Business Model Innovations for Scaling-up Water Services in Developing Countries

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This presentation was hold in Addis Ababa at the GeoGen Conference. It shows the role of business model innovations in scaling-up water businesses in the developing countries. Key take away is that …

This presentation was hold in Addis Ababa at the GeoGen Conference. It shows the role of business model innovations in scaling-up water businesses in the developing countries. Key take away is that organizations have to continuously innovate the business model. It is not a one shot attempt and organizations stick to it. No, it is in effort of a continuous adaptation and modifcations in all business model elements.

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  • 1. Business model innovations forscaling-up drinking water businesses indeveloping countriesHeiko GebauerGeoGen Conference 2013Environmental Social Sciences (EAWAG), Zurich, SwitzerlandCenter of Service Research, Karlstad University, SwedenAddis Ababa, February 2013
  • 2. A viable water market creates business opportunitiesBoP (Base of the Pyramid) marketshare of total watermarkets0% 20% 40% 60% 80% 100%AfricaLatin AmericaAsiaEastern EuropeBoP Water Market ToP Water market$3.2b$5.7b$6.4b$4.8bSource Rangan, 2009, http://300in6.org, Hammond et al., 2007.
  • 3. Appropriate water treatment technologies existHousehold (individual)treatment technologiesCommunity-basedtreatment technologiesSmall and medium-sized firms (SMEs) orNGOs• Ceramic filters (NGOInternational DevelopmentEnterprises (IDE)• Tulip siphon filter (Basicwater needs)• Reverse osmosis waterkiosks(Naandi, Sarvajal)• Chlorination plants(Aquasure)• Bone char filters (NDC)• Arsenic removal (Trunz)Multinationalenterprises (MNEs)• Unilever Pureit filter• Procter&Gamble withwaterdisinfectant PUR• Tata Swach(rice huskash, pebbles, and crushedcement)• Grameen Veolia (arseniccontamination)Research institutions • SODIS – Safe water throughsocial behavior change• Gravity Driven Membrane(GDM)• Bone char filters (OSHO)• Bone char filters(OSHO)
  • 4. But why is it so difficult to scale-up?Market potentialAppropriate technologiesBusiness model innovationKPKAKRVPDMCRCSC RKP – Key Partner, KA – Key Activities, KR – Key resources, VP – Valueproposition, CR - customer relationship, DM – distribution & marketing,Cost – Cost structure, R - RevenuesBoP Protocol 2.0Simanis and Hart, 2008
  • 5. Sampling business ventures in the water market• Research methodology – Qualitative case studies• Case characteristics – Variety (type NGO, private firms, size - SMEs,MNEs, or development stage (surviving, successful, or scaling-up)•Data collection & analysis• Primary data – workshop, interviews, observations•Secondary data – Reports, presentation•Case study descriptions – narratives, critical incident techniques•Content analysis – within-case, cross-case• Examples -Aquasure, Naandi water kiosks, Sarvajal, Unilever Pureit filters,IDE, Medentech, P&G Pur, Antenna Watasol, PSI, 2AEP, AGUATUYA,Healthpoint Services E-Health Points,Inter Aide, IWADCO, Manila Water, PSIKenya, Osho, Veolia Grameen, Suez Environnement PALYJA
  • 6. Scaling-up means continuous businessmodel innovationsPenetrating watermarketsCreating watermarkets whereneeds existBusiness modelinnovationTimeExistenceSurvivalSuccessTake-offMaturity
  • 7. 05001000150020002500300035004000Installed watersystems2008 2010 2014 20162012...Holistic extension of the business modelSarvajal(Franchisor)(5000 $ /2600$)Micro-entrepreneurs(Franchisees)500 $ (40% ofrevenue)Communities(Villages –3’000)0.12 $ for 20liters1 : n 1 : mSkills and methods for maintaining and monitoringthe systemsIndividual skills – bright brains to repetitive gainsMethods – Franchisee strategy tool / approach tobalance own / borrowed capitalBankMicro-creditinstituteSource: own interpretation and interviews. Based on Macomber and Sinha (2012)Business model innovation at sarvajal– affordable, accessible, and pure water
  • 8. Summary of the key finding• Strategic planning approaches (objectives and aims for combiningsocial and profit-oriented goals)• Value proposition & marketing (e.g., PSI as social marketing expert anddeep knowledge of BoP customers)• Business model extension from the top of the BoP to the bottom (e.g.Unilever, Tata versus IDE ceramic filters as symbol for poverty)• Scaling-up as scaling-out or extending the scope (e.g., Naandi – smallto larger villages, expand the service range to grocery items, mobilephone services and newspapers)• Managing a network of micro-entrepreneurs to support the distributions(e.g. Unilever„s „Shakti‟ (empowerment) program, micro-entrepreneurdisinfecting jerry cans at the lakefront)• Micro-credit (Unilever and Tata) and financial institutions (Aquasure)
  • 9. Conclusion“Experimenting withbusiness models is a smallstep, one giant leap to makewater markets works”