talk on 24th may pesit-building businesses in india-a bop perspective

A talk onBuilding businesses in and for India

DEEPAK V DEV24 May 2013

@PESIT , Department of Management

Hosur Road, Bangalore.

Disclaimer..The concepts and points covered in the following slides have been taken frompublic domain sources with my interpretation/extrapolation and are in generalin line with my outlook- personally and professionally. These serve as indicatorsto what I would want to do or be but not necessarily all are being practised byme as we speak. I , however, shall strive to maximise adoption of these in mypersonal and professional capacity in the coming years!

DEEPAK V DEVBangalore24 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?

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 IndiaTypical TOP Market

Not price sensitive, High margins, Quality /Look-Feel conscious, Low-volume

Typical BOP MarketExtremely price sensitive,

Low margins, Quality a Plus, Very High Volume

Major Product & ServicesHousing & Primary services,

Food Healthcare, Power, Education and Vocational Training,

Micro-Financing, Micro-entrepreneurshipPlus

Lifestyle products (optionally)

Building business in and for IndiaAny 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 BOPBenefits:• 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 choiceCalls for:• Disruptive Innovation• Drastic price reduction• Different samplings/packaging• Extensive distribution


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


(CDF/IFMR “Power to the People” Study and extrapolations).

• 4As instead of traditional 4Ps1. 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 acceptance4. 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 IndiaConversion of BOP markets

Innovation for BOPNPD 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 contextWhy Sandbox?


Source: Article by Dr Prahlad on Innovation Sandbox


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


• 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


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 issuesHow 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 50lbsFootprint: 4-10 SqftAC operatedWorks in A/C environmentResults/reports in a day..Retails around $10K


BOP version: developed in India for the World!Weighs 2.5lbsFootprint: 1.5 Sqft/ManpackBattery operatedWorks anywhereResults/reports on the spot!Retails around $1.5K in BOP, 2.5K in Developed countriesSource: GE website,

article by Dr Prahlad on Innovation Sandbox

Innovation for BOP: Modular shelter, New DelhiThere 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.


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.


Source: MHS website

Innovation for BOP: Pay-as-you-go Solar Power


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!


• 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


• 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..☺

To-do set for a working professional-disclaimer holds!

Some Additional reads!

Best wishes ahead on your journey

Deepak V Dev0 98450 21533

[email protected]

Balanced Scorecard• What does an Organisation get to Balance and Why?

Balanced ScorecardDepartment AreasFinance 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

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