Positioning Design as a tool for strategic growth in MSME clusters.
This project for Business design and Business Model Innovation was done as a part of Design project -2 in National Institute of Design. The project aimed at positioning design as a core for strategic growth in MSME sector and related clusters. We used Business model canvas as a tool for evaluating the selected organization. Further using this tool we studied each block of the Business model and understood how they interacts with each other, this exercise lead us to propose required changes as an strategy of growth for the selected organization and similar organization present in the cluster.
Business Model Evaluation
Business Model Innovation
N-TEX machinery Pvt. Limited was established in 1972 and since then it has moved from a product portfolio of textile machinery to Flexo-graphic printing machinery. Since the last 15 years, it is manufacturing sheet fed Flexo-graphic printing machinery as the product focus. The substrates used for printing are the Corrugated sheet, Jute sacks and Paper. They make machinery which is compatible with water and chemical based inks.
History and evolution of Flexo-graphic printing:
The first Flexo type printing presses were patented in the late 19th century. Originally, flexographic printing was rudimentary in quality with its limitations in ink control and rubber printing plates. Labels requiring high quality were generally printed using offset printing process until recently. Since 1990, very few advances have been made to the quality of flexographic printing presses, printing plates, and printing inks.
Lack in the advancement of technology has resulted in diminishing the entry barriers for competitors. This has further resulted in fragmenting the whole industry; allowing the proliferation of lower grade manufacturing setups with reduced pricing, making it very difficult for multiple vendors to survive. This context is getting translated throughout similar organizations in the cluster.
Our study specifically aims to understand and identify the key factors impacting this situation. To conduct this study we have evaluated the current business model and tried to come up with different configurations of strategic interventions for an innovative business model and frameworks which will help the industry sustain in a robust way towards growth.
EXISTING BUSINESS MODEL
BUSINESS MODEL EVALUATION
Each block of the existing business model was evaluated on the basis of the Strengths, Weakness, Threats and Opportunities which included following assessment areas.
VALUE PROPOSITION ASSESSMENT
COST AND REVENUE ASSESSMENT
CUSTOMER INTERFACE ASSESSMENT
BUSINESS MODEL REDESIGN
After doing the evaluation of the existing Business Model, we picked up every block of BMC and suggested interventions to address the problem statement related to the company in context.
This exercise helped us do a comparative analysis of the older version of every block and then come up with the most suitable interventions that should be viable for the business.
At the end of above exercise we got an innovative business model which proposed strategies to widen their customer segment by offering additional value propositions in form of varied customer acquisition schemes in the form of refitted machineries at lower prices and leasing and subscription models. This will also provide the business alternate revenue streams with increased business opportunities.
The new business model will also be supportive for generating brand recall by introducing several engagement points for the customers in the form of servicing and bundled offerings.
POSITIONING DESIGN IN MSME CLUSTERS
We started our study with understanding the concerns of a specific organization through using various design research tools and Business Model Canvas and subsequently gave the solutions keeping in mind the organization context. Now, if we want to establish Design as a tool to take strategic decisions in any of the related MSME organizations then we had to create some inclusive frameworks for the existing cluster.
NTEX Machinery Pvt Ltd.
Flexographic Machinery Cluster
FUTURE OF FLEXOGRAPHIC PRINTING
Increase in ecological printing due to Plastic ban.
Increase in corrugated box consumption.
India has the biggest population of lower income group.
Long tail effect- customization leading to increase in the digital print and media.
FUTURE OF FLEXOGRAPHIC PRINTING
Lack of orders
Lack of new product development (R&D investment risks)
The threat from global competition.
No direct customer reach.
Long Product life- Revenue streams are skewed.
DIRECTIONS CHOSEN FOR INTERVENTIONS
Technology and threats from global competitiveness
MSME businesses are family owned and lack vision.
PROBLEM STATEMENT 1.0
The printing machine manufacturing sector faces an immediate threat from global competition in terms of quality and technology advancement which will require huge capital and resource investment for them to compete. Also, looking at the fragmented state of this cluster it is very difficult for any of such manufacturers to get sufficient orders.
HOW TO SOLVE THIS?
To create a collective impact
form or group into a class or cluster
Collaboration can be the new competition
Aggregate to form an autonomous association of organizations united voluntarily to meet their common economic needs and aspirations through jointly owned and democratically controlled enterprise.
The question is how the organizations in the cluster will access whether they should aggregate with there competitors
CHALLENGES OF AGGREGATION
Trust issues amongst partners
Difficult to get like minded people together.
Sense of lost control
Maintain the transparency in the transactions.
My baby syndrome
Order sharing/ Division
WHAT VALUE AGGREGATION OFFERS?
Difficulty in getting bulk orders.
Huge capital investment required for upgrading technology.
Risk involved in the R&D expenditure.
No available network of customer.
An aggregation platform where both seller and users derive value.
Not able to find a reliable one stop solution for such needs.
No warranty or maintenance service availability.
Quality compliant manufacturers.
None availability of Special Purpose Machinery manufactures
HOW TO AGGREGATE?
Clearly defining what can be done together
Showing them the bigger picture. Create stress in the system.
Create a backbone organization
Staff at these organizations ensure that work is completed between meetings, track data, enable adaptation, disseminate knowledge, ownership from all participants.
Make the aggregation voluntary
Transcend narrow-mindedness that seeps in with respect to establishing trust in each other.
Work and learn
This platform can be a breeding ground for a Knowledge management system where participants learn from each other's experience.
MSMEs require to operate in alliance with the formed conglomerates and create a sustainable ecosystem.
ADVANTAGES OF AGGREGATION
Optimizing Operational cost
Optimizing marketing cost
Investment in Innovation
Control over market
To create a sustainable ecosystem
or a union or association formed for mutual benefit, especially organization
PROBLEM STATEMENT 2.0
In the MSME sector, 77% of the businesses operating in the flexographic printing industry are family owned businesses which acts as a reason for their unclear vision and growth.
ANALYZING THE PROBLEM
Paternalistic nature of business
Laid back culture
Laid back culture
Old generation resist change, a new generation has different aspirations
Similar life experiences leading to a uniform view of business
Centralized control for any kind of decision making
Lack of standardized processes and organizational policies
HOW TO DEAL WITH THIS PROBLEM?
The family business in flexographic printing industry requires a transitional leadership framework to overcome the generational challenges faced.
The framework requires components of family business acumen and leadership virtues which can help sustain family businesses.
ELEMENTS OF FAMILY BUSINESS ACUMEN
ELEMENTS OF LEADERSHIP VIRTUES
The ideal acumen required for family-owned business should have voluntary ownership from the leader, adaptability towards radical changes in business and the ability to preserve the essence and emotions of a Family business.
Innovative mindset and entrepreneurial zeal are some of the core qualities required for a leader to sustain in family businesses in order to constantly innovate as per market needs.
be adaptive to radical
To take up new business opportunities as per market trends
Institutionalized cultural mindset and processes that support growth
To carry forward legacy without compromising on the core of the business
3 A FRAMEWORK
Change organization culture
People, inside and outside the organization
Performance and workflow
Click to Know More
MAJOR ISSUES ADDRESSED BY FRAMEWORK
Effective decision making
Management and ownership issues
Facilitating effective ownership of the business
Aparna Singh - SDM'17 | Saurabh Singh - SDM'17
National Institute of Design
You may also like