My talk at MSRIM Conference - Start-up India, Stand up India - Role of B-Schools 27th of May 2016

Good Afternoon ladies and Gentlemen!

I am greatful to MSRIM, especially Dr.Muralidharan and Prof.Jayashree for having me here today. It gives me the opportunity to catch up with many old friends.

          When I saw the topic given to me, Business models, Technology & Marketing, my first thought was that Dr.Muralidharan made a list of subjects to be covered and after assigning the topics, put all the left over topics into one and gave that to me.

           That is not at all true. The two very important components of business model are technology and marketing, apart from the financials which is what everyone talks about with regard to start ups.

Let me by telling you three stories. All true stories.

Story-1

J.C.Fargo who was the president of American Express was on European holiday in 1892.He had a very difficult time converting the letters of credit that he carried into cash. He went back to the US thinking that if the president of American Express was having this trouble, what about the common traveler. American express then created the travelers cheques.

          In the year 2000, American express issued cheques worth USD 24.6 Million. In recent years the debit card/Credit card and multi currency cards have replaced these cheques and business has dispersed to many commercial banks thanks to Visa & Master card.

Story – 2

How many of you have heard of Vayloo technologies. This is a Bangalore based start up that belongs to Piyush Bansal. Recently Lenskart received another 130 crores rupees investment and their annual turnover has reached 100crores.

          The story I want to tell you is not about Lenskart. Vayloo technologies had conceptualized and started Bagskart , Watchkart and Jewelskart also. However no one has heard of them and Vayloo has shut down there three businesses.

          There are many startup’s that fail for a range of reasons. Today most of the ‘food delivery’ sites are closing down because they did not visualize that they have very little control on the restaurant or housewife who is cooking to supply.

(Dazo/Tiny owl, Zomato.)

Story – 3

Chandubhai Virani was selling potato chips near a cinema theatre in Rajkot Gujarat and also working in the Theatre Canteen. He started with one frying pan.  Balaji wafers today, has 65% market share in 5 states where it is sold and is a 1000 crore company.

          Chandubhai had earlier failed in two businesses in one his suppliers sold him fake fertilizers and in another he could not run a college canteen successfully.

Business models are very much about stories, stories about how enterprises work. Joan Magretta as far back as 2002 in a HBR article says “A good business model begins with an insight into human motivations and ends in a rich stream of profits.”

We have all learnt about identifying customer wants/needs and making a profit by satisfying them.A business model helps us to focus attention on how the various elements of the system fit into a working whole.

There are many business models classified as pipe and platform business models. The essential thing to remember is that we need to have clarity on how the business will actually make money.

Technology enables new products & services .

Technology is a choice in a start up and in a business model.

What level and type of technology to use to solve the problem?

Whether you want hand held order taker in your restaurant or just a writing pad is a choice. Using WhatApp to chat with your friend when the lecture is going on is good use of technology,   using it to chat with a roommate within the hostel room is unnecessary and wasteful use of technology.

In a start-up converting a technological innovation into a profitable product is a critical area. When Xerox launched its copier it was very expensive compared to the earlier wet copiers. To make economic value of this technology innovation, Xerox introduced a new business model, they leased the equipment which calls for very low down payment. This led to the success – 41% compounded annual growth (CAG) FOR 12yrs.

Like travellers cheques gave way to credit & debit cards, newer technology replacing the old is an everyday occurrence. Kodak is classic example of being washed away due to technological advancements and not accepting new realities quickly. Keeping track and adapting new technologies to offer value to customers is another important area. I love the Indian railway for launching internet booking long ago and it now sells 2 lakh tickets each day providing a great value preposition.

Technology and marketing are very much interconnected. Just a few years ago the buzz word was ‘technology marketing’ which relates to selling hi technology products and services. The book ‘Crossing the Chasm’ by Geoffrey Moore was very popular. Today the buzz word is ‘marketing technology‘which is about technology tools available for marketing especially digital marketing.

 Marketing is required to give life to technology innovations

          While the essential philosophy of marketing is still very relevant, there are three major changes in the world. First is the speed . Everything is much faster, so responsiveness needs to be instantaneous. Second, with the world becoming smaller, the need for marketing professionals to understand many cultures and tailor marketing programs to culture is increasingly important. Third, is the digital transformation that is happening all around us. Everything is now becoming digital.

I am sure many of the students have been exposed to the business model canvas. Many of the components need a good understanding of marketing concepts. Customer segments, value preposition, customer relationships, and channels are the core of every business model.

The opportunities for marketing to the bottom of the pyramid are immense and right from understanding customer needs, developing relevant lean products, to selling such products to this market is the need of the day.

Differentiation and positioning are becoming a challenge. Marketing needs a lot of pertinent creativity to understand customers and put out something that offers significant value to them and bring home a profit.

The sense I am getting is that behind every successful business, apart from a lovely lady, there are many failures. Business graduates must build the confidence to fail.

In my Opinion, Technology management especially using technology as a component of a business model, and how technology can add economic value that is useful to customers, marketing to the bottom of the pyramid and the stories of business models should be part of the curriculum of business schools.

Thank you