SELCO and For-profit Social Enterprise

I have been a fan of the concept of for-profit social enterprise after seeing Prof Trilochan Sastry's work on Commodity Cooperatives (CCD). CCD works for creation of wealth for the poor by acting as a catalyst and as capacity builder and let the poor manage their own affairs. For example farmers in AP districts form a cooperative, operate it and add value to their production by adding collective capability to process their turdal (arhar) in their own daal mill. Another district builds a different cooperative for different crop and purpose.

The most important part for me was the grounded approach, and the philosophy that it's arrogant to tell poor how to improve their lives. One should rather assist them in institution-building and they will manage things better than external agencies can.

Recently I came across an article about SELCO who are also one such enterprise. They sell solar equipment to poor which can improve their livelihoods. The important bit again is the philosophy of respecting the intelligence of poor and providing them systems or commercial business models.

SELCO founder Harish Hande makes quite a few interesting observations in this lecture (Part 1 - starts around 18:30, 2, 3, 4). This article is also a good perspective of his work and thoughts.

• Business models for poor are fundamentally different than classic business studies and need to be innovated in a decentralised way. Therefore the models for poor cannot fundamentally scale-up (only the abstract principles behind them can scale).
• Poor pay for energy more than average person - 1/8th of income in the example he gives. So the question of affordability is twofold - low income but also higher cost (last mile delivery, financial risk, contract enforcement and so on). Most often poor are willing to shore up the ability to pay but there are not enough market solutions for the cost part. This is where SELCO found that their solar energy solution can be cost competitive if a financial model can be provided. His favourite example - a fruit vendor could repay Rs 10 a day but not Rs 300 a month.
• India keeps saying that its energy intensity is very low and development of poor needs coal power, but there is a stark divide in which urban/rich India consumes energy in line with developed economies and the power from coal plants is not reaching the poor anyway. In that sense the rich in India are hiding behind poor to make an excuse for cheap energy.
• "I went to IIT [only] because 600 million Indians did not write [JEE]". The number is debatable but the point is the uneven field of awareness/opportunities.
• 'Fortune at the bottom of pyramid' is coming from non-expendable income. Providing a poor person a choice to buy Re 1 shampoo sachet is fine but at what cost is the choice for clean water? The fortune is larger in enabling them instead of selling to them.
• Microfinance models are often too expensive for asset financing, it may work for working capital.

You can disagree with his overall slant of moral obligation (which is perhaps only a perception because of his style of rhetorical questions and sarcastic remarks) but the points are quite valid. For example I didn't see the moral obligation of us being a product of subsidy and therefore giving back to society is as black and white (perhaps he also doesn't). Those who work for their own or corporate also create value in society. The point remains that the value created by such a social enterprise is better in broader sense than the value created for shareholders. The broader sense can be improving livelihoods, providing economic freedom/dignity, financial inclusion or even macroeconomics (poor have higher propensity for consumption because they are fulfilling needs before wants). It is an individual choice in selecting the value creation.

Coming back to the for-profit part - SELCO are providing the product at a margin which is also shareholder value. But such a shareholder is fundamentally making the choice of making less margin for a longer term to fund such business. The margin part is important for market efficiency and avoiding wrong incentives / behaviours (for example in a subsidised model poor have less incentive to repay). There will be a subjective assessment of how much margin is right - setting the right incentives but not usurious - again there won't be a theoretical solution here.

Overall a very inspiring example - of a for-profit social enterprise creating value for poor and of a person with grounded and no-nonsense views of the world.

Update 20/1: M-Kopa in Kenya also offer such product with additional accessories (Hat-tip: Himanshu). Poor in Kenya have less access to banking compared to India so the company had to finance the sales themselves. On the flipside the mobile payment systems (M-Pesa) is much more widely used in Kenya so collections are easier.

Trekking in the Scottish Watershed

"Raindrop to the East reaches the sea
And to the West the ocean, you see,"
Said Aylan, my trekking guide
"Watershed is a drainage divide."

You couldn't tell the two apart
In the air, did they depart
And hit the ground inches away
To each their own waterway.

I pictured the journey of a drop
At the lake's gate she had to stop.
'Practice the ritual oh your sweetness
Only then will you be called Loch Ness.

It's a privilege to go East from the Loch'
'Ah fine. But such thought is a lock.'
'You must be a keeper of the tradition'
'That I'm here, isn't of my volition'

Company to the sea wasn't too kind
Heretic was she who unlocked her mind
Asking too loud, 'What's the point?
The ocean and the sea are anyway joint'


"Edinburgh is charming and so is Glasgow"
Aylan said, "wherever a drop may flow.
The Watershed is a transient border
The borders in our minds caused a murder."



Notes:
I kept thinking about this theme when I read about Scottish Watershed few months back. You must have guessed the thoughts were not particularly about trekking or Scotland and obviously the choice of name is recent.

There is a safety principle in manufacturing plants - accidents don't happen, they are caused.

Game theory in nature?

I recently saw a BBC documentary and it covered Clark's nutcracker. This bird stores tens of thousands of nuts in stashes of 10 across area spanning upto 100 square miles for retrieval during winter and manages to remember around 70% of them.

This also happens to be a symbiotic relationship between this bird and tree (whitebark pine) from which it gathers these nuts. The 30% forgotten seeds help the tree sow its seeds in the coming spring and reach out farther. The bird's beak and the seeds have matching size and shape.

While marveling at the incredible memory of this bird, I have a feeling that it's not only that. It is perhaps possible that it remembers more than 70%, but chooses to leave the seeds in the ground for the relationship to remain symbiotic. I couldn't find out if the seeds 'forgotten' are at the locations forgotten (it seems so). If however these are forgotten even within a stash, it would reinforce this hypothesis.

Now let's see about ultimatum game. An example runs like this - Alice proposes dividing $100 between herself and Bob, say keeping 90 for herself and 10 for Bob. Then Bob can agree or disagree. If he agrees, both of them keep the agreed split. If he disagrees then none of them get anything.

Standard explanation of rational behaviour says Alice should propose 99 / 1 split because 1 is better than nothing for Bob so he should accept that rather than reject and Alice can keep the rest. However empirical runs of the game seem to split the pie 50/50 to 70/30, but also dependent on priming, cultural norms, and possibly the size of the pie.

Ultimatum game, along with dictator game are often given as examples to illustrate success/failure in a public development project where different stakeholders need to get consensus. This is perhaps more explainable by principle of fairness or reciprocity, especially evident if the game is run multiple times and by switching players. An interesting diversion on this topic is the empirical run of dictator game giving evidence of 'power corrupts', on Dan Ariely's blog.

70% is a convenient number in this case because Clark's nutcracker seems to be Alice in our example and Bob the tree, and they seem to be respecting the reciprocal benefit to continue the repeated game.

It is entirely possible that this symbiosis and the ultimatum game are unrelated, and the matching number is just a coincidence. However I will not be surprised if this bird and tree implicitly knew about this game before us humans. I have argued before that we need to respect other life forms better. This does reinforce that view.

PS: I have deliberately not put this on the other blog which I intended to use for economics-related posts because it seems more inter-disciplinary. Also labels make multiple blogs somewhat irrelevant.

Taxi Fraud - Facts and Interpretations

There was an interesting incident yesterday, combined with today. While narrating I have tried my best to separate facts and my opinions. Let me know your opinions (and facts, if available).

After a trip to Jhansi over the extended weekend, wife and I reached Dadar by train yesterday (Tuesday) around 8 pm. A taxi driver in dull pink shirt asked us as we got down, "Kahaan chalenge?"
"Borivali", I said.
"Thik hai, chaliye, meter se chalenge."
I was mildly surprised at his offer, since he had approached us first. But I had nothing to lose, so I just nodded and went with him.

We dragged the luggage towards his taxi. It didn't have enough space behind since it was CNG-fitted old car. I think it was Maruti 800. We kept some luggage above in the tray, and a bag in the front seat. He seemed reluctant to keep it there, but I insisted. It appeared that another friend of him wanted to sit there. The friend, a sardar in white turban, managed to push the bag a bit and sit there.

Then sardar friend asked if we had two notes of 500 in exchange of a 1000 Rs note. I took the note, drew my wallet, and handed him two notes. He turned them back saying "thousand diye na". I looked at the notes again, and noticed that they were two 100 Rs notes, not 500. I was mildly surprised again. We took those notes back and gave him two 500 notes instead. He walked off.

Later the pink-shirt requested that we take another cab instead as he didn't have enough fuel to reach Borivali. He guided us to another cab and helped move our luggage. The new driver then drove us home from Dadar station.

Halfway to Borivali I noticed that I should have had more 500 Rs notes, and I had more 100 Rs notes than I should have had. Then it struck me that the sardar friend must have exchanged them. I had heard such stories with Bangalore rickshaw-wallas, but it didn't strike me at the instant when the same fraud was happening with me. As a friend had commented earlier - I am too nice.

We had failed to note the registration number of both - the earlier taxi we sat in, and the taxi we eventually took to Borivali. Angry with ourselves, we came home, cursed, ate and slept.

Today (Wednesday) I was staying a bit late in office, but left and reached Mahalaxmi station at around 7.41 pm (since 7.40 Borivali local was already gone, and 7.43 Andheri was next). I like 7.40 Borivali, it goes to platform number 8 at Borivali, from where I can walk home easily. Next Borivali train was 7.50 which goes to PF7. Not so bad, but... meh. So I thought let's go to Dadar and check out if I can find the pink shirt and the white turban again.

I went there. There was a similar looking (though I am not really sure whether he was the same) sardar at the same spot. I roamed around and tried to observe him for five minutes. Eventually he took an old couple to his taxi. Now I was watching him like a mom watching her two year old walk in the park, without the affection of course. Another sardar, with dark blue turban sat in the front seat and engaged in some talk with the old couple. After two minutes the couple came out of taxi, being walked to another one.

Now reasonably sure of the culprit, I confronted the sardar driver (with white turban) and asked him where he was yesterday. He came out of the taxi. I maintained that he had embezzled me of 800 rupees yesterday. He listened curiously to my allegations and denied being there the last day. 3-4 people gathered around the drama. I explained the whole sequence to everyone and accused that he was trying the same trick with the old couple. I ran to the uncle and asked him whether he was asked for change of 1000 rs note. He submitted that he was asked but he didn't have change. Lucky him!

So now back to the driver I asked for my money back and threatened to report to police otherwise. When I was walking away from him, another fellow sardar (third one) and a non-sardar driver tried to console me and asked me about the details.After much exchange of facts and descriptions of the people and taxi involved, they said they knew of the taxi and it belonged to a rival taxi union. Now here comes the twist. They fully reimbursed me my loss, and noted my mobile number to verify the fraud at a later stage of investigation.

I asked them why he had to suffer because of someone else's mischief. One of them said they will recover it from the actual culprit since they know him, and "customer is god". Even after more hesitation in taking money, they insisted that it was not a big thing. I finally walked off with the recovery.

End the facts, start the thoughts.

First, did the fraud actually occur, or was I too suspicious? Cues - taxi driver approaching and then asking to go by meter, reluctance of bag being kept in front seat (pre-planning of fraudster coming and sitting), my estimation of number of notes in my wallet, similar incident heard in case of bangalore rickshaw-wallas, guiding to another taxi to avoid questions later using an excuse of low fuel (he should have known earlier). Or I was downright cynical. I am betting a 95% probability of fraud.

Secondly, did I catch the culprit or ended up victimizing someone else? Frankly I have no idea.

One possibility is that I was mistaken about the identity, it is hard for me to distinguish one sardar with white turban from another. They either knew the real culprit and were in a position to get the money back or just wanted to shut it off since the costs of the matter reaching police may be very high - suspension/fine. Supporting cases - their narrative, a general opinion of sardars on average being truthful and honest, seeming rivalry between taxi unions. Second case is more disturbing since it is equivalent to harrassment.

Another possibility is that these guys or their friends were the real culprits. So to avoid the matter from reaching the police, they kept it amongst themselves. Supporting facts - same episode with elderly couple, readiness to reimburse me, the insistance that it was not a big thing (he actually showed a bunch of 100 and 500 notes, which together would have been approx cash 5k), and "customer is god" jargon.

Put with these facts and interpretations, I would take a 20% bet on them knowing, 20% on them paying me off (the first possibility cases) and 60% bet on the second possibility. Let us see if I get a call for the promised investigation.

Thirdly, should I have taken money from him at that instant, or waited for investigation and then asked for it? Given the above bets of mine, I now think I did the right thing by taking it.

Fourthly, should I have reported the incident to police anyway? I did not put myself into the agony, since there was a natural justice received. I am still not sure how to proceed. What if policeman takes advantage and harrasses them unduly? What if the fraud keeps on happening to others?

Also, why is it so hard to take note of taxi numbers, or why are we so lazy in such basic things?

As Nietzsche's famous quote goes - "There are no facts, but only interpretations." My interpretation is that I am nice, but not too much. Also, management bullshit lingo has gone mainstream.

PS: Finally off from my blog-o-sleep. Only such incident could wake me up. Comments welcome.

Doing a "Weird Al"

It's been a long time since I thought and wrote
Or maybe I didn't have much to make a note
Ooooh, here's my thinking cap, here's my thinking cap, here's my thinking cap,
Gotta find it out who is steering my boat
It's been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time.

चाँद तारों की कहानियों में
किसी का हाथ ढूंढ रहा था
मीठी बातों में सूनी रातों में
अनदेखे सपने ढूंढ रहा था

Look at those bozos, that's the way you do it
You smoke some pot and study MBA
That ain't working, so that's the point to do it
Money for nothin' and keep jumping 'cross the bay

दिल आखिर तू क्यूँ रोता है,
दुनिया में यूँ ही होता है, वगैरा वगैरा....
अपने हिस्से की धूप वैसे भी जी लेगा
जोगी अपना ग़म आसानी से पी लेगा

Is this the real life?
Is this just fantasy?
Caught in a routine
No escape from reality
Open your eyes, meaning of liff you see
I'm just moving by, I feel no hunger
Because I'm late-come, early-go, little joy, lot of woe
Any way the work grows, doesn't really matter to me, to me.

सिर रख के सोने के लिए
एक कंधा ढूंढ रहा हूँ
वो समझ और संभाल लेंगे
ये उम्मीद ढूंढ रहा हूँ

Now I fish, now I fish, and have beer
We're just few stuck souls swimming in a wish hole, year after year,
Running over the same old ground.
What have we found? The same old peers.
Fish, and have some beer.




Obligatory links to references - Weird Al, Led Zep, Dire Straits, Queen, Liff, Pink Floyd, Poem, ZNMD

Damn nature, you brilliant!

Recently I read a quote which went something like –

There is a incredible amount of phobia of supercomputers taking over the world. I sometimes wonder if it is arrogant to assume that our one creation which has been fifty odd years in evolution can beat the billions of years of natural evolution so easily.

This research is immensely humbling, illustrating that quote. On one hand scientists are scrambling to get quantum computers running at conditions which require cryogenic temperatures and responses in femtoseconds (10^-15 second). And on the other hand algae may be doing it already all this while. As a fair comparison, quantum computers are not running at room temperature and definitely not generating food side by side.

Earlier I was wondering if we are really the smartest/best species on the planet (You will point out rats and dolphins, but I suspect Douglas Adams was overestimating humans.) and we need to acknowledge ingenuity of other lifeforms on earth. There is enough in the world to know and there will be ever more which is not understood.

P.S. This part was mind-blowing –

This "quantum coherence" binds them together for a fleeting 400 femtoseconds (4 × 10^-13 seconds). But this is long enough for the energy from the absorbed photon to simultaneously "try out" all possible paths across the antenna.

Comparing that to our "normal" sense of time, I feel like typing one keystroke in 1000 years. Only similar thing I can think of is this xkcd comic.

lux gold coin fraud

The omnipresent ad of (some) lux soaps containing gold coin will be pulled back. I could not find any english news report, here are Pratahkal (Hindi) and Loksatta (Marathi) reports. The two are not reporting the same thing. I guess it is better than no reporting from English media.

What I could gather from the news:

• Ad watchers had appealed to consumer court claiming fraud by HUL.
• HUL agreed that some language in the ad could be misleading and decided to pull the ad out and change the packaging.
• The basic claim is that the batches that contained gold coins were out much before (manufactured before 22 Nov/10 Dec 2009) and currently running ad-campaign says that offer is valid for soaps manufactued between 5 Oct 2009 and 20 Jan 2010.
• Appeal has been made for 2.5 Crore penalty for misleading.

Loksatta also quotes that it is illegal to advertize based on schemes involving luck (like lottery).

So many interesting things here -

1. Win for consumer awareness
   
2. How can HUL dare to violate a law, that too in marketing itself?
   
3. Why is there so little reporting on news sites or blogs (The reason I am putting it up here)?
4. Why does it take day and half more for other news sites to investigate a decently important story? Are there vested interests (unlikely that so many are together)? Or is it delay in indexing from google (again, unlikely)?