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Destination Dhaka
Kornelius Thimm, an MBA student at IMD, takes an elective course in Bangladesh, and learns that the countrys future lies in protecting the industry of its past
Jan 21st 2010 | From The Economist online
It sometimes seems as if the financial crisis has touched every aspect of my time at business school. Throughout my one-year MBA at IMD in Switzerland, I have engaged in countless discussions about bail-out programmes, economic-stimulus packages and restructuring efforts across all industries. But how does the financial crisis effect a country that was struggling before the crisis and that does not have the financial and economic backbone of America, Europe or China?
This was one of the questions that a small group of IMD students explored when we chose the Bangladesh elective course, led by Professor Jean-Pierre Lehmann. We travelled to Dhaka for eight days to better understand how the power of innovation in business models and technology can generate inclusive growth.
This was my first trip to Bangladesh, one of the least developed countries of the world. I had not expected that I would be so captivated by the country as well as the people and their positive attitudes in light of the challenges they face.
Arriving in Bangladesh the first discovery was that Dhaka is truly the rickshaw capital of the world. It seems that life in Dhaka is dominated by these elaborately-decorated vehicles. They are everywhere and transport everythingnot just people, but also goods like goats, fridges, five-metre-long bamboo sticks and anything one can imagine that can be sold. As much as they give flexibility and service, they are also the reason for many accidents and the permanent traffic jam.
I was also surprised to see thousands of small stores and markets on the bustling streets. It seems that every ground floor in Dhaka is used for several single-room stores with open fronts that are only closed a couple of hours late at night. These shops can range from workshops or pharmacies to beef butchers. The markets are spread throughout the city, covering streets, whole city blocks and sometimes several building levels. Similarly well-organised, stores for fresh foods have well-separated vegetables and fruits outside in the sun and potatoes and onions in the shade. Separate areas are reserved for spices and dry ingredients where the smells of thousands of flavours overwhelm the senses.
But how do these small-store businesses, in a capital city of 15m people, contribute to the development of the country? Are they relics of the past and unimportant in todays global markets? Or could these types of businesses support Bangladeshs economy by creating employment, developing the domestic markets and ultimately fighting poverty? For me this question boils down to whether their business models are sustainable and if innovation can help to develop and increase the output.
Which came first...
To find this out we looked at the development of agriculture. Based on a mostly fertile soil with good access to fresh water, this industry has been the backbone of rural Bangladesh and could be one of the emerging sectors in the future. Local companies like Pran Foods that invest in food processing and sales capabilities have benefited. Today Pran Foods is not only one of the largest FMCG companies in Bangladesh, but also exports processed products to more than 70 countries. Its suppliers, the farmers in rural Bangladesh, also profit from this constant demand.
In Lagalia, in the district of Gazipur, we visited a chicken farmer who also produces biogas. Most Lagalia farmers specialise in chicken and egg production. Jointly they have a daily transport of products to Dhaka where they sell to retailers and markets. And by collecting the chicken waste in an underground container, they generate biogas, which is used for cooking and to generate electricity. The remaining waste is then used as a fertiliser.
Gas for heating and electric power is still rare in the countryside of Bangladesh. These micro biogas plants are an innovative and sustainable way to bring development. The independence of infrastructure and development are central pillars to inclusive growth. But there are still many questions about how this idea can be brought to a larger scale. Who can invest in such projects? How can rural markets for gas and electric power be developed? Should the government or other stakeholders like utility companies be involved? Is this model sustainable or just the gap-filler until the national grid system is installed and stable?
After looking at these very different examples of small- and medium-size enterprises in Bangladesh the question, it seems, is not whether these are relics of the past and unimportant in todays global markets; it is whether the only sustainable development in Bangladesh is through these companies. The responsibility of governments and regulators is to protect and even support these businesses by giving clear guidelines that encourage further entrepreneurship and innovation.
Overall our trip to Bangladesh was enlightening, thought-provoking and a great first-hand learning experienceespecially after having spent so much of my time on the MBA programme visiting businesses in the developed world. After seeing the challenges of Bangladeshlike the negative effects of globalisation, regional conflicts and global warmingI am convinced that future leaders have to consider the global effects of their actions more now than ever before. Even more, these leaders should dedicate a certain amount of their time, money and influence to tackle these challenges. It is something I have made up my mind to do.
MBA diary: Destination Dhaka | The Economist
Kornelius Thimm, an MBA student at IMD, takes an elective course in Bangladesh, and learns that the countrys future lies in protecting the industry of its past
Jan 21st 2010 | From The Economist online
It sometimes seems as if the financial crisis has touched every aspect of my time at business school. Throughout my one-year MBA at IMD in Switzerland, I have engaged in countless discussions about bail-out programmes, economic-stimulus packages and restructuring efforts across all industries. But how does the financial crisis effect a country that was struggling before the crisis and that does not have the financial and economic backbone of America, Europe or China?
This was one of the questions that a small group of IMD students explored when we chose the Bangladesh elective course, led by Professor Jean-Pierre Lehmann. We travelled to Dhaka for eight days to better understand how the power of innovation in business models and technology can generate inclusive growth.
This was my first trip to Bangladesh, one of the least developed countries of the world. I had not expected that I would be so captivated by the country as well as the people and their positive attitudes in light of the challenges they face.
Arriving in Bangladesh the first discovery was that Dhaka is truly the rickshaw capital of the world. It seems that life in Dhaka is dominated by these elaborately-decorated vehicles. They are everywhere and transport everythingnot just people, but also goods like goats, fridges, five-metre-long bamboo sticks and anything one can imagine that can be sold. As much as they give flexibility and service, they are also the reason for many accidents and the permanent traffic jam.
I was also surprised to see thousands of small stores and markets on the bustling streets. It seems that every ground floor in Dhaka is used for several single-room stores with open fronts that are only closed a couple of hours late at night. These shops can range from workshops or pharmacies to beef butchers. The markets are spread throughout the city, covering streets, whole city blocks and sometimes several building levels. Similarly well-organised, stores for fresh foods have well-separated vegetables and fruits outside in the sun and potatoes and onions in the shade. Separate areas are reserved for spices and dry ingredients where the smells of thousands of flavours overwhelm the senses.
But how do these small-store businesses, in a capital city of 15m people, contribute to the development of the country? Are they relics of the past and unimportant in todays global markets? Or could these types of businesses support Bangladeshs economy by creating employment, developing the domestic markets and ultimately fighting poverty? For me this question boils down to whether their business models are sustainable and if innovation can help to develop and increase the output.
Which came first...
To find this out we looked at the development of agriculture. Based on a mostly fertile soil with good access to fresh water, this industry has been the backbone of rural Bangladesh and could be one of the emerging sectors in the future. Local companies like Pran Foods that invest in food processing and sales capabilities have benefited. Today Pran Foods is not only one of the largest FMCG companies in Bangladesh, but also exports processed products to more than 70 countries. Its suppliers, the farmers in rural Bangladesh, also profit from this constant demand.
In Lagalia, in the district of Gazipur, we visited a chicken farmer who also produces biogas. Most Lagalia farmers specialise in chicken and egg production. Jointly they have a daily transport of products to Dhaka where they sell to retailers and markets. And by collecting the chicken waste in an underground container, they generate biogas, which is used for cooking and to generate electricity. The remaining waste is then used as a fertiliser.
Gas for heating and electric power is still rare in the countryside of Bangladesh. These micro biogas plants are an innovative and sustainable way to bring development. The independence of infrastructure and development are central pillars to inclusive growth. But there are still many questions about how this idea can be brought to a larger scale. Who can invest in such projects? How can rural markets for gas and electric power be developed? Should the government or other stakeholders like utility companies be involved? Is this model sustainable or just the gap-filler until the national grid system is installed and stable?
After looking at these very different examples of small- and medium-size enterprises in Bangladesh the question, it seems, is not whether these are relics of the past and unimportant in todays global markets; it is whether the only sustainable development in Bangladesh is through these companies. The responsibility of governments and regulators is to protect and even support these businesses by giving clear guidelines that encourage further entrepreneurship and innovation.
Overall our trip to Bangladesh was enlightening, thought-provoking and a great first-hand learning experienceespecially after having spent so much of my time on the MBA programme visiting businesses in the developed world. After seeing the challenges of Bangladeshlike the negative effects of globalisation, regional conflicts and global warmingI am convinced that future leaders have to consider the global effects of their actions more now than ever before. Even more, these leaders should dedicate a certain amount of their time, money and influence to tackle these challenges. It is something I have made up my mind to do.
MBA diary: Destination Dhaka | The Economist
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