In this series of posts titled ‘Part of The Solution’ read about imaginative yet realistic entrepreneurs, working towards a positive social difference in India. Read on for more!
With an idea seeded at business school, Rustam Sengupta created a social enterprise that works towards providing affordable renewable energy access for rural poor in India. An Electrical Engineer from the University of California and an MBA from INSEAD, Rustam decided to follow a passion and calling in 2009 that would benefit thousands. I talk to him about his journey, motivation and reality checks along the way.
Rustam Sengupta took a life-changing trip to India in 2007, as part of his ‘building social companies’ course at INSEAD. He witnessed the basic living conditions of rural poor on home soil and devised a practical and realistic solution to tackle the obvious lack of electrification solutions. Taking affordable and quality products to BoP customers would mean providing the critical linkages for product companies to this segment. Rustam wanted to take usable and quality products to the rural masses at a price point and service level that they would appreciate. While at business school, he and a few friends devised a model that won much appreciation and validation. However it was not until a few years later that Rustam, having enjoyed a prolific career across the world, decided that the draw to India was too strong to ignore. Rustam knew right away that he would have to apply every bit of business school learning to create a robust and scalable solution to address the needs of the population he was targeting. In 2010, an idea became a real adventure in the form of Boond.
What’s the solution then?
Rustam admits that the idea to take electrification solutions to rural areas is not new by any means. The novelty lay in the attitude and approach to it. For instance solar products were not known to this low-income and rural segment. Even with awareness, there was a barrier in affordability as the initial cost of purchase and installation was expensive. Added to these two issues was just poor product design and negligent post sale support service. These three inefficiencies offered Boond an opportunity to innovate. Boond’s solution to these problems of awareness and affordability, is through the development of locally managed distribution centres and agents who sell these items on credit. Boond ensures that products match the needs of the community through rural feedback based product design and a commission based peer to peer sales model.
Boond’s speciality in energy access lies in service and logistics support and managing affordability. Boond believes clean energy products and services need creative mechanisms for financing, service support and awareness in order to be sustainable enterprises. Public and private partnerships along with inclusive business models are the potential solutions. Boond has had great impact stories from the North of India.
Building Blocks and Success Stories
Rustam and his founding team took time to examine existing models for alternative energy solutions delivery in India. They were keen on building a consolidated solution based approach to deliver energy products to rural areas. They were confident that a consolidated approach that took care of logistics and financing a purchase was the only way to penetrate rural markets. Additionally bad product design needed to be addressed. While there were generations of solar products being designed and manufactured, there was a clear reason why they were not being adopted as expected. They were not being built for their actual use. Rustam and team went to villages to discover that rural customers wanted all the same things a regular urban consumer would want. They used all this intelligence to create a business model that was both viable and scalable in the short-term and long-run.
Boond has had several breaks along the way to help their efforts along. Boond has had NGO support from Seva Mandir in Udaipur and loans and financial support from Baroda Rajasthan Kshetriya Gramin Bank. SELCO’’s Harish Hande was an active mentor to Rustam and Boond.
Rustam says their assumption to lead with a product instead of a solution lead to their first big reality check. He says “educated in the west, we thought the product was the solution. We had this weird shaped lantern, that we wouldn’t use in our own houses, but I want a poor person to buy it? None of this has really been tested before.” Essentially he realized that today’s better designed lanterns were paid for by these poor people – they covered the research cost. That was a pretty bad approach, because the better solar lantern designs that are accessible to the upwardly mobile segments, started off as bad designs tested on the poorest sections of society. Most product features and benefits were only claims in a lab. Rustam and team had several moments where they realized they had to very seriously consider the design of the product before they ever tried to sell it to rural markets. They had to consider that rural homes have very similar lighting and electrification needs as an average household in a city would need.
Keys to Success?
Rustam reveals that team Boond has developed an eye for looking at market challenges in rural areas and creating an inclusive, sustainable and demand-based solution. They have been consistent and creative in this and believe in allowing business approaches and decisions to be shaped by on-ground insights rather than centralized thinking at the top. Boond believes they have arrived upon an energy access solution model that truly works. Rustam believes that it is players like them and several others whose perseverance and patience to stick to a business model in this space which will ultimately attain critical mass, breaking through the innovation and adoption barriers. This could result in huge increase in consumption and sophistication in technology. Until then, they will all have to strive to sustain their business models in their respective markets.
The guy in the village home wants some basic things. Keep his kids safe from kerosene related injuries, light his home sufficiently and save on diesel expense. Keeping this basic tenet in mind is core to our business solution.
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