T E A M M E M B E R S :V I S H A L G U P T A

J E N N Y H UK E V I N K U N G

A W I L D A M E N D E Z

Agenda

Vision Context Business Model Tradeoffs Leadership Initiatives

Vision

The Entrepreneurial Solution for Defeating the Diseases of Poverty

Reinvent village healthcare and micro retailing in the developing world,

Through networks of franchised micro entrepreneurs,

Who bring high quality products to poor consumers at significantly lower cost.

Vision Context Business Model Tradeoff Leadership

Initiatives

Context

• Nearly 20,000 people die every day in developing countries for want of basic medicines that cost less than a cup of coffee.

• This list of diseases account for nearly 70% of childhood illness and death in Africa.

Vision Context Business Model Tradeoff Leadership

Initiatives

Avon Model Inspiration Design

Vision Context Business Model Tradeoff Leadership

Initiatives

Partner Branches (24)

LG DirectBranches (4)

CHPs (480) CHPs (140)

Rural/Peri-Urban Markets$0.50-$2.00/day

Business in a Bag

Products

Vision Context Business Model Tradeoffs Leadership

Initiatives

Product Offering

Vision Context Business Model Tradeoff Leadership

Initiatives

Avon Model Inspiration Design

Lean Supply Chain, Tight Information Loops, Cash Flow

Vision Context Business Model Tradeoff Leadership

Initiatives

LG DirectBranches (4)

CHPs (480) CHPs (140)

Rural/Peri-Urban Markets$0.50-$2.00/day

Business in a Bag

Products

Branches (24)

Value Proposition Model

Branches (24)

CHPs (480)

LG DirectBranches (4)

CHPs (140)

Rural/Peri-Urban Markets

Manufacturer(e.g. P&G)

National Distributor

Regional Distributor

Local Distributor

Rural Seller

Vision Context Business Model Tradeoff Leadership

Initiatives

Value Proposition Model

Vision Context Business Model Tradeoff Leadership

Initiatives

CHPs (480)

LG DirectBranches (4)

CHPs (140)

Rural/Peri-Urban Markets

Manufacturer

-Buying power

-Optimizes density of agents

-LG prices average 30% lower than market

-Products delivered directly to consumer

-Managing frequency of stock -outs, counterfeits

Branches (24)

Cash Flow Model

LG DirectBranches

CHPs ($75/mo.)

CHPs ($125/mo.)

Rural/Peri-Urban Markets

Donor Capital($1.6 m in 2009)

Inventory Restock

Sales

Micro-financing

Vision Context Business Model Tradeoff Leadership

Initiatives

Branches (24)

Cash Flow Model

LG DirectBranches

CHPs ($75)

CHPs ($125)

Rural/Peri-Urban Markets

Donor Capital

-CHPs retain 20% of sales

-Average monthly income $75/$125

-Targeting sustainability within five years

Simple Cash Flow Loop

Vision Context Business Model Tradeoff Leadership

Initiatives

Branches (24)

Information Loop

Quantitative monitoring of information is part of the model

Vision Context Business Model Tradeoff Leadership

Initiatives

LG DirectBranches

CHPs CHPs

Rural/Peri-Urban

Markets

-Initial training covers market data collection

-1 week review training/year

-Monthly coaching sessions

Branches (24)

Adaptability+ tailor to local needs+ capturing niche markets+ sense of franchise ownership+ resilient to price fluctuations+ learning/improving/experimenting

Uniformityproduct quality control +

branding +bulk purchasing power +

simplified/measurable standards +

Example Tradeoff: Adaptability vs. Uniformity

Vision Context Business Model Tradeoffs Leadership

Initiatives

Independence+ operations management+ identity+ quality control

Partnershipusing on existing infrastructure (“lean”) +

reduced overhead costs +distributed risk +

potential to scale up +

Example Tradeoff: Independence vs. Partnership

Vision Context Business Model Tradeoffs Leadership

Initiatives

Empowering women

Delivering health care

+

+

Expansion

Training ProcurementMonitoring

RA

RT RD

RA + RT + RD = Given resources (constrained)

Example Tradeoff: Prioritizing Goals

Vision Context Business Model Tradeoffs Leadership

Initiatives

Actionable Suggestions

Monitoring/Regulation. As LG expands, the ability to monitor CHPs may become more costly. Develop aligned incentives to ensure that CHPs cooperate with LG rules and standards.

Tracking Impact. Develop quantitative metrics for measuring LG’s Avon-like operations model and efficiency, in addition to its health outcomes.

Refining Core Competencies. As LG expands into other countries and work with other partners, it needs to decide on what operations can be outsourced, and what core competencies it would like to “own”.

Vision Context Business Model Tradeoffs Leadership Initiatives

References

Center for Health Market Innovations. Living Goods. 14 Jul. 2010. Accessed 8 Dec. 2010. <healthmarketinnovations.org/program/living-goods?display=default>.

Global Health Group, University of California, San Francisco. Clinical Social Franchising Compendium. San Francisco: UCSF, May 2010.

GiveWell. Charities worthy of special recognition. 10 May 2010. Accessed 8 Dec. 2010. <www.givewell.org/international/charities/special-recognition>.

IBS Center for Management Research. Living Goods - developing a sustainable business model to provide healthcare services in Uganda. 2009. Accessed 8 Dec. 2010. <www.icmrindia.org/casestudies/catalogue/Business%20Ethics/BECG104.htm>.

Khalil, O. An Avon approach to healthier and wealthier communities. CauseCapitalism. 4 Jun. 2010. <causecapitalism.com/an-avon-approach-to-healthier-and-wealthier-communities>.

Lemelson Foundation. The ‘Avon’ of rural health. Accessed 8 Dec. 2010. <www.lemelson.org/programs-grants/developing-country-program/technology-dissemination-grants/health/living-goods>.

Living Goods. Accessed 8 Dec. 2010. <www.livinggoods.org>. Living Goods. A sustainable system for defeating the diseases of poverty. 2008. Living Goods. March 2009 update and milestones. 2009. Living Goods. Scaling a sustainable system for defeating the diseases of poverty. 2010. Living Goods. Simple habits for health living. 2010. Mulago Foundation. Living Goods: taking health door to door. Accessed 8 Dec. 2010.

<www.mulagofoundation.org/portfolio/living-goods>. Omidyar Network. Living Goods receives $915K from Omidyar Network to improve health care, support

livelihoods in Africa. 2 Dec. 2010. <www.omidyar.com/about_us/news/2010/12/02/>.

Appendix: Business Extensions

Appendix: Avon Video

Avon Business Model – Andrea Jung SWIM video: 2:34 (towards end) start mitsloan.mit.edu

Appendix: Avon Video Notes

Avon videos Video: 00:20 to 1:21- Vast bond with women- earnings opportunity and social purpose to women- Independent earnings opportunity- largest economic engine in the world is the emerging market

of women 3:21 to 3:40- Earnings to support families, access health care and education

and improves personal security- Extend earnings to society to build hope and spurring social

progress- http://www.youtube.com/watch?v=sLojyNBXtiA&feature=p

layer_embedded#!

Appendix: Living Goods & Avon: Business Model & Social Responsibility Shared Goals

A proven business-in-a-box system heavily supported with training, marketing and coaching

Low start up costs of just $100-$250 supported with simple low-cost financing, and

Flexible hours and lifestyle: Sellers can work on their own schedule and in their own communities.

“Independent earnings opportunity for women”

“Social purpose for women” “Largest economic engine in

the world is the emerging market of women”

“Women’s earnings are used to support families, access health care and education and improves personal security

“Women’s earnings are used to build and spur social progress”

Appendix: LG-BRAC Partnership

Appendix: LG’s Branches

Appendix: LG’s Money Flow

2009 program expenditure: US$1,600,000 2009 donor support: US$1,600,000 Projected 2016 operation costs: US$1,720,367 (in

2009 dollars) Note that the projected figure for 2016 comes from a

different source, and may not be consistent with the 2009 figures.