Archive for May, 2009

Social Enterprise or Not?

May 30, 2009

A social investor spoke to us at out mid year meeting in Hyderabad about his investment philosophy. He said that his firm was looking for high growth companies in the social space and that the key metric of social impact would be something that would be measured by the investor. He mentioned that he did not want to burden the company with this metric.

I found this philosophy quite interesting because often the greatest social impact comes from a company that is not really thinking of social impact. Take for example the growth of the mobile phones in rural India. Saturated urban markets forced companies to go rural and rapidly a huge section of the population is now “connected”.

Does it really matter if your investment is a social enterprise offering an affordable and valuable product or service versus an enterprise that offers an affordable and valuable product or service?

Probably not.

However, there are some risks associated with unburdening a company of it’s social mission. On a day-to-day basis, the pressures of meeting revenue targets and achieving profitability (and therefore sustainability) can often force companies to pursue higher margin market opportunities that may eventually dilute the organization’s social mission.

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Travels thru’ India – Sweatshops & Workers

May 29, 2009

In the past 7 months, I have had the opportunity to visit several industrial parks in the two most industrialized and entrepreneurial states in India, namely Gujarat and Maharashtra. I would like to share some of my observations with you.

Most of the industrial parks house small manufacturing units that employ anywhere from 15 to a 100 people. All sorts of plastic and mechanical components are manufactured here which eventually are sold in domestic and international markets.

There are three types of employees, adult men, adult women and teenagers. The men tend to do the work that requires more brawn, like lifting heavy parts or working near furnaces and the women and young teenagers are mostly involved in finishing operations like cleaning and packaging.

The machines used to manufacture these components are often semi-automatic, much like an automobile line. Workers are needed to load and unload product at frequent intervals. The employees are semi-skilled and for their efforts they receive approximately Rs.100 to Rs. 150 a day for men and Rs. 80 to Rs.100 for women. That’s approximately $2 to $3 per day. There are 2 shifts, each lasting 12 hours with two ten minute breaks for tea and 30 minutes for lunch. There are four off-days a month.  Some of the workers are migrants from the more impoverished states of India and often sleep in the same factories where they work.

Most of the units are covered with a layer of black grime, a combination of dust, oil and some unknown substance. Chemicals are strewn all over the place and the air in these factories feels heavy with fumes from machines.

This is not a scene from a Dickens novel, but is in fact the real status of a majority of small scale manufacturing sector in India.

I asked some of the workers how they manage to work for such long hours in these conditions. Their response is often a shy smile, a nod of the head with their fingers pointing towards their stomach. Yes, we all have to eat, an unfortunate necessity for existence.  Many of the migrant workers are happy to have a job where they can earn enough to support their families that are left in their home states.  They save assiduously and send home anywhere from Rs. 1000 ($20) to Rs. 1500 ($30) per month, critical funds that are needed to provide food and other essentials for their families.

The factory owners claim that they need to control costs in order to compete with cheap imports from China and that they cannot afford to clean up their factories or offer higher wages.

Sure, the workers could organize and demand better wages and conditions, but most of them are temporary workers and often do not have the wherewithal to launch a coordinated effort. Labor laws and workplace safety laws exist, but enforcement is a huge challenge mainly due to corruption and a shortage of labor inspectors in a country that has millions of such units.

Intellectuals are of the view that this is a part of industrial development and that every country goes through the sweatshop stage. They argue that businesses need to grow and gain profits that will enable them to pay more and maintain cleaner factories. Furthermore, a job today is much more valuable than none. I have been told that I must not apply my “first world” concepts at this point in time of India’s development.

What should we (i.e the development community) do about all this? Should we stick to our mandate of selling valuable products and services to the BoP and just ignore this? Can we try to influence governments? Can we insist that the products our social enterprises produce have to be manufactured in clean factories where labor laws are followed?

What are your thoughts?

The Hype Curve

May 28, 2009

hypecycle-thumb

The research firm Gartner developed the curve above, nicknamed the hype curve, to describe the lifecycle of technology product adoptions. The words at different points on the curve can be used to describe the feelings of  users as they get acquainted with the product/service.

Curiously enough, most of the stuff I do and the way I feel about them fits this basic curve (just ignore the tech words). For e.g my current thoughts on the social enterprise sector or my current job lie at some point on the curve.

Most importantly, it is a reminder that thoughts and feelings are transient by nature and that eventually equilibrium is reached, where expectations and reality are in sync.

Aha! – The poor are so smart!

May 16, 2009

If you happen to meet someone who recently experienced an interaction with the BOP for the first time, invariably one of the insights they would share is that the poor are really smart. I had this Aha moment in early 2006 when my work at Villgro (formerly known as Rural Innovations Network) took me to the villages of eastern Uttar Pradesh, a state in North India. It was the first time in my life that I was interacting with impoverished farmers. I was touring the villages to better understand the market for an Insect Trap, an innovation incubated at Villgro. The poor inhabitants of these villages, not only amazed me with their understanding on the variety of problems they faced but also with the sheer ingenuity of  some of the solutions they had come up with.

My work at Villgro took me to villages around India and I re-lived this aha moment many times over until I had a much bigger Aha!

What in the world made me assume that the poor are dumb?

Obviously, what I had heard from the villagers was, in most of the cases, just common knowledge for them. In retrospect, I had these big aha’s because at some level I was prejudiced with the assumption that poor people did not know what their problems are,  if they did know about their problems, they were not articulate enough and even if they were articulate, they were not smart enough to solve the problem.

Sometimes our prejudices have a stronger influence on us than we think.  It is shocking to find out that many a times our prejudices dictate our thoughts and actions in spite of what we think we strongly believe in. From my own experience, I know that overcoming these prejudices have gone a long way in making me much more effective at the work I do.

In the fight to end poverty, I strongly believe that overcoming our prejudices about  the poor is as important, if not more, as the different poverty alleviation interventions themselves.

May 16, 2009

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Mohammed Ishmail is an eleven-acre farmer who doesn’t need a broker to diversify his portfolio. Like his counterparts in the developed world who invest in various types of stocks and bonds in order to spread the risk on their portfolios, Mohammed does not put all his eggs in one basket. During the summer season, he plants 10 acres of cotton, a crop with minimal price volatility, and one acre of onion, a crop that is notorious for huge price fluctuations. The price of onion can fluctuate between PKR 10,000 to 300,000. Mohammed sees this as an opportunity to hit the jackpot. According to him, during a 10-year period, he will hit the jackpot five to six times. Not bad odds. An onion lottery… that is innovation

Do we have a goal for the human family?

May 15, 2009

I think I can safely assume that a significant  majority of us have a goal oriented approach to living our lives. We all have different and unique world views but most of us do some version of goal setting before setting out to achieve them. Personal goals, professional goals, individual goals, family goals, institutional goals, national goals, financial goals, philanthropic goals,  spiritual goals, fitness goals, travel goals,… the list goes on. We set goals because we understand the importance of goal setting.

If you are following this blog,  I can make another assumption that, you definitely believe in making this world a better place for all humans! But have you really thought about a goal for the human family? Do we have such a goal? If not, what are we all working towards? I believe that there is at least one such goal. Allow me to introduce you to The Universal Declaration of Human Rights.

I am surprised by the fact that many of us do not  know about the existence or the contents of this profound document (Full disclosure – I learned about the contents only about 8 months back when the Acumen Fellows read and discussed the Universal Declaration of Human Rights in detail.) The Universal Declaration of Human Rights was proclaimed by the General Assembly of the United Nations on December 10, 1948 as a common standard of achievement for all peoples and all nations.

I hope you agree that the Universal Declaration of Human Rights is a legitimate goal for all of us. If not we should use this forum to debate it.

If you believe in goals, you also know that one of the pre-requisites of achieving a common goal is that, not only should everyone involved be clearly aware of the goal, but they also know what is expected of them to achieve the goal. This goal is pretty straight forward – to achieve this goal, we not only have to know it and practice it but also try and ensure that every human knows about it and practices it.

Now that you know about it, do you think that everyone you know has heard about the Universal Declaration of Human Rights? If not, I would encourage you talk about this important goal more often.

When a Fellow Tweets in India,…?

May 14, 2009

Thought.  Sounding board.  Pilot.  Ditch.  New thought.  Tweak.  Ditch.  Revive and alter.  Success.  Oops, not so much.  Big lesson learned.  Next idea.  Sell.  Resistance.  Reframe.  More resistance.  Reposition.  Collaboration.  Pilot.  Improve.  Phase II.  What’s next?  This describes a typical fortnight for me at D.light.  The pace is unbelievable.   Our standard operating procedures are defined by risk, act, learn, repeat.

As my blogging has devolved mostly into short-storytelling, I had an Acumen-style a-ha that I should switch my main medium of reporting back on my fellowship year to Twitter.   When I learned that my mother was discussing my Twitter account with my ex-boyfriend at a family gathering in Potrero Hill San Francisco, I knew I had hit gold.  Concise, digestible, and an easy conversation piece for potentially awkward situations.   Its 140 character limit requires me to invoke the “zip it” rule, one of my favorite heuristics for survival as a Fellow.  Plus, Twitter fits the hectic nature of my day-to-day, testing low-cost ways to crack the nut of creating a new category and a new brand in the rural market in India, all the while struggling to find a reliable cab service and a decent glass of wine.  So, for those that are game to follow my fun and foibles in a new way, please check out HKinIndia

Also, I had a chance to chat with the fantastic 7th grade class the American Embassy School in Delhi, thanks to the kind invitation of teacher Elizabeth Namba (who I met at the kiddie pool at the American Embassy).   This has also become a great new partnership where D.light will help facilitate AES’ efforts  to sponsor a village in going solar.  More on that next time.

Trial by Fire…D.light Fellows Applicants Shine

May 14, 2009

D.light Design launched its global fellows program in February 2009 to better organize its human resources strategy to leverage the talent and energy of interns, volunteers, advisors and short-term staff to propel company growth. D.light is sharply focused on building out its permanent core team; we just made three significant hires into finance, manufacturing, and sales operations roles in the last couple of weeks . CEO Sam Goldman recently said that 50% of his time is spent on recruiting. However, D.light has also been fortunate and intentional in bringing talented “short-timers” – e.g. consultants looking for externships, MBAs on summer breaks, investors looking for a career change, and young professionals looking for start-up experience – into the company for three to ten-month stints. When we posted Fellows positions this February, we got an incredible response across positions and offices (China and India). We had 80 stellar applicants for the Business Development position in our India office alone.

The D.light culture is fast-paced and action oriented, so we structured our assessment process to be as experiential as possible. It was trial by fire. We wanted to assess candidates’ ability to think outside the box, apply creativity and structure to an unstructured business question, produce deliverables quickly, and present a concise and compelling point of view. Business Development candidates were asked in their second round interviews to prepare a presentation that could be used to pitch a new partner on a hypothetical solar loan pilot. Plus, they were asked to author a hypothetical, “guest” blog posting that would run on Sam’s SocialEdge blog 90 days later. Our final Graphic Design candidate was asked to spend two days in our Noida office and come up with a new in-store display unit that would build the D.light brand among peri-urban consumers and provide basic education about solar energy. She had to present to Sam and other senior managers at the end of her 36 hours. She’s now on board and we’re going to print in a week. We asked behavioral questions such as “if you had been working with an executive coach for the last three months, what would be the key issues you’re working on? What’s the toughest retreat you’ve ever had to make or hardest no you’ve ever had to give? Can you describe your ideal manager?”

After all of this, four superstars rose to the top as having the best fit in terms of skill, attitude and style for D.light India. These fellows design, strategize, envision, and execute. They speak French, Hindi, English, Spanish and Gujurati. They are artists and authors. They are social change evangelists and entrepreneurs. They are going to help D.light build a movement around solar energy. Welcome to D.light India—Anay Shah (Business Development – from Development Alternatives, Inc), Sana Rao (Graphic Design – from National Institute of Design), Mariette Fourmeaux du Sartel (Carbon – from Haas School of Business, Mauna Kea Technologies), and Jack Godfrey Wood (Product Design – award winning Industrial Designer, educated at Central St. Martin’s).

Innovations in the Field: Wheat ATM

May 14, 2009

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Zulfiqar Ali, a four-acre farmer in the small village of Dabri, Pakistan, doesn’t travel to his nearest bank branch when he needs some cash. All he has to do is open the door to a room where he stores his wheat crop and travel to the market. Unlike most farmers in Pakistan, Zulfiqar does not sell his wheat crop upon harvest. He realized that harvest season was the worst time to sell his crops due to a glut in supply. Zulfiqar stores his wheat crop and sells it one bag at a time, based upon when he needs cash. With each passing week, the value of his remaining wheat increases. A wheat ATM… that is innovation.

Joel Montgomery

Innovations from the Field: Natural Insurance Policy

May 13, 2009

The next series of blog posts will cover innovations from the field. Recently, I conducted some in-depth farmer interviews around Hyderbad and learned about some pretty interesting innovations that are happening on the ground. Keep in mind that these are not college-educated individuals; most have not even finished high school. What I saw was human ingenuity in its purest sense. At the end of the day, I found myself leaving inspired by their innovativeness and creativity.

Agriculture is extremely risky. There are so many things that can go wrong: bad seed, no water, pest attack, fake fertilizer, bad weather, no transportation to market, etc. Price fluctuations are also quite common. This means that a farmer may spend Rs. 25,000 (USD $315) or more on inputs (seed, fertilizer, pesticide, etc.) and land preparation (tractor rental, laborer wages, etc.) just to find out at the end of the season that the price of his crop is so low that he will make a loss. He borrowed money at the beginning of the season from an arti (money lender) at a rate of 120% annual interest and now is even farther in debt.

In Pakistan, most farmers grow two crops: cotton (summer) and wheat (winter). We always wondered why both crops were so prevalent and finally realized upon completing our interviews. Firstly, most farmers grow cotton and wheat because the prices are stable. It takes a lot of the guess work (and risk) from other types of crops that have more volatile prices. Secondly, farmers grow cotton and wheat because they don’t spoil. If you grow vegetables, then you must transport them to the market quickly before they rot. Cotton and wheat, on the other hand, can be stored for a long time and won’t go bad. Probably the most interesting reason for the traditional cotton-wheat rotation is that wheat is a natural life insurance policy. Farmers grow wheat and keep 50-100 munds (1 mund = 40kg) back to ensure that their families have food to eat during the coming year. Usually an average family needs around 50 munds per year, but they keep extra for festivals, weddings, and unforeseen circumstances. No matter what happens in