Social Enterprises: The "Silver Bullet"?

As I mentioned in my previous post, I have been deciding what to share in my final post. Should I talk about culture in India? My personal adventures throughout this vast and diverse country? My life in the most cosmopolitan and populous city in India?

I could speak about my experiences but because I know I'm coming back soon (or at least to another emerging market), I've decided to share what I've learned from early-stage social entrepreneurs in India which  is far more interesting... well ,for me at least! So what have I learned?

Focus on doing one thing well: Early-stage entrepreneurs usually have limited resources to get their product or service to market and start gathering feedback and generating revenue.  Entrepreneurs have a choice: do many things poorly or focus on doing one thing (or a few things) well. From my conversations, the entrepreneurs that choose to focus on one thing tend to have a more coherent pitch, vision and plan of action to achieve the vision. As a MBA student, this lesson hits home even more. In business school, you are inundated with opportunities - professionally, socially, and academically. Would you rather attend that corporate presentation tonight, study for an upcoming exam, attend a social event for your favorite club, or go to a happy hour with your friends? Logistically, you can't do everything. Fortunately, what you decide underlies that which you value most thereby (hopefully) leading to a more defined focus.

Understand who your customers are and listen to them often: Rather than try to sell to everyone at once, entrepreneurs are more likely to succeed if they take the time to first understand who to sell to and work to meet their needs. Entrepreneurs that pay attention to their customers, peers, and even competitors have a much higher chance of survival. For example, during my conversation with Chachii, the co-founder had identified peers in India and abroad to better understand their models. With this analysis, the entrepreneur further differentiated her service while identifying potential exit opportunities. Another common thought among entrepreneurs is that "if you build it, they will come" which is especially prevalent for entrepreneurs with a technically superior product. Although your product or service may be the next best thing, the ultimate judge for any entrepreneur should be the market and their customers. Numerous cases, such as Betamax vs VHS or the more recent Blu-Ray vs HD DVD, demonstrate that business success hinges less on your amazing and technologically advanced product specifications than on your ability to listen to your customers and execute on your model.

Focus on business model first, social impact second: Without a viable business model, any social impact that a social entrepreneur generates is short-lived (note: my definition of a social enterprise is one that seeks financial and social/environmental returns.) Although understanding the context of the social or environmental issue that an entrepreneur is trying to address, the immediate questions that come to mind all relate to an entrepreneur's business model including:

"Have you identified a market with customers who have some willingness to pay?",

"How do you plan to offer your product or service cost-effectively to eventually generate profits?", and

"What or who stands in your way and how do you plan to address that?"

For social entrepreneurs, the last question is one of the toughest since achieving social impact usually involves changing behavior and these enterprises face the toughest competitor: the status quo with customers who are usually resistant to change regardless of how the product or service could "change their lives". For example, solar lamps and cookstoves provide a safer and cleaner alternative than kerosene as light or fuel for cooking, respectively. Plenty of entrepreneurs sell these but few have managed to convince potential customers to switch, differentiate themselves and achieve scale.

Play well with others: Besides overcoming the status quo, social entrepreneurs occupy a unique space as they usually try to offer something that the government has failed to do (or at least, do well), non-profit organizations provide free or at cost like water or food, incumbents "offer" usually in the form of exploitation, or any combination of the three. Social entrepreneurs need to understand if, when, and how to engage with these players to create a market with fewer distortions thereby leading to sustainable and long-term change. For example, NextDrop has worked with the local water utility from day one because without the utility's buy-in (agreement), NextDrop would not have been able to launch its SMS service.

A market-based approach is not the end all be all for poverty alleviation or any other socio-economic or environmental issue. Humanitarian aid to countries or regions in conflict or post-major natural disaster, for example, is the most feasible solution despite its shortcomings and criticism. At the same time, my experiences with social enterprises and non-profits have convinced me that social enterprises have the potential to address most socio-economic issues. They, however, need to closely collaborate with government and the social sector to adequately address the complex, inter-related nature of these issues. Market-based approaches and especially social enterprises are not the "silver bullet". But they should lead the way to achieve real and sustainable social change.

Collection of photos from Somaliland, North Somalia

The Jordanian Arab Spring

In July, I met with some members of Le Café Politique Amman, a group that started out as a small secret Facebook group that now flourished to include about 2000 Jordanians from all walks of life united by their belief in Jordan and progress. We met with Dr. Marwan Muasher, previously Jordan’s foreign minister who was also Jordan’s first Ambassador in Israel.  Dr. Muasher’s long political career aided by his time as vice president for studies at the Carnegie Endowment and his well-respected and approachable personality make him an especially valuable resource for many young Jordanians looking to become politically involved.

Dr. Marwan spoke candidly about the Kingdom’s tight decision-making circle, lack of pluralism in Jordanian politics, and most importantly lack of organization among the few budding political parties. This is a link to the meeting's video. 

I found most fascinating his remarks on how no government in the Arab world gave diversity any attention. While I know it is true, I find it rather ironic since the region has always been a diverse medley of religions and ethnicities – that alone is proof that many Arab governments do not represent the societies they govern. It seems that in modern times, many Arab governments sidelined political participation and social equality and really only focused on economic development. This entrenched the limited circles of executive power, intensified income inequality, and increased corruption, all of which are supported by the strong intelligence machine that continues to interfere in the daily life of citizens.

He stressed that in order to build democratic and sustainable institutions nations affected by the Arab Spring must end their ambiguity to commitment for pluralism. The revolutions are proof that the notion “bread before freedom” no longer holds true and that a serious reform process that does not foster political development alongside economic development is unsustainable.

The “Arab Spring” as a term insinuates a romantic and overtly optimistic notion that the revolutions will propel the states into democracy overnight. We must recognize that the wave of revolutions that hit the region did not come as a surprise (if anything they were well overdue), and that many generations will have to struggle and build before they can accomplish a truly democratic and inclusive state. This change is inevitable, but the timeline and the framework are still unknown. And the daunting question remains, what will it take? 

This is a link to the meeting's video. 

Best of Bhutan

This post is aptly called the Best of Bhutan. I've decided to include some photos that I had not previously been able to the blog. Each picture has a story which I'll briefly share.

Another Day Another Cow

Every single day, I walked to DHI and on my way I encountered a new cow on the way. This one is quite pleasant looking but occasionally I have to walk past enormous bulls. They were sure to leave cow pies on the road each day. I felt like I was walking through a minefield. 

"Tiger's Nest" from afar

View From "Tiger's Nest"

Tiger's Nest is a monastery over 10,000 ft elevation perched on a cliff. 

 

From there, the view of the Paro valley was amazing.

Just out of view to the left is Paro Airport. Planes are only able to fly there during the day because the mountains are difficult to navigate at night.  

 

This is the Supreme Court which was within walking distance of my apartment and DHI. It was here where I consulted with the Court Registrar and with a Supreme Court Justice regarding my research. These meetings were very informative and provided with much needed perspective on my assignment. 

View from my Front Yard

This photo was taken on my way to a banquet where DHI officials met with the officials of its subsidiary companies. The rapport between these companies is very interesting. In many ways DHI is a new-comer to the public sector in Bhutan since many of these subsidiary companies pre-existed before DHI was established. They were initially within the Ministry of Finance until they were transferred to DHI which manages them. 

Gho vs. T-shirt and Jeans

Every single day I worked with people who wore Ghos which are the traditional outfits which Bhutanese have been wearing for hundreds of years. I was tempted to purchase one but I managed to move around wearing western dress. 

Thank you everyone for reading my blogs! I can't wait to meet up with the rest of the WDI fellows back in Ann Arbor this fall.

Somaliland Diaspora investing in Somaliland health sector- interview

During my stay in Hargeisa it was difficult to ignore how many Somali expatriates are returning either for summer vacation or to open new businesses. I had the opportunity to sit down with expatriate entrepreneur, Mohamed Ibrahim. Mohamed is from Boston; he has multiple investments in Somaliland and in Boston. Mohamed and a group of investors from the diaspora opened a specialist health center for neurology diagnosis in Hargeisa beginning of this year. I had keen interest to know about this venture. I wanted to know why invest in unrecognized semi-conflict zone like Somaliland. How they are able to sustains their business, and overcome financial and other barriers.

Hargeisa Neurology Clinic works by recruiting specialized foreign doctors to work in Somaliland. Mohamed and his partners recruited two neurology specialists from Pakistan. Because there are not enough skilled doctors in the country, people are compelled to travel to neighboring countries for treatment. Somaliland has one of lowest ratio of doctors per capita (there is 1 doctor every 31,531). There are roughly 111 certified doctors in the whole country, according to 2011 estimate. Brining foreign doctors to work in Somaliland is a difficult task because of instability in the region and bad reputation of the country. Somaliland is unrecognized country situated in a conflict zone. However, unlike Somalia in the South, Somaliland enjoys stability and it has a functioning democracy. In addition, it is one of the poorest regions in the world. It is difficult to give incentives to doctors to live or work in this difficult place.

I was surprised to learn that doctors are coming here for financial reasons. Working in Hargeisa is more rewarding financially for doctors than working for example in Pakistan. Hargeisa Neurology Clinic covers travel expenses, housing, transportation, food and other personal expense for foreign doctors. Because of scarcity of specialists and well-trained doctors, people pay high fees for visiting and foreign doctors. Mohamed told me that his clinic has had patients from as far as Gal Mudug in central Somalia. Mohamed added, “there is money in Somaliland, don’t let the dusty roads fool you… People will spend money for quality care.” Normally charity organizations bring medical volunteers few times every year to do surgical treatment or provide unavailable treatment in the region for the masses. People would line up for days before the arrival of doctors and sometimes pay kickbacks to see visiting doctors. It became obvious there is a business opportunity to bring high-skilled doctors to work in developing countries like Somaliland.     

However, investing in healthcare is a tricky business. It is a costly operation that needs skilled labor, collaborative ecosystem, and high maintenance. In addition, the GDP per capita in Somalia is roughly $333 (2009 estimate, UN). The average person earns less than one dollar per day. It is extremely prohibitive for the majority of the population to seek treatment from quality clinic. Brining foreign doctors can make healthcare unaffordable for the majority of the population. A visit to a private doctor ranges between $3-$20. But it is a much-needed service. Mohamed told me that his clinic is charging below what most specialists are charging.

Healthcare system in the country is in bad shape. People travel to neighboring countries to get treatment. The maternal mortality rate in Somaliland is one of the highest in the world; MMR was 1,013 per 100,000 in the year 2006. Treatable infectious disease like tuberculosis, measles, Malaria, diarrhea are wide spread in Somaliland. The public health service is limited in scope and coverage. Large aid organizations like UNICEF, WHO, FAO, WFP provides the Somaliland with funds and capacity to maintain basic infrastructure of prevalence diseases prevention, surveillance and food security. Similarly, the health private sector in Somaliland lacks adequate resources. There is an urgent need of investment in healthcare in Somaliland.

In this video, I interview Mohamed about his businesses and investment in Somaliland. We discuss what role the Somaliland diaspora can play in the development of the country, the role of technology in creating business opportunities, and difficulties that face investors and entrepreneurs.