Saturday, August 16, 2008

Business unusual, yes, then what?

In October last year, I had begun my search for a grad project and sent out feelers to different people, when one of my faculty came back with a interesting lead. 'Would you be interested in working with Corporate X to understand how to bring renewable energy based light to the poor?', he propositioned. 'The focus is Africa', he added as an afterthought. I agreed faster than you can say Africa!
Corporate X knew from experience that this was not business as usual. It was tough sell even within the corporate kingdom, as most were not convinced by their enticing, 'We can make billions of dollars', kind of motherhood statements. They had some idea of what they were up against, geographically scattered 'customers', no real organized channels of distribution and the limited ability to purchase durable goods. Yet, most within the core project team wanted to make a difference by replacing dangerous kerosene lanterns and candles with a sustainable alternative. They also realized that profit may not be the driver in this venture and that they must have a longer-term vision for their involvement in this business. Corporate X, the MNC with a tiny team of social enterpreneurs?
So far so good.
'Lets get some real customer stories', the first step towards their lofty goal. A flurry of interviews, focus groups, house visits and field trips followed. 'People love our lights'! 'It is just what they need!' 'Get some products out there for testing!', were the thrilling first results. The mood in the corporate is buoyant, the management is pleased and the steam train is rushing ahead.
This is great, isn't it? Or is it?
Let me outline both sides of story and let you decide whether they will succeed or not.

Yes, Corporate X, indeed has the power to source, scale and supply millions of better products. They have the ability to set quality standards, educate their customers on usage and maintenance and help support local manufacturers and non-profits as partners in this venture.
Solar lanterns save money in the long run, are inherently safe and have the ability to provide brighter light. Installing community flood lights can cause a dramatic drop in crime levels in the area, making it safer for women and children to venture out at night. People liked the products they were shown and indicated they were willing to pay x amounts for it. They also hope to generate employment by empowering women enterpreneurs to act as agents within the community.
The company can customize their business plans and products to a certain degree for different countries or regions by getting community feedback for various plans. Considering the business structures of Corporate X, they need to scale up for this venture to be interesting to them in the long run. To scale, one also needs templates that can be applied in different situations, perhaps with small changes depending on culture.

On the other hand, Corporate X went in with a pre-determined idea of the people needed and the technology that could solve their problems. They asked the questions they thought were important and heard the answers they wanted to hear. Customer input was more a means to validate their own assumptions and ideas than to have a dialogue with these people. Perhaps, if the people around the table were citizens, setting their own agenda, rather than customers, we would have a very different picture. Perhaps they might have worked on promoting safer use of the 'big, bad' kerosene for both cooking and lighting? We don't know because we never asked.

Corporate X makes lighting products. They see an unfulfilled need and are looking to reach out to these people by selling them better products. Isn't that enough?
Or was the whole 'fortune at the bottom of the pyramid' a myth, when what may be needed really to address poverty cannot be scaled up and mass produced? A citizen movement and not a customer base?

The big question, are they likely to succeed with the current venture? (Write in quick, needed for thesis conclusion!)

5 comments:

g said...

so in my opinion business models addressing social causes can definitely be replicated in places that they were not originally designed for...but starting with a set solution that worked somewhere and then trying to adapt it to the local needs creates the problem. citizen participation on the other hand can change the very way we define our problem...and hence affects the solution.
corporate x right now runs the risk of finding out that even though their customers might pay x amount for product a, they might have payed a lot more for product b that would help them solve the same needs , plus another that they never thought about because it was particular to this local culture ( and which corporate y did..and has now made their product redundant )...and this is not even about their failure in engaging citizens..this is about not knowing your customers. social enterprises are like any other business enterprise in this aspect. a case of citizen participation would have been if their customers were not just the beneficiaries of the new system but also allies or partners in the creation of the solution and had a stake in it. had corporate x based their system on citizen participation, not only would they have reduced their risks of failure but also created loyal customers and participants and real social value. as to scalability of such a model...the way i see it is to identify the parts that need to be replicated as it is and those that need to be flexible.

Ambika Sam said...

Thanks, gauri:)
Assuming if people were given a stake in the system and had co-designed the solutions, would this process would have to be carried out time and again? Because that eliminates templating, but makes the process of scaling up, virtually impossible for the corporate. I was thinking along the lines of flexible templates too, but it looks like the best they can do is offer a choice of products to their customers and try out a variety of business models. And live and learn.

g said...

you are right ambi, a portfolio of different options would certainly reach a wide number of people...but let me rephrase my last comment to include that...citizen participation can be cultivated not just in designing the solution but also by encouraging customers to innovate around your product...( reminds me of the lasi churning washing machines:)...guess its time for new post ...platforms...hey howz the thesis coming along?

Ambika Sam said...

it definitely is time for a new post! will get aparna to post...thesis has taken backseat thanks to mounting pressure from corporate x with the final presentation deadline coming up:(

aparna said...

Firstly, the replicability or templating across countries is impossible !
However, keeping target groups constant, fixed 'parameters' that are a prerequisite for the success of the system, then templating within a country is (should be) feasible.

I agree, community participation is very important. Another point is the stage at which different stakeholders participate/have a role.For example;community participation is most crucial in need/problem defining phase (ideally through the entire process), corporates should participate at a later stage,if they can suitably contribute to the solution. In the case of MNC's, their early presence or initiation by them, we risk misinterpretation or misdefining of needs to fit what the corporate can offer. What they offer need not necessarily be the best solution for a given demand.
However, in the instances where there is a good fit, the needs of people will be met,the MNC's do have a lot to offer, and yes, the MNC's would profit from selling to BOP :)