Embrace (A): Opportunity Identification PDF Case Study 2013

9B13M004 EMBRACE (A): OPPORTUNITY IDENTIFICATION Mridula Anand, Anand Nandkumar and Charles Dhanaraj wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have dis...

9B13M004 EMBRACE (A): OPPORTUNITY IDENTIFICATION Mridula Anand, Anand Nandkumar and Charles Dhanaraj wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected]. Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-04-16 It was Monday and a group of students had gathered in a classroom at Stanford University, located in California in the United States. Unlike many other classes on campus, this was a small one. The class of 2008 of the Stanford Biodesign program consisted of almost twenty students, most of whom had not even met each other before. Linus Liang, Rahul Panicker, Razmig Hovaghimian, Naganand Murty and Fabio Tran were later joined in the classroom by Jane Chen. They had gathered there to choose a project that would not only determine their future, but also perhaps change the lives of many in impoverished countries. THE COURSE The graduate-level project course at the Stanford Institute of Design spanned two quarters. Named Entrepreneurial Design for Extreme Affordability, this course introduced students to the challenges faced by the world’s poor and gave them the opportunity to design solutions to these problems. The multidisciplinary course involved graduate students from diverse schools at Stanford, enabling them to create innovations that lay at the intersection of business, technology and human values. It gave them the opportunity to work closely with many local and international organizations. A brochure for the program summarized it as follows: Many of our alumni stay connected to the course after they graduate. Some have gone on to become respected social entrepreneurs, and return to the class to tell their stories. Others serve as design coaches for current student teams. Still others connect us with potential project partners. Wherever our students land after they graduate, we hope this class will empower them to be innovation leaders in their organizations and catalysts for positive social change.1 The Stanford Design lab was a unique venture that brought research to the marketplace. Each student chose one out of four projects — the one to which they felt they could best contribute. By bringing forth tangible and affordable products, the lab attempted to address the needs of the millions at the “bottom of the pyramid” in other parts of the world. According to Chen, a 2008 graduate of the course, “Extreme 1 http://dschool.stanford.edu/extreme/course/students.html, accessed March 6, 2013. Page 2 9B13M004 Affordability has fundamentally changed the way that I think about and tackle problems. I have been empowered with the tools to develop products that address significant world problems.... The class has shaped my life course.” The fast-paced course began with an initial introduction to designing projects and culminated in a real- world project with local and international partners that supported the program. As the program brochure stated: Our students are a highly motivated collection of graduate students from the schools of business, engineering, humanities and sciences, earth sciences, medicine, education, and law. Some enter the class with extensive international experience, while some are just getting their feet wet. Though they have diverse backgrounds, they all share a common passion for creating positive change in the lives of the world’s poor.2 THE PROJECTS The student teams were presented with a range of projects to solve the issues of the economically disadvantaged in developing countries. The challenge was to find affordable solutions to ease the often resource-stretched systems of developing nations. The Low-cost Inhaler One of the proposals in the programs was to design and develop a low-cost asthma inhaler for children. Millions of children across the world and especially in Mexico suffered from acute asthma, and had minimal access to hospitals. The standard asthma inhalers that were used prior to 2006 had a continuous puff of aerosolized3 medicine that was difficult for children to handle, as they struggled to co-ordinate their breath to the inhaler. What was needed was a low-cost chamber that would temporarily hold the medicine before the child was able to inhale. Developed nations had this option in the form of valved chambers within the inhalers, but they were prohibitively expensive at around $40.4 According to one source: In Mexico, about 11 million people suffer from asthma, and 8-9 million are in our target population of kids under the age of 8. Maybe 4-5 million receive health care from the government and would seek treatment through clinics that would be stocked with the product. This is not counting those with non-governmental insurance who might get the product in hospitals or pharmacies.5 The Water-storage Device The second proposal was related to a dire need faced by farmers in Myanmar. In irrigating their plants, farmers had to first pump water from wells into storage devices before sprinkler cans could be used. The stumbling block proved to be the water-storage devices. A hole dug in the ground was an affordable 2 Ibid. 3 This was in the form of ultramicroscopic solid or liquid particles dispersed or suspended in air or gas. 4 Julia Tran, “BOP Innovation Helps Kids Breathe,” Nextbillion.net, August 24, 2007. 5 Ibid. Page 3 9B13M004 solution, but not necessarily an efficient one, as decreased productivity could occur due to water seepage. Larger and more permanent storage devices were expensive. The Deep-lift Pump This was another proposal related to the problems of Myanmar’s needy. Small-plot farmers in the country were faced with irrigation problems when a water bed was deeper than 10 feet. Irrigation in such cases required a device to pump the water from the well into the fields. The regular suction pumps, which were more affordable, did not work for deep-water tables, which required expensive deep-lift pumps. Typically, these consisted of three major components beneath ground level: a liner pipe that provided structural support for the tube well, a riser pipe that carried the water up to the surface, and a piston rod that connected to the submerged piston. The Affordable Cooking Surface Farmers in Ethiopia needed a product designed to radically increase the durability of their clay cooking surfaces. Traditionally, Ethiopians baked injera, an indigenous staple bread that was large and similar to a pancake. Injera was cooked on large clay discs called mitads, on three stones, over an open fire lit in the space underneath. A large percentage of Ethiopians were farmers, living in traditional huts with their families and livestock, barely making ends meet. Eaten at almost every meal, injera had to be prepared every day. Unfortunately, the mitads were not hardy and were often trampled underfoot by animals or knocked over by children. Replacing these mitads when they fell into disrepair cost about 40 Ethiopian birr (US$4), which was not economically viable for the farmers on a regular basis. The Affordable Infant Warmer Affordable infant warmers were another project that required an innovative approach to reduce cost and be efficacious and safe for one of the most vulnerable customers — a newborn baby. In many countries, most neonatal deaths occurred due to hypothermia, infections and asphyxia. In large cities, these neonatal health issues were addressed to a certain extent, due to more developed infrastructure and human capital. But it was in rural areas outside cities such as Kathmandu in Nepal and Bangalore in India that an alarming picture emerged. There existed an urgent need for a practical solution to the high rate of premature births that would never make it to a hospital. This would involve effective functionality in a rural environment and the capacity to work without electricity and with portability, ease of operation and, perhaps most importantly, affordability. THE STUDENTS The instructor encouraged the students to work in teams of about three to four towards finding a viable solution to the real-life challenges before them (see Exhibit 1). Team A Comprised of students with diverse backgrounds, this team included Jane Chen, Linus Liang, Rahul Panicker, Naganand Murty, Razmig Hovaghimian and Fabio Tran. After Jane Chen had spent several Page 4 9B13M004 years as the program director of a nonprofit startup that dealt with HIV/AIDS in China, and after she had worked for the Clinton Foundation’s HIV/AIDS initiative in Tanzania, she became an advisor in strategy development, marketing and acquisitions for the Asia Pacific region at Monitor Group. She was particularly interested in the lack of access to critical care and resources — an issue encountered not just in the fight against AIDS. Linus Liang was a serial entrepreneur whose entrepreneurial ventures included two technology companies. Prior to joining the program, he had worked as a program manager at Microsoft. Other team members included Dr. Rahul Panicker, who had a master’s degree and doctorate in electrical engineering from Stanford University and a bachelor of technology from IIT Madras, India, and Naganand Murty, who had undergraduate and master’s degrees in aerospace engineering from IIT Bombay. In his statement of purpose, Murty said that he was keen on developing innovative health technology solutions for the developing world. Razmig Hovaghimian had studied political economics at Berkeley before doing his master of business administration at Stanford. He had co-founded a management consultancy firm serving the United States, Europe and Asia, and had led the United Nations Development Programme’s first crisis zone pro-poor investment strategy project in Sudan. Fabio Tran, an engineer, had worked at A.T. Kearney Management Consultants and at Solo Corp., a Brazilian venture capital fund. Team B The next team included Eric Green, Santiago Ocejo and Barry Wohl. Green, a bachelor of arts from Harvard College, was in a combined medical doctor/doctorate program at Stanford, focusing mostly on research on high-tech medical devices. Ocejo had a medical background and a doctor of medicine from the Tecnologico de Monterrey School of Medicine in Mexico. Wohl was a mechanical engineer from Stanford and had studied biomedical engineering at Columbia University. He also brought medical device manufacturing and mechanical design expertise from Medtronic and Varian Medical Systems. Team C Laura Bloomfield, Nishant Parulekar, Anurupa Rao, Danielle Sheehan and Goh Kuan Tan formed the next team. Bloomfield, with a background in earth systems, had a doctor of medicine and doctorate from Stanford. She had attended a post-baccalaureate pre-medical program at Harvard University. Parulekar was an environmental engineer who held a sales/design engineer position with Sun Light & Power for two years after having volunteered for Agricultural Extensions in the Peace Corps in Mali. Anu Rao was a mechanical engineer from Stanford and subsequently an R&D engineer in UCAL Fuel Systems Limited. Danielle Sheehan had worked as a mechanical engineer/product designer in IDEO, Lockheed Martin and Nellcor and had completed her mechanical engineering degrees at Stanford and the University of California Davis. A manufacturing engineer from the University of Cambridge and a master of business administration from Stanford, Goh Kuan Tan provided the business expertise. Goh had advised on pharma growth, marketing, new product introduction, lifecycle management, competitor defense strategies and corporate finance, while working as a consultant with the Monitor Group and an analyst with the UBS Investment Bank. Team D The fourth Stanford team was comprised of three mechanical engineers — Yuan Chun Ling, Neeraj Sonalkar and Dana Ung — as well as Peet Lau. Ling had a mechanical engineering background from Cornell and Stanford and had joined the Extreme Affordability course while doing his master’s at Page 5 9B13M004 Stanford. Sonalkar was a mechanical engineer from the University of Mumbai who had gone to Kozmetsky Global Collaboratory to implement the role of vision and values expert in the United States and then facilitated the adaptation of the role to an Indian context.6 Earlier he had been a design engineer who conducted engineering design and analysis for a general anesthesia machine and a blood analyzer. With a master’s in international relations, Lau had had many roles such as deputy director of Planning and Management Information for Singapore’s Ministry of Education and first secretary to the Permanent Mission to the United Nations in New York. Dana Ung, after having graduated with a mechanical engineering degree from Stanford, worked at both IDEO, a design and innovation consulting firm, and Palm, a smartphone manufacturer in California. Team E The final team included Dave Evans, who had worked as an engineer in various firms such as Apple Computers, Light and Motion Industries, Edge Innovations, and Northrop Grumman. Evans had a bachelor of science in mechanical engineering and a master of science in product design. Emilie Fetscher had a bachelor of arts in engineering modified with art followed by a bachelor of engineering. Jeannie Rosenthal and Abby Schlatter had extensive business experience; Schlatter had worked as a sales manager in McMaster-Carr Supply Company and had been a volunteer caretaker and English teacher in the Development and Education Programme for Daughters (DEPDC), Thailand. PROJECT SELECTION Looking at the different student groups, the course instructor — who was teaching the course for the first time — was curious about who would choose which project. Each member brought some unique expertise or knowledge to the table. Amid all the banter and talk, the teams sat down for some serious thinking to choose the project on which they would spend a good part of their stay at Stanford and ultimately help meet an existing need somewhere in the world. 6 The program links various researchers from both Stanford and the University of Texas to conduct research on using technology to enhance global prosperity through education, economic innovation and effective social institutions. Page 6 9B13M004 Exhibit 1 SNAPSHOT OF TEAMS Team Members Background Work Experience Team A  BA, Pomona College  Program director of nonprofit Jane Chen  MPA, Harvard University startup for HIV/AIDS in China  MBA, Stanford University  Clinton Foundation HIV/AIDS initiative in Tanzania  Advisor in strategy development, marketing, and acquisitions for the Asia Pacific region at Monitor Group Linus Liang  BA, Computer Science, UC Berkeley  Serial entrepreneur  MS, Computer Science, Stanford University  Program manager at Microsoft Rahul Panicker  B. Tech, IIT Madras, India  Infinera Corporation (optical  MS, PhD, Electrical Engineering, Stanford telecommunications) Naganand Murty  BE, Aerospace Engineering, IIT Bombay,  Strategy consulting and venture India financing, marketing, pricing,  MS, Aerospace Engineering, IIT Bombay, value messaging, and product positioning for pharmaceutical, India biotech and medical device firms Fabio Tran  BS, Engineering, USP’s Escola Politécnica  A.T. Kearney Management Consultants  Solo Corp. (Brazilian venture capital fund) Razmig  BA, Political Economy, UC Berkeley  Co-founded the Cloverfield  MBA, Stanford University Group, a boutique management consultancy  Ashoka, the World Bank, and the UN  Led UNDP’s first crisis zone pro- poor investment strategy project in Sudan Team B Eric Green  AB, History and Science/Chemistry, Harvard  Co-founder and Adviser, iLab Solutions, LLC University  MSTP fellow, Stanford  MD/PhD, Chemical and Systems Biology, University Stanford University  School of Medicine Santiago Ocejo  Fellow, Biodesign Program, Stanford  Director of Innovation, University International Institute of Health,  MD, Tecnologico de Monterrey, School of Mexico Medicine, Mexico Barry Wohl  BS Biomedical Engineering, Columbia  Healthcare Analyst Sapphire University Group  Medical device, manufacturing,  MS, Mechanical Engineering, Stanford and mechanical design expertise University from Medtronic and Varian Medical Systems Page 7 9B13M004 Exhibit 1 (continued) Team C Laura Bloomfield  MS, Earth Systems, Stanford University  Intern, International  MD/PhD, Stanford University Development Enterprises, Myanmar Nishant Parulekar  BA, Physics, Grinnell College  Agricultural Extensions in the  MS, Civil and Environmental Engineering, Peace Corps (Mali) Stanford University  Sales/design engineer, Sun Light & Power Anurupa Rao  B.Tech, Mechanical and Automation  R&D engineer, UCAL Fuel Engineering, Indira Gandhi Institute of Systems Limited Technology  MS, Mechanical Engineering, Stanford University Danielle Sheehan  BS, Mechanical Engineering, University of  Mechanical engineer/product California Davis designer, IDEO, Lockheed  MS, Mechanical Engineering, Stanford Martin and Nellcor University Goh Kuan Tan  BA, Manufacturing Engineering, University  Consultant and analyst, Monitor of Cambridge Group and UBS Investment  MBA, Stanford University Bank Team D Yuan Chun Ling  BS, Mechanical Engineering, Cornell  Senior Officer, Singapore  MS, Mechanical Engineering, Stanford Economic Development Board University Neeraj Sonalkar  Mechanical Engineering, University of Mumbai Dana Ung  Mechanical Engineering, Stanford University  IDEO and Palm Peet Lau  B.A, Political Science and International  Deputy director, Planning and studies, Yale University Management Information, and  M.Phil, International Relations, Cambridge Tanglin Police Division, University Singapore  First secretary to the Permanent Mission to the United Nations in New York Team E Dave Evans  BS, Mechanical Engineering, Stanford  Apple Computer University  Light and Motion Industries  MS, Product Design, Stanford University  Edge Innovations  Northrop Grumman Emilie Fetscher  BA, Engineering (modified with art), Dartmouth College  M.S, Engineering Product Design, Stanford University Jeannie Rosenthal  BE, Mechanical Engineering, Dartmouth College  MBA, Stanford University Abby Schlatter  AB, History and Literature, Harvard College  Sales manager, McMaster-Carr  MBA, Stanford University Supply Company  Volunteer caretaker and English teacher in Development and Education Programme for Daughters (DEPDC), Thailand