Creating a Social Enterprise

I realized the other day that I still have not mentioned what I'm actually doing this summer. I guess I've been busy... working? Anyway, a professional update is certainly in order.

As I mentioned in an earlier post, I'm here as a WDI Fellow at CARE Bangladesh, country office of NGO CARE International. I got placed here at an amazing time. CARE BD is in the process of separating its innovative Rural Sales Program from the non-profit to form a joint social venture with global consumer product goods company Danone. I get to work on the final business plan and governance structure, preparing it for approval by Danone's social enterprise group!

Background on the Rural Sales Program

The Rural Sales Program is an initiative formed by CARE BD’s Economic Development Unit. It equips CARE BD's infamous "Aparajitas" (women who do not accept defeat) with training and products to sell to villages in rural Bangladesh. The program employs more than 2,000 women who source products at more than 50 hubs.

The model is based on CK Prahalad’s BoP concept and is similar to the Shakti model run by Hindustan Unilever. The big difference is that it was set up by an independent organization, allowing them to engage a number of for-profit companies and keep close measurement of social impact.

As a result, the Aparajitas sell a range of products, which ultimately mitigates risk. They sell shoes (Bata), daily packets of soap (Bangladesh Unilever), sanitary napkins (Square), seeds, animal feed, phones/minutes (Grameenphone), yogurt (Grameen-Danone Foods), and will soon be selling garments. Shoe sales, which earn the women the largest commission, fluctuate in a cycle of about one-two months, while soap sells daily but provides less commission. In the end, sales balance out into a steady income stream for the women.

The Aparajitas operate completely independently of CARE. They sell only what they want to sell and front the money for the goods themselves. This independence gives them full ability to tailor their sales to their geographic region so they can maximize individual profit. It also limits losses for the for-profit consumer goods companies.

In 2009, RSP generated $1M in sales for the companies it partnered with, and it is projected to generate $10M this year, almost 700 million Bangladeshi taka. In addition to providing the women with a regular income, the project also empowers the Aparajitas to become entrepreneurs and decision-makers in their families. RSP targets the most marginalized women in rural Bangladesh, so the impact of empowerment can be quite significant.

As one woman told us on a field visit, before she became an Aparajita, she couldn't approach even the poorest house in a village, and now she is welcomed at the home of the wealthiest.

The Future of RSP

The new social venture will be headed by the CARE staffer who formed, tested and ran RSP from the beginning, and who is also my supervisor. The work has be incredible so far. CARE has never been in this position, despite 65 years of experience, so we are essentially flying by the seat of our pants. I've been working on the new enterprise's governance structure, valuing the model to support CARE's ownership share (thanks to Ross finance professors Sreedhar Bharath and Gautam Kaul for imparting on me the most valuable knowledge I have so far gained as an MBA student).

We had a meeting with Danone on Monday and things are looking good. I have a few more numbers to clarify, and then I'll send my calculations to someone much smarter than I to make sure I didn't mess anything up. Once I'm done with that, I'll start work on refining the full proposal CARE will be submitting to Danone's social enterprise team for final approval (has been in the works for about six months).

It's all so exciting... and terrifying! I really hope I don't mess everything up.