The BOP Challenge â Opportunities for the Electronics Industry
The BOP Challenge â Opportunities for the Electronics Industry
The BOP Challenge â Opportunities for the Electronics Industry
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<strong>The</strong> <strong>BOP</strong> <strong>Challenge</strong> –<br />
<strong>Opportunities</strong> <strong>for</strong> <strong>the</strong> <strong>Electronics</strong> <strong>Industry</strong><br />
Jaswinder Ahuja<br />
February 18, Bangalore<br />
1
Agenda<br />
<br />
Introduction<br />
<strong>BOP</strong> <strong>Challenge</strong> – <strong>The</strong> Indian Perspective<br />
Group Discussions – 3 rounds<br />
Open Mike<br />
Wrap up<br />
• Analysis Summary<br />
15 min<br />
12 min ea.<br />
15 min<br />
15 min<br />
© Jaswinder Ahuja 2<br />
Cadence Design Systems
Base-Of-<strong>the</strong>-Pyramid (<strong>BOP</strong>) –<br />
<strong>The</strong> Global Picture<br />
<strong>The</strong> <strong>BOP</strong> comprises of 4 billion people worldwide<br />
that have significant and unique unmet needs<br />
and represent a $5 trillion market<br />
Source: CK Prahlad, World Resource Institute,<br />
International Finance Corporation<br />
© Jaswinder Ahuja 3<br />
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<strong>BOP</strong> – <strong>The</strong> Indian Context<br />
In India, 70% of our population, ~ 800 million people live in<br />
rural and semi urban areas.<br />
To realize our goal of 9%+ INCLUSIVE growth, we must<br />
integrate <strong>the</strong>m into <strong>the</strong> <strong>for</strong>mal economy, improve overall<br />
productivity and address <strong>the</strong>ir unmet needs using a market<br />
based approach<br />
Source: CK Prahlad, World Resource Institute,<br />
International Finance Corporation<br />
© Jaswinder Ahuja 4<br />
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<strong>BOP</strong> – <strong>The</strong> Opportunity<br />
<strong>The</strong> Indian <strong>Electronics</strong> <strong>Industry</strong> is in a unique position to<br />
identify and address <strong>the</strong>se unmet needs and contribute to<br />
<strong>the</strong> national interest.<br />
Source: CK Prahlad, World Resource Institute,<br />
International Finance Corporation<br />
© Jaswinder Ahuja 5<br />
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<strong>The</strong> <strong>Challenge</strong><br />
What role will<br />
<strong>the</strong> electronics industry play<br />
© Jaswinder Ahuja 6<br />
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Base-of-<strong>the</strong>-Pyramid<br />
A Counter-intuitive New Opportunity <strong>for</strong> Business<br />
in <strong>the</strong> New Millennium<br />
<br />
Market Characteristics<br />
• Large, highly distributed, low income<br />
• Extremely value conscious<br />
A Trans<strong>for</strong>mative <strong>Challenge</strong> –<br />
• Expectations on high quality are no different from<br />
top-of-<strong>the</strong>-pyramid<br />
<br />
Market Development<br />
How to marry low cost, good quality,<br />
sustainability, and profitability at <strong>the</strong> same time<br />
• Trans<strong>for</strong>m Unorganized, Inefficient to Organized and<br />
Efficient<br />
• Need Breakthrough Innovations<br />
Source: CK Prahlad, World Resource Institute,<br />
International Finance Corporation<br />
© Jaswinder Ahuja 7<br />
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Re-framing Conventional Thinking<br />
8<br />
Technology<br />
Technology<br />
and<br />
and<br />
Business<br />
Business<br />
Models<br />
Models<br />
Productivity<br />
and and Capital<br />
Efficiency<br />
Sustainable<br />
Sustainable<br />
Development<br />
Development<br />
Price<br />
Price<br />
Per<strong>for</strong>mance<br />
Per<strong>for</strong>mance<br />
Relationship<br />
Relationship<br />
Scale Scale and<br />
and<br />
Profitability<br />
<strong>The</strong> Profit equation<br />
Cost + Profit = Price<br />
Price – Profit = Cost<br />
Source: CK Prahlad<br />
© Jaswinder Ahuja<br />
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Disruptive Business Models<br />
Radically alter <strong>the</strong> economics of <strong>the</strong> industry<br />
Maintain and improve functionality<br />
Make it difficult <strong>for</strong> incumbents to react<br />
Sustainable – Built on logical, internally consistent<br />
business principles<br />
Significantly enlarge market size<br />
Source: CK Prahlad<br />
© Jaswinder Ahuja 9<br />
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2 Wheeler – and <strong>the</strong> Indian Family<br />
© Jaswinder Ahuja 10<br />
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Need <strong>for</strong> a $3,000 Car<br />
Used Car<br />
Source: CK Prahlad<br />
$1000<br />
$3000<br />
$6000<br />
$12000<br />
© Jaswinder Ahuja 11<br />
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Vision Meets Opportunity<br />
I observed families riding on two-wheelers –<br />
<strong>the</strong> fa<strong>the</strong>r driving, his kid standing in front,<br />
his wife seated behind him holding a baby. It<br />
led me to wonder whe<strong>the</strong>r one could<br />
conceive of a safe af<strong>for</strong>dable, all wea<strong>the</strong>r<br />
<strong>for</strong>m of transport…<br />
– Ratan Tata<br />
© Jaswinder Ahuja 12<br />
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<strong>The</strong> Dream <strong>The</strong>y Said Couldn’t Be…<br />
© Jaswinder Ahuja 13<br />
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<strong>The</strong> Indian Solution –<br />
Unique, Low Cost, Effective<br />
Jaipur Foot<br />
Mumbai Dubbawallas<br />
Single Serve Retailing<br />
Mobile with a torch<br />
Amul, Operation Flood<br />
Combination Chulah<br />
…<br />
© Jaswinder Ahuja 14<br />
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<strong>The</strong> <strong>Challenge</strong><br />
India is Ready <strong>for</strong> Us:<br />
Are We<br />
© Jaswinder Ahuja 15<br />
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Opinions Sampler<br />
Do You Believe…<br />
• … that <strong>the</strong> rural and semi-urban population has<br />
unique needs that are presently not being serviced<br />
• … that <strong>the</strong> electronics industry can contribute<br />
towards improving quality of life of this population<br />
• … <strong>the</strong>re is a business opportunity <strong>for</strong> <strong>the</strong> electronics<br />
industry at <strong>the</strong> base of <strong>the</strong> pyramid<br />
© Jaswinder Ahuja 16<br />
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Table Activity<br />
Brainstorm as a group on <strong>the</strong> topic provided<br />
• Identify a discussion leader and a scribe<br />
• Time – 10 min discussion, and 2 min <strong>for</strong> summarizing<br />
• Document key conclusions on response sheets provided and hand<br />
over to floor facilitators<br />
Ground Rules<br />
• Please think high level; market / product / consumer needs…<br />
• Divergent brainstorming – please focus on possibilities,<br />
opportunities…<br />
• Please stick to planned schedule<br />
• Please be brief and crisp in discussions / debriefs<br />
© Jaswinder Ahuja 17<br />
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Question 1<br />
Which are <strong>the</strong> top 2 market segments that may have maximum<br />
product / application potential (in terms of Revenue) <strong>for</strong> “Base-of-<strong>the</strong>-<br />
Pyramid” (<strong>BOP</strong>)<br />
NOTES:<br />
a. If a particular opportunity straddles more than one market segment, pick <strong>the</strong> one that most represents <strong>the</strong><br />
end-user segmentation.<br />
b. Please feel free to use “O<strong>the</strong>rs” category to list new markets and enumerate <strong>the</strong> same.<br />
Market Segment<br />
Agriculture<br />
Education<br />
Energy<br />
Entertainment<br />
Healthcare<br />
Medical<br />
Security<br />
Telecom<br />
Transportation<br />
O<strong>the</strong>r<br />
Biggest Rev.<br />
Potential<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Next Biggest<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
© Jaswinder Ahuja 18<br />
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Question 2<br />
Name and describe (max of 1 sentence each) a product or application<br />
idea (<strong>for</strong> at least one market segment) that may have <strong>the</strong> potential <strong>for</strong><br />
“high” volume with “reasonably attractive” margins.<br />
Examples<br />
Agriculture<br />
Energy<br />
Smart farming as in use of nano sensors to measure humidity and ground moisture to<br />
regulate irrigation <strong>for</strong> conservation of water<br />
Hybrid energy source using a combination of natural resources (sun, water and/or<br />
wind) to generate and capture (via batteries) <strong>for</strong> rural / community electricity<br />
© Jaswinder Ahuja 19<br />
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Question 3<br />
Highlight challenges that will have to be overcome to realize<br />
<strong>the</strong> above product /application idea. Please rank by priority<br />
(by writing 1, 2 or 3) against <strong>the</strong> following categories.<br />
Note: If a particular category is not listed below, please put your response<br />
under “O<strong>the</strong>r” and enumerate<br />
Govt Policy /<br />
Regulations<br />
<br />
Investment / Funding<br />
<br />
Product Definition<br />
<br />
Research &<br />
Development<br />
<br />
Consumer Education<br />
<br />
Create / Optimize Supply<br />
Chain<br />
<br />
Market Research<br />
<br />
Innovative Support and<br />
Distribution Channels<br />
<br />
Branding<br />
<br />
O<strong>the</strong>rs<br />
<br />
© Jaswinder Ahuja 20<br />
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Open Mike<br />
© Jaswinder Ahuja 21<br />
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Analysis Summary<br />
© Jaswinder Ahuja 22<br />
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Thank You!<br />
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