Creating Cross-sector Partnerships for a Sustainable CSR

This is an outline of my talk at the CSR Conference organized by the Madras Chamber of Commerce and Industries, Chennai on 2 Mar 2018

A partnership becomes meaningful when its accomplishment as a whole is greater than the sum of achievements of its parts! As is self-evident, the word “part” is an integral part of a “partnership” J

Let’s take a step back, look at the parts in the context of today’s conference, understand their roles and achievements todate:

Some five thousand years ago, our society organized itself into three broad parts.

1. For Profit Businesses: Provide goods & services to consumers, create employment, generate wealth, pay taxes 
2. Governments: Foster competition among businesses, tax them, deploy the resources on common physical & social infrastructure for the welfare of people 
3. Not for Profit Non Govt Organisations: Keep a tab on 1 & 2 on behalf of people, for their general well-being

One can granulate further and make more parts, like academia (but they could be made up of any of these parts, as in academic institutions for profit or set up by Government or not for profit), or media (again could be any of these three parts). There are also For Profit Social Enterprises and Not for Profit Businesses. Keeping those nuances aside, for the sake of ease, let’s recognise these three parts for our narrative and move on.

What has this socio-economic structure achieved in terms of wealth, welfare and well-being in these five thousand years? 

1. As of this evening, we have lived through 17% of this year 2018. That's two out of twelve months. But, do you know that we have exhausted 29% of the natural resources our earth can regenerate in the same twelve months? Which means, we have lived on the resources borrowed from our children and their children. Actually, stolen from them! This description is just a recast of Earth Overshoot Day, some of you would be familiar with. That was 2^nd August in 2017. 
2. Top 1% of the richest people on earth own 50% of all wealth. And, the bottom 50% own a meagre 1%. A statistic we can all be very shameful of…      

These "inglorious" achievements were recognized a few decades ago and we have set for ourselves what we called Millennium Development Goals then. We didn’t get very far, so we have re-set for ourselves Sustainable Development Goals, now to be achieved by 2030.

For a more balanced achievement of wealth, welfare and well-being, as envisaged in SDGs, we need to see ourselves as “partners” in the mission than merely as “parts” doing our own bit. All hands must be on the deck. 2030 will just be here, like tomorrow! Each part does have a different and complementary role in this new “partnership” approach.

1. Government: For scale. Not just for funds, but for its machinery that’s spread across the nook and corner. 
2. NGOs: Terrain knowledge. Social mobilization. Community empowerment. For, there’s no better bet than empowered communities to achieve sustainable development. 
3. Businesses: Surely, not for the CSR money they are manadated to spend. The mandatory CSR spend, aggregating to Rs 25,000 crores, doesn’t even add up to four days of Government’s budget on welfare! It’s actually for their project and financial management capabilities. More importantly, for their entrepreneurial energies, innovation, and for designing the much-needed impact-making interventions. 
4. In addition to the three parts I had outlined earlier, I will call out a fourth part: Technical & Scientific Establishments - these could be from any of the three sectors - for their domain knowledge and for continuous action learning. For designing best practices based on science and evidence. Otherwise, the interventions end up shortsighted.

It’s easy to play the words, parts and partners, but it is not easy to actually forge and foster partnerships. There are more broken and failed partnerships, than there are successful ones. It’s important to recognize the barriers to partnerships before we move any further.  

• Entrenched prejudices colour actions and communications:
• Businesses and Governments think NGOs are too micro-focused and inefficient.
• Governments and NGOs think Businesses are too profit-minded and there’s always something ulterior in their social motives.
• NGOs and Businesses think Governments are just outlay focused and its officers are corrupt.

• Work cultures and practices lead to operational friction and frustration:
• NGOs can’t fathom the need for institutional systems & controls. “Can’t you just trust us?” is their exhortation. 
• Government is too siloed and procedure oriented and end up pushing all action to the last quarter of a year! Do you know that some 27 approvals are required to translate an MGNREGA project idea into a reality? 
• Businesses expect execution like clockwork, which doesn’t make sense when social capacity of underprivileged communities needs to be built.

• And, once partnering starts, there’s a new problem! Of adversarial posturing by each partner, due to perceived threat to their respective territories.
• We know our bit. You don’t need to tell us!

With odds stacked so badly against partnerships, how do we make partnerships work? Let me share a three-point formula, based on our experience of implementing ITC’s CSR projects in partnership with some 85 NGOs, 9 Governments, and 15 Technical & Scientific Institutions:

1. Co-create projects from the beginning. Conceptualise multi-stakeholder projects after explicitly recognizing the complementary strengths of each partner, and how without any one of them the outcomes would fall short of the community needs. 
2. Design a predetermined review rhythm. A platform of key members of each partner to review progress and remove roadblocks. This way, the engagement becomes more evidence based and resolution focused; otherwise, there’s lot of finger pointing based on different perceptions. 
3. One of the partners must become an Orchestrator of the partnership and take on the primary responsibility for the project outcomes. To convene and harness the collective power. To make things work.

Thank you.

Agriculture: Twenty Years from Now...

Following is a summary of my remarks in an “Agri Panel” at the Global Entrepreneurship Summit earlier today, in response to the question, “What do you think will be game-changing about how we think about agriculture, twenty years from now?”

Soon after the panel moderator sent me this very interesting question a couple of days ago, the first thing I did was to post this question on Twitter, Facebook, and LinkedIn to crowdsource thoughts from my friends. There were nearly two hundred unique responses! They added up to twenty pages of text, without counting the number of pages in the links I received. Overwhelming, isn’t it?

All I am doing now is to simply synthesize those inputs and share with you J

The future of any system is shaped the current aspirations of the key stakeholders. Let’s take a look at the aspirations of the consumers, producers and the society at large…

Consumers want sufficient quantity of food (because we would be nearly nine billion by then, and on average richer than today), that is tasty (although, a friend did say in lighter vein, “since we will have nano-bots in our blood streams, and since our memories could be uploaded on to cloud, maybe we don’t need food and therefore no agriculture; we probably just need some electricity, or batteries, or just a few hours of exposure to sun ;-), is safe (you are all consumers here, don’t you agree that harmful chemicals in food is your topmost concern?), nutritious (scientists say that most of the world is suffering from invisible hunger), and all of these at reasonable prices!     

Farmers want higher incomes (as you know, per capita income of farmers around the world, especially in emerging economies, is far lower than the general per capita) with lower risk (weather and disease related production risks, price volatility). Their labour deserves more dignity (as it is, hardly any youth from the next generation wants to be a farmer) and they deserve better quality life (as in, the conveniences and comforts that are common in urban settings).  

Society at large would like agriculture to conserve natural resources (water and top soil, for example) and where possible, actually renew them. Agriculture needs to be resilient to climate change (the summer rains and warm winters, extreme climate episodes like heavy downpours on one hand and droughts on the other, etc), and again, where possible, positively impact climate change (sequester carbon, minimize greenhouse gas emissions etc).

An interplay of these different - at times conflicting - aspirations gives rise to three distinct scenarios, all of which will co-exist in twenty years. Let me label them: Farms as Factories, Homes as Farms, and Back to Basics!

Farms as Factories: By using the metaphor of factories, all I am saying is that the consistent quality of output will be produced, crop after crop, by leveraging the evolving technologies – both farming (like seed, nutrients, farm-equipment, agronomy practices etc) and digital (IoT, block chain, hyper-spectral imaging, GPS / GIS etc). A friend called them, “hardware, software, and liveware”). Another friend went to the extent of visualising a self-managing seed! These seeds will analyse the experienced conditions like soil, weather, water etc and invoke the necessary embedded features that would maximize the yield and quality. This may sound like fantasy today, but those of you who are familiar with experiments on seeds with multiple layers of coating in the past may very well say this could be a reality in twenty years!

Homes as Farms: I am sure, you have heard of vertical farming, balcony farming, kitchen gardens and such other names. Once supply chains are established to supply DIY-type mini production units, seeds, nutrients etc to the households, this phenomenon will expand more rapidly. This food is safe without any doubt in the consumer mind, and zero carbon miles! Business Models are also in the works for another kind of service. If you are not adventurous enough to grow crops in your backyard yourself, you can simply let out the space to Service Providers who can grow crops on a BOO model. Besides experts growing the crops in this model, a colony-level kitchen garden is more optimal than a household level garden. And a third model, which is not a ‘home-as-farm’ strictly speaking, is a partnership between a group of, say, five thousand, consumers and a community of, say, five hundred farmers. I know of several such partnerships across cities, built as WhatsApp Groups integrating even the e-commerce functionality.       

Back to Basics: Much of today’s ills of agriculture are due to chemical-intensive mono-cropping paradigm. A more sustainable future scenario would be an integrated farming system consisting of polyculture, permaculture, organic compost, bee-keeping, animal husbandry, renewable energy. In fact, I already see some farms where solar energy brings larger revenue than the conventional crops.  

As the panel went forward, there were other questions, but for now I am wrapping up this post without covering them.

As always, comments are most welcome J This is a live and lively topic! 

Rural is more about doing it the right way: Effective Execution of Strategies

The Event Theme:

Rural India is the next growth destination. The aspirations of today’s rural consumers, who are “better-connected” and “more-aware”, are rising. They are fuelled further by their increasing incomes. “Why” marketers should go rural is not a question anymore… The task now is to devise strategies that can seize this opportunity. The “how” of it!

To help marketers navigate this future effectively, Rural Marketing Association of India organized a Conclave with the theme “From why rural to how rural”.

The event saw an amalgamation of two generations of the rural marketing fraternity. Experienced industry veterans joined the new age professionals to share the best practices and preview the next practices through panel discussions, presentations and case studies.

My Session Theme:

While some marketers have hopped on to the rural bandwagon early, many have started exploring more recently. Strategies that worked in rural markets, as also those that didn't, have been well documented. Riding on the increasing penetration of mobile devices and internet, social media and e-commerce are no longer the things of the future in rural India.

Coming well after the mid-point of the event, on Day 2, my job was to pick a few widely recommended “hows” (the strategies) from the preceding sessions, and share my thoughts on “how exactly” does one go about implementing them.

I picked four “hows” and went on to prescribe “how exactlies” based on the lessons from ITC e-Choupal experience… 

How 1: Because rural is a ‘connected community’ and the rural people are ‘social’, you must work through “Opinion Leaders” to influence the buying decisions of rural consumers.

Such Opinion Leaders could be Panchayat Presidents, Large Farmers, Shop Keepers, Teachers, and so on…

How Exactly does one go about finding the right Opinion Leader relevant to my offering and my context?

Step 1 is to figure out the exact role such a person would play in your business model, and accordingly determine the relevant profile.

For example, it could be a Value Chain Intermediary who is making up some missing infrastructure to improve efficiency.

Like the way the village money lender knows whether or not to extend an additional loan when the previous loan has not been repaid. Despite the missing credit rating infrastructure, he would know what to do because he knows whether the crop has failed, or if an unforeseen domestic expense has come up, or if the farmer simply wants to renege despite having cash on hand.

Or the way an Adathiya in the Mandi knows if the lot of agri produce has to be priced higher or lower than the average. Despite the missing laboratory infrastructure, he would know whether the lot has more of good, bad or ugly material. With one look!

That’s how the role of Samyojak came into being in ITC e-Choupal system. One of the roles of Samyojak, located at Choupal Saagar (the hub of the hub & spoke e-Choupal architecture) is to disburse cash to farmers. While the Banks offered to do this job at a cost of 1.0% of transaction value (accounting for the cost of a bill clerk, a cashier, and a security person, working in two shifts to service our working hours of 0700-2100), the adathiyas were ready to do this at 0.25% by combining all three roles into one! We found a Samyojak in the adathiya. He was making up for the missing cash-less transaction ecosystem. One day, when the infrastructure is in place, Banks will be able to do this more effectively.

Other example could be an Influencer who demonstrates the value of an offering through personal usage. Sort of a “lead consumer”.

It is important that the rest of the consumers perceive this person as “one amongst them”. Not the Agent of a Company, promoting their offerings. Nor should the companies see him as a Leader of the farmers / consumers as in a Trade Union context.

Thus, a medium sized farmer became a Sanchalak in the e-Choupal system. Not a large farmer, nor a shop keeper or a teacher with whom the majority of the farmers cannot identify with.  

The Choupal Sanchalak was the “go to” person for both the villagers (when they had an issue with the companies riding on the e-Choupal platform) as well as the companies (when they had an issue with the villagers). Sanchalak was “one of us” for both the parties!

To my mind, this unique institution of Sanchalak is a bigger innovation in the ITC e-Choupal model than bringing Internet to the villages when most of them hadn’t even seen telephones!

The social capital of the Choupal Sanchalak is further enhanced through a public oath he takes in front of the whole village that he would act a like trustee etc.

How 2: Although the rural consumer’s aspirations are more urban-like, you must tailor-make products for rural consumers and their contexts because rural is heterogeneous (eg. single razor vs multi-blade systems) 

You must co-create with rural consumers, because you can’t otherwise keep up with the speed with they are changing. They are not urban consumers with a standard time lapse, as someone said.

How Exactly do you co-create? This is an often-used but hardly understood phrase!

It may be easier to understand co-creation, if we first understand what is not J

Co-creation is not more research. It is not bringing consumer voice to the boardroom.

Co-creation is not crowd-sourcing ideas.

Co-creation is not even marketers immersing with consumers and developing empathy.

Co-creation is not testing company-centric product designs with the consumers.

Co-creation is giving consumers the tools and structure that allow them to become designers!

Sanchalaks – as lead consumers (of crop management knowledge, for example) – were integral part of the e-Choupal web portal design team. It was at their instance that a typical “best practices’ content was structured as “current practices, what is right or not right with them” and “why some practice needs to be changed, and then the recommended practices”. This helped add credibility to the portal that the scientists panel understood their context and then only were recommending something else, rather than a conventional expert style instruction…

The structure of periodic village meetings with all the farmers, further rolled up into Sanchalak Sammelans, helped embed their insights and inputs into the continuously evolving design of e-Choupal on an ongoing basis instead of an occasional feedback system…

We pleasantly realised that the brand “e-Choupal” was owned by the community, and that ITC was a mere trustee, when such a co-creation process articulated the brand tagline as “kisanonke hithme, kisanonka apna” in the very second year of the initiative.  The highest level any brand can attain, to my mind J  

When everyone was looking for a low-cost-last-mile to reach the rural markets, ITC e-Choupal was working on an intelligent-first-mile by working together with the communities.

How 3: You must forge partnerships to win in the “high-cost-to-reach but low-ticket-size” rural markets

Partnerships are relevant from many angles, how exactly do you determine what kind of a partnership does one forge?

I have a product, you have the channel. Let’s partner to expand outreach?

I have a product targeted at a market. You have a non-compete product for the same market. Let’s partner and go to market together and cut costs?

All such partnerships are eminently worthwhile. But the best partnership potential is in creating what is called a meta-market.

There is a fundamental disconnect in the conventional markets. Consumers think in terms of activities; companies think in terms products / services. For example, a car buyer would think in terms of information to understand the features of cars available in the market, source of credit, dealer in the vicinity, insurance, RTA etc. Each of these belong to a different industry, each trying to reach the consumer independently!

What a meta-market does is to cluster such complementary products / services and offer a complete solution to the consumer.

In the context of agriculture, farmers think in terms of weather forecasts, market prices, access to farm inputs, credit, insurance, markets for the produce, and so on… The ITC e-Choupal ecosystem assembled all these players from diverse set of industries on one platform to offer a seamless market experience to farmers / consumers at one place, right in the village! As many as 160 organisations ride on this platform today!

How 4: You must leverage technology to operate in the rural markets, because it can cut costs through remote delivery as well as personalise offerings

There is so much technology around me, how exactly do I use technology? Mobile advertising, geo-coding?

Simple! You understand the unfulfilled consumer needs and the current business processes first, and then see what role technology can play. Not the other way round.

For example, when the farmer goes to a mandi to sell his produce, four transactions are rolled into one. Price discovery, Sales, Delivery, Cash Collection. The sunk cost of transportation he has incurred even before discovering the price forces him to sell at whatever he is offered. Taking the produce back doubles his transportation cost with no guarantee that he would fetch a better prices next time he comes to sell.

ITC e-Choupal brought price discovery process to his doorstep using Internet (supplemented by the quality testing by the Sanchalak) empowering him to decide when and to whom he would sell without the pressure of a sunk cost.

When he sells to ITC, we have the ability to stack the produce of different farmers in different lots pooled as per our quality norms rather than the random aggregation done by the adathiya in a mandi. This helps preserve identity and maintain product integrity, so critical for the success of our brands.

A win more + win more solution enabled by technology J

 

Will the new CSR mandate be a game changer?

As you may know, the new Companies Act of India mandates that companies of a certain size and profitability must spend at least 2% of their net profits on Social Responsibility activities (See Section 135 on Page 80 of the Act)

I was a panelist at the 'CII National Summit on CSR' in Delhi held on 30th September 2013. These were my opening remarks in response to the question posed to my panel, "Will the new CSR mandate be a game changer?"

The 2% CSR spend is estimated at about Rs 20,000 Crores. This money is less than what Government spends in five days, considering the annual expenditure budget of Government is some Rs 17 Lakh Crores. Subsidies alone, out of this total amount, exceed Rs 250,000 Crores! Therefore the 2% CSR spend is not going to bring in the game-changing resources...

However, if Corporate India harnesses its 'innovation capacity' and leverages the 'power of partnerships' to solve India's social and environmental problems, I am sure it can change the game!

Instead of looking at the 2% amount as 'a philanthropy budget', if companies can innovatively embed CSR into their business strategies, larger problems can be solved.

This could be in the form of 'socially inclusive business models' where the capacities of low income suppliers and distributors can be strengthened to improve their productivity, market access, and bargaining power, while enhancing the competitiveness of the whole value chain in which the company is a part. Eg. ITC eChoupal.

On the environmental front, investing in renewable energy is a low hanging fruit, given our unreliable grid power, and the high cost of diesel-generated power. Innovation of higher order is required to build 'green supply chains' that regenerate the natural resources consumed in a business. Eg. ITC FarmForestry. 

Embedding CSR into business strategies would also ensure that the CSR spends do not get impacted in times of slowdown. Of course, this whole argument is not to rule out the need for philanthropic spends in cases of extreme distress.

Now I come to my second idea. I believe four types of partnerships could contribute to game-changing outcomes:

Partnerships with other Corporates operating in the same geography or working in the same domain can create joint projects and / or knowledge platforms for experience sharing.

Partnerships with CSOs / NfPs for social mobilisation and impact audits.

Partnerships with Communities themselves for gaining deeper insights while designing and executing projects. Also, Users Groups for democratising common property management.

Partnerships with Governments to create markets for trading "social credits" ala "carbon credits", and for aligning social subsidies to develop inclusive markets rather than distorting markets. This is besides the PPPs for building infrastructure that are already gaining traction.

While no one stopped Corporates from innovating and partnering to solve societal problems - indeed several companies have done so, successfully - the new CSR mandate hopefully inspires many companies to look at this as a game changing opportunity.

Never believe that a few caring people can't change the world. Indeed it is the only thing that ever has ~ Margaret Mead