Understanding Context & Trust - Video 1

Summary

The transcript discusses the critical importance of understanding context in various situations, drawing from personal experiences and academic insights. It uses the examples of an ice pack in Chennai and the COVID-19 vaccine distribution to illustrate how institutional voids can create challenges and opportunities. The speaker emphasizes the need for a mental map to navigate these voids, adapt to new situations, and leverage them for innovation and problem-solving.

Takeaways

• 🧠 The importance of context: Understanding the context is crucial for applying knowledge effectively and avoiding pitfalls in various situations, such as in business, politics, or social interactions.
• 🏫 Academic realization: The speaker's interest in context was sparked during their time at Harvard Business School, where they realized traditional business theories might not apply universally.
• 🏭 Practical challenges: The speaker contrasts theoretical knowledge with real-world applications, using the example of motivating employees in emerging markets where immediate rewards are preferred over long-term incentives.
• 🗺️ Mental mapping: The need for a mental map to navigate the application of past experiences to new contexts, especially in volatile or unfamiliar environments.
• 🌐 Global connectivity: Even in a globally connected world, individuals need to assess the relevance of external information to their specific context, such as a kid in Kinshasa or Rio.
• 🧊 Ice pack anecdote: The story of trying to find an ice pack in Chennai illustrates the concept of institutional voids and the significant effort required to bridge them in the absence of established solutions.
• 💉 COVID-19 response: The pandemic serves as a modern example of how information asymmetry and institutional voids can affect even highly developed contexts, such as vaccine distribution in Boston.
• 📈 Emergence of institutions: The gradual development of institutions to resolve information problems and verify the veracity of claims, which is essential for transactions and collaboration.
• 🌐 Cross-cultural nuances: The impact of cultural differences and misunderstandings in intercultural exchanges, highlighting the need for context understanding even more in a globalized world.
• 💼 Institutional entrepreneurship: The speaker sees institutional voids as opportunities for creating new organizations, nonprofits, or businesses to fill the gaps and make a positive impact.
• 🌟 High-level impact: The concept of institutional voids and the need for context understanding applies to both small everyday situations and large-scale global issues, such as vaccine equity.

Q & A

Why did the speaker feel that traditional business school teachings wouldn't work in his family's enterprises in India?

The speaker felt that the teachings lacked applicability in the volatile environment of emerging markets like India, where immediate results were preferred over long-term incentives.

What is the importance of having a mental map for understanding context when trying to affect change?

A mental map helps individuals, such as entrepreneurs, scientists, politicians, or activists, to assess their past experiences and determine which strategies are likely to work in a new context, thus avoiding pitfalls and identifying opportunities.

Can you explain the concept of 'institutional voids' as mentioned in the transcript?

Institutional voids refer to the absence of mechanisms or institutions that facilitate information flow, transaction verification, and trust in a market or society, which can lead to difficulties in collaboration and commerce.

How did the speaker's experience in Chennai with needing an ice pack illustrate the importance of understanding context?

The experience showed that without understanding the local context, such as the absence of ice machines and convenience stores, one could waste significant effort and resources trying to find a solution that would be readily available in a different setting.

What was the role of Gavi, the Vaccine Alliance, in addressing institutional voids during the COVID-19 pandemic?

Gavi aimed to ensure equity in vaccine distribution, acting as an intermediary to fill the institutional void between the demand for vaccines in poorer countries and the supply from richer nations, thus preventing a situation where only wealthy countries could secure vaccines.

How did the COVID-19 pandemic create a situation analogous to an emerging market?

The pandemic created uncertainty and a need for new norms and rules for information exchange and transaction verification, similar to what happens in emerging markets, thus necessitating the development of new institutions to manage these challenges.

What is the significance of adjudication mechanisms in the context of institutional voids?

Adjudication mechanisms are important for verifying the truthfulness of claims and ensuring fair transactions, which is particularly crucial when institutional voids exist, as they help to establish trust and facilitate commerce.

Why did the speaker emphasize the need for a conceptual framework for understanding context?

The speaker emphasized the need for a conceptual framework to help individuals navigate different contexts effectively, by identifying information asymmetries and institutional voids, and to seize opportunities for change or innovation.

How did the speaker's experience trying to get a vaccine appointment in Boston highlight the challenges of information gaps?

The experience showed that even in a developed context, information about vaccine availability was scarce and hard to come by, leading to difficulties in fulfilling basic needs like getting vaccinated.

What opportunities do institutional voids present, according to the speaker?

Institutional voids present opportunities for innovation and entrepreneurship, as they represent areas where new institutions or organizations can be created to fill the gaps and meet unmet needs in the market.

Outlines

00:00

🧐 The Importance of Contextual Understanding

The speaker reflects on the significance of understanding context, stemming from their time at Harvard Business School. They highlight the disconnect between theoretical business strategies and real-world applications, particularly in emerging markets. The speaker emphasizes the need for a mental map to align past experiences with current situations to effectively motivate people, set up operations, or design contracts. The example of trying to implement incentive pay in a volatile market is used to illustrate this point, underscoring the necessity of context in decision-making.

05:00

🌡 Adapting to Different Contexts: An Indian Experience

The narrative shifts to a personal anecdote set in the southern Indian city of Chennai, formerly known as Madras. The speaker recounts the difficulty of obtaining an ice pack, a simple task in the US but a complex endeavor in 1980s India. This story serves as a metaphor for the broader concept of context, illustrating the vast difference in effort and resources required to achieve the same outcome in different settings. It exemplifies the importance of adapting to local conditions and the inefficiency of applying foreign solutions without considering the local context.

10:03

😷 Context in the COVID-19 Pandemic

The speaker discusses the COVID-19 pandemic as a contemporary example of the need for contextual understanding. They describe the initial uncertainty and information vacuum during the lockdown, the development of the mRNA vaccine, and the challenges in accessing it due to scarcity and misinformation. The speaker points out the emergence of institutions and mechanisms to address these issues, such as websites providing vaccine availability information and the role of Gavi, the Vaccine Alliance, in ensuring equitable access to vaccines globally. This highlights the critical role of context in navigating and resolving information asymmetries and institutional gaps.

15:03

🏥 Institutional Voids and Opportunities in Context

The final paragraph delves into the concept of institutional voids, the absence of mechanisms that facilitate information flow and transaction verification. The speaker uses the examples of the slow emergence of information and contracting institutions during the vaccine rollout, as well as the role of Gavi in filling the void between demand and supply of vaccines in poorer countries. They argue that recognizing and addressing these voids is crucial for effective collaboration and transaction, and also presents opportunities for innovation and entrepreneurship. The speaker concludes by emphasizing the value of a mental map for context to identify both pitfalls and opportunities in various situations.

Keywords

💡Context

Context refers to the circumstances or setting in which something occurs. In the video, it is emphasized as a crucial element for understanding and applying knowledge or strategies effectively. The speaker uses the example of applying business school knowledge in a factory in India, highlighting the importance of context in making theoretical concepts practical.

💡Mental Map

A mental map is a conceptual tool that helps individuals understand and navigate their environment by relating past experiences to current situations. The video discusses the need for a mental map to effectively apply one's knowledge base to new problems or settings, like a scientist, entrepreneur, or activist entering a new environment.

💡Institutional Void

Institutional void describes a gap or absence of organizational structures or systems that facilitate information flow, collaboration, and trust in transactions. The script uses the example of the COVID-19 vaccine distribution challenges to illustrate how institutional voids can impede effective response to crises and the need for mechanisms to fill these gaps.

💡Scarcity

Scarcity refers to a situation where demand for a resource exceeds its supply. In the video, scarcity is mentioned in the context of vaccine distribution, where high demand and limited supply created challenges in equitable access, highlighting the need for institutional mechanisms to manage such situations.

💡Adjudication Mechanisms

Adjudication mechanisms are systems or processes that determine the truth or validity of claims or disputes. The video discusses the importance of these mechanisms in verifying the authenticity of information and claims, such as those related to vaccine availability or individual eligibility, especially during times of crisis.

💡Information Asymmetry

Information asymmetry occurs when different parties in a transaction have unequal access to information. The script uses the example of finding a vaccine appointment to illustrate how information asymmetry can hinder transactions and the role of institutions in mitigating this issue.

💡Emerging Markets

Emerging markets are economies that are in the process of rapid growth and industrialization but are still developing. The video references emerging markets to contrast the volatility and immediate needs of such economies with the long-term planning often taught in business schools, emphasizing the need for context-sensitive strategies.

💡Transaction

A transaction is the act of conducting a business deal or exchange. In the video, the concept is applied to the process of obtaining a vaccine, illustrating how even in highly developed contexts, the absence of proper institutions can make transactions difficult.

💡Intercultural Misunderstandings

Intercultural misunderstandings refer to the confusion or misinterpretation that can arise from cultural differences. The video mentions such misunderstandings in the context of international vaccine distribution, emphasizing the need for cultural sensitivity and understanding in global transactions.

💡GAVI

GAVI, the Vaccine Alliance, is an international organization that aims to improve access to vaccines for children in poor countries. The video discusses GAVI as an example of an institution that fills an institutional void by facilitating equitable vaccine distribution, especially in the context of the COVID-19 pandemic.

💡Opportunities

Opportunities in the video refer to the potential for innovation and entrepreneurship that arises from addressing institutional voids. The speaker suggests that recognizing these voids can lead to the creation of new organizations, businesses, or systems that solve problems and meet needs, such as the establishment of an ice pack company in Chennai.

Highlights

The importance of understanding context in applying business logic to different circumstances.

The speaker's realization during his MBA at Harvard that traditional business strategies may not work in emerging markets.

The need for a mental map to align past experiences with current situations for effective change-making.

The concept of context as a lens for applying knowledge to new problems, regardless of location.

The idea that everyone, even in places like Kinshasa or Rio, needs a mental map to make sense of global content.

The speaker's decades-long work to create a toolkit for understanding context in various situations.

An anecdote about the difficulty of finding an ice pack in Chennai, illustrating the importance of context in problem-solving.

The comparison of the effort required to get an ice pack in Chennai versus the US, highlighting the concept of institutional voids.

How the COVID-19 pandemic created a contemporary example of the need for context understanding in a crisis.

The challenges of vaccine distribution during the pandemic, including information gaps and misrepresentation.

The emergence of institutions to resolve information problems and ensure transaction integrity during the pandemic.

The concept of institutional voids and the need for mechanisms to fill them in various contexts.

The role of Gavi, the Vaccine Alliance, as an intermediary filling an institutional void in global vaccine equity.

The speaker's perspective on institutional voids as both constraints and opportunities for innovation.

The importance of a mental map for navigating and identifying opportunities amidst uncertainty and change.

Transcripts

so K we're going to start by talking

about understanding context before we

begin why why does it matter like what

what got you so interested in context in

the first

place so so that's a good good question

um

probably going back to the last century

yes when you were a student at the

harbor Business School

guys last Cur

1990 um I thought it was

89 ' 89 I arrived at Harvard 1990 I made

it to our classroom HS I see okay and um

uh I was sitting in our MBA classroom

and our instructors many of whom are

still our our our colleagues here uh we

talking about you know how do you

motivate people how do you set up a

factory floor how do you design a

compensation contract how do you raise

capital for a company yeah and uh our

family owned a number of Enterprises in

in India and I remember

thinking this ain't going to work yeah

yeah none of this stuff is going to work

it doesn't have a snowball chance in

hell if I go to my factory manager who's

an educated guy and I say you have to

take these options and you know you have

an incentive pay and it's going to pay

off down the road you know Emerging

Markets are volatile places nobody wants

something that's pay paying off down the

road they immediate so just it's a small

example of how I thought thought that

the logic that the instructors were

communicating was eminently sensible

it's just that the application of the

logic to different circumstances gave

you very different action action plans

got it and I began to think that it

would be nice to have a little bit of a

mental map for imagine that you're

somebody who wants to affect change yes

uh you're an entrepreneur you're you're

even a scientist you're a politician

you're an activist um and you show up in

some place and you are naturally drawing

on the repertoire of your own

experiences yes and trying to figure out

what is it that I know from the past

that's likely to work here and what

isn't you ought to have a mental map of

where you are to understand how to do

that mapping of past expertise to

current situation so even if you're not

in a situation like what we find

ourselves in our campus like

multinationals going to a new new

country even if you're locally in a

country and you're applying your

knowledge base to a particular problem

this this lens of a context uh matters

yeah so you know even if you're a you

know a kid in um in in Kinshasa or a kid

in um Rio Rio yeah you are absorbing

content particularly in this day and age

and everybody's connected uh most people

are connected anyway and we we'll

probably get to that um you're absorbing

content from everywhere else how do you

know what you're hearing about from New

York City makes any sense for you you

still need a mental map in most in most

most cases it's implicit got it so what

I was trying to do in my work for the

last several

decades he's

old is a create a toolkit for people to

so that's what we'll talk about got it

great so um I thought one simple way to

um explain this was going back to an

experience I had in the southern Indian

city of what I used to Call Madras which

is now called chenai yes and I just

remember a particular episode when um uh

my family and I arrived there it's a

very hot City yeah um in a you know nice

hotel yeah and uh one of the family

members had some medication and so we

need an ice back yes and now in the US

what do you do when you need an ice back

you just go to the hotel floor and then

there's there's ice machine so we went

down there's no such thing as an ice

machine we asked for ice B you had no

idea what a pack was what is an ice pack

what is an ice P didn't exist right yeah

you could e go to 7-Eleven or cor go to

CVS or 7-Eleven and get it so there's no

CVS and no 7-Eleven this is now in

the'80s

1980s right so what ensued then um was

you know my probably my dad calling

someone knew yes and someone he knew

saying don't worry Mr Han we'll take

care of this and sending like five five

people wandering around the city looking

for

ice and then making ice pieces and

putting them in an ice bag and bringing

them to the hotel and giving it to us

and I remember thinking uh when I was

trying to communicate the importance of

understanding context to our uh

Executives who are you know activists

and CEOs from all over the world I

remember thinking this is a great way to

explain explain this if you just compute

um the ratio of the value of the I back

to you yes to the amount of expenditure

of effort and time yes um in getting the

ice back right uh that number is

probably I computed going compared to

going to the CVS or corner store and

coming back is like a 1: one yeah right

uh whereas if you computed for chenai in

1980 yes it's like 1 to 10 1 to 20

something like that so you have 20 times

more effort effort to get the same same

functionality of the functionality

yeah and we take it for granted like in

our settings like of course there's ice

packs there's many ways to get ice right

and versus in chai that there was there

was nothing time there it's different

today of course modern city but uh but I

think that makes the point so why don't

we talk about a um a a contemporary

example yeah absolutely I mean we all

live through this covid-19 pandemic

perfect uh and so yeah tell us how this

applies in this in this setting

so one of one of one of the things that

I found uh myself and I think all of us

found ourselves in the same situation

when the pandemic hit um of course we

went through this lockdown period when

everybody was trying to isolate we

didn't know how deadly the the virus was

uh mortality in some cities New York

City Rome was extremely high New Delhi

later on was extremely high um and we

were all worried but after that we had

uh our local friends the Mna colleagues

um and the uh fiser and colleagues in

Germany the the the Turkish German

entrepreneur who came up with the MRNA

vaccine so we had we had a solution so

to speak but the part after that was

sort of interesting because for a long

time almost 2 or 3 months at least in in

in Boston nobody that I knew could

figure out where the vaccine was

available yes right uh of course there

was scarcity there was production

constraints and so on um uh I remember

going to var's websites at late at night

or early in the morning saying like

which which pharmacy has has a vaccine

like can I get an appointment can I get

an appointment um and I wanted a madna

one I didn't want a J&J one you know all

that we didn't know what the efficacy of

the different ones were the MRNA ones

were reputedly better but you knew about

the long-term consequences anyway so

there was an information vacuum uh that

gradually began to be filled in right

and in the absence of information it's

very difficult to transact yes to get

anything done to collaborate right if I

want to work with you on some creative

Enterprise say on shooting this video

first I have to know who you are yeah if

I didn't know who you were then I would

wander around you know effectively

metaphorically wander around and say how

do I find a good interlocutor

intellectual partner a buddy that I can

work with yes uh despite being a

pain he's a

pain um so whether it's collaboration or

transacting right you can think of

getting a vaccine shot as a transaction

right I have a demand for a vaccine

because I'd rather not get covid uh

somebody else is a supply vaccine either

because they doctors or their Pharma

companies or pharmacies Etc so that

information is missing and transactions

almost impossible so one of the purposes

of the mental map um of a conceptual

framework for understanding context is

that you pay attention to these to the

emergence of these institutions that

help you resolve this information

problem got it that's a central thing

got it so let's turn to another aspect

of this vaccine uh business that makes

the point um uh there was also a lot of

misrepresentation and fraud oh yeah

right T leave aside the rampant fraud in

other countries of vaccine being faked

uh but even even in uh Newton

Massachusetts where I live which is a

nice Community leafy green afluent Etc

you had people misrepresenting their

status yes I know that for a fact

misrepresenting the status and saying I

deserve it because I'm compromised uh

and producing something to um because

they wanted to jump the line and make

sure that they got it um and that in

those kinds of situations where you

don't have adjudication mechanisms or

redress mechanisms like how do you judge

the veracity of how do you judge exactly

how do you judge the veracity of a

potential collaborating or transacting

part those mechanisms again began to

emerge over time to police this to make

sure that somebody who says I have a

stock by a vaccine actually had it and

was not misrepresenting it or

equivalently someone who said they

didn't have it but had it was

representing the status correctly all

those mechanisms emerged over a year 2

years something like that it did take

that long um there was a proliferation

as you were saying earlier of websites

Etc so step back for a second uh what

we've just outlined with a very simple

example is in a contemporary situation

of um uh uh of uncertainty triggered by

uh an environmental event the arrival of

this mutated virus that was affecting

humans all over the world uh and the

coroller um uh event of a technological

yes uh achievement the creation of the

MRNA vaccine triggered all this flux and

the institutions that were needed to

ensure that information flowed freely

and that uh people were not

misrepresenting uh their ability or

willingness to engage in discourse and

exchange emerged over time yeah so

what's interesting saying is that even

in highly developed context like Boston

Massachusetts the vaccine literally was

developed a mile away from here where

we're sitting today even in that in that

situation there was information gaps

right and this adjudication Gap like not

knowing how to test whatever whatever

claims people are making exist right and

so so so even there this is everywhere

this is not just a um an Emerging Market

situation in any kind of a cont C

context you have this kind of

information asymmetries information

missings and knowing what to what how to

uh a lot of our colleagues here um at

Harvard and elsewhere our former

students have developed this idea of

thinking over over the last decades

yes um and one of the things that which

seems obvious in hindsight with this Co

example is that uh any discontinuity

triggers what in effect becomes an

emerging market right because the market

literally has to emerge yeah and what is

a market it's just a set of norms right

and a set of rules for information

exchange and transaction veracity of

representation and that's a fact of life

you walk down the street anywhere it

doesn't have to be Chennai

1980 um or you know Rio a long time ago

it could just as easily be Boston and

London or any place else um it's very

helpful so that's why I think that this

just having a Rough and Ready mental map

of context is so important yeah let me

give you one more example on the uh on

the vaccine situation um even though

we've been talking about uh the the

slowness with which information and

Contracting institutions emerge um so

the absence I refer to as a situation of

an Institutional void it's a bit of a

mouthful but the idea is that that

institution that allows us to have

access to information uh requires some

effort and premeditation and some

economic viability and enough itself and

those take time to establish but when

they're absent we refer to them as as an

absence of void um even though those

voids are everywhere that there is an a

change in the Ambiance they're

particularly severe in developing

countries yeah right and they're

particularly severe in uh shall we say

um uh attempts to exchange things across

countries where there is cultural Nuance

um Intercultural misunderstandings India

versus Pakistan India versus Pakistan

yes I'm of Indian origin he's a

Pakistani origin so we speak different

languages in

each other um related in different

languages yes so one example going back

to the covid situation was uh of course

we knew exactly what was going to happen

right that somebody eventually hopefully

would come up with the vaccine yes and

when that happened there would be

scarcity all this was predicted yes 100%

there would be there would be scarcity

cu the factories would have to be tooled

up production facilities economics Etc

governments would hem and Hall about

putting money into it the political

contestation would ensue you knew that

that was going to happen therefore you

also knew that rich countries would grab

everything yeah right and so um I had

the Good Fortune to make a friend Seth

Berkeley yes um who was the just

recently stepped down as the head of

Gabi yes uh gavi is the it's the French

acronym for World vaccine Alliance in

Geneva yes and gav's purpose gavi was

seeded by Bill Gates uh a very long time

ago 20 plus years ago but the whole idea

was how do you get uh equity in vaccines

yes uh and traditionally of course it

had applied to vaccines that have been

known for a long time but were too

expensive for poor people and so Gabel

and polio all kinds of stuff right um um

Gabi was the entity that got access to

those vaccines at concessional rates so

in effect Gabi was an intermediary yes

right was filling an Institutional void

between demand uh from poorer countries

and poorer people for vaccines and

supply of vaccines in generally richer

richer countries um so what I'm trying

to illustrate is that you can think

about the ice pack example in chenai as

a very tiny daily uh example of where an

institution matters you can't find the

information or you can think at this

abstract high futin level yes of Gabi

you know organizing contracts between

heads of state in different places it

doesn't matter at the end of the day you

just go back to The Primitives that's

that's why I like being an academic is

that you can cut to the chase very

quickly what's really going on and then

if you have the predisposition as we

do you can use that to hopefully make

some good changes so if I can summarize

the what I'm hearing is like look in any

kind of a situation any kind of a new

situation new uncertainties there will

be a need for information often

information is missing and even as the

information becomes available there's

going to be this need to say like which

is what kind of information do we really

believe and trust because it'll be

competing interest

after and so that creates this void that

creates this void and so you need in

order for the transactions to take place

me to buy the vaccine for me to get the

ice pack we need some kind of like a

mechanism some kind of a some kind of a

an organization that can fill that void

right that that Gap and that's where the

so you you both examine the

institutional voids that may exist in

markets and then say what are the

different ways in which those could be

filled precisely so in a highend setting

like the

comes in funded by Bill Gates trying to

solve the vaccine access problem but

then in a in a very simple ice pack

example you can imagine you know some

entrepreneur saying you know lots of

Western tourists are coming to our cting

we need they need ice for some reason

about to be made there about to be made

about to be made so let's create the ice

pack company yeah these strange people

coming to Chennai who are white not me

of course but but who white people and

they kind of w around they need ice

because they're not used to this heat um

there's a buck to be made um you know if

I if it's if it costs a rupe in India I

can probably sell it to this guy who has

no idea for five bucks because otherwise

he's going to spend another 50 bucks

trying to get trying to get the ice so

there's a so that actually is a very

important point which is the these

institutional voids are both constraints

on action yes because they might prevent

us from collaborating or consummating

contracts or what have you but there are

also opportunities yes they are so it's

a double-edge sword so I as an

as you know I love starting things

including this thing that we're doing so

uh but I look at this and I say it's

like a kid in a candy store I can I can

build all these organizations and

nonprofits and businesses and so on and

so forth um so again going back to the

basic idea I think uh the reason I'm so

fixated on um um on on developing this

mental map for context is that for me

it's a it's it's a way to both avoid

pitfalls but Al to identify

opportunities fabulous