Last weekend I posted this question to a class of students at Institute of Energy & Management Research during the course of a session on Business Model Innovation. And it was quite interesting to see how they did come up with a variety of good ideas to do this.
Just to give you a little context, we were having a discussion on Business Model Innovation and we went through the session looking at product and process innovations, leading to the grander idea of business model innovation. And to travel from product, process to the Business Model Innovation I chose the public transport buses in Delhi as our guinea pig. Most of the students have had a first-hand experience with the Delhi’s notorious Blue Line Buses.
Delhi’s Blue Line buses have been famous for their wayward driving and poor service levels before. However since last few years Blue lines have been phased out in favor of modern low floor buses. The buses have more convenient and spacious seats with aesthetically pleasing window and interior design. There are two types of buses- Red and Green. The red ones are air conditioned and charge a higher fare. The experience inside these new buses is obviously better and they in terms of transport services are an example of product innovation.
From here we further took the bus example and stretched it to process innovation. Many buses in Delhi still have a very archaic method of ticketing. A conductor issues a combination of a number of paper tickets in proportion to the distance the traveler will travel. He tears them in a particular fashion to mark the issuance. However there are better methods of ticketing being practiced in public buses elsewhere. For example in Ahmedabad, public buses issue ticket using a handheld ‘Point of Sales’ ticket printer. This obviously reduces the hassle for both the conductor and the traveler. Electronic ticketing also improves management of sales and allows better monitoring of sales. This would be an example of Process innovation.
However the most interesting part of the session came when we posed this question to ourselves. What more the bus transport system can do to innovate on its Business Model?
Is there a way through which these buses just make all the rides free for all and yet make a profit?
For a little while the class pondered and then started pouring with the answers. Somebody said –Advertisements. Buses can carry advertisements may be on their outdoors. Yes that’s one way but that would not be complete. Then the class progressed on to the idea of attaching the back portion of the seats so that we can serve them advertisements right then and there. This could also allow us to target our advertisements to the type of audience. As in if the bus is carrying students, advertisements could be of commodities targeted at them such as career advertisements. Somebody also gave this funny idea of pitching matrimonial ads to bachelors. As I said then, I would say now, funny yet an idea you could look at.
Then somebody came up with another brainwave, that we could also serve video games on demand on the buses. That would actually be quite a money churner.
So we realized that if this business model were to be implemented by any bus company (Obviously I can see the questions being raised on its profitability already, but then suppose somebody does this profitably, if not now than in future with technology advancements) than the business models of the bus transport will look like this:
Instead of this (Old Model)