highly competitive domestic retail market. Excel Coatings approached the Terwilliger Center and with our support, they were able to expand their operations to the mass retail market, making their products available in 120 retail locations. Through the partnership, the firm conducted in-home demonstrations of the coatings that helped consumers feel the difference in thermal comfort and followed it up with targeted marketing campaigns across various digital channels to increase awareness amongst households. The strategy helped the firm to create a strong foothold in the retail market and promote its product, thereby improving its visibility. The firm looks to grow exponentially, expanding their geographical presence and introducing variants of their product at multiple price points.
Failures are some of the best teachers
As much as we have learned from our successes, we have also had some ‘brilliant failures’ which have taught us valuable lessons about the importance of collaborating with the right partners.
In the case of India, we have worked with several manufacturers of specialized chemical products, including one whom we approached and pitched to due to their size and position in the commercial housing market. On paper they seemed the ideal partner but no matter our agreed upon partnership and best efforts, we were not able to shift their focus to the low-income consumer in a meaningful manner. It took us two years to finally concede that the partnership was not going to yield the results we hoped for.
This type of failure can be found in all five of our Shelter Venture Labs, with examples of us trying to woo the partners we think are best placed to initiate the changes we want to see (often the largest corporations). We now try to avoid this pattern by focusing on firm behaviors first (and their related incentives, commercial or otherwise) and the firm’s size and position in the market only secondarily and allow for the partner to choose us instead of the other way around. It has been a hard lesson to learn but one that is yielding fruit, as we balance our limited time and resources with the size of the problem we are confronting.
Author: Monica Rashkin, with contributions from Sheldon Yoder, Melva Flores, Ariadna Herbert San Roman, Gema Stratico, Varun Pujari.