IDEA GENERATION: Sources of Business Opportunities

Prof . Rajendra K Lagu School of Management IIT Bombay

Change as a Source of Opportunity

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 Change brings in disruption that in consumer tastes, cost structures, business models, expectations, level of expertise needed, distribution channels, payment mechanisms, availability of finance 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

Japanese car manufacturers (1973)

Microsoft (1976-78)
Amazon and Dell (1990s)

Infosys (1989)

Broad Categories of Change

Demographic whole population (age distribution) Economic Emerging markets

Socio-Cultural -- Value systems, role models

Technological -- Variety, performance, cost

Political democratic, authoritarian/totalitarian regimes. Free market vs socialistic policies (Britain in early 1980s) Legal and Regulatory -- liberalization (internal and external), enforcement of IP protection laws

Demographic Changes

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

Socio-Cultural Changes

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

Technological Changes

Availability and wide-spread assimilation of technology

Information Technology and it pervasiveness

Costs and disposable incomes Performance, variety, ease of acquisition Cross applications interdisciplinary developments Comfort level of technology usage

Examples: CD ROM drives and mobile phones

Economic Changes

Gross Domestic Product and Per Capita Income Level of exports and imports

Inflation and interest rates

Availability of credit at all levels Size of the middle class Various growth rates industrial growth, productivity growth, exports growth

Level of unemployment

Political and Regulatory Changes

Transition from centrally planned to market economy (India, 1991)

Transition from communism to market socialism (China, 1978-1980)

Regulated, protected, closed economy No IPRs (copyrights, patent laws) Contract Enforcement and right to property Labour and land reforms

India in the New Millennium

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

India in the New Millennium

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

Analysis of Existing Entrepreneurs

Truly new, novel and innovative ideas: 3-4% 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

DOS to Windows Mechanical watch to quartz watch

Modem to ADSL modem

Ordinary TV to a flat screen TV Desktop PC to a laptop PC to a tablet PC Propeller engine to a jet engine

Most industrial innovations

Examples of Extensions

Toothbrush with a built in toothpaste

Pen with a torchlight

Mobile handset with camera, FM radio,MP3 player .

Memory sticks with MP3 players

Wristwatch with a calculator Cinema Multiplexes

Day care centers (crche) with tuitions

Swiss army knife

Examples of Specialization

Low cost airlines (Ryanair, Easyjet, Air Deccan) Boutique financial advisory services

Super-specialty hospitals
Finishing schools Executive search firms (CxOs only, finance professionals only)

Possible Service Opportunities

Schools Restaurants Travel agency and tour operators Pet shops Bookshops Gyms / weight loss clinics

Oxygen bars

Questions? Comments. Suggestions!