Ideas are everywhere Raj Bhat Change as

Ideas are everywhere Raj Bhat

Change as a Source of Opportunity n Status-quo is good for incumbent players (established companies) – they have products or services, smooth operations, established business models, loyal set of customers, functional teams …… n Change brings in disruption – that in consumer tastes, cost structures, business models, expectations, level of expertise needed, distribution channels, payment mechanisms, availability of finance n Change produces a level-playing field which is actually loaded in favour of a new player because of his flexibility, adaptiveness

Examples of Entrepreneurs Exploiting Change n Japanese car manufacturers (1973) n Microsoft (1976 -78) n Amazon and Dell (1990 s) n Infosys (1989)

Broad Categories of Change n Demographic – whole population (age distribution) n Economic – Emerging markets n Socio-Cultural -- Value systems, role models n Technological -- Variety, performance, cost n Political – democratic, authoritarian/totalitarian regimes. Free market vs socialistic policies (Britain in early 1980’s) n Legal and Regulatory -- liberalization (internal and external), enforcement of IP protection laws

Demographic Changes n Median age n Working population as the % of total population n Life expectancy n Healthcare and Social Security Needs n Urban-Rural Ratio n Literacy n Male-Female ratio

Socio-Cultural Changes n Value systems -- globalization and local assertions n Accepted norms of behaviour n Role of religion and spirituality n Pursuit of expertise, knowledge, wealth, possessions n Aspirations, fears, desires, anxieties n Measure of “time” – attention span, priorities, conveniences

Technological Changes n Availability and wide-spread assimilation of technology ¨ Information Technology and it pervasiveness n Costs and disposable incomes n Performance, variety, ease of acquisition n Cross applications – interdisciplinary developments n Comfort level of technology usage n Examples: CD ROM drives and mobile phones

Economic Changes n Gross Domestic Product and Per Capita Income n Level of exports and imports n Inflation and interest rates n Availability of credit at all levels n Size of the middle class n Various growth rates – industrial growth, productivity growth, exports growth n Level of unemployment

Political and Regulatory Changes n Transition from centrally planned to market economy (India, 1991) n Transition from communism to “market socialism” (China, 1978 -1980) n Regulated, protected, closed economy n No IPRs (copyrights, patent laws) n Contract Enforcement and right to property n Labour and land reforms

India in the New Millennium n “Young” country with rising literacy and prosperity n GDP growth rate of 7 -8 % per annum n Growing middle class n Liberal, business like values, pursuit of wealth n High unemployment, imbalance in the development

India in the New Millennium n Passages of IP laws (new patent regime) n Respect in the global community (functional democracy) n Atmosphere conducive to business -- no xenophobia, no insularity, no misplaced importance to “self-reliance” n Well developed “Institutions” – judiciary, capital markets, stock exchanges, media (free and independent), educational institutions, regulatory bodies (SEBI, FDA, ISI)

Analysis of Existing Entrepreneurs n Truly new, novel and innovative ideas: 3 -4% n Rest 96% ¨ Enhancement -- improvement / refinement of features – cheaper, better, faster, more user-friendly ¨ Extension to features ¨ Specialization -- niche’ creation

Enhancement, Extensions and Specializations Enhancements Extensions Specialization

Examples of Enhancement n DOS to Windows n Mechanical watch to quartz watch n Modem to ADSL modem n Ordinary TV to a flat screen TV n Desktop PC to a laptop PC to a tablet PC n Propeller engine to a jet engine Most industrial innovations

Examples of Extensions n Toothbrush with a built in toothpaste n Pen with a torchlight n Mobile handset with camera, FM radio, MP 3 player …. n Memory sticks with MP 3 players n Wristwatch with a calculator n Cinema Multiplexes n Day care centers (crèche) with tuitions n Swiss army knife

Examples of Specialization n Low cost airlines (Ryanair, Easyjet, Air Deccan) n Boutique financial advisory services n Super-specialty hospitals n Finishing schools n Executive search firms (Cx. Os only, finance professionals only)

Possible Service Opportunities n Schools n Restaurants n Travel agency and tour operators n Pet shops n Bookshops n Gyms / weight loss clinics n Oxygen bars

Screening Ideas: Are they Opportunities? 5 Questions 1. 2. 3. 4. 5. What important customer problem can you solve? How are you going to do it? How many customers are there that are willing to buy from you? Why can only you provide the solution? How can you defend against others? Ask these questions BEFORE somebody else does!

Screening an Opportunity: 5 Questions 1. What important customer problem can you solve? How valuable? How painful? Remember, you need to change somebody’s behavior to buy your product.

Screening an Opportunity: 5 Questions 2. How are you going to do it? Business model: Product Distribution Location Technology/Innovation Service Brand

Screening an Opportunity: 5 Questions 3. How many customers are there that are willing to buy from you? How many customers are there? (Market size) How many will buy from you? (Market share) Who will be your first customer (besides your Mom)? Who will be your 100 th?

Screening an Opportunity: 5 Questions 4. Why can only you provide the solution? How are you unique? What do you provide that nobody else can?

Screening an Opportunity: 5 Questions 5. How can you defend against others? Location, brand, patent (or other IP), great service, great taste, great fashion sense….