The business of public good

Thimk of India’s top business schools, and you are most likely to put together institutes which aim for burgeoning profits and guaranteed six-figure pay packages, and students being trained to bait plum portfolios (read investment banks and conglomerates). Or maybe not.

Students from XIMB, Bhubaneshwar during a field trip on a project in collaboration with Spring Health, a start-up which provides safe drinking water to remote rural areas in Bhubaneshwar. Pic courtesy / Dareen Lobo

Till recently, social enterprise and top B-schools had little to do with each other. But recent initiatives by the country’s top B-schools tell a different story. The focus, evidently, is to mentor leaders who can not only crunch dizzying numbers for profits, but also roll up their sleeves, get down on their haunches and provide sustainable solutions to what B-schools refer to as the Bottom of Pyramid (BOP) markets.

In August, one of India’s top B-schools, Indian School of Business (ISB) in Hyderabad released the report, New Frontiers in Affordable Housing: Notes from the Field, which addresses India’s alarming housing shortage. ISB’s Centre For Emerging Markets Solutions began research on the project in 2008-2009 with investors on board. Over the past two years, 220 low-income homes — costing between Rs 3 lakh to Rs 5.5 lakh for an area of 300-450 sq feet — were built in Shapar (a village outside Rajkot). ISB then studied the project to point out all that ails low-income housing in the country.

Students from B-schools such as ISB and IIM-B at the Khemka Foundation Social entrepreneurship forum last year. Pic courtesy/The Nand and Jeet Khemka Foundation

The report makes the obvious point — that the shortage of affordable housing in India will only rise in the coming years, and suggests solutions involving the private sector. Instead of depending on the government to provide solutions, the report suggests that the private sector can meet housing needs by building homes for people working in industries outside cities.

Ajit Rangnekar, dean, ISB, confirms that social entrepreneurship is definitely on the institution’s mind now. “I think B-schools realise that India is a young country and a large number of that young population hovers around the poverty line. As we claim to impart ‘world-class’ education, we can no longer ignore, say, 400 million people shifting from rural India to urban pockets.”

Amrish Kaushik (right) and Devesh Sharma, coordinators for NAVKRITI-12, the at National Institute of Industrial Engineering ( NITIE), Powai. Pic/ Pradeep Dhivar

“Who exactly is building amenities for them, and who provides them with the necessary skill set, housing, power, water, food and entertainment?” he asks, adding that at the same time, we cannot look at these projects as socially responsible initiatives or charity.

“Which is why,” he says, “We do not preach morality to students — because that can never work in the long run. Students who take up social ventures after passing out would rather think — can we look at business where, in the process of doing good, we can bring about sustainable change and decent, if not huge, profits? An increasing number of students either come decided, or end up leaning towards social enterprises, and what better place to hone them than good B-schools?”

Reuben Abraham, executive director of the Centre of Emerging Markets Centre, says the project is meant to open the students’ and investors’ minds to enormous opportunities in low income markets from a financial perspective. “The social benefits are a bonus. We began this research because we realise that, with the furious pace of urbanisation, affordable housing is a huge potential market. The only way to tackle and tap this opportunity, and have an urban future, is to plan ahead and have a market which enables regulatory policies.”

The findings of the project, which were released after the homes were built in Rajkot, reveal that low income housing’s biggest hurdles are government permissions — which take a long time — and lack of mortgage finance. “The report also addresses the issues of high registration costs and lack of trunk infrastructure associated with low-income housing. Urbanisation will be the single biggest macro trend of the world for the next 50 years, and we must be prepared to create leaders who can execute these plans.”

Incubating social responsibility
Over the last five years, education in social entrepreneurship and innovation in most institutions was limited to one-term credit courses. The Xavier Labour Relations Institute (XLRI) School of Business and Human Resources at Jamshedpur, for instance, introduced social entrepreneurship as a half-credit course in one term in 2006. Now, however, it is a full-fledged, two-term course.

Last month, XLRI launched a Social Ventures Incubator, wherein social enterprises and start-ups can pitch ideas to a board of academics, and receive mentorship, skill support and even angel/seed funding for their projects. Professor Madhukar Shukla, who teaches organisational behaviour and strategic management at XLRI and launched the incubator, says many B-schools are now moving beyond their profit-making vision and missions.

“There has been a gradual shift among the B-school community in the way they see social ventures and what good leaders can do to them. They accept that profits are not the only way of sustainable development. Over the past five years, I have observed that students are realising that there are alarming disparities between different classes in India, and that they need to be fixed. Students are willing to take risks, and B-schools cannot afford to ignore their needs.”

However, he adds, “During inductions, I often notice that some urban middle class students have never stepped beyond their comfortable boundaries — and a course in social entrepreneurship demands that they push them and come up with viable solutions.”

The Social Ventures Incubator, explains Shukla, will ensure that students and non-students across the country are not stuck at the prototype stage of their social ventures. In January, XLRI also built the Fr Arrupe Centre for Ecology and Sustainability, a multi-disciplinary centre which aims to provide thought leadership to promote policies, practices and dialogue which promote sustainable development of social enterprises. “We will ensure that we build a strong network of angel investors, alumni, academics and students who can help realise the vision of a start-up. The incubator will help social ventures go mainstream.”

Less money, bigger goals
This year, for the first time, students of Xavier Institute of Management, Bhubaneswar (XIMB) School Of Business have collaborated with the University Of Minnesota to work on the Acara Challenge, which gives emerging entrepreneurs a chance to envision and launch successful social businesses. Six students from the two institutions identify a socio-developmental problem and execute solutions for it with the help of a sustainable business model.

Students are encouraged to continue work in their chosen field even after they pass out of the institution, and XIMB will continue lending support and funds, as part of the initiative. Darren Lobo, a 24 year-old XIMB student is part of the Acara Challenge. “We have identified rural sanitation as a problem. As part of the Nirmal Bharat Abhiyaan, the government aims at providing subsidies to rural areas to build low-cost toilets. We found that locals in most areas lack the expertise and knowledge of materials to build toilets.

So, we are looking at designing low-cost toilets, and will go beyond the Acara Challenge and submit the design to the government in a few months. We are looking at designing four low-cost models — two for individual households and two for communities, for instance, schools.” Lobo adds that the challenge also demands that the team come up with ideas for not only the problem, solution and design, but also distribution networks of the toilets.

Lobo is glad that he is pushing himself in “the right direction”. “Typically, all B-schools talk about what last year’s pay package was, and who got placed where. The focus on social entrepreneurship transcends that — you know you’re looking at significantly lesser money but equally, or more ingenious solutions, and you’re bridging some huge gaps.” Lobo says he is already consulting for a startup called Spring Health which looks at providing safe drinking water to rural areas in Bhubaneshwar. He is also consultant to the Mangalajodi Eco Tourism Trust, a community-owned wildlife conservation venture in Mangalajodi, a village on the banks of the Chilika Lake in Orissa. Lobo is developing sales channels around the Chilika Lake to help locals develop newer livelihoods through tourism.

“We — B-schools and students — still have a long way to go. Most students come to B-schools with heavy loans and getting into social ventures doesn’t help pay them off. The challenge remains in making social entrepreneurship rewarding.”

Challenges ahead
XIMB rural management professor C Shambu Prasad, who has founded a social venture incubator at XIMB similar to the one at XLRI, says the interest of B-schools in social entrepreneurship is reflected by global trends. “The Acara Challenge and the association with the University of Minnesota is a result of western institutions wanting to study emerging markets closely for business opportunities. It may sound unbelievable, but some western universities emphasise social entrepreneurship more than their finance courses. The BOP market is generating newer challenges and therefore needs newer solutions.”

We need local solutions to our chronic problems, cautions Professor Prasad. “All academic literature on social entrepreneurship comes from the West, which focuses on venture capitalism. They look at the problem of scale in a singular manner,” he feels.

“We have identified that India could be a hotbed of social entrepreneurship, and need indigenous ideas. We need students who can understand that the BOP market is not merely a recipient of an MNC, but part of a meaningful engagement.”
Challenges, of course, abound when it comes to B-school students taking up social ventures. Banks, says Professor Prasad, barely give loans to start-ups, and the Indian legal system doesn’t allow trusts to make money.

According to Rangnekar, many state governments are open to working with B-schools to encourage social entrepreneurship in their states. They are also pushing efforts through the National Skills Development Corporation (a public-private partnership formed in 2008 which aims to promote skill development through vocational training initiatives) but there are other gaps to fill.

“There is opportunity but no skills. Healthcare in the country is a big opportunity for social entrepreneurs, but do we have business models to cater to them? We have neither the necessary research in key areas, nor the means for application of solutions. Then, there is always a danger of the wrong kind of money going into projects, like private equity went into microfinance. It distorts markets. This stage — after the initial hope and hype — makes me a tad weary.”

Our best bet, says Professor Shukla, are the students who take up social ventures. “Many XLRI’s alumni mentor out students to help them understand social entrepreneurship. Three years ago, the media hardly looked at these ventures, but now it has helped mainstream social enterprise. It will take time, but we are getting there.”

Creating sustainable solutions
On December 8, The Nand and Jeet Khemka Foundation, a public charitable trust which aims to build innovative cross-sectoral collaborations and development infrastructure, will host a social entrepreneurship forum in Delhi which will be attended by B-schools such as the ISB, IIM Bangalore and XIM Bhubaneshwar. “Social innovations are the ideal intersections of business and social returns — they demand out-of-the-box solutions to some very tough problems,” says Don Mohanlal, president and CEO of the Khemka Foundation.

“All innovators have four major needs — access to finance, new products, talent management and engagement with the government and media. The country’s top B-schools realise that an ecosystem needs to be built in this direction.” The conference will also be attended by Ideal, a leading US-based design firm to brainstorm on the role of design in social innovations. “The forum will also see B- school students address and discuss issues of renewable energy for low income groups,” says Mohanlal.  

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