- 1. Business Model Innovation in the Water Sector Safe and
affordable water services in the lowincome segment Heiko Gebauer
Associate Professor Business Innovation Environmental Social
Sciences (EAWAG), Zurich, Switzerland Center of Service Research,
Karlstad University, Sweden Zurich, 06-05-2013
2. Key facts on water in low-income countriesWater safety:
arsenic, fluoride, bacteria, and so on Water scarcity: physical and
economic scarcity Human water consumption: drinking water, hygiene
water, sanitation Legal issue: Drinking water as a human right
Water users: agriculture has highest water demand, industry, and
private water consumption Water sources: surface water, rainwater,
groundwater, or sea water 3. India as a hot spot of physical and
economic water scarcitySource: Harish Kumar Jeswani , AdisaAzapagic
(2012) 4. India water supply and demand gapAddams, L., G.
Boccaletti, M. Kerlin, and M. Stuchtey. 2009. Charting Our Water
Future: Economic Frameworks to Inform Decision-making. Available
at: http://www.mckinsey.com/App_Media/Reports/Water/C
harting_Our_Water_Future_Full_Report_001.pdf. [Accessed on 2 April
2011]. 5. Various water technologies might make drinking water
safer and more affordable (1) Household devices (e.g., Hydrologic
Ceramic Rabbit Filters, Unilever Pureit, Tata Swach, Sodis)Tablets
(e.g., P&G sachets, PSI chlorine tablets)Rainwater harvesting
6. Various water technologies might make drinking water safer and
more affordable (2) Pumping (e.g., Grundfos
Lifelink)http://www.grundfoslifelink.comMicro-treatment plant or
water kiosks (e.g, Naandi, Trunz, Sarvajal) 7. Gettyimages 8.
Business research has to decide on the way we take at the
cross-roadBusiness at its cross-road PPP1Base of the Pyramid
(BOP)Population in million> $20,000Industrialized
markets500$2,000-$20,000Emerging mass markets2,000< $2,0004,000
1.2 Billion ( $ 2000 annum) 1.6 Billion ( $ 725 annum) 1.2 Billion
( $ 365 annum)1 PPP Purchasing power parity Source Rangan,
2009:Exchange marketBOP (Submerge and poverty) market 9. Why are
market creation and business model innovation important to the
water sector? BOP market penetrationMobile phones 5 - Maturity
Micro-creditsInnovating Business model4 - Scale-up Mobile payment 3
- Success BOP market creation2 - Survival 1 - Existence Time (or
cumulative investments) 10. Business model thinking inspires
profitmaximizing firmsLow-cost carrierRazor & blade
(inverse)FranchisingPay-per-use 11. Business model thinking also
applies for social-businesses and non-profit firms Financial profit
maximizationN/AProfit-maximizing businesses Repayment of invested
capital (selfsustainability)No recovery of invested capital
Non-for-profit organizationSocial businessSocial profit
maximizationSource: Yunus et al (2010) 12. Do you know these
business models? Funding models for nonprofit firmsSocial business
(models) Member Motivator Entrepreneur Support Model Big Bettor
Fee-for-Service Model Public Provider Service Subsidization Model
Beneficiary Builder ... 13. Combining water treatment technologies
and business model thinkingC) Communities as a beneficiary of
micro-water treatment plantD) Entrepreneurs as franchisees for
selling water servicesA) Low-value devices given away to
supplicants for aidMicro-water treatment plants (community
filters)B) Selling high-value devices to the financially more
viable customersHousehold devicesNon-profitProfit-oriented 14.
Combining water treatment technologies and business model
thinkingC) Communities as a Micro-water beneficiary of micro-water
treatment treatment plant plants (community A) Low-value devices
given away to filters) supplicants for aidProject reportingProject
executionProposalIdentificationServiceDistributionAwareness
creationManufacturingR&DSupplicants for aid living close to the
poverty line ($500-1000 in PPP) Multiple donors supporting water
projectsD) Entrepreneurs as franchisees for selling water
servicesB) Selling high-value devices to the financially more
viable customers 15. Hydrologic in the Cambodian market Sales comes
from bulk sales sand subsidized distribution Original Tunsai
product penetration is 3.5% (after ten 10 years), despite the fact
that it was actually given away by NGOs Experimenting with
different distribution models 16. Combining water treatment
technologies and business model thinking C) Communities as a
beneficiary of micro-water treatment plant Communities living
poverty line ($5001000 in PPP)ManufacturingOperation &
maintenanceInstallationProvider of micro-water treatment plantD)
Entrepreneurs as franchisees for selling water servicesR&DC)
Communities as a Micro-water beneficiary of micro-water treatment
plants (community filters) treatment plant Project executionProject
reportingProposalIdentificationHousehold devicesMultiple donors
supporting water projects A) Low-value devices givenaway to
supplicants for aidNon-profitB) Selling high-value devices to the
financially more viable customersProfit-oriented 17. Osho (Oromo
Self Help Organization) promoting bone char filters (1)
OshoCaretakerEducation Bone char production Community-filter
installation & transfer Testing fluoride adsorption Bone char
exchange Bone char regenerationOperation &
maintenanceDonor(s)Communities living poverty line ($500-1000 in
PPP) 18. Osho (Oromo Self Help Organization) promoting bone char
filters (2) OshoCaretakerCommunities living poverty line ($500-1000
in PPP)Education Bone char production Community-filter installation
& transfer Testing fluoride adsorption Bone char exchange Bone
char Operation & Diversification Diversification regeneration
Chlorine tablets Bone dust as chicken feed maintenance Hygiene
products Bone chare as fertilizer Grocery sales Cost transparency
and Generating and securing reduction paymentsDonor(s) 19.
Combining water treatment technologies and business model
thinkingMicro-water treatment plants (community filters)D)
Entrepreneurs as franchisees for selling water servicesC)
Communities as a beneficiary of micro-water treatment plantB)
Selling high-value devices to the financially more viable customers
A) Low-value devices given away to supplicants for aid
ServicesSalesDistributionMarketingR&DNon-profitManufacturingHousehold
devicesFinancially viable customers($ 1500 50000 in PPP) 20.
Hindustian Unilever Pureit 21. Unilever promoting Pureit water
filters R&DManufacturingMarketing, sales, and
distributionServiceUser-center design to deliver better experience
Water filter as an aspirational productHousehold devices
manufactured locally with a standard quality Sales approaches
(e.g., community events) Payments (e.g., subsidies, micro-credit,
layaway) Trusted, well-educated sales force (e.g., health workers)
Promotion through seeding filters within the community Distribution
approaches (e.g., retail channels, basket of goods sales)Germ-Kit
replacements 22. Combining water treatment technologies and
business model thinking D) Entrepreneurs as franchisees for selling
water services Franchisees CommunitiesB) Selling high-value devices
to the financially more viable customersProfit-orientedBuying
waterWater SalesOperation & maintenanceNon-profitBuilding
franchiseesHousehold devicesInstallationA) Low-value devices given
away to supplicants for aidManufacturingC) Communities as a
beneficiary of micro-water treatment plantR&DMicro-water
treatment plants (community filters)Provider of microwater
treatment plant 23. Business model innovation at sarvajal
affordable, accessible, and pure water Installed water
systemsHolistic extension of the business model ...Micro-credit
instituteBank4000Sarvajal (Franchisor) (5000 $ / 2600$)3500 3000
2500 2000 1500 1000Microentrepreneurs (Franchisees) 1:n 1:m 500 $
(40% of revenue)Communities (Villages 3000) 0.12 $ for 20
litersCapabilities: maintaining and monitoring the systems
Capabilities Individual skills bright brains to repetitive gains
Routines Franchisee strategy tool / approach to balance own /
borrowed capital500 0 20082010Source: own interpretation and
interviews. Based on Macomber and Sinha (2012)201220142016 24.
Equipment 25. Water shop 26. Preparingthewaterfortransportation 27.
Transportingthewater 28. Business model innovation at sarvajal
affordable, accessible, and pure water Installed water
systemsHolistic extension of the business model ...Micro-credit
instituteBank4000Sarvajal (Franchisor) (5000 $ / 2600$)3500 3000
2500 2000 1500 1000Microentrepreneurs (Franchisees) 1:n 1:m 500 $
(40% of revenue)Communities (Villages 3000) 0.12 $ for 20
litersCapabilities: maintaining and monitoring the systems
Capabilities Individual skills bright brains to repetitive gains
Routines Franchisee strategy tool / approach to balance own /
borrowed capital500 0 20082010Source: own interpretation and
interviews. Based on Macomber and Sinha (2012)201220142016 29.
ConclusionExperimenting with business models is a small step, one
giant leap to make water markets works