Talk on 24th May PESIT-Building Businesses in India-a BOP perspective

D
A talk on
Building businesses in and for India
DEEPAK V DEV
24 May 2013
@
PESIT , Department of Management
Hosur Road, Bangalore.
Disclaimer..
The concepts and points covered in the following slides have been taken from
public domain sources with my interpretation/extrapolation and are in general
in line with my outlook- personally and professionally. These serve as indicators
to what I would want to do or be but not necessarily all are being practised by
me as we speak. I , however, shall strive to maximise adoption of these in my
personal and professional capacity in the coming years!
DEEPAK V DEV
Bangalore
24 May 2013
Can you name..
• 5 hot trends in the global business scene of
now!
• .. And instances/organisations where these
have been looked into/implemented
successfully
Can you name..
• 5 dominant business segments in India
• 5 emerging markets/segments in India
• .. And leading players in these?
• What is the country’s economy size- normally
and on PPP terms?
• What is the sector mix in the economy?
– Agriculture: Mfg: Services
• What is the extent of urbanisation?
Can you name..
• 5 things to do for a successful and sustainable
business model in India
• .. And instances/organisations where these
have been implemented successfully
Can you name..
• Who pays the most for drinking water and
other services in our country?
• Who pays the highest interest rates in the
country for short term loans? And at what
rates?
Talk on 24th May PESIT-Building Businesses in India-a BOP perspective
Building business in and for India
• India is unique in many ways, its problems are also
unique
– it follows that its problems can be best tackled by solutions
uniquely tailored for the same
• Majority of new businesses are built on models catering
to a small fraction of well-heeled Customers- (TOP)
– While the vast majority of the population making up the rest
are left untouched
– Old issues of RKM along with a host of other basic
requirements remain a mirage for the vast majority of Indians
• Way out: Include and create new markets at the
BOP
Building business in and for India
TOP: TIP OF PYRAMID
BOP: BOTTOM OF
PYRAMID
Building business in and for India
Typical TOP Market
Not price sensitive, High margins, Quality
/Look-Feel conscious, Low-volume
Typical BOP Market
Extremely price sensitive,
Low margins, Quality a Plus,
Very High Volume
Major Product & Services
Housing & Primary services,
Food Healthcare, Power,
Education and Vocational Training,
Micro-Financing, Micro-entrepreneurship
Plus
Lifestyle products (optionally)
Building business in and for India
Any sustainable businesses to be setup in India should have the
following features
– Working with the existing system- but bringing in efficiencies
by means of improved processes, training and so on
– In case the change of the system is inevitable, then the same
should have option of co-opting the affected parties from the
current system, onto the new framework.
– Not impacting the gainful employment levels- cannot afford
further job-losses in the environment of ‘jobless growth’
– Bringing in substantial cost reductions to help reduce price
barriers in adoption across all sections of the Pyramid
– Contributing to the overall wellbeing of the economy and the
people by being introduced into their midst….
Get out of the TOP and onto BOP
Benefits:
• Very Large potential Consumer base
– (~70% in India and close to 4Bn globally)
– Constituting close to $13Tn in size of market
• Can be easily made loyal if the
price/performance is right
• Seeking dignity and choice
Calls for:
• Disruptive Innovation
• Drastic price reduction
• Different samplings/packaging
• Extensive distribution
Building business in and for India
What is the India opportunity @ BOP?
• 732 million people living in villages and urban slums
• Approx 150 million households across 6L villages/ 5000 towns
• Thrive on agriculture, animal husbandry, factories or small shops
• Average monthly spend on goods and services: Rs 5000
– Primarily rent, food, water, transport
• A cumulative annual spend as-is of Approx Rs. 9Tn or USD
200Bn
• Can be at least tripled with better and new services or a market
of USD 600Bn or more- Direct market
• è Close to 5 times the size of the largest Indian corporation
Building business in and for India
(CDF/IFMR “Power to the People” Study and extrapolations).
• 4As instead of traditional 4Ps
1. Creating an awareness of the product and service such that
the BOP consumers and producers know what is available and on
offer, and how to use it;
2. Enabling access such that even consumers in remote locations
are able to get access to the products/service;
3. Ensuring that the product or service is affordable. Lowering
Price barriers are key to acceptance
4. Focusing on availability. To build trust and a loyal base at the
BOP, we have to ensure an uninterrupted supply of products and
services.
Building business in and for India
Conversion of BOP markets
Innovation for BOP
NPD and Innovation for BOP calls for innovating within the
boundaries set by constraints not seen in other markets- Dr CK
Prahlad coined the term Innovation Sandbox in this context
Why Sandbox?
Building business in and for India
Conversion of BOP markets
Source: Article by Dr Prahlad on Innovation Sandbox
Building business in and for India
Conversion of BOP markets
Source: Article by Dr Prahlad on Innovation Sandbox
Create overall Eco-system of Consumers, Partners, Vendors, regulatory
frame-work and other stakeholders for Conitnuous Innovation
Identifying Constraints and Limiting Conditions
Building the Product/Service and Delivery System
Go-to-Market
Detailed study and analysis of Customer Life and Work-styles
Consumer Insights
Developing the broad specification of Product/Service
Innovation for BOP
Innovation for BOP
• Build new aspirational products
• Build them to Global Quality
• Build them to Global Scale
• Build them cheap
Shifting Sand
in the Box
NEW
PRICE-
PERFORMANCE
LEVELS
SAFETY
STANDARDS
ECO-SENSITIVE
ASPIRATIONAL,
INTELLIGENT
SCALABILITY AND
AVAILABILITY
Building business in and for India
Conversion of BOP markets
• Additional points
• BOP is not a monolith. Wide variations exist between BOP
markets—India versus Mexico, or within India, Tamil Nadu versus
Bihar. There is no universal BOP solution. Solutions must be
specific to an industry and to a particular target within the BOP.
• BOP is not about charity- but about building a viable and
profitable model catering to an under-served market.
• Profitability depends on large volume, low capital intensity, low
margin per unit, localisation of resources and so on
• Special attention to workflow- External Logistics/ Internal
processes
• Learnings to be leveraged in developed markets for even better
profitability
Building business in and for India
Conversion of BOP markets
Innovation for BOP: GE case
• GE Healthcare ECG machine for use in rural
India.
Shifting Sand
in the Box
Technology,
material and
associated costs
Robustness
due to
Handling/
Usage issues
How to make it work
In a New Environment
of power shortages , Skill
shortage etc
Availability/Ease of Support
across the vast hinterland
US version:
Weighs 50lbs
Footprint: 4-10 Sqft
AC operated
Works in A/C environment
Results/reports in a day..
Retails around $10K
Building business in and for India
Conversion of BOP markets
BOP version: developed in India for the World!
Weighs 2.5lbs
Footprint: 1.5 Sqft/Manpack
Battery operated
Works anywhere
Results/reports on the spot!
Retails around $1.5K in BOP, 2.5K in Developed countries
Source: GE website,
article by Dr Prahlad on Innovation Sandbox
Innovation for BOP: Modular shelter, New Delhi
There are anywhere between 5-8 million homeless people in urban India. The majority of
these are daily wage labourers unable to afford rental units in the slums. In partnership with
a local NGO, mHS designed and constructed two modular shelters to accommodate about
150 persons per night. The project serves as a scalable model for providing sustainable, cost-
effective housing to urban India's most vulnerable population.
Building business in and for India
Conversion of BOP markets
Source: MHS website
Innovation for BOP: Design Home Solutions
DHS brings construction finance and technical assistance – at reasonable rates -to existing
households. In partnership with BASIX-BSFL, a microfinance institution, the product reached
15 families with 2-storey construction in the pilot phase. The technical assistance ensured
structural safety, better ventilation, cost estimates, and monitoring assistance to those living
in highly precarious structures.
Building business in and for India
Conversion of BOP markets
Source: MHS website
Innovation for BOP: Pay-as-you-go Solar Power
Building business in and for India
Conversion of BOP markets
The Problem of Energy Access: Worldwide, approximately 1.6 billion people have no access to
electricity and another 1 billion have extremely unreliable access. Without ready access to
electricity, the poor depend on kerosene lanterns and battery-powered flashlights for light.
They can’t break the cycle of poverty because they can’t take advantage of the myriad
productive uses of energy. Access to energy is essential for a family’s economic livelihood,
health, safety, educational achievement, and quality of life.
Each Payment made via sms is in line with the daily/weekly spend that
the family has been having from kerosene, firewood perspective-
transform san energy expenditure into an asset purchase exercise!!
Source: Simpa Networks website
Some established Organisations doing
great work for/in India and the world..
Some interesting new initiatives
SourceForbes India
Girl’s iron
deficiency
Relevant
rejuvenating
BOP Gatorade
Namkeen for
the masses!
Some Interesting India start-ups..
Some other points of relevance..
To-do set for a budding Entrepreneur
disclaimer holds!
• Get some real experience/exposure before the plunge
ideally outside your extended family
– Understand operational aspects of business
– How to sustain the business and scale after the initial
exuberance/euphoria
• Always have an Entrepreneurial mind-set- even while
working with/for someone else
– Develop a gut-feel for commercials and business aspects
• Cobble up an idea-funnel- and do max diligence on all
to arrive at the final Go-to model
– Do not get emotionally attached to any one idea or model
• Have one or two co-travellers who understand you,
your plans and is ready to run the distance with you
– Remember co-traveller’s should run alongside and not
stay-back and exhort you..
• Pick at least one dispassionate mentor
– to be your sounding board.
• Find your pick of F-F-F for funding
– No Angels or demons ideally
– Be aware of possibility of under-selling yourselves and too
early that too!
To-do set for a budding Entrepreneur
disclaimer holds!
• Have one PLAN-No PLAN B or C or any safety net
• If you are creating a great value-prop, then better have
the right plan to ‘appropriate’ the value on an on-going
basis
– Build entry/IP barriers to competition so that no one else can
appropriate and re-define your value-prop
– Move on and differentiate with new options when
competition enters the scene finally
– Ensure that the intended Customers are able to avail the
product/service at the place/time of their choice
To-do set for a budding Entrepreneur
disclaimer holds!
• Never over-stay your utility the organisation & its to you
– Remember the Peter Principle.
• Keep the Entrepreneurial mind-set on!
– Choose organisations that foster ‘intra-preneurs’
• Never change a job for/because of your boss or for that
matter anyone
• Be Good and Keep learning! You will pickup the rest on
the job..J
To-do set for a working professional-
disclaimer holds!
Some Additional reads!
Best wishes ahead on your journey
Deepak V Dev
0 98450 21533
v.devd@yahoo.com
Balanced Scorecard
• What does an Organisation get to Balance and Why?
Balanced Scorecard
Department Areas
Finance Return On Investment
Cash Flow
Return on Capital Employed
Financial Results (Quarterly/Yearly)
Internal Business
Processes
Number of activities per function
Duplicate activities across functions
Process alignment (is the right process in the right department?)
Process bottlenecks
Process automation
Learning & Growth Is there the correct level of expertise for the job?
Employee turnover
Job satisfaction
Training/Learning opportunities
Customer Delivery performance to customer
Quality performance for customer
Customer satisfaction rate
Customer retention rate
Balanced Scorecard
• Additional perspectives of now
– Societal Perspective & CSR
– Special Projects
1 sur 35

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Talk on 24th May PESIT-Building Businesses in India-a BOP perspective

  • 1. A talk on Building businesses in and for India DEEPAK V DEV 24 May 2013 @ PESIT , Department of Management Hosur Road, Bangalore.
  • 2. Disclaimer.. The concepts and points covered in the following slides have been taken from public domain sources with my interpretation/extrapolation and are in general in line with my outlook- personally and professionally. These serve as indicators to what I would want to do or be but not necessarily all are being practised by me as we speak. I , however, shall strive to maximise adoption of these in my personal and professional capacity in the coming years! DEEPAK V DEV Bangalore 24 May 2013
  • 3. Can you name.. • 5 hot trends in the global business scene of now! • .. And instances/organisations where these have been looked into/implemented successfully
  • 4. Can you name.. • 5 dominant business segments in India • 5 emerging markets/segments in India • .. And leading players in these? • What is the country’s economy size- normally and on PPP terms? • What is the sector mix in the economy? – Agriculture: Mfg: Services • What is the extent of urbanisation?
  • 5. Can you name.. • 5 things to do for a successful and sustainable business model in India • .. And instances/organisations where these have been implemented successfully
  • 6. Can you name.. • Who pays the most for drinking water and other services in our country? • Who pays the highest interest rates in the country for short term loans? And at what rates?
  • 8. Building business in and for India • India is unique in many ways, its problems are also unique – it follows that its problems can be best tackled by solutions uniquely tailored for the same • Majority of new businesses are built on models catering to a small fraction of well-heeled Customers- (TOP) – While the vast majority of the population making up the rest are left untouched – Old issues of RKM along with a host of other basic requirements remain a mirage for the vast majority of Indians • Way out: Include and create new markets at the BOP
  • 9. Building business in and for India TOP: TIP OF PYRAMID BOP: BOTTOM OF PYRAMID
  • 10. Building business in and for India Typical TOP Market Not price sensitive, High margins, Quality /Look-Feel conscious, Low-volume Typical BOP Market Extremely price sensitive, Low margins, Quality a Plus, Very High Volume Major Product & Services Housing & Primary services, Food Healthcare, Power, Education and Vocational Training, Micro-Financing, Micro-entrepreneurship Plus Lifestyle products (optionally)
  • 11. Building business in and for India Any sustainable businesses to be setup in India should have the following features – Working with the existing system- but bringing in efficiencies by means of improved processes, training and so on – In case the change of the system is inevitable, then the same should have option of co-opting the affected parties from the current system, onto the new framework. – Not impacting the gainful employment levels- cannot afford further job-losses in the environment of ‘jobless growth’ – Bringing in substantial cost reductions to help reduce price barriers in adoption across all sections of the Pyramid – Contributing to the overall wellbeing of the economy and the people by being introduced into their midst….
  • 12. Get out of the TOP and onto BOP Benefits: • Very Large potential Consumer base – (~70% in India and close to 4Bn globally) – Constituting close to $13Tn in size of market • Can be easily made loyal if the price/performance is right • Seeking dignity and choice Calls for: • Disruptive Innovation • Drastic price reduction • Different samplings/packaging • Extensive distribution Building business in and for India
  • 13. What is the India opportunity @ BOP? • 732 million people living in villages and urban slums • Approx 150 million households across 6L villages/ 5000 towns • Thrive on agriculture, animal husbandry, factories or small shops • Average monthly spend on goods and services: Rs 5000 – Primarily rent, food, water, transport • A cumulative annual spend as-is of Approx Rs. 9Tn or USD 200Bn • Can be at least tripled with better and new services or a market of USD 600Bn or more- Direct market • è Close to 5 times the size of the largest Indian corporation Building business in and for India (CDF/IFMR “Power to the People” Study and extrapolations).
  • 14. • 4As instead of traditional 4Ps 1. Creating an awareness of the product and service such that the BOP consumers and producers know what is available and on offer, and how to use it; 2. Enabling access such that even consumers in remote locations are able to get access to the products/service; 3. Ensuring that the product or service is affordable. Lowering Price barriers are key to acceptance 4. Focusing on availability. To build trust and a loyal base at the BOP, we have to ensure an uninterrupted supply of products and services. Building business in and for India Conversion of BOP markets
  • 15. Innovation for BOP NPD and Innovation for BOP calls for innovating within the boundaries set by constraints not seen in other markets- Dr CK Prahlad coined the term Innovation Sandbox in this context Why Sandbox? Building business in and for India Conversion of BOP markets Source: Article by Dr Prahlad on Innovation Sandbox
  • 16. Building business in and for India Conversion of BOP markets Source: Article by Dr Prahlad on Innovation Sandbox Create overall Eco-system of Consumers, Partners, Vendors, regulatory frame-work and other stakeholders for Conitnuous Innovation Identifying Constraints and Limiting Conditions Building the Product/Service and Delivery System Go-to-Market Detailed study and analysis of Customer Life and Work-styles Consumer Insights Developing the broad specification of Product/Service Innovation for BOP
  • 17. Innovation for BOP • Build new aspirational products • Build them to Global Quality • Build them to Global Scale • Build them cheap Shifting Sand in the Box NEW PRICE- PERFORMANCE LEVELS SAFETY STANDARDS ECO-SENSITIVE ASPIRATIONAL, INTELLIGENT SCALABILITY AND AVAILABILITY Building business in and for India Conversion of BOP markets
  • 18. • Additional points • BOP is not a monolith. Wide variations exist between BOP markets—India versus Mexico, or within India, Tamil Nadu versus Bihar. There is no universal BOP solution. Solutions must be specific to an industry and to a particular target within the BOP. • BOP is not about charity- but about building a viable and profitable model catering to an under-served market. • Profitability depends on large volume, low capital intensity, low margin per unit, localisation of resources and so on • Special attention to workflow- External Logistics/ Internal processes • Learnings to be leveraged in developed markets for even better profitability Building business in and for India Conversion of BOP markets
  • 19. Innovation for BOP: GE case • GE Healthcare ECG machine for use in rural India. Shifting Sand in the Box Technology, material and associated costs Robustness due to Handling/ Usage issues How to make it work In a New Environment of power shortages , Skill shortage etc Availability/Ease of Support across the vast hinterland US version: Weighs 50lbs Footprint: 4-10 Sqft AC operated Works in A/C environment Results/reports in a day.. Retails around $10K Building business in and for India Conversion of BOP markets BOP version: developed in India for the World! Weighs 2.5lbs Footprint: 1.5 Sqft/Manpack Battery operated Works anywhere Results/reports on the spot! Retails around $1.5K in BOP, 2.5K in Developed countries Source: GE website, article by Dr Prahlad on Innovation Sandbox
  • 20. Innovation for BOP: Modular shelter, New Delhi There are anywhere between 5-8 million homeless people in urban India. The majority of these are daily wage labourers unable to afford rental units in the slums. In partnership with a local NGO, mHS designed and constructed two modular shelters to accommodate about 150 persons per night. The project serves as a scalable model for providing sustainable, cost- effective housing to urban India's most vulnerable population. Building business in and for India Conversion of BOP markets Source: MHS website
  • 21. Innovation for BOP: Design Home Solutions DHS brings construction finance and technical assistance – at reasonable rates -to existing households. In partnership with BASIX-BSFL, a microfinance institution, the product reached 15 families with 2-storey construction in the pilot phase. The technical assistance ensured structural safety, better ventilation, cost estimates, and monitoring assistance to those living in highly precarious structures. Building business in and for India Conversion of BOP markets Source: MHS website
  • 22. Innovation for BOP: Pay-as-you-go Solar Power Building business in and for India Conversion of BOP markets The Problem of Energy Access: Worldwide, approximately 1.6 billion people have no access to electricity and another 1 billion have extremely unreliable access. Without ready access to electricity, the poor depend on kerosene lanterns and battery-powered flashlights for light. They can’t break the cycle of poverty because they can’t take advantage of the myriad productive uses of energy. Access to energy is essential for a family’s economic livelihood, health, safety, educational achievement, and quality of life. Each Payment made via sms is in line with the daily/weekly spend that the family has been having from kerosene, firewood perspective- transform san energy expenditure into an asset purchase exercise!! Source: Simpa Networks website
  • 23. Some established Organisations doing great work for/in India and the world..
  • 24. Some interesting new initiatives SourceForbes India Girl’s iron deficiency Relevant rejuvenating BOP Gatorade Namkeen for the masses!
  • 25. Some Interesting India start-ups..
  • 26. Some other points of relevance..
  • 27. To-do set for a budding Entrepreneur disclaimer holds! • Get some real experience/exposure before the plunge ideally outside your extended family – Understand operational aspects of business – How to sustain the business and scale after the initial exuberance/euphoria • Always have an Entrepreneurial mind-set- even while working with/for someone else – Develop a gut-feel for commercials and business aspects • Cobble up an idea-funnel- and do max diligence on all to arrive at the final Go-to model – Do not get emotionally attached to any one idea or model
  • 28. • Have one or two co-travellers who understand you, your plans and is ready to run the distance with you – Remember co-traveller’s should run alongside and not stay-back and exhort you.. • Pick at least one dispassionate mentor – to be your sounding board. • Find your pick of F-F-F for funding – No Angels or demons ideally – Be aware of possibility of under-selling yourselves and too early that too! To-do set for a budding Entrepreneur disclaimer holds!
  • 29. • Have one PLAN-No PLAN B or C or any safety net • If you are creating a great value-prop, then better have the right plan to ‘appropriate’ the value on an on-going basis – Build entry/IP barriers to competition so that no one else can appropriate and re-define your value-prop – Move on and differentiate with new options when competition enters the scene finally – Ensure that the intended Customers are able to avail the product/service at the place/time of their choice To-do set for a budding Entrepreneur disclaimer holds!
  • 30. • Never over-stay your utility the organisation & its to you – Remember the Peter Principle. • Keep the Entrepreneurial mind-set on! – Choose organisations that foster ‘intra-preneurs’ • Never change a job for/because of your boss or for that matter anyone • Be Good and Keep learning! You will pickup the rest on the job..J To-do set for a working professional- disclaimer holds!
  • 32. Best wishes ahead on your journey Deepak V Dev 0 98450 21533 v.devd@yahoo.com
  • 33. Balanced Scorecard • What does an Organisation get to Balance and Why?
  • 34. Balanced Scorecard Department Areas Finance Return On Investment Cash Flow Return on Capital Employed Financial Results (Quarterly/Yearly) Internal Business Processes Number of activities per function Duplicate activities across functions Process alignment (is the right process in the right department?) Process bottlenecks Process automation Learning & Growth Is there the correct level of expertise for the job? Employee turnover Job satisfaction Training/Learning opportunities Customer Delivery performance to customer Quality performance for customer Customer satisfaction rate Customer retention rate
  • 35. Balanced Scorecard • Additional perspectives of now – Societal Perspective & CSR – Special Projects