Hatching innovative startups
By Irene Kim
Startups seeking help in solving a tough business challenge look to BR Incubators, the Johnson School's student-run consulting service.
Faced with intense competition and declining profitability, Fingerlakes Aquaculture of Groton, N.Y., a producer of farm-raised tilapia, needed help in tackling the challenge. They turned to BR Incubators and engaged a student consulting team to work on their branding and marketing strategy. Student consultants Jaspreet (Jazz) Singh and Becky Karp, both MBA '08, gathered the essential data by querying chefs, consumers, and industry experts, combed through U.S. Census and industry reports, and visited the client's site to determine what differentiated its product and process.
"We mapped out the characteristics of the target consumer segment, including eating preferences, buying habits, and demographics," says Singh. Team members discovered that the high quality and local, organic production of the client's product resonated most with consumers. They also found a promising new target segment and used industry reports to quantify potential sales.
"The analysis and the recommendations helped the company develop a marketing strategy to target new consumer segments in existing markets, and solidified their growth strategy by identifying potential demand in new target markets," says Singh.
How BRI works
Essentially a student-run boutique consulting firm, the Johnson School's BR Incubator (BRI) provides targeted consulting to early-stage businesses while providing hands-on experience to MBA students. For five years, BRI has helped fledge some of the most promising startups. "That includes help with brand and positioning strategy, customer and market assessment, financial modeling, and sometimes supply chain and technology commercialization," says Brent Pycz, MBA '08, BRI's director of human capital.
The incubator's six student directors are second-year MBA candidates, most of whom were consultants in their first year. "The great thing about being a BRI director is that you not only learn about consulting to early-stage companies, but also how to manage a relatively sizable consulting organization," says Professor Lars Bengtsson, BRI's lead adviser. "The directors recruit consultants, match projects with consultants, and basically fully manage the process."
For each client, the directors assign a two- or three-consultant team, drawing from BRI's 45 student consultants, mostly first-year MBA candidates, plus a few students from other areas of Cornell. "We pair up strengths and weaknesses from the different consultants to put together a team that will best serve the client's needs," says Pycz. "Non-Johnson School students can provide useful expertise in a specific technical field, such as agriculture or IT," adds George Dougherty, MBA '08, BRI's director of operations.
"We tend to focus on startups that already have a very solid business plan and some sales, hopefully, and we offer strategic advice and guidance to take them to the next level," says Chi Tony Tang, MBA '08, BRI's director of business development. This has been BRI's approach ever since it was launched.
Take, for example, one of its first clients: Tetragenetics, a producer of genetically engineered proteins. "BRI consultants' input was really useful in understanding the markets associated with our business [including vaccine producers and biopharmaceutical companies], and some of the opportunities and obstacles associated with breaking into these markets," says Ted Clark, Tetragenetics' chief scientific officer and associate professor in Cornell's Department of Microbiology and Immunology.
When assessing applicants, BRI's six directors also consider timing, because BRI's consultants must be able to wrap up their engagements during the academic year. "The ebb and flow of the project has to be such that it is realistic for students to complete," says Tang.
BRI charges $150 per consultant, so clients pay $300 to $450 for an engagement. "The students have great enthusiasm and access to a wealth of materials - and the cost to the client is much lower than for a professional consultant," says BRI faculty advisor Randy Allen, associate dean for Corporate Relations and the Johnson School's Consultant in Residence.
A proven track record: BRI deliversThe following case summaries give a clear picture of what BRI consultants do for clients:
Better service at a better price
Company X, a salary negotiation coaching service, was getting a lot of site visitors but few paying customers. Consultants Chi Tony Tang and Vinay Chandran, both MBA '08, faced a daunting task: figuring out why its business model wasn't working.
Delving into a benchmarking study, the BRI team found several key weaknesses. "Most competitors either had more competitive rates or billed on an hourly basis; offered other career services in addition to salary negotiation; used more-aggressive marketing tactics; and had a 'stickier,' more interactive and professional-looking Web site," says Tang. He and Chandran also surveyed students at the Johnson School and other business schools to find out what might make Company X's service more compelling.
As a result of their investigation, Tang and Chandran recommended that Company X keep its focus on salary negotiation; shift its attention away from older, higher-income customers and toward graduate students; consider some price decreases; streamline its Web site and add more interactive content; and focus on segments with the highest growth potential, including prospects in the southern and western United States and in the management ranks in the transportation, professional-services, and educational-services industries.
Shifting focus: A new product and pricing strategy
ADD/Ware Development Systems (Ithaca) engaged BRI to help with its product-release strategy for a new software program. "We initially thought the product would be sold for a one-time fee with a small ongoing support and maintenance cost," says ADD/Ware president Michael Addario. The pricing model assumed the product would be installed at the customer site and operated internally on the customer's intranet.
But BRI's competitive research found that this setup wasn't optimal. ADD/Ware changed its strategy to deploy the software as a hosted service from the ADD/Ware site, charging customers a monthly service fee. While the software had to be modified to address security issues, says Addario, "this ultimately provides the customer with better service."
Big challenges; bigger impact
With a startup, nothing is set in stone - which can pose a challenge. "In many cases, the startup is moving faster than the students, so things keep changing," says Allen.
At times, a BRI team may initiate a change of direction. One recent client, for instance, developed an Internet browser toolbar to "unclutter" busy Web pages, initially targeted for elderly Internet users. Based on the BRI team's findings, however, the client decided instead to target industrial clients who conduct Web-to-Web transactions. The industrial users would be willing to pay for the service, while elderly users might not, says BRI marketing director Daipayan Bhattacharjee, MBA '08. "Now there is a change of focus, and we'll have to redo our research specifically for this new focus."
Having such a large impact on a company is exciting, says Dougherty. "If you're consulting to large companies, for instance, you're generally not going to do a consulting project that's going to completely turn that company around; but with these small companies, you may find there's a huge market out there that they weren't even aware of, and your findings can change their entire strategy." That kind of impact can be quite impressive to prospective employers.
As with many Johnson School programs, the hands-on nature of BRI is what draws many students. "When I was looking at business schools, BRI really attracted me because it took you out of the classroom and gave you that practical experience," says Pycz. "It's the sort of program that you wish every student could get exposure to."
"In our first year, we definitely got good experience as consultants; but in our second year, we are grooming students to be consultants themselves," adds Bhattarcharjee. "We're giving back to the school - and to the Cornell entrepreneurship community as a whole."
A wide entrepreneurial array
BRI is part of the Johnson School's Entrepreneurship Triad, which also includes venture-capital organization BR Ventures, and the legal arm, BR Legal, offered in conjunction with Cornell Law School students. The three organizations will sometimes refer prospective clients to each other - for example, if an applicant to BRI turns out to be too nascent for the incubator's services, BRI can refer the client to BRV for help with writing a business plan.
Some clients avail themselves of the services of multiple BR Triad organizations - and even more organizations within the Johnson School community. For instance, Ted Clark, founder of Tetragenetics, a producer of genetically engineered proteins, first came into contact with students in the Entrepreneurship and Private Equity immersion, who helped him formulate a business plan. Clark then engaged a team of BRI consultants -Johnson School students Brian Machinist and Andres Trivelli, both MBA '04, Josh Friedlander, MBA '05, and then-CALS student John Reilly, MBA '08 (E) - to help identify and quantify Tetragenetics' potential markets. Through working with BRI advisor and senior lecturer of entrepreneurship Zach Shulman, Clark became aware of BR Legal, which he credits with providing "extremely valuable legal advice at very low cost before and after we established the company in early 2004."
Tetragenetics' association with the Johnson School didn't end there. Former BRI consultant Reilly became Tetragenetics' director of business development shortly after graduating from CALS in 2005. Finally, he returned to the Johnson School for the EMBA program, which he completed in 2008.
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