A Case Study on Rural Entrepreneurship


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A Case Study on Rural Entrepreneurship

  1. 1. A Case Study on Rural Entrepreneurship Work of RED, BITS-Pilani at Garinda Étude de casβ, Center for Entrepreneurial Leadership, BITS Pilani Keerthikiran.K, A.V.S Karteek, Saurav Neel Patyal, Apoorva, Mustafa. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  2. 2. INTRODUCTION India is the 2nd most populous country in the world and has 70% of its population in villages. Though the world is advancing towards urbanization, the resources are not increasing uniformly. The economic gap between the urban and rural sectors is increasing exponentially. Success of new economic trends such as microfinance and increasing number of companies in the rural sectors suggest that there exists a large untapped market at the bottom of the economic pyramid. In the current scenario, rural markets and self help groups have gained never before significance. Many institutes both profit and non-profit are focusing on rural entrepreneurship. Here is one success story of a student team, which worked with a self help group in Garinda. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  3. 3. TIMELINE ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  4. 4. Garinda is a hamlet near Pilani, with a population of around 500 families. It is cut out geographically, economically and in terms of exposure from the real world. The infrastructure, education and employment opportunities are inadequate. The nearest place from where the public transport is available is 4kms away. There is electricity for just 8 hours a day. The main source of income in the village is agriculture which is around 2000 INR per month. Most of the women in the village were employed in agriculture related activities, as this is seasonal. They were left with free time after their daily chores. This led NSS to start a self help group to help these women earn in their leisure time. The women in the village have a natural skill in knitting, sewing and allied activities. Considering this they worked with women to make daris [2] .The project was planned to be self sufficient and in the initial stage, the women were paid a monthly stipend. The sales picked up, but not to the extent to make it sustainable as the daris did not find a ready market in Pilani. The women took the stipend to be a salary which was not possible for NSS to continue because of poor sales. After a few months the whole project fizzled out. By the end, the confidence of women in the self help group itself was dwindling. However Divya Devarajan, who was part of the NSS team which worked in Garinda, was not ready to give up yet. At around the same time, Centre for Entrepreneurial Leadership[1] (CEL) started a new division called Rural Entrepreneurship Division (RED) aimed at encouraging rural entrepreneurship so as to empower rural populace both socially and economically. Divya, who was also one of the core members of CEL decided to pursue her passion. She wanted to create a sustainable model which had a greater entrepreneurial value than altruistic. Hari Kishore, Goutham and Prashanth with similar ideas joined the team under Divya. The team went to the concerned authority to grant them permission to allow project activity in Garinda. But the professors were skeptical that any venture in Garinda could be sustainable ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  5. 5. considering the NSS experience. So they advised the team to interact and understand the situation better at a micro level. Garinda being several hundred kilometers away from the nearest city gave very little space to work with. The team was trying to avoid the mistakes from the previous experience. So, the RED team started working to develop a sustainable product for the self help group (SHG) of the women in Garinda with the main market as BITS-Pilani simply because it was a ready market. They wanted to work on an activity on a smaller scale with quicker returns to rejuvenate confidence amongst the villagers. They eventually came up with ‘paper bags’ as a product as plastic bags were banned on campus and they needed environment friendly bags. Moreover, the demand at Akshay, the co- operative supermarket store within BITS Pilani campus for paper bags made the whole venture self sustainable. Paper bag production also required minimal skill sets. So, they talked to Prof.S.K.Verma, then the Professor in charge of ‘Akshay’, about the entire venture. From an administrative standpoint, he was supportive of the project and asked them to go ahead for a pilot run. Now that the line was clear, the team initiated the execution phase. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  6. 6. Why did the team choose Garinda and not any other small village in the neighborhood of Pilani? The team attributes the reason behind the choice of Garinda to the following factors. • Isolation: Being quite remote than most of the villages around Pilani, Garinda has little or no external influences. So the attitude and social change and their cause-effect relationship are fairly stable and easy to understand • Size: Garinda being a very small village, a higher degree of control could be exercised easily. Furthermore, small villages in Rajasthan were formed primarily on the basis of caste. So the majority of population in a village was of the same caste and hence there was no scope for caste discrimination or communal tension while working, which is a major problem with having a larger population with different castes • Infrastructure: The most important and perhaps the crucial factor which led to the option of Garinda was established infrastructure of the village. The village already had a vocational training center established with the required facilities for establishing a SHG of any kind • Familiarity: Divya’s original experience with the women in Garinda made it easy for the team to understand the local conditions on a more personal and subjective note and hence, they were able to work on a more human level. So, this made Garinda an obvious choice The women first developed a prototype of the bag according to the method which was most efficient in terms of both time and effort (cutting, folding etc.). They made adhesives from naturally available household materials which the women could easily find or put together while making the bags. Abhishek recalls the team going to the local binding store in Pilani to find out about the various types of adhesives used and one which suits newspapers better. This was because newspapers would be the raw materials used in making the paper bags given that there is a lot of newspaper collection as recyclable material from the BITS Pilani campus. After consultation, they finally fixed upon rice flour. The reason for this was that the team wanted to identify such a process that could be easily understood by the rural women and raw materials that were easily available in the villages. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  7. 7. At this point of time, the efficiency of the rural women working in Garinda was a matter of serious concern because having been introduced to the production of paper bags only recently, they were not very conversant with the manufacturing process. It took some time for the process to stabilize. The team later realized this was just a beginning to the hurdles they were about to face. When the team was working in Garinda, the major problem they faced was lack of a common medium of communication. The women did not know Hindi; instead they spoke a local dialect known as Marwari. But on the positive side the women were very keen to learn, understanding and quite receptive. After some effort from both the sides, they could comprehend each other to some extent but there still was an element of discomfort associated between them. This was due to inherent social barriers in Garinda like opposite gender interaction and prejudice in dealing with strangers. The social structure too was not favorable for free interaction; both inter gender and inter social-backgrounds. Moreover, as the NSS model had failed in its promise of paying the stipend, gaining their confidence was tough. So, the team avoided things like talking in English or any other language than Hindi in front of them. Also, the female team members dressed in the local attire of ‘salwar kameez’ and the males not the urban attire they usually wear. The team’s concern was to remove the barriers between them and the women as fast as possible. For that, they tried to mix in with the locals as much as possible by following the local customs. For example, they celebrated the Independence Day with the village locals. Sumanth recollects, “We had to walk around 5 Km to reach the village because we thought that would get us one step closer to them accepting us which would not have happened if we had taken a cab”. Now that the team and the women were ready with the manufacturing process of the product, they wanted to see how the market would react to the new product. So they talked to the manager of Akshay about their pilot run. He suggested that the paper bags be placed alongside the machine made bags currently in use at Akshay. At the end of the month, they would get an idea as to how the customers were reacting to the product. So, after a month of β testing in Akshay, they realized that the news- paper bags made by the villagers were successful and quality was comparable to the machine made bags that were available. Now, they had the next mammoth task of setting up an organizational structure around the idea, that is, the final working model so that the market demand is met consistently and the system becomes self reliant. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  8. 8. The team had a specific order from Akshay stating the number, size and the quality of the paper used for the paper bags per week (5000). They divided the women into teams which produced different types of bags. The elderly women were assigned the products which required greater manufacturing skill and took more time, because time was not a constraint. Moreover, the quality was not greatly affected by the age of the working women. For a product in high demand however, younger women were assigned the task so as to meet the market needs and deadlines efficiently. Further, in each group, there was division of labor amongst the various steps that were involved in making the bag. There were 21 women, divided into 5 groups, out of which 9 women were young and unmarried while the other 12 were older. The payment system followed here was directly proportional to the number of accepted bags in Akshay and would be once a month. The team also appointed two girls who were educated till class 10 to take care of the inventory, attendance and to keep track of the number of bags made per week. Even though it may seem here that the team was mainly responsible for setting up the women groups, it was majorly dependent on the already existing social structure amongst the women. Moreover, the women took initiative in organizing themselves. Contrary to assumptions, problems cropped up in the final working model too. There was a lot of distrust amongst the women. The essence of team work wasn’t known to these women as well. The structure that the women and the team had worked out collectively turned out to be a cause for friction between the women. There was also the social hierarchical problem; the elderly women did not want to listen to the younger ones. While the older women did not know basic arithmetic, they did not trust the younger ones with the calculations. Further they did not find the gestation lag in the monthly salary motivating enough. So, many women dropped out of the center and worked for some quick money even though it earned them very little compared to what they were getting at the end of the month. As Sumanth puts it, “They don’t have fiscal control nor do they have the habit of saving. So a quicker return is of better use to their lifestyle”. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  9. 9. The team also tried to equip them with the knowledge of mental math and Basic English to widen their horizon of understanding. Unfortunately, that did not work out as the elder women did not like to learn from the younger ones. Now, it was obvious that division of labor would not work because it results in lack of individual efficiency due to difference in age groups and beliefs. Hence, the team decided to adopt a more flexible approach to the situation. They delegated the entire job of making a paper bag to each woman separately. Each woman would use her share of newspapers, homemade adhesives and accordingly would be paid according to the number of bags she makes. Using this model, each woman could work at times convenient to her and find the best suited procedure for making the bag. As the time went by, the model was self adapting and the project stabilized. Soon, it became a completely self sustainable and sufficient with practically little or no involvement from the RED team. Given that the vision of the project was and is to create entrepreneurs out of rural women and to empower them, the team wanted to change the attitude of the villagers, especially village women about spotting market opportunities and developing methods to exploit opportunities. That still remains to be fulfilled completely but the team along with the women have come a long way. They have managed to penetrate the rural society in an unconventional way; the entrepreneurial way and in the process, changed the societal beliefs in certain aspects like the women of house not just limiting themselves to household chores but augmenting the family income. This, the team believes is one of its prime accomplishments. Today, running for over one and half years, this project is one of the most successful rural ventures by a student team in the history of the institute. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  10. 10. The organizational structure and working of a rural organization are entirely different when compared to an urban setup. Mindset, culture and exposure of the people are a few of its distinct attributes. Here are a few conclusions the team drew out of its experience. • Team division: Team division in rural work setups requires consideration of factors like age group of people, gender ratio and the already existing social structure • Work flow dynamics: The work flow dynamics should be very informal and flexible so as to allow customization of the working methods which need frequent change. This ensures that the villagers constantly adapt to their job in the best suited way. As the team found out, this method is considerably more efficient and easier than having a rigid framework • Responsibility: The villagers respected deadlines and realized the importance of quality in their products. They somehow seemed to understand the fact that the only way to sustain a market share is to deliver quality goods on time • Leadership: The team felt that many women tried to take the step forward as a leader and like in any other organization, it created problems more than once. Some problems were heightened faster due to the villagers being in close social proximity anyway. But, gradually the process smoothened out majorly due to the fact that there was already an existing social hierarchy and also that some women made much more effort than others in the project. • Transparency: According to the team, this is perhaps the most important factor which determines the stability of the organization in a rural setup. The process needs to be explicit in how much money is being spent / earned and how it works because the villagers are very protective and under the impression that they are being looted by smarter people. So, the team ensured that they gained the trust of the locals before they started the activities on a full scale. They did this by conforming to local customs and spending festivals like holi with them • Money: Money paid immediately can act as a major incentive in the rural work domain where hand to mouth existence is commonplace. Faster the returns, more the dedication of the villagers in doing the task ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  11. 11. Now, at this stage, even though the team had succeeded in its initial aim, the team members were not content with what they had achieved. They wanted to try different ideas which could help the women more in terms of market value and a greater market for their products. They tried products like bags, seasonal candles, files, and finally Vermicompost[2]. The technical know-how of Vermicompost was obtained from the Morarka[1] foundation. Fertilizer development was supposed to take place in a moist and damp environment. However, the project failed eventually because the fertilizer lost its effectiveness due to lack of moisture. In retrospect, the team realized that the reason for the failure of the project was the time of introduction of Vermicompost. It was introduced during the harvest season, a time when the women had very little time to concentrate on the compost as they were busy with their field work. Eventually the compost got neglected. As it turned out, the team and the women got their first insight into the intricacies of an Agro-based production. Ultimately, the decision was to reintroduce this idea during the time between the harvesting seasons when seasonal unemployment is high. In the meantime, Sumanth, a team member read about oyster mushroom cultivation by a woman named Lalmuni in an isolated village called Azadpur near Patna. He was so inspired by the story that he wanted to cultivate oyster mushrooms on a larger scale as a part of the RED project in Garinda. He interned at National Research Centre for Mushrooms and got certification from the Horticulture Board of Andhra Pradesh in mushroom cultivation. He realized that the oyster mushrooms could be grown with minimal technical know-how and could be sold effectively outside Garinda in local marketplaces due to satisfactory demand existing for it especially in the BITS messes and cafeterias. So the team now tried to build a sustainable model around the mushroom idea. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  12. 12. The villagers by this time were closely attached to the team and trusted their ideas. The women were less skeptical, received support from their husbands and by the other women in the village. This is when the team realized it had in a period of nearly two years succeeded in seeding a gradual socio-economic impact in the village. Since the team had already identified the women who were actively participating and leading the paper bag project, they handed them the responsibility of the mushroom project. The pilot was held in November in a small shed owned by one of them. Unfortunately, the mushroom growth was disrupted by fungal infection due to sandstorms and unpredictable weather. Arrangements made in the shed seemed to be insufficient to withstand against the weather conditions. They realized that better infrastructure and planning was required for successful mushroom production. Now, the intention is to have another run in the summer of 2008 both with respect to mushroom production and Vermicompost while still continuing with paper bag production. This is the current status of the team but is still subject to change given the local variable conditions and the possibilities of newer and better ideas. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  13. 13. TEAM SPEAK Any project is truly successful if it provides not only the desired result but also the kind of experience and learning to the people doing it. RED epitomizes such projects. The team says it was and is a huge learning experience for anyone wanting to work in the rural sector either as an entrepreneur or a change maker. Krithika, the team leader recalls that she joined the team because she wanted to work for social change in rural areas, while Smitha, another team member says that she felt very strongly about changing the rural scenario by economic empowerment. However, one thing the entire team agrees on is that the experience gained was invaluable in understanding how market and team forces work at the rural level. CONCLUSION This case study has been aimed at providing insights into the working model of the system which has successfully been carried out in Garinda to economically empower the women and eventually bring about a change in the social attitude of the rural folk. There are many projects which happen in such areas but mainly with the aim of charity and doing ‘social good’. This latter term however, seems to have been interpreted differently by people. The RED team took it as a challenge to do social good by economically empowering the women and teaching them to spot and capitalize on market opportunities to their best possible extent. It is the team’s hope that this case study shall be helpful in imparting useful knowledge about certain aspects of the project which are only available after interaction and experience in the rural setting. By doing so, its replication in the future by people all across India shall be much easier. After all, there are millions of ‘Garindas’ out there. ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  14. 14. EXHIBIT 1 CENTER FOR ENTREPRENEURIAL LEADERSHIP The Center for Entrepreneurial Leadership (CEL) at BITS Pilani was set up for that very purpose, to create entrepreneurial leaders and have a significant impact on the global entrepreneurial community. The Center is also one of: • The Centers for Excellence at BITS Pilani • The top 5 centres of Entrepreneurship among Indian Universities • The founders of the National Entrepreneurship Network The various immensely popular events held by the Center, such as Conquest, Epsilon, I4RI and BBB have managed to create maximum impact on the student and entrepreneurial community in India. MORARKA FOUNDATION A not for profit voluntary organization was set up by Mr. Kamal M. Morarka in 1993. From being a successful grass-root level implementing agency for 10 years, today it is also being recognized as a leading resource organization offering solutions for sustainable agriculture in the world. EXHIBIT 2 ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.
  15. 15. ÉTUDE DE CAS Étude de cas or the case study project of CEL aims at developing quality case studies about startups, business models or any aspect of entrepreneurship the team members find interesting and can act as a resource for other students, E-cells or any other groups across the world. The first Case study was released in the summer of 2007 on Mobile Medics Healthcare India Private India Limited, a rural healthcare company started up by BITS alumni a few years back. They were an award winning business plan and the team wanted to investigate the relationship if any between a successful startup and a good business plan. It is available for free as an online resource on the CEL home page http://www.celbits.org Now, the team will focus on case studies relating to other startups by BITS alumni who have recently graduated given that the number of them leaving high paying jobs and starting their own companies is exponentially rising. This can be expected from management students but from undergraduates is whole new phenomenon which the team wants to study in detail. The final aim is to create marketable case studies which shall add value to the academic and entrepreneurial arena on aspects which might be so micro that they have been overlooked in the drive towards data oriented case studies but are necessary from a students and a young entrepreneur’s point of view. THE CASE STUDY TEAM ©Étude de cas, Center for Entrepreneurial Leadership, BITS Pilani.