revised May 23, 2011case 1-428-915 ITC e-Choupal 3.0 Throughout the historical development of e-Choupal, the initiative had always focused on having a positive social impact, as shown in Figure 2. A tenet of 1.0 was treating farmers with dignity and respect. All commercial transactions between ITC and the farmers were transparent and fair and handled with dignity and respect, which stood in a stark contrast to the mandi, which was the existing marketplace in rural India. Published by GlobaLens, a division of The William Davidson Institute at the University of Michigan. ©2011, Katharine Egan, Annie Kneedler, Pradeep Sagi, and Harveen Sethi. Katharine Egan, Annie Kneedler, Pradeep Sagi, and Harveen Sethi prepared this case under the supervision of University of Michigan Ross School of Business Professors CK Prahalad and MS Krishnan. Unauthorized reproduction and distribution is an infringement of copyright. Please contact us for permissions:
[email protected] or 734-615-9553 DO As S. Sivakumar, CEO of ITC’s Agribusiness Division, and his team began to envision the e-Choupal 3.0 model, they reflected on how far they had come since the inception of e-Choupal in 1999, a journey depicted in Figure 1. By starting with the idea that each farmer could be a micro-producer, the 1.0 model focused on a one-way supply chain from the farmers to ITC, with ITC purchasing soya and other commodities from rural communities. The 2.0 e-Choupal expanded on this concept and incorporated the idea that farmers could also be micro-consumers. To serve these consumers, ITC expanded its supply chain to include selling consumer-packaged goods to the farming communities. As the team was considering how to augment the 2.0 model, they realized that through the support of the e-Choupal, farmers had also become entrepreneurs. The approach now required a deeper personalization and the ability to facilitate greater economic opportunities for members of the community. NO T ITC’s e-Choupal was an initiative that enabled rural Indian farmers to enhance their efficiency through price transparency over the Internet. The project had received international accolades and in the summer of 2008, executives of ITC gathered together to discuss the next iteration of the successful initiative. ITC had first created e-Choupals, internet-enabled computer stations based in villages, to provide information on weather, best practices, crop details, market prices, and important local news to farmers in 1999. That early project then expanded to a version 2.0 between 2003 and 2008, and by 2008 the team was beginning to sense that they needed to update the current version. A new version would encompass what they had learned through the initial years and would be necessary to further encourage and foster the entrepreneurial spirit of the farmers and rural communities. CO PY ITC was one of India’s largest private sector conglomerates with a diversified presence in multiple industries, including, food, agriculture, hotels, cigarettes, personal care, paper and stationery. In 2008, it had a market capitalization of US $19 Billion and annual sales of more than $5 Billion. ITC was ranked as one of the world’s most reputable companies by Forbes magazine and listed as one of India’s most valuable companies by local Indian business magazines. The Agri-Business at ITC was one of India’s largest exporters of agricultural products. ITC e-Choupal 3.0 1-428-915 e-Choupal 2.0’s shift to a two-way supply chain gave farmers and rural communities access to consumer goods that were previously unavailable, and 3.0 would expand this access to provide more customized offerings based on local demand. Positive social impact was central to ITC’s work and would continue to be a core aspect of e-Choupal 3.0. Figure 1 ITC e-Choupal Timeline Farmer Farmer 2.0 ITC ITC Farmer 1.0 ITC Focus on farmers as micro-producers in one way supply chain Streamlined supply chain for direct access and immediate payment to farmers Micro-producer 1999–2003 Expansion to two way supply chain: focus on farmers as producers AND consumers Set up of Choupal Saagar Micro-consumer Micro-producer 2003–2008 NO T 2.0 1.0 Figure 2 e-Choupal Social Impact Timeline DO Provided farmers dignity and greater confidence to sell goods at fair price Offered farmers goods and services previously inaccessible and unaffordable Micro-producer 1999–2003 Micro-consumer Micro-producer 2003–2008 This case provides a synopsis of the e-Choupal 1.0 and 2.0 models as well as a detailed overview of what was planned for e-Choupal 3.0. It concludes at a juncture when the model is yet to be fully executed by ITC, allowing the reader to debate ITC’s strategic approach and enabling capabilities. CO PY Focus on rural engagement and deeper personalization of ITC‘s goods and services Micro-entrepreneur Micro-consumer Micro-producer 2008 Onward 3.0 Expansion to co-created supply chain: focus on farmers as entrepreneurs and innovators 3.0 Facilitation of greater employment and economic opportunities through fast moving consumer goods; increased agricultural productivity through personalized advice Micro-entrepreneur Micro-consumer Micro-producer 2008 Onward 2 1 The key issue that put farmers at a significant disadvantage. ITC e-Choupal 1. which benefited farmers first by addressing CO PY Buyers ITC/ Others City . The mandi system was characterized by corruption and ineffectiveness but were the only delivery point where farmers could bring their produce for sale to traders (Figure 3).0 1-428-915 ITC e-Choupal Business Model Evolution ITC innovatively used information and communication technologies to establish an information and business platform for India’s small and poor farmers. CEO of ITC’s Agribusiness Division. he was forced to accept the price offered. was the lack of information on the reasonable price that their crops could command.e-Choupal kiosks.ITC e-Choupal 3. Figure 3 Price and quality discovery occur at Mandi along with transaction NO T Old Process Mandi Traders (CAs) Mandi = Market (OPEN Auction) Town 3 DO Farmers Village S. The result of this proposal was the e-Choupal program. Since its first initiative to set up internet-enabled. Hence. demonstrating the power and impact of connecting rural India to urban markets through the coordination of partnerships across the public. ITC had pioneered rural commercial engagement. The system was rampant with ineffective traditional practices. which the company relied on for its agricultural export business. when a farmer arrived at a mandi.0 ITC first launched e-Choupal in June 2000 to make changes to India’s inefficient and ineffective agriculture supply chain. farmers relied on local information within a village to decide when to sell and which mandi to use. Lacking resources to analyze or anticipate price trends. who had previously always operated in unorganized traditional markets (mandis) that exploited their disadvantaged position. proposed a pioneering use of digital technology to improve the agriculture supply chain and enhance the effectiveness of ITC’s International Business Division. and non-profit sectors. and one that the local market mandis fully exploited. Sivakumar. The farmers had no bargaining power at a mandi because the crops had already been harvested and there were no alternate markets. private. the farmer now had the opportunity to take a sample of his produce to the e-Choupal and have the Sanchalak inspect it to get a benchmark price based on the quality. Unlike the mandi. Figure 4 Village Set up within village in a farmer’s house NO T Town e-Choupal Supply Chain eChoupal SUPPLY CHAIN City eChoupal Cluster of villages CHOICE Mandi DO Farmers ITC Hub Why go to ITC Direct? • Prompt payment • Pay for transportation • Services (cold water. the hubs had a transparent and efficient process for inspections. best practices in farming. This digital infrastructure resulted in an e-Choupal. A key tenet of ITC’s approach was freedom of choice for farmers. market prices. a virtual meeting place that provided transparent access to information that was previously unavailable at the village level. ITC installed computers with Internet connections in villages to provide information on weather. depending on where they would get a better deal. Open markets allowed ITC to set up its own hubs as marketplaces for farmers to sell produce based on their knowledge of fair market prices. and payments for the produce. CO PY SANCHALAK Processing Plant Mandi How does ITC control flow to avoid excess produce? • Transaction commission to the kiosk coordinator • One-day advance pricing 4 . crop details. This village member took on the role of Sanchalak. and important local news. Sanchalaks were highly respected individuals in the community with extensive farming experience and ITC built on the inherent trust and respect extended to the Sanchalaks to assimilate with the local community. farmers could now choose to sell to ITC or the mandi. Sanchalaks were chosen and trained by ITC and were seen as the key connection between ITC and the village. sit in shade) • Guaranteed same day service • Price transparency: info is FREE! Can choose to go to Mandi • Empowerment through dignity *The Sanchalak is the ITC representative in a village. weighing. the e-Choupals were placed in a village member’s house.0 1-428-915 information asymmetry. Empowered with market information. ITC immediately paid the farmers for their produce. The computer is in the Sanchalak’s house. Avoiding transportation to the mandi. and he also has equipment to test the quality of crops. In the original model. Concurrently.ITC e-Choupal 3. and reimbursed them for the cost of transportation. ITC convinced the government to allow agricultural transactions to take place outside the mandi. Building on the concept of Choupal (meaning a meeting place in Hindi). There was even an interactive question and answer forum.0 is illustrated in Figure 4. which had been prohibited by the Agricultural Produce Marketing Act. The model of 1. the Sanchalak also had equipment on-hand for testing crop quality. or ITC representative. In addition to housing the e-Choupal. his grain was weighed and then he was handed a payment slip that he could redeem at the Choupal Saagar. seeds) as well as credit and insurance. However.0 model in the form of storefronts that it called Choupal Saagars. ITC relied 5 DO After the tremendous success of launching the e-Choupal project. ITC began to transition to e-Choupal 2. With e-Choupal 1. farmers could order products through the Sanchalak or the Saagar. ITC realized that a significant opportunity had emerged to expand the paltform to engage in a two-way channel to connect farmers to local and global markets from both the production and consumption sides. Recognizing the farmers’ needs for agricultural inputs (fertilizers. greater weighing accuracy. personal consumer goods. By overcoming the challenges of rural geography through virtual aggregation. there were more than 6500 e-Choupals set up to serve approximately 4 million farmers. By 2008.0 was not sufficient to capture value across the entire network. an agri-extension clinic. ITC saw an opportunity to make these products available to the same communities that were selling their produce to ITC. ITC had greater control of quality. The trust built through this process was the key driver for ITC’s further commercial engagement in rural India.2 This resulted in a multiplier effect on the economic and social benefits. the program brought many economic benefits. The e-Choupal became a “virtuous cycle. more reliable payments. The company could directly communicate with the farmers. and facilitated the development of a community-responsive grassroots organization built on freedom of choice and local management with self-interest. The company viewed sales to India’s rural population as a potential growth engine.3 NO T CO PY . ITC also realized that e-Choupal 1.0 in August 2004 through the introduction of Saagars. and was able to better manage risk by developing long-term supplier relationships with farmers. health services (including telemedicine). ITC benefited from the program through savings from the streamlined supply chain. He also saved money through more efficient transactions. the platform approach of e-Choupal proved scalable. It also ensured efficiency through competition. This brought the farmer into the Saagar and exposed him to the various products and services that were available. The model satisfied only part of the opportunity that had been created by this newly cultivated relationship between ITC and farmers.0 ITC built on the 1.0 1-428-915 The e-Choupal platform empowered the community through real-time information and customized knowledge. reliable access to goods. While the e-Choupal initiative provided the community with an avenue to receive fair pricing on commodities. insurance. With this expanded model. and cost reimbursements. as well as more timely information which helped him fetch the optimal price for the product. agrichemicals. Essentially a Saagar served as a marketing platform and storefront for agricultural equipment. ITC realized that the farmers were purchasing supplies from stores and merchants outside ITC’s reach. The farmer had better access to information about prices.ITC e-Choupal 3. but it also relied on the Sanchalaks to become sellers of agricultural inputs and fast moving consumer goods (FMCG). ITC had built the network connecting the farmers to each other and ITC via the Sanchalak and had created trust in the community. in addition to the positive social impact of improving farmers’ confidence and sense of social dignity. the concept of e-Choupal delivered benefits from scale as well as specialization through collaboration and helped capture the latent value in the dormant markets of the economy in rural India. ITC e-Choupal 2. minimizing the power of intermediaries and enabling ITC to expand. Each store was placed at the center of a cluster of approximately 40 e-Choupals.0. When a farmer came to the Choupal Saagar to sell his crop. and reduced freight costs. Most importantly.” as it contributed to higher earnings and greater trust within the community. a fuel station. and a food court. Above all. and offered a range of services. agricultural inputs.0 and 2. studying the challenges it had faced and recognizing the opportunities it had realized in the process of working with farmers as producers and consumers. ITC realized that by facilitating empowered access to the markets and streamlining the rural value chains. but also for the company. A new individual. ITC also wanted to engage in a deeper understanding of the unique requirements of retailers and their customers. and profitability. and ITC’s lack of control over the transactions. The farmer became both ITC’s supplier and consumer.0. The company learned that many Sanchalaks were losing interest in their role and felt that they were wasting time and effort in developing these businesses without much return. There was also a huge capacity challenge as the Sanchalaks lacked the business skills and entrepreneurial abilities to expand beyond farming expertise to engage in selling goods. and financial services had varying economic structures. In 2008. private businesses could build a profitable business model. The vision was to build upon past efforts and co-create with farmers.0. It invested significant time and resources in evaluating the lessons learned from 2. because the information and insights were not properly captured at the rural level and transmitted to ITC. continue to enable ITC to achieve greater social benefits for the villagers. ITC employed a similar process for shaping 3. ITC’s efforts to date had allowed it to understand the uniqueness of the farmers—both as micro-producers and micro-consumers. offering credit and managing inventory. The services at the e-Choupals helped farmers improve productivity and crop yields. ITC transformed the way farmers did business. oversaw a region of Sanchalaks. and the Choupal Saagars provided the rural communities with a one-stop shopping experience comparable to urban environments. Despite what had been accomplished so far.0 Based on the successes and challenges that had resulted from the implementation of e-Choupal 1.ITC e-Choupal 3. Sanchalaks stocked fertilizers. Through its efforts. The e-Choupal Saagar hub and spoke combination transformed rural communities. in enabling sales of a host of products and services to these traditionally under-served consumers.0 as it had for 2. managing the inventory of goods and serving as the link between Sanchalaks and ITC headquarters. with the title of Samyojak. thus empowering farmers to be micro-entrepreneurs and micro-innovators. their distributors and the Samyojaks. The evaluation of e-Choupal 2. ITC continued to evolve its thinking for the next phase. Rural distribution was becoming complex due to the numerous interactions between the partner companies. This also facilitated the creation of market infrastructure not only for the farmers.0. logistics. ITC e-Choupal 3.0 1-428-915 on the trust-based relationship established with the Sanchalaks to facilitate transactions of insurance and for distribution of goods ordered. and with it. pesticides. and household goods to sell to the villages. Based on 6 DO NO T CO PY .0.4 By progressively linking the digital infrastructure to a physical network of rural business hubs and agricultural extension services. The rural distribution of various products and services such as FMCG (fast moving consumer goods). many challenges remained to develop e-Choupal into a significant two-way multidimensional delivery channel that efficiently facilitated the flow of goods and services to and from previously inaccessible rural markets. ITC began to build a vision for e-Choupal 3. ITC realized that there was a need to train the retailers in merchandising and working capital management for the goods distribution to be effective. and the way rural markets worked.0 revealed significant opportunities for a new ITC platform to fuel greater growth for ITC. gas lanterns. Upon designing a sustainable business model. a firm focused on designing innovative business models. but the specific value propositions needed to be identified and leveraged.0 platform to encompass services. to seek fundamental insights and develop a model based on service solutions that would be scalable throughout rural India. knowledge. In order to do so. the value proposition for each partner had to be made clear as ITC connected the partners to its contacts in rural India. Accordingly. ITC envisioned developing the 3. ITC planned to prototype and version the idea from conception to scale in order to learn from the strengths and weaknesses of pilot programs. ITC had built a strong relationship with vendors and partners. Figure 5 Insight Process Phases NO T DO 7 The primary assumption in moving into this phase was that farmers were the experts but they could benefit from learning about new technologies and techniques. ITC wanted to create a supply chain embedded with trust. incorporating many partners and broadly reaching out to the target recipients. products. ITC partnered with Erehwon Innovation Consulting. and convenience. The vision was to provide a large audience for companies to develop new relationships and for farmers to benefit from new techniques and technologies. This could be done through numerous ways. the team used the methodology of “Insight Search Dialogue” (Figure 5) to shape the 3. training partners.0 1-428-915 this evaluation. whether via live demonstrations of products in the field. It would then adapt an execution plan for the broad rollout of the 3. ITC recognized the opportunity to create personalized solutions to foster interaction and co-creation among participants by leveraging its existing technology and social architecture to build a platform based on new anchor businesses and deeper personalization. Approach and Methodology Focused on co-creating with farmers and harnessing their entrepreneurship.0 platform to millions of farmers across India. or bundling products and services together.ITC e-Choupal 3. CO PY Phase 2–Solution Insight Phase 3–Scale Insight Phase 1–Opportunity Insight .0 platform. Some investigation of these success provided evidence that personalization of services to each farmer or farming community could certainly help. The following sections describe each of these in detail. Business Model Figure 6 shows the ITC e-Choupal 3. It wanted to be perceived as a platform enabler that provided information and choice. ITC was challenged to create a solution for all of the identified challenges while creating prototypes within a realistic target budget. this approach helped ITC initiate a few focused experiments designed to find solutions in areas where new scalable insights were needed. The overarching themes that guided these task forces were the co-creation of new anchor businesses and personalized solutions for farmers. and developing pilot programs across India to determine what methods would best meet the challenges identified in e-Choupal 2. where the pilot programs were re-evaluated and adjusted and then rolled out on a larger scale across many e-Choupals. ITC’s strategy was to foster an ecosystem to create rich partners and commitment for its e-Choupal 3. outlining how the fundamental concepts as well as the insights identified through the task forces led ITC to create a new way for farmers to customize their learning and co-create their businesses through access to resources and opportunities in ITC’s ecosystem of partners and knowledge. synthesizing. ITC wanted to understand some of the greatest challenges in these communities and therefore it sent thirty-five employees from across functions to travel across India for four months to gather insights. complemented with micro-entrepreneurship. and business pillars. DO NO T 8 CO PY . This allowed for tremendous learning on the ground and a dynamic model of evolution of the idea as it was being modified.0. IT was aware that addressing this need for personalization would require a shift in the channel’s existing paradigm. filtering the partner companies and ensuring that the farmers were given a choice. One important finding that emerged from the insight process was that some entrepreneurial Sanchalaks and farming communities had been able to better utilize the power of the e-Choupal channel to realize better results in their businesses. The pilots were designed as a series of experiments that were improved over time as each version led to new insights that were integrated into the next version.0 1-428-915 ITC would play a role at the center of the hub.0 business model that emerged from this insight process. The insights identified through the task forces led ITC to the scale phase of the process. the top leadership team of ITC’s agri-business division traversed rural India and identified potential areas of opportunity to further develop relationships with farmers and villages. After brainstorming these solutions.ITC e-Choupal 3. In the solution insight search phase. Unlike a usual pilot program designed to validate the efficacy of an idea. and further integrate ITC with its constituents. from pushing output to pulling (or proactively facilitating and enabling) output. These insights led to brainstorming. Thereafter four task forces consisting of cross-functional teams were created to focus on specific innovation-sensitive areas. including the drivers. enablers.0 model. and received personalized advice. ITC could then use this information to create a base for data analytics. who served as the intermediary between ITC and the farmers. While intermediation by the Sanchalak would continue.0 Drivers The second key tenet was to support the scalability of the e-Choupal model. This was intended to create a virtuous cycle of personalization.0 Business Model DRIVERS 1A Deeper Personalization 1B New Anchor Businesses P I L L A R S BUSINESSES FMCG Technology ENABLERS Convergence Social Architecture Co-creation experience platform ITC e-Choupal 3. the link to farmers had been through the Sanchalak. wherein farmers sent information through mobile technology about any issues they faced. As ITC continued to expand across the India. NO T 9 CO PY F O U N D A T I O N Agri-inputs & Demo Employment Exchange . ITC intended to leverage mobile technology to supplement these interactions to further personalize solutions for farmers.0 was intended to capture this information from farmers directly (i. Additionally. requests. Thus deeper personalization through technology would introduce a more structured method of providing advice.ITC e-Choupal 3.0 was deeper personalization.0 1-428-915 Figure 6 e-Choupal 3. it was constrained in resources to interact with farmers individually and provide personalized advice informally. which it could aggregate to develop (internally or through a partnership) more personalized solutions. Traditionally.e. While the information ITC received at an aggregate level from each Sanchalak had been adequate to date. N=1 engagement with each farmer). or feedback that the farmers provided the Sanchalaks. ITC could not capture the individual information. The first tenet of this driver was to gain a deeper level of communication with individual farmers in order to respond to their needs in a more customized manner. The deeper personalization platform of 3. DO Deeper Personalization The first driver of ITC e-Choupal 3. 0 model would be FMCG. In addition to the above factors. while others did not. and wanted to explore new models and possibilities to scale and expand. because they were predominantly farmers with no distribution capabilities. In addition. ITC was interested in finding new anchor businesses outside agriculture. India’s growth trajectory had slowed significantly. and inventory management. Fast Moving Consumer Goods The first business pillar of the e-Choupal 3. and this goal was another driver in the e-Choupal 3. So. the Indian government slowed down reform activities. ITC first began distributing FMCG to rural areas in 2003. who would 10 DO NO T CO PY ITC e-Choupal 3. which controlled stock levels and stopped derivative pricing in commodities. The deep insights rested with the Sanchalaks. credit management. ITC began to rethink its model. The direct access to rural markets helped partner companies increase sales and improved the visibility of their brands. logistics. and cash management. But this was a complex supply chain with the Sanchalak managing multiple sources of supply. it was essential to have high inventory turns and robust money management.0 1-428-915 New Anchor Businesses The second driver of ITC’s e-Choupal 3. partner companies distributed their products to the Samyojak. which relied on commodity sourcing. who in turn distributed them to the retailers. As a result of high inflation in 2006. ITC decided to take the Sanchalak out of the direct purchasing and distribution process and allow him to be involved in the areas where he could excel most. There was a hesitation on the part of many Sanchalaks to be in the business of distributing FMCG. the ITC food businesses were reaching a plateau. where ITC would buy the products from the partner companies and have a central distribution center to distribute the products to the Samyojak.0 model. With all of these factors in mind.0. he knew the retailers and understood what they bought and what products sold well.0 strategy was to develop new anchor businesses to diversify ITC’s portfolio. As the FMCG business was a low-margin. The exchange between the Sanchalak and the retailer was informal. The Samyojak supplied the products to the Sanchalak. some of whom engaged with the retailers and consumers. To design a new model. ITC did not have control over the transactions between the partner companies and their distributors and had a low visibility on the interactions between the players. Original Business Model Originally. By introducing ITC branded products and a portfolio of products from partner companies. The hope was that ITC e-Choupal 3. At the same time. ITC studied the high-performing and under-performing Sanchalaks to understand their success factors and limitations.0 would take this model to the next level through insights as to which products and services would best meet the needs of rural consumers.ITC e-Choupal 3. There was also a strong synergy with the parent company’s vision of becoming the leading FMCG company in India. He/She also had insights on consumers’ needs. He had to interact with many partner companies on a daily basis for products. and how much value could be added through these activities. it was difficult for many of the Snchalaks to develop skills such as selling. The Sanchalak had the contextual knowledge. with a limit to how much additional FMCG (fast moving consumer goods) products could be branded and sold. the program scaled quickly. high-volume business. prices were increasing and agricultural production was suffering. The Sanchalak and the Samyojak benefited from increased sales and a regular flow of income. New Engagement Model The proposed model was an engagement model.0 Businesses . during e-Choupal 2. particularly through the Essential Commodities Act. The FMCG business also helped ITC realize its vision of improving the quality of life in rural India by providing quality products to rural communities. In the current model. For example. ITC wanted to ensure that farmers could at least earn the minimum wage. telling farmers exactly what to do rather than providing various techniques for them to choose from. Samyojak. In a market that was characterized by scarcity of options for rural retailers. who did not want to be seen as just selling products and collecting money. As ITC was moving toward a new model. In the new model. it had been extremely difficult for ITC and its partners to capture data and information from retailers and consumers. personalization and smart exchange at affordable prices to consumers. it wanted to personalize its demonstrations. 11 DO NO T CO PY . In e-Choupal 3. but quickly found that they were too prescriptive. A streamlined and digitallyenabled supply chain would ensure better efficiencies and economies of scale in the transactions with the partner companies and enable ITC and its partners to create new products suitable to the consumer. educating consumers. or promoting products. The motivation behind this new model was to offer a more streamlined exchange. ITC planned to build on the Sanchalaks’ strengths and knowledge by keeping them involved in aspects such as credit assessment. Sanchalaks knew which retailers could be given credit based on their ability to repay and the risks associated with it.0. ITC needed to introduce new production techniques and higher-value crops. partner companies. ITC planned to engage the retailers and co-create value for the rural communities. ITC would also have more control and visibility of transactions. and communication of promotional schemes to customers. to encourage people to continue to farm rather than go to cities in search of work. innovations from the farmers could be passed on to other farmers. ITC planned to capture the value from the exchange between the Samyojaks and the retailers by using technology and creating a smart exchange. In the past. most innovations from farmers were not captured or disseminated to a wider audience. this was eventually linked into a larger initiative within ITC to launch a horticulture program. which would empower him. While the initial plan was just to build demonstration farms. moving away from an informal exchange among the retailer. who could get training from salespersons of FMCG firms. Agri-inputs and Demonstration Farms The second business pillar of e-Choupal 3.0 1-428-915 then supply them directly to the retailer. This approach appealed to most Sanchalaks. but ITC could offer a complete portfolio of FMCGs available to the retailer network. and ITC. ITC recognized that information technology would be the backbone that enables ITC to deliver the value proposition. ITC had success with some demonstration farms. introduction of retailers to Samyojaks. Retailers would have an opportunity to connect directly with ITC through a loyalty program and link up to a transparent and flexible system without creating a hierarchy in the system.0 would be agricultural inputs and demonstration farms to help farmers improve productivity. rural retailers were not trained in ordering. With closer connections between ITC and farmers. ITC intended to explore the possibility of financing the retailers by partnering with banks and making use of the Sanchalak to assess the risk to extend credit. The information only spread in one direction – from ITC to the farmers. displaying merchandise.ITC e-Choupal 3. Unlike the retailers in urban areas. Sanchalak. Most companies did not go directly to the retailers in rural India. The demonstration farms would also provide a more personalized avenue for information to flow between the farmers and ITC. The Sanchalaks would become facilitators. Many farmers were still having a hard time making ends meet. To move farmers from subsistence to profit-earning and improve their standard of living. the Sanchalak would not experience social alienation within the village but would instead be an advocate of the value proposition and learning. The program planned to target both processed and fresh fruits and vegetables for the local and export markets. The company could also offer merchandising and working capital solutions. 6. ITC would use a train-the-trainers approach.g. and he was considering investing in drip irrigation. the plots showcased 350 crop varieties.0 1-428-915 New Engagement Model The demonstration farms would showcase improved production and harvesting techniques (e. as described in the following three examples of how change multiplied through the farming communities.ITC e-Choupal 3. With diversification. supplied neem-based organic fertilizers. (4) regular/traditional. visited the ITC demonstration plot to learn about improving his family techniques and chose to adopt a few new practices for his tomatoes. (3) aromatic and medicinal plants. International Development Enterprises India was the partner for drip irrigation technologies. estimating demand for each crop and managing supply so the market was not flooded with a crop when there was only limited demand. Nunhems. 5. 2. They identified progressive farmers in each community to serve as lead farmers to showcase techniques to the village. 4. purchased improved seedlings. 3. With these techniques. The pilot program was based in the state of Madhya Pradesh and included six one-acre plots and one 27-acre installation for more intensive training. irrigation. Through its demonstration plots. the goal was for each farmer to grow at least a quarter of an acre of new crop varieties. To scale up the program. with added expenses of only 8. The main partners for this activity were: 1. Five categories of crops were shown at each plot: (1) horticulture/high value. a German company. ITC was building a network of global resource partners who had been critical participants since the inception phase of the program. At each plot. In total. a farmer. fertilizers. Agriculture universities brought agricultural expertise and research knowledge. an internal ITC department. Preliminary Results ITC witnessed some initial success with its demonstration plots. and eventually provide links to new markets for improved crops. (2) organics. Bayer. ITC built off its successful Sanchalak network to disseminate the best practices and publicize the activities of the demonstration farms. so farmers could choose which techniques they wanted to adopt. Its product offerings were the most appropriate for the Indian agro-climate. other farmers visited his farm to learn about the new techniques. plant beds. ITC agents were posted in each of the pilot villages to provide daily agricultural advice. supplied the hybrid seeds to sell through the ITC channel. and (5) Indian spices.500 rupees. from tying up tomato plants to installing a greenhouse. and it had invested significant resources in research and development for new varieties. Well Grow. ITC had four main goals for the demonstration plot program: 1) increasing quantity. The farms would demonstrate a range of options. and pesticides. brought years of experience in crop science and assisted with identifying the best practices. Based on his success. and put his tomato plants into stalks. a seed producing company. 12 DO NO T CO PY . ITC would retain the overall management of the program. The Central Institute for Medicinal and Aromatic Plants provided best practices for the medicinal and aromatic category. a key element of improving production. He applied fertilizer and pesticides. a nursery sold high-quality seedlings. Omkar Singh Sahu. he saw a five-fold increase in the price per kilo he received for his tomatoes. and 4) diversifying crops. 3) reducing costs. intercropping. hiring farmers to work on the demonstration plots who could then serve as trainers for their communities. 2) improving quality. and greenhouses) and new crop varieties. While the employment portal could be accessed from any computer. ITC e-Choupal 3. but no way to match them up.5 Many wanted to stay in their local area. potatoes and okra. After talking with an ITC village representative.0 was an employment exchange platform. 5% of people between ages 21 and 30 were unemployed graduates.0 Enablers The complexity of the new opportunities conceived within e-Choupal 3. 13 DO NO T CO PY . eggplant. When his farm became too wet.ITC e-Choupal 3. was inspired by visiting Sahu’s farm and purchased improved seeds. the portal was developed to provide job postings and networking opportunities much like similar sites in the United States and Europe. but they had difficulty finding job opportunities. Employment Exchange The last pillar business for e-Choupal 3. he was advised to tie up his plants but he chose not to make the investment. Created in partnership with Monster. Unfortunately his eggplants became too wet and rotted. There was a complex Enterprise Resource Planning system underpinning the e-Choupal business model. which was a completely new business.0 required a strong foundation of enablers to support these new anchor businesses and deeper personalization efforts. New Engagement Model The employment exchange was intended to be a one-stop portal for job openings. the access point would be through Sanchalaks. With ITC’s rural network already established through the Sanchalaks. The Sanchalak would play an essential role by verifying the identity of the job applicant to provide traceability through the system. There was also increased demand for employees from the rural areas.com. the Sanchalak would receive a commission payment. Complementary sources of income were desperately needed.0 it became obvious that not only did ITC need to diversify its businesses. and created crop beds for his eggplant.0. with marigolds. 2. and 90% of them were looking for job opportunities outside agriculture. convergence. Employers demanded traceability and integrity. but the farmers did too. and social architecture. But companies were finding it very expensive and time-consuming to recruit qualified candidates. Technology Technology had been the crux of enabling the e-Choupal network from the beginning through to version 2. ITC and other portal partners benefited from ad revenue and transaction fees. confirming for him the importance of stalking his plants in the future. During the strategic discussions for e-Choupal 3. In the e-Choupal areas. and career advice. The horizontal enablers that applied to the new business pillars fell into three overarching categories: technology. and the Sanchalaks provided a link into rural communities. he decided to stalk his tomatoes and create beds for his crops as a result his crops improved in health. If the applicant received an offer letter. as expanding businesses needed front-line employees in tier 1. To minimize opportunities for corruption. there was a clear opportunity for ITC to serve as the link between job seekers and companies. training opportunities. Harirampal already had a diversified farm. the Sanchalak would have no involvement after identity verification and no impact over the employment decision. tomatoes. There were job providers and qualified candidates. Agricultural land holdings per person were decreasing and it was becoming more and more difficult to support a family on agriculture alone. and 3 cities.0 1-428-915 Dhasi Dheriya another farmer. This would create the base for analytics to anticipate and develop solutions for farmers. Younger retailers seemed to be receptive to the idea and saw the value of ordering goods through their mobile phone. broader. The purpose was to allow retailers to order directly from the Samyojak or distribution center. 14 DO NO T CO PY . a farmer could use his mobile phone to send in a digital picture of a diseased crop to obtain advice on what to do to fix it. it was becoming increasingly difficult for ITC staff to interact with farmers directly to serve them with customized solutions and advice. So ITC explored using mobile technology to create the smart exchange for FMCG goods as noted earlier. ITC had not been able to formally capture any consumer insights that could help it penetrate the rural market more effectively. ITC partnered with Nokia to think about how to personalize what each farmer received. The value for ITC was in certain data that a farmer could input into a mobile phone that would greatly help ITC better understand the agricultural landscape of India. One critical point of feedback that had emerged through the co-creation process with farmers was the need for customization by language (Hindi. ITC first focused on demonstrating the value of the mobile business model. This provided retailers with the opportunity to also access partner companies that were leveraging this channel. and overall needs. This would help ITC give more tailored advice to farmers regarding what to grow in different areas. One of the lessons ITC had learned from e-Choupal 1. which would help them develop and market the most appropriate products. Therefore. To develop this model. and then rolled out the mobile technology platform.0 was that adoption was quicker when the value creation opportunity was clearer to the farmers. thus enabling smart decision-making by ITC to sell and develop new products to meet demand in the villages. ITC could also use the information to advise its partner companies of the differing needs. and helped determine each day’s buying price. and more personalized expansion through mobile technology. This would be done in part by partnering with other multi-national companies and providing them the data collected from farmers. They could call or send SMS text messages to ask questions regarding the health of a crop or order agricultural inputs. So a benefit of mobile phone technology was to provide farmers with a vehicle to communicate their needs and requests. and how to develop a user-friendly interface that would secure farmer adoption of using mobile technology for transactions previously conducted through the e-Choupal computer. as ITC’s staff was being stretched to serve more and more farmers.ITC e-Choupal 3. Tamil. etc. It had been challenging to obtain information on the commercial exchange between village retailers and their consumers. Interactions between farmers and ITC staff became intermittent in some areas. At the heart of this model was enabling personalization for ordering and distribution service for the retailers through a connected resource. including capturing data from farmers about their soil. without the need to go to the Sanchalak’s home to use the e-Choupal computer. Mobile technology would achieve personalization and scale the solution in a more cost-effective manner. for example the different soil regions. the company recognized the opportunity for deeper. Another use of mobile technology was to support the FMCGs deeper personalization effort. This was based on the premise that people’s intuitive ability to use technology is very different if they understand and appreciate the value from the use of new technology.0 1-428-915 This system enabled Choupal Saagars to manage their daily demand and inflow of different agricultural commodities from farmers.). It was also convenient that these needs could be met in real-time through mobile communications. Therefore. As ITC’s e-Choupal model continued to scale. For example. As ITC’s e-Choupal model expanded across India. crops. For instance. CO PY . The value of charging the user would be in making ITC more accountable since the users had to purchase information. Since farmers could receive this information for free from the e-Choupal or on the computer. whether they were involved in the FMCG. Information and Communication Technology Architecture The business models of ITC e-Choupal in all three phases were supported by the underlying information and communication technology architecture. ITC believed farm product input companies would be willing to pay for the data farmers provided. For instance. and for FMCG order fulfillment and tracking. or employment exchange. in the initial conceptualization of the e-Choupal idea.0 1-428-915 The areas in scope were to use mobile technology for obtaining and delivering information to and from farmers.ITC e-Choupal 3. since the Sanchalak would make commissions on the goods. the Sanchalak would have a greater incentive to carry out the transaction.0 demonstrated the concepts of deeper personalization. there could be an expected service level agreement for ITC to send responses to farmers’ questions within a given turnaround time. One possible solution was for ITC to pay farmers to input data based on what the agri-input dealers were willing to pay to obtain the data. ITC believed three kinds of models were possible for the mobile information exchange: 1. Mobile Business Model One of the challenges ITC faced with deploying the mobile platform was determining who should pay for the farmer’s mobile communication. How could ITC incentivize the farmers to feed in the data. Thus. as the farmer provided information that sat in a data repository and then could be sold to ITC partners. and the mobile data from the farmers would be particularly beneficial for agri-input companies to forecast demand.0. and Sanchalaks for distribution of the goods. agri-inputs. once the rural employment new anchor business was launched. However these ideas were still in the experimental stage and ITC plans to learn from these experiments to develop their strategy for scaling. ITC’s use of mobile technology for 3. enabling wider access to resources. Integrate the users into the value chain: ITC and partners could extract value from the information the farmers provided by using that information to penetrate the market more effectively. Another option for ITC was to send market information to farmers through cell phones. it might also be supported with the mobile technology platform. it would be user-built content. ITC’s intended mobile platform would enable personalized solutions for the businesses that were part of 3. particularly small farmers with low margins. with FMCG linking retailers to sourcing of goods. ITC was not sure if farmers would pay for this information on their phones. Create an exchange: Because many people wanted to sell and buy. ITC could explore incentive structures within the value chain of matching up different value chain players. As noted earlier in the case. The increased revenues would pay for the cost of the technology. Technically. At a future point. 3. Agri-input forecasting was very difficult in India. and the power of analytics to map a whole country’s agriculture landscape and increase its agricultural productivity with customized agri-inputs. particularly if they had to spend their own money to send this information via text messaging? One of the models under consideration was for ITC to charge agricultural input partner companies for the data. but mobile transmission costs would exist (for mobile phone costs or web browsing). The information would still be free. 2. senior leadership at ITC chose technology as a means to achieve rural connectivity and 15 DO NO T Users would pay for part of what was received: The farmer would pay for the information (but only a small portion of actual cost). demo plots. A simple text control attached to a local font was developed in-house. village. and price trends in various markets. improve operational efficiency and enhance the farmer’s experience in the process. and back office were still intermediated through manual and batch systems Technology Architecture in e-Choupal 2. The information systems also captured basic data on the identity of the farmer. and dynamic content pages were developed with a template-driven approach for faster access. The intent was to get the farmer and the retail outlets registered and transacting by selling directly from the village. The main business objectives were to remove the information asymmetry in the supply chain.0 technology goals were significantly influenced by the need to create an access infrastructure.ITC e-Choupal 3. market prices. ITC first used ActiveX controls.0 In e-Choupal 2. The integration layers among farm. static contents in the web pages were cached in local machines. In many cases.0 In version 1.. and best practices to farmers. hub. The e-Choupal Version 1. which began in 2004. For example. soyachoupal for soya beans. the connectivity infrastructure was upgraded. The ITC team also customized content and optimized the web pages to download faster under the limited bandwidth available. aquachoupal for marine products. The following traces the evolution of the information and communication technology architecture that shaped and supported the respective stages of the e-Choupal business model.g. The connectivity infrastructure in rural areas was primitive and required massive effort and investments to make it ready for use in e-Choupal context. • Managing physical aspects such as positioning computer and other equipment in villages and enabling connectivity • Imparting skills to first-time Internet users in remote areas of rural India • Personalization of content for the fragmented and heterogeneous farmer groups— there was a separate website for each of the crop and language combinations (e. With the help of telecommunications companies. plantersnet for coffee) These features and functionality were not readily available off the shelf and had to be developed or modified in-house. This goal required creation of a flexible transaction portal. in order to support local language. the business goal was to create a physical infrastructure of e-Choupals at the village level and create community ownership of the initiative through the identified Sanchalaks. images were optimized with special techniques. the business model shifted from viewing farmers only as suppliers to seeing them as consumers as well.0 1-428-915 eliminate information asymmetry. Technology Architecture in e-Choupal 1. which provided the required information such as local weather. Hence new lines of business and services streams were added to the business model. This took a long time in areas where the connectivity was poor. which integrated directly to the back-end ERP and ensured that there was no latency in processing any of the transactions. the capabilities in their technology architecture were viewed as critical to their ability to execute their strategy and vision. but that meant that the software had to be downloaded to the Sanchalak’s machine in the village. the local language content. the fonts were developed in-house to produce a better visual effect. quality of produce.0. As result. For example. Hence an alternative approach was adopted. 16 DO NO T CO PY The following were additional technology challenges in this phase: . which was launched in 2000. At this stage an important technical challenge was creating a local language portal. This led to faster download and display of dynamic content.0. and information publishing. The 17 DO NO T CO PY In addition. including tractor manufacturers. services providers. the security and integrity of the systems was of paramount importance. This reduced the maintenance overheads for customized fonts and made it easier for anyone to plug in and start using the e-Choupal facilities without having to go through a painful set-up process. etc. and forecast estimations. insurance firms. soya beans procurement started in Maharashtra and Karnataka). language. which began implementation in April 2009. and others. everything moved to Unicode-based language fonts to manage the local language requirements. and region.0. outlet coverage. Filtering features provided ability to select content relevant to the season. rural youth. The database was the pivot around which the new services and products would be developed and offered. Planning models and analytical tools resulted in better territory coverage. this architecture allowed business processes to be easily modified. farmers. This improved visibility and control over the supply chain. and transact through integrated systems on a pan-India scale. aqua product companies.echoupal. The access infrastructure was also undergoing significant change due to mobile telecommunications technology.com) for umbrella branding and consistent user experience. consumption preferences. and customer data. In addition to supporting the evolving nature of these businesses. collaborate. crop. The strategic intent was for all these people to plug into the network.g. product manufacturers. quality. state combinations) through a single content engine and publishing system. family details.0 In e-Choupal 3. This architecture enabled a variety of business processes from ITC partners. This shift to the mobile platform was a must to achieve personalization.ITC e-Choupal 3. A secure and comprehensive database with all the information pertaining to farmers’ holdings.” The meta market would enable operators such as input providers and rural distributors to create and exchange value through the e-Choupal platform. the business goal was to create a personalized co-creation platform to support a full-fledged “meta market. and credit-worthiness. both for the incoming agri-commodity procurement channel and the outgoing rural distribution channel. Besides a firewall and intrusion detection systems.0 1-428-915 The individual websites (soyachoupal. in addition to maximizing cross-selling opportunities with customers. aquachoupal. But as the network expanded. The participants included micro-entrepreneurs in the village. and the data was expected to facilitate co-creation opportunities and a unique customer experience. The information started becoming more real-time.) were all integrated into one single portal (www. The back-end ERP systems were integrated with the front-end business process and transaction portal for seamless integration that facilitated order capture. . the RSA security token technology was in the process of being woven into the website to provide a comprehensive authentication and access mechanism. It meant that villagers could access services at any time and removed the dependence on a fixed-location infrastructure at a Sanchalak’s house. ITC adopted a flexible business process platform and content management architecture to manage multiple web-fronts (crop. It also facilitated a seamless coordination for the rural distribution business by providing inventory control. The connectivity infrastructure was upgraded too—e-Choupals were connected through broadband VSATs that enabled realtime connectivity and fast Internet access. and employers. It facilitated an integrated view of business operations as the agri-commodities procurement crossed over to several states across India (e. Technology Architecture in e-Choupal 3. was being built to bring the personalization scope to an individual level. and Sunsilk Gang of Girls. They examined examples such as Paan Bhandars ( small shops). ITC hoped to tap into this concept to foster greater social networking both in physical spaces and through the Internet. Convergence The physical e-Choupal. At a later point. namely services ITC could market and the partnerships it could establish in existing ecosystems. such as at village Haats (a physical meeting place) as well as Haats in cities where rural artisans came together (for example. ITC planned to move the virtual Adda to the mobile platform. ITC looked to find efficient economies of scale. The analysis revealed key opportunities for ITC to act upon.0 prototype. As the e-Choupal initiative expanded across India. New Model ITC wanted to expand its convergence points for social networking. tea or paan stalls. ITC referred to this latter concept as virtual Addas. both physically and virtually. with personalization features and the ability to interpret and analyze the information for emerging requirements. The first step of the pilot prototype was to understand the dynamics of the convergence points. However. to help communities express their needs. and Internet-based convergence points such as Facebook. The technical capabilities and business model evolution at ITC were not independent. accessible from anywhere. malls. One way ITC was attempting to foster greater convergence points was in physical spaces. and to engage members of the community. Based on a thorough analysis of physical. the technology architecture would revolve around an integrated multi-commodity. natural. multi-service. Information technology was the backbone supporting the complexity of all of ITC’s e-Choupal businesses. it was primarily only the farmers who converged around the e-Choupal at the Sanchalak’s house. and multi-language rural exchange with physical delivery and customer service delivered through network partners. parks. ITC was particularly keen to understand this so as to not disturb the social fabric of an existing social ecosystem when introducing services. and leverage these points of convergence for dissemination of information and services. and Sanchalaks were limited. Tapping into convergence as a platform enabler became critical for further expansion. ITC therefore recognized the need to find or create additional locations for convergence points where people could engage and make informed choices. ITC saw great potential in tapping into this natural tendency for social convergence around the e-Choupal.0. Another means of convergence that was being explored was in virtual spaces over the Internet.0 1-428-915 security management of ITC’s base information technology was very strong. who had not yet been involved in the e-Choupal model. had been considered a convergence point that enabled informed choices and knowledge exchanges regarding transactions. as well as for gathering feedback on what consumers desired and needed. ITC’s e-Choupal from the onset had been built upon a scalable component-based architecture that enabled the ITC technical team to easily build upon the base architecture in designing the 3. such as women. the ITC management team tried to tease out the key insights by observing the drivers for convergence and opportunities that remained to be untapped at such points. In summary. multiproduct. be it at coffee shops. ITC discovered that people sought these places to get away and take a break. The network would be real-time. eBay. coffee shops. Technology would be the backbone to deliver the value proposition and enable personalization and smart exchange. virtual. which means third place. and engineered places. malls. bus stands. considered a place other than home and work. This was particularly useful as the technical team built provisions for security of data transmission through the mobile interface. A third place was where people liked to naturally converge.ITC e-Choupal 3. since its initial launch as part of 1. DO NO T 18 CO PY . Dilli Haat in New Delhi). including food grains. The point of this pilot was to co-create a convergence experience from the ground up with the Sanchalak. ITC and its partners ran promotions to draw in foot traffic. Anyone who succeeded in hitting the bull’s eye won a bar 19 DO The first ITC convergence pilot was undertaken at a Haat on December 21. which is three-hour drive from the city of Lucknow. fruits.0 1-428-915 The business objective of the convergence points was to provide a space for people to make informed decisions about services available to them. The point was to spread awareness. general Insurance (motor. bicycle parts and other miscellaneous items. generate leads and aggregate demand for ITC products and services. NO T + + CO PY FMCG Durables . and credit card services (through partnership with the State Bank of India). At this first pilot. Convergence points such as the Hardoi Haat tended to attract around 2. vegetables. Additionally. Rural Haats were considered one such natural convergence point. hair accessories. build excitement. ITC’s partners had found it difficult to penetrate rural markets and therefore were interested in partnering with ITC to promote awareness of their products and services at convergence points. and to demonstrate the value proposition to the Sanchalak in marketing various ITC and partner services and products at the Hardoi Haat. snacks. teas.ITC e-Choupal 3. spices. Figure 7 shows the different basket of offerings intended to be shared at such convergence points. 2008. ITC’s partner John Deere was there advertising its products and services. For example. in a village called Hardoi. health). ITC organized a dart board game. clothing. including a tractor display. ITC was interested in leveraging the existing traffic going to a rural Haat by offering a set of relevant (noncompetitive) products and services to the rural consumer.000 people from around 15 villages twice a week. where each person was charged one rupee for three throws. Figure 7 Basket of Offerings at Convergence Points Buzz/Info Excitement Financial Services Choupal Haat Agri inputs ITC set up a stall offering an assortment of ITC FMCG products and a range of partner services including life insurance (through partnership with Life Insurance Corporation of India). The Haat sold a range of goods. who was an extended arm of ITC in the village.ITC e-Choupal 3. while 20 DO NO T Partner Companies Provide product/service/ • Directly connect with Provide product/service information/promotional support to target audience enhance the functional/aesthetic • Platform for promotion of utility of the Choupal Haat products and subsequent sales Augment all above services to drive • Direct revenue more footfalls to the Choupal Haat CO PY Value Proposition • Awareness spread • Lead generation • Subsequent conversions • Increased earnings from sales . The idea of using the Haat as a convergence point appeared to be promising. particularly in drawing people from the community who were not farmers and had not yet been exposed to such products and services. Original Model An ITC hub was a buying center of the agricultural commodities and the rural distribution of FMCG. In addition. anchoring the Choupal Haat Sanchalak word of mouth propaganda Local independent entrepreneurs (Vet. initial implementation. ITC attempted to reorganize the social architecture by working with Sanchalaks to facilitate community engagement and with the ITC hub teams to drive the back-end. Some Sanchalaks started off very well.) Social Architecture The third enabler was the reorganization of the social architecture that was critical for the successful deployment of the new businesses. etc. however. The hub pushed down the business targets to the Sanchalak. John Deere ran a promotion where it offered free maintenance and service for the first ten tractors it sold. Over time. Sanchalaks had begun losing interest in e-Choupal due to the gap between their initial aspirations and the reality of the realized earnings. but underperformed later. the Sanchalak was to be instrumental in the success of this platform. both in providing ITC credibility in his community as well as in communicating feedback from the community to ITC. One of the main ideas behind ITC’s e-Choupal initiative was to empower the villages by providing them with information so that they could transact with better bargaining power. Table 1 Stakeholder ITC-Agribusiness Division Role/Responsibility Concept and communication design. Table 1 outlines the role ITC expected each stakeholder to play in the process and the respective value proposition drawing each group into the convergence model.0 1-428-915 of soap. Moving forward. financial services and agri-inputs were coordinated through the hub. But the information and transactions were concentrated with one person in the village—the Sanchalak. ITC hoped to use such convergence points as a platform to draw insights for further personalization of products and services. working out revenue models Word of mouth propaganda. The stall also offered free basic medical check-ups. GP. Sourcing targets. bringing in partner companies. and financial services targets primarily drove the hub. rural distribution targets. If ITC wanted to create a more enabled and open ecosystem for rapid deployment. or that the branch was asking for too many reports. The entrepreneurial hub would identify new opportunities for growth by intercepting. ITC aimed to assess the Sanchalak on the basis of his suitability for each kind of business and understand his preference for engaging in different businesses. the company needed to better understand the attitudes and capabilities of these farmers. These feelings came from many sources. but if ITC wanted them to do many other things.ITC e-Choupal 3. Sanchalaks and service providers to deliver enhanced services. The hub could understand what else the village needed. an entrepreneurial approach would be required. but the framework within which the company had established its presence was changing. as otherwise ITC would not able to reach out to the entire community through the Sanchalak. if ITC could leverage what was already happening there. there were some limitations due to the social dynamics. It was becoming essential to know what motivated Sanchalaks and identify the skills required to perform the changing role. As part of 3. and reporting emerging trends. The hub teams were pushing the Sanchalaks and Samyojaks. the hub interface would have to have the capacity to not only maintain the existing services. the hub could feed the information and ideas back to the ITC network. and innovation. the social architecture needed to change. From this information. There were many incomegenerating opportunities inside the village. which could be distributed through ITC. which worked very well for the procurement-led business. For the Sanchalaks. Then. these stakeholders were tired and not always happy with the achievements. it would co-create new possibilities. Every Sanchalak engaged differently and communicated differently and a standard agreement. ITC planned to try to profile Sanchalaks on different parameters such as the village potential. At the end of the day. Sanchalaks were historically successful farmers. because of social hierarchy or gender considerations. which led to a feeling of helplessness. They said that the Sanchalaks were not interested or capable. the village potential was limited. The company could use these insights to collaborate with partner companies. and reporting to the ITC branch office. tastes. For example. ITC wanted to play a relevant role in the rural communities. capturing. In addition. To enable this. While rural distribution of FMCG was very 21 DO NO T CO PY . if they could go through the Sanchalak. It enabled the existing businesses within ITC. the Samyojaks were not cooperative. and the resources and ability to deliver the value propositions. collating. The hub would continue to execute its existing roles of commodity procurement and rural distribution.0.0 1-428-915 others were never very engaged. was not going to work in these relationships moving forward. the role of the hub would have to shift from being an administrative outpost to an entrepreneurial entity that could grow its own market independently. managing the environment. and had no time or energy to work with the Sanchalaks to re-engage them. it would build relationships with the village. The Sanchalak provided a critical link to engage with the village. the Sanchalak’s skills. as the Sanchalak could not reach out to all the communities in the villages. These partners could start to pick up the understanding of what the ecosystem needed and offer new products or services. and business propositions in the hub ecosystem. such as procurement and distribution. The hub teams presented numerous reasons for their lack of engagement. development. For the company’s offerings to be customized to the village. New Engagement Model The social architecture was both an enabler and a barrier. but also to start engaging with the village community and the Sanchalak in a personalized manner to understand what could be customized. Instead of an administrative approach. There was a need to change this. selling insurance is very different from selling FMCG. It was important to understand the villages’ desire for growth. by tapping into the innovative mindset of farmers and co-creating with farmers as micro-entrepreneurs.0 would probably not be seen for years. Most importantly. What challenges will ITC potentially face in implementing 3. The beauty of the business model was that ITC’s profits were predicated on factors that carried huge social benefits. ITC had engaged with the farmers as both microproducers and microconsumers. particularly in the rural areas. which is a deferred benefit that is uncertain. While the above introduces the evolution of ITC’s e-Choupal model.0. and the benefits might take even longer to materialize.0 1-428-915 tangible.0 to 2. ITC wanted the hub to be able to interpret the needs of development in a manner that would translate into a particular service. ITC built a foundation for sustainable commercial engagement in rural India. hubs used to get business targets. viewing the challenges in the rural supply chain as business opportunities.0 to the formation of 3. ITC had a lot of data about the villages where it had a presence and was planning to analyze that data to drive its next moves. The effects of the implementation of 3. In terms of identifying opportunities.0? What changes should it consider to the structure described above. it is not the end of the story. what could e-Choupal 4. In some cases this could be an employment exchange and in others it could be education and training. The services and solutions offered had to be what the village needed rather than what ITC believed would be good for that particular village. how growth happened and what was critical for the village to grow. From e-Choupal 1.0 look like and what should CEO Sivakumar consider about the future of this project? NO T 22 ITC had accomplished an enormous amount through its e-Choupal initiative. growth. Through the iterations of e-Choupal. Under the new plan they would primarily identify opportunities.ITC e-Choupal 3. In particular. Conclusion DO ITC aimed to go a step further with e-Choupal 3. and development. Based on this future. selling insurance. these differed from village to village. CO PY . ITC demonstrated tremendous dedication to learning from each of its implementations and addressing key issues and opportunities. and are there components and services they should add? Imagine what the Indian agricultural landscape could look like. and had positively impacted the lives of farmers across India. once ITC co-creates personalized solutions with farmers.0. and pioneering rural commerce for the base of the pyramid. required the Sanchalak to be able to think conceptually and communicate the benefits to the customers. Village progress indicators were very key elements to understanding how people in a particular village measured success. Earlier. ITC was able to meet both its profit and social impact goals by structuring the e-Choupal initiative as a win-win deal for ITC and Indian farmers. December 2005 ITC presentation DO 23 NO T CO PY . C.K. C. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. “ITC’s e-Choupal: A Platform Strategy for Rural Transformation.0 1-428-915 Endnotes 1 2 3 4 5 Prahalad. Wharton School Publishing.ITC e-Choupal 3. December 2005 Prahalad. S. 2006. Anupindi. Ravi and Sivakumar. Anupindi.K. “ITC’s e-Choupal: A Platform Strategy for Rural Transformation. 2006. The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits. Ravi and Sivakumar.” Presentation.” Presentation. Wharton School Publishing. S. Endnotes .