India needs a network of social businesses to solve the problems faced by the masses. Experts discuss ways through which a healthy ecosystem can be created.
Being a country where problems are a dime a dozen, one would assume India to be the perfect brewery for social businesses; in other words, a breeding ground for, as described by Nobel Peace Prize laureate Prof. Muhammad Yunus, a ‘new kind of capitalism that serves humanity's most pressing needs'. However, it is quite unfortunate that such enterprises are far too few to meet the needs of their customers. One of the main causes for concern for entrepreneurs and investors are that such businesses are risky. However, as Solomon Prakash, country head, Ashoka India explains, "Running a social business is no more risky." He, along with others in this segment, agrees that the key ingredient, that is often lacking, is the passion for the cause. The gestation period for such businesses is much higher and many are not prepared for the long haul. However, there is profit at the end of the tunnel. "Profitability is subject to the volume we attain. Through a sustainable business model, we can regenerate our money to invest further. Scaling horizontally as well as vertically is the only way to grow. We also need to understand consumer psychology and their discomfort in using new technology or accepting new ideas," believes Mandeep Singh, MD, d.light India.
Manpower constraints and the lack of vision and knowledge form roadblocks along the way. Talent driven by passion for the cause is hard to come by. Despite this, experts believe that with entrepreneurs making their presence felt in the economy, it will be only a matter of time before many more social businesses crop up if a nurturing ecosystem is provided to them. "We need knowledge centers where innovators can come together and share ideas and concepts. The lack of awareness of the technology already available or ideas already in application sometimes leads to redundancy and acts as an obstacle to moving forward. Innovators and entrepreneurs need to come together and form a knowledge pool. The technology, at times, already exists. Often, all one needs to do is adapt and adopt them," says Paul Basil, CEO, Villgro Innovation Foundation.
Regarding the problem of talent constraints, adopting a different structure of functioning can be helpful. A clear understanding of the ground realities is essential. The people who are aware of the actual problems at the ground level and have the ability to come up with viable solutions to solve them do not necessarily belong to the top of the pyramid. That is why, "a top-down system where ideas come cascading down cannot work. We need people belonging to all parts of the pyramid pooling in their ideas and sharing their observations. Hence, it is important to not restrict participants to their function alone, but involve them in the process of ideation," says Prakash. However, there are some who say that less inclusion of people reduces instances of fallibility. "One of the biggest lessons I've learnt is that not everyone who participates will share the same mission and vision as the organisation. Hence, not everyone should be trusted to be efficient or honest. It is extremely difficult to penetrate into the areas we'd like to reach, and is even more difficult to find talented and trustworthy manpower willing to do so for the kind of money we are able to offer. Hence, it is important that the process replaces people to a certain extent. For instance, we have set up ‘prepaid water ATM' at sites. This eliminates the need to employ money collectors that add to our costs. We are also left assured that our customers are getting the quality they deserve while our franchisers help spread the word and our value propositions," explains Anand Shah, CEO, Sarvajal.
With a lot of work at hand, such businesses need all the support they can get and most companies rely on grant capital. The kind of funding such enterprises require challenge the current set-up and persisting notions. "Private equity firms are looking for quick returns and an early easy exit. We need investors who are prepared for a ten-year journey," says Basil. Despite the several challenges, it is essential to create a healthy ecosystem for such enterprises to thrive, as without their help, it would be impossible to solve the multitude of problems India is facing.
- Tanya Thomas