Posts Tagged ‘Social Enterprise’

Whose vision of serving the poor?

July 20, 2009

Does the vision of serving the low income segment of society extend beyond the investors and CEO of a social enterprise?

In my opinion, only an affirmative answer to this question will ensure that the vision of serving the poor is fulfilled (however long it may take…).  Watch what the team of doctors running AyurSEVA Hospitals has to say about their vision and motivation to work for this organization.

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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.

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.

If developing Social Enterprises is so tough then why are so many engaged?

May 8, 2009

I had many thoughts while attending the Sankalp Social Enterprise & Investment Forum last week, some are shared below. However, one particular comment made during a panel session remained in my mind, “By definition creating a Social Enterprise will be more challenging – it is where Government or NGOs have failed to have lasting impact, and the traditional private sector sees no viable business opportunity.” So the question becomes: if the task is so challenging, why are so many engaged? Because if attendance at Sankalp is any indication, many are indeed passionately engaged.

Although not the first conference focused on Social Enterprise and Investment, Sankalp 2009 was a first for me. Surprisingly, I found myself most excited not by any particular panel session or keynote address, but by the enthusiasm and genuine interest in the ‘space’. A year ago when I completed my MBA, I felt I was one of the only students talking about the power of market-based solutions to address social change. I also worried about career prospects for an MBA who wanted to work in this field. Attending Sankalp, despite a rough global economic climate, I felt the possibilities were widespread.

As part of the conference awards were presented to notable social enterprises. Many of the categories are ones you would expect to see: Education for All, Healthcare Inclusion, Agriculture and Rural Innovation, Environment and Clean Energy. However, it was within the catch-all category of ‘Highly Scalable Social Models’ that I found myself most engaged. The majority of social entrepreneurs here were working on income generation for the BOP or ‘lifestyle improvement’. The models were simple – for example, developing an online platform accessible by mobile to connect job seekers in the informal sector to employers. For maids, drivers, security guards, nannies, etc. this tool enables seeing which jobs are closest to home (min. travel cost), and most importantly which employers are paying the best salaries. The CEO of Babajob, Sean, used the example of two nannies working down the street from each other…one could be making $20USD/month, while the other earns $160. An online platform forces much needed transparency into the system. What I like best about income generation models is that they seem to answer an inherent “want” that exists for those living below the poverty line, vs. assuming what they “need”. Monitor Inclusive Markets talks about the importance of distinguishing between ‘wants’ vs. ‘needs’ at the BOP in their recently released report, Emerging Markets, Emerging Models. Knowing how difficult it is to change behaviours and attitudes, it makes intuitive sense to work on developing social business models that build on what the lower income communities want. I believe this is necessary to ensure scalable impact.

I have not yet found my answer to why so many are engaged in the Social Enterprise space despite the challenges. For myself it is because I see opportunity to create powerful and lasting social change.

Social Enterprise is HARD to do

December 23, 2008

Starting a business is hard enough, but starting a business that has a social focus is even harder.  For Micro Drip, we are still very much working to refine our business model so that we can successfully sell to the Base of the Pyramid (BOP) here in Pakistan, those who live on less than $4/day.  For Micro Drip, one of the most difficult challenges is that we can have the greatest low cost, high quality drip irrigation system in the world, but ultimately success for a farmer depends on much more than our system: microfinancing, stable water source, good seed, fertilizer, storage, know-how, distribution to markets, etc.  As a result, we cannot simply sell our system off the shelf; we have to think about ways to directly and indirectly (through partnerships) address the problems that come before and after our product. 

A second difficulty that we face is the seasonality of our product.  There are two growing seasons in Pakistan each year with most farmers growing cotton during the summer season and wheat during the fall season.  Unfortunately, drip irrigation cannot be used with wheat given the density of the plants/acre.  Vegetables can be grown during both seasons and offer much higher prices, but the lack of storage and access to markets forces many farmers into cotton and wheat, which are more stable with much less risk of going bad. 

A third difficulty that we are tackling is how to motivate local sales reps in the communities that we serve.  CEMEX, a Mexican cement company, has successfully mobilized a large network of local promoters in its program Patrimonio Hoy, which helps clients who make between $5-$15/day to save money for do-it-yourself home improvements.  While there are some successful models out there, many social businesses are struggling with this issue, as it is often difficult for local sales people to make sufficient income selling a single product.  Where sales channels to the BOP already exist, it is much easier for existing sales people to add additional products to their offerings.  Unfortunately, we are not aware of any other sales channels that reach our target market that would be willing to add our systems to their existing portfolio.

In spite of the challenges, we are committed to bringing irrigation solutions to the poor farmers of Pakistan.  Drip irrigation increases crop yields by 30-100% all the while decreasing water usage by 50-70%.  This translates into more money for poor farmers and ultimately has the potential to free farmers who are imprisoned in debt and a subsistence life.