Innovative ICT4D Business Models

Hillary Miller-WiseCEO, Esoko

• Introduction to Esoko• Business model definition• Business model innovation

– Examples of business model innovation in developed markets– Drivers of business model innovation– ICTD examples of business model innovation: Zoona and Esoko– Some advice

• Discussion

Overview

Introduction to Esoko (1/2)

Push/Pull contentsuch as market prices,weather and ag tips

Collect and analyzedata from field viacustomizable Androidapp and deployment

Insights

Esoko is a technology company that enables businesses to communicateand transact more effectively with the bottom of the pyramid. We do thisthrough simple but powerful mobile and web solutions.

Bids & offers – amatchmaking servicefor farmers and buyers

M-commerce solutionfor farmers andenterprises (Q4 FY16)

Targeted marketing –B2C and B2B

Channels: SMS, USSD, IVR, voice messaging, call center, Android apps

Promotion Trade

Introduction to Esoko (2/2)

• Private, for-profit company• Established in 2008• Currently in 10 countries

– Four additional countries bythe end of FY16

• 3 go-to-market strategies– Subsidiaries– Resellers– Partner deployments

Operating model

Value proposition

What is a business model?Two main components: value proposition and operating model

Business ModelBusiness Model

Targetsegments

Targetsegments

ProductofferingProductoffering

Revenuemodel

Revenuemodel

Value chainValue chain Cost modelCost model OrganizationOrganization

Source: “Business Model Innovation”, BCG, Dec. 2009

Examples of business model innovation

Operating model

Value proposition

Business ModelBusiness Model

Targetsegments

Targetsegments

ProductofferingProductoffering

Revenuemodel

Revenuemodel

Value chainValue chain Cost modelCost model OrganizationOrganization

The Powerof Free

AccelerationLow Cost

Source: “Business Model Innovation”, BCG, Dec. 2009

Difference between business model innovation and othersRadical not incremental

• Unlike other types of innovation, changes to the business model requiresignificant changes to multiple components of the value proposition and/oroperating model.

• Therefore, business model innovation will likely be radical.– Most innovation is incremental, such as product innovation, where technology

enhancements are routinely included in product updates as a way of increasingperformance or reducing costs

Sources: http://www.innovation-management.org/business-model-innovation.htmlhttps://hbr.org/2013/12/the-three-most-innovative-companies-of-2013/

More than half of the relatively recent companies that made it onto the Fortune 500 before their25th birthday were business model innovators.

It’s easy to get captivated by shiny technology or compelling marketing, but if you really want toidentify tomorrow’s giants, pay the most attention to innovators that have figured out how tocreate, capture, or deliver value in unique ways.

HBR.org

More than half of the relatively recent companies that made it onto the Fortune 500 before their25th birthday were business model innovators.

It’s easy to get captivated by shiny technology or compelling marketing, but if you really want toidentify tomorrow’s giants, pay the most attention to innovators that have figured out how tocreate, capture, or deliver value in unique ways.

HBR.org

Drivers and focus of business model innovationA conceptual framework

Re-inventorsBusiness model is deteriorating slowlyand growth prospects are uncertain.

Company must reinvent its customer-value proposition and realign its

operations to profitably deliver on thenew superior offering.

MavericksInnovate to scale up potentially more

successful core business. Mavericks—either startups or insurgent established

companies—employ their coreadvantage to revolutionize theirindustry and set new standards.

AdaptersCurrent core business, even if

reinvented, is unlikely to combatfundamental disruption. Adaptersexplore adjacent businesses or

markets, in some cases exiting theircore business entirely.

AdventurersAggressively expands the footprint of abusiness by exploring or venturing into

new or adjacent territories

Driver

Focus

Defend against decline or disruption Aspire for break-out growth

Transformthe core

Expand intonon-core

Source: “Driving Growth with Business Model Innovation” bcg.perpectives, Oct. 8, 2014

Drivers and focus of business model innovationTwo ICT4D Examples: Zoona and Esoko

Driver

Focus

Defend against decline or disruption Aspire for break-out growth

Transformthe core

Expand intonon-core

Source: “Driving Growth with Business Model Innovation” bcg.perpectives, Oct. 8, 2014

Re-inventors Mavericks

Adapters Adventurers

ZoonaMaverick: Aspire to break-out growth by transforming the core

• Digitizing payments and communication to rural cottonfarmers for cotton supplier

• Electronic vouchers for WFP subsidies

• Payment collection for Zambian Breweries micro beveragedistributors

• Partnership with Airtel

• Mobile money transfer business

00

22

33

11

Target Offer VC

B2B PymtComms

Mom-and-Pop

B2G Pymt

B2B -

- -

B2C - Franchise

Source: “Zoona: A case study on third party innovation in digital finance”, FSD Zambia,Aug. 2015

Esoko1. Re-inventor: Defend against decline/disruption by transforming the core2. Adventurer: Aspire to break-out growth by expanding into non-core

• Market prices for farmers

• Broader content for farmers

• Subscriptions model for enterprisecustomers

• Resellers

• Communications and transactions

00

11

11

33

22

Target Offer Rev VC

B2CContent

Commun-ication

FeesRev share Direct

- ContentComms+ - -

B2B2C -Fees

Rev shareSubs

-

- - DirectResellers

-ContentComms

E-commerce

FeesRev share

SubsCommission

-

Business model innovationTips

Existing businesses:1. Separate the new unit from the rest as much as possible2. Bring in fresh talent from outside3. Consider a different brand identity4. Create new key success indicators5. Beware of portfolio bloat, hammer effect, ideation overload

Start-ups:1. Beware of portfolio bloat, hammer effect, ideation overload2. Choose one business model and stick with it…for a while

“It's all about experimenting to find product-market fit,recognizing it once you have it (which we took way toolong to do), and then focusing on it to scale but cullingthe noise.”

Mike Quinn, CEO Zoona

“It's all about experimenting to find product-market fit,recognizing it once you have it (which we took way toolong to do), and then focusing on it to scale but cullingthe noise.”

Mike Quinn, CEO Zoona

Thank You

Back Up

Software Business ModelsIn choosing a business model, many companies start with tech alignment…

Managed ServicesHosted delivery

Offline purchase and supportHigh price, low volume

On Demand BusinessSaaS delivery

Online purchase and supportLow price, high volume

Enterprise SolutionsCustom software delivery

Offline purchase and supportHigh price, low volume

Retail PublisherPackaged software delivery

Online and offline purchase andsupport

Low price, high volume

Online

Offline

Extensiveservices

Minimalservices

Source: Adapted from “The SAAS-Hybrid Question” by Joel York, Feb. 3, 2009

Software Business Models…but the right place to start is with customer alignment

Managed ServicesModest competitive advantage

Tight custom integrationModest internal IT capability

High expense budget

On Demand BusinessLow competitive advantage

Loose integrationLow internal IT capability

Low expense budget

Enterprise SolutionsHigh competitive advantage

Tight custom integrationHigh internal IT capability

High expense budget

Retail PublisherLow competitive advantage

Loose integrationModest IT capabilityLow expense budget

Online

Offline

Servicesvalue

Productvalue

Source: Adapted from “The SAAS-Hybrid Question” by Joel York, Feb. 3, 2009

Example of a SaaS Business Model Canvas

SaaS Sales ModelsModel Sales Marketing Support Examples

Self-service Very limited Full responsibility forcreating awareness,educational content andautomation capable ofdriving business throughentire purchase processfrom awareness to close

Provides automation andtools for easy on-boarding,plus templates and contentthat allow customers toresolve any issues theyencounter on their own

Transactional Inside sales reps supportedby online content andautomation, tools, training,incentives and metrics thatenable high efficiency andmany transactions per rep

Feeds highly qualified leadsto the sales team to buildpipeline and improvesefficiency by removingroadblocks through contentand automation that drivecomplexity out of thepurchase

Inside support reps thatmeet range of SLAs fromwith tools, training andmetrics that enable highefficiency and manytransactions per rep,complemented bycustomer self-service tools,templates and content

Enterprise Territory sales reps focusedon a narrow set of targetprospects directlysupported by productmarketing and salesengineering resources at adeal level

High-end marketing thatfacilitates brand awareness,education, relationshipbuilding and trust,complemented by directsupport of the sales team,detailed sales tools such asproduct roadmaps, ROIcalculators, etc.

High touch support up toonsite issue resolutioncomplemented byeducational tools andtraining tailored to thespecific needs of individualcustomers

Source: Adapted from “SaaS Start-Up Strategy” by Joel York, Nov. 10, 2010