June 10, 2010

55) ITC Limited (eChoupals)

危 wēi  danger

As I outlined in a post last year the Indian agricultural market is tough.  Farm ownership tends to be heavily fragmented, the infrastructure is often poor and historically the supply chain has been clogged by middlemen. This makes life difficult for both farmers and the buyers.  For example, often farmers would have to travel for days to a market with no knowledge of current prices, once there the exploitative middlemen could pay below the market rate and refuse to pay any premium for quality.  It has been estimated that farmers were losing up to 60% of the value of their crop as a result.  This in turn disincentivised the farmers from improving their crop quality and made supply to the industry’s big buyers unpredictable.  Large food buyers, such as ITC Limited (an Indian conglomerate), would surely have to accept this status-quo?

机 jī opportunity

No, to the contrary ITC has harnessed technology to overcome these structural problems by investing in internet kiosks in rural villages.  The kiosks, named eChoupals, enable the farmers to sell direct to ITC at an agreed price, give access to best practices and enable them to place orders for agricultural inputs such as seeds and fertilizers.  In order to instill trust in the system ITC trains a local farmer to run the system and places it in their house – on average each serves 600 farmers in the surrounding ten villages.  To ensure that they remain incentivised the sanchalaks receive a small service fee.  Even after this service fee it is estimated that farmers’ profits have increased by more than a third and ITCs costs have reduced. The conglomerate plans to scale up to 20,000 eChoupals by 2012 (from 6,500 today) potentially servicing 15 million farmers.

How About…

  • Harnessing technology to disintermediate inefficient value chains?
  • Empowering local talent to assist in supporting your customers?

–

May 4, 2010

49) Cranium

危 wēi  danger

In 1998, after spending a weekend playing games with some friends Richard Tate, a rising star at Microsoft at the time, decided that there was a gap in the market for a board game that used multiple skills.  He was so confident of the opportunity he quit his job and convinced his coworker, Whit Alexander, to join him. Instead of focusing on a general market need the two founders decided to design their game around a “moment,” specifically the moment when players “appear smart and funny in front of family and friends.” Together they designed a novel board game called Cranium – billed as “The Game for Your Whole Brain.” Initial feedback from friends and family was so strong they decided to place an order for 27,000 units from China.  However, with the order delivery date looming the team failed to get their product into the American International Toy Fair and hadn’t managed to sign up a single toy retailer.

机 jī opportunity

While drowning their sorrows in cups of Starbucks the team wondered why they needed traditional toy retailers at all, it struck them that other channels might make more sense, not least Starbucks.  After some persuasion the coffee chain stocked Cranium, the first time they had ever sold such a product and it was an immediate success.  The game went on to be the first board game sold by many other retailers too, including Barnes & Noble and Amazon.com.  Cranium then developed a series of other products, making sure that they stayed true to their brand by remembering the acronym CHIFF (clever, high quality, innovative, friendly, and fun) as their guiding principle.  By developing great new products and selling them through new retail channels the company has sold over 22 million games – making it the third largest games company in the world.  Whit and Richard sold out to Hasbro in 2008 for $75m…

How About…

  • Optimising products or services around an important “moment”?
  • Distilling your brand down to its DNA to help choose brand extensions wisely (acronym optional)?
  • Questioning traditional channels, instead asking yourself where your target customers tend to congregate?

—

April 27, 2010

48) Waitrose

危 wēi  danger

The big UK supermarkets are increasingly under attack for pressuring their suppliers and destroying the traditional British ‘high street’.  But, for the bulk of UK consumers value, choice and convenience remain the most important selection criteria for their choice of food retailer.  As supermarkets expand (because they address these criteria better than many of the alternatives) they are likely to feel the backlash more, particularly as they grow their high street presence with the rising ‘convenience format’, (stores that are smaller than average and retail a selection of key ranges). For example, in September 2009 Waitrose announced plans to increase its numbers of convenience stores to 300 over the next 10 years after successful trials of the format. Given this expansion Waitrose will surely increasingly feel a backlash from consumers?

机 jī opportunity

Perhaps not, Waitrose recognizes the importance of engaging with local communities.  Waitrose has always donated a proportion of its profits to charities but its challenge has often been in having consumers value this philanthropy.  Its Community Matters scheme, launched in 2008, tackles this challenge in a smart way. The scheme gives each branch £1,000 to share out between three local good causes each month. Customers vote for their preferred cause using a green token they receive every time they shop and the money donated to each cause is directly proportional to the tokens they receive. I’m always amazed at the time consumers spend to choose the charity they will give their token to – surely a reflection of how engaged they are versus traditional approaches.

How About…

  • Involving consumers in decisions to increase their engagement?
  • Making strategic decisions around what type of social impact will be most valued for your business, e.g. local or global?

—

here’s the collection box in my local Waitrose – I’m always intrigued to see which charities shoppers prefer…  I also wonder if people tend to default to other shoppers’ choices (and fill the most full section) or try to support the underdog…

January 26, 2010

32) Kegg Farms

keggfarms_logo_1

危 wēi  danger

Delhi-based chicken producer, Kegg Farms was founded by Vinod Kapur in 1967.  Kapur had realised that the Indian poultry sector lagged behind western markets in its adoption of genetic breeding, accordingly he began breeding birds specifically for the Indian urban market.    The company’s chicken was particularly successful due to its resilience and egg productivity.  However, the company’s solid economics were threatened in 1990 when industrial and foreign trade policies were liberalized, enabling foreign competitors to enter the market for the first time – would Kegg Farms be able to compete with the better-financed global firms?

机 jī opportunity

Kapur rightly predicted that the foreign entrants would focus on the attractive urban markets and switched his focus to the rural market – a tougher proposition because of the harsher environment and lack of infrastructure.  He overcame these challenges by breeding a new bird, the ‘Kuroiler’ which was faster growing, laid eggs more frequently and was capable of scavenging for its food.  He also catalysed the creation of a completely new supply chain by empowering entrepreneurs to take on the required roles – Keg Farms now supplies to 1,500 entrepreneur-owned ‘mother units’ across India which in turn supply to villages through vendors on cycles.  Finally, rural villagers, frequently women, supplement their income by selling eggs or the birds for meat (a liquid asset for when they require money urgently). As of November 2006, Kegg Farms was supplying chicks to about 4 million poor villagers, generating incomes for 700,000 households.

how about…

  • Scenario-planning for potential legislation changes?
  • Where no economic supply chain exists, catalysing the growth of your own through entrepreneurship?

—