Tag Archives: Business model

Old Economy, New Businesses: #RuralWork in India

Judging by the comments and enthusiasm that my post on #RuralLiving drew, it seems to me that the idea of living in India’s villages is romantic enough for many people. Therein lies the irony – it is romantic, but is it achievable? After all, one can’t subsist on clean air and water (seeing as India is not turning socialist anytime soon). However, therein also lies the opportunity. Let me elaborate.

 

On the one hand, it may be true that today every other graduate of the hallowed IITs/ IIMs/ Ivy League or such other institutions is not a jobseeker but a (wannabe) job-creator and going down the entrepreneurship route. On the other hand, one in five 30-something yuppies, wants to turn farmer in the second innings of her/his career.

 

Not too long ago, becoming a farmer was the final resort for the lowest of the low offspring of a farmer and even (s)he would have considered at least one other avenue before signing up for it. The lure of city-life, with its bright lights, shopping options, a service culture (unheard of in the villages), and above all, a much higher income, was something every child who was born towards the end of the Cold War period yearned for.

 

And yet, for the same reasons that #RuralLiving is a massive innovation opportunity, it is also a tremendous business opportunity. It is possible to make money in our villages too, and not simply through the so-called (real estate) “development” projects (perhaps the last thing rural India needs at the moment, but that discussion could be the subject of another post). Expectedly, the two key sectors to focus on are agriculture and services.

 

India continues to be known as an agrarian economy but agriculture is rapidly losing its place as rampant labour-drain from villages forces people to look to other sources of livelihood. After all, how can you till the soil if there’s nobody to till it? Yet, if ever there was a time for agriculture to own its moment in the sun, it is now, what with question of food security looming over our heads in the near future. Of course, the challenges for agriculture in India have changed and so the strategy and methods for agriculture must change too. It needs to be accorded the same level of importance as any other science.

 

What agriculture in India misses is more than simply labour – it lacks a sound systematic knowledge base, appropriate technologies, a focus on scalability, a focus on financials, models to rationalise producer-to-consumer hops, and models to allow non-farmers to participate in the process, to name just a few challenges. But these gaps are precisely where new businesses can flower. Hosachiguru is one such catalyst in the agriculture paradigm that is now being defined.

 

Scalability or the lack of it has been pointed out too often as the chief culprit in the non-story that Indian agriculture has become. But one look at Desai Fruits & Vegetables will tell you how focus, perseverance and horticultural technology can work wonders and still leave the space open for several more F&V kings. Encouragingly, corporates like Mahindra have taken the leap in the dairy sector. But with agriculture being so vast, there are many such opportunities not just in horticulture and dairy, but also in floriculture, pisciculture, cattle rearing, etc.

 

Let’s look at the services sector then. Most people seem to believe either that people in rural areas don’t need services or that a service provider will not thrive there. But, consider this. Over half of the upper income households in India live in rural areas. A higher proportion of rural households are D-I-N-K than urban households. The demand-pull for automobile ownership (passenger vehicles) is expected to be equal for rural and urban areas in this decade. Rural incomes and rural discretionary spending have been rising at a faster clip than urban incomes and similar urban spending.

 

Yet, the rural population is forced to take this discretionary surplus to the cities because there simply aren’t enough avenues, not even essential services, in the rural areas to spend on. A vehicle owner in a rural area must travel at least 50 km, to the nearest service workshop, to get his/ her car serviced or repaired. She must visit the next city to get a salon treatment. He must plan his next city trip such that he can make a visit to the laundry to drop off his ‘dry-clean only’ wardrobe items. She must do justice to her aggregated shopping list for clothes, shoes and beauty essentials when she visits the sole cinema theatre in the city to catch the latest Bollywood release, which will run only for a week at the theatre. Even routine maintenance and repair activities requiring the skills of a plumber, electrician or carpenter require dialing into a city directory for summoning required help.

 

These simple enough routine activities for an urbanite require significant planning, long-distance commuting and an enormous amount of time for the upper income ruralite. Admittedly, it would take an innovative business model, novel channel marketing tactics, and a long-term horizon to make services economically sustainable in the rural areas. But surely the reward should be worth the risk once a solution to the aggregation and scalability challenges is achieved.

 

More power to our villages!

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Guard Against These Eight Myths to Fuel Corporate Innovation

Anybody who has had the good fortune to work in a startup as well as in a corporatised environment will know that corporate innovation is an animal by itself. To make that animal move and keep it going, critical myths must be busted.

 

Myth #1: Innovation is all about ideas.

 

Truth: Innovation is as much about knowledge-sharing, collaboration and execution. As innovation becomes ‘the’ way of doing things for firms, the emerging structures of team formation and work allocation demand increasing openness of channels for communication and feedback. The devil, of course, remains in the details. Hence, systematic follow-through of ideas and their execution determines success.

 

When structuring the innovation process, bear in mind that there is a grimy and messy back end beyond the warm and fuzzy front end of innovation.

 

Myth #2: Innovation must be disruptive and create a white space.

 

Truth: While this could be true for an entity that is looking to establish itself as a player in the market (check out RentSher and MealTango) for the corporate engine that wants to weave innovation into its DNA, it is more likely to be incremental, addressing the core business.

 

Encourage employees to make incremental improvements to routine activities. The impact of innovation activity is only magnified when even the mundane gets a productivity boost.

 

Myth #3: Innovation means creating new products.

 

Truth: Early literature on metrics for corporate innovation is responsible for the belief in this myth. In reality, innovation also includes creating new processes and business models. Doblin, the innovation consulting firm, has in fact noted ten types of innovation in three categories. Some of the highest impact innovations have come about through business model innovation (think #Uber) and process innovation (think Aravind Eye Care).

 

Look beyond just product development. The gold could be elsewhere.

 

Myth #4: Innovation is the domain of R&D departments.

 

Truth: A corollary to the previous point, innovation can also be brought about by other functions. You can only build a culture of innovation in a company if all employees believe that they have a role to play. Just as innovation does not comprise product development alone, it is not the reserve of R&D teams alone.

 

Get all hands on deck.

 

Myth #5: Innovation happens at the grassroots.

 

Truth: Innovation requires a linkage of bottom-up and top-down approaches.

Innovation does require a willingness to defy convention, an attribute that tends to decline with increasing seniority. Hence, the bottom-up approach is necessary to fuel innovation. However, complex pivot points that involve decision-making accompany innovation projects. These are perhaps better addressed in a top-down fashion. Note, however, that the person who ‘knows’ more is not necessarily the person who innovates better.

 

Define scope and authority for the teams at the bottom as well as the executives at the top.

 

Myth #6: Innovation requires highly creative and intelligent workers.

 

Truth: In reality, innovation more often requires highly networked workers. Innovation success comes from carefully structuring the process for consistently better results. In fact, superior talent could serve to mask organisational inefficiencies. Instead, a well thought out innovation process would lead to more predictable results despite variability in talent.

 

Break processes down into well-defined steps; then talent will not matter much.

 

Myth #7: Innovation should be remunerated monetarily to increase employee motivation.

 

Truth: Innovation thrives on increasing degrees of empowerment – self-directed use of time, resources (human and capital) and authority. The battle between intrinsic and extrinsic motivation can be best seen in the case of innovation projects. In the long run, and a company is concerned with the long run, it is factors that help build intrinsic motivation that keep the innovation engine going.

 

Cater for serendipity and blurring of boundaries. Monetary rewards are an afterthought.

 

Myth #8: Innovation requires large capital outlays.

 

Truth: Innovation is often most successful when capital is constrained. Constraints engender creativity and novelty. They also foster sustainability and endurance. But most of all, they help focus efforts on the problem that must be solved rather than on administrative detailing.

 

Give your innovation project teams enough to work with but not everything they ask for.

 

Corporate innovation is a marathon, not a sprint.

Six reasons why #Uber could fail in India

The rise of the new economy has given rise not just to new industries but also to new business models. E-commerce led the wave of what has today become the positioning of choice for many an entrepreneur – the ‘integrator’. With technology playing a substantial role in ‘integrating’ various pieces of the model, several challenges got addressed. The same technology in turn, however, laid out a fresh set of issues that need to be resolved.

For Uber, these challenges centre around seemingly infrastructural but essentially human factors. It has overcome the ignominy that (an) errant driver(s) caused in its early days in India, but its problems are far from over. Here are six reasons why #Uber could fail in India:

Reason 1: Technology issue – Hi-speed Internet, the keystone of Uber’s business model, is not yet the norm even in metros in India.

Reason 2: Trust issue – Drivers don’t trust the navigation feature on their Uber devices, and so, bother customers endlessly for directions, making pick-ups a nuisance.

Reason 3: Agency issue – Drivers, at will, turn off their device, misleading customers as to their actual location. Worse, they can refuse calls and become incommunicado because calls to and from customers are routed through Uber.

Reason 4: Temporal issue – Drivers don’t respect the time estimate for arrival provided to customers. Hence, 5 minutes become 15, 10 become 25. Detours are rampant, sometimes for a snack break, at other times for a brief nap.

Reason 5: Cultural issue – We Indians have an oral culture. We don’t like to talk to an email ID (support@), especially one that doesn’t respond. As a customer, your only recourse to grievance redressal is to force-fit your complaint into the standard set of issues listed on Uber’s website, after which you will promptly receive a stock email from Uber in, no doubt, a personalised tone.

Reason 6: Holier-Than-Thou issue – Uber charges customers for rides cancelled by drivers, at will. That too without any notice. A case of taking the customer for granted, methinks.

A fancy name and a fancy app don’t a business model make; respect the customers – recognise their uniqueness – and their business is yours to take.