MBA From Indian Streets

 

In most developing nations, the highest contribution to the GDP comes from the unorganized sector i.e. the businesses that aren't registered and pay taxes. In India, the unorganized sector contributes almost 50% to the GDP and hires almost 80% of the workforce.

India has a workforce of about almost 500 million and 90% of that is employed by the informal industry, by the unorganized industry. And as I’ll show to you with one example after the other, they also perform pretty much in every metric better than Tier 1 businesses or businesses that we normally consider to be the benchmarks or in many cases the aspirational companies that we want to join.

SHELF-SPACE

                  

I’m sure many of you must have seen these stores, these bookstores, these food counters. You can actually measure that the per square footage revenue and return of investment that happens in a pavement exceeds by several multiples the return of investment that happens in these big malls that you see, the shiny malls, the the chrome and glass and the branded stores.

The pavement acually delivers a much better rate of return for every rupee that is invested in a business over there. These books that you see stacked in the pavement, you would have also noticed that many vendors carry these books in their hand.

Equitable distribution of equity

A street seller shares his profit with the whole supply chain starting from his vendor to the customer.

A corporate only shares a small percentage with the supply chain.

Degree of empowerment

A large conglomerate will take weeks to accept a 5% discount but a street vendor will give you a discount immediately.

The decision is quick on the street.

Change management

A street business changes its business 12-15 times a year.

Change in products to match festivals.

Change in segments to match the demand.

Change in the sales pitch to cater to the respective target audience.

Smart planning without using smart applications

The street business plans ahead to meet the demand.

They do all the planning without ERP application or any other automation.

Equal opportunity market

The only market that hires everyone.

Doesn't look at your education, religion, caste, gender, domicile, etc.

Corporate houses talk about gender equality but these street businesses implement it.

True opportunity cost

A corporate company will not mind if they miss one opportunity in a quarter as it can be substituted in the following quarter.

A street entrepreneur will leave no stone unturned to sell the product as he knows that if he doesn't sell, he will have to sleep on an empty stomach that night.

Know the decision-maker

A street beggar is persistent. He doesn't budge unless he gets the money.

The beggar knows who exactly is the decision-maker whereas in the corporate we don't even get the opportunity to talk to the decision-maker.

Once the beggar gets the money, he goes back and tells his team to approach the same decision-maker. Incorporate, one account is handled by one person and no business goes to the other person from the same company.

Know when it is enough

A street entrepreneur knows when it is enough but a corporate will always go for higher market share, acquisition, new markets, and more.

To co-exist you need to fulfill everyone's plate and not accumulate what can be for others.

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Reference: A speech by Caption Raghu Raman. Here is the video. https://www.youtube.com/watch?v=yQGaoj9Iwro&t=1109s