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Business Design 

Positioning Design as a tool for strategic growth in MSME clusters.

PROJECT OVERVIEW

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.

Key Learning

  • Business design

  • Business Model Evaluation

  • Business Model Innovation

  • Business Strategy

  • Framework Design

  • Design Research

INDUSTRY CONTEXT

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Year Estd.

Sector

Turnover

Manpower

CEO

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.

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PROBLEM STATEMENT

 

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

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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

INFRASTRUCTURE ASSESSMENT

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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.

 

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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.

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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.

SPECIFIC INTERVENTIONS

NTEX Machinery Pvt Ltd.

GENERIC INTERVENTIONS

Flexographic Machinery Cluster

SPECIFIC FRAMEWORKS

SPECIFIC FRAMEWORKS

TRENDS

FUTURE OF FLEXOGRAPHIC PRINTING

01

Increase in ecological printing due to Plastic ban.

02

Increase in corrugated box consumption.

03

India has the biggest population of lower income group.

04

Long tail effect- customization leading to increase in the digital print and media.

GAPS

FUTURE OF FLEXOGRAPHIC PRINTING

01

Obsolete technology

02

Lack of orders

03

Lack of new product development (R&D investment risks)

04

The threat from global competition.

05

No direct customer reach.

06

Long Product life- Revenue streams are skewed.

1.0

2.0

DIRECTIONS CHOSEN FOR INTERVENTIONS

OBSOLETE

Technology and threats from global competitiveness

77%

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?

AGGREGATE

 

To create a collective impact

 

Verb:

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

01

Trust issues amongst partners

04

Difficult to get like minded people together.

02

Sense of lost control

05

Maintain the transparency in the transactions.

03

My baby syndrome

06

Order sharing/ Division

WHAT VALUE AGGREGATION OFFERS?

Sellers Issues

  • 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. 

COMPLEMENTARY ASSET

Customer Issues

  • 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?

01

Clearly defining what can be done together

Showing them the bigger picture. Create stress in the system.

03

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.

02

Make the aggregation voluntary

Transcend narrow-mindedness that seeps in with respect to establishing trust in each other.

04

Work and learn

This platform can be a breeding ground for a Knowledge management system where participants learn from each other's experience. 

SUGGESTED FRAMEWORK

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AGGREGATE

SUSTAIN

INNOVATE

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MSMEs require to operate in alliance with the formed conglomerates and create a sustainable ecosystem.

ADVANTAGES OF AGGREGATION

  • Risk sharing

  • Shared Investment

  • Optimizing Operational cost

  • Optimizing marketing cost

  • Knowledgebase

  • Investment in Innovation

  • Control over market

  • Network effect

  • Decreased Cannibalization

ALLIANCE

 

To create a sustainable ecosystem 

 

Plural noun:

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 

Leadership Challenges 

Tunnel Vision 

Generational Gap

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 

BUSINESS

OWNERSHIP

FAMILY

ELEMENTS OF LEADERSHIP VIRTUES 

ENTREPRENEURSHIP

INNOVATIVE MINDSET

STRONG VALUES

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.

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Voluntary ownership

Task-oriented, should

be adaptive to radical

change

Emotions, preserving

stability

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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

A

ACTIVATE

Change organization culture

A

ALIGN 

People, inside and outside the organization

A

ACCELERATE

Performance and workflow

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MAJOR ISSUES ADDRESSED BY FRAMEWORK 

  • Effective decision making

  • Management and ownership issues

  • Conflict resolution

  • Facilitating effective ownership of the business

PROJECT TEAM

Aparna Singh - SDM'17 | Saurabh Singh - SDM'17   

National Institute of Design  

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