The role of social enterprises in changing lives – lessons from Indian SWM organizations

>I had the pleasure to spend two and half month as an intern in the Waste Venture’s Dehi office. One of my main tasks was conducting a series of interviews with organizations already operating in India’s solid waste management (SWM) sector and producing a report summarizing their experiences. While SWM related, most findings can be extrapolated into general principles applicable to social enterprises active in developing countries. I will share some of them with you in this blog post, adding my thoughts and observations.

Most organizations were happy to schedule a call or a meeting and to answer our long list of questions. We talked mainly with founders or directors (often the same person) and their passion for the cause was very clear. This was the first learning point. People running social enterprises truly believe in what they are doing and social mission, the other element of a double bottom line, is central to all their activities.

This is important for two reasons. Firstly, it is not an easy job. Most of them went through tough times when they were starting up and growing the businesses further is not a piece of cake as well. Their unflattering belief and dedication were often the key to survival of their organizations. Secondly, it helps in ensuring that improving lives does not get sidetracked to increasing profits as there are often ways of making a social business more profitable at expense of some of the beneficiaries. A SWM example would be hiring physically stronger male day labourers for waste collection as opposed to female rag pickers not used to regular working hours.

Demand wallah’s perspective

That is not to say however, that social enterprises should be run like charities with deep pocket donors behind them. On contrary, the major learning point for me was that in terms of interaction with customers, they are business entities as any other. They are offering a certain service and should be supplying the service only if there is demand for it and people are willing to pay for it. Abhijit Banerjee and Esther Duflo in their book Poor Economics talk about supply and demand wallah (wallah is an Indian word for a man doing certain occupation – e.g. chai wallah is a tea vendor) approaches to helping people escape from poverty. While supply wallahs advocate donating goods and provision of services to poor people mostly for free, regardless on whether they want them or not, demand wallahs propose to treat poor people as consumers and let the market cater for their needs. Taking deman wallahs’ perspective, social enterprises are an integral part of this market and should therefore treat poor people as customers.

One of the most successful organizations we interviewed accepts the fact that not everybody is interested in its product – paid door to door household waste collection. If after a reasonable trial period a substantial majority of people in a street is not paying collection fees, it simply stops servicing the whole street, letting the community make a decision. Another organization applies this concept to its recruitment strategy. It does not actively approach informal waste pickers to join the enterprise (i.e. to stop working whenever and wherever they want to and to enter into a semi-formal contract with fixed working hours and determined collection route, a significant lifestyle change) but rather relies only on world of mouth within the waste pickers community. Those that joined the business tell others what it is like and people interested in pursuing this opportunity then approach the company while others are free to decide that this is not something for them.

Changing behaviours

But is leaving everything up to the invisible hand of the market really the best way to achieve social change? The answer is not entirely, and supply wallahs would be quick (and often correct) to point out that the poor can be in a poverty trap which does not allow them to make choices they want. Being poor also sometimes means that people do not have sufficient education and general overview to know what they can aspire for. Finally, they have been living their lives in a certain way and in an extremely unpredictable environment without any cushion to fall back on they might be reluctant to risk any changes to their income generating activities or well established consumptions patterns. It is then up to social enterprises to make use of various nudges, stimuli, to help poor people make decisions which would ultimately improve their lives.

Our interviews gave us two good examples. As mentioned earlier, one organization does not carry out the service unless significant majority of households sign up and pay collection fees. It is then enough if only some households recognize the benefits of hygienic way of waste disposal because these create a peer pressure on the unaware households to pay for the service as well. In this way, the whole neighbourhood benefits from clean streets and the SWM organization achieves 95% fees collection rates enabling it to further expand its services. Another organization has found out how to persuade people to separate organic and inorganic waste. It does not ask the households to ‘segregate’ waste because that creates a perception of being asked to do extra work. Instead, it simply encourages them not to mix man-made and natural waste. While both mean effectively the same, the latter has proved to be a much more successful approach.

On balance, my internship with Waste Ventures has certainly been a very enlightening experience. It has assured me of my belief that social businesses can indeed change lives of poor people in a way that is self-sustainable, scalable and most importantly, it treats people with dignity by making them empowered to be in charge of their own futures as opposed to putting them in a position of mere aid recipients, dependant on external donors.

This post will be featured on Waste Venture’s blog Talking Trash on http://www.socialedge.org/blogs/talking-trash