Mega Trend #: 2 New Business Models in the Age of Distributed Capitalism

Prof. Shailendra Raj Mehta IIM-Ahmedabad and Duke CE

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MEGA TRENDS 2020: Shaping Indias Future

Business Models are Important

Often a new technology or market needs a new business model There are lead markets
High tech for the US Miniaturization for Japan Low cost innovation including bottom of the pyramid in India

Google and Apple succeeded because they created Technology + Business Model (Search + Adwords) (iPod + iTunes) US universities prospered by changing the business model
Alumni control

As against a 60 million job creation in the period 1999-2000 to 2004-05, just about a million jobs were created in 2004-05 to 200910. (Rangarajan, Kaul et al. 2001). Important in Entrepreneurship and New Job creation.

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MEGA TRENDS 2020: Shaping Indias Future

Innovative Business Models Johnson 2010

Affinity club Brokerage Bundling Cell Phone Crowdsourcing Disintermediation Fractionalization Freemium Leasing Low-touch Negative operating cycle Pay-as-you-go Razors/ blades Reverse auction Reverse razors / blades Product-to-service Standardization Subscription club User communities
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MBNA Century 21, Orbitz Fast-food value meals, iPod/ iTunes Sprint, Better Place Wikipedia, You Tube Dell, WebMD Time-sharing condos, Net Jets Skype, Linkedin, Pandora Xerox, Luxury cars, Machinery Link Southwest, Wal-mart, Xiameter Amazon PG&E, metered ISPs Gillette, personal printers Elance.com, OnForce.com iPod/iTunes, Amazon Kindle IBM, Hilti, Zipcar Minute Clinic Magazines, Costco, Netflix Angles List
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Business Model Definition

Customer Value Proposition Target Customer Profit Formula Revenue Model Key Resources People Key Processes Routines Rules and Metrics Norms

Job to be Done
Offering

Cost Structure
Margin Model Resource Velocity

Technology
Equipment Information Channels Partnerships Brand

From Johnson, Christensen et.al. HBR 2008

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Indian Business Models

Bottom of the Pyramid C.K. Prahalad But also frugal engineering or Gandhian engineering India is the lead market for Bottom of the Pyramid Innovation Want to look at what has happened in the last 10 years Link up to
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12 Models Direct Fit with Rifkin Distributed Information and Energy

Government
Aadhar Aakash

Social Sector
108 Emergency

Indian Companies
Forus Healthcare Ekgaon Mahindra Reva Tata Nano Chotukool Microfinance Global Delivery Model E-choupal

MNCs
e-Shakti

Others
21 other models (33 in all)

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MEGA TRENDS 2020: Shaping Indias Future

Government Sector
Aakash Tablet
Create community learning solutions 40,000 print materials by IGNOU, 1600 videos (free) IITs and IISc. http://nptel.iitm.ac.in/ MIT open course ware

Aadhar Card
Clear Trip ATM machines Limited only by our imagination
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Ekgaon
customized farming recommendations based on local weather, crop and soil conditions using text and voice, delivered to the most basic and cheap cellphones that dot the rural countryside.
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Cloud computing Rs 250 a year 12,000 paying subscribers

MEGA TRENDS 2020: Shaping Indias Future

Reva Electric Car

Created by the Maini Group Taken over by Mahindra and Mahindra Today, Mahindra Reva has one of the largest deployed fleets of electric cars in the global market and the accumulated data from more than 100 million km of user experience.

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MEGA TRENDS 2020: Shaping Indias Future

Forus Healthcare
The large number of blind people who have what may be called avoidable blindness on account of a neglect of cataracts, glaucoma, refraction problems, corneal problems and diabetic retinas. Forus has created a a single, portable, intelligent, noninvasive, eye prescreening device tests for all five of these conditions and if any anomalies are found connects the patient to a doctor via telemedicine.
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Formula
One visionary Low cost highly skilled talent Simple, affordable, bundled technology, complete or customized solution using technology Low cost distribution using low cost sales force Combination of high tech and low tech management Large volumes, low prices Scale up fast while remaining very close to the customer Appeal to the impulse to make a difference (CSR) Good stakeholder management Key Question How will these new business models mix and match to create new value in the future?
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