Effectuation Stories

          Case studies, lessons and stories about Effectuation!

          Persist Easy; Swerve Hard - The Story of EasyAuto

          Snarly Problem

          The city of Bangalore India has over 200,000 three wheel autorickshaws short distance open taxis that provide critical transportation in a metropolis of 6+ million inhabitants with no metro or underground rail system. Efficiently ferrying both people and goods, these simple machines challenge the urban environment. Their entrepreneurial drivers cruise the edges of the streets eagerly soliciting passengers, choking traffic and adding smog to an already congested city. Meanwhile, frustrated businesspeople, merchants and families await rides in other locations without a free autorickshaw in sight.

          Smooth Solution

          So when the commissioner of traffic police approached Padmasree Harish, an entrepreneur and self-taught web designer, to build a software system that would connect available autorickshaws with waiting passengers, she saw both a natural answer to her city's problem as well as a good business opportunity. The system would receive SMS messages from drivers indicating location and availability, and calls from passengers with location and interest. The queue would match passenger with closest autorickshaw and dispatch the vehicle to the passenger. Harish could charge a setup fee for each driver, and a small fee for each fare her system connects. All she had to do was let the software do the work while the rupees roll in. And so in 2007, EasyAuto kicked into gear.

          Hard Stop

          In theory. In practice, the system never got beyond the rave press write-ups of its potential after the announcement of the initiative. Leaving Harish with a software system she and her team had spent six months developing, a call center filled with people hired to take calls from passengers, a tech team ready to roll out the system, extra uniforms for the drivers of the spruced up rickshaws and even 50,000 rupees worth of coolers and inventory from Pepsi for in-transit sales and additional revenue. The bumps in the road seemed never ending. Drivers were reluctant to pay a setup fee and were unwilling to send SMS messages with their current location. But the unseen pothole that derailed Harish was regulatory. It turned out that the traffic commissioner who initiated the project did not have permission from the branch of the bureaucracy that oversees autorickshaws, and the entire project was brought to a screeching halt.

          U Turn?

          Harish's inclination was to return to her profitable web hosting and design business leaving physical traffic to someone else. But her personal cell phone was one of the three numbers provided in the EasyAuto announcement for passengers to call an autorickshaw on demand. And whenever it rained, as it often does in Bangalore, Harish would get 200-250 calls. The market had her number and simply would not hang up. But when does tenacity become foolishness? And how does an entrepreneur know when to quit?

          A New Route

          Harish started looking for workarounds. She took courses in entrepreneurship so she could get others chewing on her problems. She actively observed every autorickshaw she rode in and then some. In one she saw an advertisement. She saw taxis with GPS units. Nearly every web site she saw offered services for free to end users, but made money from someone else. So when the head of transportation came back to her in 2009 and asked her about getting EasyAuto going again, she was ready to say, "Yes, and"_."รน. She had learned what to negotiate for. Yes, and"_The approvals had to be complete before she would spend a rupee. The autorickshaws would have to be equipped with units containing LCD screens showing promotional videos and GPS units for precise location information. The video would be funded by a company that builds the autorickshaws. The drivers would receive compensation for signing up with EasyAuto. The GPS and LCD hardware would be provided by the manufacturers in advance with payment once the system started generating income. The call center would be outsourced to a firm willing to set it up at no charge. Absolutely everything would be upside down from her first try. Harish had left behind the choice between the straight road of persistence and the sad U-Turn. She had learned to swerve hard.

          Enduring Logic

          Conventional wisdom describes the doggedly determined entrepreneur, enduring in the face of adversity. But a closer look reveals an unexpected combination of persistence and flexibility. Persisting hard in a solution can be counter-productive and even end in despair. But hard-headed flexibility may transform the problem into an opportunity that attracts unexpected shareholders. Especially when problems persist, entrepreneurs need to be able to swerve hard to co-create new answers that can form the basis of new firms, new products, new markets, or even that unlikeliest of novelties ? smoother traffic flow in Bangalore.

          Written by Stuart Read, professor of marketing at IMD and Saras Sarasvathy, associate professor of business administration at the University of Virgina's Darden School and also available at Business Life.

          British Airways Business Life
          Stuart Read

          PDF 50X50-1BABL EasyAuto

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