Social entrepreneurship: Changing the World

Social Entrepreneurship: Changing the world
ArunRamanujapuram
arun_ramanuj@yahoo.com
http://techseva.org
October 2010

A world plagued with problems…
~10% of India jobless [ref]
½ the world < $2.50/day
[ref]
30%-40% of India
illiterate [ref]
global mortality, <5 years –
67 per 1000 [ref]

Its all about social change…
A social entrepreneur is someone who uses entrepreneurial principles to bring about social change
Mohammed Yunus
Grameen Bank, Bangladesh
Microfinance
Alleviating poverty

Social enterprises drive change
Primary goal is “social impact”
Livelihood or employment
Better health
Quality education
Access to essential goods – water, power, medicines, …
…essentially, create positive change at the “bottom of the pyramid”
Profits are a means to “sustain”
Novel business models
Novel service delivery models
High efficiency

Constraints are many…
Undeveloped markets
Inadequate infrastructure
Lack of knowledge & skills
Restricted access to finances
Little or no regulations

…but, opportunities exist
Meet basic needs of the poor
Food, quality water, power, sanitation and health-care
Increase productivity
Stronger access to information, products & services
Increase incomes
Poor as producers with stronger market access
Increase knowledge and skills
More awareness, high-quality education, vocational training
Large numbers – nearly 3B poor people to serve!

Some examples
(scalable ones and new innovations)

SKS - Microfinance
Microfinance to poor (incomes < Rs. 20,000/year)
Started in 1997
73,00,000 customers, 2266 branches, Rs. 16670 crores (USD 3.9B) disbursed
Mechanism
Small loans Rs. 2000-12,000 to poor women - joint-group liability model
Repayment rate > 99%
Technology
Smart-card based MF platform
Web-based business intelligence portal
Integrated & encrypted MPLS communication network and a mission-critical data-center
Social benefits
Alleviate poverty, improve livelihood
http://www.sksindia.com

SELCO – Solar lighting
100,000+ solar lighting systems in 15 years
Karnataka & Gujarat
46% of households in India with no electricity
Technology
Photo-voltaic (PV) solar systems for lighting
Flexibility in usage
How user’s pay
4-light home system: Rs. 18,000/-
Cheaper than kerosene or dry-cell batteries
Initial capital via micro-finance, increased incomes repays loan
Social benefits
Increase in incomes (longer work hours, savings on kerosene!)
Improved health (no kerosene smoke inhalation!)
Children can study well (no excuses!)
http://www.selco-india.com

Safari’s M-Pesa – Mobile money
Banked
population
Addressable
Mobile market
19%
70%
M-Pesa – mobile money
Person to person transfer, individuals to business, cash withdrawals, loans
12.6M customers, ~20,000 outlets
Started 2007
Benefits
Banking to the millions
Savings now possible
“Eko” in India along with SBI
81%
30%
http://www.safaricom.co.ke

Kiva - Microloans
~800,000 users; ~5000,000 lenders; $165M in loans; 98.9% repayment rate
Business model
Interest returned to lenders, part interest retained by Kiva
Technology
Web service for anyone to lend money
Easily track your loans, see impact – all online (web or mobile)
Benefits
Alleviate poverty, improve livelihood
In India: RangDe is similar
http://www.kiva.org

Samaanguru– Mobile supply-chain management
Strengthen rural supply-chains via mobile-phones
Inventory management, Ordering
Stock-level Optimization
Started 2009 – pilots underway
Technology
Mobile-phone based data capture
Cloud-based data processing
Algorithms for inventory optimization
Business model
SaaS, transaction-based pricing
Benefits
Ensure availability of essential goods in rural areas
http://www.samaanguru.org

Key Challenges and Lessons

Key Challenges
How to get adoption?
How to monetize?
How to scale?
How to organize efficiently?
How to raise capital?

Social Enterprises are all-round innovation labs!
Innovation and experimentation in every possible aspect of business creation:
Customer development
Business models
Service Delivery
Technology (and usability)
Organization models
Funding models

We need to build the runway first…
Market creation
(expect undue delays!)
Towards monetization
(expect false starts!)
Sustainable
(expect turbulence!)
3-5 years
+1-3 years
+3-6 years

Sustenance is key – varied models!
Market research (early customer development)
Self-sustenance by entrepreneur(s)
Grant-based funding – esp. given its research for social good
Customer development
Angel and early-stage VC funding
Monetization
VCs – different ones at different levels of monetization
Sustainable Business
Customer revenues

Customer development takes time
Customers are of many types:
Private-sector organizations – e.g. a hospital with rural clinics
Public-sector organizations - e.g. aid agencies
NGOs – Who already have a field presence
Government
Village consumers – esp. for a consumer-based products
Typically, a multi-partner model works best
Trusted and relevant partners are critical
Sales funnel should be crafted carefully
Use case diversity, and probability of project success are important
Strategically seeking customers/partners, pro-actively anticipating needs
and adapting fast are critical!

Business models have to be novel
Customers cannot pay much, or are not used to!
Product pricing evolves over time
Learn and evolve fast – customer is also experimenting!
Cultural factors important – economics will not always work!
Understand value-proposition and willingness to pay – jointly with customer!
Extreme cost management is crucial
Management personaland organizationalcosts determines runway (initially) and margins (later)
Ensure BoP-friendly models and a deeply conscious ways of
running a business!

Technology is essential to scale
Scale can be achieved only with new technologies!
Technology has to be disruptive & created anew
High usability (in resource-constrained environs)
Low cost
Easy ramp-up
Significant innovations are happening
Water purification, solar lighting, smokeless stoves, low-cost bamboo housing, …
Information & transaction services via the “Mobile-cloud”
Low-cost technology has to be invented along with a
deep understanding of usability

Measurements are critical
Metrics are hard to define and measure
E.g. Can we correlate number of school meals to improved literacy?
Data matters, but is hard to come by!
Not easy to collect and manage data – mostly on paper!
Computers and mobile-cloud will make it easier
Need careful and trustworthy measurements
Done by credible individuals or organizations
Efficient frameworks for collecting and
visualizing metrics have to be designed upfront!

Scaling impact is really hard
Pilot evaluations are easy, scaling is really hard!
Takes time, risks are high!
Needs:
Low-cost technology that can scale
Marketing to remote areas
Scalable customer support
Long-term capital
This is where most enterprises struggle!Few examples of
scalable models exist today.

Funding models are evolving
New types of “social” investors
Organized foundations
E.g. Deshpande, Bill Gates, …
Angels
Social venture capitalists
Social impact vs ROI
Expect social outcomes
Expect return on investments – perhaps, with lower margins
“Patient capital”?
Outcomes and timeliness of outcomes are unpredictable!
Need a breed of investors who can wait!

Social enterprise timelines
Start
5 years
13 years
15 years
8000
customers
73,00,000
customers
SKS
100,000+
customers
500
customers
SELCO
Akshay
Patra
1M+
Meals/day
5000
meals/day

Entrepreneur’s challenges are immense
Getting funding
Attracting talent
Understanding remote villager’s needs
Convincing customers
Creating usable technology
Getting customer to pay!
Living frugally
Managing costs efficiently!
Coping with family pressure
…

Most importantly…

It is a journey of personal change
Build deep compassion
Towards the underprivileged
Develop strong passion
Towards a social goal
Persevere, persevere, & persevere
Against all odds, over long periods
Simplify life, achieve sustenance
Voluntary simplicity – as found in villages today

Be the change you wish to see…
Thank You!
Let’s create a good future…
arun_ramanuj@yahoo.com
http://techseva.org

Reading List
My Experiments with Truth, Mahatma Gandhi.
Banker to the Poor, Mohammed Yunus.
Innovator’s Solution, Clayton Christensen.
Conscious Business, Fred Kofman.
Voluntary Simplicity, Duane Elgin.
Stanford Innovation Review
[http://www.ssireview.org/]
The Social Enterprise – Harvard Business School
[www.hbs.edu/socialenterprise]
Engineering Social Systems
[http://ess.santafe.edu/]
Top 25 Social Entrepreneurship Websites
[http://e-180.com/2009/02/04/our-top-25-social-entrepreneurship-websites/]

Social entrepreneurship: Changing the World

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