Thinking Inside the Box

After presenting my Romanian version of the Lean Canvas at the first ever Global Entrepreneurship Week in Moldova, I darted over to Innovation Weekend organized by Junior Achievement and directed by fellow Peace Corps volunteers Laura Demmel, Matt Rutter, and Julie Carter. Innovation Weekend was a business model competition created to teach high school students from across the nation how to create and test a Lean Canvas business model. Each team would pitch their business ideas in front of a qualified panel of Moldovan judges. I participated as a mentor and was assigned to coach one of the ten teams, steering them in the right direction.

To my surprise, the team I inherited represented the district of Leova (where I currently live). The city of Leova is the district capital and has a population of roughly 12,000 inhabitants. The team I assisted was from the town of Tomai, which is home to approximately 900 people. When I first arrived to Leova in August 2012, I visited Tomai to go fishing with my business partner, his son, and friends. What I remember about the village is that it did not have roads, just one dirt path. We drove down it, over grass, and through brush to get down to the pond in Tomai that weekend. Needless to say, the town lacks the most basic infrastructure a city needs to operate. When I read that the team I was coaching was from Tomai, I double checked the listing in disbelief. Surely I thought a mountain would need to be climbed to get the team to understand concepts of the rather complex Lean Canvas business model.

558271_714915182743_2066883384_nI met with all seven members of the team: Ana, Mirela, Mihaela, Doina, Ionela, Vladimir, and our Junior Achievement mentor Camelia. From the start, we all high-fived and introduced ourselves. My number one goal going into the project was to try to keep the mood light and our team calm under pressure. I have participated in Startup Weekend, a worldwide entrepreneurship competition, and projects like this before. The worst thing a team or person can do when facing a strict deadline is panic. Our team instantly gelled and cracked jokes among each other. I made a lot of playful voices in the Romanian language, which instantly won them over.

After a great round of informative presentations by the Junior Achievement staff members and the aforementioned Peace Corps leaders, Camelia and I felt well-guided and focused on the goal of our business model. The product we would be selling to the audience was not the finished product/service, but the business model in entirety. I vocalized this concept to the team immediately.

What most entrepreneurs do is “fall in love” with their own ideas and fail to recognize the consumer market’s problems/needs. The lean canvas follows nine sequential steps to craft and test a feasible business model on real clients that ultimately leads to building a sustainable product.

Team Tomai was terrific at staying within this framework and taking the business model one step at a time. Here is how their plan unfolded based on the Lean Canvas methodology:

1) Problem: Children that go to school in Tomai only receive 15 minutes per day to eat lunch, leaving them hungry, tired, and unhealthy. Most of their parents work abroad, have busy schedules, or do not take the time to make their kids a packed lunch before school. Instead, they hand them 10 lei (75 American cents) to buy a snack. Most of these kids use their allowance to buy an oily, fattening pastry stuffed with meat called “chifre” or a bag of chips.

2) Customer Segment: First to fourth graders are served lunch by the school. Fifth to twelfth graders are not. The latter became the target market to serve for this problem as they carry 10 lei to school each day and have few, underwhelming options for lunch on a daily basis.

3) Unique Value Proposition (UVP): The UVP is meant to transform the unassuming prospect into a customer. A clear and precise message will allow the customer to understand the benefits that the eventual solution will deliver.

The team came up with, “Te simți energetic, plin de viață, și satisfacut în timpul scolii.” (You feel energetic, full of life, and satisfied during the school day.)

4) Solution: In order to solve the problem, the team decided to create a small bagged lunch filled with healthier options: a cup of oatmeal with dried fruit, an apple, and a small piece of chocolate that would be delivered in a horse carriage outside of school. They called the product/service, “Caruța cu Mâncare” (The horse carriage with food).

PCM

This is the marketing material designed by the team.

5) Channels: In order for the product to be profitable, a clear path towards customers needed to be determined by Caruța cu Mâncare. The team pinpointed three strong channels to target: informing students in-person with the product outside of the school, by communal word of mouth (and formal presentations at school), and via social media. Placing posts through the local newspaper for free was also an effective mode of communication selected by the team.

6) Revenue Streams: Pricing the product/service offers two items for the buyer to consider, quality and its relative position to the competition. In pricing the packaged lunch and selling it in front of the school, the team priced its offering at 10 lei. Surely a student could purchase two meat pastries or two bags of chips at the same price, but the option is unique given its contents and availability only steps away from the school’s entrance. What the team realized through this exercise was that they were not only selling the healthy bagged lunch, but also convenience.

Targeting 200 of the 400 students per day * 5 days per week * 10 lei per lunch = 10,000 lei in sales revenue per week

7) Cost Structure: Fixed and variable costs were then calculated.

SC

The team’s costs totaled 5,000 lei per week giving them a weekly profit of 5,000 lei per week.

8) Key Metrics: The main success indicators of Caruța cu Mâncare were the number of bagged lunches sold (key action), a minimum of 20,000 lei in monthly profit, and to improve the health and academic performance of their town’s students. These three metrics were to be verified at the resolution of each month.

9) Unfair Advantage: This was one of the trickiest elements for the team to discover. Was their product unique or difficult to imitate? Building strong relationships with local fruit and grain producers in Moldova, especially in the rural areas, is challenging. Our group, however, understands the rural consumer better than most. With advanced knowledge of the product, a strong/committed team, and a closely-knitted distributor network, the team felt well prepared to fend off competitors and expand to more local towns after dominating its primary market.

When the group finished its Lean Canvas, they were then asked to build a testable model of their product otherwise known as a Minimum Viable Product (MVP). Then, they went out into the streets of Chișinau and began presenting their offering to potential consumers for measurable learning. The results, both positive and negative, were invaluable to the team in re-evaluating its current offering. The majority of pedestrians on the streets and townspeople surveyed via social media endorsed the idea and were ready to pay cash on the spot. Those that did not mentioned that the team needed to make minor adjustments: a.) to provide nutritional information on the packaging and b.) to reduce the serving size of chocolate.

MVP1MVP2

After testing the MVP, modifications were made to the Lean Canvas in advance of the final pitch to the competition judges. I asked that Ana, our strongest team player, present the product (wearing red in the picture above). She agreed and I provided her with storytelling coaching for the judges. I informed her that all of the nine elements of the Lean Canvas must be involved. We practiced her pitch repeatedly Sunday afternoon, performing five dry runs.

She spoke about the hardships of living in Tomai. Ana does not eat breakfast, she has a bag of chips for lunch, and returns home for dinner tired and hungry. All of her classmates do the same. I could not help but feel sick to my stomach during her speech. Hearing the truth in her words was surreal and reminded me of where I was currently standing, which can get clouded after being in Moldova for so long. She spoke with conviction and it choked me up during our practice session. I knew she would be masterful.

As our presentation neared, I noticed that Ana began wiping her hands with a napkin and looked visibly nervous. Mirela, who was asked to direct the PowerPoint, begged that I signal to her when it was time to switch the slides. I could tell the group from the small town of Tomai had been shaken after watching the other group presentations.

As their mentor, I was in Ana’s ear the entire time:

“I love your idea.”

“Our business model is incredible.”

“Your story is great,” I told her.

As our team presented its plan, a few audience members snickered at the business concept. A horse carriage serving lunch does seem quite backward in our innovative and high-tech driven world. But the team owned it. They owned who they were. They owned were they were from. They stuck to their plan and delivered with confidence.

The presentation went amazingly. I gave the team a thumbs up from the top of the steps as I was highly interested in what the judges would ask them. The main concerns they had were profitability and scalability of the product. The team referred back to its budget and mentioned that the plan would involve extension into other rural villages throughout Moldova. The panel, uncertain, offered their parting words and, after two more presentations, gathered to select the winners.

After a half hour of debate, the judges came back to the lecture hall and presented their winners.

“In third place… Caruța cu Mâncare!” announced the judges.

Our team jumped in the air with their hands waving high. All of the team members began hugging each other as I watched them from the bottom of the stage. I felt numb in that moment watching them celebrate. To witness a group of kids from rural Moldova excel at building a Lean Canvas and then place third against solid competition left me with feelings that cannot be placed into words. In the United States, it would be equivalent to a group of inner-city kids with limited resources competing against privileged children from the richest suburbs. Tomai vs. Chișinau is David vs. Goliath.

I was elated for the team. They won a couple of entrepreneurial books translated into Romanian and a big white board with dry erase markers to continue developing business ideas upon in the future. Greater than prizes was the team receiving an invaluable educational experience, and, most importantly, the respect of their peers.IMG_4952

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One thought on “Thinking Inside the Box

  1. Pingback: How to Utilize Facebook in Moldova | Southeast Dispatch

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