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Business model intimacy


Courtesy: NobelPrize.org
The Grameen Bank success story continues to be researched and written about. Other companies have tried to repeat the Bank's model. Is there a fundamental difference between the original innovation and the followers? In MIT Sloan Management Review (Summer 2009), Erik Simanis and Stuart Hart compare the original model with that of India-based Hindustan Unilever's model and point out a crucial difference.

Grameen Bank was a result of personal bond and shared vision between Nobel laureate Muhammad Yunus and Bangladeshi farmers/villagers. Yunus and the villagers spent quality time together as a community before the innovator launched the bank. While Grameen Bank became a profitable and scalable village bank, the authors say that Hindustan Unilever's project is "unlikely to grow into anything more than a new distribution channel." While Grameen Bank generated a "groundswell" of demand," Hindustan Unilver's entrepreneur turnover rate reached 50% within 3 months of project launch and the company's resource-intensive push strategy only "met with consumer skepticism."

The difference, the authors say is: business model intimacy. It is a community-company relationship with a jointly constructed vision. The "better life for the community" vision instills a sense of responsibility in the community for the success of the company.

Companies including those in India -- where business model innovation is often the only form of innovation you find -- should learn from Yunus' original innovation model where intimacy is an essential attribute. For some companies, this might require moving away from profit-maximizing, which is typically achieved by compromising value for other stakeholders in the ecosystem. For all organizations pursuing business model innovation, Yunus' model certainly requires two things: (a) Change in the way they understand "value" and (b) Change in how they understand and practice innovation.

Do you know of other intimacy-embeded business model innovations?

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