Authored by AIF Fellow Hamsini Balaji
One of the most unique aspects of the development and social impact sectors are the multidisciplinary, multi-sectoral partnerships and the collaboration required to accomplish development goals. As I wrap up my journey as a Banyan Impact Fellow, I reflect on the lessons I have learned from working on a multi-sectoral initiative targeted at increasing incomes and creating sustainable livelihood opportunities for rural women.
It is estimated that post COVID-19, there is a USD 4.2 Trillion gap1in funding needed to accomplish the 2030 United Nations Sustainable Development Goals (SDG). One of the key shifts in development is viewing businesses as essential actors who are intrinsic to the system and creating incentives and accountability structures to create multi-stakeholder partnerships.²
In this blog, I intend to capture insights from working with a quasi-governmental entity and building a hybrid business model to provide increased market access for rural women. This is an attempt to share lessons and conundrums from building a hybrid structure which can translate to approaches used to build multi-stakeholder partnerships.
Background:
I was placed at the Jharkhand State Livelihood Promotion Society (JSLPS). It is an autonomous society set up by the Rural Development Department of the Government of Jharkhan. It acts as the primary agency for promoting increased livelihoods of rural and tribal women through strong community institutions like Women Self Help Groups (SHG), Village organizations, and Cluster Level Federations³.
JSLPS serves as the State of Jharkhand’s implementing organization for the National Rural Livelihood Mission (NRLM). Conceivably, the largest poverty reduction programme for the poor in the world — NRLM — aims to reach nearly 70 million rural households and link them to sustainable livelihood opportunities.
Until 2020, interventions that were being implemented by JSLPS revolved around providing credit and access to financial products for SHG women as the primary point of intervention while supplementing it with technical assistance on entrepreneurship skills such as marketing, financial management ideally resulting in higher and more sustained incomes due to business growth.
However, through routine feedback surveys and program implementation, it was found that the women were facing some key challenges:
Women were primarily selling their products in large state fairs in high volumes and infrequently leading to lowered sales and inconsistent income.
The products sold by women were often sold without appropriate packaging, handling, and product information thereby deterring customers who preferred to purchase products that were on par with safety, quality, and reputation of branded products available in the market.
Women were also finding it hard to directly access markets without losing income to the different players in the value chain.
Women wanted to excel in entrepreneurship but were unable to access the right resources and ecosystem they needed to succeed such as appropriate financing and digital skills/tools.
Given the current challenges, JSLPS reconsidered their strategy by creating a brand that would be owned by the SHG women and would provide direct access to markets with the point of intervention now being direct access to markets attempting to solve the above challenges.
The Idea:
Palash, a one-of-a-kind initiative, was created in 2020 to brand the products of the 250,000 SHG members under a single umbrella to increase direct access to markets in an attempt to increase income for the women. A total of 64 products are currently being sold through Palash such as rice, pulses, spices, soaps, essential oils, jewelry, apparel, and chocolate.
My role as a Fellow involved:
1. Strategic design of a human resources and governance structure which would serve as the foundational design to register the entity.
2. Analyze the operational feasibility of the designed model through field visits and focus group discussions.
3. Conduct the first consumer survey with 300 Indian consumers of varying demographics.
The Structure of Palash:
The team at JSLPS decided that Palash will be registered as an APEX Farmer Producer Company (FPC) sponsored and promoted by the State Government. The shareholders of the company are the SHG women but the senior management and operations would mimic that of a private consumer goods company. The initial capital will come from the government and sources would later be diversified upon Palash reaching a growth stage.
The Insights:
The insights below are lessons from ten months of discussions with multi-sectoral stakeholders, field visits to study operational feasibility, and focus group discussions with rural women.
Get Clarity on the Objective and Decide the Structure of the Entity Accordingly:
The core principle of a farmer producer company is to leverage the aggregate power of farmers to negotiate higher prices and ensure profits reach grassroot levels. With SHG women, the idea is to aggregate them under a brand to create a sense of identity, the brand, which will be harnessed to increase market interest and buy-in for purchase. The hope through larger markets is to increase incomes that directly reach the women.
In this case, there is scope to explore different models of structuring a company including but not limited to revenue generating social enterprises, cooperatives and/or other hybrid structures as opposed to just a farmer producer company. Currently, Palash has a high product diversity which, if not streamlined, could not help a farmer producer company succeed as FPCs focus on the entire chain of activities needed to produce the product.
Capacity Building:
Initiatives like Palash require a significant amount of capacity building for the SHG women to ensure that production meets demand. In addition, there is a requirement for training of ground operational staff for production. While these models serve as great job creation vehicles (if executed well), the ecosystem serves as a foundation for their success.
Strategic Partnerships:
There are immense opportunities for strategic partnerships when building the ecosystem for a model like Palash. In addition to partnerships that build the capacity of SHG women, there is also scope for partnerships that bring innovation across the production value chain. For example, we explored sustainable packaging companies which would open up opportunities to employ women who were not currently part of our primary beneficiary community.
Standardization:
Many collective based structural entities exist around the world but few have succeeded at scales large enough to create identity for the communities they work in. If the vision is to take such models to a national/international level, standardization at the level of products, specifically perishable products, is a proven strategy for success.
With Palash, we were already dealing with variability in raw materials, recipes, taste, quality and location of production for the value added products like pickles, jams, honey, etc.
While studying existing structures similar to what we were trying to create, one commonality in the process was the prioritization of one or a few products that would represent the brand and designing a standardized production process ensuring consistent quality of the product. An internationally recognized cooperative Lijjat Papad started by seven women and only employing women members sells papads, an Indian savory snack which is fried or baked until crunchy.
Every morning a group of women head to the lentil processing facility at 5 AM to knead the dough for the day’s production. Another group of women are then handed the raw dough to make papads for the day⁴. While picking up the day’s raw material, they hand over the prior day’s production to the management. The raw materials for making papads are all sourced from a single supplier.
There is a standardized recipe that the women are trained to follow to ensure a consistent product despite producing from various locations. They are known for their “consistently good quality” and credit it to the standardized process. As of 2019, 45,000 women work at Lijjat and they made a turnover of INR 16 Billion⁵.
Vision Alignment across Leadership and Other Stakeholders:
One of the biggest points of contention, discovered through field visits, for the beneficiary is the loss of their personal business identity to a larger entity and the uncertainty of added value to them.
Given that Palash is based on collectivism, a level of ownership and mutuality is required from the beneficiaries. One of the governance principles of Lijjat Papad is that the culture of the organization will involve three components: a business component, a family component and a devotional component.
While ideal, the “sister-members” are collectively responsible for running the branches efficiently and profitably. According to the sisters, the most important concept is devotion – “Devote one’s energy not for his or her own interest, but for the benefit of all.”⁴
Additionally, the success of such an entity relies heavily on operational feasibility, ensuring inclusive flow of information across all levels of an organization will help refine the model. Based on the structure and to attract the right kind of funding, it is important to have vision alignment across senior management and the funders.
Optimal Incubation Space and Culture:
A model like Palash requires significant access to resources and an entrepreneurial culture to allow for flexibility in building the company. Models like this can be challenging to implement in highly bureaucratic environments with competing intentions, slowing down innovation and decision-making.
In my case, it was helpful to identify champions within the system and/or organization who bought into the vision and were willing to push for the required resources and momentum.
Non-Negotiable Principles:
In hybrid structures, given the multiple stakeholders involved in execution, I found it tough to meet all objectives while staying in alignment with the goal. What would help is to agree on a few non-negotiable principles that stakeholders and the company at large chooses to follow.
For example, while building a governance structure for Palash, a few of the proposed non-negotiables were: Engaging a third-party auditor and 50 percent representation of women on the board.
These principles not only serve as a way to protect the rights of various stakeholders but also add to what the company and brand represents.
Balancing Development Objectives with Brand Awareness and Growth:
The core objective of this company is to increase incomes for self-help group women which requires accounting for the operational realities of the holistic development of the women. Management principles should then incorporate a development ethos in decision making.
This observation and thinking was applied by designing a Ecosystem Development Department of Palash to accentuate the corporate method of operations while incorporating a development ethos.
The Chief Ecosystem Development Officer (CEDO) position has been designed with the hybrid nature of Palash in mind and is intended to serve as the primary liaison to ensure that data from the community institutions on field is being used in the development of strategy and execution plans across all departments.
The CEDO is also responsible for the impact reporting and stakeholder relations. In this sense, the CEDO will be cross departmental and will work closely with the CEO to ensure evidence-based strategy, execution and decision making with feedback and data from primary shareholders of the company on a consistent basis.
In the case of Palash, we saw rural women as co-actors in building the entity considering that literally and metaphorically, they are shareholders of the company. Through hours of discussions with the various stakeholders involved in the project, three key points of negotiation stood out in multi-stakeholder partnerships:
Risk: Certain stakeholders have a greater appetite for risk. Aligning and/or defining the operational culture can help with increased innovation and decision making.
Vision: In the context of development as a whole, where and how does this multi-stakeholder partnership and/or hybrid model fit in? Understand how and where each stakeholder fits within the larger goal and the direction of the stakeholders after the partnership can help refine who falls in the partnership.
Objectives: Each stakeholder has their own needs, culture, values and end goals. Ensuring mutuality can help iron out differences and lead to richer collaboration.
At the end of my ten months, the learning I sit with is: The importance of innovative and sometimes radical partnerships required to create hybrid business models and raise sustainable funding to move towards the SDG 2030 goals.
Sources:
Closing the SDG Financing Gap in the COVID-19 Era. UNDP, OECD. https://www.oecd.org/dev/OECD-UNDP-Scoping-Note-Closing-SDG-Financing-Gap-COVID-19-era.pdf
The SDG Partnership Guidebook. https://sustainabledevelopment.un.org/content/documents/2698SDG_Partnership_Guidebook_1.01_web.pdf
http://www.jslps.in/overview.html
Gupta, Ananda Das. Lijjat Papad: A Case Study of Inclusive Responsible Leadership. Vol 3, Issue 1. June 2014.
https://www.go-yubi.com/blog/lijjat-papad-success-story/
What are the benefits and challenges of using hybrid businesses? https://www.linkedin.com/advice/3/what-benefits-challenges-using-hybrid-business
Data as of November 26, 2022. National Rural Livelihood Mission State Wise Report. Government of India. https://nrlm.gov.in/shgReport.do?methodName=showIntensiveStateWiseReport
MSME Report. India Brand Equity Foundation. August 2022.
https://vamnicom.gov.in/dashboard and Ministry of Cooperation, Government of India
India’s New Ministry of Cooperation – Catalysing the Cooperative Movement. India Brand Equity Foundation. August 2021.