BOP workshop: From Idea to Business - Experience sharing workshop
Leading Danish companies and organisation meet in March to exchange experience on doing business in the BOP segment at the workshop "From Idea to Business" facilitated by the BOP Learning Lab. Learn about their findings below.
During the workshop the participating companies were grouped with other companies in the same project phase facing similar problems. The discussions were kicked off by a ‘problem tree’ developed for the companies and the specific situation they.
The workshop created intensive discussion between the participants and facilitated the essential knowledge sharing. During the workshop is was proven that Danish companies working within the BOP field are able to use each other for mutual benefit.
Key recommendations
Below you find a summary of the key recommendations and findings which were brought forward during the workshop. The recommendations are categorised according to three project phases: Idea, Start-up & Scale.
Idea phase
At the "Idea Phase" table the discussions centered around 4 problems, specifically financing, local knowledge, focus and gaining support from top management. 3 companies identified financing, local knowledge and focus as their main barriers at the current stage of their project.
- Local knowledge: Involves all essential areas as local markets dynamics, customer needs, local regulation, local partners and other essential information. Finding the right partners as well as identifying the optimal mode of cooperation is particularly challenging for companies.
- Focus: The problem for most companies is the lack of focus due to a wide range of opportunities within the BOP segment. Many companies find it difficult to focus geographically as well as sector-wise, which is why a BOP strategy often becomes too large of an assignment to em-brace.
- Finance: Difficult to secure finance for an unproven product/service in a unfamiliar market. Financing is an equally challenging issue for companies as well as NGOs.
- Support from management: It is a challenge to convince the management about the relevance, strategic importance and potential profitability of the project, especially if no pilot project has been conducted to show concrete opportunities.
After identifying challenges and discussing the possible solutions, participants from all tables shared their experience and advice about what to do in the idea phase. It was emphassised that it is important to choose markets and partners carefully. However, the majority of advice provided, focused on how to reach the start-up phase. First and foremost, it is crucial to move from the analytic phase to an action oriented phase. Success greatly depends on starting up with a small-scale project in a specific (or limited number of) markets in order to identify opportunities as well as prove the concept/product/service targeting the BOP segment. Further, entrepreneurship is about doing, failing, learning and building. In this process it is essential to start small and agile and build in several steps, milestones and deadlines in the projects.
Start-up phase
At the ‘Start-up Idea’ table participants focused their discussions around iteration of the business model together with talks about finance and project management. 4 companies identified the iteration process as a challenge and 2 companies identified finance and project management as obstacles.
- Iteration of business model: When launching the idea in the market it often becomes obvious that the business model and product needs adjustments which are obtained by learning through an iteration process. The emphasis of this aspect underpins the importance of an explorative process, as the projects typically are of an innovative nature. Whether the company applies a trial-and-error approach or uses more resources than usual on research depends on the strategy and nature of the product.
- Finance: Securing finance while profitability of business model is uncertain was also highlighted as a major challenge for BOP venturing. This requires a lot of risk-willing capital, which in the midst of the financial crisis is at a minimum at most companies.
- Project management: Managing the business and iteration process in a distant unknown market with a different culture is difficult. This has become clear as the project period has tended to be extended comprehensively. The companies that have gone into the start-up phase and initiated scaling of the business model, admit that it has taken longer time that initially planned to arrive at a stage that makes it attractive to scale the model. This aspect is a barrier to develop BOP projects and should not be underestimated.
The advice targeting companies in the start-up phase focused on flexibility. This is closely connected to the earlier discussions about iteration as a central challenge in the start-up phase. Overall participants emphasised the need to be flexible and open in order to adjust plans based on the learning’s from pilots during the iteration process. It is necessary to include flexibility in relation to time, finance and culture.
Scale phase
At the ‘Scale Phase’ table, the discussion centered around 2 problems. 3 of the four companies identified return on in-vestment as a challenge while two identified marketing as a key obstacle at the scale phase. Compared to the discussions at other tables, the discussion at scale phase table was more focused with only 4 areas being identified as challenges com-pared to 8 at the idea phase and 11 challenges in the start-up phase.
- Return on investment: It is challenging to achieve a satisfying level of return on investment. The challenge is intertwined with financing aspects, as financing becomes increasingly more complex in this phase. The primary reason is because the companies are moving closer to the capitalization of the initial investment, thereby requiring a return on investment. However, as capitalization requires a certain (large) scale, a need for financing the scale of the business model becomes apparent. As the typical nature of a BOP project is more risky than other types of pro-jects, the need for risk-willing capital emerges. The risk-willing capital could be provided in the form of grant capital, but as grant capital typically applies on the first phases, as mean to develop not only a business model, but also a viable business case, it would be conducive if the BOP projects are able to attract commercial capital of some form at this stage. Ideally, attracting anything but grant capital at a later stage of the BOP projects should be included in the earlier stages of the project. Meaning, developing an investor strategy could be requirement for the projects as they develop, because it determines the ability to scale the project and thereby the overall successful completion of the project.
- Marketing: It a challenge to reach the customer and a challenge to utilize alternative marketing channels. Marketing is a key issue and traditional marketing channels might not have the outreach to BOP end-users as is required. Therefore, new and creative ways of marketing must be developed to reach success. The advice provided for the scale phase touched upon three topics. First, it is essential to ensure commercial viability of the project to attract further finance and gain independence from donor funding. It is further recommended to get assistance in identifying the right local partner.
