Thursday, March 20, 2008

Business Models from the Field: and DCC

Learning about Business Models from the Field: The assignment and DCC
Image: Prof. M P Ranjan explaining the Systems Design Model to the DCC class. This four stage process includes User studies, Scenario Visualisation, Concept Detailing and Business Model development.
Several years ago, as part of the DCC course, we realized that strategy and planning were as important as concept and product detailing if a particular set of design offerings were to be successful in the marketplace. Unlike technological innovations and science innovations which can be proven in the laboratory or be subjected to peer reviews for validation, design innovations and design offerings are of a class that can be measured and the success of which can only be tested in the marketplace and this makes it truly complex to prove. The producers who have almost the same quality of product on offer can only differentiate their offering by the thoughtful development of their business models. So we see objects being converted into a service offering through a lease finance model or a service being dematerialised through the use of technology and the shift could be in either direction and the winner is the one who can capture the imagination of the consumer and offer a special convenience that the other is not able to offer.

Learning business processes is seen as the exclusive domain of the management graduate and not that of the designer, however as teachers at NID we realized that without this knowledge being integrated into the product creation and development process, the impact of the new product or service offering would be essentially incomplete. This led to the creation of the four stage systems design model that I presented at the CII-NID Design Summit in 2001. This model was several years in the making and was an implicit part of the DCC assignments over many years before it got formalized in the Design Summit paper and presentation which is called “Cactus Flowers Bloom in the Dessert”.( download pdf: Part 1 of 3.6 MB and Part 2 of 4.6 MB and paper of 123 KB) Much earlier, in 1998 we had asked a group of students in the DCC class to go out onto the streets of Ahmedabad and study several street food vendors in working groups and come back to the class with an understanding of their business processes and strategies. We called it the assignment and it was an instant success since we realized that the students were indeed able to observe, interact and understand the structural, functional and performance attributes of the business particularly since these were small and micro enterprises that were managed and effectively carried out by one entrepreneur with a small team of supporters, many from within the family itself. We have offered this assignment to all batches since then and the learning from the explorations and presentation that go across three or four days is very rich indeed. The contacts in the field, we found, were also open to share much information and insights with the students, but there were others who were either suspicious or indifferent to the needs of the students. On their part the students learned how to be diplomatic and deal with the very public interactions with care and empathy. Besides learning about fieldwork and about gathering information first hand from the live subjects the students also developed insights about start-up entrepreneurship and how some of these individuals learned to cope with poverty and to deal with it rather effectively. The revelation that the students usually came back with was that some of these individuals earned more each day than their teachers, their own parents in some cases or even officers in very respectable and well known large business enterprises.

The assignment that evolved over the years included the forming of five or six groups, each being assigned to research one kind of street food vendor through direct contact and observation in the street. Students were briefed about various issues to be kept in mind while making these field observations and in the interviews that followed The criteria for the selection of the vendors would be based on a quick survey of a number of such vendor locations and to seek out the ones that were basically cooperative as well as those who provided some significant attribute such as proximity to public facilities, apparent success by the customer draw that was exhibited in the preliminary observations, and the presence of other differentiators which the group feels would be worthy of deeper examination. Over the years we have had our students look at Street Tea vendors (The Chaiwallah), Omlette makers (Omlettewallah), Fried Bhajiya makers (Bhajiyawallah), Paav Bhaji wallah (Fried Bread and mashed vegetables), Golla wallah (Crushed ice on a stick), Pani Puri wallah (Puffed Puris with a sour dip) and so on, all favorite Indian street foods, all served from Laris or informal carts, by small and micro business enterprises, each run by a poor but determined individuals who is trying to build a livelihood in a harsh socio-economic environment.

Each group of students are required to make repeated visits to the chosen locations for observation and use the insights to model the flow of resources, finances and build an understanding of the visible as well as intangible assets and processes that have been incorporated to make the particular business a success. Through the interviews that are also required to get an understanding of how the story pans out across the year or a longer period and in some cases get an understanding of the history of the establishment and its various successes and periods of crisis, of which there are many being so exposed to the vagaries of the street environment that is at once full of opportunity as well as challenges. This collective understanding is to be mapped out using the group processes of discussion, dialogue and modeling from which would emerge a coherent model that can be worked into a suitable metaphor that can be used to share their understanding with the rest of the class. The students would be required to make a rich visual representation of their model in the form of a wall size poster for presentation and this would be used as a prop to explain the concepts that they have gathered about the particular business that they have studied. Teachers use this opportunity to connect the students to possibilities for further study and they are in turn quite ready to follow up on these leads since the learning from the field is quite deep and highly motivating as well. We look forward to seeing how this particular batch respond to the field study challenge particularly since it happens across the Holi festival weekend with all its associated distractions, but we are sure that they would stay focused and get the job done in time. Only time will tell.

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