An Indian FOPSE (Innovations Case Discussion: Keggfarms)

Abstract

India on a case for my Harvard Business School class on international entrepreneurship. A friend of mine had invited me to attend the ceremony for the first Innovations for India Awards in Mumbai. Several Indian businesspeople received the award, but I was particularly struck by a dignified silver-haired gentleman who took the stage to receive the award for social innovation. He then proceeded to eloquently describe the development of a business concept centered on the rural poor of India, which was based on a specially bred “superchicken” that was twice as big and five times as productive as the typical backyard chicken. The incongruity of Vinod Kapur’s elegant appearance and his subject matter struck me as fascinating, but the most intriguing element of the presentation was how he arranged an entire system of distribution to deliver the hatched chicks to these remote villagers and did so in a way that enabled everyone to profit in concrete financial terms, from Keggfarms itself to the rural villagers. Almost a million households are today affected by Keggfarms, and the numbers are constantly rising. The most striking element of Keggfarms is the chicken itself—it is a beautiful, big, colorful bird, and I must say that the meat and eggs are by far the tastiest poultry products I have eaten in my life. But the most significant innovation is not the chicken per se but the business model, in particular the distribution system used to get the newly hatched chicks into the hands of the villagers quickly and safely. It is difficult to imagine a more nightmarish distribution problem: The customers are dispersed geographically in regions of relatively low population density. The transportation infrastructure is undeveloped—most of the customers can be reached only by footpath. The products are perishable, vulnerable to heat and disease. The product is considered to be a commodity with little price elasticity. The customers have extremely limited purchasing power so that high distribution costs cannot be transferred to them. It would be prohibitively expensive for any company to establish its own distribution system to bring tens of millions of live chicks into the rural villages. Furthermore, it would be difficult to organize and even more difficult to control. Such a distribution system would be required to some extent to build on established distribution patterns, in which the various parties would be extrinsically