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LEARNING CASE

OPEN SOURCE
HOUSE

From OS-House to Janta Meals and


everything in between. How Enviu
learns its way to more successful
social business development

Our top-7 key lessons


1) Focus on asking the right questions, instead of
jumping to solutions.
2) If you want to start a company, start developing the
business model, and then the business case, as early as
possible.
3) Do this intertwined with involving the end-user, in
their role as a possible customer, not as a non-binding
think tank.
4) Attract a financing/funding mix for your development
that allows this iterative development, also allow time
for emerging insights.
5) Preferably the entrepreneur is the idea-owner and
otherwise involve the entrepreneur as early as possible.
Make sure the entrepreneurial team has the right skill
set for this particular start-up idea.
6) Innovation is seldom about (just) technology.
7) Cherish crowdsourcing but use it wisely. Accurately
assess its position in the whole process from Idea to
Start-up.

CONTENT
01/
INTRODUCTION
02/
THE PROCESS
OF OS-HOUSE
03/
DIFFERENT THAN
EXPECTED
04/
LESSONS
LEARNED
05/
SOME FINAL
WORDS

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01/
INTRODUCTION

Innnovation, a word
we love to use.

Innovation, a word we love to use. But what


does it mean? When are you innovative. And
when is innovation successful? We will get
back to that question at the end of this report.
At Enviu we believe in challenging the current
system, the way things are done in business.
We also believe in the power of the crowd: two
can come up with more than one. With these
two things in mind we started our Enviu journey
in 2004. And it brought us to various places.

Image credit:
Detail from competition entry

02/
THE PROCESS
OF OS-HOUSE

Flashback to
2007. Vincent, an
architect, went
on a trip to Africa
and discovered
something...

In 2007, while in Africa, Vincent van der


Meulen, an architect, noticed there was a
huge need for affordable housing. Moreover
he saw the new middle class building housing
for themselves in a unsustainable way. As an
architect he knew you could build an affordable
house that people with a stable income and
decent jobs would be able to afford and at the
same time would be sustainable.

Image credit:
Detail of competition entry
WBR House

THE START
Since the context of his regular work was not
the place to work on this idea, he knocked
on Envius door. At Enviu we love a good
challenge, so together with Vincent we started
working on the Open Source House concept.
From the start the question was how
we can unleash the international
knowledge about sustainable building
for people in the emerging middle
class. Therefore the idea of organizing
an international competition and making all
designs available as open source was born.
Additionally, it was a method that we knew
would be interesting for funders, because of its
visibility. At that time social entrepreneurship
was not a topic yet and most grants would
not allow to develop a social business but
instead were focussed on creating visibility and
awareness. We applied for a grant at VROM
(one of the former ministries now included
in the current one for Infrastructure and
Environment) to finance the project.

Image credit:
The Advocacy Project (Flickr.com)

THE ISSUE
As Vincent noted, a lot of people live in slums.
To be exact, more than one billion people
worldwide. The inhabitants of these slums
are usually people with a job and an income.
However because of a lack of choice,
a lack of knowledge on sustainable
building, use of expensive imported
materials and high prices of the
current housing these people do not
have access to appropriated housing.
After a research period about the size of the
issue in various countries, and their general
conditions, we chose Ghana as country for the
competition. It would be a pilot country because
the results were to be the basis for activities in
more countries. Next to the grant of VROM we
attracted partners such as COM.wonen, Dura
Vermeer and NCDO to finance the competition.
The aim was to challenge architects worldwide
to submit and co-create a design for a modular,
flexible and sustainable family house. The
Open Source House challenge was born.

1 blj.
people live
in slums

30%
mortgage
rate per
year

The Open Source House


challenge was born.

The assignment:
a single family house
for the emerging middle
class.
CHALLENGE COMPETITION
It took us 7 months to prepare the challenge,
which included more in depth research about
the social and cultural characteristics and
stakeholders in Ghana, as well as finding a
plot for the pilot house so the architects would
have a context to design for and building
relationships there. This phase included
collection of the wishes and needs of the enduser and an assessment of the current housing
industry.
We selected a jury for the competition involving
high-end people, so it would be attractive for
architects to participate. In January 2010 we
started the competition. The assignment of
the competition was a single family house for
the emerging middle class in Ghana on a plot
within the Cape City project.

Image credit:
Detail of competition entry

RESULTS
The competition process took 5 months from
start to choosing a winner and the response
was overwhelming. 3100 architects from
more than 45 countries worldwide
participated, joined as teams and
submitted a total of 247 entries. That
was a lot more than we expected, especially
since the participating teams had to share their
design open source and on-line to be eligible to
join the competition. We had to include an extra
jury round. 10 independent architects rated all
the designs, which took them a week to do, and
handed the top 30 over to the expert jury. The
expert jury chose 10 designs to be presented
to the final jury. More than 500 people joined
the OS-house final event, and the design
Emerging Ghana was selected as the winner
of the competition.
The event reached national television, the
competition had been enormously successful,
the jury was happy. We were all excited.

The design Emerging


Ghana was selected
as the winner of the
competition.

Image:
The winning team of the Open
Source House Competition 2010.

image:: competition entry


by pietje janssen

Image credit:
image:
Detail of
detail
winning
fromcompetition
competitionentry
entry
Emerging
Emerging
Ghana
Ghana

We had to get back to


the drawing board to
come up with a more
feasible design.
DREAM HOUSE
The winning team teamed up in a pressure
cooker week with architect Vincent to optimize
the design. We started preparing for the pilot
in Ghana. At this stage we involved
a lot of possible end-users, took
interviews, and we asked them what
their dream house would look like.
We started building the winning design in
Ghana as a pilot house. It turned out that the
calculated price of the house was much higher
in the Ghanaian context using local calculators.
One reason for this was the innovative
sustainable building technology that was
applied and not yet common in Ghana. So we
had to go back to the drawing board to come
up with a more feasible design. It took us a year
to build the first pilot house, mainly because
of land issues (zoning plans and permits from
different government institutes). We attracted
a local entrepreneur, Samuel, in Ghana to start
the OS-house company there and to sell the
houses, with the first house as showcase. All
this was a slow process, at least, much slower
than anticipated, despite the local support we
had built.

Besides the costs of the pilot house, we


discovered by going in depth with endusers and other stakeholders that apart from
availability of proper housing, a much bigger
issue was relevant, but less visible, literally: In
Ghana the typical mortgage rates were 30%
per year. This turns the total costs for
financing a house for an end-user into
an insurmountable barrier, at least if
the mortgage works as it currently
does.
With this new knowledge, much more attention
had to be paid to the financial mechanisms
of buying a house. This effort paid off: a new
innovative financing service was developed
with stakeholders, bringing down the mortgage
rate to (less than) 10%. With this break through
achieved, the entrepreneur wrote a decent
business plan, paying more attention to groups
of houses (communities), got the parties
involved, but we were not able to make the
deals with the stakeholders since the market
was not ready yet. All parties waited for the
other to go first.

INURBA
Then Rick came on board, an American
entrepreneur with years of experience in project
development. The new direction which had
evolved focussing not only on the house, but
much more on the community, infrastructure,
affordable financing and scale to make the
house affordable was something he could relate
to.
After his evaluation of the project in Ghana, he
wrote recommendations on what to do next. His
main conclusion was that setting up a company
in Ghana was not feasible at that moment. The
financial innovation we had developed was
good, but it was an extra effort for the company
to make it work. Since project development
is already a very cumbersome process we
decided to start with a project where the right
partners were on board and that preconditions
were met. He also concluded that, since the
focus of the business had shifted from the
house to project development, we had to
strengthen the entrepreneurial team with real
estate development experience.

Rick and Enviu started a spin-off company,


called INURBA, which includes a whole new
inclusive business model around building
communities, mortgages, infrastructure and
housing. Prefab housing replaced the
more expensive designs from the
competition to improve control on
budget, quality and timing. Getting the
project finance on board is still a challenge,
because developing the project to a stage
where there are enough securities for funders
is difficult without initial funding. A community
project in Nigeria is close to launch. Over 250
potential buyers signed up for a mortgage for
an affordable house and are already enrolled in
the screening process of the bank.

Rick and Enviu started


a new company, called
INURBA

FUNDING
Right now the business model is good and
the financial feasibilities and securities are
getting better every day. We had guarantees
for 3 million euro from two large housing
corporations, but then at the last minute that
deal fell through because of the crisis in
the Dutch housing corporation sector at the
beginning of 2013.
Rick and Enviu are currently looking for
investors in the public and private sector.
As soon as we receive funding we can start
building the houses. We just have to find the
right source for funding.

Image credit:
Putting up the panels of the
INURBA house - ENVIU

We had guarantees
for 3 million euro

03/
DIFFERENT THAN
EXPECTED
Asking the wrong
questions and more

unfortunate choices

It took us three years from start to finish to learn


that some things didnt work as we assumed
they would. To start with we spent an extraordinarily amount of time conducting feasibility
studies, but we asked the wrong questions,
and the answers given were theoretical and not
binding.
But we made more unfortunate choices...

Image:
Detail from competition entry

Their dream house was


too expensive
EXPERTS VERSUS END-USERS
In the competition we focussed only on the
product, the design of the house; not on other
things that can be relevant for a house to be
bought by the end-users. We selected a highend jury, including high-level people from
Ghana. They were not the potential
end-user, so they focussed on other
things in judging the designs than the
end-users would have. We dont use them
as scape goat, as they judged with their best
intention, but for us it was a lesson: match the
person with the task.

THE PILOT HOUSE


International architects designed the house.
The cost calculations were therefore off the
mark. After having the cost calculated by a
Ghanaian engineer we discovered that the
house was too expensive to build and the
design needed to be altered.
We organised two co-creation workshops with
local experts and end-users in Ghana. We
learned that the design didnt correspond with
the local cultural preferences. For instance,
the house was too open and didnt
give enough feeling of security and
the lay-out of the house was also not
in line with how Ghanaian people like
to live. The kitchen was closed and had a
roof; something that they didnt like because all
the food smells would be trapped in the house.
They preferred to have an open cooking place
next to the indoor kitchen.
We organised a second workshop and cocreated a new design. We asked them what
their dream house would look like. After this
session 36 people signed up showing interest
in buying such a house.

THE REQUIRED ENTREPRENEURIAL


SKILLS
We took a local entrepreneur on board, with
a good knowledge background in architecture
and real estate. However throughout the
course of the project the focus of the business
slowly changed towards project development.
We were not able to strengthen the core
entrepreneurial team with the right real estate
development expertise. This turned out to be
crucial.
DEVELOPING THE BUSINESS MODEL
We involved stakeholders, but we didnt think
about the business model in the first stages
of the project. In part this was due to
the financing, which was focused
on organising a successful design
competition, Getting access to an affordable
mortgage or other form of financing proved
to be a much bigger problem than getting
access to an appropriate house. We did come
up with an innovative solution for that, which
actually turned out to be the real innovation.
This happened relatively late in the process
though. A likely reason again was the focus on
design of the house from the start of the project
and therefore asking the wrong questions to
the end-users, i.e., not about how they were
thinking to finance their house.

An affordable
mortgage proved to be a
much bigger problem

04/
LESSONS
LEARNED

What have we
learned and how to
apply it?
With the valuable knowledge we gained in
this project we definitely would approach
things differently. We would not start with a
competition. We would start with going to
Ghana ourselves, discussing the issues and
solution direction with potential buyers and
getting them on board, then start looking for
financing and finally the design.
Learn from your mistakes but also
from what went well, even if it was
not intended like that. Thats what true
innovation is all about. So anticipate that this
learning will take place, as will unexpected
situations. The key is to let these unexpected
situations happen before a lot of money has
been spent and/or final choices have been
made.

Image:
Detail from competition entry

Continue reading for more specific lessons,


both for Enviu itself, and others.

How to approach:
1. Get a design
2. Go to Ghana
3. Discuss issues
and solutions
4. Look for financing
5. Get a design

Check this video with


the 5 dos for the lean
start up at http://tinyurl.
com/ohaxx3m
But as always: never
blindly copy, always
Watch, Reflect, Learn
and Apply when and
how it makes sense.

ASK BETTER QUESTIONS INSTEAD OF


JUMPING TO SOLUTIONS
A few years ago we had resources available
to spend on research and feasibility studies.
However, the questions asked in these
studies, including proper analysis of the
issue to be addressed, usually were not
the right ones, or the most crucial ones.
The solution direction that was
provided (crowdsource designs)
was so tempting that we forgot to
verify whether design was really the
problem.

FROM LONG TO LEAN


With this financing mix having improved after
the OS House challenge we have been working
for all start-ups projects since then to apply the
lean start up method. That means that you start
with a proposition that is not ready yet and find
out if you can attract buyers. If you dont have
buyers, you dont have a business. Active
involvement of the prospective end
users means you will hit on crucial
insights early on. In the case of OS-house,
or now INURBA, we ask to start saving for a
house and put down a deposit, so that we can
discover how serious people are about buying
a new house. On the cost side, with the details
of the solution sufficiently clear, you can make
a proper ballpark estimate about the costs,
before something is built.

FINANCING MIX
Getting from issue to idea to market is a
complicated and risky process, which is known
for its difficulty to finance. Organising a clear
competition, with a goal, prizes a jury, and
lots of inspiration to go around is a tough, but
manageable process, which therefore can
more easily be financed. The idea was that a
successful competition would attract attention
and draw in financing for follow up phases. And
it did.
However, the importance of working on the
business model, getting the right stakeholders
on board, getting buy in from government,
private sector and end users has become very
clear. As has the fact that you need to start
with these aspects as early on in the process
as possible. Whereas, if your main aim
is to solve societal issues, it feels
wrong to start with the question
Where is the money?. To make the
idea a successful one, you need to
start working on the question Who
will pay for my product/ service and
how sooner rather than later. The point
here is: with that insight crystal clear, you need
to look for a financing mix for your innovation
project that allows both the technical part,
as well as the business part to be developed
in parallel, or rather, intertwined. We find that
back in 2009 this was harder to explain to
financers than it is nowadays, since social
entrepreneurship has become much more
known and accepted.

END-USER NOT AS CO-CREATOR BUT AS


BUYER
It has been said before, but when people
asked about their ideals, they can dream
away. It doesnt mean that they will actually
buy the product. For our new startups Discovered and Janta Meals
we include the end-user as soon
as possible in their role as (paying)
customer, not just as Wouldnt it be
nice if-think tank. As a very important
additional lesson, we realise that while we did
many workshops with a variety of stakeholders
and end-users, most workshops, and the
results, were text based. Working more with
visuals, and even movies, as early on as
possible, might probably have avoided some
misunderstandings and resulted in conclusions
that reflected reality better, especially for the
design case.

Visualisation might have


avoided misunderstandings

Two examples of how we applied these


lessons:
Janta Meals is a start up in India that aims
to build a chain of restaurants where slum
dwellers can buy affordable and healthy food.
We opened the first restaurant branch within 4
months after conceiving the idea and we are
testing what works, how much things should
cost and whether people are buying the meals.
The next step is getting an investor on board
and scale up.
Discovered is an online platform where
artisans can stage their products for an
international buyers community. We had a
lean version of the platform live and made
our first reveneus within 5 months. Currently
we are testing whether people are buying the
products, and which products are most popular.
Not everything works straight away. Its still a
challenge, but we are already live and we can
test with real buyers behaviour.

Image:
Screenshot from www.discovered.us

ENTREPRENEURIAL SKILLS
At Enviu we start, we get things ready, but
we prefer to start with an entrepreneur who
has a great idea or get this entrepreneur
on board as soon as possible. So they
become mental owner of the startup idea, can actively contribute to
shaping the business model, and have
a key role in building the relevant
local relationships necessary for a
successful launch. The combination of
business skills, social relationship skills and
deal closing skills simply requires experience in
these areas. Both the timing and the required
skill set is something we now are checking
more carefully when getting the entrepreneur
and his/ her team on board.

At Enviu we get things ready


but we need an entrepreneur
to bring things further

INNOVATION IS SELDOM ABOUT (JUST)


THE PRODUCT/ SERVICE
We noticed that in most of our business models
an innovation of the current financial system
is needed. We often started with competitions
to come up with a new product, such as the
Hybrid Tuk Tuk challenge which resulted in
Three Wheels United. We learned that its
not only about the product, but that the far
more important part of the issue is lack of
appropriate access to finance to address the
issue. By building a business model around
that part of the issue, we can empower the
end-users, instead if simply selling them
something. The essential part of the
business model is the business case,
which determines whether besides
addressing an issue, a viable start-up
can be developed.
We know that inclusive business models can
be complex and still time consuming to get
everyone on board, but within this realm, we
always aim to pilot, to test as soon as possible.
And addressing the real issues and putting
empowering end users central, we will
achieve more impact.

In the case of the OS-house challenge we


could have chosen to have 10 nominated
teams to go to Ghana for a pressure cooker
week with the end-users themselves to fine
tune design. In this pressure cooker week not
only the end-user should participate but also
experts like constructors, quantity surveyors
(calculators) and building permit civil servants.
We would have gotten some answers sooner
and the winning design would have been
more than just a design, but the house would
much more likely have been more affordable
to build, we might have gotten the necessary
government organisations on board sooner and
we would have developed the necessary basis
for a business model.
Granted, the financing at that time would not
have allowed for such a step, but with that
knowledge we would now include such a step
and then find a way to finance it, instead of the
other way around.

Our process:
ideate, validate, participate

Image:
Detail from competition entry

CROWD SOURCE CHALLENGE AND


PROCESS
Together with partners we set up a challenge
competition to come up with business solutions
for issues. Not in every case a challenge is the
right starting point. Sometimes the outcome of
a challenge requires so much rework, that its
not an efficient way to start a company.
That being said, a challenge is a great way
to generate a lot of new business concepts.
In terms of global outreach the
OSH challenge is perhaps still the
biggest success so far, with over
3000 architects from 45 countries
participating. But the position of such a
phase in the entire (business) development
process must be clear(er) from the start. A
open crowd source challenge is a perfect tool
when looking for a lot of fresh input, or creating
new business concepts for a specific issue/
theme. However if the goal of the competition
is a product or technology it is much better
to start with a lean business development
process immediately, going through the phases
of ideate, validate and participate. During the
course of validation a co-creation challenge
can than still be applied, which gives a lot more
context to the designers.

A FAILURE?
So does this all mean that the (design)
competition was a failure? Not at all!
Thousands of people were inspired by the
process, during and after the competition. The
idea to actually share your design on a platform
has triggered many people. Also long after the
competition ended, people kept submitting
to the platform. The Mexican organisation
Sustentables has used it to organise a local OS
House competition, and the Com.wonen/Dura
Vermeer/Ballast Nedam had similar plans for
the city of Rotterdam, which due to the budget
cuts was not executed.
So, in terms of creating awareness
and providing the opportunity to
people world wide to discuss and
work together on this issue, even in
the form of a friendly competition,
the original OS House idea was very
successful. Our main learning is about the
position of a platform and a challenge in the
larger whole.

Thousands were
inspired, during and
after the competition

The Enviu Process Diagram

05/
SOME FINAL
WORDS

No theoretical
definitions but a
practical view

So, to answer the question: what is successful


innovation? We are not married with theoretical
definitions so our practical view is: a good
idea that addresses an issue in a new
way so that it reaches and is adopted
by the market. Without the last part, it
remains just a nice idea. To get through all
these stages, with iterations, validations, loop
backs and loop forwards, you need an ecosystem that enables you to do that. This is valid
for an individual entrepreneur and definitely for
Enviu. We are well on our way to dynamically
orchestrating this eco-system, we think this is
reflected in the way we are currently working.
But make no mistake (pun intended), we will
still learn from every project.
Image credit:
Adam Bowie

COLOFON

ENVIU 2014
www.enviu.org
Text
Vibeke Helder, Wouter Kersten en
Walter aan de Wiel
Design
Robin Budel Ontwerp

Image credits
Unless stated otherwhise: Enviu.

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