Dr. Harish Hande and New Biz Models

Co-founder of Selco, which sells household solar panel lighting systems to the poor in southern India, Harish Hande was a real firebrand of a speaker at ForSE2011. I was glad I attended his talk. He was inspiring. I hope someone puts together a book about him and his alternative approach to development.

He has a dispute about the “bottom of the pyramid” concept of development, which I share. It seems, on one hand, a great concept to try to get life-improving options to the poor of the world, which have traditionally been ignored by markets. But on the other hand, it does look like a cause-celebre, a latest and greatest idea of how to push consumerist exploitation further and further into the hands of anyone who has any two rupees to rub together. I’m glad that some effects of expanding markets make a difference for some people – creating new jobs, enabling people to afford lifestyle changes. I don’t think many lifestyle changes proffered by profit-seekers are really beneficial to societies, especially fragile social structures. Dr. Hande also thinks the poor should not just be seen as a new market frontier. He wants the poor to benefit from the rich, not just the rich benefit from the poor. Until this pattern changes, economic inequality will continue to result in dire poverty.

Hande’s heterodox development model is focused on a multi-stakeholder value commitment, not just proposition. He focuses on business models, not product models. He believes that scaling up is to participate in the creation of more enterprises in an economic ecosystem, not just grow certain elements larger. He exhorted us to not confuse needs with wants. Wants, consumer products and the like, can be standardized. These are the things that industrial business models can excel with. What things and services poor people want around the globe are not standardizable, but must be tailored to the particular realities of their socio-economic conditions. This is why a healthy ecosystem of social enterprise is so difficult, and why it is so necessary.

A lot of his discussion was on the business model(s) of Selco, and how their success is based on looking at the poor, through the eyes of the poor rather, for solutions, for new models. It was counter-intuitive to many investors that poor people live on cash flow rather than net present value. The poor that Selco works with think longer term than what is expected. The persistence of financial insecurity changes the standard economics that are taught in top western universities and their progeny. Selco explores this and meets this. They look holistically at poverty alleviation through sustainable power.

I found it interesting to hear him talk about their financed solar panel product as having the essential benefit of incorporating the family into the financial system. And that their decentralized sustainable energy had as a goal the uplifting of the quality of life of these families multiple times. They are not trying to save the planet or reduce carbon emissions. It is simply lifestyle improvement. He talked of how what the poor burn, how they use resources, will be the fate of the world. What the poor change to – what technologies they use – so will go the world. There is an intensely direct correlation, geographically, between areas of poverty and areas of social unrest (terrorism, civil war, crime, etc). Poverty is the biggest problem facing humanity. We need a paradigm shift to address the needs of the poor.

One of his major arguments, and the message that stayed with me the most, was to look at the poor as centers of innovation, not as beneficiaries or recipients of aid. I know that there is no environment where innovation and creativity are stronger, than in poor places. Another from Dr. Hande: the poor are poor because we are afraid of sharing ideas, of sharing innovation. Selco is all open-source. The qualification of an idea is if it is fit to the process needed: let anyone take it and run. This is service to the poor. The more you share, the better. He continued, that we need a paradigm shift. Standard business models, even tweaked for the “bottom of the pyramid” will not succeed in the long run. Social enterprise, creative thinking, innovation must be core subjects for business schools. My favorite quote of the presentation: the best form of protest is to create solutions.

Thank you Dr. Harish Hande for your inspiring presentation, and thank you TiE-Boston Social Enterprise Special Interest Group for bringing him to ForSE2011!

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