In our contribution to Enspace, The Entrepreneurship Magazine at IIT Bombay (India), Yash analyzes the sustainable business models of a number of promising start-ups in Nigeria, Mauritius, and Uganda.
These are interesting times. And entrepreneurs in particular like such times. Crucial challenges and enabling innovations exist in our markets today- unaddressed or maybe to some extent stymied by the prevailing market order. Among the many challenges staring at us today include the ability to sustain economic growth, alleviate poverty, battle rising commodity prices and address climate change. Alternatively, among the many innovations that have come up include completely new ways in which humanity is connecting now through social media, the advances in clean technologies and low cost-market disruption technologies.
These factors beckon a complete reinvention of our market order. What is perceived as ‘value’ in the market will also undergo a change. What will not address the most pertinent challenges facing our society will not be seen as valuable as the ones that do. We’re already talking about a system where ‘value’ will be determined by how a company performs under the triple bottom-line concept- People, Profit and the Planet.
One small company in Nigeria, KXN Nigeria exemplifies the concept of the triple bottom-line. Nigeria is among the last few countries that have not been able to eradicate the polio virus in the country. An important reason for this is the fact that Nigeria’s rural areas are poorly connected with electricity supply. Many of the vaccines that are dispatched for rural vaccination centers for children are spoiled enroute due to extreme heat conditions that exist in the country. Even the areas which are connected with electricity do not receive round the clock electricity. KXN Nigeria introduced solar energy powered refrigerators to remedy the situation, in effect enabling vaccination of 4.6 million kids. The facilities were also used to store vaccines for other life threatening diseases. KXN’s solution created value for the people, for the planet by employing clean energy and profit for the company and provided solar energy services in a region where clean energy expertise is scarce. Today KXN also serves oil companies and engineering firms in the region.
ToughStuff is another company running a similar enterprise in Africa. Millions of villages in Africa descend into darkness with the sunset and while a few people have access to mobile phones but even they struggle to charge them without electricity. ToughStuff has brought forward a solution to such problems. They have created solar power based solution for lighting, mobile charging and radio sets. Its path breaking ‘Business in a box’ program provides rural people with $9 kit which could be used to run a lamp, a mobile charger and a radio using solar power. ToughStuff has sold over such 140,000 kits. ToughStuff’s retail model consists of small village level entrepreneur who raises money from local people, NGOs, microfinance institutions or individual ToughStuff customers to buy such kits for the village. A village level entrepreneur may further rent these units.
Yet what is social entrepreneurship remains open to interpretation. For some social entrepreneurship is about building enterprises that aim primarily to create value for the society and are not ‘for profit’ ventures. Still others consider ‘for profit’ ventures who also some social value as social enterprises. There is a seamless spectrum of enterprise -stretching from the for profit enterprises aiming-to maximize share holder returns at one end to those at the other hand aiming to maximize the social benefit for the society. Throughout this gradient those models that are also creating significant and perceptible social value can be safely termed as social enterprises.
Many successful social enterprises have profitable models built within their overall ‘not for profit’ architecture. Such components allow these organizations to sustain themselves. Water.org, a non-profit working to provide safe water for last 20 years has provided watercredits or soft loans to communities to build water provision infrastructure. Women groups who are the primary recipients of such loans repay these loans back which are further used to extend watercredits to more communities. The entity has till this day mobilized $5 million financing from commercial banks.
The Living Goods a not for profit organization operating in Uganda has a network of door to door salesman/woman who make their living by selling medicines and personal hygiene products at cheapest prices possible. The network salesmen and saleswomen make nominal money through the sales of such products. The model aims to cut down costs by eliminating the middle men and buying medicines at cheap rates from manufacturers by leveraging scales. Further it spends time in procuring from the cheapest manufacturers and provides the smartest possible option for a given ailment and then provides the same solution to the customers. Its five year goals are defined by their social impacts and not revenue targets: Reaching 4-5 million people and cutting child mortality by 15-30% in the communities it operates.
Ultimately what a social enterprise achieves is not defined by what form it can take but what goes into the DNA of the enterprise. Some of the most impossible looking social engineering goals have been achieved in the most unfavorable environments and social entrepreneurs can learn a few lessons from such examples. The most pertinent one that comes to mind is one of the oldest social entrepreneurs in the independent India, Vinoda Bhave. His Bhoodan movement achieved land reforms what no government of Modern India with all measures- such as regulatory, administrative or financial- at its disposal could achieve. Bhoodan movement secured voluntary donations of 5 million acres of land from the wealthy and powerful across the length and breadth of country to be distributed to landless labourers. As Bhave walked across the country in minimalist Khadi and wooden sleepers, this is what Bhave had to say to the landlords to request them to make voluntary land donations “I have come to loot you with love”. It perhaps sums up the collaborative spirit of Bhave’s movement. It also in particular focused on people’s participation and unwavering focus on its social goals. If one were to look at Wikipedia, it has similar lessons to offer- people’s participation, collaborative spirit and unwavering focus to keep Wikipedia as a non ad-supported, unmonetised format.
Perhaps when one man’s idea becomes everyone’s idea, it multiplies the ability of the social enterprise to succeed.
As contributed to Enspace, Vol. VI, Issue I (2011), The Entrepreneurship Magazine at IIT Bombay, India – by Board of Innovation