The enterprise model of development
[95]
Ram recently pointed out to me that the market paradigm is considered the top driver of development in the last 10 years.
Throughout the 80’s and 90’s the emphasis of practitioners in rural development was what was then called “income generation activity”. Some were quite successful. Gandhigram trust still has many viable business units running in and around Dindigul. (http://www.gandhigram.org/activities/employment-generation/khadi-trust-and-vipc-trust)
HESCO with its water mills, its many womens groups who make jams and squashes (http://www.hesco.in/accomplishments.php).
Centre for Technology Development with their whole carcass technology taken forward by STD (http://societyfortechnologyanddevelopment.blogspot.com/).
Without forgetting Development Alternatives and the businesses they have created (http://www.devalt.org/about-Significant-Achievements.aspx).
There are so many developmental organisations that worked on rural technologies in the 80’s and 90’s in close alignment with the Government of India (GoI). Many times the hope was that the GoI, once seeing the successful demonstration of a technology, would take up the same through the district rural development agency. It was never very clear why these adoptions did not take place especially since some ministry or department of the government would have funded the effort. Even today there does not appear to be a mechanism to transmit new technologies or innovative ideas through the government channels for rural development.
Many young and energetic practitioners in the rural space attempted to deliver some of these technologies and ideas through entrepreneurial means. Many of them failed but a new paradigm was born, that of the social enterprise (SE). While these entrepreneurs may have failed, C K Prahalad made a case out that there was a fortune at the base of the pyramid in the book of the same name. New brands of entrepreneurs are working their way into this space, sometimes unaware that many had been doing that. These entrepreneurs could learn much from the previous efforts and currently there is little chance of that happening. Thus the market paradigm seems to be the top contender today but it was there before but not as highly touted as today.
A poll on Technology and Development
[94]
This is another idea provided by Ram to gather a list of what all of you readers out there think are the top 5 decisions made by India regarding development of the nation that you feel were wrong and why.
My top 5 are as follows:
a) Nuclear technology: Too expensive, environmentally harmful and totally unnecessary
b) Not studying and documenting in detail of indigenous agricultural practices
c) Not rehabilitating and refurbishing hydropower stations especially in Kerala
d) Polluting all our rivers with industrial and domestic effluent
e) Not putting research money into energy from biomass and photovoltaic cells
Roadside Repairman
[93]
Here is another question raised by my friend Ram: Why is it possible to have a 8th standard tinker an iPhone whereas many scientists/engineers cannot repair the simplest of machines?
To answer this question I think the simple answer is Fear. Fear of failure by the scientist or the engineer. The fear, that if they don’t make it work they may be ridiculed. Fear that if they do make it work, they may be seen simply as repairmen and not the towering intellect they believe they are. There is of course the other fear of getting their hands dirty.
When radios were first introduced in rural areas there were no engineers or technicians running around doing servicing and repairs. The radio when found faulty would be given a few suitable bangs and maybe a new battery set would be tried and after an unsuccessful look at the innards would be taken to the village tinkerer. Now this was the man with no fear. He would open up the backside make acouple of checks on the power supply to ensure it was reaching the circuit board and the start systematically tapping around. By this laborious method there was a 50% chance that he would fix the radio.
The “tinkerer” is an important village functionary. He repairs the radio, TV, hand pump, diesel pumpset, cellphone and his urban avatar does blackberrry’s and iphones. The tinkerer has no fear of failure, the device is already dead, he can’t make it any worse and in case it starts to work he would have learnt something and his customer goes satisfied.
Storm in a tea cup
[92]
My friend Ram has thoughts on why the most sophisticated institutions still serve coffee in disposable plastic cups. He believes it may be due to a lack of aesthetic sense and an unwillingness to pay importance to small things in Indian institutions.
When we were moving into a brand new office in the IIT Madras Research Park I wanted to impose one ground rule in the office. I said no eating and drinking inside the office of anything. My logic was that most people will invariably spill stuff and very few will clean up. Those that do may do a bad job. This meant that slowly ants will find their way into the office. Following them would be the cockroach and fresh on its heels would be the rat. I was considered a villain for announcing this. This was also followed by civil disobedience by everyone including me. All of us were constrained to eat in the office as there was really no place to eat outside since the food court of the IIT Madras Research Park was not yet ready.
It is going to be 2 years since the office was occupied. Certain places within have gained ungainly spilt food stains. There are ants present and cockroaches have been spotted and killed. The rats haven’t shown up yet, but they won’t be far away.
Unlike Ram I don’t believe it matters whether it is a plastic cup, paper cup, mud cup, ceramic cup or the stainless steel tumbler. If people spill and don’t clean up properly there is a lasting damage to the immediate work environment. If we are capable of looking after and addressing that, then the larger environmental issues will also be easier to address. The important thing to pay attention to is to first use the cup carefully and dispose of it even more carefully.
Your daily energy consumption?
[91]
It is always difficult to calculate your energy consumption. The easy one is electricity. Your bimonthly/monthly meter reading tells you exactly how many units of energy you have used. Depending on the number of gas cylinders you run through in a year you can calculate how much LPG you have used. Look at the date you purchased your car or motorbike and see how many kilometers it has run. How many times do you fly in a year? How many times do you travel by train or bus? At this site there is a tool that does most of the calculating for you. What it does is based on all the information it tells you your individual carbon footprint. http://www.carbonfootprint.com/individuals.html
I tried it and found I am above the national average. The site has remedies for you if you are concerned to reduce your carbon footprint. My friend Kannan Narayanaswamy and I tried to persuade the young entrepreneurs in C-Tides at IIT Madras that they should use this as a marketing tool. The company Ecologin offers what I would consider tours with a low carbon footprint. So they could calculate the carbon footprint of a city based customer and allow them to see their carbon footprint when on a Ecologin tour. The company could even evolve a plan to reduce the city’s footprints by getting the customer involved in carbon reducing endeavours that the customer pays for.
Arvind Gupta’s science toys
[90]
I was fascinated by LEGO and its Mindstorm series of programmable robotic toys. I was working with n-Logue communications at the time and thought how wonderful it would be to have the Mindstorm kit available at every Internet kiosk so that the youngsters from the village could play with it. The costs were prohibitive.
I remembered Arvind Gupta. “Arvind Gupta is an inventor and populariser of science. As a student in the 1970s in Indian Institute of Technology, Kanpur, Gupta became a socialist in belief but eschewed actionless discourse; he stated that, instead he “placed more faith in small positive action than empty rhetoric. ” Gupta began his social service by teaching the children of the mess staff who had no opportunities for formal education”. (http://en.wikipedia.org/wiki/Arvind_Gupta)
His work embodied everything that I was looking for at the time. Articles of creativity made from everyday objects that also had a scientific message. I contacted a company called “Benchmark Systems”. This was arguably the first company comprised of B-Tech students from IIT Madras to be created and incubated there. They had experience in making kits. I gave them one of his publications and asked them to look it over and see if we could together build low cost do-it-yourself toy making kits and place these in the village kiosks for students to play with. Benchmark however did not devote resources to make this happen.
Arvind Gupta “ has won awards for his lifelong popularising of science and contributions in designing science teaching aids for young children. These include the inaugural National Award for Science Popularization amongst Children (1988), the Distinguished Alumnus Award from IIT Kanpur in 2001, the Indira Gandhi Award for Science Popularization conferred by the Indian National Science Academy (2008), the TWAS (Third World Academy of Sciences) Regional Prize for Public Understanding and Popularization of Science (2010). At present, he works at the Children’s Science Centre located in the Inter-University Centre for Astronomy and Astrophysics (IUCAA) Pune, India.” http://en.wikipedia.org/wiki/Arvind_Gupta. More on his work at http://arvindguptatoys.com/
PPST and its impact on the S&T thinking
[89]
The PPST group (as far as I know) was an offshoot of IIT and other students who were reading Marx in and around IIT Kanpur in the late 1970’s. My first encounter with the group was through its writings in a bulletin that I saw in my hostel during college days. It was intriguing stuff. They were writing blasphemous stuff like western science is wrong.
“It is the objective of the Bulletin to attempt a re-evaluation (from the point of view of the non-Western World) of the modern S&T and of the non-Western cultures. This re-evaluation, we hope, will raise the possibility of the development of an alternative S&T; an alternative based on more human values; an alternative that would lead to a better, self-reliant and non-exploitative social order, thereby constituting a Patriotic and People-oriented Science and Technology (PPST).
The bulletin was irregularly published between 1981 and 1990 and some of them can be seen at http://samanvaya.com/main/articles.html. To quote Claude Alvares, “During this period, in fact, members of the PPST Group produced some of the finest articles ever written and published on the subjects of Indian science, culture, technology, and the relevance of Western science and technology to Indian society”.
My first encounter with this eclectic group was in 1983 when they held a conclave at Gowriwakkam, near Chennai. The meeting went into the details of western notions of science, philosophy, astronomy, and a lot of what was being spoken went clear over my head and still does. The core of the message for me was that India as a civilization had its own working systems in all spheres of life, agriculture, medicine, astronomy, mathematics, education, metallurgy and so on. The next message was that during the time of British occupation this knowledge was systematically taken away from our society and replaced with a foreign, incomplete and exploitative version of science and technology largely derived from the western religious ethos. PPST as a group were determined to salvage as much of the traditional systems as they could.
Many young students from many different disciplines were suitably impressed by these very powerful academics and their views. The whole notion of indigenous technology arose and became powerful due to their strong vision of a self reliant India.
Scale and Impact
[88]
An investor has to promise a financial return to his own bosses. When he looks at a “social enterprise” his primary concern is whether the enterprise will scale. Whether selling a service or a product, social enterprises are liable to have very thin profit margins. To become attractive for an investor it is very important that the business can grow and have a bigger customer base and therefore bigger rotation of money, thus increasing profits. In a “social enterprise” however the word “social” is included for a purpose. The enterprise must have some social impact. In some cases the impact may be small, but spread over millions of people and these are attractive to investors.
Other enterprises may target a smaller group but have a profound effect on their quality of life. There are many organisations working with, say, a community of salt pan workers, another herding camels, a group of farmers growing medicinal plants. The size of these communities may be a few thousands at best. This may be a finite customer base, but the social enterprise may be able to double their income. Typically in these cases the organisation is using the community as a resource and adding value to enhance the market potential. The community may be producers of a product or service.
This second group of social enterprise finds attracting funding very difficult though their impact is very high. This is an issue that will need to be researched better for solutions.
Business models
[87]
Having spent most of my life as a practicing engineer I never spent too much time studying or understanding enterprise or businesses. But over the years I have had to get my rudimentary knowledge intact. So here it is.
The big box model:
As an entrepreneur my job is to build and sell you a very big box. The big box could be your house, your car or maybe a piece of medical equipment (CAT or MRI scanner), an airplane, telecommunication infrastructure, a tractor and so on. In most of these cases, as a customer we may only have a one time interaction and you would make a very big spend and I would earn profits on it. But you would not come back to me for several years. So I have to continuously find new customers. Though I have mentioned these as products there are some services too like a giant insurance policy or a consultancy for a very large project. This model operates on very large numbers and though profit margins may be thin the amount involved is substantial and it keeps business flowing.
The daily model:
In this model I find something that you will buy from me almost everyday and you are a repeat customer who I don’t want to let go. I could be selling you fruits or vegetables, idlis, soaps, movie tickets, bus tickets, newspapers anything that is consumed regularly. What I sell could be a product or a service. The total value of the product may be small. The margins will generally be around 10% to 20%. In this model I make money because money is “rotating” very fast. For instance when you buy a cup of tea for Rs. 5/- maybe the profit is Rs. 1/- for me. My cost is Rs. 4/-. In a month I use Rs. 4/- on a daily basis (since you give it back to me) and it earns a Rs. 30/- profit. This explains why a vegetable vendor will take a loan at 10% interest per day. His expectation is to make 20% to 30% profit on sales.
After this everything is a matter of detail. When I try to evaluate a business, it is in terms of potential return customers and how often they come back. If this is a reasonable number that can earn a decent profit then the business is viable. If the customers are finite and unlikely to return, it may not be a good business.
The changing perception of India among IIT students
[86]
On the suggestion of my good friend Ram I will compare experiences of an IIT graduate from the 1980’s with that of a more recent one. In the 80’s there were limited opportunities and graduates from the IIT’s had the following priorities: (Please note that the percentages mentioned are more based on impression rather than on any study I have found.)
a) Go abroad for a Masters with a scholarship (40%)
b) Get into a Management School (30%)
c) Look for a job (20%)
d) Pursue a Masters programme in IIT (10%)
e) No other options.(—)
Today things have changed there is no real way for me to judge what kind of priorities the young people have, but I have noticed the addition of another category that just did not exist previously namely: become an entrepreneur.
Students from the 80’s would have been appalled if becoming an entrepreneur was mentioned to them. In fact the word ‘entrepreneur’ was not fashionable instead the term used was “go into business”, as if you could just walk in and do well because business was easy. I was associated with some very bold B-Tech’s who did become entrepreneurs and some of them serial entrepreneurs (they will be described in subsequent blogs). It was a very, very rare phenomenon.
Today’s B-Tech’s have a plan as they have seen the likes of Vinod Khosla, Gururaj Deshpande and a host of others who have become wealthy as technology entrepreneurs. The plan is usually to work in a well structured organisation learn the basics of business and then start your own venture. The plan has some variations but by and large the aim is to become an independent entrepreneur. In my estimation roughly 10% -15 % current crop of B-Techs have this on their minds.
The IIT system has also become more aware of these young ambitions and gives several ways for the students to achieve their aims. This nurturing environment was totally absent in the 1980’s. The exception being Prof. Ashok Jhunjhunwala, who encouraged many youngsters to become entrepreneurs, but that is another story.