STARTING any business is hard enough. Building one that is both profitable and achieves social impact is tougher. Muhammad Yunus, the Nobel Prize winner who developed the idea of microfinance, argues that social enterprises should be “at least as well managed as any profit-maximizing business”.
I took MBA to develop my management skills. But I also wanted to explore the ways that business methods can be used to solve social problems. This is what compelled me to enter the Hult Prize last November, along with four colleagues from ESADE Business School in Spain.
The Hult Prize is a global case competition and start-up accelerator for social enterprises, run in partnership with the Clinton Global Initiative (CGI). This year’s challenge, posed by Bill Clinton himself, was a daunting one: tackle food insecurity for 200m urban slum dwellers by 2018. Rural areas account for the majority of the world’s malnourished. However, urban populations are often overlooked. The statistics paint a troubling picture. One in four children in the world is hungry. Poor nutrition plays a role in more than 5m child deaths every year. This motivated 10,000 teams to apply for the prize and a chance to win $1m in seed capital.
We started our research in January, and quickly identified India as an “attractive” target market with high rates of malnutrition and huge slum populations. We quickly discovered the importance of small retailers to the country’s economy. More than 7m small grocery stores (known as kiranas) account for around 90% of the total retail trade, and serve close to 100m slum dwellers. Low-income consumers rely on these stores as a source of food, since they offer convenience, interest-free credit and smaller, more affordable packages. And yet kiranas suffer from outdated business processes and limited access to technology. From these observations our solution started to take shape.
A few months later we landed in Dubai for the Hult regional finals. We were quietly confident that our idea was distinctive enough get us through to the next round. Our model uses tablet technology to combine the buying power of small retailers and reshape supply chains. We will help local entrepreneurs improve their profitability, large companies better understand the needs of the urban poor, and slum dwellers get affordable and nutritious food. Even so, going up against 56 other teams and presenting to a packed house with $1m on the line was a harrowing experience. Long hours of preparation paid off and we took out the prize in Dubai. We had secured a place in the final round of six teams, and an invitation to undertake a seven-week accelerator programme in Boston. Getting one step closer to launching our social enterprise was exhilarating, but we immediately knew that all of our assumptions and desktop research would need to be tested in the field. If we were going to have a chance of winning we would need first-hand knowledge of life in the slums. Next stop India.
Bombay (rarely called Mumbai by locals) is a gigantic, gritty and generous melting pot of humanity and humidity. Our task was to navigate the city’s hectic streets and hidden lanes to build partnerships and better understand the needs of shop owners and consumers in the slums. We visited Dharavi—home to an estimated million people and one of the largest slums in the world—as well as central urban settlements and Peri-Urban slums. We conducted interviews, focus groups and behavioural observation. Two things were especially noticeable. First, was the generosity and optimism of the people regardless of their income level, our Indian hosts always welcomed us warmly and rarely accepted payment for anything. Second, was the staggering inequality of Indian society, not just between the rich and the poor but also within the slums. In the Colaba district, we saw cramped dwellings and a field of garbage and open sewers, overlooked by an ominous 27-story skyscraper called Antilia, the $1 billion home of Mukesh Ambani, head of petrochemical giant Reliance Industries.
Thankfully, our time in the slums validated many of our assumptions. But with every new insight comes a new set of challenges. Positive meetings with NGOs, social investors, big corporations and small business owners have left us with a renewed sense of excitement and a long to-do list. When we make our final pitch at the CGI annual general meeting in New York City in September, Muhammad Yunus will be sitting on the judging panel. No doubt his expectations for our social enterprise will be as high as Antilia.